Reva Payrovi v. LG Chem America, Inc.

Background

Reva Payrovi alleged that, in March 2017, Payrovi’s daughter bought an LG HG2 18650 3000mAh lithium-ion battery through an online store operated by Ipurchase Online, doing business as Vape Society Supply. Payrovi alleged that, in February 2018, while in Texas, the battery exploded and caught fire after Payrovi placed it in a pant-leg pocket, causing second- and third-degree burns. The complaint asserted strict products-liability and negligence claims.

LG Chem America, Inc. and LG Chem, Ltd. each moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), which permits dismissal for lack of personal jurisdiction. LG Chem America is incorporated in Delaware and has its principal place of business in Atlanta, Georgia. It is a subsidiary within the LG Chem corporate structure and handles sales and distribution, not manufacturing. LG Chem, Ltd. is headquartered and has its principal place of business in Seoul, South Korea. The opinion states that LG Chem, Ltd. does not own or lease property, have employees, or maintain an office in California, and is not registered to do business there.

Both companies denied designing, manufacturing, distributing, advertising, or selling lithium-ion cells for individual consumers to use as standalone rechargeable batteries in electronic-cigarette or vaping devices. They also denied authorizing Vape Society to sell or distribute LG-branded cells for that use.

Personal-jurisdiction analysis

The court explained that California’s jurisdictional reach extends to the limits of constitutional due process. A court may exercise general jurisdiction when a company is essentially “at home” in the state, or specific jurisdiction when the claims arise from or relate to the company’s contacts with the state.

The court concluded that California did not have general jurisdiction over either company. LG Chem America was incorporated in Delaware and headquartered in Georgia, while LG Chem, Ltd. was headquartered in South Korea. The court also declined to attribute one company’s California contacts to the other because Payrovi had not made a preliminary showing of an agency relationship or another basis for treating the companies as one entity.

For specific jurisdiction, the court considered whether each company deliberately conducted activities in California and whether Payrovi’s injury arose from those activities. As to LG Chem America, Payrovi alleged that the company established local distributors, sold or delivered batteries to California consumers, advertised to and targeted California consumers, and sold to major California customers. The court found those allegations sufficient at the preliminary stage to show purposeful availment, meaning deliberate engagement with California.

The court found, however, that the record did not establish whether LG Chem America’s California marketing and distribution activities were connected to the battery sold through Vape Society. LG Chem America denied marketing or distributing the battery for individual vaping use, while Payrovi argued that the battery reached Vape Society through California suppliers targeted by LG Chem America. Because those facts were disputed, Payrovi had not yet made the required preliminary showing that the injury arose from LG Chem America’s California contacts.

As to LG Chem, Ltd., Payrovi alleged contacts involving investment, design, manufacturing, partnerships, and business with California companies. The court found that LG Chem, Ltd. purposefully availed itself of California but concluded that Payrovi had not shown that the company’s California contacts were connected to the battery injury. The court considered it implausible, based on the record, that LG Chem, Ltd. designed or developed this battery in California.

Jurisdictional discovery and disposition

Jurisdictional discovery is discovery directed at facts needed to determine whether the court has personal jurisdiction. The court denied Payrovi’s request for discovery concerning LG Chem, Ltd., finding that Payrovi’s theory about the company’s design activities in California was speculative and that further discovery was unlikely to establish jurisdiction.

The court authorized jurisdictional discovery concerning the extent and nature of LG Chem America’s advertising and marketing of the battery to California retailers such as Vape Society. The court stated that, if LG Chem America targeted and advertised to similar California retailers and Vape Society obtained its batteries through those suppliers, those facts could support a finding that the California conduct caused the injury.

The court granted LG Chem, Ltd.’s motion to dismiss for lack of personal jurisdiction. It granted Payrovi’s request for jurisdictional discovery as to LG Chem America and denied LG Chem America’s motion to dismiss without prejudice to renewing that motion after the discovery was completed. Only jurisdictional discovery requests could be served on LG Chem America, and disputes about the discovery’s scope were referred to the magistrate judge. The order addressed personal jurisdiction and did not decide the products-liability or negligence claims on their merits.