United States: Ninth Circuit Limits Personal Jurisdiction over Foreign Parent Corporation and Requires Product Defect to Result in Safety Hazard

Last week in Williams v. Yamaha (No. 15-55924),1 the Ninth Circuit Court of Appeals affirmed the district court's two separate rulings in favor of defendants: dismissal of Japanese corporation, Yamaha Motor Co., Ltd. ("YMC"), for lack of personal jurisdiction and dismissal of plaintiffs' consumer fraud claims against Yamaha Motor Corporation, U.S.A. ("YMUS") under FRCP 12(b)(6). The Ninth Circuit found that no general or specific jurisdiction could be extended to YMC and that appellants had failed to adequately plead against YMUS that the alleged defect produced an unreasonable safety hazard.

Procedural History

In July 2013, plaintiff/appellant George Williams filed suit against defendants/appellees Japanese parent YMC and its U.S. subsidiary YMUS, alleging violations of federal and state warranty law and other claims. The suit was consolidated with two similar actions. Appellants purchased outboard boat motors that YMC designed and manufactured

in Japan and that YMUS imported and marketed in California. Appellants alleged that the motors contained a design defect that caused premature corrosion in the motors' dry exhaust system, that appellees knew of the defect prior to the sales, and that the defect posed an unreasonable safety hazard.

On August 19, 2014, the district court dismissed Japan-based YMC for lack of personal jurisdiction. In a separate ruling, the district court dismissed plaintiffs' claims for breach of warranty and unjust enrichment against YMUS. On April 29, 2015, the district court granted YMUS's fifth motion to dismiss, ruling that appellants failed to prove that YMUS had presale knowledge of the alleged defect and dismissed the remaining claims that YMUS violated California consumer protection laws.

Appellants appealed both rulings.

No General Jurisdiction Over YMC

The Ninth Circuit found that YMC did not have sufficient contacts with California for general jurisdiction to be established. Appellants failed to submit evidence to support that YMC was "at home" in California.2 Although California was important to YMC, YMC has 109 subsidiaries in 26 different countries and YMC's net sales in North America (including all 50 states and Canada) accounted for only approximately 17% of YMC's total net sales.

Appellants also failed to establish that YMC and YMUS were "alter egos." The Ninth Circuit recognized that although Daimler3 invalidated the "agency" test, it left the alternative "alter ego" test for imputed general jurisdiction.4 To establish that a parent is an alter ego of a subsidiary, plaintiff must show: (1) there is such unity of interest and ownership that the separate personalities of the two entities no longer exist and (2) failure to disregard their separate identities would result in fraud or injustice.5 Appellants made almost no factual allegations about YMUS and YMC's parent-subsidiary relationship, and even if the Court assumed that YMUS's contacts could be imputed to YMC, it was insufficient to establish general jurisdiction under Daimler.

No Specific Jurisdiction Over YMC

The Ninth Circuit also felt that appellants did not allege that YMC purposefully directed any actions at California.6 The Court found that the facts here were similar to those in Asahi,7 where defendant knew its products would be sold and used in California and benefited economically from such sales, but exertion of personal jurisdiction over the defendant was found unreasonable.8  Appellees submitted un-rebutted evidence that YMC did not conduct any activities within California or target California with marketing or advertising. The only connection appellants identified between YMC and California was through YMUS; therefore the Court looked to whether YMUS's connections could be attributed to YMC under the agency theory.

Although the Court recognized that Daimler left open whether an agency relationship would justify specific jurisdiction,9 it determined that such an analysis was doubtful. As appellants neither alleged nor showed that YMC had the right to substantially control YMUS's activities, the Court did not conduct such an analysis.

No Prima Facie Case Against YMUS

Appellants' claims under California consumer fraud statutes require an affirmative misrepresentation or an omission of material fact. Appellants did not allege any affirmative misrepresentations, just that

The district court had found that appellants' use of consumer complaints about corrosion did not support a finding of presale knowledge and relied upon multiple cases to illustrate that customer complaints as a basis for establishing a party's presale knowledge was disfavored. In contrast, the Ninth Circuit found such cases distinguishable because appellants provided sufficient detail as to the timing of the complaints, how they were lodged, how YMUS responded, and YMUS's internal complaint tracking system.

The Ninth Circuit still affirmed the dismissal because appellants failed to plausibly plead that the alleged defect constituted an unreasonable safety hazard. Appellants proffered two unreasonable hazards resulting from the alleged dry exhaust defect: (1) the potential for fires and (2) the risk of injury due to loss of steering power. However, appellants' own characterization of the defect doomed their claims. According to appellants, the defect merely accelerated the normal and expected process of corrosion. If the Court were to conclude that premature (but otherwise normal) wear and tear would establish an unreasonable safety hazard, it would open the door to claims that all of Yamaha's outboard motors eventually pose an unreasonable safety hazard. Furthermore, the hazard was speculative: no customer or plaintiff experienced a fire. Finally, the alleged defect concerned the premature, but post-warranty, onset of a natural condition, raising concerns about using consumer fraud statutes to impermissibly extend a product's warranty period.

The Ninth Circuit continues to follow Daimler's limitations on personal jurisdiction by refusing to extend jurisdiction over a foreign corporation without significant forum state contacts or control over its U.S. subsidiary. Dismissal is also appropriate under FRCP 12(b)(6) where plaintiffs fail to plead sufficient facts to support their failure to disclose defect case. 

YMUS failed to notify consumers of the alleged dry exhaust defect. To state a claim for failing to disclose a defect, a party must allege (1) a design defect exists; (2) an unreasonable safety hazard exists; (3) a causal connection between the alleged defect and the alleged safety hazard; and (4) the manufacturer had presale knowledge of the defect.

1 Williams v. Yamaha Motor Co., No. 15-55924, 2017 WL 1101095, at *1 (9th Cir. Mar. 24, 2017).

2 Courts have general jurisdiction over a foreign corporation only if the corporation's "continuous and systematic" connections to the forum state render it "at home." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).

3 Daimler AG v. Bauman, 134 S. Ct. 746 (2014).

4 The "alter ego" test is used to extend personal jurisdiction to a foreign parent when "the foreign entity is not really separate from its domestic affiliate." Ranza v. Nike, Inc., 793 F.3d 1059, 1073 (9th Cir. 2015).

5 Id.

6 California courts will exercise specific jurisdiction over a non-resident defendant only when: (1) the defendant purposefully directs its activities or purposefully avails itself of the benefits afforded by the forum's laws; (2) the claim arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction comports with fair play and is reasonable. Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002).

7 Asahi Metal Indus. Co. v. Super. Ct. of Solano Cty., 107 S. Ct. 1026 (1987).

8 Id. at 1033.

9 Daimler, 134 S. Ct. at 759 n.13.

10 Apodaca v. Whirlpool Corp., No. 13-00725 JVS (ANx), 2013 WL 6477821, at *9 (C.D. Cal. Nov. 8, 2013).

* See: www.schnader.com/jakarta

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions