Williams v. Yamaha Motor Co.

• Decision Date: 24 March 2017
• Docket Number: No. 15-55924,15-55924
• Citation: 851 F.3d 1015
• Parties: George WILLIAMS; Lorenda Overman; Gerald Chiariello, II; Steve Oetegenn; Charles Pencinger; Brian Gilderman; Joseph Ramos; Adam Daniel Jacks; Philip Kirsopp; William Kratz ; William Neff; James R. Krapf, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, and Mark D. Cooperman; Gerald L. Washington; Ernest Paul Camilleri, Jr.; Scott Markowitz; Joe Diorio; Thomas Blatt; Matthew J. Bonzella; Joe Garsetti, Plaintiffs, v. YAMAHA MOTOR CO. LTD. ; Yamaha Motor Corporation, U.S.A., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

851 F.3d 1015

George WILLIAMS; Lorenda Overman; Gerald Chiariello, II; Steve Oetegenn; Charles Pencinger; Brian Gilderman; Joseph Ramos; Adam Daniel Jacks; Philip Kirsopp; William Kratz ; William Neff; James R. Krapf, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,andMark D. Cooperman; Gerald L. Washington; Ernest Paul Camilleri, Jr.; Scott Markowitz; Joe Diorio; Thomas Blatt; Matthew J. Bonzella; Joe Garsetti, Plaintiffs,

v.YAMAHA MOTOR CO. LTD. ; Yamaha Motor Corporation, U.S.A., Defendants-Appellees.

No. 15-55924

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 16, 2017, Pasadena, California

Filed March 24, 2017

Van Bunch (argued), Bonnett Fairbourn Friedman & Balint P.C., Phoenix, Arizona; Charles Clinton Hunter and Debra Brewer Hayes, The Hayes Law Firm PC, Houston, Texas; for Plaintiffs-Appellants.

Theane Evangelis Kapur (argued), Michael Holocek, and Timothy W. Loose, Gibson Dunn & Crutcher LLP, Los Angeles, California, for Defendant-Appellee.

Before: MILAN D. SMITH, JR. and JOHN B. OWENS, Circuit Judges, and ALVIN K. HELLERSTEIN, District Judge.^*

OPINION

M. SMITH, Circuit Judge:

This appeal challenges two separate rulings by the district court: the dismissal of Defendant-Appellee Yamaha Motor Co. Ltd. (YMC) for lack of personal jurisdiction, and the dismissal of Plaintiffs-Appellants' claims against Defendant-Appellee Yamaha Motor Corporation, U.S.A. (YMUS) pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth in this opinion, we affirm the district court on both accounts.

FACTUAL AND PROCEDURAL BACKGROUND

Appellants are a group of twenty named plaintiffs who purchased "first-generation ... four stroke outboard motors" (the Class Motors) manufactured by YMC from 2000 to 2004. Appellants brought suit against YMC, which designed and manufactured the Class Motors in Japan, and YMC's wholly-owned subsidiary, YMUS, which imported and marketed them in California. Appellants allege that the Class Motors contained an inherent design defect that caused severe, premature corrosion in the motors' dry exhaust system. Appellants assert that this defect caused the motors to fail after between 500 to 700 hours of use, even when properly serviced and maintained, when absent this defect an outboard motor would have an expected useful life of at least 2000 hours. Although the alleged defect manifests early in an engine's expected lifespan, the average recreational boater only uses her engine an average of 100 hours per year. Accordingly, the defect typically will not manifest until the three-year warranty period has expired. Appellants assert on appeal that Appellees knew of the dry exhaust defect prior to the sales of the Class Motors to Appellants, and that the defect poses an unreasonable safety hazard.

Appellant Williams filed the initial complaint on behalf of himself and all others similarly situated on July 15, 2013, naming YMC and YMUS as defendants. The complaint asserted claims for violations of federal and state warranty law; California's Consumer Legal Remedies Act, California Civil Code § 1750 ; and California's Unfair Competition Law, California Business and Professions Code § 17200.

Appellees filed a motion to dismiss, in response to which Appellants filed an amended complaint. YMUS then filed a second motion to dismiss for failure to state a claim, and YMC filed a motion to dismiss for lack of personal jurisdiction. While these motions were pending, the district court consolidated this matter with two similar cases and vacated all pending motions, after which Appellants filed a consolidated class action complaint. The consolidated complaint contained, in addition to the claims asserted in the initial complaint, ten new statutory claims from five different states, as well as claims for negligence and unjust enrichment.

YMUS subsequently filed a third motion to dismiss for failure to state a claim, and YMC filed a second motion to dismiss for lack of personal jurisdiction. On August 19, 2014, the district court granted in part YMUS's motion, dismissing Appellants' warranty and consumer fraud claims, and granting YMC's motion in its entirety. Appellants then filed their first amended complaint, to which YMUS responded with a fourth motion to dismiss. The district court granted YMUS's motion entirely, but granted Appellants leave to replead their consumer fraud claims.

