Products Liability: Service on Foreign Manufactures

Posted in Products Liability on August 10, 2009

Yamaha Motor Corporation, Ltd. v. Superior Court, (4th District, May 26, 2009) —Cal.Rptr.3d—-, 2009 WL 1458270, 09 Cal. Daily Op. Serv. 6433
A boy who was injured while operating a Yamaha Rhino filed a products liability action against Yamaha Motor Company, Ltd. (Yamaha-Japan), the Japanese entity which manufactured the vehicle, as well as Yamaha Motor Corporation, U.S.A. (Yamaha-America), its wholly owned domestic subsidiary and exclusive importer and distributor in the United States. When the plaintiff attempted to serve Yamaha-Japan by serving Yamaha-America through its agent for service of process, Yamaha-Japan filed a motion to quash service, arguing that Yamaha-America is only a subsidiary of Yamaha-Japan, not Yamaha-Japan’s general manager in California, and therefore service should have been made through the Hague Convention.

The trial court denied the motion, reasoning that Yamaha-America is Yamaha-Japan’s general manager in California. Yamaha-Japan filed a petition for writ of mandate but the court of appeal denied the writ, holding that California law allows service on a foreign corporation by serving its domestic subsidiary:

“This court issued an OSC in response to this petition for writ of mandate because it presents an issue of some public importance that has not yet been squarely faced by a California state court, in a published opinion, in this particular context: The question of whether a Japanese manufacturer can be served under California law simply by serving the Japanese manufacturer’s American subsidiary. The trial court ruled that a Japanese manufacturer could indeed be validly served that way. The method just seemed too easy a way to get around the Hague Service Convention and we scheduled an OSC on the petition to give us the chance to study the issue.
On review, however, it turns out that, yes, it really is that easy. And not only that, there is nothing this court, as a matter of California common law, can do about it. We are a court under authority, and there is a non-overruled, non-distinguishable California Supreme Court case, Cosper v. Smith & Wesson Arms Co. (1959) 53 Cal.2d 77, 346 P.2d 409, that makes service on the California representative of a foreign parent valid-that is, valid as to the foreign parent-under California law. And not only that, but there is a 1988 federal United States Supreme Court case, Volkswagenwerk Aktiengesellschaft v. Schlunk, supra, 486 U.S. 694, 108 S.Ct. 2104, 100 L.Ed.2d 722(Schlunk ), that says when service is valid under state law on the American subsidiary of a foreign manufacturer, there is no need to serve papers in accord with the Hague Service Convention. Accordingly, we have no choice but to deny the petition for writ of mandate.”