Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00133/USCOURTS-caed-2_05-cv-00133-5/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 09:1 U.S. Arbitration Act

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

MARIA ENRICHETTA MELZI

CARGNANI,

NO. CIV. S-05-0133 WBS JFM

Petitioner,

v. MEMORANDUM AND ORDER RE:

MOTION TO STRIKE AND MOTION TO

DISMISS

PEWAG AUSTRIA G.m.b.H., PEWAG

WEISSENFELS HOLDING A.G.,

PEWAG WEISSENFELS

INTERNATIONAL G.m.b.H., and

AGYD PENGG, an individual,

Respondents.

----oo0oo----

Petitioner Maria Enrichetta Melzi Cargnani

(“Petitioner”) brought this action to enforce a foreign arbitral

award against respondents pursuant to 9 U.S.C. § 201 et seq. 

Respondents now move to dismiss the action based on lack of

personal jurisdiction and forum non conveniens, or in the

alternative to stay the action pending the resolution of a matter

before the Trieste Court of Appeal in Italy. Petitioner moves to

strike portions of respondents’ motion to dismiss and of

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 1 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Respondents asserted that throughout 2002 and 2003, 1

they discovered numerous illegal and fraudulent actions taken by

petitioner in relation to properties and companies that were part

2

declarations filed therewith. 

I. Factual and Procedural Background

Respondents Pewag Austria G.m.b.H. (“Pewag Austria”),

Pewag Weissenfels Holding A.G. (“Pewag Holding”), and Pewag

Weissenfels International G.m.b.H. (“Pewag International”), are

corporations organized under the laws of Austria, specializing in

the manufacture and sale of high quality chains. (Petition ¶ 3.) 

Respondent Agyd Pengg is a citizen of Austria and CEO of Pewag

Holding, Pewag International, and Metallwaren Beteiligungs

G.m.b.H. (the parent company and majority owner of Pewag

Austria). (Pengg Decl. ¶ 1.) Petitioner is a resident of Italy.

 (Petition ¶ 2.) 

The dispute originates from a contract entered into by

the parties on July 13, 1999 (“Agreement”), in which respondents

agreed to purchase from petitioner the controlling interest in

the three companies (in which petitioner and her brother, Carlo

Enrichetta Melzi, were the sole or joint shareholders) in

exchange for cash as well as stock ownership in a newly created

company. (Petition ¶ 5; Bartlma Decl. Ex. B at 1-3.) 

On December 12, 2001, the parties entered into a

settlement which clarified their obligations going forward and

provided for arbitration in the event of further disputes. (Id.) 

(“Settlement”). (Petition ¶ 5.) Nonetheless, problems continued

to arise, and eventually respondents abandoned the transactions

provided for in the Agreement. (Mot. to Dismiss 3.) 1

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 2 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 of the transactions contemplated in the agreement.

3

Based on this failure of performance, an arbitration

was held in Trieste, Italy, pursuant to the provisions of the

agreement. (Petition ¶ 6.) On September 17, 2003, the

arbitrators issued an award in favor of petitioner, in the amount

of €9,249,018.08, plus interests and costs of the arbitration. 

(Petition ¶ 11.) Respondents timely appealed that award to the

Trieste Court of Appeal, wherein they contended that the

arbitration award violated the Italian Civil Code, and was thus

null and void. (Bartlma Decl. Ex. B.) That appeal is currently

pending, and is scheduled for a hearing on June 15, 2007. (Ponti

Decl. ¶ 5.)

On June 8, 2004, petitioner sought to enforce the

arbitration award in the District Civil Court of Graz, Austria. 

(Pressl Decl. ¶ 8.) On June 17, 2004, the Austrian District

Court ruled that the arbitration award was enforceable. (Id.) 

Respondents, however, appealed that ruling to the Austrian

Appellate Court, arguing that the appeal pending in the Trieste

Court of Appeal rendered the arbitration award without the effect

of law. (Id.) On March 18, 2005, the Austrian Appellate Court

reversed the lower District Court’s decision, and suspended

enforcement of the arbitration award pending the outcome of the

Italian appeal. (Id. ¶ 9.) 

On January 21, 2005, petitioner filed with this court a

petition seeking to confirm the original enforcement award

pursuant to the Convention on the Recognition and Enforcement of

Foreign Arbitral Awards, 9 U.S.C. § 207. Petitioner predicates

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 3 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

personal jurisdiction over respondents on the fact that a whollyowned subsidiary, Pewag Inc. (“Pewag America”), a New Jersey

corporation, maintains an office in 

California. (Petition ¶ 7.) 

Respondents now move to dismiss, arguing that this

court does not have personal jurisdiction over respondents and

based on the doctrine of forum non conveniens. In the

alternative, respondents request that this court stay the

proceedings until the Italian appeal is resolved. Petitioner

moves to strike portions of Mr. Ponti and Mr. Pengg’s

declarations based on the assertion that the information stated

therein lacks proper foundation. Petitioner additionally moves

to strike a portion of the factual recitation in respondents’

motion to dismiss, arguing that it lacks relevancy and

foundation.

