United States District Court, C.D. California
Present: The Honorable CHRISTINA A. SNYDER JUDGE
DEFENDANT
DAIKIN INDUSTRIES, LTD.’S MOTION TO DISMISS FOR LACK OF
PERSONAL JURISDICTION (DKT. 45, FILED MAY 16, 2016)
DEFENDANTS DAIKIN NORTH AMERICA, LLC AND DAIKIN APPLIED
AMERICAS INC.’S MOTION TO DISMISS PLAINTIFFS’
SECOND AMENDED COMPLAINT (DKT. 44, FILED MAY 16,
2016)
HONORABLE CHRISTINA A. SNYDER JUDGE
I.
INTRODUCTION
On
November 6, 2015, plaintiff Joanna Park-Kim filed a putative
class action in the Los Angeles County Superior Court against
defendants Daikin Industries, Ltd. (“DIL”);
Daikin Applied Americas Inc. (formerly known as “McQuay
International”); and Daikin North America, LLC
(“Daikin NA”). Dkt. 1. In brief, plaintiff
alleges injury arising from defective evaporator coils in
defendants’ heating, ventilation, and air conditioning
units (“HVAC units”), which purportedly are
susceptible to refrigerant leaks due to “formicary
corrosion” of the units’ evaporator coils.
On
December 9, 2015, defendants removed this action to federal
court, asserting diversity jurisdiction, as well as original
jurisdiction pursuant to the Class Action Fairness Act, 28
U.S.C. § 1332(d). Id. (Notice of Removal). On
December 16, 2015, defendants Daikin Applied Americas Inc.
and Daikin NA filed a motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6).[1] On January 6, 2016,
plaintiff Joanna Park-Kim filed a first amended complaint
(“FAC, ” dkt. 24) as a matter of course, pursuant
to Federal Rule of Civil Procedure 15. See
Fed.R.Civ.P. 15(a)(1)(B) (“A party may amend its
pleading once as a matter of course within . . . 21 days
after service of a motion under Rule 12(b) . . . .”).
On
January 25, 2016, defendants Daikin Applied Americas Inc. and
Daikin NA filed a Rule 12(b)(6) motion to dismiss plaintiff
Park-Kim’s FAC. Dkt. 28. In an order dated March 17,
2016, the Court dismissed plaintiff’s FAC without
prejudice, emphasizing that the pleadings must provide
“factual enhancement[s]” in place of
“generalized assertions, ‘legal conclusions,
’ and ‘threadbare recitals of a cause of
action.’” Dkt. 39 (Order on Motion to Dismiss
FAC), at 10 (quoting Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009)).
On
April 15, 2016, plaintiff Maria Cecilia Ramos was added as a
party in this action and, along with plaintiff Joanna
Park-Kim, filed the operative second amended complaint
(“SAC”). Dkt. 40. The SAC asserts the following
claims: (1) violation of the Magnuson-Moss Warranty Act, 15
U.S.C. §§ 2301, et seq.
(“MMWA”); (2) strict liability - failure to warn;
(3) strict liability - manufacturing defect; (4) strict
liability - design defect; (5) negligence; (6) breach of
express warranty; (7) breach of implied warranty of fitness;
(8) breach of implied warranty of merchantability; (9)
violation of California’s unfair competition law
(“UCL”), California Business and Professions Code
§ 17200, et seq.; and (10) violations of
California Civil Code § 896(g)(5). See id.
On May
16, 2016, defendant DIL, who had not joined the
previously-filed Rule 12(b)(6) motions to dismiss, filed a
Rule 12(b)(2) motion to dismiss for lack of personal
jurisdiction on the grounds that this Court lacks both
general jurisdiction and specific jurisdiction over DIL. Dkt.
45 (“Def.’s Mot. PJ”). On May 27, 2016,
plaintiffs filed an opposition to DIL’s motion, dkt. 48
(“Pls.’ Opp’n PJ”), and on June 6,
2016, DIL filed a reply, dkt. 51 (“Def.’s Reply
PJ”).
