# Opposition Brief — Dorel Industries, Inc. v. Superior Court of California, Santa Clara County (No. 06-5)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2006

## Text

a | FILED
U AUG 2 - 2006
No. 06-05 OFFICE OF THE cos
IN THE

Supreme Court of the United States

DOREL INDUSTRIES, INC.,
Petitioner,
v.

SUPERIOR COURT OF SANTA CLARA COUNTY,
CALIFORNIA,

Respondent.

(Jonathan Jackson III, by and through his Guardian ad Litem,
Jocelyn Sullivan, and Jocelyn Sullivan, Real Parties in Interest)

ON PETITION FOR A WRIT OF CERTIORARI TO THE
CourT OF APPEAL OF CALIFORNIA, SIXTH DISTRICT

BRIEF IN OPPOSITION
Rosert H. BOHN DANIEL U. SMITH
Boun & Bonn LLP Counsel of Record
152 North Third Street Law OFFICE OF DANIEL U. SMITH
Suite 200 21 Rancheria Road
San Jose CA 95112 Kentfield, CA 94904
(408) 279-4222 x 302 (415) 461-5630

Attorneys for Real Parties in Interest

202540 ce

COUNSEL PRESS
(800) 274-3321 * (800) 359-6859

TABLE OF CONTENTS

Page
TABLE OF CITED AUTHORITIES ......cccee: ill
BRIEF FOR REAL PARTIES IN INTEREST
ase 5 6 6b dees 6 vb e0e4e es l
DEAlemens OF THE CASE .....cccccccveecs 4
A. Petitioner’s business is child restraints.
Petitioner delegated design and manufacture
| 4
B. Petitioner is not a mere passive investor. ... 6
1. Petitioner and DJG work “closely” on
design of child restraints and other
a 6
2. Petitioner conducts activities in
DR I EE, occ eevee vesvece 7
3. Petitioner sells child restraints. ....... 7
C. Petitioner regards its subsidiaries’ activities
SS Cee re 7
D. The trish Court rilimg. .... 2... ccc cee eee. 9

E. The court of appeal ruling ............... 9

il

Contents
Page
REASONS FOR DENYING THE PETITION ..... 10
A. No conflict: California and federal courts
apply the same rule, asserting jurisdiction
where the subsidiary conducts the parent’s
| RA ee ee OEP E wT ro rer 10
ee I ee ee il
ie: SL ab wins save Weced omen 13
3. Petitioner’s cases create no conflict. ... 15
B. The decision below raises no “vitally
SIE I. bs 5 n.d ence ses onc uQeRehs 19
IS cue ccktascvscancwsdekeatnn’s 22

AONE S55 So sey ox a ckss eee, la

lil

TABLE OF CITED AUTHORITIES

CASES

Page

Asahi Metal Industry Co., Ltd. v. Superior Court,

OU PIRI oon iio oo vce occas

Bulova Watch Co., Inc. v. K. Hattori & Co., Ltd.,

508 F. Supp. 1322 (E.D.N.Y. 1981) ......

Burstein v. State Bar of California,

693 F.2d 511 (Sth Cir. 1982) ...........

Chan v. Society Expeditions, Inc.,
“ 39 F.3d 1398 (9th Cir. 1994)

Curtis Publishing Co. v. Cassel,

302 F.2d 132 (10th Cir. 1962) ..........

Digi-Tel Holdings, Inc.
v. Proteq Telecommunications (PTE), Ltd.,

89 F.3d 519 (8th Cir. 1996) ............

DVI v. Superior Court,
128 Cal. Rptr. 2d 683 (Cal. Ct. App. 2002)

Empire Steel Corp. v. Superior Court,

ee Be i) Pet Sere err

F. Hoffman-La Roche v. Superior Court,

cope Be ge. nD

oe ew were eeeee

iv

Cited Authorities
Page

Freeman v. Gordon & Breach, Science Publishers, Inc.,
390 ¥. Supp. SUISAS.DON.Y. F973) occ ddccess 14

Gallagher v. Mazda Motors of America, Inc.,
781 F. Supp. 1079 (E.D. Pa. 1992) .......... a, a 45

Gelfand v. Tanner Motor Tours, Ltd..
Dee Wee FEO Ge CH, TOOEP oo iis pc he ed cavnes 14

International Shoe Co. v. Washington,
Pee UA OED 5 8 aR hee awd RS 20

K.J. Schwartzbaum, Inc. v. Evans, Inc.,
44 F.R.D. 589 (S.D.N.Y. 1968) ........cceee 11, 20

McGee v. International Life Ins. Co.,
SAI, AAAI TS 63 4b Ks a eee 21

Meier v. Sun Int'l Hotels, Inc.,
Zee 0.56 3208 CTC. ZOU) sec eccsiseves 14

Mirrow v. Club Med. Inc.,
oi Re oe Ste aes Oe | ere 15

Mylan Laboratories, Inc. v. Akzo, N.V.,
Se EG SEE kh odin S eb aa oe eer aes 15

Paneno v. Centres for Academic
Programmes Abroad Lid.,
13 Cal. Rptr. 3d 759 (Cal. Ct. App. 2004) ...... 12

Cited Authorities
Page

Project Promotions, Inc. v. Cousteau,

Gee 0.26 Fes CG. TGTS) cccccccvcvcvesss 18
Religious Technology Center v. Liebreich,

poe & Ge Le ee re 17, 18
Sonora Diamond Corp. v. Superior Court,

99 Cal. Rptr. 2d 824 (Cal. Ct. App. 2000) ...... 12
Spectacular Promotions, Inc. v. Radio Station WING,

232 F. Supp. 734 (E.D.N.Y. 1967) ...ccccveves 14
Sunrise Toyota, Ltd. v. Toyota Motor Co.,

Fo Pee. OEP Ce Me ADTE) ccc cc ccvesce 14
Tokyo Boeki (U.S.A.), Inc. v. S.S. Navarino,