Finally, on February 2, 2015, Appellants filed their second amended complaint (SAC), to which YMUS responded with its fifth motion to dismiss for failure to state a claim. On April 29, 2015, the district court granted YMUS's motion and dismissed Appellants' only remaining claims with prejudice. Appellants now appeal the district court's grant of YMC's motion to dismiss for lack of personal jurisdiction, and its grant of YMUS's fifth motion to dismiss Appellants' consumer fraud claims.

JURISDICTION AND STANDARD OF REVIEW

We exercise jurisdiction over appeals from final decisions of the district court pursuant to 28 U.S.C. § 1291. We review de novo a district court's dismissal of a party for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). Mavrix Photo, Inc. v. Brand Techs., Inc. , 647 F.3d 1218, 1223 (9th Cir. 2011). We similarly conduct de novo review of "a district court's dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6)." Walker v. Beard , 789 F.3d 1125, 1131 (9th Cir. 2015).

ANALYSIS

I. The District Court Lacked General Jurisdiction Over YMC

Federal courts apply state law to determine the bounds of their jurisdiction over a party. See Fed. R. Civ. P. 4(k)(1)(A). California's long-arm statute permits the exercise of jurisdiction to the full extent that such exercise comports with due process. Cal. Code Civ. P. § 410.10.

Under Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011), courts have general jurisdiction over a foreign corporation only if the corporation's connections to the forum state "are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State." Id . at 919, 131 S.Ct. 2846. A corporation's "continuous activity of some sorts within a state is [generally] not enough to support the demand that the corporation be amenable to suits unrelated to that activity." Int'l Shoe Co. v. Washington , 326 U.S. 310, 318, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Rather, in the paradigmatic circumstance for exercising general jurisdiction, the corporate defendant is incorporated or has its principal place of business in the forum state. Goodyear , 564 U.S. at 924, 131 S.Ct. 2846.

In Daimler AG v. Bauman , ––– U.S. ––––, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014), the Supreme Court considered for the first time "whether a foreign corporation may be subjected to a court's general jurisdiction based on the contacts of its in-state subsidiary." Id . at 759. The plaintiffs sought to sue Daimler, a German corporation, in California on the basis that Daimler's subsidiary's contacts could be attributed to Daimler under an agency theory, thereby establishing Daimler's "continuous and systematic" presence within California. Id . at 752. Daimler's subsidiary, MBUSA, served as Daimler's exclusive U.S. importer and distributor and had multiple California facilities. Id . We found general jurisdiction over Daimler under an agency theory, applying a test that asked whether MBUSA's services were "sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation's own officials would undertake to perform substantially similar services." Bauman v. DaimlerChrysler Corp. , 644 F.3d 909, 921 (9th Cir. 2011) (quoting Doe v. Unocal Corp. , 248 F.3d 915, 928 (9th Cir. 2001) (emphasis omitted)).

The Supreme Court reversed our finding of general jurisdiction, emphasizing that the test for general jurisdiction asks whether a corporation is essentially "at home" in the forum state. Daimler , 134 S.Ct. at 754, 757. The Supreme Court assumed that MBUSA could be considered "at home" in California, and that its in-state contacts could be attributed to Daimler, but it rejected a theory that would permit "the exercise of general jurisdiction in every State in which a corporation ‘engages in a substantial, continuous, and systematic course of business.’ " Id . at 760–61. In so doing, the Court noted that while general jurisdiction is not strictly limited to a corporation's place of incorporation or principal place of business, those exemplars illustrate the need for predictability in jurisdiction and "afford plaintiffs recourse to at least one clear and certain forum in which a corporate defendant may be sued on any and all claims." Id . at 760.

Subsequently, in Ranza v. Nike, Inc. , 793 F.3d 1059 (9th Cir. 2015), we considered whether an in-state corporation's contacts could be attributed to its foreign subsidiary to establish general jurisdiction over the subsidiary. See id. at 1065. We stated that while Daimler invalidated our previous "agency" test, it "left intact" the alternative "alter ego test for ‘imputed’ general jurisdiction." Id . at 1071. We made clear, however, that the parent-subsidiary relationship does not on its own establish two entities as "alter egos," and thus does not indicate that general jurisdiction over one gives rise to general jurisdiction over the other. Id . at 1070 (citing Dole Food Co. v. Patrickson , 538 U.S. 468, 474, 123 S.Ct. 1655, 155 L.Ed.2d 643 (2003) ; United States v. Bestfoods , 524 U.S. 51, 61, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998) ). Rather, we held that "the alter ego test may be used to extend personal jurisdiction to a foreign parent or subsidiary when, in actuality, the foreign entity is not really separate from its domestic affiliate." Id . at 1073 (emphasis omitted). To satisfy this test, "a plaintiff must make out a prima facie case (1) that there is such...