PRIVATE INTERNATIONAL LAW | B2015

CASE DIGESTS

ASAHI METAL INDUSTRY

CO. LTD
v. SUPERIOR COURT OF
CALIFORNIA
February 24, 1987
OConnor, J
Luciano, Noel Christian

SUMMARY: Gary Zurcher figured in an accident and filed a

product liability case against Cheng Shin Rubber Industrial
(Taiwan) alleging that the accident was caused by a
mechanical defect in his motorcycle. Cheng Shin filed a
cross-complaint against Asahi Metal Industry, the Japanese
manufacturer of tube assemblies used by Cheng Shin in
the production of its tires. Zurchers claim was settled and
what was only left for resolution was the indemnification
claim of Cheng Shin. Asahi filed a motion to quash the
service of summons on the ground that the California court
could not exert jurisdiction over it consistent with the due
process clause. The Supreme Court of California held that
the exercise of jurisdiction is proper, holding that the fact
that Asahis intentional act of placing its components into
the stream of commerce coupled with its awareness that
some of the components would eventually find their way to
California, is sufficient basis for court jurisdiction.
The US Supreme Court reversed and held that there is
insufficient minimum contacts to sustain exercise of
jurisdiction.
DOCTRINE: Due Process Clause requires something more
than the fact that the defendant was aware of its products
entry into the forum State through the stream of
commerce in order for the State to exert jurisdiction over
defendant.
SUBSTANTIAL CONNECTION between the

defendant and the forum State necessary for a finding of

minimum contacts must come about by an action of the
defendant PURPOSEFULLY directed towards the forum
state.
The placement of a product into the stream of
commerce, without more, is not an act purposefully
directed by defendant to the forum State. Additional
conduct must be needed to show intent or purpose to
serve the forum State.
PARTIES:
1. Gary Zurcher plaintiff who figured in an accident
and alleged that it was due to a mechanical default
in his motorcycle
2. Cheng Shin Rubber Industrial Co. Ltd. defendant
and cross-complainant, who was the Taiwanese
manufacturer of the tube
3. Asahi Metal Industry Co. Ltd. cross-defendant, the
Japanese manufacturer of the tube assembly
FACTS: On an interstate highway, Gary Zurcher lost control
of his Honda motorcycle and collided with a tractor. Zurcher
was severely injured and his wife died in the accident.
Zurcher filed a product liability action in California alleging
that the accident was caused by a sudden loss of air and an
explosion in the rear tire of the motorcycle. He further
alleged that this was due to a defect in the tire, tube, and
sealant. Zurchers complaint named Cheng Shin Rubber
Industrial Co. Ltd., the Tiawanese manufacturer of the tube.
Cheng Shin filed a cross-complaint seeking
indemnification from Asahi Metal Industry Co. Ltd. Who was
the manufacturer of the tubes valve assembly.
Eventually, Zurchers claims against Cheng Shin were
settled and dismissed, leaving only Cheng Shins
indemnification action against Asahi.
ASAHIS MOTION TO QUASH:
1. Asahi moved to quash Cheng Shins service of
summons

PRIVATE INTERNATIONAL LAW | B2015

CASE DIGESTS

2. It argues that the State of California could not exert

jurisdiction over it consistent with the Due Process
Clause (DPC)
3. It manufacturers tire valve assemblies in Japan and
sells the assemblies to Cheng Shin and to several
other tire manufacturers
SUPERIOR COURT OF CALIFORNIA: It denied the motion
to quash summons. It held that Asahi obviously does
business on an international scale. Thus, it is not
unreasonable that they defend claims of defect in their
product on an international scale.
COURT OF APPEAL OF THE STATE OF CALIFORNIA: It
reversed the Superior Courts decision and ordered the
quashal of the service of summons.
It held that it would be unreasonable to require Asahi
to respond to California solely on the basis of ultimately
realized foreseeability that the product into which its
component was embodied would be sold all over the world
including California.
SUPREME COURT OF THE STATE OF CALIFORNIA: It
reversed the CA decision and held:
1. True, Asahi has no offices, property, or agents in
California
a. It solicits no business in California and has made
no direct sales in California
b. It did not design or control the system of
distribution that carried its valve assemblies into
California
2. Nevertheless, the exercise of jurisdiction over Asahi
is consistent with the DPC
a. Asahi knew that some of the valve assemblies
sold to Cheng Shin would be incorporated into tire
tubes sold in California
b. Asahi benefited INDIRECTLY from the sale in
California
of
products
incorporating
its
components

3. THUS, Asahis intentional act of placing its

components into the stream of commerce coupled
with its awareness that some of the components
would eventually find their way to California, is
sufficient basis for court jurisdiction
ISSUE: Whether the Court validly acquired jurisdiction over
Asahi
HELD: NO
I.

