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declining to exercise general jurisdiction over a holding company that engaged in national advertising campaigns but conducted no operations in the forum and maintained no physical presence there
Summary of this case from In re Chocolate Confectionary Antitrust LitigationOpinion
No. C 04-01453 SI.
September 3, 2004
ORDER GRANTING MOTION BY DEFENDANTS ALTRIA GROUP, INC. AND LOUIS C. CAMILLERI TO DISMISS FOR LACK OF PERSONAL JURISDICTION
Defendants move to dismiss the claims against them for lack of personal jurisdiction. Plaintiff has not filed a brief in opposition to defendants' motion. The Court takes defendants' motion under submission without oral argument pursuant to Local Rule 7-1(b). Having carefully reviewed the arguments submitted, the Court hereby GRANTS defendants' motion to dismiss.
On September 3, 2004, the date previously set for hearing on this motion, the Court received by facsimile from plaintiff Ross an "Objection to Today's Proceedings." In this filing, plaintiff stated that she was not served with defendants' motion or with notice of the hearing, and that she first learned about the hearing when called by defendants' counsel on September 2, 2004. Pl.'s Objection ¶¶ 1-3. Plaintiff also asked why she was not directly informed by the Court of the hearing's cancellation. On file with the Court is a proof of service by mail of defendants' motion, filed by defendants on July 23, 2004, and noticing September 3, 2004, 9:00 a.m. for the hearing. In response to an inquiry by defendants' counsel, the Court informed counsel of its intent to take the motion under submission without argument, and it instructed defendants' counsel to notify plaintiff of the canceled hearing.
BACKGROUND
Plaintiff Linda Ross ("Ross") filed a complaint on April 8, 2004 in Sonoma County Superior Court against defendants Altria Group, Inc. ("ALG"), and Louis C. Camilleri ("Camilleri"), alleging that defendants and their subsidiary, Kraft Foods, used aspartame as a sugar substitute in the manufacture of "Crystal Light," and thereby knowingly and intentionally exposed consumers to the health risks associated with aspartame without warning them of its harmful effects. Compl. at 1:20-22, 2:10-13. Plaintiff alleges violations of the California Consumers Legal Remedies Act, fraud, and breach of warranties under California law, and seeks damages and injunctive relief. Id. at ¶¶ 49-89. Defendants removed the case to this Court on April 14, 2004. Subject matter jurisdiction exists on the basis of diversity.
Plaintiff is a California resident. Compl. ¶ 1. Defendant ALG is a Virginia holding company with its principal place of business in New York. Declaration of Kathleen S. Lampe ("Lampe Decl.") ¶¶ 2, 4. Defendant Camilleri is a resident of New York. Declaration of Louis Camilleri ("Camilleri Decl.") ¶ 2.
Plaintiff alleges personal jurisdiction over ALG on grounds that ALG, "through their subsidiary Kraft Foods[,] sells Crystal Light in the state of California and worldwide," and "via Kraft Foods, advertises its products extensively in California." Compl. ¶ 2. Plaintiff also states that ALG's website "is accessible to California consumers." Id. In addition, plaintiff alleges that ALG "manufactures," "distributes," and "market[s]" Crystal Light through Kraft Foods, and has made false representations that Crystal Light is safe and healthy. Id. at ¶ 41, 43, 44-45.
Plaintiff alleges personal jurisdiction over Camilleri on grounds that "as Chairman and Chief Executive Officer" for ALG, he "is responsible for the operation of the company and its subsidiaries and in that capacity is directly and proximately liable for the actions of the company in the use and sale of Aspartame as an additive in Crystal Light," and is also "individually liable for the actions of Defendant Altria Group, Inc." because he has "intentionally allowed Aspartame-containing products to be placed in the stream of commerce to the detriment of the Plaintiff and other similarly situated consumers." Id. at ¶¶ 3-4.
ALG, formerly the Philip Morris Companies, Inc., is a publicly traded holding company that acquires ownership interests in various subsidiaries for investment purposes. Lampe Decl. ¶ 2-3, 6. It is incorporated in Virginia and has its principal place of business in New York. Id. at ¶ 2. ALG does not conduct business in California, has never engaged in sales or service activities in California, and does not place products into the stream of commerce with the expectation that they will enter California.Id. at ¶ 7. It does not file any state income tax returns or pay state taxes in California. Id. ALG does not have an office or place of business, bank accounts or credit facilities, real property, joint ventures, or telephone listings in California. Id. at ¶ 7, 9, 11, 13. It has no employees or agents in California and has no designated agent for service of process in the state. Id. at ¶ 7, 8.
