Huffaker v. Eagle Fuel Cells, Inc.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 MCKENZIE HUFFAKER, personally and Case No.: 19-cv-01996-GPC-AHG as personal representative of the ESTATE [12] OF PERRY HUFFAKER AND SARAH ORDER GRANTING DEFENDANT’S 13 HUFFAKER; JERILY MARTIN, as MOTION TO DISMISS WITHOUT guardian of AUBREE HUFFAKER; PREJUDICE AND GRANTING [14] JAXSON HUFFAKER; CADEN PLAINTIFF’S REQUEST FOR 15 HUFFAKER; LEROY HUFFAKER; LIMITED JURISDICTIONAL KATHRYN HUFFAKER; GREG DISCOVERY [16] PAYNE and CLAUDIA PAYNE , 17 [ECF No. 8] Plaintiff, [18] v. [19] EAGLE FUEL CELLS, INC. aka EAGLE 20 FUEL CELLS-ETC. INC. aka/dba EAGLE TECHNOLOGIES CO. and [21] DOES 1 through 100, [22] Defendants. [26] 19-cv-01996-GPC-AHG 1 Before the Court is Eagle Fuel Cells, Inc. aka Eagle Fuel Cells-Etc, Inc. aka/dba 2 Eagle Technologies’ (“Defendant” or “Eagle”) motion to dismiss the first amended 3 complaint, filed on November 27, 2019. ECF No. 8. The motion has been fully briefed. 4 ECF Nos. 10, 11. The Court GRANTS the motion to dismiss and additionally GRANTS 5 Plaintiff’s motion for jurisdictional discovery. [6] I. Procedural History [7] Plaintiffs first filed suit against Defendant Eagle in Utah on July 23, 2019. ECF [8] No. 6 (“First Amended Complaint” or “FAC”) ¶ 19. Eagle moved to dismiss for lack of [9] personal jurisdiction. Id. ¶ 20. Plaintiffs filed a notice of non-opposition on September [10] 18, 2019. Id. ¶ 21. Plaintiffs then filed suit in the San Diego Superior Court on [11] September 18, 2019, and the suit was removed to this Court on October 16, 2019. ECF [12] No. 1. Plaintiffs allege claims of strict products liability, negligence, and breach of [13] warranty against all defendants. FAC ¶¶ 22-35. [14] 15 II. Factual Background 16 Plaintiffs are the family members of two individuals who died as a result of 17 injuries sustained in an airplane crash. Id. ¶¶ 1-5. The airplane (“Subject Airplane”) 18 crashed on July 26, 2017 in Utah. Id. ¶ 9. The decedents were residents of Utah when 19 they died; Plaintiffs are also residents of Utah.1 Id. ¶¶ 1-5. 20 Defendant Eagle provides, among things, replacement fuel drain valves for 21 aircrafts. Id. ¶ 6. Eagle is incorporated in Wisconsin and has its principal place of [24] 25 1 One Plaintiff is currently living in Brazil. FAC ¶ 2. [26] 19-cv-01996-GPC-AHG 1 business in Wisconsin. Id. ¶ 6; Declaration of Kurt Hartwig (ECF No. 8-2) (“Hartwig 2 Decl.”) ¶ 4. Plaintiffs also name as defendants Does 1 through 100, as agents, servants, 3 employees and/or joint venturers of their codefendants. Id. ¶ 8. 4 Eagle designed, manufactured, overhauled, inspected, and distributed a fuel drain 5 valve (“Subject Valve”) that was “sold in and sent” to Borrego Springs, California where 6 it was ultimately installed in the Subject Aircraft. Id. ¶ 11. Allegedly, the Subject Valve 7 failed to properly drain water from the fuel system in the fuel system; as a result, the 8 Subject Aircraft lost power at the time of the crash. Id. ¶¶ 12, 13. No alterations were 9 made to the Subject Valve between the time that Eagle shipped it and the time of its 10 installation. Id. ¶ 14. 11 The Subject Valve was shipped pursuant to a purchase agreement executed on 12 November 20, 2007. ECF No. 8-3 at 3. The seller is listed as Eagle Fuel Cells, 617 13 Skylane Taxiway, Eagle River, Wisconsin 54521, and the recipient of the Subject Valve 14 is listed as Tom Pantich, 4643 Mesquite Lane, Borrego Springs, CA 92004. Id. Tom 15 Pantich is not a party in this action. 16 On or around June 20, 2019, Plaintiffs learned, through their experts’ analysis of 17 the crash wreckage, that there was water in the fuel system and the defects with the 18 Subject Valve at the time of the crash. Id. ¶ 15. Plaintiffs’ experts had previously 19 inspected the wreckage on January 25, 2019 and April 19, 2019. Id. ¶ 18. [20] III. Legal Standard [21] Defendant moves to dismiss for lack of personal jurisdiction under Fed. R. Civ. P. [22] (“Rule”) 12(b)(2). [23] “Federal courts ordinarily follow state law in determining the bounds of their [24] jurisdiction over persons.” Daimler AG v. Bauman, 571 U.S. 117, 125 (2014). Under [26] 19-cv-01996-GPC-AHG 1 California’s long-arm statute, California state courts may exercise personal jurisdiction 2 “on any basis not inconsistent with the Constitution of this state or of the United States.” 