Also on
May 16, 2016, defendants Daikin Applied Americas Inc. and
Daikin NA filed a Rule 12(b)(6) motion to dismiss
plaintiffs’ SAC for failure to state a claim. Dkt. 44
(“Defs.’ Mot.”). On May 27, 2016,
plaintiffs filed an opposition to the Rule 12(b)(6) motion,
dkt. 49 (“Pls’ Opp’n”), and on June
6, 2016, defendants Daikin Applied Americas Inc. and Daikin
NA filed a reply, dkt. 50 (“Defs.’ Reply”).
Having
carefully considered the parties’ arguments, the Court
finds and concludes as follows.
II.
BACKGROUND
The SAC
pleads the following facts:
Defendants
Daikin Industries, Ltd., Daikin Applied Americas Inc., Daikin
North America, and Does 1 through 50 “design,
manufacture and sell heating, ventilation, and air
conditioning units (‘HVAC units’) containing a
component known as an evaporation coil manufactured with
copper tubing (‘Daikin Coils’).” SAC at
¶ 4. These “Daikin Coils” contain a
refrigerant that absorbs heat from the surrounding air, cools
the air in the process, and thereby allows defendants’
HVAC units to air condition homes, businesses, and buildings.
Id. at ¶ 5. However, plaintiffs allege that
Daikin Coils fail to operate properly under normal
conditions. Id. at ¶ 6. Specifically,
plaintiffs allege that
[i]nstead of performing their intended purpose of cooling
air, Daikin Coils fail to cool air because they corrode and
leak refrigerant well before the expiration of their useful
life. These leaks render the HVAC units useless for an
intended purpose, leading to costly repairs, and eventually,
the total failure of the Daikin Coils so that they need to be
replaced.
Id. Plaintiffs further aver that the failure of
Daikin Coils to perform as intended is an unavoidable
consequence of their design. Specifically, “[a]s a
result of their manufacturing process, ” the copper
tubes in the Daikin Coils are prone to “formicary
corrosion, ” a process that “causes microscopic
holes within the tubing that cause the Daikin Coils to leak
refrigerant and ultimately fail.” Id. at
¶ 7.
According
to plaintiffs, “[t]he corrosion and failure of Daikin
Coils are due to Defendants’ actions, including but not
limited to, [1] selecting the wrong alloy, [2] defective
manufacturing of the Daikin Coils, and [3] failing to
properly ensure that the Daikin Coils will perform for their
useful life and are fit for their intended purpose.”
Id. Plaintiffs further aver that defendants
“designed, created product materials for, designed
instructions for, caused the manufacture of, and sold HVAC
units containing Daikin Coils that were installed in homes
throughout California, including Plaintiffs’, the
Class’s and the Subclass’s homes.”
Id.
Named
plaintiff Joanna Park-Kim alleges that she purchased a new
condominium unit in September 2010 that included “a
McQuay brand Enfinity Water Source Heat Pump, Model FCV
Vertical Floor unit, ” which included Daikin Coils that
have “corroded and leaked refrigerant such that her
HVAC unit failed, ceasing to adequately cool
air.”[2]Id. at ¶¶ 36-37; see
also id. at ¶¶ 38-39. Named plaintiff Maria
Cecilia Ramos alleges that she purchased a new condominium
unit in June 2009 that included “a McQuay brand
Enfinity Water Source Heat Pump, Model FCV Vertical Floor
unit, ” which “was manufactured with defective
Daikin Coils” that have “corroded and leaked
refrigerant such that her HVAC unit failed because it could
no longer adequately cool air.” Id. at
¶¶ 40-41; see also id. at ¶¶
42-43.
Pursuant
to California Code of Civil Procedure section 382, plaintiffs
bring this action on behalf of the following proposed class
(“the Class”) and subclass (“the
Subclass”):
Class: All individual, entity and associations of owners in
the State of California who own HVAC units with Daikin Coils
installed in them.