ALG owns a majority interest in Kraft Foods, Inc., a Virginia corporation with its principal place of business in Illinois.Id. at ¶ 4. Kraft and ALG have separate boards of directors, are managed by separate executive officers, and engage in different types of business activity. Id. at ¶ 4, 6. Unlike ALG, which does not produce any products or services, Kraft is a food and beverage company that derives its income from the sale of these products. Id. at ¶ 6.
ALG occasionally engages in national, non-product "image" advertising. Id. at ¶ 14. Previously, ALG aired advertisements about the public service efforts of the people and companies that were part of the Philip Morris family of companies, and in 2003 it conducted a national advertising campaign to introduce its new name and communicate its identity. Id. None of ALG's placements have included product advertisements. Id. ALG has a public website, but it is not used to advertise the products made and distributed by ALG's operating subsidiaries or to solicit business. Id. at ¶ 15.
Louis Camilleri is the Chairman of the Board of Directors and Chief Executive Officer of ALG. Camilleri Decl. ¶ 1. His only residence is in New York, and he has never resided in California.Id. at ¶ 2. His only office is in New York, and he has never maintained an office in California. Id. at ¶ 3.
Camilleri has never owned, leased, or possessed any real property in California. Id. at ¶ 4. He has never filed tax returns in California, and he does not have bank accounts, investment accounts, or loans with California financial institutions. Id. at ¶ 5-6. He has never been a party to litigation in California other than this action. Id. at ¶ 7. He has never entered into any contracts in California. Id. at ¶ 8. He has traveled to California only once. Id.
Camilleri has not personally directed, controlled, or had day-to-day decision-making responsibility for the formulation, design, manufacturing, labeling, promotion, marketing, distribution, or sale of Crystal Light, or its placement into the stream of commerce. Id. at ¶ 11. He has never made any statements or representations to plaintiff Ross about Crystal Light or aspartame. Id. at ¶ 10.
Now before the Court are ALG's and Camilleri's motions to dismiss plaintiff's claims for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Plaintiff has filed no opposition to defendants' motion. Therefore, the Court assumes that the factual assertions made in defendants' motion are uncontroverted.
Defendants have also requested that the Court take judicial notice, pursuant to FRE 201, of three decisions in other unrelated cases: Dymits v. American Brands, Inc., 1996 WL 751111 (N.D. Cal. Dec. 31, 1996); Sept. 29, 2000 Order, Taylor v. Lorillard, Inc., No. 811998-2 (Alameda County Super. Ct.); Feb. 21, 2003 Order, Coolidge v. Philip Morris Inc., No. RIC-361063 (Riverside County Super. Ct.). The Court grants this request based on its authority to take judicial notice of public records, including judicial proceedings. However, the Court takes notice of these opinions "not for the truth of the facts recited therein, but for the existence of the opinion, which is not subject to reasonable dispute over its authenticity." Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001),quoting Southern Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd., 181 F.3d 410, 426-27 (3d Cir. 1999).
LEGAL STANDARD
A motion to dismiss for lack of personal jurisdiction may be brought under Federal Rule of Civil Procedure 12(b)(2). "Although the defendant is the moving party on a motion to dismiss, the plaintiff bears the burden of establishing that jurisdiction exists." Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002) (citation omitted).
The court's exercise of personal jurisdiction must comport both with the state long-arm statute and with the constitutional requirements of due process. Omeluk v. Langsten Slip and Batbyggeri A/S, 52 F.3d 267, 271 (9th Cir. 1995), citing Chan v. Society Expeditions, Inc., 39 F.3d 1398 (9th Cir. 1994). California's long-arm statute confers jurisdiction over nonresident defendants to the extent permitted by the California or United States Constitution. See California Code of Civil Procedure § 410.10. Therefore, the jurisdictional inquiry collapses into a single analysis of due process. Absent traditional bases for personal jurisdiction (physical presence, domicile or consent), due process requires that the defendant have certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. See International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
The court must determine whether sufficient minimum contacts between moving defendants and the forum state exist to allow the exercise of personal jurisdiction over them. In this regard, courts may exercise either general or specific jurisdiction over nonresident defendants. FDIC v. British-American Ins. Co., LTD., 828 F.2d 1439, 1442 (9th Cir. 1987).
General jurisdiction exists when the nonresident has substantial or systematic and continuous contacts with the forum state, and the exercise of jurisdiction satisfies traditional notions of fair play and substantial justice. See Ziegler v. Indian River County, 64 F.3d 470 (9th Cir. 1995). The Ninth Circuit has established a three-step test to determine whether the court may exercise specific jurisdiction over a nonresident defendant. See Ziegler, 64 F.3d at 473; Data Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). First, there must be a showing that the out-of-state defendants purposefully directed their activities toward residents of the forum state or purposefully availed themselves of the privilege of conducting activities in the forum state, thus invoking the benefits and protections of its laws. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-475 (1985). Second, the controversy must be related to or "arise out of" defendants' contact with the forum. Ziegler, 64 F.3d at 473; Data Disc, Inc., 557 F.2d at 1287. Third, the exercise of jurisdiction must comport with fair play and substantial justice; i.e., it must be reasonable. Id.;British-American, 828 F.2d at 1442. Generally, the relationship among the defendants, the forum, and the litigation is the essential foundation of personal jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984), citing Shaffer v. Heitner, 433 U.S. 186, 204 (1977).
DISCUSSION
A. General jurisdiction
General jurisdiction exists when a nonresident defendant has "substantial" or "systematic and continuous" contacts with the forum state, even if the cause of action is unrelated to the defendant's forum activities. See Data Disc, 557 F.2d at 1287. The Court must evaluate each defendant's individual actions to determine if there are sufficient contacts to support a finding of jurisdiction. See Advantage Lift Systems, Inc. v. OMER S.p.A, 1997 U.S. Dist. LEXIS 11355 at *19 (S.D. Cal. March 19, 1997).
1. ALG
Defendant ALG argues that, as an out-of-state holding company with no office, place of business, joint venture, bank account, real estate, or telephone listing in California, it has insufficient contacts for general jurisdiction. Defs.' Mot. at 5. ALG does not engage in sales or service activities in California or pay taxes in California. In addition, its national "image" advertising is limited and in any event does not provide a basis for jurisdiction. See Shute v. Carnival Cruise Lines, 897 F.2d 377, 381 (9th Cir. 1990), rev'd on other grounds, 499 U.S. 585 (1991). ALG's website does not create sufficient contacts because it does not advertise any product or service and does not allow customers to make purchases. Bancroft Masters, Inc. v. Augusta National Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). Because ALG is a holding company that does not manufacture, sell, or promote products in California, the Court finds that it lacks the substantial, systematic, and continuous contacts required for general jurisdiction.
2. Camilleri
Defendant Camilleri argues that his contacts with California are insufficient for general jurisdiction because he is an out-of-state resident who has only traveled to California once. He does not have offices, real property, contracts, bank accounts, or loans in California, and he has never filed tax returns in the state. Plaintiff has made no showing of any additional contacts by Camilleri, and the Court finds that he is not subject to its general jurisdiction.
B. Specific jurisdiction
For the court to exercise personal jurisdiction over ALG and Camilleri, they must be subject to specific jurisdiction based on a three-step analysis: (1) whether ALG and Camilleri have "purposefully availed" themselves of the forum; (2) whether plaintiff's claims "arise out of' the defendants' forum-related activities; and (3) whether the exercise of jurisdiction over each defendant would be reasonable. Data Disc, Inc., 557 F.2d at 1287. Defendants focus on the second step of this inquiry and argue that neither ALG nor Camilleri has engaged in any activity in California out of which plaintiff's claims might arise.
1. ALG's forum-related activities
ALG contends that California lacks specific jurisdiction over it because plaintiff has not established any connection between ALG's forum activities and her claims regarding Crystal Light. Defs.' Mot. at 7. In addition, ALG argues that the activities of its subsidiary Kraft Foods cannot form the basis for purposeful availment or claims against ALG.
The Court finds that there is no evidence that ALG has either (1) purposefully availed itself of the forum or (2) engaged in any forum-related activities causally connected to plaintiff's claims. Plaintiff's claims are based on the sale, manufacture, distribution, marketing, and advertising of Crystal Light. Compl. ¶¶ 41-48. Because ALG is a holding company that does not manufacture, sell, or market any product, plaintiff's claims cannot arise out of ALG's activities.
