Judge: Daniel M. Crowley, Case: 19STCV42761, Date: 2022-10-27 Tentative Ruling

Case Number: 19STCV42761    Hearing Date: October 27, 2022    Dept: 28

Specially Appearing Defendant Technogym S.p.A.’s Motion to Quash Service of Summons and Complaint; Plaintiff Hyung Koo’s Motion for Protective Order

Having considered the moving, opposing and reply papers, the Court rules as follows. 

BACKGROUND

On November 27, 2019, Plaintiff Hyung Koo (“Plaintiff”) filed this action against Defendants Central Fitness Partners, Inc. (“CFP”), Central Fitness, LP (“CF”), TechnoGym USA Corp. (“TechnoGym USA”), Jamison Properties, Inc. (“JP Inc.”) and Jamison Properties, LP (“JP LP”) for general negligence, products liability and premises liability. Plaintiff later amended the complaint to include Defendants Central Plaza, LLC (“CP”), Jamison Services, Inc. (“JS”),  Jamison Reality Advisors, Inc. (“JRA”), Glide Fitness Products, Inc. (“GFP”), Baycap LLC (“Baycap”), Technogym S.p.A. (“S.p.A.”) and Philmont Management Inc. (“PM”).

On February 7, 2020, CF and CFP filed an answer. On May 14, 2020, the Court dismissed JP Inc. and JP LP, without prejudice, pursuant to Plaintiff’s request. On November 19, 2020, GFP filed an answer. On March 1, 2021, the Court dismissed Baycap, without prejduice, pursuant to Plaintiff’s request.

On April 13, 2020, CP and JS filed an answer and a Cross-Complaint against Cross-Defendant TechnoGym USA for indemnity, contribution, apportionment and declaratory relief. They later amended the Cross-Complaint to include GFP. On November 3, 2020, TechnoGym USA filed an answer. On January 27, 2021, GFP filed an answer.

On July 9, 2020, TechnoGym USA filed an answer and a Cross-Complaint against Cross-Defendants CFP, CF, JS, CP, and JRA for comparative indemnity/apportionment of fault, total equitable indemnity, express indemnity, implied contractual indemnity and declaratory relief. On September 1, 2020, TechnoGym USA filed an amended Cross-Complaint. On September 30, 2020, CP and JS filed an answer. On October 1, 2020 CF and CFP filed an answer. On November 19, 2020, JRA filed an answer.

On October 7, 2020, the Court dismissed TechnoGym USA’s third and fourth causes of action, as well as TechnoGym USA’s Cross-Complaint against JS.

On September 4, 2020, JRA filed an answer and a Cross-Complaint against Cross-Defendants CF and CFP for breach of contract, equitable indemnification, comparative indemnification, declaratory relief, equitable apportionment of fault and contribution. On October 2, 2020, CFP and CF filed an answer. On November 13, 2020, the Court dismissed this Cross-Complaint, without prejudice, pursuant to JRA’s request.

On April 1, 2021, Specially Appearing Defendant S.p.A. filed a Motion to Quash Service for Lack of Personal Jurisdiction, to be heard on September 29, 2021.On September 16, 2021, Plaintiff filed an opposition. On September 22, 2021, S.p.A. filed a reply. The Court denied the motion, but it was later vacated. The Court set a hearing on the motion for April 15, 2022, which was subsequently continued to October 28, 2022, pursuant to a stay on the entire action. Plaintiff filed a supplemental opposition on April 15, 2022. S.p.A. filed a supplemental reply on April 21, 2022.

On January 21, 2022, Plaintiff filed a Motion for Protective Order to be heard on September 27, 2022. The Court continued the hearing to October 27, 2022.

There is no trial date currently set.

PARTY’S REQUESTS

S.p.A. requests the Court quash service of Plaintiff’s summons and complaint against S.p.A.

Plaintiff requests the Court deny the motion and be granted an opportunity to conduct jurisdictional discovery.

Plaintiff requests that Plaintiff’s deposition shall not be taken until all parties, including S.p.A. have appeared in the lawsuit. In the alternative, Plaintiff requests that if the deposition be taken before all Defendants have appeared, then previously appearing Defendants not be allowed to ask any questions in later depositions.

LEGAL STANDARD

A plaintiff has the initial burden to establish valid statutory service of a summons and complaint. (Dill v. Berquist Const. Co., Inc. (1994) 24 Cal.App.4th 1426, 1439-40; Floveyor Internat. v. Sup. Ct. (1997) 59 Cal.App.4th 789, 794.) 

A defendant may file a motion to quash a service of summons on the ground of lack of jurisdiction of the court over said defendant. CCP § 418.10 (a). A motion made under CCP § 418.10 does not constitute an appearance unless a court denies the motion.

Personal jurisdiction takes two forms—general and specific. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.) General jurisdiction exists when a nonresident defendant has “substantial . . . continuous and systematic” contacts in the forum state. (Id.) General jurisdiction only exists when a defendant’s contacts with the forum state “are so constant and pervasive as to render it essentially at home” there. (Daimler AG v. Bauman (2014) 571 U.S. 117, 122.) “A court may exercise specific jurisdiction over a nonresident defendant only if: (1) the defendant has purposefully availed himself or herself of forum benefits [citations.]; (2) the controversy is related to or arises out of [the] defendant's contacts with the forum [citations.]; and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice [citations.].” (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269 (internal quotations omitted).)

Under California’s long-arm statute, California courts may exercise personal jurisdiction on any basis not inconsistent with the Constitutions of California and the United States. (Code Civ. Proc., § 410.10.) The exercise of jurisdiction over a nonresident defendant comports with these Constitutions if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate traditional notions of fair play and substantial justice. (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268.) A court may exercise general personal jurisdiction over a foreign corporation only where the corporation is “essentially at home” in the forum state. (Goodyear v. Dunlop Tires Operations, S.A. v. Brown (2011) 564 U.S. 915, 919.) A corporation’s place of incorporation and principal place of business are the paradigm bases for general personal jurisdiction. (Daimler AG v. Bauman (2014) 571 U.S. 117, 137.) The U.S. Supreme Court has stated “it is the defendant’s conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him.” (Walden v. Fiore (2014) 571 U.S. 277.) “The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.” (T.A.W. Performance, supra, 53 Cal.App.5th at 643.) It is essential that there be some act by which the foreign defendant purposefully avails itself of the privilege of conducting activities within the forum State. (Ibid.)

“Although the defendant is the moving party and must present some admissible evidence (declarations or affidavits) to place the issue before the court (by showing the absence of minimum contacts with the state), the burden of proof is on the plaintiff to establish, by a preponderance of the evidence, a basis for jurisdiction (minimum contacts between the defendant and the forum state) . . . .” (School Dist. of Okaloosa County v. Superior Court (1997) 58 Cal.App.4th 1126, 1131.) “If the plaintiffs are able to make a showing of minimum contacts with the forum state, ‘the burden shifts to the defendant to present a compelling case demonstrating that the exercise of jurisdiction by our courts would be unreasonable. [Citations.]’” (CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 1101, 1118)

DISCUSSION

Initial Ruling

Plaintiff was injured on November 8, 2019, when a cable crossover machine toppled over onto him while exercising at the Wilfit Sports Club. Plaintiff contends that the machine was a “Technogym cable crossover machine.” Plaintiff initially named Technogym USA Corp. as a defendant in the suit, but later filed an amendment naming S.p.A. S.p.A. is a company selling equipment and digital technologies for fitness, sports, and health based in Cesena, Italy.

S.p.A. contends that it is not subject to general or specific jurisdiction in this Court as it is a foreign corporation not doing business in California. To determine whether a foreign corporation has the requisite minimum contacts with California for general personal jurisdiction, the court considers only the foreign defendant’s contacts with California at the time of the alleged conduct and at the time of service of summons. (DVI, Inc. v. Superior Court (2002) 104 Cal.App.4th 1080, 1100.) Here, that window is November 8, 2019 to March 2, 2021 (when summons was served on S.p.A.)