Subclass: All individual, entity and associations of owners
of originally constructed individual dwelling units, other
than condominium conversions, in the State of California in
which purchase agreements for the individual dwelling units
were signed by the original seller on or after November 2,
2005 and in which the residential units had installed as part
of the original construction HVAC units with Daikin Coils
installed in them.
See id. at ¶¶ 14-15.
The SAC
further alleges that Daikin Coils damage the environment and
expose consumers to various specific health and safety risks,
which are outlined in the SAC. See id. at
¶¶ 33, 35. The operative SAC further alleges in
general terms that “leaked refrigerant [from the Daikin
Coils] damages surrounding property, including walls, floors,
and other components of HVAC units in the vicinity of a
leak.” Id. at ¶ 34.
III.
DISCUSSION
A.
DEFENDANT DIL’S MOTION TO DISMISS FOR LACK OF PERSONAL
JURISDICTION
1.
Legal Standard
When a
defendant moves to dismiss for lack of personal jurisdiction
under Federal Rule of Civil Procedure 12(b)(2), the plaintiff
bears the burden of demonstrating that the court may properly
exercise personal jurisdiction over the defendant. Pebble
Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006).
Where, as here, a court decides such a motion without an
evidentiary hearing, the plaintiff need only make a prima
facie showing of jurisdictional facts to withstand the motion
to dismiss. Ballard v. Savage, 65 F.3d 1495, 1498
(9th Cir. 1995); Doe v. Unocal Corp., 27 F.Supp.2d
1174, 1181 (C.D. Cal. 1998), aff’d, 248 F.3d
915 (9th Cir. 2001). Plaintiff’s version of the facts
is taken as true for purposes of the motion if not directly
controverted, and conflicts between the parties’
affidavits must be resolved in plaintiff’s favor for
purposes of deciding whether a prima facie case for personal
jurisdiction exists. AT&T v. Compagnie Bruxelles
Lambert, 94 F.3d 586, 588 (9th Cir. 1996);
Unocal, 27 F.Supp.2d at 1181. If the defendant
submits evidence controverting the allegations, however, the
plaintiff may not rely on its pleadings, but must “come
forward with facts, by affidavit or otherwise, supporting
personal jurisdiction.” Scott v. Breeland, 792
F.2d 925, 927 (9th Cir. 1986) (quoting Amba Mktg. Servs.,
Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th
Cir. 1977)).
Generally,
personal jurisdiction exists if (1) it is permitted by the
forum state’s long-arm statute and (2) the
“exercise of that jurisdiction does not violate federal
due process.” Pebble Beach, 453 F.3d at
1154-55 (citing Fireman’s Fund Ins. Co. v.
Nat’l Bank of Coops., 103 F.3d 888, 893 (9th Cir.
1996)). California’s long-arm jurisdictional statute is
coextensive with federal due process requirements, so that
the jurisdictional analysis under state and federal law are
the same. Cal. Civ. Proc. Code § 410.10; Roth v.
Garcia Marquez, 942 F.2d 617, 620 (9th Cir. 1991). The
Fourteenth Amendment’s Due Process Clause requires that
a defendant have “minimum contacts” with the
forum state so that the exercise of jurisdiction “does
not offend traditional notions of fair play and substantial
justice.” Int’l Shoe Co. v. Washington,
326 U.S. 310, 316 (1945). Depending on the nature of the
contacts between the defendant and the forum state, personal
jurisdiction is characterized as either general or specific.
2.
Analysis
Defendant
DIL argues that this Court has neither general nor specific
jurisdiction over DIL, such that plaintiffs’ claims
against DIL must be dismissed.
A court
has general jurisdiction over a nonresident defendant when
that defendant’s activities within the forum state are
“substantial” or “continuous and
systematic, ” even if the cause of action is
“unrelated to the defendant’s forum
activities.” Perkins v. Benguet Consol. Mining
Co., 342 U.S. 437, 446-47 (1952); Data Disc, Inc. v.
Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1287 (9th Cir.
1977). DIL avers that its place of incorporation and
principal place of business are in Osaka, Japan; that it
“does not have offices, staff, or other physical
presence in California;” and further that it “is
not licensed to do business [in California].”
Def.’s Mot. PJ at 5. Based in part upon such
information, plaintiffs concede that this Court cannot assert
general jurisdiction over defendant DIL. However, the parties
dispute whether the Court may properly exercise specific
jurisdiction over DIL.
For the
reasons explained in the discussion that follows, the Court
finds that it lacks specific jurisdiction over defendant DIL,
and accordingly must dismiss DIL from this action for lack of
personal jurisdiction.
a.
Specific Jurisdiction
A court
has specific jurisdiction over a defendant if that defendant
has sufficient minimum contacts with the forum state arising
from, or related to, the plaintiff’s claims. See
Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d
1218, 1228 (9th Cir. 2011). The test for specific personal
jurisdiction has three parts:
(1) The non-resident defendant must purposefully direct his
activities or consummate some transaction with the forum or
resident thereof; or perform some act by which he
purposefully avails himself of the privilege of conducting
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 forum-related activities; and (3) the
exercise of jurisdiction must comport with fair play and
substantial justice, i.e. it must be reasonable.
Id. at 1227-28 (quoting Schwarzenegger v. Fred
Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004);
see also Burger King Corp. v. Rudzewicz, 471 U.S.
462, 475-76 (1985).
The
plaintiff bears the burden of satisfying the first two
prongs. Schwarzenegger, 374 F.3d at 802. “If
[plaintiff] does so, the burden then shifts to [defendant] to
set forth a ‘compelling case’ that the exercise
of jurisdiction would not be reasonable.”
Mavrix, 647 F.3d at 1228. If, however, either of
these prongs is not satisfied, personal jurisdiction is not
established. Schwarzenegger, 374 F.3d at 802.
i.
Purposeful Availment of this Forum
DIL
argues that plaintiffs cannot satisfy the first prong of the
specific personal jurisdiction analysis because DIL has not
purposefully availed itself of the privileges of conducting
business in California. “In order to have purposefully
availed oneself of conducting activities in the forum, the
defendant must have performed some type of affirmative
conduct which allows or promotes the transaction of business
within the forum state.” Sinatra v. National
Enquirer, 854 F.2d 1191, 1195 (9th Cir. 1988).
“This purposeful availment requirement ensures that a
defendant will not be haled into a jurisdiction solely as a
result of random, fortuitous, or attenuated contacts, or of
the unilateral activity of another party or third
person.” Burger King, 471 U.S. at 475
(citations and internal quotations omitted).
In the
operative SAC, plaintiffs assert in general terms that
“[d]efendants manufactured, designed, sold, supplied,
marketed, or otherwise introduced [the relevant products]
into the stream of commerce . . . .” SAC at ¶ 73.
In plaintiffs’ view, because DIL purportedly
“does not dispute” in the instant motion that the
“products [it] designs or manufactures are sold in
California . . . [t]he resultant transactions are thus
sufficient to . . . satisfy[] the purposeful availment
requirement.” Pls.’ Opp’n PJ at 4
(citations omitted). The operative SAC further alleges in
general terms that each defendant “was the agent, joint
venturer or employee of each of the remaining [d]efendants,
and in doing the things . . . alleged [in the SAC], each was
acting in the course and scope of said agency, employment or
joint venture with advance knowledge of, acquiescence in or
subsequent ratification of the acts of each and every other
remaining defendant.” SAC at ¶ 10. In
plaintiffs’ view, such alter ego allegations establish
that all of the named defendants, including defendant DIL,
are “subject to jurisdiction if there is jurisdiction
over any one of them.” Pls.’ Opp’n PJ at 5
(citations omitted). Finally, plaintiffs highlight certain
statements on DIL’s website relating to “Daikin
Global’s” “Group Philosophy” and
“synergetic effects, ” which purportedly indicate
the global and interconnected nature of DIL’s business
and that of its affiliated companies. Id. at 5.