II. Discussion

A. Motion to Strike

Upon a motion made by a party, the court may order

stricken from any pleading any insufficient defense or any

redundant, immaterial, impertinent, or scandalous matter. Fed.

R. Civ. P. 12(f). When ruling on a motion to strike, the court

views the challenged pleadings in the light most favorable to the

pleader. See Pillsbury, Madison & Sutro v. Lerner, 31 F.3d 924,

928 (9th Cir. 1994). Motions to strike are not favored and

“should not be granted unless it can be shown that no evidence in

support of the allegation would be admissible, or those issues

could have no possible bearing on the issues in the litigation.” 

Gay-Straight Alliance Network v. Visalia Unified School Dist.,

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 4 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

262 F. Supp. 2d 1088, 1099 (E.D. Cal. 2001).

Petitioner cites a case from the District Court of

Arizona for the proposition that a court considering a motion to

dismiss may only consider admissible evidence. Travelers Cas. &

Surety Co. v. Telstar Constr. Co., Inc., 252 F. Supp. 2d 917 (D.

Ariz 2003). There the court noted that, because the burden of

proving personal jurisdiction falls on the plaintiff, it is clear

“that Plaintiffs [sic] affidavits and exhibits submitted in

support of the Response to the [Motion to Dismiss] must comply

with the Rules of Evidence.” Id. at 923 (emphasis added). 

Assuming arguendo that respondent bears a similar burden,

petitioner’s motion to strike must nonetheless be denied. 

1. Ponti Declaration

Petitioner moves to strike paragraphs two, three, and

four of Luca Ponti’s declaration, submitted in support of the

present motion to dismiss. These three paragraphs contain a

brief overview of the business transactions entered into between

petitioner and respondents, as well as the subsequent Settlement

between the parties and the ultimate dispute taken to

arbitration. Prior to these paragraphs, Mr. Ponti notes that the

facts contained therein “were reported to me by Mr. Pengg.” 

Petitioner therefore asserts that Mr. Ponti lacks personal

knowledge of the events described, and that these paragraphs are

inadmissible hearsay and lack adequate foundation. 

Everything stated in these three paragraphs can be

verified by additional documents submitted with respondents’

motion. The three paragraphs give merely a brief overview of the

factual and procedural history of this case--which are described

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 5 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The court notes, moreover, that these three brief 2

summary paragraphs in Ponti’s declaration bear no direct

relevance to respondents’ motion, which is founded on a claim of

lack of personal jurisdiction. Thus the court need not rely on

the declaration for these particular facts--even if the court

were to strike these portions of Mr. Ponti’s declaration, it

would not impact its reasoning.

6

in much greater detail in respondents’ petition to the Italian

courts for review of the arbitration award. (Bartlmä Ex. B.) 

Mr. Ponti undoubtedly had additional sources for the knowledge he

recounts, because, as he notes in the very next paragraph, he

filed the appeal of the arbitration award to the Italian court. 

(Ponti Decl. ¶ 5.) Thus, as counsel for respondents in this

appeal, Mr. Ponti familiarized himself with the facts and history

of the original action by conducting a review of the record

below. Accordingly, these paragraphs will not be stricken.2

2. Pengg Declaration

Petitioner moves to strike paragraphs four, eight, and

twelve, as well as most of paragraphs five and eleven from Agyd

Pengg’s declaration. All of these statements relate to how Pewag

America runs its own operations, separate from the international

Pewag entities. (Pengg Decl.) Pengg notes in his declaration

that, “although I am listed as the Secretary of the American

Subsidiary, I have no involvement in the operations of the

company . . . .” Petitioner therefore argues that because Pengg

doesn’t play an active role in the operations of Pewag America,

he has no personal knowledge of how it operates its business. 

Mr. Pengg is the CEO of all three international Pewag

entities, and is thus intimately associated with the innerworkings of these organizations, including the subsidiaries. 

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 6 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Petitioner argues inconsistently that Pewag 3

International and Pewag America are one and the same entity,

while arguing at the same time the CEO of Pewag International

lacks foundation to speak regarding Pewag America’s operations.

7

Neither party disputes that Pewag America is a subsidiary of

Pewag International. Therefore, Mr. Pengg is in a very good

position to speak to how Pewag America operates, particularly

with regard to what tasks Pewag America performs on its own,

without guidance or assistance from Pewag International. This is

exactly the subject of the statements to which petitioner

objects.

Merely because Mr. Pengg is not involved in making the

day-to-day decisions for Pewag America does not mean he is not

familiar with how they are made, or in the very least aware of

the fact that they are made by Pewag America, and not Pewag

International. There is ample foundation for Mr. Pengg’s 3

statements. Accordingly, these statements will not be stricken. 