324 F. Supp. 361 (S.D.N.Y. 1971) ............ 14
Wells Fargo & Co. v. Wells Fargo Express Co.,

se we Te A og) 14
Wiwa v. Royal Dutch Petroleum Co.,

pep ee ee ee 14
RULES
CG SS RE i Sig 8 We ke wd eit ee see baa Oo 3

l

BRIEF FOR REAL PARTIES IN INTEREST
IN OPPOSITION

Petitioner Dorel Industries, Inc.—whose business
includes the design, manufacture, and sale of child
restraints—was sued because on December 11, 2003,
Jonathan Jackson III was severely injured in an automobile
accident while riding in one of Petitioner’s defective child
booster seats. The defendants included Dorel Juvenile Group,
Inc. (DJG), and Petitioner, the parent of DJG through an
intermediary corporation. Pet. App. A la.

The Petition for Certiorari challenges a California court
of appeal ruling exercising general personal jurisdiction over
Petitioner.

That ruling was justified for several reasons

1. From the start, Petitioner’s business has incMded the
design, manufacture, and sale of child restraints. In recent
years, Petitioner has delegated some—but not a!]—of that
business to DJG (whose contacts with California are not
disputed). If DJG did not perform the functions delegated to
it, Petitioner would have to perform those functions.

2. In supervising DJG’s conduct of its business,
Petitioner is not a mere passive investor. Petitioner and DJG
work “closely” on designing child restraints and other
business activities. Petitioner conducts business activities in
California for DJG. And Petitioner still carries on part of the
business itself—selling child restraints in Canada.

3. Petitioner presents itself to the public as a single entity
in SEC filings and annual reports, describing its subsidiaries’
activities as its own.

2

Finally, the exercise of California jurisdiction over
Petitioner is not unreasonable. Petitioner has undertaken its
own activities in California—obtaining a license from the
State of California and, in a California lease procured by
Petitioner for DJG, agreeing to be sued in California courts.

These facts show that California’s exercise of jurisdiction
over Petitioner did not violate due process.

Moreover, the rationale below does not conflict with
federal circuit court decisions. Federal courts, like the court
below, exercise general jurisdiction over a parent corporation
where (as here) a subsidiary corporation with forum contacts
performs “representative services” that in the absence of the
subsidiary the parent would have to perform itself. As shown
below, this rationale is adopted in 13 federal decisions.
Moreover, the federal decisions cited by Petitioner create no
conflict with the decision below because they are either
inapposite or apply the rule applied below—that jurisdiction
may be asserted where (as here) a subsidiary with sufficient
forum contacts assists the parent corporation’s business by
performing services the parent would otherwise have to
perform itself.

Hence, Petitioner’s claim—that the opinion below
supposedly “eliminates the distinction between parent and
subsidiary companies” (Pet. 8)—is simply not true. Indeed,
the opinion below rejected jurisdiction “where the parent is
merely a holding-company whose only business pursuit is
the investment in the subsidiary.” Pet. App. A 15a. Similarly,
the trial court reasoned that “neither ownership nor control
of a subsidiary corporation by a foreign parent corporation,
without more, subjects the parent to the jurisdiction of the
state where the subsidiary does business.” Pet. App. B 28a
(citation omitted). Hence, contrary to Petitioner’s claim, the

3

California courts below recognize the distinction between
parent and subsidiary companies and reject jurisdiction
simply because the defendant is the parent of a subsidiary
with forum contacts.

The court below agreed with a multitude of federal courts
that allow jurisdiction under the “representative services
doctrine” where (as here) a subsidiary with sufficient forum
contacts “‘provides services beyond “mere solicitation” and
these services are sufficiently important to the foreign
corporation that if it did not have a representative to perform
them, the corporation’s own officials would undertake to
perform substantially similar services.’” Pet. App. A 14a
(quoting Chan v. Society Expeditions, Inc., 39 F.3d 1398,
1405 (9th Cir. 1994)). The trial court applied the same
representative services doctrine to assert jurisdiction over
Petitioner, also citing federal authority: Gallagher v. Mazda
Motors of America, Inc., 781 F. Supp. 1079, 1085 (E.D. Pa.
1992). Pet. App. B 29a.

In sum, California courts assert jurisdiction over a parent
corporation based on the same rationale as federal courts.
Hence, the conflict that Petitioner imagines between the
opinion below and federal courts simply does not exist.
Moreover, any conflict between California’s intermediate
appellate courts and federal appellate courts does not create
a “compelling reason” for granting certiorari. Sup. Ct. R.
10(c). The petition should therefore be denied.

4

STATEMENT OF THE CASE

A. Petitioner’s business is child restraints. Petitioner
delegated design and manufacture to its subsidiary
DJG.

Petitioner, an active operating company, was founded in
Canada 1962 to design and manufacture child restraints in
Canada. Pet. App. A 3a. Petitioner “is the sole owner of all
patents and manufacturing licenses for its products.” Brief
in Opp. App. A 4a, § 7(1). In 1987, Petitioner merged with
Ridgewood Industries, a Canadian corporation. Through a
Canadian public offering, Petitioner became publicly-owned.
Ibid. In 1988 Petitioner expanded into the United States by
buying Cosco, Inc. (corporate predecessor of DJG). Ibid.
Cosco was a leading manufacturer of child restraints in the
United States. /bid.