3 Cal. Civ. Proc. Code Ann. § 410.10 (West 2004). California’s long-arm statute is 4 coextensive with federal due process requirements; accordingly, “the jurisdictional 5 analyses under state law and federal due process are the same.” Schwarzenegger v. Fred 6 Martin Motor Co., 374 F.3d 797 , 800–01 (9th Cir. 2004). To satisfy due process, a 7 defendant must have sufficient “minimum contacts” with the forum state that 8 “maintenance of the suit does not offend traditional notions of fair play and substantial 9 justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The two recognized 10 bases for exercising personal jurisdiction over a nonresident defendant are “general” and 11 “specific.” Doe v. Am. Nat. Red Cross, 112 F.3d 1048 , 1050 (9th Cir. 1997). When there 12 has been no evidentiary hearing, a plaintiff need only make out a prima facie showing of 13 jurisdictional facts. See Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124 , 14 1127 (9th Cir. 2010); Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th 15 Cir. 1977). “It is only if the court takes evidence on the issue or rules on the personal 16 jurisdiction question in the context of a trial that a heightened, preponderance of the 17 evidence standard applies.” Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005). 18 Where a motion to dismiss is granted, “leave to amend should be granted ‘unless 19 the court determines that the allegation of other facts consistent with the challenged 20 pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc., [21] 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture 22 Co., 806 F.2d 1393 , 1401 (9th Cir. 1986)). In other words, where leave to amend would 23 be futile, the Court may deny leave to amend. See Desoto, 957 F.2d at 658 ; Schreiber, 24 806 F.2d at 1401. [26] 19-cv-01996-GPC-AHG 1 IV. Discussion 2 Defendant argues that this Court lacks both general and specific jurisdiction. The 3 Court addresses each in turn. 4 A. General Jurisdiction 5 Defendant argues that general jurisdiction is inappropriate since it is a Wisconsin 6 corporation with its principal place of business in Wisconsin and has insufficient contacts 7 with California. Plaintiffs do not oppose. 8 “With respect to a corporation, the place of incorporation and principal place of 9 business are paradigm bases for general jurisdiction.” Daimler AG v. Bauman, 571 U.S. 10 117, 137 (2014) (citations omitted). “General jurisdiction does not exist simply because 11 of the magnitude of the defendant’s in-state contacts.” Wright & Miller, 4 Fed. Prac. & 12 Proc. Civ. § 1067.5 (4th ed.) (citations omitted). It is insufficient to prove that a “foreign 13 corporation’s in-forum contacts can be said to be in some sense continuous and 14 systematic,” rather, the corporation’s affiliations with the forum state must be “so 15 continuous and systematic as to render it essentially at home in the forum State.” 16 Daimler, 571 U.S. at 138–39 (internal citations and quotations omitted). “General 17 jurisdiction instead calls for an appraisal of a corporation’s activities in their entirety, 18 nationwide and worldwide.” Daimler, 571 U.S. at 139 n.20. “A corporation that 19 operates in many places can scarcely be deemed at home in all of them.” Id. 20 For Eagle, both of the paradigm bases for general jurisdiction (i.e., the principal 21 place of business and place of incorporation) are located in Wisconsin. Therefore, the 22 only remaining basis for exercising general jurisdiction would be Defendant’s contacts 23 with California. [26] 19-cv-01996-GPC-AHG 1 Defendant argues that it does not transact or solicit business, maintain offices or 2 any other places of business, own real property, or have any clients or employees in 3 California. ECF No. 8-1 at 18. The Court finds that Plaintiffs have failed to allege 4 sufficient facts to show that Eagle’s contacts with California are so continuous and 5 systematic to render it “at home” in California. Accordingly, the Court declines to 6 exercise general jurisdiction over Eagle. 