3. Factual Recitation in Motion to Dismiss

Petitioner objects to pages two through seven of the

motion to dismiss, which constitutes the entire “Brief Statement

of Facts” portion of respondents’ motion. Specifically,

petitioner argues that the facts cited lack relevancy and

foundation, because 1) the background facts of the parties’

original dispute is not relevant to the arbitral award, and 2)

the factual recitation “relies heavily on the declarations of

Ponti and Pengg.” (Mot. to Strike 4-5.)

Pages two through seven merely provide an appropriate

contextual background of the facts that led up to the ultimate

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 7 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

arbitration in issue. It is hard to reason that facts regarding

a business relationship, and an agreement to engage in business

transactions that contained an arbitration clause, are not

relevant to an ultimate action to enforce an arbitration award

under that exact clause. Moreover, because Mr. Ponti’s and Mr.

Pengg’s declarations are proper, a factual recitation relying on

these declarations is also proper. Accordingly, these pages will

not be stricken from the motion.

B. Motion to Dismiss

1. Legal Standard

Federal Rule of Civil Procedure 12(b)(2) governs the

dismissal of an action based on lack of personal jurisdiction. 

On a motion to dismiss, the plaintiff bears the burden of

“demonstrat[ing] facts that if true would support jurisdiction

over the defendant.” Ballard v. Savage, 65 F.3d 1495, 1498 (9th

Cir. 1995) (citation omitted). “Where not directly controverted,

plaintiff’s version of the facts is taken as true for the

purposes of a 12(b)(2) motion to dismiss.” Doe v. Unocal Corp.,

248 F.3d 915, 922 (9th Cir. 2001) (citing AT & T v. Compagnie

Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)). 

A court’s exercise of personal jurisdiction “must

comport with the state long-arm statute, and with the

constitutional requirements of due process.” Omeluk v. Langsten

Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995). Given

that California’s long-arm statute extends jurisdiction to the

limits imposed by the Due Process Clause, the only question is

whether the exercise of jurisdiction is constitutionally

permissible. Cal. Code Civ. Proc. § 410.10; Ziegler v. Indian

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 8 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

River County, 64 F.3d 470, 473 (9th Cir. 1995). 

The Ninth Circuit has made clear that, although Chapter

II of the Federal Arbitration Act, 9 U.S.C. §§ 201-208, provides

subject matter jurisdiction for District Courts, courts must

nonetheless have personal jurisdiction over a defendant--the

constitutional due process standards remain the same. Glencore

Grain Rotterdam B.V. v. Shivnath Rai Harnarian Co., 284 F.3d

1114, 1122 (9th Cir. 2002) (“[I]n suits to confirm a foreign

arbitral award under the Convention, due process requires that

the district court have jurisdiction over the defendant . . .

.”). 

Due process requires that a nonresident defendant have

certain “minimum contacts” with the forum state so that the

exercise of jurisdiction “does not offend traditional notions of

fair play and substantial justice.” Int’l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945). Applying the minimum

contacts analysis, a court may obtain either specific or general

jurisdiction over a defendant. Unocal Corp., 248 F.3d at 923.

2. Specific Jurisdiction

To establish specific jurisdiction, the plaintiff must

show that: (1) defendant purposefully availed itself of the

privilege of conducting activities in California, thereby

invoking the benefits and protections of its laws; (2)

plaintiff’s claims arise out of defendant’s California-related

activities; and (3) the exercise of jurisdiction would be

reasonable. Ziegler, 64 F.3d at 473. In this case, the court

need look no further than the second prong. In assessing whether

a claim arises out of forum-related activities, “courts apply a

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 9 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The court notes, however, that the reasonableness 4

inquiry for specific jurisdiction parallels the same inquiry into

reasonableness in assessing general jurisdiction. Thus, as

discussed in Section II(B)(3)(b) of this order, this factor in

evaluating specific jurisdiction would also likely counsel

against the existence jurisdiction.

10

‘but for’ test.” Unocal Corp., 248 F.3d at 924 (citing Ballard

v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995). “[T]he Court

considers whether [petitioner’s] claims would have arisen but for

[respondents’] contacts with California.” Id. 

Importantly, petitioner does not assert that the claims

against respondents for violation of the Agreement had anything

to do with respondent’s California-related activities. Indeed,

the basic subject matter of the Agreement related to the

purchase, by Austrian entities, of three companies located in

Italy and owned by Italian citizens. Furthermore, both the

contract and the subsequent settlement agreement were negotiated

and signed in, and under the laws of, Italy. Because the claims

in this particular dispute have no relation to respondent’s

asserted California contacts, the court does not have specific

jurisdiction over respondents, and it need not address

defendants’ purposeful availment of California’s laws or

reasonableness of asserting jurisdiction.4

///

3. General Jurisdiction Based on California Contacts

General jurisdiction exists when a defendant is

domiciled in the forum state or has engaged in activities there

that are “substantial” or “continuous and systematic.” 