Discussion on DPC
A. The DPC limits the power of the state court to
exercise personal jurisdiction over a nonresident
defendant
B. For an exercise of jurisdiction to comport with due
process, the defendant must have purposefully
established MINIMUM CONTACTS in the forum
State
1. Minimum contacts must have a basis in some
act by which the defendant purposefully avails
itself of the privilege of conducting activities
within the forum State, thus invoking the
benefits and protections of its laws

II. In World-Wide Volkswagen Corp v. Woodson, the

Court applied the minimum contacts based on an act
of the defendant
A. In that case, the Court rejected the assertion that
a consumers unilateral act of bringing the
defendants product into the forum State was a
sufficient constitutional basis for personal
jurisdiction over the defendant
1. The
Court
rejected
this
concept
of
foreseeability as an insufficient basis for
jurisdiction under the DPC
B. However, courts have interpreted the ruling in
World-Wide differently:
1. Some
courts
have
held
that
mere
foreseeability
or
awareness
was
a

PRIVATE INTERNATIONAL LAW | B2015

CASE DIGESTS

constitutionally sufficient basis for personal

jurisdiction if the defendants product made
its way into the forum State while still in the
stream of commerce
a. Basically what this means is that since a
defendant doing international business
places its product into the stream of
commerce it should be aware that its
products may find its way into the forum
State. (You can ask me for clarification )
2. Other courts have understood the DPC to
require something more than that the
defendant was aware of its products entry
into the forum State through the stream of
commerce in order for the State to exert
jurisdiction over defendant
a. Here, the courts require that the
defendant MUST PURPOSEFULLY and
INTENTIONALLY sought the market of the
forum State
III. The Supreme Court held that the 2nd position is
consonant with the requirements of Due Process.
A. SUBSTANTIAL
CONNECTION
between
the
defendant and the forum State necessary for a
finding of minimum contacts must come about
by an action of the defendant PURPOSEFULLY
directed towards the forum state.
B. The placement of a product into the stream of
commerce, without more, is not an act
purposefully directed by defendant to the forum
State
1. Additional conduct must be needed to show
intent or purpose to serve the forum State
like:
a. Advertising in the forum state,
b. Establishing channels for providing regular
service to consumers

c. Marketing
the
product
through
a
distributor who agrees to serve as sales
agent in the forum state
2. BUT a defendants awareness that the stream
of commerce may or will sweep the product
into the forum State does NOT convert the
mere act of placing the product into the
stream into an act purposefully directed
toward the State
C. Assuming that respondents have established
Asahis awareness that some of its valves sold to
Cheng Shin would be incorporated into tire tubes
sold in California, respondents have NOT
demonstrated any action by Asahi to purposefully
avail itself of the California market
1. Asahi does not do business in California
2. It has no office, agents, employees, or
properties in California
3. It does not advertise not solicit business there
4. It did not control, create or employ the
distribution system that brought its valves to
California
IV. The strictures of DPC forbid a state court to exercise
personal jurisdiction over Asahi under circumstances
that would offend traditional notions of fair play and
substantial justice
A. Determination of reasonableness of the exercise
of jurisdiction in each case will depend on an
evaluation of several factors:
1. Burden on the defendant
2. Interests of the forum state
3. Plaintiffs interest in obtaining relief
B. Certainly, the burden on Asahi in this case is
severe
1. It has been commanded by the Supreme
Court in California to travel from Japan to
California and submit its dispute to a foreign
nations judicial system

PRIVATE INTERNATIONAL LAW | B2015

CASE DIGESTS

C. When minimum contacts have been established,

often the interests of the plaintiff and the forum
in the exercise of jurisdiction will justify even the
serious burdens placed on the alien defendant
1. In this case, however, the interests of the
plaintiff and the forum in Californias assertion
of jurisdiction over Asahi is slight
2. NOTE:
a. The
transaction
on
which
the
indemnification took place is in Taiwan
b. Asahis components were shipped from
Japan to Taiwan
c. Cheng Shin has not demonstrated that it is
more convenient for it to litigate its
indemnification claim against Asahi in
California than in Taiwan or Japan
V. Considering the international context, the heavy
burden on the alien defendant and the slight
interests of the plaintiff and the forum State, the
exercise of personal jurisdiction by a California Court
over Asahi in this instance would be unreasonable
and unfair.
SUPREME COURT CALIFORNIA REVERSED. Case remanded
for further proceedings.