Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-03258/USCOURTS-cand-3_07-cv-03258-3/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 28:1441 Petition for Removal- Personal Injury

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United States District Court

For the Northern District of California

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1

Daimler labels itself a "specially appearing defendant" in

order to avoid waiving its jurisdictional challenge by making an

appearance. "Rule 12 of the Federal Rules of Civil Procedure has

abolished the formal distinction between general and special

appearances." Wright v. Yackley, 459 F.2d 287, 291 (9th Cir.

1972). Daimler timely challenged the Court's jurisdiction pursuant

to Rule 12(b)(2) and therefore has not waived its right to object. 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SHELLEY R. ROBINSON; and ELIZAVETA

M. HUNSINGER, by and through her

Conservator IVAN J. HUNSINGER,

Plaintiffs,

 v.

DAIMLERCHRYSLER AG; DAIMLERCHRYSLER

MOTORS COMPANY LLC; DAIMLERCHRYSLER

CORPORATION; and DOES ONE through

FIFTY, inclusive,

Defendants.

 

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No. 07-3258 SC

ORDER GRANTING

DEFENDANT DAIMLER

AG'S MOTION TO

DISMISS FOR LACK OF

PERSONAL JURISDICTION

I. INTRODUCTION

Defendant Daimler AG ("Daimler") brings this Renewed Motion

to Dismiss for Lack of Personal Jurisdiction under Federal Rule of

Civil Procedure 12(b)(2). See Docket No. 31.1 Plaintiffs Shelley

Robinson and Elizaveta Hunsinger ("Plaintiffs") opposed the

motion, and Daimler replied. See Docket Nos. 36, 37. Having

reviewed all of the parties' submissions, the Court hereby GRANTS

Daimler's motion for the reasons set forth below.

Case 3:07-cv-03258-SC Document 39 Filed 03/17/08 Page 1 of 13
United States District Court

For the Northern District of California

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2The details of the Defendants' corporate history and

structure are taken from the Declaration of Louann Van Der Wiele

and the Declaration of Paul Hecht. Docket Nos. 26, 12.

2

II. BACKGROUND

A. The Accident

Plaintiffs allege that the 1998 Jeep Cherokee ("the

Cherokee") in which they were traveling lost control and rolled

over on a road in Idaho on May 25, 2005. See Notice of Removal,

Docket No. 1, Ex. B ("Complaint") ¶ 8. Plaintiffs allege that

certain components of the Cherokee, including the roof, roof

supports, and restraints, failed during this accident as a result

of flaws in their design and manufacture. Id. ¶¶ 10, 11, 17, 18. 

This failure allegedly resulted in severe and catastrophic

injuries to Plaintiffs. See, e.g., id. ¶¶ 12, 19. Plaintiffs

brought this suit against DaimlerChrysler AG, DaimlerChrysler

Motors Company LLC, and DaimlerChrysler Corporation, alleging

causes of action for negligence, strict liability, and breach of

warranty. See id. Plaintiffs filed the suit in the Contra Costa

County Superior Court on May 9, 2007, and Defendants removed it to

this Court on June 20, 2007. See Notice of Removal; Compl. 

B. Defendants' Corporate History and Structure

Chrysler Corporation was incorporated in Delaware in 1986,

and was responsible for the design, development, and assembly of

Chrysler, Dodge, and Jeep vehicles.2

 Chrysler Corporation had its

principal place of business in Michigan.

Chrysler Motors Corporation was incorporated in Delaware in

1998, and was responsible for the sale of Chrysler, Dodge, and

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For the Northern District of California

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3"AG" is the standard abbreviation for "Aktiengesellschaft,"

which is a German stock company, comparable to a shareholder-owned

company in the United States. The details of this designation, and

the differences between an AG and an American corporation, if any,

are not material to this order.

3

Jeep vehicles to authorized dealers. Chrysler Motors Corporation

was a wholly owned subsidiary of Chrysler Corporation.

DaimlerChrysler AG was incorporated under the laws of the

Federal Republic of Germany in May 1998, and has its principal

place of business in Stuttgart, Germany.3 DaimlerChrysler AG

designed and manufactured Mercedes-Benz vehicles in Germany.

In May of 1998, Chrysler Corporation entered into a Business

Combination Agreement ("BCA") with Daimler-Benz AG and

DaimlerChrysler AG, which became effective on November 12, 1998.

Pursuant to the BCA, Daimler-Benz AG merged into DaimlerChrysler

AG, and Chrysler Corporation became a wholly owned subsidiary of

DaimlerChrysler AG. 

In November 1998, upon execution of the BCA, Chrysler

Corporation renamed itself DaimlerChrysler Corporation, and

Chrysler Motors Corporation renamed itself DaimlerChrysler Motors

Corporation.

