Judge: Anne Richardson, Case: 22STCV19207, Date: 2023-04-11 Tentative Ruling

Case Number: 22STCV19207    Hearing Date: April 11, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Gresham Lombard sues a number of Defendants pursuant to a March 29, 2023 Second Amended Complaint (“SAC”) alleging claims of (1) Negligence, (2) Strict Liability – Failure to Warn, (3) Strict Liability – Design Defect, (4) Fraudulent Concealment, and (5) Breach of Implied Warranties on the grounds that, from about 1990 through the early 2000s, Plaintiff Lombard worked at oil refineries and chemical plants in California doing shutdowns and turnarounds, painting, maintenance, construction, and other work, with his exposure to crude oil, fuels, and petroleum hydrocarbon solvents therethrough—all containing significant concentrations of benzene—causing serious injuries to Lombard’s internal organs—including myelodysplastic syndrome—necessitating hospitalization, surgeries, chemotherapy, and other treatments for Lombard, with a bone marrow transplantation now being medically necessary as treatment.

On January 3, 2023, Specially Appearing Defendant Intercontinental Terminals Company LLC (“Intercontinental”) made a motion to quash service of summons on grounds of lack of personal jurisdiction.

On February 9, 2023, Specially Appearing Defendant Enterprise Products Partners L.P. (“EPP”) made a motion to quash service of summons on grounds of lack of personal jurisdiction.

On February 21, 2023, Plaintiff Lombard filed a request for dismissal from this action, with prejudice, in relation to Intercontinental, and dismissal was entered on February 22, 2023.

On March 27, 2023, Plaintiff Lombard made a motion for leave to file a SAC.

On March 10, 2023, and through special appearance, EPP filed a notice of no-opposition to the motion for leave to file a SAC, requesting only the Court direct EPP’s motion to quash to the SAC.

On March 27, 2023, the Court granted Plaintiff Lombard’s motion for leave to file a SAC.

On March 28, 2023, Plaintiff Lombard opposed EPP’s motion to quash.

On March 29, 2023, Plaintiff Lombard filed his SAC.

On April 4, 2023, EPP filed a reply to Plaintiff Lombard’s March 28th opposition.

Both quash motions are now before the Court.

Motion to Quash Service of Summons [Intercontinental]: MOOT

In light of the February 22, 2023 dismissal with prejudice as to Intercontinental, Specially Appearing Defendant Intercontinental Terminals Company LLC’s Motion to Quash Service of Summons is MOOT.

Motion to Quash Service of Summons [Enterprise]: GRANTED.

Legal Standard

A defendant, on or before the last day of her time to plead or within any further time that the court for good cause may allow, may move to quash service of summons on the ground of lack of jurisdiction over her. (Code Civ. Proc., § 418.10, subd. (a); see Greener v. Workers’ Comp. Appeals Bd. (1993) 6 Cal.4th 1028, 1036.) For a court to have personal jurisdiction over a defendant, two elements are required: (1) there must be some basis for exercising personal jurisdiction over the defendant, i.e., defendant’s consent, physical presence, domicile, or minimum contacts; and (2) service of summons must be proper. (Ziller Elecs. Lab. GmbH v. Superior Court (1988) 206 Cal.App.3d 1222, 1229.)

A motion to quash service of summons can be used to challenge one or both elements of personal jurisdiction. (See ibid.) When the defendant makes a motion to quash, the burden is on the plaintiff to prove, by a preponderance of the evidence, facts justifying the exercise of jurisdiction over the defendant. (See id. at pp. 1232-33 [If a defendant files a motion to quash service of summons, the plaintiff has the burden to establish both elements of personal jurisdiction]; see also ViaView, Inc. v. Ratzlaff (2016) 1 Cal.App.5th 198, 209-10.) Further, such a motion must establish personal jurisdiction on any grounds challenged by the defendants; if the defendant alleges that there is no basis for personal jurisdiction and that service was improper, the plaintiff must establish both a basis for personal jurisdiction and proper service. (See Ziller, supra, 206 Cal.App.3d at p. 1229; Summers v. McClanahan (2006) 140 Cal.App.4th 403, 413 [plaintiff required to prove jurisdictional facts supporting personal jurisdiction over each defendant when defendant challenged jurisdiction on improper service].) The mere allegations of facts or allegations in an unverified complaint are insufficient to establish jurisdiction for these purposes. (In re Automobile Antitrust Cases I & II (2005) 145 Cal.App.4th 100, 100.)

