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September 2016

Gordon & Rees California Toxic Tort Litigators Win Dismissal of Multimillion Dollar Lawsuit for Lack of Personal Jurisdiction

Oakland partner Christopher Strunk and San Diego senior counsels Shari Weintraub and Rosie Badgett collaborated to obtain a convincing and complete win for their out-of-state client and to persuade a Sacramento County Superior Court judge to dismiss a multi-million dollar products liability claim brought against it for lack of personal jurisdiction under Daimler AG v. Bauman (2014) 134 S.Ct. 746. Gordon & Rees's client is an established wholesale distributor of a variety of plant fertilizers, supplements and equipment to the indoor gardening industry.

The plaintiff claimed to have suffered severe and permanent anoxic brain injury which he alleged to have been caused after he drank a shot of a natural and organic fertilizer on a bet at a promotional event in Sacramento County, California.  Later that same day, the plaintiff suffered a heart attack and stroke which he claimed was caused by his consumption of the product. The plaintiff alleged that the firm's client was in the “chain of distribution” of the product and therefore strictly liable under a products liability theory. 

The evidence established that the firm's client decided not to distribute the product, with the product ending up in California merely because its manufacturer asked the client to “return” the product by sending it to other distributors. In fact, the client was incorporated outside California; was not registered to do business in California; did not own property in California; did not have offices in California; did not have any employees in California; and did not have any bank accounts in California. 

The result was more than a year and a half in the making. When the client was first sued, Gordon & Rees's attorneys argued its jurisdictional position to the plaintiff’s counsel, who was unpersuaded.  However, after being forced to file a motion to quash service of summons on personal jurisdiction grounds, the plaintiff voluntarily dismissed the client.  Undeterred, the plaintiff spent the subsequent months developing his jurisdictional evidence, ultimately re-naming and re-serving the firm's client (and two other “related entities”) eight months later.  

Gordon & Rees's attorneys responded by renewing its motion to quash. The plaintiff sought – and obtained – a deposition of the client’s corporate representative in an effort to further develop facts supporting jurisdiction in California. Rather than confirming the plaintiff's claims, the testimony subsequently established helpful facts previously communicated to the plaintiff, including the client never sold the product specifically at-issue in California. 

The plaintiff conceded in his opposition that the defendant's affiliation with California was not so continuous and systematic as to render it at-home in California (and therefore was not subject to the court’s general personal jurisdiction).  However, the plaintiff did argue that Gordon & Rees's client was subject to specific personal jurisdiction because 1) the client placed itself in the chain of commerce of the product by accepting a sample quantity of the product from the manufacturer, 2) “shared” a facility with its California sub-distributor, and 3) had sold numerous other similar products in California (including, apparently, some from the same manufacturer) through that same sub-distributor. 

In fact, while the product at-issue was in transit to the United States, the firm's client notified the manufacturer of its decision not to distribute the product. The manufacturer asked that the product be shipped to other distributors in the United States, including in California, so as to avoid the lengthy shipping time and expense on a product return. The client never sold the product in California and was not reimbursed for the shipping costs. Gordon & Rees's attorneys argued under these facts, the client merely became a pass-through delivery company such as the U.S. Postal Service, FedEx, or United Parcel Service. 

The court acknowledged in its extensive written opinion that exercise of specific personal jurisdiction requires much more and agreed with the arguments that no personal jurisdiction – general or specific – existed. Under established case law such as International Shoe Co. v. Washington (1945) 326 U.S. 310, 316 to the more recent Daimler AG v. Bauman (2014) 134 S.Ct. 746, 761, the court agreed that a defendant must have purposefully availed itself of the forum benefits with respect to the matter in controversy which must be related to, or arise out of defendant’s contact with the forum, and the exercise of jurisdiction must comport with the interests of fair play and substantial justice. 

The court correctly found in this case the client merely passed along a new product to another distributor, which is entirely insufficient to place the client in the stream of commerce or characterize it as having purposefully availed itself of the forum’s benefits that would also subject it to risk of litigation in California. The plaintiff waived oral argument and the court entered its order on the client's behalf on September 19, 2016, ending the matter with an exclamation point in favor of Gordon & Rees's client and forcing the plaintiff out of California if he wished to pursue his claim.



Christopher D. Strunk