Rejuvi Laboratory, Inc. v. Corso

Background

Rejuvi Laboratory, Inc. appealed orders of the United States Bankruptcy Court concerning Maria Corso’s claim in Rejuvi’s bankruptcy case. Corso had sued Rejuvi in the District Court of South Australia for negligence after Rejuvi’s tattoo-removal product was applied to her back and right ankle at a clinic in Adelaide. She alleged severe adverse reactions and multiple injuries. Rejuvi did not respond to the Australian lawsuit or appear, and the Australian court entered a judgment against Rejuvi for AU$1,020,508.55. Rejuvi later applied to set aside that judgment, but the application was denied.

After Rejuvi filed for bankruptcy, Corso filed a proof of claim based on the Australian personal-injury judgment. Rejuvi objected, arguing that the Australian court lacked personal jurisdiction over Rejuvi and that South Australia was a seriously inconvenient forum. The Bankruptcy Court ultimately allowed Corso’s claim in the amount of $1,118,958.80.

Issues and analysis

The district court considered whether Rejuvi was barred from challenging the Australian court’s personal jurisdiction because it had applied to set aside the default judgment. Under California’s Uniform Foreign-Country Money Judgments Recognition Act, a defendant’s voluntary appearance generally can prevent a later personal-jurisdiction challenge, unless the appearance was for the purpose of contesting jurisdiction. The court concluded that Rejuvi could pursue its challenge because the Australian rule governing an application to set aside a default judgment required the applicant to show both a lack of timely knowledge of the initiating process and a prima facie defense on the merits. Rejuvi’s application had been denied, and the record did not show that it had proceeded beyond that application to defend the merits.

The court then applied California’s personal-jurisdiction standards. Because California’s long-arm statute reaches as far as federal due process permits, the relevant question was whether Rejuvi had sufficient minimum contacts with South Australia. The court applied the specific-jurisdiction test, which asks whether the defendant purposefully conducted activities in the forum, whether the claim arose from or related to those activities, and whether exercising jurisdiction would be reasonable.

Rejuvi had an exclusive Australian distributor based in Queensland, and Rejuvi’s president had visited Australia twice to provide product seminars. But Rejuvi did not control how the distributor sold products or promotional materials, did not organize the seminars, and had not sent personnel to conduct seminars in South Australia. The court concluded that Rejuvi had directed activities at Australia generally but had not purposefully conducted business in or directed activities at South Australia. It therefore found that the South Australia Court lacked personal jurisdiction over Rejuvi.

Ruling

Judge Maxine M. Chesney reversed the Bankruptcy Court’s order allowing Corso’s claim and remanded the matter to the Bankruptcy Court for further proceedings consistent with the decision. The court did not reach Rejuvi’s separate argument that South Australia was a seriously inconvenient forum.