7 B. Specific Jurisdiction 8 Defendant argues that the Court lacks specific jurisdiction since it has not 9 purposefully directed its activities or otherwise purposefully availed itself of California; 10 Plaintiffs’ claims do not arise out of any of Defendant’s forum related activities; and the 11 exercise of jurisdiction in California would be unreasonable. Plaintiffs oppose. 12 1. Legal Standard 13 Although the Supreme Court has drawn clear and narrow constraints on general 14 jurisdiction, the jurisprudence on specific jurisdiction has grown in a different direction. 15 “[W]hile specific jurisdiction has been cut loose from Pennoyer’s sway,” – i.e., “the idea 16 that jurisdiction was necessarily limited to the geographic bounds of the forum” – 17 “general jurisdiction has not been stretched beyond limits traditionally recognized.” 18 Daimler AG v. Bauman, 571 U.S. 117, 117 (2014) (citing Pennoyer v. Neff, 95 U.S. 714 19 (1877)). 20 The Due Process Clause protects an individual’s liberty interest in not being 21 subject to the binding judgments of a forum with which he has established no meaningful 22 “contacts, ties, or relations.” International Shoe Co. v. Washington, 326 U.S., at 319 . By 23 requiring that individuals have “fair warning that a particular activity may subject [them] 24 to the jurisdiction of a foreign sovereign,” Shaffer v. Heitner, 433 U.S. 186, 218 (1977) [26] 19-cv-01996-GPC-AHG 1 (Stevens, J., concurring), the Due Process Clause “gives a degree of predictability to the 2 legal system that allows potential defendants to structure their primary conduct with some 3 minimum assurance as to where that conduct will and will not render them liable to suit,” 4 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). 5 Where a forum seeks to assert specific jurisdiction over an out-of-state defendant 6 who has not consented to suit there, this “fair warning” requirement is satisfied if the 7 defendant has “purposefully directed” his activities at residents of the forum, Keeton v. 8 Hustler Magazine, Inc., 465 U.S. 770, 774 (1984), and the litigation results from alleged 9 injuries that “arise out of or relate to” those activities, Helicopteros Nacionales de 10 Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984). 11 In California, the reach of state long-arm jurisdictional statute is coextensive with 12 federal due process, which requires that a nonresident defendant have “minimum 13 contacts” with the forum “such that the exercise of jurisdiction ‘does not offend 14 traditional notions of fair play and substantial justice.’ ” Schwarzenegger, 374 F.3d at 15 800-01 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); Cal. Civ. Proc. 16 Code § 410.10. The Ninth Circuit applies the following three-prong test for determining 17 specific jurisdiction over a non-resident defendant: 18 (1) the non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some [19] act by which he purposefully avails himself of the privilege of conducting 20 activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum21 related activities; and 22 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable. [26] 19-cv-01996-GPC-AHG 1 See Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1227 (9th Cir. 2011) (citing 2 Schwarzenegger, 374 F.3d at 802 ). 3 While a plaintiff bears the burden of satisfying the first two prongs, on the third 4 prong, “the burden then shifts to the defendant to ‘present a compelling case’ that the 5 exercise of jurisdiction would not be reasonable.” Schwarzenegger, 374 F.3d at 802 6 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985)). 