Panavision Int’l v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1988)

(quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 10 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Petitioner does additionally contend, upon information 5

and belief, that respondent Agyd Pengg travels to California to

participate in the business of Pewag. This assertion, however,

is directly contradicted by the Declaration of Agyd Pengg,

submitted in support of this motion, and petitioner offers no

evidence to support its contention. (Pengg Decl. ¶ 10) (“I have

not traveled to California on behalf of or in connection with the

business of the American Subsidiary. In fact, I have not

traveled to California in the past 10 years.”)

11

U.S. 408, 414-16 (1984)). “The Supreme Court has bifurcated this

due process determination into two inquiries, requiring, first

that the [respondents] have the requisite contacts with the forum

state to render it subject to the forum’s jurisdiction, and

second, that the assertion of jurisdiction be reasonable.” Amoco

Egypt Oil Co. v. Leonis Navigation Co., Inc., 1 F.3d 848, 851

(9th Cir. 1993).

a. Minimum Contacts

It is undisputed in this case that respondents have no

direct contacts with California. (Petition ¶ 7; Mot. to Dismiss 5

7:20-24.) The only asserted connection to the forum state is

through respondents’ wholly-owned subsidiary, Pewag America,

which has an office in California. (Petition ¶ 7.) In a case

such as this, where “the [respondents’] alleged contacts are

through its corporate subsidiaries, the Court must engage in a

preliminary inquiry to determine whether the subsidiaries

contacts are properly attributed to the [respondents].” Unocal

Corp., 248 F.3d at 925. The mere “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 with the forum.” Id.

(citing Transure, Inc. v. Marsh & McLennan, Inc., 766 F.2d 1297,

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 11 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

1299 (9th Cir. 1985)). In addressing corporate separateness, the

Supreme Court has employed the principle that “a parent

corporation may be directly involved in the activities of its

subsidiaries without incurring liability so long as that

involvement is ‘consistent with the parent’s investor status.’”

Id. at 926 (citing United States v. Bestfoods, 524 U.S. 51, 72

(1998)).

However, “if the parent and subsidiary are not really

separate entities, or one acts as an agent of the other, the

local subsidiary’s contacts with the forum maybe be imputed to

the foreign parent corporation.” Id. (citing El-Fadl v. Cent.

Bank of Jordan, 75 F.3d 668, 676 (D.C. Cir. 1996)). In

particular, the Ninth Circuit has noted two typical instances

where a subsidiary’s contacts will be imputed to the parent: 1)

when the subsidiary is an “alter ego” of the parent, and 2) when

the subsidiary is acting as an “agent” of the parent. Id.; see

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

(9th Cir. 1980).

i. Alter Ego

To demonstrate that a subsidiary is an “alter ego” such

that its contacts with a forum should be imputed to a parent 

(also known as “merger”), the plaintiff must show “(1) that there

is such unity of interest and ownership that the separate

personalities [of the two corporations] no longer exist and (2)

that failure to disregard [their separate identities] would

result in fraud or injustice.” AT & T, 94 F.3d at 591. 

“Underlying both of these factors is a general presumption in

favor of respecting the corporate entity.” Calvert v. Huckins,

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 12 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

875 F. Supp. 674, 678 (E.D. Cal. 1995). Courts have interpreted

this first prong as an inquiry into whether or not the parent

controls the internal affairs and day-to-day operations of the

subsidiary so as to “render the latter the mere instrumentality

of the former.” Unocal Corp., 248 F.3d at 926. 

In this case, petitioner has failed to demonstrate that

respondents exercise sufficient control over Pewag America so as

to create a prima facie case of alter ego jurisdiction. The only

contentions petitioner offers in support of this proposition are:

1) that “Pewag International uses Pewag [America] to conduct

business on its behalf in this district and elsewhere” and that

their interests are thus “closely aligned;” 2) respondent Agyd

Pengg is the Corporate Secretary of Pewag America; and 3) Pewag

American and Pewag International’s web-sites demonstrate

sufficient interconnectivity. (Petition ¶¶ 7-8, 10; Opp’n to

Mot. to Dismiss 5-6.) 

However, it is undisputed that Pewag America an

independently operated manufacturing and distribution center. 

(Pengg Decl. ¶ 3.) It maintains its own payroll, marketing,

distribution and manufacturing facilities. (Id. ¶ 4.) Moreover,

it hires is own managers and employees, and makes all of its dayto-day financial decisions based on its own needs and business

strategies. (Id. ¶ 5.) Indeed, while Pewag America does receive

some of its merchandise, specifications, and branding information

from Pewag International, it also conducts business with a

completely unrelated Chinese manufacturer. (Id.)

Although petitioner is correct in pointing out that

respondent Pengg is a Corporate Secretary for the American

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 13 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

14

subsidiary, he has no involvement with the running of the

company, and has never even traveled to California on business. 

