Opinion
NOT TO BE PUBLISHED
Super. Ct. No. CV030845
BUTZ, J.In this breach of contract/fraud action, none of petitioners dealt with the plaintiff (Grimaud Farms of California, Inc.), did business, had offices, paid taxes, or sold products in California. The superior court held petitioners were subject to jurisdiction in California based upon an unexplained, nebulous connection to their parent company “Whole Foods Market, Inc.” (WMFI), and its sister company.
Petitioners have effectively conceded that they are subsidiaries of WFMI.
Petitioners sought writ relief from the superior court’s denial of their motion to quash service of summons. We issued an alternative writ ordering respondent court to show cause why it should not grant the relief sought. We also issued a stay of trial proceedings pending the outcome of this petition. We now issue a peremptory writ, directing the trial court to quash service.
FACTUAL AND PROCEDURAL BACKGROUND
This lawsuit finds its way to the courthouse steps due to a desire on the part of Whole Foods Market executives to sever all ties to farms that participate in the controversial enterprise of producing foie gras.
“Foie gras” (French for “fat liver”) is a popular and well-known “delicacy of French cuisine.” Traditionally, a rich, buttery, and delicate pâté, it is made of “the liver of a goose or duck that has been [specially] fattened by a process of force feeding, ” unlike that of a regular goose or duck liver. (New Encyclopedia Britannica (15th ed. 1989) p. 858, col. 2.)
Plaintiff and real party in interest Grimaud Farms of California, Inc. (Grimaud), a Stockton-based company, produces poultry products, including Muscovy duck and duck meat. Until 2006, Grimaud supplied ducks to a company known as Sonoma Foie Gras, Inc. (SFG), which specialized in the production of foie gras products.
Grimaud was also a supplier of duck products to Whole Foods Markets (Whole Foods). Whole Foods stores stopped selling foie gras in 1996, but for many years Whole Foods continued to purchase poultry products from Grimaud.
We use the generic name “Whole Foods” not to designate a particular business entity, but to refer to the aggregation of supermarkets that do business using that logo.
In December 2003, Grimaud’s President Rheal Cayer and Vice-President Jim Galle traveled to the “Animal Compassionate Stakeholder Meeting” at Whole Foods headquarters in Austin, Texas. There they met with Whole Foods executives John Mackey and Margaret Wittenberg. Mackey was the Chief Executive Officer of Whole Foods Market Services, Inc. (WFMSI), and Whole Foods Market California, Inc. (WFMCI), corporations that are presently defendants in this lawsuit. Wittenberg was Vice President of Global Communications and Quality Standards for WFMSI.
According to Grimaud, it was at this meeting that Mackey and Wittenberg entered into an oral agreement with Galle and Cayer whereby Grimaud would sever its ties to SFG and the foie gras industry and, in return, Whole Foods would increase its business with Grimaud to compensate for the lost revenue Grimaud would suffer as a result of the dissociation. The dissociation would be accomplished in stages, while Grimaud sought to comply with Whole Foods’ animal compassionate standards (ACS).
During the first part of 2004, Galle kept Whole Foods national meat buyer Steve Keville apprised of Grimaud’s progress in achieving compliance with the ACS. During 2004, Grimaud continued to update Wittenberg and Keville on its steps in achieving ACS compliance.
On November 10, 2005, Keville sent Galle and Cayer an e mail letter notifying Grimaud that it had until March 31, 2006, to sever all association with the foie gras industry; if the dissociation did not occur within that time frame, Whole Foods would have to cease doing business with Grimaud.
Galle responded by e mail on November 18, 2005, informing Keville that Grimaud had given formal notice to SFG of its intention to terminate its contractual commitments to SFG, and expressing the hope that this would be acceptable to Whole Foods. A week later, Galle wrote to Keville and Wittenberg, advising that the SFG-Grimaud relationship would end on May 15, 2006.
In January 2006, SFG sued Whole Foods for interfering with its contract with Grimaud. On May 10, 2006, a meeting took place at Whole Foods’ Austin headquarters among Mackey, Wittenberg, regional presidents Walter Robb and A.C. Gallo and vice-president of purchasing for Whole Foods Market LLC Edmund La Macchia, along with general counsel for WFMI Roberta Lang. The discussion centered on Grimaud, SFG and the SFG litigation. At the meeting, a consensus was reached to end Whole Foods’ relationship with Grimaud.
