Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_09-cv-03085/USCOURTS-cand-5_09-cv-03085-3/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1332 Diversity-Employment Discrimination

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United States District Court

For the Northern District of California

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ORDER GRANTING IN PART AND DENYING IN PART FOREIGN DEFENDANTS’ MOTION TO DISMISS — No. C-09-03085

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United States District Court

For the Northern District of California

E-FILED on 6/1/2010 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

CARL FERRIGNO,

Plaintiff,

v.

PHILIPS ELECTRONICS NORTH

AMERICA CORP.; KONINKLIJKE

PHILIPS ELECTRONICS; VICTORIA

ELWELL, HEIN RENSMA, PAUL VAN

DER SANDEN, individuals, and DOES 1

THROUGH 100, inclusive,

Defendants.

No. C-09–03085 RMW

ORDER GRANTING IN PART AND

DENYING IN PART FOREIGN

DEFENDANTS' MOTION TO DISMISS

[Re Docket No. 35]

On May 14, 2010, the court heard the motion to dismiss for insufficient service of process

and for lack of personal jurisdiction by defendants Koninklijke Philips Electronics, N.V., Hein

Rensma and Paul Van Der Sanden. Plaintiff opposes the motion. Having considered the papers

submitted by the parties and the arguments of counsel at hearing, and for good cause appearing,

the motion is granted in part and denied in part.

Plaintiff Carl Ferrigno ("plaintiff"), a California resident, filed this action in the Santa Clara

County Superior Court on June 12, 2009 alleging five claims for relief: (1) wrongful demotion in

violation of public policy; (2) age discrimination (Cal. Gov't Code §12940(h)); (3) retaliation and

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age-based harassment (Cal. Gov't Code § 12940(g)(j)); (4) breach of oral contract; and (5) unfair

competition and false advertising (Cal. Bus. and Prof. Code §§ 17200 and 17500). Compl. at 10-

15. Plaintiff named as defendants his employer Philips Electronics North America ("PENAC"), a

parent company Koninklijke Philips Electronics ("KPE"), his supervisor Hein Rensma, and two

additional management employees, Paul van der Sanden and Victoria Elwell. Compl. ¶1-6. 

Defendants Rensma and Van Der Sanden are citizens of the Netherlands who reside in the

Netherlands and are employed by a non-party Philips subsidiary, Philips Electronics Nederland

B.V. Defendant KPE is a Netherlands corporation with its principal place of business in the

Netherlands. 

I. Service of Process. 

Defendants first seek dismissal on the ground that plaintiff has not validly served them

with process. The state court issued summons on June 12, 2009, and on July 6, 2009, plaintiff

sought to serve these defendants pursuant to California Civil Procedure Section 415.40, which

authorizes service on a person outside the state by sending a copy of the summons and complaint

to the person to be served by first class mail, postage prepaid, requiring a return receipt. Two days

later, on July 8, 2009, defendant Philips Electronics North America, removed the action to federal

court. 

Defendants argue that service was not effective because service was not complete until

after removal. Motion at 1. Defendants argue that under CCP §415.40, service "is deemed

complete on the 10th day after such mailing" and thus was not complete until July 16, 2009, eight

days after removal. Motion at 1. Defendants argue that where a defendant has not been served

with state process prior to removal, "the federal court cannot 'complete' the state process by

permitting it to be served after removal; rather the federal court must issue new process pursuant to

Rule 4 of the Federal Rules of Civil Procedure. The state court process becomes null and void on

the date the action is removed to federal court." Beecher v. Wallace, 864 F.2d 85, 87 (9th Cir.

1988).

Plaintiff argues in opposition that service was effective upon mailing, pursuant to CCP

415.40. The ten-day provision in Section 415.40 merely lengthens the period by which a

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1

 Neither side's papers addressed the question of whether service was proper under the Hague

Service Convention. Cal. Civ. Proc. C. §413.10(c). At oral argument, the parties conceded that

service by mail satisfied the convention. 

ORDER GRANTING IN PART AND DENYING IN PART FOREIGN DEFENDANTS’ MOTION TO DISMISS — No. C-09-03085

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defendant may respond to service. Opposition at 2, citing Johnson & Johnson v. Superior Court,

38 Cal.3d 243, 248 (1985) and Ginns v. Shumate, 65 Cal.App.3d 802 (1977). Thus, according to

plaintiff, the foreign defendants were served prior to removal.

Plaintiff has the better argument and Johnson & Johnson is controlling. Section 415.40

provides:

A summons may be served on a person outside this state in any manner provided by

this article or by sending a copy of the summons and of the complaint to the person

to be served by first-class mail, postage prepaid, requiring a return receipt. Service

of a summons by this form of mail is deemed complete on the 10th day after such

mailing.