S.p.A. had its principal place of business in Cesena, Italy. (Florenzano Decl. ¶ 4.) It is a non-resident of California and is not incorporated in the state of California. (Id. at ¶¶ 5,7.) S.p.A. is not registered, licensed, or otherwise authorized to do business in California. (Id. at ¶ 8.) S.p.A. does not have a registered agent for process in California, nor is it required to. (Id. at ¶ 9.) S.p.A. does not target advertising in the state of California. (Id. at ¶ 12.) S.p.A. admits that the machine Plaintiff was allegedly injured by (serial number MB8511100239) was designed by S.p.A. in Italy and was sold in Italy to Technogym, based in Seattle, Washington, USA. (Id. at ¶¶ 14, 16.) The machine was manufactured by Technogym E.E., S.R.O. in Slovakia, and was subsequently shipped to Washington in August 2011. (Id. at ¶¶ 15 – 17.) S.p.A. did not enter any agreement to sell any equipment to Wilfit Sports Club in California. (Id. at ¶ 18.)

A foreign defendant selling products in a foreign country, or another state, even if it is aware that some might or would be swept into the forum state, is not enough to subject a foreign defendant to specific personal jurisdiction. (Dow Chemical Canada ULC v. Superior Court (2011) 202 Cal.App.4th 170.) S.p.A. did not engage in any purposeful activities in California; was not authorized to do business in California; did not maintain an offices, plants, or other facilities in California; did not maintain any employees in California; did not pursue targeted advertising in California; did not design, manufacture, or assemble any products in California, or have an agent for service of process in California. (Florenzano Decl. ¶¶ 8 – 13.)

Plaintiff alleges that S.p.A. purposefully availed itself to the jurisdiction on California courts by placing its products into the stream of commerce. Plaintiff argues that S.p.A. has intentionally targeted California for the sale of exercise equipment through its hosting and operation of Technogym USA Corp.’s website. (Ex 8.) The subject website, which plainly states that it is operated by S.p.A., allows sales of the machines directly from Technogym USA Corp., the exclusive distributor of S.p.A.’s machines in the United States. (Id.) The website additionally directs customers to Technogym USA Corp.’s Los Angeles storefront for in-person appointments and sales of S.p.A.’s machines. Plaintiff moreover argues that even though S.p.A. may maintain a distinct legal presence, its business presence is undeniably tied to Technogym USA Corp. and its operations in the United States. Plaintiff notes that 3 of Technogym USA Corp.’s board members are employees of S.p.A. who occupy the highest levels of leadership in S.p.A. (Ex. 5., Response #s 6, 7, 8, 10, 12, 14, 15, 16.) Plaintiff asserts that because Defendant Technogym maintained a presence and targeted sales in California, and because the equipment was purchased by a gym in California, and because Plaintiff, a resident of California, was injured in California, the action relates directly to the forum state and the Court’s exercise of jurisdiction is proper.

Plaintiff also argues that subjecting S.p.A. to jurisdiction does not offend the notions of fair play. Plaintiff contends that there is a significant state interest in California courts adjudicating claims made by citizens of California who have been injured by out-of-state actors. Moreover, Plaintiff certainly has an interest in the convenient and effective relief provided by litigation in this Court, rather than by another.

S.p.A. raises several arguments in their reply. S.p.A. argues that it does not control Technogym USA Corp. and that the mere ownership of a subsidiary does not subject a nonresident parent company to the subsidiary’s forum contacts. (DVI, Inc., supra, 104 Cal.App.4th at 1086.) In order to exercise personal jurisdiction over a foreign parent corporation based on the activities of its subsidiary, the plaintiff must establish an alter ego relationship, or that the parent corporation exercises such a degree of control of the subsidiary as to reflect the parent corporation’s purposeful disregard of the subsidiary’s independent corporate existence.” (Id. at 1087, quoting Sonora Diamond Corp. v. Superior Court (2000) 83 Cal. App. 4th 523, 542.) Here, Defendant contends that Plaintiff has not properly shown an alter ego relationship exists. Moreover, normal characteristics of ownership, such as some degree of direction and oversight, interlocking directors and officers, a close financial connection, consolidated reporting, and shared professional services are insufficient to establish an agency relationship. (Sonora, supra, 83 Cal.App.4th at 540–541.) Evidence of co-branding or the broad use of terms linking the corporations together in SEC filings, or other materials, do not establish control rising to the level of an agency relationship. (Strasner v. Touchstone Wireless Repair & Logistics, LP (2016) 5 Cal.App.5th 215, 225.) S.p.A. further argues that the use of a distributor in the United States does not support a finding of purposeful availment specifically within California. Defendant cites to J. McIntyre v. Nicastro and its progeny, which held that “targeting the national market is not enough to impute jurisdiction to all the forum States.” (Oticon, Inc. v. Sebotek Hearing Sys., LLC, 865 F. Supp. 2d 501, 513.)