If a motion to quash is granted because there was no basis for personal jurisdiction, the Court can dismiss the complaint without prejudice, either in whole or as to the moving defendant if there are any remaining defendants in the action. (Code Civ. Proc., § 581, subd. (h).) Although the dismissal without prejudice is not res judicata on the merits of the action, it is res judicata on the court’s jurisdictional ruling. (See MIB, Inc. v. Superior Court (1980) 106 Cal.App.3d 228, 234-35.)

Analysis

Specially appearing Defendant EPP moves to quash service of summons in this action on the grounds that Plaintiff Lombard cannot establish that California courts may exercise general or specific jurisdiction over EPP. (See Mot., 4:21-7:4.)

A California court can exercise personal jurisdiction over a nonresident defendant who has “minimum contacts” with the state. (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268; Virtualmagic Asia, Inc. v. Fil-Cartoons, Inc. (2002) 99 Cal.App.4th 228, 238.) A defendant has minimum contacts if the quality and nature of its activity in the forum state (referred to as “contacts”) is such that it is reasonable and fair to require the defendant to conduct a defense in that state. (Pavlovich, supra, at p. 268; Strasner v. Touchstone Wireless Repair & Logistics, LP (2016) 5 Cal.App.5th 215, 221.) The focus of the minimum contacts analysis is the defendant’s contacts with the forum. (Bristol-Myers Squibb Co. v. Superior Court (2017) 137 S. Ct. 1773, 1779.) Depending on the extent of a defendant’s contacts with California, it may be subject to either general or specific jurisdiction. (Elkman v. National States Ins. (2009) 14 Cal.4th 434, 445-46; see Pavlovich, supra, at p. 268-69; see also Bristol-Myers, supra, at pp. 1779-80 [noting that general and specific jurisdiction are the two types of personal jurisdiction the United States Supreme Court has recognized since its decision in International Shoe Co. v. State of Wash., Office of Unemployment Compensation & Placement (1945) 326 U.S. 310, 316].)

I. General Jurisdiction

A court can exercise general jurisdiction over a nonresident defendant when the defendant’s in-state contacts are so continuous and systematic that the defendant is essentially “at-home” in the forum. (BNSF Ry. V. Tyrell (2017) 137 S. Ct. 1549, 1558; Daimler AG v. Bauman (2014) 571 U.S. 117, 138-39; Williams v. Yamaha Motor Co. (9th Cir. 2017) 851 F.3d 1015, 1020.) The contacts considered for the purposes of general jurisdiction are those that existed from the time the alleged conduct occurred to the time of the summons. (Strasner, supra, 5 Cal.App.5th 215, 222.) When the nonresidents contacts render it essentially at home in the forum state, the court can exercise jurisdiction over the defendant even if the cause of action is unrelated to the defendant’s in-state activities. (See Bristol-Myers, supra, 137 S. Ct. at p. 1780; Vons Cos. V. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.)

Generally, a natural person is “at home” where she is domiciled, while a corporation is “at home” where it is incorporated and where it has its principal place of business. (Bauman, supra, 571 U.S. at p. 137; see BNSF Ry., supra, 137 S. Ct. at p. 1558.) In exceptional cases, a corporate defendant’s contacts with a forum may be so substantial as to render it “at home” even when the forum is not where it is incorporated or where it has its principal place of business. (BNSF Ry., supra, at p. 1558; Bauman, supra, at p. 139, fn. 19.) To determine whether a foreign corporation is essentially “at home” in California despite being incorporated and having its principal place of business outside of the State, California courts look to a variety of factors, including the “maintenance of offices, the presence of employees, use of bank accounts and marketing or selling products in the forum state, to analyze whether a corporation’s contacts render it effectively at home in that state.” (Brue v. Shabaab (2020) 54 Cal.App.5th 578, 590-91.) However, the U.S. Supreme Court has clarified that the focus of this inquiry is the comparison between the defendant’s contacts with the forum state and the defendant’s activities worldwide and whether such contacts render it essentially “at home” in the forum state. (See Bauman, supra, at pp. 138-39, 139 n. 20; Williams, supra, 851 F.3d at pp. 1021-22; see e.g., Bristol-Myers, supra, at pp. 796-97 [California Supreme Court finding that although the defendant had employees, sizable sales, and a registered agent in California, the defendant was not “at home” in California given the imbalance between its in-state business activities and its nationwide operations in their entirety].)

In its motion, EPP argues that no general jurisdiction in California can be established over EPP because “EPP, a Delaware corporation, has no such connection with the State of California, as the principal place of business is located in Houston, Texas[] (Wade Decl. ¶ 4),” “[n]one of EPP’s employees live or work in California[] (Wade Decl. ¶¶ 9, 10),” and “EPP does not conduct any business or had any operations in California[] (Wade Decl. ¶¶ 7, 8),” for which reason “it is clear that EPP is not subject to general jurisdiction in California.” (Mot., 4:5-10.)

In opposition, Plaintiff Lombard does not distinguish between general and specific jurisdiction, instead simply arguing that EPP’s contacts with California arise from EPP “conducting business in the State of California through its subsidiaries and affiliates which applied to, and were licensed by, the California Secretary of State to conduct business in the State of California and have long been doing business in California.” (Opp’n, 2:5-9.)

More specifically, Plaintiff argues that: (1) the declaration of Christopher Wade filed with EPP’s motion establishes that EPP conducts business in California through its corporate subsidiaries and affiliates where Wade declares that EPP conducts “substantially all of its consolidated business operations through its subsidiaries, each of which is a separate legal entity from” EPP (Opp’n 2:26-3:5) and (2) two affiliates of EPP— Enterprise Products Operating LLC (“EPL”) and Enterprise Products OLPGP, Inc. (“EPI”)—are shown to be licensed to conduct business in California through California Secretary of State filings, with the filings—including Applications for Registration of EPL in California, a Statement and Designation by foreign Corporation for EPL, and Statements of Information for both companies—showing that the affiliates list a business address exactly the same as the Texas business address for EPP: 1100 Louisiana, Houston, TX 77002. (Opp’n, 3:7-4:11.) Plaintiff last argues that federal authority in Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2016) 817 F.3d 755 provides grounds for the Court to conclude that EPP has been doing business in the State of California through EPL and EPI where Acorda allegedly determined that a corporation consents to jurisdiction in a state where it registers to conduct business. (Opp’n, 4:14-20.)

In reply, EPP argues that: (1) Acorda Therapeutics is distinguishable because (a) Acorda does not apply to California law and makes only a general proposition that jurisdiction exists where a corporation registers a business, and (b) Acorda only deals with issues related to specific jurisdiction (Reply 3:4-16); and (2) Plaintiff has failed to establish general jurisdiction over EPP where the only contacts raised by Plaintiff are those related to business registrations of EPL and EPI, and where Plaintiff fails to establish general jurisdiction through such contracts via theories of alter ego or agency (Reply, 3:18-5:25).

The Court agrees with EPP.

Some courts have held that an entity’s contacts with California can be attributed to its parent-company when evidence establishes that the parent and subsidiary are alter egos or have an agency relationship. (DVI, Inc. Superior Court (2002) 104 Cal.App.4th 1080, 1093-94 [alter ego]; F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 796 [alter ego and agency]; Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538 [agency].)

To invoke the alter-ego doctrine, the plaintiff must establish (1) there is such a unity of interest and ownership between the parent and subsidiary that they do not have separate personalities and (2) it would be inequitable to treat the conduct as attributable to only one of the entities. (Strasner, supra, 5 Cal.App.5th at p. 223.) Among the factors considered in such a determination are:

(1) Comingling of funds and assets (Sonora Diamond, supra, 83 Cal.App.4th at p. 538);

(2) The representation of one entity that it is liable for the debts of the other (ibid.);

(3) Identical equitable ownership of the two entities (ibid.);

(4) The use of the same offices and employees (ibid.);

(5) Use of one entity as a mere shell or conduit for the affairs of the other (ibid.); and

(6) Inadequate capitalization (ibid.).

