Opinion ID: 216921
Heading Depth: 3
Heading Rank: 1

Heading: Requisite Contacts

Text: In determining the requisite contacts of a defendant, we look to whether its activities in the forum are `substantial' or `continuous and systematic,' even if the cause of action is unrelated to those activities. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir.1990) (quoting Data Disc, Inc. v. Systems Tech. Associates, 557 F.2d 1280, 1287 (9th Cir.1977)). In other words, we ask whether a defendant's continuous corporate operations within [the] state are. . . so substantial and of such a nature as to justify suit against the defendant on causes of action arising from dealings entirely distinct from those activities. Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1169 (9th Cir.2006) (quoting Int'l Shoe Co. v. Wash., 326 U.S. 310, 318, 66 S.Ct. 154, 90 L.Ed. 95 (1945)) (quotation marks and brackets omitted). Here, there is no doubt that MBUSA has the requisite contacts. [11] The question is whether MBUSA's extensive contacts with California warrant the exercise of general jurisdiction over DCAG. Under the controlling law, if one of two separate tests is satisfied, we may find the necessary contacts to support the exercise of personal jurisdiction over a foreign parent company by virtue of its relationship to a subsidiary that has continual operations in the forum. The first test, not directly at issue here, is the alter ego test. It is predicated upon a showing of parental control over the subsidiary. The two prongs of the alter ego test are as follows: (1) that there is such unity of interest and ownership that the separate personalities of the two entities no longer exist and (2) that failure to disregard their separate identities would result in fraud or injustice. The first prong of this test has alternately been stated as requiring a showing that the parent controls the subsidiary to such a degree as to render the latter the mere instrumentality of the former. Unocal, 248 F.3d at 926 (internal citations, quotation marks, and brackets omitted). The second test, which is applicable here, is the agency test. That test is predicated upon a showing of the special importance of the services performed by the subsidiary: 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. Id. at 928 (quoting Chan, 39 F.3d at 1405) (emphasis added) (internal quotation marks omitted); see also Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1135 (9th Cir.2003). For the agency test, we ask: Are the services provided by MBUSA sufficiently important to DCAG that, if MBUSA went out of business, DCAG would continue selling cars in this vast market either by selling them itself, or alternatively by selling them through a new representative? We answer this question in the affirmative. In addition, this test requires the plaintiffs to show an element of control, albeit not as much control as is required to satisfy the alter ego test. [12] We conclude that DCAG has more than enough control to meet the agency test, because DCAG has the right to control nearly every aspect of MBUSA's operations.