Petitioner transferred design and manufacturing activities
to “facilities in. . . California,” as described by the trial court:

In the late 1980s, Petitioner sought to expand its
business internationally and thus purchased two
juvenile product manufacturers located in the
United States, Cosco, based in Indiana and
Infantino, Inc., based in San Diego. Cosco was
manufacturing a line of child care seats that was
competing with Petitioner’ products. After the
acquisition, Petitioner ceased manufacturing
juvenile products in Montreal and began
importing these products from the facilities in
Indiana and California.

Pet. App. B 26a.

5

Petitioner continued to make child products, including car
seats, in Canada until 1995 or 1996, when it began importing
Cosco’s restraints to Canada. Pet. App. A 43. Thereafter,
Petitioner had its juvenile products for both Canada and the
United States designed and manufactured at Cosco in the United
States. /bid.

“(I]t was undisputed that DJG manufactured juvenile
products that Petitioner had previously manufactured itself for
sale to Petitioner’s Canadian customers.” Pet. App. A 18a.

Petitioner is now sole owner of Dore! U.S.A., Inc. (Dorel-
USA), a Delaware corporation with its principal place of
business in Indiana. Pet. App. A 3a. Dorel-USA is the sole owner
of DJG. Pet. App. A 3a.

By 2003, 73 percent of sales by Petitioner and its
subsidiaries were in the United States. /bid.

“(T]here was evidence that DJG, the Indiana subsidiary,
over which there is no dispute as to jurisdiction, performed
functions that were compatible with and assisted the parent
company (Petitioner) in the pursuit of the parent’s own business
as a Canadian operating company.” Pet. App. A 19a.

For example, “the Canadian parent company [Petitioner]
used its U.S. subsidiary [DJG] to design and manufacture the
car seats, a task it otherwise would have done itself, to meet the
demands of its Canadian customers.” Pet. App. A 19a-20a.

In 2000, Petitioner acquired Safety Ist, a manufacturer of
juvenile safety devices and merged Safety 1st and Cosco to form
DJG, which continued the Cosco business of designing and
manufacturing child safety seats for the United States and
Canada. Pet. App. A 4a.

6

B. Petitioner is not a mere passive investor.
Petitioner is not a mere passive investor:

(1) Petitioner and DJG work “closely” on design of child
restraints and other business activities.

(2) Petitioner conducts some business activities in
California for DJG.

(3) Petitioner is an operating company, selling child
restraints in Canada.

1. Petitioner and DJG work “closely” on design of
child restraints and other business activities.

“Petitioner worked closely with DJG to insure that the car
seats met the requirements of the Canadian government with
regard to safety and labeling and the demanas of the Canadian
market place in terms of style.” Pet. App. A 19a (emphasis
added). “This work was done by DJG-Canada, a division of
Petitioner that was not a separate subsidiary company.” Ibid.

(emphasis added).

“There was also evidence that DJG-Canada, got involved
in customer service issues related to DJG products that were
manufactured in the U.S. and distributed in Canada. /bid

Moreover, Petitioner provides DJG “financing, insurance,
and procurement”: For its “United States subsidiaries,”
Petitioner “provides basic structural services, such as
arrangements for financing, insurance, and procurement,” with
the subsidiaries engaged in “designing, manufacturing,
marketing, and distributing quality products.” Pet. App. A 4a.

7

2. Petitioner conducts activities in California for DJG.

Petitioner conducts several activities in California that
benefit DJG:

* Petitioner guaranteed the lease of a California
warehouse for DJG. Pet. 5; Pet. App. A 13a.

* Petitioner’s lease guarantee has a forum selection clause
selecting Orange County, California. Pet. 5.

* Petitioner has a license from the California Bureau of
Home Furnishings and Thermal Insulation. Pet. 5; Pet.
App. A |3a-14a.

3. Petitioner sells child restraints.

A division of Petitioner called DJG-Canada buys juvenile
products from DJG and sells them to Canadian customers. Pet.
App. A 4a-Sa. “DJG-Canada is a division of Petitioner and not
a separate subsidiary company.” Pet. App. A 5a. “Petitioner
continued its traditional business of manufacturing and
distributing juvenile products in Canada, including car seats,
and. . . relied on DJG to design and manufacture those car seats.”
Pet. App. A 19a.

C. Petitioner regards its subsidiaries’ activities as its own.

Ample evidence showed that DJG was carrying on the
business of Petitioner.

|. Petitioner’s 2003 annual report filed with the
Securities and Exchange Commission describes the
manufacture and sale of car seats as the business of
Petitioner—anot of its subsidiaries:

8

e Petitioner is “a global manufacturer of consumer
products.”

¢ Child restraints are part of the “product offering” of
“Dorel.”

¢ The manufacture and sale of child restraints in the
United States are Petitioner's “business,” conducted
by its “juvenile products segment” (nor subsidiary)
(emphasis added).

Pet. App. A Sa.

2. Dorel Industries’s annual reports describe DJG, the
entity that manufactures the child safety seats in Indiana, as
a “division.” Pet. App, B 26a (emphasis added).

3. “DJG employees are Dorel Industries employees . . .
carry|ing| out Dorel Industries’ business, including the sale
of juvenile products, such as car seats, in California.”
Pet. App. B 26a.

4. Dorel [Industries employees participated in and
approved DJG design and marketing activities:'

¢ “Two Dorel Industries’ employees, Liz Klaus and
David Hall, participated in design meetings for
the Cosco Grand Explorer Shield Booster Seat.”
Pet. App. B 26a.

1. This evidence presented by Real Parties in Interest was
disputed by Petitioner. The trial court did not expressly resolve the
dispute, but its ruling, denying Petitioner’s motion to quash, impliedly
accepted Real Parties’ version presented above.

9

¢ “fA]pproval” by Klaus and Hall is “required for
details such as product labels as well as design
features.” Ibid. (emphasis added).

¢ Jeffrey Segal, Dorel Industries’ Executive Vice
President of Sales and Marketing, “regularly
participa[ted] in marketing and sales activities with
DJG customers,” attended “product development
meetings in Indiana,” “received copies of
the [product development] meeting minutes
each month,” and “offered opinions” on DJG
expenditures. Pet. App. B 27a.

D. The trial court ruling.

Based on this evidence, the trial court denied Petitioner’s
motion to quash, asserting jurisdiction over Petitioner under
the following test: “[I]f a parent uses a subsidiary to do what
it otherwise would have done itself, it has purposely availed
itself of the privilege of doing business in the forum.”
Pet. App. B 29a. In so ruling, the trial court cited a federal
decision, Gallagher v. Mazda Motors of America, Inc., 781
F. Supp. 1079, 1085 (E.D. Pa. 1992).

E. The court of appeal ruling.

The opinion below denied Petitioner’s challenge to the
trial court’s ruling under the following test:

A foreign corporation is doing business in
the forum state under this theory when its
representative in the forum state “provides
services beyond ‘mere solicitation’ and these
services are sufficiently important to the foreign
corporation that if it did not have a representative

10

to perform them, the corporation’s own officials
would undertake to perform substantially similar
services.”

Pet. App. A 14a.

REASONS FOR DENYING THE PETITION

Petitioner asserts a conflict between the ruling below
and federal Circuit court rulings. Petitioner’s Question
Presented asserts that California’s “representative services
doctrine”—attributing to foreign parent corporations the
contacts of their subsidiaries when those subsidiaries assist
in the parent’s business—’’conflicts with every federal Circuit
that has considered the issue. . . .” Pet. i; 11 (“frank conflict”);
13 (“other courts conflict”); 15 (“stark conflict”).

In truth, Petitioner’s claim of a conflict between
California’s courts and federal courts is simply wrong, as
shown below.

A. No conflict: California and federal courts apply the
same rule, asserting jurisdiction where the subsidiary
conducts the parent’s business.

California and federal courts apply the same test when
asked to assert jurisdiction over a parent corporation. Under
that test, where (as here) the parent corporation is not a mere
holding company but is an active operating company using a
subsidiary to conduct “representative services” for the
parent’s corporation’s business, jurisdiction may be asserted
over the parent corporation (based on the subsidiary’s
forum contacts). Using the subsidiary’s contacts to support
jurisdiction over the foreign parent corporatiea in such

1]

circumstances is justified for two reasons: (1) the subsidiary is
performing services the parent corporation would otherwise have
to perform in the forum itself; and (2) to reject jurisdiction over
the parent corporation where the subsidiary 1s assisting the parent
corporation’s business would allow the parent corporation to
“hide behind the corporate fiction” to evade accountability
for injurious effects the parent caused in the forum.
K.J. Schwartzbaum, Inc. v. Evans, Inc., 44 F.R.D. 589, 590-591
(S.D.N.Y. 1968).

1. California courts.

Under the test articulated by the California intermediate
appellate court below, a subsidiary’s forum contacts support
jurisdiction over a foreign parent corporation where (as here)
the subsidiary “provides services beyond ‘mere solicitation’
and these services are sufficiently important to the foreign
corporation that if it did not have a representative to perform
them, the corporation’s own officials would undertake to
perform substantially similar services.” Pet. App. A 14a.

This statement of the “representative services doctrine” is
consistent with California decision for the last half century.

For example, in 1961 the California Supreme Court ruled
that if a subsidiary corporation conducts the parent’s “economic
activity,” the parent corporation is subject to personal

jurisdiction:

Empire [the parent corporation] has engaged in
economic activity within this state and obtained the
benefits and protection of our laws . . . through the
instrumentality of a subsidiary corporation. . . .

Empire Steel Corp. v. Superior Court, 56 Cal.2d 823, 834 (1961)
(emphasis added).

12

Similarly, a California appellate court has said
jurisdiction exists over a foreign parent “when the local
subsidiary performs a functions that is compatible with, and
assists the parent in the pursuit of, the parent’s own
business. ...” Hoffman-La Roche vy. Superior Court, 30
Cal.Rptr.3d 407, 419 (Cal.Ct.App. 2005)(emphasis in
original); accord, Paneno v. Centres for Academic
Programmes Abroad Ltd., 13 Cal.Rptr.3d 759, 765
(Cal.Ct.App. 2004)Qurisdiction over a parent that “uses a
subsidiary to do what it otherwise would have done itself
...)} DVI v. Superior Court, 128 Cal.Rptr.2d 683, 692
(Cal.Ct.App. 2002) (jurisdiction where “the local subsidiary
performs a function that is compatible with, and assists the
parent in the pursuit of, the parent’s own business.”)
(emphasis in original); Sonora Diamond Corp. v. Superior
Court, 99 Cal.Rptr.2d 824, 839 (Cal.Ct.App. 2000)(same).

These uniform statements of the “representative services
doctrine” have resulted in uniform decisions—rejecting
jurisdiction where the parent is a passive holding company.
For example, where a Swiss parent drug company was
“a true passive ho!lding company that globally invests in
pharmaceutical subsidiaries,” the domestic entities were not
“mere instrumentalities” of the Swiss corporation and the
California court refused jurisdiction over the parent.
F. Hoffman-La Roche v. Superior Court, supra, 30
Cal.Rptr.3d at 422; accord, DVI v. Superior Court, supra
(no jurisdiction over foreign parent corporation where
subsidiary did not perform representative services for the
parent); Sonora Diamond Corp. v. Superior Court, supra (no
jurisdiction over foreign parent corporation that was merely
a passive investor).

