Shelton v. Air & Liquid Systems Corporation

Background

Frank J. Shelton, Jr. and Jennifer Schuyler filed an amended complaint against multiple defendants, including Superior Lidgerwood Mundy Corporation, which the opinion calls “SLM.” The complaint alleged that Shelton served in the United States Navy from approximately the mid-1960s to the early 1970s and worked as a machinist mate aboard the USS Constellation, USS Repose, and USS Haleakala. It alleged that he performed maintenance and repairs involving asbestos-containing equipment and later developed malignant mesothelioma.

The complaint asserted six causes of action: negligence, breach of implied warranty, strict liability, fraud and concealment, conspiracy to defraud and failure to warn, and loss of consortium. SLM moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), which allows a defendant to challenge the court’s personal jurisdiction over it. Personal jurisdiction is the court’s power to decide claims against a particular defendant.

Personal-Jurisdiction Standard

Because no federal statute governed personal jurisdiction in this case, the court applied California law. California permits jurisdiction to the extent consistent with the United States Constitution. The court explained that a defendant generally must have sufficient “minimum contacts” with California so that requiring the defendant to litigate there is fair. The opinion discussed general jurisdiction, which permits a court to hear all claims against a defendant in limited circumstances, and specific jurisdiction, which requires a connection between the defendant’s California-related activities and the claims.

For specific jurisdiction, the court applied the Ninth Circuit’s three-part test: the defendant must purposefully direct activities toward California or purposefully conduct activities there; the claims must arise from or relate to those activities; and exercising jurisdiction must be reasonable.

Court’s Analysis

The plaintiffs argued that SLM’s placement of its pumps into the stream of commerce was enough to establish jurisdiction. The court rejected that theory, explaining that, in the Ninth Circuit, merely selling a product to a California resident or placing a product into the stream of commerce is not enough without additional conduct purposefully directed at California.

The complaint alleged generally that SLM and other defendants were doing business in California and had conducted business in Alameda County. SLM submitted a declaration from its vice president and chief financial officer disputing those allegations. According to the declaration, SLM was not headquartered or principally located in California, had never manufactured its products there, had not sold its pumps there on a retail or commercial basis, was not licensed to do business there, had no California agent for service of process, owned no California real estate, and had no California employees, agents, or bank accounts. The declaration stated that SLM had sold and shipped 213 pumps to a United States Navy contract in California between 1978 and 1986 and had shipped one winch to Los Angeles County in 2011 and 2017.

The plaintiffs did not provide evidence refuting the facts in SLM’s declaration. The court also found that the plaintiffs had not alleged facts showing additional conduct, such as advertising in California, designing products for the California market, or using a sales agent there to distribute or sell the products. The court therefore found that the plaintiffs had not made the required preliminary showing that SLM had sufficient contacts with California.

Ruling

The court granted SLM’s motion to dismiss with leave to amend. The court also granted the plaintiffs’ request for jurisdictional discovery. It stated that, if appropriate, the plaintiff was to file an amended complaint by January 10, 2022, and that the defendant was to respond within 21 days afterward. Judge Yvonne Rogers issued the order.