On May 22, 2006, La Macchia wrote a letter to Galle notifying him that Whole Foods was terminating its relationship with Grimaud. The termination was confirmed by La Macchia’s follow-up letter dated June 14, 2006.
Grimaud then brought this lawsuit against WFMCI for breach of oral contract and related causes of action. Subsequently, WFMSI was added as a defendant. A fourth amended complaint (hereafter the complaint) brought in a third defendant, WFMI.
The present dispute arose when Grimaud served each of the petitioners as fictitiously named Doe defendants under the complaint. The following is a description of the six petitioners:
Nature’s Heartland, Inc. a Massachusetts corporation with its principal place of business in Needham, Massachusetts.
Whole Foods Market Pacific Northwest, Inc. a Delaware corporation with its principal place of business in Bellevue, Washington.
Whole Foods Market Procurement, Inc. a Delaware corporation with its principal place of business in Austin, Texas.
Whole Foods Market Rocky Mountain/Southwest I, Inc. a Delaware corporation with its principal place of business in Austin, Texas.
Whole Foods Market Rocky Mountain/Southwest, L.P. a Texas limited partnership with its principal place of business in Austin, Texas.
Whole Foods Market Southwest Investments, Inc. a Delaware corporation with its principal place of business in Wilmington, Delaware.
Without answering the complaint, petitioners filed a motion to quash service of summons for lack of jurisdiction. In support of the motion, petitioners submitted the declaration of Patricia Yost affirming that none of the petitioners (1) is licensed, registered or qualified to do business in California; (2) owns or operates any stores in California; (3) advertises, markets, sells or distributes any products in California; (4) solicits business in this state; (5) derives revenue from the sale of products in California; (6) maintains offices, computers or telephones in California; (7) maintains any books or records in this state; (8) has any tangible personal or real property or bank accounts in California; (9) has an appointed agent for service of process in California; or (10) pays any income or other taxes in this state. The declaration also confirmed that Mackey, Wittenberg and Keville are not officers, directors or employees of any petitioner.
Grimaud opposed the motion and filed counter declarations.
After a hearing on September 11, 2009, the trial court denied the motion to quash, giving the following one-sentence ruling: “The Court finds there are adequate pleadings for jurisdiction, therefore, the Defendants’ Motion to Quash Summons is Denied.”
DISCUSSION
I. Principles of Review
As stated in Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434 (Vons): “California’s long-arm statute authorizes California courts to exercise jurisdiction on any basis not inconsistent with the Constitution of the United States or the Constitution of California. (Code Civ. Proc., § 410.10.) A state court’s assertion of personal jurisdiction over a nonresident defendant who has not been served with process within the state comports with the requirements of the due process clause of the federal Constitution if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate ‘“traditional notions of fair play and substantial justice.”’” (Vons, at p. 444.)
“When a defendant moves to quash service of process on jurisdictional grounds, the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction. [Citation.] Once facts showing minimum contacts with the forum state are established, however, it becomes the defendant’s burden to demonstrate that the exercise of jurisdiction would be unreasonable.” (Vons, supra, 14 Cal.4th at p. 449.)
“On review, the question of jurisdiction is, in essence, one of law. When the facts giving rise to jurisdiction are conflicting, the trial court’s factual determinations are reviewed for substantial evidence. [Citation.] Even then, we review independently the trial court’s conclusions as to the legal significance of the facts. [Citations.] When the jurisdictional facts are not in dispute, the question of whether the defendant is subject to personal jurisdiction is purely a legal question that we review de novo.” (Dorel Industries, Inc. v. Superior Court (2005) 134 Cal.App.4th 1267, 1273 (Dorel); see Vons, supra, 14 Cal.4th at p. 449.) “The ultimate issue of whether an exercise of jurisdiction is fair and reasonable is a legal determination subject to de novo review on appeal.” (Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 568, citing In re Automobile Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 111.)
Because there was no conflict in the evidence on the jurisdictional issue, we review the trial court’s ruling de novo.
II. Bases for Jurisdiction
“Personal jurisdiction may be either general or specific. A nonresident defendant may be subject to the general jurisdiction of the forum if his or her contacts in the forum state are ‘substantial[, ]... continuous and systematic.’ [Citations.] In such a case, ‘it is not necessary that the specific cause of action alleged be connected with the defendant’s business relationship to the forum.’ [Citations.] Such a defendant’s contacts with the forum are so wide-ranging that they take the place of physical presence in the forum as a basis for jurisdiction.” (Vons, supra, 14 Cal.4th at pp. 445-446.)
“If the nonresident defendant does not have substantial and systematic contacts in the forum sufficient to establish general jurisdiction, he or she still may be subject to the specific jurisdiction of the forum, if the defendant has purposefully availed himself or herself of forum benefits [citation], and the ‘controversy is related to or “arises out of” a defendant’s contacts with the forum.’” (Vons, supra, 14 Cal.4th at p. 446.)
Since the burden was on Grimaud to establish jurisdiction over petitioner nonresident business entities, we shall analyze its arguments in favor of each type of jurisdiction.
A. General Jurisdiction
A nonresident may be haled into California under the principle of general jurisdiction if its contacts with the forum are substantial, continuous and systematic. The contacts must be so wide-ranging as to constitute the functional equivalent of a presence in the state. (Vons, supra, 14 Cal.4th at pp. 445-446.)
Here, Grimaud produced no evidence that any of the petitioners had contacts with California that were substantial, continuous or systematic. On the contrary, the uncontradicted evidence showed that petitioners are not licensed to do business in California, have no offices or property in this state, sell no products or solicit business here, or have any other “wide-ranging” contacts that could fairly be said to be tantamount to physical presence in California.
Grimaud nevertheless argues that petitioners may be subject to general jurisdiction based on theories of agency and conspiracy. However, it is the burden of the party resisting a motion to quash to come forward with evidence showing jurisdiction is proper. (Dorel, supra, 134 Cal.App.4th at p. 1273.) Grimaud produced no evidence on the issue of either agency or conspiracy. Instead, it relied solely on its boilerplate allegation in the complaint that each defendant was the agent and coconspirator of each other defendant.
A general allegation of agency is a statement of ultimate fact. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 886.) While verified pleadings may be treated as counter-affidavits by the plaintiff on a motion to quash (Arnesen v. Raymond Lee Organization, Inc. (1973) 31 Cal.App.3d 991, 995), allegations that consist of vague assertions of ultimate fact rather than specific evidentiary facts do not prove anything (see Jewish Defense Organization, Inc. v. Superior Court (1999) 72 Cal.App.4th 1045, 1055-1056 (Jewish Defense Organization)). Likewise, “‘the bland allegation of conspiracy without a prima facie showing of its existence is insufficient to establish personal jurisdiction.’ (Taylor-Rush v. Multitech Corp. [(1990)] 217 Cal.App.3d [103, ] 114.) A plaintiff ‘must allege specific facts warranting the inference that the defendants were members of the conspiracy, and “come forward with some definite evidentiary facts to connect the defendant with transactions occurring in [the forum state].”’” (Mansour v. Superior Court (1995) 38 Cal.App.4th 1750, 1759-1760, italics added.) In the absence of evidence, Grimaud’s pleading allegations did not carry its burden of proving jurisdiction based on either an agency or conspiracy theory.
We conclude Grimaud provided no basis for California to assert general jurisdiction over petitioners.
B. Specific Jurisdiction
Specific personal jurisdiction may exist even if the defendant’s forum-related activities are not so pervasive as to justify an exercise of general jurisdiction. Specific jurisdiction results when the defendant’s contacts with the forum state are sufficient to subject the defendant to suit in the forum on a cause of action related to or arising out of those contacts. (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 536 (Sonora).) Whether jurisdiction exists turns on the quality and nature of the defendant’s activities in the forum related to the cause of action. (Cornelison v. Chaney (1976) 16 Cal.3d 143, 147-148.) We focus on the relationship among the defendant, the forum, and the litigation. (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062 (Snowney).)
A defendant is subject to specific jurisdiction if it satisfies all of the following three requirements: (1) the defendant has purposefully availed itself of forum benefits with respect to the matter in controversy, (2) the controversy is related to or arises out of the defendant’s contacts with the forum, and (3) “the exercise of jurisdiction would comport with fair play and substantial justice.” (DVI, Inc. v. Superior Court (2002) 104 Cal.App.4th 1080, 1090; accord, Jewish Defense Organization, supra, 72 Cal.App.4th at p. 1054.)
It is unnecessary to analyze the second and third elements of specific jurisdiction, because we find that the first requirement, the “purposeful availment” test, has not been met.