Cal. Civ. Proc. C. §415.40. The California Supreme Court held that "this language is properly

interpreted as making service effective on the date of mailing, while permitting a 10-day grace

period before the time for the defendant to answer begins." Id. at 250, 252. Additionally, the

Ninth Circuit's decision in Beecher supports this conclusion. There, the court noted that 

Some states provide that service of process shall not be deemed complete until a

return thereon is filed in the state court. If, under state law, the filing of the return

is not necessary to confer jurisdiction (the fact of service being enough), such

service may be completed' in the federal court by permitting the return to be filed

there after removal. 

Beecher, 381 F.2d at 373. Under Beecher's example, service could be complete, after removal, by

filing the return in federal court. Logically, then, the same result should occur here, where service

is complete by the mere passage of time, which expired post-removal. Defendants' reading of

Beecher is inaccurate. 

Accordingly, the fact that a defendant removed this action to federal court less than ten

days after plaintiff mailed the summons and complaint to overseas defendants does not prevent

such service from being effective when mailed, nor does it require the issuance of federal process

to be served on such defendants pursuant to Rule 4. Service appears proper, and defendants'

motion to dismiss on this ground is denied.1

II. Personal Jurisdiction

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Defendants KPE, Rensma and Van Der Sanden also seek dismissal for lack of personal

jurisdiction over them. Plaintiff concedes that there is no personal jurisdiction over Van Der

Sanden, but otherwise contends that the court may exercise personal jurisdiction over both KPE

and Rensma. Each will be addressed in turn.

A. Legal Standard

The California long-arm statute permits a court to exercise jurisdiction over non-resident

defendants “on any basis not inconsistent with the Constitution of this state or of the United

States.” CAL. CIV. PROC. CODE § 410.10. Because California’s long-arm jurisdictional statute is

coextensive with federal due process requirements, the jurisdictional inquiries under state law and

federal due process merge into one analysis. FDIC v. British-American Ins. Co., 828 F.2d 1439,

1441 (9th Cir. 1987). For a court to exercise personal jurisdiction over a non-resident defendant,

that defendant must possess sufficient “minimum contacts” with the forum such that the exercise

of jurisdiction “does not offend traditional notions of fair play and substantial justice.” 

Schwarzenegger v. Fred Martin Motor Co., 374 F.3d, 797, 801 (9th Cir. 2004) (quoting Int’l Shoe

Co. v. Washington, 326 U.S. 310, 316 (1945)). Plaintiff bears the burden of proving that personal

jurisdiction exists. Doe v. Unocal Corp., 248 F.3d 915, 921 (9th Cir. 2001). 

Personal jurisdiction may either be general or specific. General jurisdiction requires that a

defendant engage in systematic and continuous contacts with the forum state so as to approximate

physical presence within the forum state. Bancroft & Masters, Inc. v. Augusta National, Inc., 223

F.3d 1082, 1086 (9th Cir. 2000). Specific jurisdiction is appropriate where the defendant has

purposefully directed his activities at the forum or purposefully availed himself of the privilege of

conducting activities in the forum, the claims must arise out of defendant's forum-related activity,

and the exercise of jurisdiction must be reasonable. Ochoa v. J.B. Martin & Sons Farms, Inc., 287

F.3d 1182, 1188-89 (9th Cir. 2001).

B. Defendant KPE

Defendant KPE argues that there is no personal jurisdiction over it. KPE is a Dutch

company with a principal place of business in the Netherlands. Plaintiff is not employed by KPE,

however, but is instead employed by PENAC, which is a wholly owned subsidiary of Philis

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Holding USA, Inc., which in turn is an indirectly wholly-owned subsidiary of KPE. Durchak

Decl. ¶¶ 2-3. KPE does not operate PENAC and its employees do not manage PENAC. KPE does

not have a place of business in the United States, does not employ anyone in the United States, and

does not conduct business in the United States. 

Plaintiff seeks to establish personal jurisdiction over KPE based on the connection between

the forum and KPE's subsidiary, defendant PENAC. Plaintiff contends that there are two bases

upon which the court may exercise personal jurisdiction over defendant KPE, specifically, that

KPE is the alter ego of PENAC and that PENAC is the agent of KPE. Plaintiff, however, has

failed to meet its burden of establishing either alter ego or agency. 

With regard to the alter ego theory, plaintiff concedes that in order to "pierce the corporate

veil" for jurisdictional purposes, he must establish a prima facie case for alter ego liability, which

requires plaintiff to establish that there is such a unity of interest in ownership between the

corporate entities that in reality no separate entities exist, and 2) that failure to disregard the

separate entities would result in fraud or injustice. Opp. at 7, citing American Tel. & Tel. Co. v.

Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir. 1996). Plaintiff argues that KPE is the

100% owner of the subsidiaries and that on defendant’s website, in its financial statements, and in

its press releases, "Philips" promotes itself as a single entity, and thus contends that the two-part

test has been met. Plaintiff’s showing is insufficient, however, and plaintiff has failed to meet this

burden. 

The mere existence of a parent-subsidiary relationship is not sufficient to establish personal

jurisdiction over the parent. Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). 100%

ownership by the parent, is thus not sufficient. To establish the first prong of the test, plaintiff

must make a showing that the parent controls the subsidiary to such a degree as to render the

subsidiary a mere instrumentality of the parent. Id. at 926. Plaintiff has not offered evidence,

however, to establish that KPE is involved in the day-to-day operations of the subsidiary. The Doe

court also rejected claims of alter ego based on references the parent’s annual reports. Doe 248

F.3d at 928.

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Plaintiff has also failed to establish the second prong, that the failure to disregard the

corporate entities would result in fraud or injustice. Plaintiff's argument is that he may be left

without a remedy if the foreign defendants "are dismissed there would be no viable remaining

defendant. The obvious next step for PENAC would be to assert that it had no operational control

over plaintiff, did not review plaintiff, did not demote plaintiff, did not take any action against

plaintiff, and therefore, plaintiff would be left without any recourse." Opp. at 8. As defendants

observe, however, PENAC has appeared and is defending this action and has conceded that it is

plaintiff's employer. Reply at 7. Plaintiff has not established that fraud or injustice would

necessarily result if the separate entities were not disregarded.

 Plaintiff has also failed to establish that PENAC is the agent of KPE such that its contacts

with the forum may be attributable to KPE to establish personal jurisdiction. In order to establish

agency, plaintiff must establish that "the subsidiary functions as the parent corporation’s

representative in that it performs services that are sufficiently important to the foreign corporation

that if it did not have a representative to perform them, the corporation's own officials would

undertake to perform substantially similar services." Doe, 248 F.3d at 928, citing Chan v. Society

Expeditions, Inc., 39 F.3d 1398, 1405 (9th Cir. 1994). Plaintiff argues that "[o]ne has no farther to

look than the annual report of Philips and the trading of "Philips" on the New York Stock

Exchange to recognize that if not for the existence of its various operating subsidiary entities, the

corporate parent would, to earn revenue and to trade on the New York Stock Exchange, engage in

exactly the same activities that the corporate subsidiaries engage in." Opp. at 8-9. This showing,

however, is insufficient. 

Doe recognized that in the case of a parent company that is a holding company, the

subsidiary is not an agent. Doe, 248 F.3d at 929. In the case of a holding company, the subsidiary

does not perform any functions that the parent would otherwise have to perform; in the absence of

this subsidiary, the parent could simply hold another type of subsidiary. Id. Defendants argue that

it is undisputed that KPE is a holding company that has invested in PENAC for purposes of

diversifying its risk. If PENAC did not exist, KPE could invest in another subsidiary. PENAC

does not provide any integral services such as tax or corporate finance for KPE. Plaintiff has not

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meaningfully established otherwise. Therefore, PENAC is not an agent of KPE and PENAC's

contacts with California cannot be imputed to KPE for the purposes of establishing personal

jurisdiction.

Accordingly, defendant KPE's motion to dismiss for lack of personal jurisdiction is

granted.

C. Defendant Rensma

Defendant Rensma also moves to dismiss based on lack of personal jurisdiction. Plaintiff

contends that there is both general jurisdiction and specific jurisdiction over Rensma. The court

disagrees. Rensma's modest contacts with California are woefully inadequate to establish general

jurisdiction over him. Thus, specific jurisdiction offers the only possibility for exercising personal

jurisdiction over Rensma, but in order for specific jurisdiction to apply, the claims asserted against

the defendant must arise out of defendant's forum-related activity and the exercise of jurisdiction

must be reasonable. Ochoa v. J.B. Martin & Sons Farms, Inc., 287 F.3d 1182, 1188-89 (9th Cir.

2001). Here, plaintiff asserts claims against Rensma for age-based discrimination, harassment and

retaliation, and for unfair competition based upon that same conduct. Complaint (Second, Third

and Fifth Claims for Relief). 