DIL,
however, avers through the sworn declaration of its Legal
Officer that it “did not even ‘place[] in the
stream of commerce’ the products at issue here”
because “DIL does not design, manufacture, or sell
McQuay products” like the HVAC units at issue in this
action. Def.’s Mot. PJ at 9; see Data Disc,
557 F.2d at 1284 (in ruling on a motion to dismiss for lack
of personal jurisdiction, the Court “may not assume the
truth of allegations in a pleading which are contradicted by
affidavit.”). More importantly, as DIL rightly notes,
even if DIL did place the allegedly defective
products into the stream of commerce, “placement of a
product into the stream of commerce, without more, is not an
act purposefully directed toward a forum state. Even a
defendant’s awareness that the stream of commerce may
or will sweep the product into the forum state does not
convert the mere act of placing the product into the stream
of commerce into an act purposefully directed toward the
forum state.” America Line Inc. v. Wartsila North
America, Inc., 485 F.3d 450, 459 (9th Cir. 2007)
(citations omitted).
With
respect to plaintiffs’ allegations regarding
DIL’s marketing activities, DIL also avers that it is
not involved in the marketing or promotion of any of the
McQuay-branded products at issue in this action. See
Def.’s Reply PJ at 3. Finally, with respect to
plaintiffs’ assertion that each defendant is the agent
of the other, such boilerplate legal conclusions add little
weight to the scales, as they cannot be accepted as true on a
motion to dismiss for lack of personal jurisdiction. See
Lacano Invs., LLC v. Balash, 765 F.3d 1068, 1071 (9th
Cir. 2014) (“While we do accept all of the factual
allegations in the complaint as true, we do not accept legal
conclusions in the complaint as true, even if ‘cast in
the form of factual allegations.’ ”) (citations
omitted); CollegeSource, Inc. v. AcademyOne, Inc.,
653 F.3d 1066, 1073 (9th Cir. 2011) (noting that on a motion
to dismiss for lack of personal jurisdiction, the plaintiff
cannot “simply rest on the bare allegations of its
complaint”). And even though DIL has a
parent-subsidiary relationship with the other defendants in
this action, such a relationship does not provide grounds for
imputing the California contacts of Daikin Applied Americas
Inc. or Daikin North America, LLC to defendant DIL. See
Transure, Inc. v. Marsh and McLennan, Inc., 766 F.2d
1297, 1299 (9th Cir. 1985) (holding that the existence of a
relationship between a parent company and its subsidiaries is
not sufficient to establish personal jurisdiction over the
parent based on the subsidiaries’ minimum contacts with
the forum).
Notably,
DIL does concede that it sells “certain HVAC products
(although not McQuay products . . . or the component
evaporator coils) in Japan to distributors that sell in the
United States.” Def.’s Mot. PJ at 10. However,
again, “it is [DIL’s] purposeful contacts with
[California], not with the United States [more
generally], that alone are relevant” for purposes of
the instant motion. J. McIntyre Machinery, Ltd. v.
Nicastro, 564 U.S. 873, 886 (2011) (emphasis added);
see also BenQ America Corp. v. Forward Elecs. Co.,
Ltd., 2005 WL 3445629, at *6 (N.D. Cal. Dec. 15, 2005)
(“The appropriate test is not whether the [products]
were designed for the U.S. market, but whether they were
designed for and intended to be sold in
California.”) (emphasis in original).
Accordingly,
the Court cannot conclude that DIL has “perform[ed]
some act by which [its has] purposefully avail[ed] [itself]
of the privilege of conducting activities” in
California. Mavrix, 647 F.3d at 1228.
ii.
Whether Plaintiffs’ Claims Arise out of or Relate to
DIL’s Forum-Related Activities
DIL is
also not subject to specific jurisdiction because
plaintiffs’ claims do not arise out of any of
DIL’s forum-related activities. In evaluating the
“arise[] out of” prong of the specific
jurisdiction inquiry, “the Court considers whether
[the] claims would have arisen but for [the
defendant]’s contacts with California.”