1. Purposeful availment.
“‘“The purposeful availment inquiry... focuses on the defendant’s intentionality. [Citation.] This prong is only satisfied when the defendant purposefully and voluntarily directs [its] activities toward the forum so that [it] should expect, by virtue of the benefit [it] receives, to be subject to the court’s jurisdiction based on” [its] contacts with the forum.’ [Citations.] Thus, purposeful availment occurs where a nonresident defendant ‘“purposefully direct[s]” [its] activities at residents of the forum’ [citation], ‘“purposefully derive[s] benefit” from’ its activities in the forum [citation], ‘create[s] a “substantial connection” with the forum’ [citation], ‘“deliberately” has engaged in significant activities within’ the forum [citation], or ‘has created “continuing obligations” between [itself] and residents of the forum’ [citation]. By limiting the scope of a forum’s jurisdiction in this manner, the ‘“purposeful availment” requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of “random, ” “fortuitous, ” or “attenuated” contacts....’ [Citation.] Instead, the defendant will only be subject to personal jurisdiction if ‘“it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the state.”’” (Snowney, supra, 35 Cal.4th at pp. 1062-1063.)
Grimaud produced no evidence that petitioners had any substantial connection with California, deliberately engaged in significant activities within this state, or created “‘“continuing obligations” between [itself] and residents of the forum’” with respect to the subject matter of this lawsuit. (Snowney, supra, 35 Cal.4th at p. 1063, quoting Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 475–476 [85 L.Ed.2d 528, 542-543].)
With respect to the alleged oral agreement that is the focus of this action, Grimaud alleges that the main actors giving verbal assurances of continued business were Mackey, Wittenberg and Keville. These three, along with Robb, Gallo, La Macchia and two corporate attorneys were the only ones present at the meeting where the decision to terminate Grimaud was made. Yet there is no evidence that any of these persons represented or acted on behalf of any of the petitioners. Indeed, as Yost’s declaration makes clear, Mackey, Wittenberg, Keville, Robb and La Macchia the alleged key participants in the oral agreement and its breach were not officers, directors, or employees of any of the petitioners.
Even if one or more of these people had some affiliation with petitioners, that alone would not be sufficient to carry Grimaud’s burden. “‘The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.’” (Helicopteros Nacionales de Colombia, S.A. v. Hall (1984) 466 U.S. 408, 417 [80 L.Ed.2d 404, 413].)
In defense of the trial court’s order, Grimaud points out that Mackey was the CEO of the national corporation WFMI; that he admitted in deposition that he was representing “the overall company” when he communicated with Grimaud; and that Mackey, Robb and Gallo were members of the “Executive Team” responsible for running “the company” together.
This argument commits the fundamental error of equating the acts of a parent corporation with those of its subsidiaries. The law is to the contrary. “[J]urisdiction over an employee does not automatically follow from jurisdiction over the corporation which employs him; nor does jurisdiction over a parent corporation automatically establish jurisdiction over a wholly owned subsidiary. [Citations.] Each defendant’s contacts with the forum State must be assessed individually. See Rush v. Savchuk, 444 U.S. 320, 332 (1980) (‘The requirements of International Shoe... must be met as to each defendant over whom a state court exercises jurisdiction’).” (Keeton v. Hustler Magazine, Inc. (1984) 465 U.S. 770, 781, fn. 13 [79 L.Ed.2d 790, 802, fn. 13], italics added; see also Sonora, supra, 83 Cal.App.4th at p. 540 [“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”]; AT&T v. Compagnie Bruxelles Lambert (9th Cir. 1996)94 F.3d 586, 590 [parent-subsidiary relationship is inadequate, by itself, to establish in personam jurisdiction].)
As stated earlier, Grimaud made no showing that any of the persons who made the alleged promises or reneged on them were acting on behalf of petitioners. Nor was it alleged, let alone proved, that any of the petitioners were alter egos of a parent corporation. (See Sonora, supra, 83 Cal.App.4th at p. 541.)
Grimaud relies on Checker Motors Corp. v. Superior Court (1993) 13 Cal.App.4th 1007 (Checker) to advance the argument that “[d]ue to the interrelationships between the various Whole Foods defendants, including overlap in management, business purpose, and operations, the actions of one Whole Foods defendant must be imputed to the others.” We disagree.
In Checker, an out-of-state corporation and partnership formed Checker Holding Corporation (CHC), a Delaware holding company, for the purpose of recruiting investors for a “leveraged buyout” of Checker Motors Company, a publicly held New Jersey corporation headquartered in Michigan. Through a securities broker, CHC recruited California investors and persuaded a California insurance company, Executive Life Insurance Company of California (ELIC), to invest in Checker Motors Co., L.P. (Checker LP), a Delaware limited partnership and newly formed private entity that was set up to operate the former Checker Motors Company. (Checker, supra, 13 Cal.App.4th at pp. 1011-1012.)
