Foreign Companies With No Connections to California Should Be Accorded Forum

Monday, March 19, 2018

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Justice Lamar Baker:

Foreign Companies With No Connections to California Should Be Accorded Forum

Jurist Invokes Statute Applicable to Disputes Involving at Least $1 Million; Majority Disagrees, Affirming Dismissal of Action Brought by Taiwanese Company Against Japanese Company

By a MetNews Staff Writer

LAMAR BAKER

Justice, Court of Appeal

Court of Appeal Justice Lamar W. Baker of this district’s Div. Five argued in a dissent on Friday that California is obliged to afford a forum to two foreign companies with no ties to California because the parties contractually agreed to litigate their disputes here.

In an opinion by Acting Presiding Justice Sandy Kriegler, joined in by Acting Justice Dorothy C. Kim, a Los Angeles Superior Court judge sitting on assignment, majority affirmed an order by Los Angeles Superior Court Judge Gregory Keosian dismissing an action based on forum non conveniens. The litigation was brought by a Taiwanese company against a Japanese company.

“Nothing in the creation, performance, or alleged breach of the contract has any connection to California,” Kriegler pointed out.

‘Open for Business’

Nonetheless, Baker declared in his dissent, the action should not have been dismissed, saying:

“The experienced trial judge and a majority of this court are understandably reluctant to hold that California courts with already bulging dockets must make room to decide a dispute with no connection to this State or its residents. But I believe our Legislature, in enacting Code of Civil Procedure section 410.40, has said our courts should be generally open for business when it comes to this type of foreign dispute.”

That section provides that “[a]ny person may maintain an action or proceeding in a court of this state against a foreign corporation or nonresident person” where that party has agreed that any contract dispute be tried here and the controversy involves at least $1 million.

(The Korean company is claiming that it is owed $2.17 million for smart phones it sold the defendant—which claims they do not meet Japanese quality standards.)

‘Garden Variety’ Dispute

Baker commented:

“The majority opinion presents a quite plausible argument that trial judges nevertheless retain some measure of discretion to decline to entertain a case that meets the Code of Civil Procedure section 410.40 criteria. But I see no reason on which the trial judge here could rely to dismiss this case that would not equally apply to any garden-variety Code of Civil Procedure section 410.40 case. If the exceptions are not to swallow the Legislature’s chosen rule, I believe the order of dismissal must be reversed.”

Kriegler said that Keosian did not abuse his discretion in dismissing the action on his own motion. The jurist pointed to Code of Civil Procedure §430.10(a) which provides:

“When a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.”

Given the existence of suitable forums in Asian counties and burgeoning caseloads in Los Angeles Superior Court, Kriegler said, it was reasonable to reject the action.

No Entitlement

Addressing Baker’s contention, he said:

“As presently written, section 410.40 recognizes the existence of jurisdiction in California for an aggrieved party to file a lawsuit against a foreign corporation for wrongs that have occurred abroad. This is not to say that the aggrieved party is entitled to have its lawsuit heard in this state, because section 410.30 continues to afford a trial court discretion to dismiss the case for “legitimate and substantial interests.” This is particularly true in this case where there are no concerns of protecting Californians from allegedly defective products, and where Japan has significant interest in promoting product availability and safety for its own citizens.”

Kriegler noted that under 1986 legislation, the doctrine of forum non conveniens could not be invoked whenever §410.40 applied—in order to attract international arbitrations—but that under a sunset clause, that provision expired Jan. 1, 1992.

The case is Quanta Computer Inc. v. Japan Communications Inc., B280042

Attorneys on appeal were Terry D. Garnett and Donald A. Miller of Loeb & Loeb for the plaintiff/appellant and Andre J. Cronthall and Sarah A. K. Blitz of Sheppard, Mullin, Richter & Hampton for the defendant/respondent.