Defendant Rensma argues that his only relevant contacts with California have been in his

capacity as an agent and employee of Philips General Purchasing, and cites authority for the

proposition that the acts of corporate officers and directors in their official capacities are

considered to be exclusively acts of the corporation and are not material for purposes of

establishing whether individuals have sufficient minimum contacts with the forum state. Reply at

10, citing Colt Studio, Inc. v. Badpuppy Enterprises, 75 F. Supp. 2d 1104, 1111 (C.D. Cal. 1999),

and Taylor-Rush v. Multi-Tech. Corp., 217 Cal.App.3d 103, 113 (1990). Defendant overstates the

holdings of Colt and Taylor-Rush. More importantly, the Supreme Court, however, squarely

refuted this argument in Calder v. Jones, 465 U.S. 783, 790 (1984). See also Keeton v Hustler

Magazine, Inc., 465 U.S. 770, 781 at n. 13 (1984) (observing that Calder v. Jones "reject[ed] the

suggestion that employees who act in their official capacity are somehow shielded from suit in

their individual capacity"); Davis v. Metro Productions, Inc., 885 F.2d 515, 521-22 (9th Cir.

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1989). Thus, for jurisdictional purposes, the fact that a defendant was acting within the scope of

his employment is not dispositive; what matters instead for specific jurisdiction is whether

plaintiff's claims against that out–of-state defendant arise out his contacts with the forum such that

the exercise of personal jurisdiction over him would not offend traditional notions of fair play and

substantial justice.

Plaintiff asserts claims against Rensma for age-based discrimination, retaliation, and agebased harassment in violation of California law. The gist of these claims is that plaintiff was

wrongfully demoted on the basis of his age and in retaliation for his having complained about acts

of age discrimination. As noted above, defendant Rensma was plaintiff's supervisor. It appears

undisputed for purposes of the present motion that Rensma was involved in the performance

evaluation and demotion that form the basis of plaintiff's complaint, and that these acts (as well as

other supervisory acts by Rensma) occurred via telephone and e-mail while Rensma was in The

Netherlands and while plaintiff was in California. Thus, it appears that the first of the two prongs

of the test for specific jurisdiction is satisfied. Plaintiff's claims arise out of defendant Rensma's

relevant forum-related activity, specifically his acts of supervising, demoting, discriminating and

retaliating against plaintiff based on plaintiff's age and complaints of age-based discrimination.

Defendant, however, argues that his forum-related conduct (acts of managing plaintiff)

cannot be used to establish personal jurisdiction here because none of those acts could create any

personal liability for Rensma. Motion at 12 and Reply at 11, citing Davis, 885 F.2d at 521.

Specifically, defendant argues that he cannot be liable to plaintiff for age discrimination or

retaliation under FEHA because such claims cannot be maintained against an individual and that

plaintiff may not assert a claim for harassment against him because the facts, as pleaded, do not

constitute actionable harassment. Motion at 12 and Reply at 12, citing Reno v. Baird, 18 Cal.4th

640, 643 (1998) (discrimination and retaliation), and Jones v. Lodge at Torrey Pines Partnership,

42 Cal.4th 1158, 1173 (2008) (harassment). In effect, defendant Rensma argues that there can be

no personal jurisdiction over him because plaintiff's complaint fails to state a claim upon which

relief may be granted.

Plaintiff offers no response to defendant's argument.

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Nevertheless, the court is not persuaded. Davis and its discussion of the fiduciary shield

doctrine does not stand for the proposition that there is no personal jurisdiction over an out-of-state

defendant if the claim asserted against him is legally deficient. It may very well be that plaintiff's

complaint would be vulnerable to a motion to dismiss for failure to state a claim – an issue the

court does not reach on the present record – but for purposes of the jurisdictional analysis, the

inquiry is whether the asserted claims arise out of defendant's forum-related activities. Here they

do. The fact that the asserted claims may be legally deficient for other reasons does not diminish

the fact that the asserted claims arise out of the forum-related conduct. 

Accordingly, defendant Rensma's motion to dismiss is denied.

II. ORDER

For the foregoing reasons, the court orders as follows:

1. The motion to dismiss for invalid service of process is denied.

2. Defendant Paul Van Der Sanden's motion to dismiss for lack of personal

jurisdiction is granted.

3. Defendant Koninklijke Philips Electronics N.V.'s motion to dismiss for lack of

personal jurisdiction is granted; and

4. Defendant Hein Rensma's motion to dismiss for lack of personal jurisdiction is

denied.

DATED: 6/1/2010

RONALD M. WHYTE

United States District Judge

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Notice of this document has been electronically sent to:

Counsel for Plaintiff:

Joseph Heathcliff Ainley joeainley@gmail.com

Counsel for Defendants:

Thomas Michael McInerney tmm@ogletreedeakins.com,

Erica Rocush erica.rocush@ogletreedeakins.com

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 6/1/10 TER 

Chambers of Judge Whyte

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