Thursday, February 7, 2013

Asahi Metal Industry Co. v. Superior Court of California case brief

Asahi Metal Industry Co. v. Superior Court of California480 U.S. 102

SYNOPSIS: On writ of certiorari to the Supreme Court of California, petitioner, a Japanese corporation, sought review of a decision that California courts had personal jurisdiction over it on the claim of respondent, a Taiwanese corporation, for indemnification in a products liability action where the defect involved a component manufactured by petitioner and sold to respondent, who had it assembled in respondent's factory in Taiwan.

-Petitioner, a Japanese corporation, manufactured a valve that was sold to respondent, a Taiwanese corporation, who used it in the manufacture of a motorcycle tire.
-When the tire exploded while the motorcycle owner was driving it in California, the driver filed a products liability action against respondent, who filed a cross-complaint for indemnity against petitioner.
-The trial court denied petitioner's motion to quash the service of summons, the appellate court reversed, and the state supreme court reversed the appellate court.

On certiorari, the Supreme Court held that the mere fact that petitioner knew that some of its component parts would be used in products that would be sold in the state did not provide the necessary minimum contacts for the state to exercise personal jurisdiction over petitioner, since petitioner did nothing to purposely avail itself of the privilege of conducting activities in the state.

-Since there were no minimum contacts, the state was estopped by Fourteenth Amendment due process from exercising personal jurisdiction over petitioner.

Minimum contacts must have a basis in some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. Jurisdiction is proper where the contacts proximately result from actions by the defendant himself that create a "substantial connection" with the forum state.
-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, and can act to alleviate the risk of burdensome litigation by procuring insurance, 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 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 product in other states, it is not unreasonable to subject it to suit in one of those states if its allegedly defective merchandise has there been the source of injury to its owners or to others.

The Court reversed the judgment and remanded the case, since petitioner conducted no activities in the state and thus did not have the necessary minimum contacts with the state that would allow the state to exercise personal jurisdiction over petitioner.

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