North v. Samsung SDI America, Inc.

Background

Joseph North brought a product-liability action after lithium-ion batteries for electronic cigarettes exploded in his pocket on May 16, 2017. The incident occurred while North was holding his child. His clothing caught fire, and he was taken by ambulance to a Texas emergency department, where he was diagnosed with first- and second-degree burns. He alleged that he suffered physical and emotional scarring and lost wages.

North asserted claims for strict liability, negligence, breach of implied warranty, negligent misrepresentation, and violation of California’s unfair competition law against Samsung SDI America, Inc. (SDIA), Samsung SDI Co. Ltd. (Samsung), and other defendants. He initially filed the action in California state court. The defendants removed it to federal court based on diversity jurisdiction, arguing that SDIA was a sham defendant whose citizenship should be disregarded.

Motion to Remand

North argued that SDIA was part of the batteries’ distribution chain and therefore could be liable under California product-liability law. He relied on allegations that the defendants acted as agents, employees, joint venturers, successors, alter egos, parents, subsidiaries, owners, or participants in the design, manufacture, sale, supply, distribution, marketing, advertising, or warranty of the batteries.

The court found those allegations were based on information and belief and were unsupported legal conclusions. It also considered declarations from SDIA Controller Jikwang Kim, who stated that SDIA did not design, manufacture, distribute, sell, or perform the other listed activities involving the 18650 lithium-ion batteries at issue. The court found this evidence clear, convincing, and uncontroverted. It concluded there was no legal basis for holding SDIA liable because SDIA was not in the batteries’ distribution chain.

The court therefore ruled that SDIA was a sham defendant and disregarded its citizenship for diversity-jurisdiction purposes. The court denied North’s motion to remand and denied his request for attorneys’ fees. The court also stated that SDIA would be dismissed as a sham defendant.

Motion to Dismiss or Transfer

After SDIA’s dismissal, Samsung was the only remaining defendant. Samsung moved to dismiss for improper venue or, alternatively, to transfer the case to the Eastern District of Texas, Sherman Division. The court did not decide whether venue was proper in California or whether it had personal jurisdiction over Samsung for purposes of the venue statute. Instead, it assumed without deciding that venue was proper and analyzed transfer under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses and in the interest of justice.

The court denied Samsung’s request to dismiss. It found no showing that North himself deliberately filed the case in the wrong court or acted in bad faith. The court then found that the transfer factors favored Texas. North did not reside in California, and California had no connection to the events alleged. The injury occurred in Texas, North’s medical records and treating physician were there, and nonparty witnesses could not be compelled to attend trial in California. The court also found that Texas had a greater interest in applying its law because North was injured there while he was a Texas resident. The remaining factors were neutral.

Disposition

Judge Edward J. Davila denied North’s motion to remand and request for attorneys’ fees, dismissed SDIA as a sham defendant, denied Samsung’s motion to dismiss for improper venue, and granted Samsung’s motion to transfer. The clerk was directed to transfer the action to the Eastern District of Texas, Sherman Division.