ELIC ran into financial hardship and was placed in conservatorship by the California Insurance Commissioner. Petitioners, who were partners in the new Checker LP, notified ELIC that the conservatorship order constituted a default under its investment agreement and moved to freeze ELIC’s assets. (Checker, supra, 13 Cal.App.4th at p. 1012.) They then filed an action against ELIC in Delaware, but the insurance commissioner objected that jurisdiction properly belonged in California. When the commissioner sought to add petitioners as parties to the conservatorship proceeding, they moved to quash service of summons on the ground they had no minimum contacts with California. (Id. at pp. 1013-1014.)
The trial court denied the motion and the Court of Appeal affirmed. Noting that petitioners formed CHC as a transparent vehicle for engaging in a number of purposeful acts in California, such as soliciting investors and negotiating agreements, the Checker court concluded it would have to “endorse a corporate shell game” to allow petitioners to avoid jurisdiction through the simple expedient of forming a holding company to do their dirty work. Such a result, the court held, “is neither compelled by legal principle nor justified as good policy.” (Checker, supra, 13 Cal.App.4th at p. 1020.)
Checker bears no resemblance to the fact situation before us. There is no evidence that any petitioner undertook purposeful activities in this forum through an intermediary, or used a “shell” business entity to conduct operations in California. Indeed, absent evidence that (1) there is such unity of interest and ownership that the separate personalities of defendant entities did not exist, and (2) failure to disregard the separation between them would work fraud or injustice, the activities of one business entity may not be imputed to another for purposes of determining jurisdiction. (See Doe v. Unocal Corp. (9th Cir. 2001) 248 F.3d 915, 926; Flynt Distributing Co. v. Harvey (9th Cir. 1984) 734 F.2d 1389, 1393; F. Hoffman-La Roche, Ltd. v. Superior Court (2005) 130 Cal.App.4th 782, 796; Sonora, supra, 83 Cal.App.4th at p. 540.) A general plea that “it is all one company” will plainly not suffice to impute the contacts of the parent company to that of a subsidiary. (See Rush v. Savchuk, supra, 444 U.S. at pp. 331-332 [62 L.Ed.2d at pp. 526-527] [aggregating acts of defendants for purposes of determining ties to the forum was “plainly unconstitutional”].)
We conclude Grimaud’s assertion of jurisdiction in California on the ground that petitioners have some amorphous connection to the conglomerate of Whole Foods companies is untenable and contrary to settled law.
2. Unreasonableness and convenience.
In a final foray, Grimaud contends that petitioners have not shown that defending themselves in California would be “unreasonable.” Grimaud claims the inconvenience of requiring it to file suit against each petitioner in its home state clearly outweighs any inconvenience of requiring petitioners to defend themselves here.
The argument is misguided. As the United States Supreme Court has noted in World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 294 [62 L.Ed.2d 490, 499-500]: “the Due Process Clause ‘does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.’ [Citation.] Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.”
Thus, no matter how reasonable or convenient it might be for petitioners to defend themselves in California, the Due Process clause forbids requiring them to do so in the absence of meaningful, significant contacts with this state. Since Grimaud produced no evidence of such contacts, the trial court’s order denying the motion to quash must be vacated.
DISPOSITION
Let a peremptory writ issue directing the trial court to vacate its order denying the motion to quash and enter a new order granting the motion. The alternative writ is discharged and the stay of trial proceedings in the superior court is dismissed as moot. Petitioners shall recover their costs in this original proceeding. (Cal. Rules of Court, rule 8.493(a)(1)(A).)
We concur: RAYE, Acting P.J. CANTIL-SAKAUYE, J.
Animal rights groups contend that foie gras production methods, and force feeding in particular, constitute cruel and inhumane treatment of animals. On September 29, 2004, Governor Schwarzenegger signed Senate Bill No. 1520 (2003-2004 Reg. Sess.), which bans the force feeding of ducks and geese for pâté de foie gras production and prohibits the sale of products resulting from that process. Under the law, California’s lone foie gras producer was given until 2012 to shut down its operations or convert them to another use. (Health & Saf. Code, § 25980 et seq., added by Stats. 2004, ch. 904, § 1, eff. July 1, 2012.)