Unocal, 248 F.3d at 924. Plaintiffs here cannot
establish that but for DIL’s activities, plaintiffs
would not have been harmed by the allegedly defective
McQuay-branded products. Plaintiffs allege only in general
terms that “Defendants” manufactured
“Daikin Coils.” SAC at ¶ 4. Of course,
plaintiffs cannot “simply rest on the bare allegations
of [their] complaint, ” Schwarzenegger, 374
F.3d at 800, and the Court “may not assume the truth of
allegations in a pleading which are contradicted by
affidavit, ” Data Disc, 557 F.2d at 1284.
Plaintiffs’ allegations here are wholly insufficient to
establish that DIL manufactured plaintiffs’
McQuay-brand products, the only named product in the SAC.
See, e.g., NuCal Foods, Inc. v. Quality Egg
LLC, 887 F.Supp.2d 977, 990 (E.D. Cal. 2012)
(“[E]ven if plaintiff’s allegation that the
entity defendants [engaged in] every aspect of egg production
was true, that is not enough to demonstrate that each
separate entity was actually involved in the sale and
delivery of the allegedly tainted eggs” for purposes of
personal jurisdiction).
Indeed,
DIL avers through the sworn declaration of its Legal Officer
that it “did not design or manufacture
[p]laintiffs’ allegedly defective evaporator coils or
any other component of [p]laintiffs’ McQuay-brand heat
pumps, nor was DIL involved in the supply or sales
chain.” Def.’s Mot. PJ at 7. Plaintiffs provide
no evidence to the contrary; accordingly, much like the
Court’s consideration of DIL’s alleged purposeful
availment, consideration of the second factor also indicates
that the Court lacks specific jurisdiction over defendant
DIL. See, e.g., Rockwell Automation, Inc. v.
Kontron Modular Computers, 2012 WL 5197934, at *9 (S.D.
Cal. Oct. 19, 2012) (finding “no evidence to support a
finding of specific jurisdiction” where declaration
established that the defendant “is not even
‘involved in the engineering or development of the[]
products [at issue]’”); see also Jackson v.
Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 586 (5th Cir.
2010) (no specific personal jurisdiction where defendant did
not manufacture either the pistol or its defective
component).
In
their opposition, plaintiffs nonetheless contend that the
second prong is satisfied both because their claims arise
from “their ownership of defective Daikin HVAC units,
” and because DIL has purportedly marketed its products
in California. Pls.’ Opp’n PJ at 6. As discussed
above, however, the actions of DIL’s subsidiaries may
not be imputed to a foreign company like DIL unless
plaintiffs sufficiently plead alter ego status, which they
have undoubtedly failed to do here. See generally
Unocal, 248 F.3d 915. Furthermore, DIL has made clear in
its reply and the sworn declaration submitted in support
thereof that it is not involved in any fashion with the
marketing or promotion of McQuay-brand products. Def.’s
Reply PJ at 3.
Accordingly,
plaintiffs have failed to establish that their claims arise
out of or relate to DIL’s forum-related activities.
3.
Conclusion
As
stated supra, “[t]he plaintiff bears the
burden of satisfying the first two prongs of the [Ninth
Circuit’s test regarding when a forum may assert
specific jurisdiction].” Schwarzenegger, 374
F.3d at 802 (citation omitted). Because plaintiffs here have
failed to satisfy both of these prongs, personal jurisdiction
is not established in California, and defendant DIL must be
dismissed from this action. Id. (noting that
“[i]f the plaintiff fails to satisfy either of these
prongs, personal jurisdiction is not established in the forum
state”).[3]
In
accordance with the foregoing, the Court hereby
GRANTS defendant DIL’s Rule 12(b)(2)
motion to dismiss for lack of personal jurisdiction.
B.
DEFENDANTS’ MOTION TO DISMISS FOR ...