(Id. ¶ 10.) It is well established that mere presence on the

board of a subsidiary by a director of the parent is insufficient

to make the subsidiary an “alter ego.” Kramer, 628 F.2d at 1177. 

Plaintiffs have submitted no evidence to show that respondents

ever controlled the Board or the internal day-to-day affairs of

Pewag America, and thus Pewag America is not an alter ego of

respondent companies, for the purposes of establishing personal

jurisdiction.

With regard to the web-sites of Pewag International and

its American subsidiary, petitioner observes that Pewag America’s

website boasts of “a company with 275 years of experience,” when

in fact it is Pewag International that has been in existence that

long. Petitioner also notes that many of the product information

pages on the American subsidiary’s website contain a German

language description. Finally, petitioner notes that Pewag

International’s website lists Pewag America’s contact

information, and contains many similar pictures and product

information pages as its American counterpart. 

However, all of these superficial indications of the

interrelated nature of the companies are precisely what would be

expected given that Pewag America is a subsidiary of Pewag

International. Respondents do not deny that they own the

American subsidiary and that Pewag America sells some of its

products. Therefore, some overlap is inevitable with regard

images, product descriptions, and general information. 

Significantly, none of the information on the web-sites cited by

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 14 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Petitioner cites Anderson v. Dassault Aviation, 361 6

F.3d 449, 453-55 (9th Cir. 2004), for the proposition that website content can establish a prima facie case of alter ego. In

Anderson, however, the court noted that the parent had

“sufficient contacts with Arkansas to support an Arkansas court’s

assertion of personal jurisdiction over it whether or not [the

subsidiary] is its alter ego.” Id. at 453. This was because the

website created by the parent corporation (a jet manufacturing

company) revealed that the subsidiary was “the main completion

center for all Falcon jets worldwide.” Thus, the subsidiary

played an integral and necessary part in the parent’s operations. 

No such relationship is even hinted at in this case, as Pewag

America and Pewag International operate independently.

15

petitioner indicates that Pewag International exercises any

control over the operations or decision making of its American

subsidiary. All that the web-sites reveal is that the two

companies are related, a fact which respondents do not dispute.6

ii. Agency

Alternatively, a subsidiary’s contacts can be

attributed to the parent when 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.” Chan v. Society Expeditions, Inc., 39 F.3d 1398, 1405

(9th Cir. 1994) (quoting Wells Fargo & Co. v. Wells Fargo Express

Co., 556 F.2d 406, 423 (9th Cir. 1977)). Courts have permitted

such imputation of contacts when the subsidiary is engaged in

activities that, “but for the existence of the subsidiary, the

parent would have to undertake itself.” Id. at 1405 n.9. The

fundamental question is whether the subsidiary’s presence

“substitutes for the presence of the parent.” Unocal Corp., 248

F.3d at 929 (quoting Gallagher v. Mazda Motor of Am., Inc., 781

F. Supp. 1079, 1084 (E.D. Pa. 1992)). 

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 15 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

16

Notably, some courts have additionally held that in

order for the agency test to be satisfied, the parent must

exercise sufficient internal or day-to-day control over the

subsidiary as in the alter ego test. Kramer, 628 F.2d at 1177-

78; Unocal, 248 F.3d at 926 (“An alter ego or agency relationship

is typified by parental control of the subsidiary’s internal

affairs or daily operations.”); but see Modesto City Schools v.

Riso Kagaku Corp., 157 F. Supp. 2d 1128, 1132-34 (E.D. Cal. 2001)

(arguing that the correct contextual reading of the agency test

in Unocal reveals that a parent’s day-to-day control over the

subsidiary “is not the sine qua non of the general agency test”).

The court need not opine as to the significance of

parental control over a subsidiary for the agency test, however,

for in this instance it is clear that petitioner has failed to

carry the burden. There are no facts alleged to indicate that,

but for the existence of Pewag America, the respondent companies

would have to undertake the activities in which the subsidiary

engages--Pewag International is completely self-sufficient and

performs on its own every task needed to do business. Other than

the assertion of a parent-subsidiary relationship, petitioner has

submitted no evidence regarding the interrelation of the

respondents’ and Pewag America’s businesses. Because there is a

presumption in favor of respecting the separateness of the

corporate entities, petitioner’s failure to evince an agency

relationship means that personal jurisdiction over respondents

can not be predicated on these grounds.

B. Reasonableness

Even assuming that sufficient minimum contacts existed,

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 16 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

17

this court must still inquire into the reasonableness of

asserting jurisdiction over respondents. Glencore, 284 F.3d at

1125 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S.