To impute contacts under a theory of agency, a plaintiff must demonstrate that the parent exercised pervasive and continuous control over the subsidiary’s day-to-day operations that went beyond the normal parent-subsidiary relationship. (Strasner, supra, 5 Cal.App.5th at p. 223; see also Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 578 [nature of control must reflect parent’s purposeful disregard of subsidiary’s independent corporate existence].) Normal characteristics of ownership (e.g., some degree of direction or oversight, interlocking directors and officers, a close financial connection, consolidated reporting, and shared professional services), evidence of co-branding, or the broad use of terms linking the parent and subsidiary in SEC filings or other materials are insufficient to establish an agency relationship. (Strasner, supra, 5 Cal.App.5th at p. 225.) But when the parent exercises such a degree of control over its subsidiary that the subsidiary is only a means through which the parent acts, or is merely an incorporated department of the parent, the subsidiary will be regarded as the parent’s agent. (Sonora Diamond, supra, 83 Cal.App.4th at p. 541; see, e.g., Harley-Davidson, Inc. v. Franchise Tax Bd. (2015) 237 Cal.App.4th 193, 215 [court found agency relationship where subsidiaries were formed and acted solely for a parent’s direct benefit, had no employees of their own but instead acted entirely through parent’s employees, and were governed by parent’s officers and directors].)

Here, Plaintiff has merely pointed to a portion of the declaration of Christopher Wade and California Secretary of State filings for EPL and EPI to establish a connection between EPP and EPL or EPI, but such sparse evidence simply does not amount to evidence that establishes (1) a unity of interest and ownership between EPP and EPL or EPI, (2) a showing of inequity should EPP not be held for contacts attributable to EPL or EPI, or (3) that EPP exercises a pervasive and continuous control over EPL’s or EPI’s day-to-day operations that go beyond the normal parent-subsidiary relationship. (Sonora Diamond, supra, 83 Cal.App.4th at pp. 538-38 [alter ego]; Strasner, supra, 5 Cal.App.5th at p. 223 [agency].)

Further, any argument rooted in Acorda Therapeutics is unavailing in light of the Court’s determination that there is no showing of an agency or alter ego liability for EPP through the activities of EPL or EPI by Plaintiff Lombard. (See discussion above.)

Moreover, even had Plaintiff Lombard provided sufficient grounds for the Court to impute alter ego or agency liability on EPP for the contacts of EPL or EPI, Plaintiff’s evidence does not in any way show that a comparison between EPP’s imputed contacts with California and EPP’s activities worldwide render it essentially “at home” in California. (See Bauman, supra, at pp. 138-39, 139 n. 20.)

Last, EPP provides evidence that it is a Delaware corporation operating out of Texas and not registered to do business in California. (Mot., Wade Decl. ¶¶, 7-10.)

The Court thus finds that EPP provides more than sufficient grounds to determine that California courts may not exercise general jurisdiction over EPP.

II. Specific Jurisdiction

A court can exercise specific jurisdiction over a nonresident defendant if (1) the defendant has purposefully availed itself of the forum’s benefits and protections and (2) the cause of action relates to or arises out of the defendant’s contacts with the forum, and (3) the exercise of personal jurisdiction would comport with fair play and substantial justice. (Williams, supra, 851 F.3d at p. 1023; Pavlovich, supra, 29 Cal.4th at p. 269.)

The contacts for specific jurisdiction are those that existed when the plaintiff’s cause of action arose. (Strasner, supra, 5 Cal.App.5th at p. 226.)

