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

Brief Fact Summary.

Asahi Metal Industry Co., Ltd. (Plaintiff) appealed from a decision of the California Supreme Court discharging a peremptory writ issued by the appeals court quashing service of summons in Cheng Shin’s indemnity action, arguing that minimum contacts between California and Asahi (Plaintiff) did not exist sufficient to sustain jurisdiction.

Synopsis of Rule of Law.

Minimum contacts sufficient to sustain jurisdiction are not satisfied just by placing a product into the stream of commerce along with the awareness that the product will reach the forum state.

Facts.

Asahi Metal Industry Col., Ltd. (Plaintiff), a Japanese corporation, manufactured tire valve assemblies in Japan and sold some of them to Cheng Shin, a Taiwanese company that incorporated which into the motorcycles it manufactured.  Zurcher was seriously injured in a motorcycle accident and a companion was killed.  He brought suit against Cheng, claiming the motorcycle tire manufactured by Cheng Shin was defective.  Cheng Shin sought indemnity from Asahi (Plaintiff), and the main action settled.  Asahi (Plaintiff) moved to quash service of summons, arguing that jurisdiction could not be maintained by California, the state in which Zurcher filed his action, consistent with the Due Process Clause of the Fourteenth Amendment.  The evidence indicated that Asahi’s (Plaintiff) sales to Cheng Shin took place in Taiwan, and shipments went from Japan to Taiwan.  Cheng Shin purchased valve assemblies from other manufacturers.  Sales to Cheng Shi never amounted to more than 1.5% of Asahi’s (Plaintiff) income.  Approximately 20% of Cheng Shin’s sales in the United States are in California.  In declaration, an attorney for Cheng Shin stated he made an informal examination of tires in a bike shop in Solano County, where Zurcher was injured.  He found approximately 20% of the tires with Asahi’s (Plaintiff) trademark (25% of the tires manufactured by Cheng Shin).  The Superior Court (Defendant) denied the motion to quash, finding it reasonable that Asahi (Plaintiff) defend its claim of defect in their product.  The court of appeals issued a peremptory writ commanding the Superior Court (Defendant) to quash service of summons.  The state supreme court reversed and discharged the writ, finding that Plaintiff’s awareness that some of its product would reach California by placing it in the stream of commerce satisfied minimum contacts sufficient to sustain jurisdiction. Plaintiff appealed this decision.

Issue.

Are minimum contacts sufficient to sustain jurisdiction satisfied just by placing a product into the stream of commerce with the awareness that the product will reach the forum state?

Held.

(O’Connor, J.)  No.  Minimum contacts sufficient to sustain jurisdiction are not satisfied just by placing a product into the stream of commerce with the awareness that the product will reach the forum state. To satisfy minimum contacts, there must be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state.  Although the courts that have squarely addressed this issue have been divided, the better view is that the defendant must do more than place a product in the stream of commerce.  The unilateral act of a consumer bringing the product to the forum state is not sufficient.  Asahi (Plaintiff) has not purposefully availed itself of the California market.  It does not do business in the state, conduct activities, maintain offices or agents, or advertise.  It also had nothing to do with Cheng Shin’s distribution system, which brought the tire valve assembly to California.  Assertion of jurisdiction based on these facts exceeds the limits of due process.  [The Court went on to consider the burden of defense on Asahi (Plaintiff) and the slight interests of the state and Zurcher, finding the assertion of jurisdiction unreasonable and unfair.]  Reversed.

Concurrence.

(Brennan, J.)  The state supreme court was correct in concluding that the stream of commerce theory, without more, has satisfied minimum contacts in most courts which have addressed the issue, and it has been preserved in the decision of this Court.

(Stevens, J.)  The minimum contacts analysis is unnecessary; by weighing the appropriate factors, the Court has found that jurisdiction under these facts is unreasonable and unfair.

Discussion.

The Brennan concurrence is very on point in criticizing the plurality for its characterization of this case as involving the act of a consumer in bringing the product within the forum state.  The argument presented in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), cited by the plurality, seems more applicable to distributors and retailers than to manufacturers of component parts.