In January 2000, DaimlerChrysler Corporation became a wholly

owned subsidiary of DaimlerChrysler North America Holding

Corporation, which was itself a wholly owned subisidiary of

DaimlerChrysler AG.

In 2001, DaimlerChrysler Motors Company LLC ("DC Motors") was

formed in Delaware. In January 2002, DaimlerChrysler Motors

Corporation merged into DC Motors. At this point, DC Motors

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assumed the responsibility for sales and distribution of Chrysler,

Dodge, and Jeep vehicles to authorized dealers. At the same time,

DC Motors became a wholly owned subsidiary of DaimlerChrysler

North America Holding Corporation, and DaimlerChrysler Corporation

became a wholly owned subsidiary of DC Motors. 

DaimlerChrysler Corporation was responsible for making recall

decisions affecting Chrysler, Dodge, and Jeep vehicles.

In March of 2007, the relationship between the German and

American automakers ended and DaimlerChrysler AG sold the majority

of its interest in DaimlerChrysler Corporation. DaimlerChrysler

Corporation was converted to a Delaware limited liability company

and renamed DaimlerChrysler Company LLC. Two months later, DC

Motors became a wholly owned subsidiary of DaimlerChrysler Company

LLC. In July 2007, DaimlerChrysler Company LLC was renamed

Chrysler Motors LLC. Chrysler Motors LLC is a wholly owned

subsidiary of Chrysler Holding LLC, in which DaimlerChrysler AG

retained a 19.9% interest. The remainder was held by a private

investment firm.

In October 2007, DaimlerChrysler AG renamed itself Daimler

AG, the "Daimler" entity that brought the instant motion. 

Daimler did not design, manufacture, or sell the Cherokee. 

Daimler does not conduct any business or maintain any offices in

California. Daimler has not appointed an agent for service of

process in California. Although Daimler currently manufactures

Mercedes-Benz automobiles in Germany, it does not sell them

anywhere in the United States, nor has it done so at any time

relevant to this suit. Mercedes-Benz USA LLC, a Delaware limited

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liability company with its principal place of business in New

Jersey, has the rights to import, advertise, and distribute

Mercedes-Benz vehicles and parts within the United States, but it

purchases the vehicles and attains title to them in Germany. 

III. LEGAL STANDARD

"When a defendant challenges the sufficiency of personal

jurisdiction, the plaintiff bears the burden of establishing

personal jurisdiction over the defendant." Sinatra v. Nat'l

Enquirer, Inc., 854 F.2d 1191, 1194 (9th Cir. 1988). "Where, as

here, the motion is based on written materials rather than an

evidentiary hearing, the plaintiff need only make a prima facie

showing of jurisdictional facts. In such cases, we only inquire

into whether [the plaintiff's] pleadings and affidavits make a

prima facie showing of personal jurisdiction." Schwarzenegger v.

Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). 

Because there is no federal statute governing personal

jurisdiction in this matter, the Court applies California law. 

See id. (citing Fed. R. Civ. P. 4(k)(1)(A); Panavision Int'l, L.P.

v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998)). "California's

long-arm statute permits a court to exercise personal jurisdiction

over a defendant to the extent permitted by the Due Process Clause

of the Constitution." Panavision, 141 F.3d at 1320 (citing Cal.

Code Civ. P. § 410.10). "For a court to exercise personal

jurisdiction over a nonresident defendant, that defendant must

have at least 'minimum contacts' with the relevant forum such that

the exercise of jurisdiction 'does not offend traditional notions

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of fair play and substantial justice.'" Schwarzenegger, 374 F.3d

at 801 (quoting Int'l Shoe Co. v. Wash., 326 U.S. 310, 316

(1945)).

Personal jurisdiction may be either general or specific. 

Panavision, 141 F.3d at 1320. "General jurisdiction exists when a

defendant is domiciled in the forum state or his activities there

are 'substantial' or 'continuous and systematic.'" Id. (quoting

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,

414-16 (1984)). The Ninth Circuit uses a three-part test to

determine whether there is specific jurisdiction:

(1) The non-resident defendant must

purposefully direct his activities or

consummate some transaction with the forum or

resident thereof; or perform some act by which

he purposefully avails himself of the

privilege of conducting activities in the

forum, thereby invoking the benefits and

protections of its laws;

(2) the claim must be one which arises out of

or relates to the defendant's forum-related

activities; and

(3) the exercise of jurisdiction must comport

with fair play and substantial justice, i.e.

it must be reasonable.

Yahoo!, Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1205-06

(9th Cir. 2006).

IV. DISCUSSION

There is no basis for the Court to exercise jurisdiction over

Daimler in this matter. In opposing the Motion, Plaintiffs do not

even suggest that general jurisdiction exists. See Opp'n at 5-6.

Rather, Plaintiffs' sole contention is that the Court has personal

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jurisdiction over Daimler because it has jurisdiction over DC

Motors and DaimlerChrysler Corporation, which Plaintiffs claim

were Daimler's agents. See id. "In determining the sufficiency

of a defendant's contacts, it is not only defendant's activities

in the forum, but also actions relevant to the transaction by an

agent on defendant's behalf, which support personal jurisdiction." 

Theo H. Davies & Co v. Republic of the Marshall Islands, 174 F.3d

969, 974 (9th Cir. 1999). 

The agency test is satisfied by a showing 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 v. Unocal Corp., 248 F.3d 915, 928 (9th Cir. 2001) (internal

quotation marks omitted). 

Plaintiffs argue that "DaimlerChrysler Corporation and [DC

Motors] were engaged in activities that, but for their existence,

[Daimler] would have had to undertake itself." Opp'n at 5. 

Plaintiffs offer no declarations, affidavits, or other evidence

for this assertion. The only basis they provide for the agency

argument is Tracinda Corp. v. DaimlerChrysler AG, 364 F. Supp. 2d

362 (D. Del. 2005). Plaintiffs' reliance on Tracinda is misplaced

for a number of reasons. First, while Judge Farnan's opinion in

that case is extraordinarily thorough in its discussion of the BCA

and the corporate structure of DaimlerChrysler following the

merger, it is based on a well-developed factual record that is not

before this Court. The Court cannot simply adopt those findings

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The Court provides only the most cursory summary of the

Tracinda facts and holdings. However, the Court has thoroughly

reviewed that case and is firm in the conclusion that the holdings

there have no bearing in this matter.

8

en masse. 

Second, even if the Court did adopt those findings, they

would be inadequate to support Plaintiffs' agency claim here. 

Tracinda was a securities fraud suit, arising out of pre-merger

statements made by executives from Chrysler Corporation and

Daimler-Benz AG that the combination was to be a "merger of

equals." See id. at 378-80.4 The plaintiffs there were investors

who claimed that despite these statements, it was more accurately

an acquisition, with Daimler retaining managing control of the

entire corporate entity. Even if the Court accepts that Chrysler

Corporation (subsequently DaimlerChrysler Corporation, now

effectively Chrysler LLC) was fully absorbed into Daimler, and

assumes, without evidentiary support, that the companies did not

observe the corporate formalities necessary to protect Daimler in

a case such as this, the Tracinda order does not address the roles

of the various subsidiaries at issue here. There is no mention of

Chrysler Motors Corporation, DaimlerChrysler Motors Corporation,

DaimlerChrysler North America Holding Corporation, or DC Motors. 

Nothing in Tracinda can shed any light on the issue here, which is

whether Daimler AG, or its predecessor DaimlerChrysler AG, can be

held accountable for the decision not to recall the Cherokee. 

Finally, even if the findings in Tracinda did support

Plaintiffs' claim that DC Motors was Daimler's agent, it would not

preclude the Court from considering the affidavits Daimler offers

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in this matter. Jurisdiction was not an issue in that case

because the suit arose out of transactions that took place in

Delaware, the defendants conducted business in Delaware, and the

shareholder agreement in question contained a forum selection

clause under which the parties had submitted to the jurisdiction

of the Delaware courts. Id. at 365. As such, the various Daimler

entities involved in that suit had no reason to present evidence

that might acquit them of the court's jurisdiction. None of the

foregoing is true here. Daimler does not do business in

California and has not submitted to the Court's jurisdiction. It

is therefore entitled to present evidence contesting jurisdiction

without concern that the unrelated holding in Tracinda will

preclude that argument. 

The evidence Daimler presented supports its argument that DC

Motors and DaimlerChrysler Corporation were not Daimler's agents. 

DC Motors and its predecessor, Chrysler Motors Corporation, were

responsible for sales of Jeep vehicles, such as the Cherokee, to

authorized dealers. Van Der Wiele Decl. ¶¶ 5, 8, 11. 

DaimlerChrysler Corporation and its predecessor, Chrysler

Corporation, were responsible for the design, development, and

manufacture of the Cherokee, as well as for decisions regarding

recalls to Jeep vehicles. Id. ¶¶ 4, 8, 13. These are not tasks

which, but for the existence of these subsidiaries, Daimler would

have had to do itself. See Doe, 248 F.3d at 928. Daimler designs

and manufactures Mercedes-Benz automobiles in Germany. It existed

(as Daimler-Benz AG) prior to entering the BCA without needing a

presence in California for the design, development, manufacture,

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sales, or recall of Jeep vehicles. Since divesting its majority

interest in DaimlerChrysler Corporation, Daimler has not engaged a

new subsidiary in those tasks or undertaken to perform those tasks

on its own. In short, the design, development, manufacture,

sales, and recall of Jeep vehicles are not tasks which are

fundamental to Daimler's business. Therefore, the subsidiaries

performing those tasks cannot be considered Daimler's agents for

the purposes of establishing personal jurisdiction.