Purposeful Availment:

To establish minimum contacts for specific jurisdiction, the plaintiff must show that the defendant has purposefully availed itself of the privilege of conducting activities in California to involve its benefits and protections. (See Axiom Foods, Inc. v. Acerchem Int’l (9th Cir. 2017) 874 F.3d 1064, 1068; Bristol-Myers Squibb Co. v. Superior Court (2016) 1 Cal.5th 783, 799-800, rev’d on other grounds, Bristol-Myers, supra, 137 S. Ct. 1773 [reversing and remanding the specific—not general—jurisdiction analysis by the California Supreme Court].) In this analysis, (1) only the defendant’s contacts with California are considered, not the defendant’s contacts with persons who reside there, (2) the defendant’s contacts must have been purposeful rather than random, fortuitous, or attenuated, and (3) the defendant must have sought some benefit by availing itself of the jurisdiction. (See Walden v. Fiore (2014) 571 U.S. 277, 285-86; Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 474-75; Vons Cos., supra, 14 Cal.4th at pp. 446, 458.)

In its motion, EPP argues that Plaintiff cannot establish that California courts can exercise specific jurisdiction over EPP because  “there is no evidence that EPP purposefully availed itself of California’s benefits” where (1) “EPP does not conduct any business or operations in California, nor has it registered with the Secretary of State,” (2) “Plaintiff has failed to provide any facts or evidence that show EPP has purposefully availed itself in California,” (3) “Plaintiff has provided no facts or evidence that Mr. Lombard’s injuries were caused by any actions, ownership, or activities of EPP in California” such that “there is no ‘… connection between the forum and the specific claims at issue’”—a relatedness argument, (4) “[n]one of EPP’s employees live or work in California[] (Wade Decl. ¶¶ 9, 10),” and (5) “EPP does not conduct any business or operations in California[] (Wade Decl. ¶¶ 7, 8).” (Mot., 5:22-6:12.)

Plaintiff Lombard’s opposition does not distinguish between general and specific jurisdiction; as such, it has been summarized above and is grounded in the position that EPP operates in California through subsidiaries—as shown by California Secretary of State filings and an acknowledgment from an EPP employee that EPP operates through subsidiaries and affiliates—where Plaintiff Lombard appears to be arguing that the Court should find that EPP has purposefully availed itself of the privileges of conducting activities in California through EPL and EPI because the registration of EPL and EPI in the State of California provides sufficient grounds for specific jurisdiction over EPP according to Acorda Therapeutics Inc. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2016) 817 F.3d 755. (See Opp’n, 3:7-4:20; see also General Jurisdiction discussion supra.)

In reply and in relevant part, EPP argues that: (1) Acorda Therapeutics is distinguishable because (a) Acorda does not apply to California law and makes only a general proposition that jurisdiction exists where a corporation registers a business, and (b) Acorda only deals with issues related to specific jurisdiction (Reply 3:4-16); and (2) Plaintiff has failed to establish grounds for specific jurisdiction because (a) “Plaintiff simply does not address any of EPP’s arguments or facts mentioned in [the] [motion to quash] and relies on the fact that the subsidiaries and EPP share the same principal executive office to establish jurisdiction” where “simply having a subsidiary in the forum state is insufficient to establish jurisdiction,” (b) Plaintiff fails to show that “the relevant actions that Plaintiff is suing for … [are] attributable to” EPP, (c) “Plaintiff fails to allege any facts that show EPP has engaged in any action or contact with the forum state,” (d) “EPP has not engaged in a joint venture with its subsidiaries, and (e) “Plaintiff has failed to provide any facts or evidence that Mr. Lombard’s injuries were caused by any actions, ownership, or activities of EPP in California.” (Reply, 5:27-6:20.)

The Court agrees with EPP.

First, the Court has already discussed ante that Plaintiff has failed to show that the EPL’s or EPI’s contacts with the State of California can be imputed to EPP through alter ego or agency theories. (See General Jurisdiction discussion above re: alter ego and agency.)

Further, failure to establish alter ego or agency theories against EPP is fatal to specific jurisdiction because if Plaintiff relies exclusively on the contacts of EPP subsidiaries in the State of California to support specific jurisdiction over EPP (see Opp’n, 3:7-4:20), then Plaintiff Lombard must establish a theory of joint liability, which he has failed to do. (See General Jurisdiction discussion supra re: alter ego and agency.)

Last, even if had Plaintiff established joint liability between EPP and EPL or EPI, the evidence presented by Plaintiff—Secretary of State filings for EPL and EPI showing a shared Texas address with EPP—does not alone show that EPL and EPI availed themselves of the privileges of conducting business in the State of California because the evidence does not show EPL or EPI in fact operate in California other than maintaining business registrations here.