Here, moreover, the forum-related activities of ALG's subsidiary cannot be imputed to ALG. The existence of a relationship between a parent company and its subsidiaries is not sufficient to establish personal jurisdiction over the parent on the basis of the subsidiaries' minimum contacts. Doe v. Unocal Corp., 248 F.3d 915, 925 (9th Cir. 2001). A subsidiary's contacts with the forum state may establish jurisdiction over its non-resident parent if the subsidiary acts as the parent's alter ego or if the subsidiary is the parent's "general agent" in the forum state. American Tel. Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir. 1996); Chan v. Society Expeditions, Inc., 39 F.3d 1398, 1405-06 (9th Cir. 1994),cert. denied, 514 U.S. 1004, 115 S.Ct. 1314 (1995). Here, plaintiff has made no showing that Kraft's activities should be attributed to ALG under an alter ego or agency theory.
Accordingly, the Court finds that ALG does not have sufficient minimum contacts with California to allow for the exercise of personal jurisdiction over it.
2. Camilleri's forum-related activities
Plaintiff has alleged that Camilleri is liable for ALG's actions "in [his] capacity" as the company's chairman and CEO. Compl. ¶ 3. Plaintiff also alleges that Camilleri is "individually liable" because he has "intentionally allowed Aspartame-containing products to be placed into the stream of commerce." Compl. ¶ 4. Camilleri argues, first, that he cannot be subject to personal jurisdiction based on ALG's activities because there is no jurisdiction over ALG itself. Defs.' Mot. at 9. Camilleri also contends that, even if ALG is subject to personal jurisdiction, its actions cannot be imputed to him, and he has no individual contacts with California that could give rise to jurisdiction. Defs.' Mot. at 9.
The Court agrees that only Camilleri's individual contacts may be considered and that they are insufficient for personal jurisdiction. There is no personal jurisdiction over an individual corporate officer on the basis of the corporation's contacts alone. See LeDuc v. Kentucky Cent. Life Ins. Co., 814 F. Supp. 820, 824 (N.D. Cal. 1992), citing Davis v. Metro Productions, 885 F.2d 515, 520 (9th Cir. 1989). Moreover, "a corporate officer who has contact with a forum only with regard to the performance of his official duties is not subject to personal jurisdiction." Erman v. Lox Equipment Co., 1992 U.S. Dist. LEXIS 13640, at *4 (N.D. Cal. August 14, 1992),quoting Forsythe v. Overmyer, 576 F.2d 779, 783-84 (9th Cir. 1978). Thus, Camilleri is not subject to this Court's jurisdiction based on ALG's activities.
The Court finds that there are no facts showing that Camilleri purposefully availed himself of the forum or that plaintiff's claims arose out of his forum-related activities. Camilleri does not reside in California and has traveled there only once. He does not own property, maintain an office, have a bank or investment account, or pay taxes in California. In addition, the Court finds that Camilleri's alleged act of "intentionally allowing" products to be placed into the stream of commerce is not an individual action, but rather a corporate decision by one of ALG's subsidiaries. From these facts, the Court cannot conclude that Camilleri personally availed himself of the privilege of conducting activities within California or invoked the benefits and protections of its laws.
Defendant also argues that plaintiff has failed to establish the required connection between the causes of action and his forum-related activities. The Court agrees that Camilleri has not personally engaged in forum-related activities that could have given rise to plaintiff's claim. Camilleri states that he has never personally made any statements or representations to plaintiff regarding Crystal Light or aspartame, and that he never personally directed or controlled any aspect of the formulation, design, manufacturing, labeling, promotion, marketing, distribution, sale, or placement into the stream of commerce of Crystal Light or any other product. Camilleri Decl. ¶¶ 10, 11.
Because the Court finds that Camilleri does not have sufficient minimum contacts with California, it lacks personal jurisdiction over him.
3. Reasonableness
The final requirement of personal jurisdiction is reasonableness: the exercise of personal jurisdiction must comport with "fair play and substantial justice." See Burger King Corp., 471 U.S. at 477-78. The Court need only conduct reasonableness analysis once minimum contacts have been established. Id. at 476. Because the Court finds that both ALG and Camilleri's contacts with the forum are insufficient, requiring them to defend in California would impose an unjustifiable and unreasonable burden. Accordingly, defendants' motion to dismiss for lack of personal jurisdiction is hereby GRANTED.
CONCLUSION
For the foregoing reasons, the Court GRANTS defendants' motion to dismiss for lack of personal jurisdiction. [Docket # 13]
IT IS SO ORDERED.