Williams v. Yamaha Motor Co.

Although a subsidiary’s contacts cannot by themselves give rise to general personal jurisdiction over the parent company under an agency theory, the subsidiary’s contacts might suffice if parent and subsidiary were alter egos; but in this case, plaintiffs did not allege facts supporting an alter ego relationship, so personal jurisdiction did not attachPlaintiffs sued YMC, a Japanese manufacturer of outboard motors, as well as YMC’s California-based distributor subsidiary, YMUS.  This decision holds that a federal court in California lacks personal jurisdiction over YMC.  YMC is not “at home” in California.  Daimler, AB v. Bauman (2014) 134 S.Ct. 746 eliminated the theory that a subsidiary’s contacts could give rise to general personal jurisdiction under an agency theory.  While the subsidiary’s contacts might suffice if parent and subsidiary were alter egos, plaintiffs did not allege facts supporting an alter ego relationship.  The agency theory might still work for purposes of specific personal jurisdiction, but here plaintiffs failed to show that YMC exercised the type of control over YMUS that is needed for an agency relationship.  YMC, itself, lacked any contacts with California.  Plaintiffs alleged that an outboard motor manufacturer knew, but did not disclose, that its motors contained a design defect which led the motors to fail after 500 to 700 hours of operation rather than the industry average of 2000 hours of operation.  As the normal recreational user uses an outboard motor only about 100 hours per year, the outboard motors failed in general after expiration of their 3-year limited warranty.  This decision holds that these facts do not suffice to state a consumer fraud claim under a variety of state statutes including the UCL.  That the complaint alleges a premature occurrence of a natural demise of the machine after the expiration of the warranty period raises a concern about use of consumer fraud statutes to impermissibly lengthen the period of a limited warranty.

Ninth Circuit Court of Appeals (Smith, M., J.); March 24, 2017; 2017 WL 1101095

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