Reinforcing Purposeful Availment

(E. Paul Dougherty, Jr., Partner-Los Angeles also contributed to this blog post).

Can a state court assert personal jurisdiction over a foreign component part manufacturer if the part was manufactured and sold overseas, but the manufacturer knew it was intended for use in a consumer product sold in the United States? This was the issue we faced while representing a Japanese manufacturer, whose battery cells were incorporated into smart phones sold throughout the United States.

Our client manufactured and sold the battery cells to another Japanese company, which then exported the cells to Korea to be incorporated into battery packs for smart phones with worldwide distribution. In a personal injury action in California alleging harm from an exploding smart phone, the company that made the battery packs attempted to bring our client, the Japanese battery cell manufacturer, into the litigation, alleging that the California state court should exercise jurisdiction over our client because it knew its battery cells were going to be used in smart phones distributed and sold throughout the United States, including California. The battery pack manufacturer further argued that the sheer number of smart phones sold in the United States (and California) should be enough, when coupled with knowledge that its component part would end up in the United States, to grant the Court jurisdiction over our Japanese client.

In response, we argued that the Court is required to find something more before jurisdiction could be exercised over our client; that is, some specific conduct by our client targeting the forum state, in accordance with the 2011 SCOTUS decision on this issue in the J. McIntyre Machinery, Ltd. v. Nicastro case. We argued that, under Nicastro, merely showing that the component manufacturer had knowledge that its part could end up in a consumer product sold in the United States is not enough to establish jurisdiction. Instead, there must be conduct purposefully directed toward the forum state – in this case, California. Because our client’s only conduct was to manufacture battery cells in Japan, which were then sold in Japan to another Japanese company, we argued that the facts of our case did not meet the Nicastro standard. The Court agreed with our argument and quashed service.

The lesson to the products liability litigant is simple: never assume that the forum court may properly exercise jurisdiction over your foreign client simply because your client’s product has found its way into the United States or even into the forum state. Instead, this ruling serves as an important reinforcement of the principle that a court may not exercise jurisdiction over a foreign component part manufacturer that did not, and could not, direct the distribution of the final consumer product.

This blog post was published originally on February 1, 2021.