13

The rule stated in these California decisions—barring
jurisdiction over a mere passive investor parent corporation,
but allowing jurisdiction where the subsidiary assists in the
parent’s own business—does not conflict with federal court
rulings but is echoed in a multitude of federal decisions, as
shown below.

2. Federal courts.

Federal courts articulate the same test stated by
California courts for jurisdiction over a foreign parent
corporation—rejecting jurisdiction where the parent is a
passive holding company, but asserting jurisdiction where
the parent conducts a business with a subsidiary performing
services the parent would otherwise have to perform itself.

For example, in 1962 the Tenth Circuit articulated the
“representative services doctrine” as follows: where the
activities of a “wholly owned subsidiary [as] agent” of a
foreign corporation “amount to doing business of the parent,
the parent is subjected to the in personam jurisdiction of the
state... .” Curtis Publishing Co. v. Cassel, 302 F.2d 132,
137 (10th Cir. 1962)(emphasis added).

This rule is followed by a multitude of federal courts.

The Ninth Circuit applied a jurisdictional test similar to
the test in Curtis in Chan v. Society Expeditions, Inc., 39
F.3d 1398, 1405 (9th Cir. 1994), after remand, 123 F.3d 1287
(1997):

[A] foreign corporation is doing business in [the
forum] “in the traditional sense” when its [forum]
representative provides services beyond “mere

14

solicitation” and these services are sufficiently
important to the foreign corporation that if it did
not have a representative to perform them, the
corporation’s own officials would undertake to
perform substantially similar services.

Chan, supra, 39 F.3d at 1405 and fn. 9; accord, Wells Fargo
& Co. v. Wells Fargo Express Co., 556 F.2d 406, 423 (9th
Cir. 1977).

The Second Circuit espouses the same rule—that a
foreign corporation is subject to jurisdiction where its
subsidiary “renders services on behalf of the foreign
corporation that . . . are sufficiently important to the foreign
entity that the [foreign] corporation itself would perform
equivalent services if no agent were available.” Wiwa v. Royal
Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000); accord,
Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116, 121 (2d
Cir. 1967); Freeman v. Gordon & Breach, Science Publishers,
Inc., 398 F.Supp. 519, 521 (S.D.N.Y. 1975); Sunrise Toyota,
Ltd. v. Toyota Motor Co., 55 F.R.D. 519, 528-529 (S.D.N.Y.
1972); Tokyo Boeki (U.S.A.), Inc. v. S.S. Navarino, 324 F.
Supp. 361, 366 (S.D.N.Y. 1971); Spectacular Promotions,
Inc. v. Radio Station WING, 272 F.Supp. 734, 736 (E.D.N_Y.
1967).

The Eleventh Circuit also applies this rule to assert
jurisdiction over international foreign parent corporations
deemed to be doing business in the forum state through a
subsidiary that promotes the parent’s business. Meier v. Sun
Int’l Hotels, Inc., 288 F.3d 1264, 1275 (11th Cir. 2002)
(Florida subsidiary promoting travel for Bahamian parent
corporation), citing Wiwa, supra, 226 F.3d at 95.

15

Similarly, “allagher v. Mazda Motor of America, Inc.,
781 F.Supp. | 1084-1085 (E.D.Pa. 1992) said jurisdiction
exists Over a fu.scign parent where the subsidiary engages in
“activities that, but for the existence of the subsidiary, the
parent would have to undertake itself.” /d. at 1084. “Put
another way, if a parent uses a subsidiary to do what it
otherwise would have done itself, it has purposely availed
itself of the privilege of doing business in the forum.
Jurisdiction over the parent is therefore proper.” /d. at 1085.
Gallagher cited other district court decisions stating the same
test for jurisdiction over a foreign parent corporation. E.g.,
Mirrow v. Club Med. Inc., 118 F.R.D. 418, 419-420 (E.D.Pa.
1986)(allowing jurisdiction over the parent corporation
because the subsidiary “performs a function that [the parent
corporation] would otherwise have to perform. .. .”); Bulova
Watch Co., Inc. v. K. Hattori & Co., Ltd., 508 F.Supp. 1322,
1342 (E.D.N.Y. 1981)(same).

In sum, federal courts uniformly assert jurisdiction over
a foreign parent corporation on the ground that the foreign
parent is present in the forum through a subsidiary’s activities
which, if the subsidiary did not exist, the parent corporation
would have to perform itself.

3. Petitioner’s cases create no conflict.

Petitioner cites four cases as supposedly conflicting with
the decision below. But Petitioner’s analysis of these cases
is flawed. In truth, three of these cases are inapposite, and
the fourth applies the rationale stated in the foregoing
California and federal cases.

Petitioner first cites Mylan Laboratories, Inc. v. Akzo,
N.V., 2 F.3d 56 (4th Cir. 1993). But Mylan does not conflict

16

with the ruling below because it was decided under a different
state-law test hinging on “control”—allowing jurisdiction
Over a parent Corporation only if the parent exercised
“considerable contro/ over the activities of the subsidiary.”
Id. at 61 (emphasis added). By contrast, the parent
corporation’s control is not an essential element for
jurisdiction over the parent corporation where (as here) the
subsidiary performs essential services to advance the parent’s
business.