102, 113 (1987)). In assessing the reasonableness of exercising

jurisdiction, the court must consider seven factors in its

analysis: “1) the extent of a defendant’s purposeful interjection

into the forum state’s affairs; 2) the burden on the defendant of

defending in the forum; 3) the extent of conflict with the

sovereignty of the defendant’s home state; 4) the forum state’s

interest in adjudicating the dispute; 5) the most efficient

judicial resolution of the controversy; 6) the importance of the

forum to the plaintiff’s interests in convenient and effective

relief; and 7) the existence of an alternative forum.” Myers v.

Bennett Law Offices, 238 F.3d 1068, 1075 (9th Cir. 2001) (citing

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)).

1) With regard to respondents’ purposeful interjection

into the forum state’s affairs, petitioner does not dispute that

respondents do not direct sales to the forum state, nor do they

advertise or market, hire or manufacture in California. (Pengg

Decl. ¶ 6.) Nor is there any evidence that respondent Pengg has

ever traveled to California on business. (Id. ¶ 10.) 

Respondents’ singular connection with California is their wholly

owned subsidiary. Indeed, “[t]his factor parallels the question

of minimum contacts” and thus, for the reasons discussed above,

the contacts of Pewag America can not be imputed to its parent. 

Amoco Egypt, 1 F.3d 852, which counsels against a finding of

personal jurisdiction over respondents.

2) The burden on respondents, and indeed on petitioner

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 17 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

It is undisputed that Pewag America was not a party to 7

the arbitration or underlying agreements in this case. Thus,

regardless of the interconnectedness of the parent-subsidiary

relationship, Pewag America is not authorized to act on behalf of

respondents nor is it liable for any arbitration award.

18

as well, would be great were they forced to litigate this issue

in California. Respondents are all located in Austria, and all

potential witnesses and relevant evidence is similarly located in

Austria and Italy. Moreover, respondents own no property in

California, and have no employees or persons in California who

are authorized to act on its behalf. Petitioner contends that 7

this case will not involve many witnesses or substantial

evidence. (Opp’n to Mot. to Dismiss 12.) Nonetheless, all

evidence and witnesses which are required are all located a

significant distance from the forum, which further argues against

asserting jurisdiction. See Asahi Metal Indus. Co., Ltd. v.

Superior Court of CA, Solano County. 480 U.S. 102, 114 (1987)

(“The unique burdens placed upon one who must defend oneself in a

foreign legal system should have significant weight in assessing

the reasonableness of stretching the long arm of personal

jurisdiction over national borders.”); see also Glencore, 284

F.3d at 1114 (noting a substantial burden because “its potential

witnesses and evidence are likely half a world away”).

3) As to the potential conflict with Austrian

sovereignty, as a general rule this factor tends to counsel

against the reasonableness of personal jurisdiction over a party

from a foreign country. Glencore, 284 F.3d at 1126 (citing Amoco

Egypt, 1 F.3d at 852)(“Where, as here, the defendant is from a

foreign nation rather than another state, the sovereignty barrier

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 18 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

19

is high and undermines the reasonableness of personal

jurisdiction.”).

4) California appears to have no cognizable interest in

adjudicating the matter. The dispute at hand involves Austrian

and Italian parties, executing in Italy a contract governed by

Italian law, which provided for arbitration in Italy in the event

of a dispute. Neither party has a direct presence in California,

nor any property in the forum state which might be relevant to

issuance of an award. See e.g. Asahi,480 U.S. at 114 (1987)

(“Because the plaintiff is not a California resident,

California's legitimate interests in the dispute have

considerably diminished.”).

5) Determining the most efficient resolution “involves

a comparison of alternative forums.” Amoco Egypt, 1 F.3d at 852. 

“The site where the injury occurred and where evidence is located

usually will be the most efficient forum.” Pac. Atl. Trading Co.

v. M/V Main Express, 758 F.2d 1325, 1331 (9th Cir. 1985). In

this case, as mentioned above, the injury occurred between

parties in Austria and Italy, under the province of Italian law,

and as such all witness and evidence are already located in that

forum. Moreover, because petitioner’s request would require this

court to inquire into the validity under Italian Civil Code of an

arbitration award issued by the Italian courts, the application

of unfamiliar Italian law by this court would further undermine

the efficiency of the proceeding.

6) The sixth factor evaluates petitioner’s interest in

the litigation being brought before this particular court. Even

this factor seems to only weigh against the reasonableness of

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 19 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

20

petitioner’s assertion of jurisdiction over respondents. As

noted, petitioner is a resident of Italy, the harm occurred in

Italy, and all relevant witnesses and evidence are similarly in

Italy or Austria. Petitioner has not asserted any connection to

California and has given no indication of its interest in

litigating the matter here. Indeed, the only motive of which

this court can conceive for bringing the suit in California (or

any United States court of federal jurisdiction) is to avoid the

impact of the proceeding already underway in Italy, which is

insufficient to tilt the balance in petitioner’s favor.

7) The final factor requires petitioner to demonstrate

the “unavailability of an alternative forum.” Amoco Egypt, 1

F.3d at 853. Undoubtedly, petitioner cannot meet this burden. 

