Court of Appeal of California, First Appellate District, Division Four
Blanca Hernandez, et al., v. Volkswagen Aktiengesellschaft, et al.
This litigation arises from claims of asbestos exposure. The plaintiffs allege the decedent, Raul Hernandez, had occupational exposure to asbestos over a 40-year career as an automobile mechanic, including exposure to asbestos-containing brake shoes, brake pads, clutch plates, gaskets, and transmission bands while working on Volkswagen cars at Volkswagen dealerships between 1969 and 1976. The decedent was subsequently diagnosed with mesothelioma. The plaintiffs filed a complaint in California naming Volkswagen Aktiengesellschaft (VWAG) among other defendants. The plaintiffs asserted causes of action for strict products liability, negligence, and fraud against VWAG.
VWAG specially appeared and filed a motion to quash service of summons by arguing, among other things, that the court did not have personal jurisdiction over it because VWAG did not purposefully avail itself of the California market. VWAG contended that only Volkswagen of America, Inc. (VWoA), which was VWAG’s exclusive importer for the United States from 1956 to 1980, served the California market during the relevant time period. VWAG further claimed that it was a German company that was not licensed, registered, or authorized to do business in California; it did not have an office or employ anyone in California; and it did not exercise day-to-day control over VWoA or any authorized distributor who sold cars in California. The plaintiffs opposed VWAG’s motion and sought written jurisdictional discovery.
The written jurisdictional discovery revealed importer agreements between VWAG and VWoA from 1967, 1969, 1971 and 1973. The plaintiffs contended these importer agreements demonstrated purposeful availment because they established that VWAG and VWoA together purposefully supplied the California market with Volkswagen vehicles and replacement parts. The plaintiffs highlighted the following provisions of the importer agreements: (1) they made VWoA the exclusive supplier for Volkswagen products in Alaska, Hawaii, and the continental United States, including California; (2) required VWoA to promote and sell Volkswagen products in California; and (3) dictated that VWoA was required to establish office employees and business fieldmen and to set up a dealership network for solicitation.
The trial court heard oral argument on VWAG’s motion. The trial court found the importer agreements “required VWoA to establish facilities to solicit sales of Volkswagen vehicles to ‘all potential customers’ in the United States.” In addition, the court observed the importer agreements allowed VWAG to retain some control over how VWoA conducted business. Yet those requirements were not sufficient to show VWAG’s purposeful availment of the California market according to the trial court. As such, the trial court granted VWAG’s motion. The plaintiffs timely appealed the trial court’s ruling.
California’s long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the United States Constitution. See CA Code Civ. Proc., § 410.10; see also Daimler AG v. Bauman, 571 U.S. 117, 125 (2014). A California court may exercise personal jurisdiction over a defendant where that defendant has such minimum contacts with the state that the assertion of jurisdiction “does not offend traditional notions of fair play and substantial justice.” Ford Motor Co. v. Montana Eighth Judicial Dist. Court, 92 U.S. 351, 358 (2021). “‘Minimum contacts’ may support either general (also called ‘all-purpose’) jurisdiction or specific (also called ‘case-linked’) jurisdiction.” Ibid. Specific jurisdiction is established when a defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws, and the plaintiff’s claims are related to or arise out of the defendant’s forum contacts. Ibid. California courts have recognized “[a]n inquiry into a foreign defendant’s purposeful availment of the forum state’s benefits must find more than merely entering a product into the stream of commerce with knowledge the product might enter the forum state.” See Bombardier Recreational Products, Inc. v. Dow Chemical Canada ULC, 216 Cal.App.4th 591, 602 (2013).
California’s Appellate Court initially concluded that VWAG purposefully availed itself of the California market through the contractual obligations created by the pertinent provisions of the importer agreements with VWoA. In that regard, the Appellate Court found that VWAG’s forum contacts were its acts to continually and systematically serve the California market – albeit indirectly – with its product(s) through VWoA, and VWoA undisputedly sold Volkswagen products and established dealerships and repair shops in California during the relevant timeframe. The plaintiffs’ claims were related to VWAG’s forum contacts because the decedent had performed mechanical work on brakes, clutches, and gaskets of Volkswagen cars at California Volkswagen dealerships from 1969 to 1976. Lastly, the Appellate Court did not find the exercise of jurisdiction over VWAG would be unreasonable, given VWAG’s efforts to serve the California market indirectly through VWoA, it should have reasonably anticipated being required to defend itself in a California court. As such, the Appellate Court reversed the trial’s court’s judgment.
Read the full decision here.