Petitioner next cites Digi-Tel Holdings, Inc. v. Proteq
Telecommunications (PTE), Ltd., 89 F.3d 519 (8th Cir. 1996).
But Digi-Te/l, which rejected jurisdiction over a foreign
subsidiary (Proteq)* despite forum activities by the foreign
parent corporation (Goldtron), does not conflict with the
ruling below for several reasons.

First, Digi-Te/, adopted the same reasoning as the court
below:

In determining whether “minimum contacts”
exist, contacts with the forum state that are made
on behalf of the defendant by others may be
considered. The Supreme Court has indicated that
“when commercial activities are ‘carried on in
behalf of an out-of-state party those activities
may sometimes be ascribed to the party, at least
where [it] 1s a ‘primary participan[t]* in the

2. Digi-Tel agreed to buy cell phones from Major, which in
turn agreed to buy those phones from Proteg. After Proteq failed to
deliver the phones, Digi-Tel sued Proteq, asserting Digi-Tel’s rights
as third-party beneficiary of the Major/Proteq agreement and as
assignee of Major’s rights under that agreement.

17

enterprise and has acted purposefully in directing
those activities.” Burger King, 471 U.S. at 480
n. 22, 105 S.Ct. at 2186 n. 22 (citations omitted).

Digi-Tel, supra, 89 F.3d at 523-524.

Second, Digi-Te/ rejected jurisdiction because the forum
contacts of both parent and subsidiary were insufficient
(unlike the instant case). For example, in Digi-7Je/ the foreign
parent corporation entered the forum to register its own
trademark for a wide range of products (fax machines;
cassette players; security equipment) including cell phones,
the foreign subsidiary’s business. But the parent’s forum
activities pertained to a cell phone different from the phone
described in the subsidiary’s forum contract. Though the
parent did attempt to settle Digi-Tel’s claim against Proteq,
public policy bars settlement discussions from providing
“contacts” for jurisdictional purposes, Digi-Te/, supra, at
524-525, and no evidence showed the parent’s settlement
discussions were “conducted primarily for the benefit of or
at the direction of Proteq.” /d. at 525.

Third, the type of jurisdiction addressed in Digi-Te/ was
“specific jurisdiction,” requiring the alleged contacts to relate
to the dispute leading to the suit (id. at 523, fn. 4), not
“general jurisdiction,” addressed in the opinion below.

Because of these fact-specific reasons for rejecting
jurisdiction in Digi-Te/, that decision does not conflict with
the ruling below.

Petitioner next cites Religious Technology Center v.
Liebreich, 339 F.3d 369, 374 (Sth Cir. 2003). But this decision

18

does not conflict with the decision below because Religious
Technology did not involve jurisdiction over a foreign parent
corporation based on a local subsidiary carrying on the
parent’s business. Rather, Religious Technology involved the
general jurisdiction over an out-of-state estate where (1) the
residence of the estate representative (Liebreich) was in the
forum state and (2) the representative conducted “sporadic
Estate-related activities” in the forum. Religious Technology
rejected general jurisdiction for reasons unrelated to the
instant case: (1) the representative’s personal residence in
the forum was not in a representative capacity, and (2) the
representative had not engaged in “a systematic and
continuous stream of activities tying the Estate to Texas.”
Id. at 374-375. Religious Technology did not cite or discuss
any decisions involving jurisdiction over a foreign parent
corporation. Hence, Religious Technology’s rejection of
general jurisdiction over the representative of an out-of-state
estate does not conflict with the ruling below.

Finally, Petitioner cites Project Promotions, Inc. v.
Cousteau, 495 F.2d 483 (5th Cir. 1974), partial overruling
recognized in Burstein v. State Bar of California, 693 F.2d
511,518, fn. 12 (Sth Cir. 1982). But Project Promotions did
not discuss, let alone criticize, basing jurisdiction over a
parent corporation on the subsidiary’s “representative
services” in the parent corporation’s business. Rather this
case applied an agency theory to reject jurisdiction over the
parent for lack of “evidence that the parent exercised the
type of control necessary to ascribe to it the activities of the
subsidiary.” /d. at 493. Because Project Promotions rejected
jurisdiction for lack of evidence of control, this ruling under
the different agency test does not conflict with the decision
below, which also declined to impose jurisdiction under an
agency theory.

19

As shown. the decisions that Petitioner claims to conflict
with the ruling below raise no conflict at all—either in their
rationales or in their results.

B. The decision below raises no *‘vitally important” issue.

In Part “C” the Petition claims that “resolution of the
conflict is vitally important.” Pet. 17-23. This claim has no
merit.

First, as shown above, California decisions and federal
decisions do not conflict over the standard for asserting
jurisdiction over foreign parent corporations. Hence, the
decision below raises no “vitally important” issue.

Moreover, none of the values cited by Petitioner—
”*Commercial Importance,” “Importance of Due Process
Values,” “International Importance”—are threatened by the
decision below.

Regarding “commercial importance,” Petitioner’s claim
that the decision below leaves foreign parent curporations
in “an unjustified state of uncertainty” (Pet. 18) is simply
wrong. The test articulated by California and federal courts
is quite specific, informing foreign parent corporations they
are subject to jurisdiction if another corporation performs
for the parent “representative services” the parent would
otherwise have to perform itself.

Regarding due process, tnat value is protected by the
“representative services doctrine.” Under that doctrine,
jurisdiction over passive foreign holding companies is barred,
while jurisdiction over foreign parent companies that conduct
business through “representative services” of subsidiaries is
allowed.

20

Indeed, the “representative services doctrine” is supported
by /nternational Shoe Co. v. Washington, 326 U.S. 310 (1945).
International Shoe was a foreign corporation with no office or
inventory in Washington, and International Shoe made no
contracts in Washington. /d. at 313. International Shoe was
represented in Washington by its salesmen, who displayed the
company’s products and solicited orders transmitted to
St. Louis for acceptance or rejection. These salesmen supported
personal jurisdiction over International Shoe by creating the
company’s “presence” in Washington based on “activities
carried on in its behalf by those who are authorized to act for
it.” Id. at 316, 320 (evaluating “activities carried on in behalf
of appellant in the State of Washington. . . .”)(emphasis added).
Hence, the ruling below complies with /nternational Shoe’s
due process requirements because Petitioner’s “presence” in
California rests on “activities carried on in its behalf,” as
International Shoe dictates.

Accepting Petitioner’s contrary argument against
jurisdiction would reduce the due process clause to a sham,,.
allowing foreign parent corporations whose subsidiaries advance
the parent’s business to avoid jurisdiction simply by “hid{ing]
behind the corporate fiction.” K./. Schwartzbaum, Inc. v. Evans,
Inc., 44 F.R.D. 589, 590-591 (S.D.N.Y. 1968).

Finally, regarding “international importance,” the decision
below threatens no unfairness to an alien corporate defendant.
Petitioner thrust itself into the United States by becoming deeply
involved in the business activities of DJG, its USA subsidiary.
Petitioner has further thrust itself into California (1) by obtaining
a license in its own name from the California Bureau of Home
Furnishings and Thermal Insulation (Pet. 5; Pet. App. A 13a-

21

14a), (2) by guaranteeing the lease of a California warehouse

for DJG (Pet. 5; Pet. App. A 13a), and (3) by agreeing under
that lease’s forum selection clause to be sued in Orange
County, California. Pet. 5. As this Court has noted, “modern
transportation and communications have made it much less
burdensome for a party sued to defend himself in a State
where he engages in economic activity.” McGee v.
International Life Ins. Co., 355 U.S. 220, 223 (1957).

Hence, for Petitioner to defend this suit in California
will impose only a minima! burden that Petitioner a/ready
accepted by agreeing to be sued in Orange County. This
minimal burden contrasts sharply with the burden that would
have been borne by the Japanese defendant with no United
States contacts in Asahi Metal Industry Co., Ltd. v. Superior
Court, 480 U.S. 102 (1987).

22
CONCLUSION

The conflict asserted by Petitioner between the decision
below and federal authorities simply does not exist. As
shown, California and federal courts uniformly assert
jurisdiction where a subsidiary with forum contacts performs
“representative services” that promote the business of the
foreign parent corporation. Because this “representative
services” test for jurisdiction conforms to /nternational Shoe,
the decision below raises no “vitally important” issue.

The Petition should be denied.

Respectfully submitted,
Daniet U. SMITH
Counsel of Record

~ Law Office oF Danie U. SMITH
21 Rancheria Road
Kentfield, CA 94904
(415) 461-5630

Rosert H. Boun

Boun & Boun LLP
152 North Third Street
Suite 200

San Jose CA 95112
(408) 279-4222 x 302

Attorneys for Real Parties in Interest

APPENDIX

la

APPENDIX — DECLARATION OF ROBERT H.
BOHN IN OPPOSITION TO DEFENDANT
DOREL INDUSTRIES, INC.’S MOTION
TO QUASH SERVICE OF SUMMONS
DATED DECEMBER 14, 2004

IN THE SUPERIOR COURT OF THE
STATE OF CALIFORNIA IN AND FOR THE
COUNTY OF SANTA CLARA
No. 1-04-CV014652

JONATHAN JACKSON, III, by and through his
Guardian ad Litem, JOCELYN SULLIVAN; and
JOCELYN SULLIVAN,

Plaintiffs,
V.
DOREL JUVENILE GROUP, INC., et al.,
Defendants.
DATE: December 14, 2004
TIME: 9:00A.M.
DEPT: 7
JUDGE: Socrates Manoukian
TRIAL: Not set yer

I, ROBERT H. BOHN, declare the following under
penalty of perjury:

2a
Appendix

| am an attorney licensed to practice law before all the
courts of the State of California and am the attorney
representing the plaintiffs herein. | know the following of
my own personal knowledge and am competent to testify
thereto if called upon as a witness.

1. Attached hereto and incorporated herein by reference
as Exhibit “1” is a true and correct copy of the complaint in
this action.

2. Attached hereto and incorporated by reference as
Exhibit “2” is a true and correct copy of the amendment to
the complaint substituting DOREL INDUSTRIES, INC. as
Doe 1.

3. Attached hereto and incorporated by reference as
Exhibit “3” is a true and correct copy of a letter from defense
‘counsel to plaintiff's counsel stipulating that the depositions
taken in the case of Rapan v. Cosco can be used as though
taken in this case for the purpose of opposing defendant’s
motion to quash service of summons and complaint.

4. Attached hereto and incorporated by reference as
Exhibit “4” is a true and correct copy of a lease for a
wareheuse in Ontario, California, provided by defendant
DOREL JUVENILE GROUP, INC., in response to plaintiff's
Request For Production of Documents (please note that the
Lease Guarantee, Exhibit “J” to the Lease, at page 58 has
been removed).

5. Attached hereto and incorporated by reference as
Exhibit “5” is a true and correct copy of the Lease Guarantee

3a
Appendix

for the Ontario, California, property at the Shea Center
obtained by subpoena.

6. Attached hereto and incorporated by reference
as Exhibit “6” is a true and correct copy of the California
Bureau of Home Furnishings and Thermal Insulation showing
that DOREL INDUSTRIES OF CANADA is licensed by the
State of California under License Number 123022.

7. Attached hereto and incorporated by reference as
Exhibit “7” is a true and correct copy of DOREL
INDUSTRIES, INC.’S 2003 Renewal Annual Information
form of May 15, 2004, filed with the United States Securities
Exchange Commission, which states that DOREL
INDUSTRIES, INC::

(a) Employs 5,000 people in fourteen countries (page
2);

(b) Its major “divisions” include DOREL
JUVENILE GROUP, which incorporates the Cosco brand
name (page 3);

(c) In 1988 DOREL purchased Cosco of Columbus,
Indiana, which later became DOREL JUVENILE GROUP
(page 3);

(d) In 1991 DOREL purchased Silgo International
in San Diego (page 3);

(e) In 2000 DOREL purchased Safety Ist, Inc., then
restructured its juvenile business in North America and

4a

Appendix

Europe, renaming the Columbus, Indiana, “Juvenile
Operating Units” in Indiana the DOREL JUVENILE
GROUP (page 4):

(f) The reporting currency of the corporation is in
U.S. dollars (page 5);

(g) Its “Juvenile Products Segment” manufactures
infant car seats under the brand name Cosco (page 6);

(h) The “Juvenile Products Segment’s success
hinges on successful new product development and Dorel’s
commitment to customer service.” (page 6);

(i) In 2003, DOREL had two major customers
(Walmart and Toys-R-Us) each representing more than 10%
of sales.” (page 7);

(3) DOREL maintains close relationships with its
major retailers such as Walmart (page 7);

(k) In 2003 73% of DOREL’s sales took place in
the United States. (page 7);

(1) “Dorel is the sole owner of all patents and
manufacturing licenses for its products.” (page 8);

(m) “Research and development is an important part
of Dorel’s business success. Each year, each of Dorel’s two
operating segments introduces a large number of new
products.” (page 8);

Sa
Appendix

(n) “Quality control is an essential part of Dorel’s
competitive position.” (page 8)

(o) Car seat research and development is done at its
plant in Columbus, Indiana. (page 9);

(p) Dorel’s Class B shares are listed on the
NASDAQ National Market under the symbol DIIB. (page
10);

(q) Martin Schwartz is the company’s President and
CEO (page 10);

(r) Jeff Segel is the company’s Executive Vice
President of Sales and Marketing; (page 11);

8. DOREL’s major divisions in the United States include
Ameriwood Industries and the DOREL JUVENILE GROUP
(DJG USA), which incorporates the Cosco and Safety Ist
brand names. (See Exhibit “7”, p. 3).

9. Attached hereto and incorporated by reference as
Exhibit “8” is a true and correct copy of a Notice of Ruling
denying DOREL INDUSTRY, INC.’S motion to quash
service of Summons and Complaint in an identical case in
Riverside County, California, Case No. INC035190, Jsaiah
Gabriel Rapan v. Cosco, Inc., Dorel Industries, Inc., et al.

10. Attached hereto and incorporated herein by reference
as Exhibit “9” 1s a true and correct copy of a facsimile
message from Nick Costides to Martin Schwartz and Rick
Lechner that on August 2, 1996, press releases issued by

6a
Appendix

Cosco, Inc., (Indiana) had to be approved by Martin Schwartz,
CEO of DOREL INDUSTRIES, INC., Canada.

11. In 1997, while manufacture of all child booster seats
was done in DOREL’s Indiana plant, DOREL INDUSTRIES,
INC., of Canada was recognized as the manufacturer of the
product and responsible for replacement of safety labels on
the products by the Canadian government. Attached hereto
and incorporated by reference as Exhibit “10” is a true and
correct of a memorandum to Mr. David Hall of DOREL
INDUSTRIES, INC., addressing violations of labeling of
these products manufactured in Indiana.

12. Attached hereto and incorporated by reference as
Exhibit “11” is a true and correct copy of a January 9. 1997
facsimile from Terry Emerson of Cosco, Indiana, to David
Hall, DOREL INDUSTRIES, INC., Canada, to review details
of product labels on the Cosco Grand Explorer to gett DOREL
INDUSTRIES, INC.’s approval of label details.

13. Attached hereto and incorporated by reference as
Exhibit “12” are true and correct excerpts of product
development meeting minutes on the Grand Explorer from
meetings on April 17, 1995, May 19, 1995, June 16, 1995,
August 2, 1995, and May 11, 1999, showing complete copies
of all product development meeting minutes were routinely
sent to Martin Schwartz and other top management officers
of DOREL INDUSTRIES, INC., of Canada.

14. Attached hereto and incorporated by reference as
Exhibit “13” are excerpts of the deposition transcript of
Jeffrey Allen Segel, Vice President of Sales and Marketing
of DOREL INDUSTRIES, INC.

-

a
Appendix

15. Attached hereto and incorporated by reference as
Exhibit “14” are excerpts of the deposition transcript of
Elizabeth Mary Chnistine Klaus, Quality Assurance Manager
for DOREL INDUSTRIES, INC.

16. Attached hereto and incorporated by reference as
Exhibit “15” are excerpts of the deposition transcript of David
Hall, Vice President of Sales for DOREL INDUSTRIES, INC.

17. Attached hereto and incorporated by reference as
Exhibit “16” are excerpts of the deposition transcript of David
Cuelar, Director of Distribution for DOREL JUVENILE
GROUP.

Executed this 2nd day of December, 2004, at San Jose,
California, under the laws of the State of California.

s/ Robert H. Bohn
ROBERT H. BOHN, ESQ.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_1117%3A2. Public record. Not legal advice.