First, the original arbitration, provided for by the agreement

between the parties, occurred in Italian courts, applying Italian

law. An appeal of this action is still pending, and petitioner

has shown no reason why that forum, agreed to by the parties as

the appropriate forum for resolving disputes, is no longer a

viable option. Moreover, the enforcement action in Austrian

court (presently stayed awaiting the outcome of the Italian

appeal) also provides a convenient alternative forum, as

respondents are all located within that forum. Overall, each of

the seven Burger King factors counsel that this courts assertion

of personal jurisdiction over respondents in this case would not

be reasonable.

4. General Jurisdiction Based on National Contacts

Petitioner argues that, even if general jurisdiction is

not found based on respondents’ California contacts, Rule 4(k)(2)

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 20 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Federal Rule of Civil Procedure 4(k)(2) provides that, 8

“If the exercise of jurisdiction is consistent with the

Constitution and laws of the United States, serving a summons or

filing a waiver of service is also effective, with respect to

claims arising under federal law, to establish personal

jurisdiction over the person of any defendant who is not subject

to the jurisdiction of the courts of general jurisdiction of any

state.” 

21

provides for personal jurisdiction based on respondents’ national

contacts. General jurisdiction based on national contacts 8

requires that: 1) the cause of action arise under federal law; 2)

the defendant not be subject to the personal jurisdiction of any

state court of general jurisdiction; and 3) exercising

jurisdiction comports with due process. Glencore, 284 F.3d at

1126. Thus, just like analyzing respondents’ California

contacts, the court must consider the minimum national contacts

and reasonableness of asserting jurisdiction.

Petitioner does not cite a single specific fact

regarding the nature or scope of respondents’ national contacts. 

Instead, petitioner merely states that “an arbitral enforcement

action in this forum would [not] be so unfair or inconvenient as

to infringe [respondents’] liberty interests.” This is

insufficient to satisfy petitioner’s burden of demonstrating

personal jurisdiction--petitioner must demonstrate a prima facie

case based on some purported national contacts. See Ballard, 65

F.3d at 1498. 

As discussed above, and conceded by petitioner,

respondents have no direct contacts with the United States--their

only purported contact is through their wholly-owned subsidiary. 

However, for all of the reasons noted in the minimum contacts

discussion above, the American subsidiary’s contacts are not

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 21 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Even if the court found sufficient national contacts to 9

support the assertion of personal jurisdiction, a reasonableness

inquiry would, for the same reasons discussed in Section

II(B)(3)(b), mandate a finding of no personal jurisdiction.

22

imputed to respondents. Even if they were, Rule 4(k)(2) would be

inappropriate, because jurisdiction founded on national contacts

requires that defendant not be subject to jurisdiction in any

state court of general jurisdiction. Unocal, 248 F.3d at 922-23

(“If [the] subsidiaries’ contacts were imputed to [the parent],

however, several states would have jurisdiction over [the

parent], and Rule 4(k)(2) would not apply.”). If the

subsidiaries contacts were to be attributed to the parent, then

general jurisdiction would exist in California, not nationally,

based on contacts with the state. As the discussion above

illustrates, however, Pewag America’s contacts are not attributed

to Pewag International--thus Pewag International has no national

contacts. Therefore, personal jurisdiction over respondents

cannot be based on national contacts.9

5. Quasi-in-rem Jurisdiction

Petitioner finally asserts that respondents are subject

to quasi in rem jurisdiction based on their ownership of property

and/or assets in California. In some cases the Supreme Court has

implied that, even without personal jurisdiction, a court may

nonetheless attach a party’s in-state property to enforce a

previous judgment. See Shaffer v. Heitner, 433 U.S. 186, 210

n.36 (1977) (“Once it has been determined by a court of competent

jurisdiction that the defendant is a debtor of the plaintiff,

there would seem to be no unfairness in allowing an action to

realize on that debt in a State where the defendant has property,

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 22 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Notably, the only authority cited by petitioner where a 10

court predicated jurisdiction based on quasi in rem jurisdiction

was an unpublished case from the Southern District of New York. 

CME Media Enters. B.V. v. Zelezny, 2001 WL 1035138, *5 (S.D.N.Y.

September 10, 2001). In that case, however, the court did not in

fact determine that it had personal jurisdiction over defendant,

but merely that it had the power to attach defendant’s property

present in the state. Id. (confirming an arbitration award and

allowing attachment “to the extent of $0.05.”)

23

whether or not that State would have jurisdiction to determine

the existence of the debt as an original matter.”); see also

Carolina Power & Light Co. v. Uranex, 451 F. Supp. 1044, 1049

(N.D. Cal. 1977) (finding no personal jurisdiction, but allowing

plaintiff to attach defendant’s California property as security

pending arbitration between parties in New York).10

Regardless of the breadth of quasi in rem jurisdiction,

as explained by the court in Glencore, the “sine qua non of

basing jurisdiction on a defendant’s assets in the forum is the

identification of some asset.” 284 F.3d at 1127. As in

Glencore, petitioner here has failed to identify any property

owned by respondents in California. The complaint contains no

allegations of any property owned by respondents and located in

California. The Newcastle, California, office belongs to the

American subsidiary, not to respondents, and petitioner does not

cite any other specific asset which could be attached. 