7 2. Purposeful Direction and Availment 8 The first prong of the specific jurisdiction test refers to both purposeful direction 9 and purposeful availment. Defendant argues that the act at issue – i.e., the sale of the fuel 10 drain valve – was not aimed at the forum state since Defendant manufactured the Subject 11 Valve in Wisconsin and executed the purchase agreement in Wisconsin. Plaintiffs 12 counter that Eagle purposefully directed its activities towards and availed itself of the 13 privilege of conducting activities in the forum state through its sale of the Subject Valve. 14 Purposeful Direction 15 Evidence of purposeful direction generally consists of action taking place outside 16 the forum that is directed at the forum. Pebble Beach Co. v. Caddy, 453 F.3d 1151 , 1155 17 (9th Cir. 2006). A forum legitimately may exercise personal jurisdiction over a 18 nonresident who “purposefully directs” his activities toward forum residents because a 19 State generally has a “manifest interest” in providing its residents with a convenient 20 forum for redressing injuries inflicted by out-of-state actors. Burger King Corp., 471 21 U.S. at 473-474. “Harm suffered in the forum state is a necessary element in 22 establishing purposeful direction.” Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1144 (9th 23 Cir. 2017). [26] 19-cv-01996-GPC-AHG 1 Here, California has no apparent “manifest interest” in providing its residents with 2 a convenient forum for redressing injuries because no California residents are party to 3 this suit. Plaintiffs allege that Defendant sold the Subject Valve to a known California 4 resident; however, Plaintiffs do not claim that this recipient suffered any harm in 5 California, let alone had any connection to the Subject Aircraft at the time of the crash. 6 Furthermore, and perhaps more importantly, Plaintiffs fail to allege that any harm that 7 gives rise to this litigation was sustained in California. Thus, Plaintiffs have not shown 8 that Defendant directed its activities towards California to justify specific jurisdiction 9 over the Defendant. 10 Purposeful Availment 11 Where a nonresident defendant “deliberately” has engaged in significant activities 12 within a State, or has created “continuing obligations” between himself and residents of 13 the forum, he manifestly has availed himself of the privilege of conducting business 14 there, and because his activities are shielded by “the benefits and protections” of the 15 forum’s laws, it is presumptively not unreasonable to require him to submit to the 16 burdens of litigation in that forum as well. Burger King Corp., 471 U.S. at 475–76 17 (citing Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 (1984); Travelers Health 18 Assn. v. Virginia, 339 U.S. 643, 648 (1950)). The nonresident defendant’s “conduct and 19 connection with the forum State” must be such that “he should reasonably anticipate 20 being haled into court there, and therefore cannot be solely the result of some random, 21 fortuitous, or attenuated contacts.” Id. at 474-475. The Supreme Court has explained: 22 When a corporation ‘purposefully avails itself of the privilege of conducting activities within the forum State,’ it has clear notice that it is subject to suit there, [23] and can act to alleviate the risk of burdensome litigation by procuring insurance, 24 passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State. Hence if the sale of a product of a manufacturer or [26] 19-cv-01996-GPC-AHG 1 distributor . . . is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its [2] product in other States, it is not unreasonable to subject it to suit in one of those 3 States if its allegedly defective merchandise has there been the source of injury to its owner or to others. [4] 5 World-Wide Volkswagen Corp., 444 U.S. at 297 . While territorial presence in a state will 6 frequently “enhance a potential defendant’s affiliation with a State and reinforce the 7 reasonable foreseeability of suit there,” it is not a necessary component if a “substantial 8 amount of business is transacted by mail and wire communications . . . thus obviating the 9 need for physical presence within a State.” Burger King Corp., 471 U.S. at 476 . 