The available authority also supports this conclusion. Where

the subsidiary maintains the "primary and exclusive responsibility

for the distribution, marketing, and sale" of the vehicle, it is

not an agent of the parent company for jurisdictional purposes. 

Kramer Motors, Inc. v. British Leyland, Ltd., 628 F.2d 1175, 1177

(9th Cir. 1980). In Kramer Motors, the president of the U.S.

subsidiary sat on the British parent company's board of directors,

the British parent reviewed and approved general policy decisions

of the U.S. subsidiary, and the parent had "general executive

responsibility for the operation" of the subsidiary, but the court

still found that the subsidiary was not an agent for the purposes

of establishing jurisdiction. Id. The level of control

Plaintiffs assert that Daimler had over DC Motors is comparable to

that rejected in Kramer Motors. See Opp'n at 6.

Other plaintiffs who have attempted to bring Daimler or its

predecessor into court by asserting agency jurisdiction have been

unsuccessful for a number of reasons. Daimler's evidence that it

has used alternate means of distributing its products was

sufficient to defeat agency jurisdiction in one case. Bauman v.

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DaimlerChrysler AG, No. C-04-00194 RMW, 2007 U.S. Dist. LEXIS

13116, at * 8-9 (N.D. Cal. Feb. 12, 2007); see Hecht Decl. ¶ 11

(Daimler has a variety of distribution channels for the MercedesBenz products it manufactures). In another, the court found that

there was no agency because there was no evidence that absent the

subsidiary, Daimler would start manufacturing and selling the

vehicles the subsidiary manufactured and sold. Cai v.

DaimlerChrysler AG, 480 F. Supp. 2d 1245, 1252 (D. Or. 2007). 

Plaintiffs do not allege that Daimler has begun the manufacture

and sale of Chrysler, Dodge, and Jeep vehicles in California since

divesting its interest in Chrysler.

Finally, the Court agrees with Daimler that, even if

Plaintiffs had adequately shown a basis for jurisdiction, it would

be unreasonable to require Daimler to defend itself in a lawsuit

in California. Daimler structured its business to avoid this sort

of liability. Plaintiffs do not provide any evidence that

Defendants failed to observe corporate formalities. Nor do they

offer any authority suggesting that the corporate structure in

question was improper. Daimler could reasonably expect that it

would not have to appear in litigation in California. See, e.g.,

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)

("The Due Process Clause, by ensuring the orderly administration

of the laws, gives a degree of predictability to the legal system

that allows potential defendants to structure their primary

conduct with some minimum assurance as to where that conduct will

and will not render them liable to suit.") (internal quotation

marks and citation omitted). Requiring Daimler to appear would be

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unreasonable. That Daimler resides in another country, rather

than merely in another forum within the United States, makes this

conclusion even more compelling. See, e.g., Sinatra, 854 F.3d at

1199 ("litigation against an alien defendant creates a higher

jurisdictional barrier than litigation against a citizen from a

sister state because important sovereignty concerns exist").

V. DISCOVERY

Plaintiffs request that, if the Court finds they have not

established a prima facie case for jurisdiction over Daimler, they

be allowed to conduct limited discovery on jurisdictional issues.

The Court has broad discretion in considering whether or not to

allow jurisdictional discovery. See Butcher's Union Local No 498

v. SDC Inv., Inc., 788 F.2d 535, 540 (9th Cir. 1986). The Court's

conclusion regarding jurisdiction was not based on a failure to

prove the facts alleged, but the failure to even allege the

necessary facts. Discovery will not cure this. Further,

Plaintiffs have not identified what discovery they would seek or

how that discovery would assist in resolving the dispute over

jurisdiction, particularly in light of the Van Der Wiele and Hecht

Declarations. See Terracom v. Valley Nat'l Bank, 59 F.3d 555, 562

(9th Cir. 1995). The Court therefore denies Plaintiffs' request

for additional discovery.

VI. CONCLUSION

For the reasons set forth above, the Court concludes that it

does not have jurisdiction over Daimler, and therefore GRANTS

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Daimler's Motion to Dismiss. The Court DENIES Plaintiffs' request

for limited jurisdictional discovery. 

IT IS SO ORDERED.

March 17, 2008

 

 UNITED STATES DISTRICT JUDGE

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