Young v. Daimler AG CA1/4

331 P.3d 179, 228 Cal. App. 4th 855, 175 Cal. Rptr. 3d 811, 2014 WL 3827652, 2014 Cal. App. LEXIS 704
CourtCalifornia Court of Appeal
DecidedJuly 7, 2014
DocketA135999
StatusUnpublished
Cited by7 cases

This text of 331 P.3d 179 (Young v. Daimler AG CA1/4) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Young v. Daimler AG CA1/4, 331 P.3d 179, 228 Cal. App. 4th 855, 175 Cal. Rptr. 3d 811, 2014 WL 3827652, 2014 Cal. App. LEXIS 704 (Cal. Ct. App. 2014).

Opinion

Opinion

REARDON, Acting P. J.

In this products liability action, the trial court granted a motion to quash service of summons for lack of personal jurisdiction filed by specially appearing defendant Daimler AG, a German public stock company (Daimler). Appellants contend that the trial court’s jurisdictional decision is erroneous, as a finding of general personal jurisdiction over Daimler is appropriate based on the substantial California contacts of current and former indirect subsidiaries of Daimler that are attributable to the German company under theories of agency. Finding the United States Supreme Court’s recent decision in Daimler AG v. Bauman (2014) 571 U.S._ [187 L.Ed.2d 624, 134 S.Ct. 746] (Bauman II) dispositive on the jurisdictional issue and contrary to the arguments advanced by appellants, we affirm.

I. BACKGROUND

On August 29, 2008, Kimberly Patrice Young (Young) and her daughter, Keyona Chester (collectively, appellants), were driving a 2004 Jeep Cherokee in San Joaquin County, California, when the vehicle rolled over, causing the *858 roof to collapse. As a result of this incident, Young sustained catastrophic injuries, rendering her a permanent quadriplegic. In addition, Young’s daughter allegedly suffered both physical and emotional harm. On April 13, 2010, appellants filed the instant action (complaint), claiming that the roof and restraint systems of the 2004 Jeep Cherokee were defectively designed and caused the injuries they sustained in the 2008 rollover.

The 2004 Jeep Cherokee at issue was designed, manufactured, and distributed by DaimlerChrysler Corporation (DCC), a former indirect subsidiary of Daimler. Thus, among others, the complaint named both Daimler and DCC as defendants. Daimler is a German Aktiengesellschaft (public stock company) that designs and manufactures Mercedes-Benz vehicles in Germany and has its principal place of business in Stuttgart. Prior to 1998, DCC was known as Chrysler Corporation. Following a 1998 agreement, Chrysler Corporation became an indirect subsidiary of Daimler (then known as DaimlerChrysler AG) and changed its name to DCC. DCC was at all relevant times a Delaware corporation with its principal place of business in Michigan. It ceased to be a subsidiary of Daimler in 2007, subsequently changing its name to Chrysler LLC. Daimler is not a successor in interest to either DCC or Chrysler LLC. 1

Appellants personally served Daimler with the complaint in accordance with the Hague Convention. Subsequently, on April 7, 2011, Daimler filed a motion to quash service of summons for lack of personal jurisdiction. Specifically, Daimler asserted that there is no basis for personal jurisdiction (either general or specific) over Daimler in California. 2 General jurisdiction is lacking, Daimler averred, because it is not qualified, licensed, or authorized to do business in California; does not maintain any office, agency, or representative in California; does not have any officers, employees or agents working for it in California; has not appointed an agent for service of process *859 in California; does not conduct advertising or solicitation activities in California; does not operate any sales or service network in California; does not have a California bank account; does not own, use, or possess any California real estate; and does not pay California taxes. According to Daimler, to the extent any Mercedes-Benz vehicles manufactured by Daimler in Germany are distributed and sold in California, such distribution and sales are conducted by companies separate and distinct from Daimler. (Cf. Goodyear, supra, 564 U.S. at p._[131 S.Ct. at p. 2852].) In addition, Daimler argued that the facts do not support a finding of specific jurisdiction over Daimler in this case as Daimler did not design, manufacture, or distribute the 2004 Jeep Cherokee at issue.

Appellants opposed Daimler’s motion to quash, arguing that Daimler was properly subject to both specific and general jurisdiction in California. For instance, appellants contended that specific jurisdiction was appropriate because the accident at issue was related to the California activities of DCC, Daimler’s indirect subsidiary. With respect to general jurisdiction, appellants urged the trial court to follow the Ninth Circuit’s recent decision in Bauman v. DaimlerChrysler Corp. (2011) 644 F.3d 909 (Bauman I), which found Daimler subject to general jurisdiction in California based on the extensive California contacts of Mercedes-Benz USA, LLC (MBUSA), an indirect subsidiary of Daimler. Because of its importance to the ultimate resolution of this appeal, we review this Ninth Circuit decision in some detail.

In Bauman I, 22 Argentineans filed suit against Daimler in the United States District Court for the Northern District of California, alleging that one of Daimler’s subsidiaries — Mercedes-Benz Argentina — “collaborated with state security forces to kidnap, detain, torture, and kill the plaintiffs and/or their relatives during Argentina’s ‘Dirty War.’ ” (Bauman I, supra, 644 F.3d at p. 911.) Since these claims did not arise out of any contacts Daimler might have had with California, the sole question at issue in Bauman I was whether the district court had general personal jurisdiction over Daimler. (Id. at pp. 912, 919.) The Ninth Circuit concluded that it did, based on Daimler’s relationship with MBUSA. (Id. at pp. 912, 924.)

The Bauman I court described MBUSA as follows: MBUSA is a Delaware limited liability company and indirect Daimler subsidiary. (It is a wholly owned subsidiary of a holding company which, in turn, is a wholly owned subsidiary of Daimler.) MBUSA acts as the sole distributor for all Mercedes-Benz vehicles in the United States, purchasing those vehicles from Daimler in Germany for sale in this country. (Bauman I, supra, 644 F.3d at pp. 913-914.) Although its principal place of business is in New Jersey, MBUSA has multiple California-based facilities, including a regional office in Costa Mesa, a vehicle preparation center in Carson, and a classic center in *860 Irving. In fact, MBUSA is the largest supplier of luxury vehicles to the California market, with its California sales accounting for 2.4 percent of Daimler’s worldwide sales. (Ibid.) Based on these facts, the parties in Bauman I did not dispute that MBUSA, itself, is subject to general jurisdiction in California. (Id. at p. 914.)

MBUSA’s distribution of Mercedes-Benz vehicles in the United States is governed by a general distributor agreement (GDA). After analyzing the provisions of the GDA “at some length,” the Ninth Circuit concluded that, under the terms of the GDA, Daimler has “the right to control nearly every aspect of MBUSA’s operations.” (Bauman I, supra, 644 F.3d at pp. 914 — 917, 920-924.) Additionally, the Bauman I

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331 P.3d 179, 228 Cal. App. 4th 855, 175 Cal. Rptr. 3d 811, 2014 WL 3827652, 2014 Cal. App. LEXIS 704, Counsel Stack Legal Research, https://law.counselstack.com/opinion/young-v-daimler-ag-ca14-calctapp-2014.