10 Here, Plaintiffs have not sufficiently alleged that Defendant transacted a substantial 11 amount of business in the state or has created any continuing obligations with any 12 California residents. Plaintiffs only allege the following: Eagle maintains a 1-800 13 number, which CA residents can call without incurring charges; Eagle allows customers 14 to request a quote online; Eagle performs services across North America and around the 15 country; and Eagle sold a defective drain valve to a California resident. ECF No. 10 at 9. 16 Eagle’s sale of the Subject Valve to a California resident is the strongest connection to 17 the forum state, but as mentioned, the recipient of the valves is not a party in this action, 18 and Plaintiffs do not claim that the recipient of the valves suffered any harm or had any 19 connection to the Subject Aircraft at the time of the crash. 20 While Defendant’s lack of presence in California is not wholly determinative, the 21 facts show that Eagle is not registered to do business in California, has never had a 22 registered agent in California, owns no real property in California, does not maintain any 23 offices in California, does not keep any officers or directors in California, does not hold 24 any bank accounts or have any telephone listings in California, and does not maintain any [26] 19-cv-01996-GPC-AHG 1 corporate books in California. Hartwig Decl. ¶ 6. Plaintiffs only alleges a single instance 2 of Defendant mailing a product to a non-party California resident in 2007, ten years 3 before the aircraft crash occurred. Cf. DIRECTV, Inc. v. EQ Stuff, Inc., 207 F. Supp. 2d 4 1077 (C.D. Cal. 2002) (defendants purposefully directed activities at forum state by 5 filling orders for over 2,500 products that they knew were bound for California and 6 conducting business relationships with several California companies that provide ongoing 7 services necessary for operation of defendants’ website). Plaintiffs have thus failed to 8 show that Defendant had contacts with California that would provide “clear notice” that 9 Defendant should reasonably anticipate being haled into court in California. 10 The cases that Plaintiffs cite – Patterson v. Home Depot, USA, Inc., 684 F. Supp. 11 2d 1170 (D. Ariz. 2010) and Dillard v. Fed. Corp., 321 F. Supp. 3d 752 (W.D. Tex. 12 2018) – are unhelpful. In Patterson, plaintiffs were actually injured in Arizona by a 13 product that was sold in Arizona, the forum state. The Patterson court held that a foreign 14 corporate defendant purposefully availed itself of the privileges of conducting activities 15 in the forum state because the Company placed its design for the defective ladder into the 16 “stream of commerce” and directed that design toward U.S. consumers by establishing an 17 American subsidiary and giving that subsidiary a license to disseminate products 18 manufactured in accordance with an allegedly defective design. Patterson, 684 F. Supp. 19 2d at 1183; cf. Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 112 (1987) 20 (plurality opinion) (a defective or negligent design may be sufficient to establish specific 21 jurisdiction when a defendant designs the product for the market in the forum state). 22 Unlike in Patterson, there is no indication that Defendant similarly directed its design of 23 the Subject Valve towards California so as to cause harm in California. [26] 19-cv-01996-GPC-AHG 1 In Dillard, the Texas district court rejected Asahi’s plurality opinion which 2 applied a “stream of commerce plus test” to specific jurisdiction determinations and, 3 instead, followed a “looser test” as articulated by the Fifth Circuit, requiring only “mere 4 foreseeability or awareness” that the end product would be purchased by or used by 5 consumers in the forum state. Dillard, 321 F. Supp. 3d at 756 . The Ninth Circuit has not 6 adopted this “looser test.” Consequentially, Dillard has no precedential weight or effect 7 in the present case. 8 Accordingly, the Court concludes that Plaintiffs have failed to satisfy the first 9 prong of the three-prong test and that an exercise of specific personal jurisdiction over 10 Defendant would offend due process. Thus, it is unnecessary to address the final two 11 prongs. 