Jurisdictional Discovery

Pursuant to the appellate order, the Court vacated the ruling and granted leave to conduct jurisdictional discovery.

Plaintiff submitted a brief citing to multiple cases that would provide a basis for finding specific jurisdiction over S.p.A. Generally, Courts have held that “if the sale of a product of a manufacturer or distributor, such as S.p.A., is not an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, tire market for its product in (several or all) other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others.' [Citation.]" (Ford Motor Company, 141 S.Ct. at 1027 quoting World-Wide Volkswagen, at 297, 100 6 S.Ct. 580.) The Court has looked to advertising efforts, as well as relevant warranties and repairs in the subject states.

S.p.A. has an exclusive distribution deal with Technogym-USA in the United States; this includes California. Technogym and S.p.A. operate utilizing the same website, owned and operated by S.p.A. Technogym has had a storefront specifically in Los Angeles since 2020—one of only two retail stores that sell S.p.A.’s equipment in the United States. The branding and marketing used in the store is exclusively S.p.A.’s proprietary branding and intellectual property. California represents a good chunk of S.p.A.’s sales, and S.p.A. provides the requisite warranty for the products sold in California. Finally, S.p.A. has attended multiple trade shows in California, displaying and selling S.p.A. products; the representatives did not travel to any other state in the United States for work. In summation, there is still substantial evidence of sufficient contact for the Court to exercise jurisdiction over S.p.A.

S.p.A. argues that the majority of Plaintiff’s opposition focuses on the actions of Technogym-USA, rather than S.p.A. and that Plaintiff has failed to establish that Technogym-USA is a alter ego of the subsidiary. S.p.A. cites to case law that states normal characteristics of ownership are insufficient to establish an agency relationship. (Sonora Diamond Corp. v. Superior Court (2008) 83 Cal.App.4th 523, 540–541.) These include interlocking corporate officers, consolidated reporting and shared professional services. Additionally, S.p.A. argues that S.p.A. has made no sales of products to California consumers and did not target California consumers via advertising. Appearance at a tradeshow, alone, is insufficient to establish purposeful availment. Finally, S.p.A. argues that the Los Angeles store should not be factored into the Court’s decision: “In analyzing purposeful availment, [o]nly contacts occurring prior to the event causing the litigation may be considered.” (DVI, Inc., 104 Cal.App.4th at 1100-1101.)

In weighing the new evidence, the Court finds that case law supports finding the Court does not have jurisdiction over S.p.A. Outside of trade shows and the retail store, any relationship between S.p.A. and California is tenuous at best, and case law indicates that neither of the attendance at tradeshows nor the subsequent opening of a retail outlet by Technogym USA are relevant to the Court’s decision. The Court grants the motion and deems service quashed.

Protective Order

Given the timing of the hearing of this motion for a protective order and the outcome of the motion to quash, the Court will not order that Plaintiff’s deposition may not be taken until Technogym S.p.A. appears in this action.  As to a protective order than no other Defendants may depose Plaintiff until all defendants have appeared in the matter, the Court is disinclined to make such an order.  Such an order could allow Plaintiff to delay serving a defendant, thereby delaying the ability of the defendants who have appeared to discover the case against them and to develop their defenses.  While the Court recognized that this matter was stayed for a little over 3 months, it is nearly 3 years old now.  All potential defendants should have been named and served by now. 

CONCLUSION

Specially Appearing Defendant Technogym S.p.A.’s Motion to Quash Service of Summons and Complaint is GRANTED. Service of summons and the complaint on S.p.A. is quashed.

Plaintiff Hyung Koo’s Motion for Protective Order is DENIED.

            Moving party is ordered to give notice of this ruling.

Moving Party is ordered to file the proof of service of this ruling with the Court within five days.

The parties are directed to the header of this tentative ruling for further instructions.