The only evidence petitioner offers regarding possible

California assets is a singular unsubstantiated assertion that

respondents “have property and assets in California based upon

money owing from the American subsidiary with a primary location

in Newcastle, California.” (Opp’n to Mot. to Dismiss 9.) This

is insufficient to satisfy petitioner’s burden. See Glencore,

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 23 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

24

284 F.3d at 1128 (“Indeed, the best [plaintiff] can say is that

it believes in good faith that [defendant] has or will have

assets located in the forum. This is simply not enough.”); H.

Ray Baker, Inc. v. Assoc. Banking Corp., 592 F.2d 550, 552 (9th

Cir. 1979) (citing Shaffer, 433 U.S. 185) (“The presence of

assets in California is a relevant contact, though not one that

is sufficient by itself to confer jurisdiction.”). Accordingly,

petitioner has failed to make out a prima facie case of quasi in

rem jurisdiction.

6. Request for Jurisdictional Discovery

Petitioner requests that, if this court finds she has

not satisfied her burden of demonstrating facts sufficient to

establish jurisdiction over defendant, she be entitled to

jurisdictional discovery to gather further evidence. Discovery

“should be granted where pertinent facts bearing on the question

of jurisdiction are controverted . . . or where a more

satisfactory showing of the facts is necessary.” Wells Fargo &

Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 430 n.24 (9th Cir.

1977). However, a refusal to grant such discovery “is not an

abuse of discretion when it is clear that further discovery would

not demonstrate facts sufficient to constitute a basis for

jurisdiction. Id. (citing Budde v. Ling-Temco-Vought, Inc., 511

F.2d 1033, 1035 (10th Cir. 1975). 

In this case, petitioner’s attempt to establish

personal jurisdiction over respondents is not merely lacking in

evidence--petitioner does not even have any idea of what sort of

evidence jurisdictional discovery might uncover. It is

undisputed that the solitary contact with California is an office

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 24 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

25

owned and run by the American subsidiary, and at oral argument

petitioner was unable to indicate what, if any, evidence might be

discovered to connect the actions of that office to Pewag

International. The only evidence petitioner suggests might be

found are records of accounts receivable, for chains purchased by

Pewag America from Pewag International. This, petitioner

contends, might be sufficient for quasi-in-rem jurisdiction.

First, as the court has already explained, quasi in rem

jurisdiction is not a means of acquiring jurisdiction over a

party, but merely a means of attaching property. Second, it is

not even clear that such a tenuous financial connection is

sufficient to establish quasi in rem jurisdiction. The only case

petitioner cites for this proposition is Carolina Power & Light

Co. v. Uranex, 451 F.Supp. 1044 (C.D. Cal. 1977). However, while

the court in that case did postpone vacating an attachment of an

$85 million debt, owed by an instate debtor corporation to a

corporation out-of-state, the court also made clear that in order

to be “constitutionally permissible,” the facts must “show that .

. . the attaching jurisdiction is not an inconvenient arena for

defendant to litigate the limited issues arising from the

attachment.” Id. at 1050. In that case, the “[the out-of-state

corporation] had agreed to litigate in California any disputes

that might arise in its dealings with [the instate debtor].” 

By contrast, as already explained in detail in this

order’s consideration of the reasonableness of asserting personal

jurisdiction over respondents, the inconvenience to respondents

is great. Overall, petitioner’s assertion of personal

jurisdiction over respondents seems based on mere assertion, and

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 25 of 26
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

26

neither this court, nor petitioner for that matter, can foresee

any what substantial evidence might be uncovered by granting

jurisdictional discovery. Terracom v. Valley Nat. Bank, 49 F.3d

555, 562 (9th Cir. 1995) (citing Rich v. KIS Cal., Inc., 121

F.R.D. 254, 259 (M.D.N.C. 1988)) (“[W]here a plaintiff’s claim of

personal jurisdiction appears to be both attenuated and based on

bare allegations in the face of specific denials made by

defendants, the court need not permit even limited discovery . .

. .”). Discovery will not cure this constitutional deficit. 

Accordingly, the court will deny petitioner’s request for

jurisdictional discovery.

IT IS THEREFORE ORDERED that petitioner’s motion to

strike be, and the same hereby is, DENIED.

IT IS FURTHER ORDERED that respondents’ motion to

dismiss be, and the same hereby is, GRANTED.

DATED: February 2, 2007

Case 2:05-cv-00133-WBS -JFM Document 50 Filed 02/05/07 Page 26 of 26