FRANK W. WILSON, District Judge.
In these products liability lawsuits it is alleged that the plaintiff, Ruby Velandra, sustained severe and permanently disabling personal injuries, and that the plaintiff, Roy Velandra, sustained medical expenses, loss of services, and loss of consortium, all as the result of an automobile accident in Michigan caused by defective brakes in a Renault automobile manufactured in France by the defendant, Regie Nationale des Usines Renault (Regie), and imported into the United States by the defendant, Renault, Inc. (Renault), before ultimate sale to the plaintiffs in Ohio.
The plaintiffs commenced their suits in the United States District Court for the Eastern District of Michigan, for negligent manufacture and for breach of express and implied warranties. The complaints claim federal jurisdiction upon the basis of diversity of citizenship and amount in controversy, alleging that the plaintiffs are citizens of Michigan, that defendant Renault is a New York corporation, and that defendant Regie is a French corporation.
Some argument has been devoted to the question whether, under the principle of Erie R. Co. v. Tompkins,
The Court must therefore first look to see what "contacts" the defendants each have with the State of Michigan under the facts of this case. It is apparent that any definition of "minimum contacts," if not also any definition of "traditional notions of fair play," will require an evolutionary process rather than a quick definitive statement, as these terms involve subjective judgments that must be based upon a multitude of variant factors as they are presented in a multitude of cases. The existence or nonexistence of the necessary "minimum contacts" to justify the upholding of personal jurisdiction over foreign corporations under the Fourteenth Amendment as interpreted in the International Shoe Company case must obviously be worked out with reference to the facts of a particular case rather than in a statement of dogmatic rules of all-inclusive principles.
Affidavits filed by the parties in support of and in opposition to the motions to dismiss below establish the general nature and extent of the defendants' activities within and their relationship to the State of Michigan. The following appear to be the facts upon which this opinion must be based.
Regie is a French corporate manufacturer of Renault automobiles.
Do the above facts establish such "minimum contacts" with the State of Michigan as to satisfy "traditional notions of fair play" so as to properly subject the defendant foreign corporation to the personal jurisdiction of the courts of Michigan?
Considering first the chain of corporate ownership, Regie owns 100% of the stock of Renault, and Renault in turn owns 100% of the stock of Great Lakes, which, as indicated, carries on substantial economic activities within the State of Michigan. However, the mere ownership by a corporation of all of the stock of a subsidiary amenable to the jurisdiction of the courts of a state may not alone be sufficient to justify holding the parent corporation likewise amenable.
It should be noted that the ruling of the Cannon case, if not qualified by the subsequent ruling in the International Shoe Company case, has been at least qualified in later cases holding foreign corporations amenable to the personal jurisdiction of local courts because of the local activities of subsidiary corporations upon the theory that the corporate separation is fictitious,
Unfortunately, such reasoning in these and similar cases,
The International Shoe decision represented an effort by the Supreme Court to clarify earlier concepts in the area of the amenability of foreign corporations to the personal jurisdiction of state courts by sweeping aside any lingering notions that the earlier shibboleths of "consent," "presence," and "doing business" were self-defining abstractions, and by redefining those tests in terms of "minimum contacts."
Another contact alleged to exist between the defendant and the State of Michigan is the sale of the defendant's product, Renault automobiles, within the State of Michigan and the delivery within the State of a warranty thereon, to which warranty the defendant Regie is a party. It is proper to note that it has come to be increasingly recognized that activities — in particular sales of products — outside a state resulting in consequences within the state may subject the actors to the personal jurisdiction of the courts within the state.
All that appears in the record in this case is that three dealers for the sale of Renault automobiles exist in the City of Detroit and that one of these sells a "substantial" number of Renault automobiles, having gross sales of "upwards" of $100,000. This record of dealerships and sales, even when considered together with the existence of a subsidiary corporation doing business within the State and the distribution of warranties with automobiles sold, does not in our opinion establish a sufficient showing of contacts between the defendants and the State of Michigan so as to constitute the minimum contacts essential to permit the exercise of personal jurisdiction in that State over these foreign corporations under the International Shoe Company case.
The judgment of the Trial Court is therefore affirmed.
Professor Cheatham goes on to approve this practice, however. After having noted that the case of McGee v. International Life Ins. Co., 355 U.S. 220, 222-223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957) had explained recent expansions in state court jurisdiction in terms of "the fundamental transformation for our national economy over the years," "increasing nationalization of commerce," and "modern transportation and communication," which make it "less burdensome for a party sued to defend himself in a State where he engages in economic activity," [Cheatham, Some Developments in Conflict of Laws, 17 Vand.L.Rev. 193, 195 (1963).] Professor Cheatham declares that the practice of applying interstate principles to international problems "is fortunate in these days of expanding international relations." Ibid., 200.
On another point, Professor Cheatham refers to "the question whether international conflict of laws is governed by state law or by federal law," and states as follows:
Because the parties have raised no question as to the foregoing matters, and in view of the Professor Cheatham's comments thereon, the Court mentions these matters only in passing, and will proceed to apply the law of Michigan to Regie as well as to Renault.
The defendants have advanced no argument, however, that Regie should be treated differently than a private corporation for purposes of passing upon its amenability to the jurisdiction of the District Court.
Compare Restatement, Foreign Relations Law of the United States, sec. 72 (1962), with Cheatham, Some Developments in Conflict of Laws, 17 Vand.L. Rev. 193, 200 (1963):