Asahi Metal Industry Co., Ltd. v. Superior Court

702 P.2d 543, 39 Cal. 3d 35, 216 Cal. Rptr. 385, 1985 Cal. LEXIS 294
CourtCalifornia Supreme Court
DecidedJuly 25, 1985
DocketS.F. 24657
StatusPublished
Cited by19 cases

This text of 702 P.2d 543 (Asahi Metal Industry Co., Ltd. v. Superior Court) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Asahi Metal Industry Co., Ltd. v. Superior Court, 702 P.2d 543, 39 Cal. 3d 35, 216 Cal. Rptr. 385, 1985 Cal. LEXIS 294 (Cal. 1985).

Opinions

Opinion

BIRD, C. J.

Can California constitutionally exercise personal jurisdiction over a manufacturer of component parts who made no direct sales in California but had knowledge that a substantial number of its parts would be incorporated into finished products sold in the state?

I.

In 1978, Gary Zurcher was severely injured when he lost control of his Honda motorcycle and collided with a tractor rig. His passenger and wife, [41]*41Ruth Ann Moreno, was killed. The accident was allegedly caused by a sudden loss of air and an explosion in the rear tire of the motorcycle. Both Zurcher and Moreno were California residents. The collision occurred on a California highway.

Zurcher filed a products liability action alleging that the motorcycle tire, tube, and sealant were defective. Zurcher’s complaint named, inter alia, Cheng Shin Rubber Industrial Co., Ltd. (Cheng Shin), the Taiwanese manufacturer of the tube, and Sterling May Company, Inc., the California retailer. Cheng Shin, in turn, filed a cross-complaint seeking indemnity from its codefendants and from Asahi Metal Industry Co., Ltd. (Asahi), the manufacturer of the tube’s valve assembly.

Asahi is a major Japanese producer of valve assemblies. Its product is incorporated into tubes sold throughout the world, including tubes sold to the large motorcycle manufacturers. The declarations presented to the trial court established that Asahi has the following contacts in California.

For 10 years, Asahi has done business with Cheng Shin, a tube manufacturer that makes 20 percent of its United States sales in California. Between 1978 and 1982, Asahi sold 1,350,000 valve assemblies to Cheng Shin. Such sales represented 1.24 percent of Asahi’s gross income in 1981 and .44 percent of its gross income in 1982. In addition, Asahi valve assemblies are incorporated into the tubes of numerous other manufacturers selling tubes in California.1

Asahi moved to quash service of summons. The trial court denied the motion, finding that Asahi had the requisite minimum contacts with California and that jurisdiction was fair and reasonable. The trial court relied on (1) the significant number of tubes with Asahi valve assemblies sold in California, (2) the number of valve assemblies Asahi sold to Cheng Shin, (3) Cheng Shin’s substantial business with California, and (4) Asahi’s knowledge that its valve assemblies would be incorporated into tubes sold in California.

Asahi now seeks a writ of mandate compelling the trial court to grant its motion to quash service of summons.

[42]*42II.

California’s long-arm statute provides that it can exercise jurisdiction “on any basis not inconsistent with the Constitution of this state or of the United States.’’ (Code Civ. Proc., § 410.10.) Asahi contends that its connection with California does not warrant jurisdiction. It cites the due process clause of the Fourteenth Amendment of the United States Constitution, which bars the states from entering judgments affecting the rights or interests of a nonresident defendant absent such “minimum contacts” with the state that “the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316 [90 L.Ed.95, 102, 66 S.Ct. 154, 161 A.L.R. 1057] [hereafter International Shoe], quoting Milliken v. Meyer (1940) 311 U.S. 457, 463 [85 L.Ed.278, 283, 61 S.Ct. 339, 132 A.L.R. 1357].)

As the United States Supreme Court noted in International Shoe, the minimum contacts test is not “mechanical or quantitative,” but depends upon the “quality and nature” of the defendant’s activities within the state. (International Shoe, supra, 326 U.S. at p. 319 [90 L.Ed. at p. 104].) If a nonresident corporation’s activities are sufficiently wide-ranging, systematic, and continuous, it may be subject to jurisdiction within the state on a cause of action unrelated to those activities. (Id., at p. 318 [90 L.Ed. at p. 103]; Secrest Machine Corp. v. Superior Court (1983) 33 Cal.3d 664, 669 [190 Cal.Rptr. 175, 660 P.2d 399]; Buckeye Boiler Co. v. Superior Court (1969) 71 Cal.2d 893, 898-899 [80 Cal.Rptr. 113, 458 P.2d 57].) Where the activity is less extensive, the cause of action “must arise out of or be connected with the defendant’s forum-related activity.” (Buckeye Boiler, supra, 71 Cal.2d at p. 899; see also Secrest, supra, 33 Cal.3d at p. 669.)

Thus, in determining whether the defendant’s contacts with the forum are sufficient to warrant jurisdiction, the courts must focus on “the relationship among the defendant, the forum, and the litigation.” (Shaffer v. Heitner (1977) 433 U.S. 186, 204 [53 L.Ed.2d 683, 698, 97 S.Ct. 2569]; accord Secrest, supra, 33 Cal.3d at p. 668.) “The relationship between the defendant and the forum must be such that it is ‘reasonable ... to require the corporation to defend the particular suit which is brought there.’” (World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 292 [62 L.Ed.2d 490, 498, 100 S.Ct. 559], quoting International Shoe, supra, 326 U.S. at p. 317 [90 L.Ed. at p. 102], italics added.)

[43]*43In the 40 years since International Shoe was decided, the minimum contacts standard has been “substantially relaxed.” (World-Wide Volkswagen, supra, 444 U.S. at p. 292 [62 L.Ed.2d at p. 498].) In McGee v. International Life Ins. Co. (1957) 355 U.S. 220 [2 L.Ed.2d 223, 78 S.Ct. 199], the Supreme Court described the reason for liberalizing the rule. “In part this is attributable to the fundamental transformation of our national economy over the years. Today many commercial transactions touch two or more States and may involve parties separated by the full continent. With this increasing nationalization of commerce has come a great increase in the amount of business conducted by mail across state lines. At the same time modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity.” (Id., at pp. 222-223 [2 L.Ed.2d at p. 226].) Moreover, as the Supreme Court observed in Worldwide Volkswagen, “[t]he historical developments noted in McGee . . . have only accelerated in the generation since that case was decided.” (444 U.S. at p. 293 [62 L.Ed.2d at pp. 498-499].)

However, liberalization of the minimum contacts rule has not proceeded unabated. Shortly after McGee was decided, the Supreme Court warned that the state courts’ jurisdiction over nonresidents is not limited solely by the inconvenience of litigating in a foreign tribunal.

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Asahi Metal Industry Co., Ltd. v. Superior Court
702 P.2d 543 (California Supreme Court, 1985)

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702 P.2d 543, 39 Cal. 3d 35, 216 Cal. Rptr. 385, 1985 Cal. LEXIS 294, Counsel Stack Legal Research, https://law.counselstack.com/opinion/asahi-metal-industry-co-ltd-v-superior-court-cal-1985.