The Court thus finds that EPP provides more than sufficient grounds to determine that California courts may not exercise specific jurisdiction over EPP for lack of a showing that EPP purposeful availed itself of the privileges of conducting business in the State of California.

Accordingly, the Court does not analyze the relatedness (Bristol-Myers, supra, 137 S. Ct. at p. 1780) or fair play and substantial justice prongs of specific jurisdiction, particularly where fair play and substantial justice is only analyzed where the defendant’s contacts are sufficient to invoke specific jurisdiction, thus shifting the burden to the defendant to establish that exercising jurisdiction would be unreasonable, i.e., that it would offend traditional notions of fair play and substantial justice. (See Vons Cos., supra, 14 Cal.4th at p. 449; see also Mot., 6:12-7:4 [arguing fair play and substantial justice in favor of EPP].)

III. Further Discovery

In his opposition, Plaintiff Lombard argues that “[i]f the Court is not convinced that [EPP] has been doing business in California through its affiliates or subsidiaries, the Court should continue the hearing on [EPP’s] motion to quash and grant leave to Plaintiff to conduct jurisdictional regarding [EPP] and its affiliates and subsidiaries so the court can determine, based on full and complete record whether [EPP] has consented to jurisdiction in California by registering its corporate subsidiaries and affiliates through which it conducts ‘substantially all of its consolidated business operations …’ to do business in the State of California,” citing to Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 17 and Magnecomp Corp. v. Athene Co. (1989) 209 Cal.App.3d 526, 533 in support of the Court’s authority to permit further discovery. (Opp’n, 4:24-5:8.)

In reply, EPP argues that Plaintiff Lombard should not be granted leave to conduct jurisdictional discovery because (1) “[i]n order to prevail on a motion to conduct jurisdictional discovery, plaintiff should demonstrate that discovery is likely to lead to the production of evidence of facts establishing jurisdiction,” citing to In re Automobile Antitrust Cases I & II, supra, 135 Cal.App.4th at p. 100 for this proposition, (2) “[n]either Plaintiff’s Opposition nor the Second Amended Complaint provides any evidence that EPP has sufficient contacts in California,” (3) “Plaintiff has provided no evidence to suggest that EPP is an alter ego of its subsidiaries,” (4) Plaintiff has not demonstrated how further discovery would contradict EPP’s contentions that it does not engage in substantial, continuous, or systemic activities in California,” and (5) “[i]t would be unduly prejudicial to EPP and a waste of judicial and other resources” to permit Plaintiff to conduct discovery into the relationship between EPP and its subsidiaries where “[s]uch a discovery effort would be unfounded and unnecessary given the clear California case law [that] instructs that there is no automatic personal jurisdiction as to a parent company simply because a plaintiff’s opposition alleges that a subsidiary may be licensed in the forum state.” (Reply, 7:11-27.)

The Court agrees with EPP.

The SAC does not explain, outside of generalities, why EPP is being sued, for example, because Lombard worked for EPP, or EPL or EPI, between certain years in the State of California. (See FAC generally [only mentioning EPP in the caption and at paragraph 8 in describing EPP as a Texas company].) Further, even if EPP were found to be liable for EPL’s or EPI’s contacts with the State of California, Plaintiff Lombard has failed to elaborate how such contacts would relate to Plaintiff’s claims against EPP, a necessary requirement to establish specific jurisdiction. (Bristol-Myers, supra, 137 S. Ct. at p. 1780.)

The Court therefore DENIES Plaintiff’s request for jurisdictional discovery and GRANTS Defendant EPP’s motion to quash summons.

Conclusion

Specially Appearing Defendant Intercontinental Terminals Company LLC’s Motion to Quash Service of Summons is MOOT in light of Plaintiff Lombard’s February 22, 2023 dismissal with prejudice as to Intercontinental.

Specially Appearing Defendant Enterprise Products Partners L.P.’s Motion to Quash Service of Summons is GRANTED because Plaintiff failed to provide sufficient grounds for the Court to determine that California courts can exercise general or specific jurisdiction over Enterprise Products Partners, L.P.