12 C. Jurisdictional Discovery 13 Plaintiffs request permission to conduct jurisdictional discovery in the event that 14 the Court finds that Plaintiffs have failed to establish a prima facie case for personal 15 jurisdiction. Defendant counters that that jurisdictional discovery is unnecessary and that 16 Plaintiffs have failed to move for a continuance. 17 “[T]he question of whether to allow discovery is generally within the discretion of 18 the trial judge.” Am. W. Airlines, Inc. v. GPA Grp., Ltd., 877 F.2d 793 , 801 (9th Cir. 19 1989). A decision “to deny discovery will not be disturbed except upon the clearest 20 showing that the denial of discovery results in actual and substantial prejudice to the 21 complaining litigant.” Laub v. U.S. Dep’t of Interior, 342 F.3d 1080, 1093 (9th Cir. 22 2003) (internal citations omitted). While “purely speculative allegations of attenuated 23 jurisdictional contacts” are insufficient to warrant jurisdictional discovery, Getz v. Boeing 24 Co., 654 F.3d 852, 860 (9th Cir. 2011), “discovery should ordinarily be granted where [26] 19-cv-01996-GPC-AHG 1 pertinent facts bearing on the question of jurisdiction are controverted or where a more 2 satisfactory showing of the facts is necessary.” Laub, 342 F.3d at 1093 (citing Butcher’s 3 Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535 , 540 (9th Cir. 1986); Boschetto v. 4 Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008)). 5 In their request for jurisdictional discovery, Plaintiffs argue that discovery may 6 show the extent to which Defendant has sent its products to California and provided fuel 7 system services to California residents, noting that it is “extremely unlikely that the 8 subject drain is the only product or service Eagles [sic] has provided to California 9 residents.” ECF No. 10 at 15. Defendant counters that it is a “Wisconsin Corporation 10 that has no significant connection to California at all.” ECF No. 11 at 13. Defendant 11 additionally denies any further involvement with the individual who purchased the fuel 12 drain valve in 2007 after the purchase was concluded. See Hartwig Decl. ¶¶ 6, 10. 13 However, Plaintiffs have established that Defendant has completed at least one sale to a 14 California resident. Cf. Crafty Prods., Inc. v. Fuqing Sanxing Crafts Co., 2016 WL 15 5464552, at *11 (S.D. Cal. Sept. 29, 2016) (jurisdictional discovery denied where 16 plaintiff failed to establish any prior instance of defendant directing infringing activity at 17 the forum state). Plaintiffs allege that they may be able to find more sales by Defendant 18 to other California residents and have shown that Eagle performs services across North 19 America and around the country and maintains a 1-800 number, which California 20 residents can call without incurring charges, in order to obtain products and services. 21 Plaintiffs have also shown that Defendant allows customers to request a quote on 22 Defendant’s website. While it is a close question, the Court will permit limited 23 jurisdictional discovery so that Plaintiffs may determine the extent of Defendant’s sales [26] 19-cv-01996-GPC-AHG 1 || of their products and services in California. Accordingly, Plaintiff's request for 2 || jurisdictional discovery is GRANTED. [3] 4 V. Conclusion In sum, Defendant’s motion to dismiss the FAC is GRANTED without prejudice. Plaintiffs’ request for jurisdictional discovery is GRANTED and Plaintiffs will be given 45 days from the date of this order to conduct jurisdictional discovery. Plaintiffs are further granted leave to amend within 20 days of the conclusion of jurisdictional 9 discovery. [10] IT IS SO ORDERED. Dated: January 31, 2020 2 sale Ox 13 Hon. Gonzalo P. Curiel United States District Judge [24] 25 14 26 19-cv-01996-GPC-AHG