Jurisdiction Over a Parent Corporation In Its Subsidiary State of Incorporation
The principle of availment arises where it is shown that a specific activity of the parent corporation, while done in the context of the parent-subsidiary relationship, is itself sufficient to justify the exercise of specific jurisdiction over the parent by the forum state.
The target activity by the parent corporation must support a finding that the parent has purposefully availed itself of the protection and benefits of the forum state. (Empire Steel Corp. v. Superior Court (1961), 56 Cal. 2d at p. 829; Firemans' Fund Ins. National Bank (9th Cir. 1996) 103 F.3d 888, 894; Caruth v. International Psychoanalytical Ass'n (9th Cir. 1995) 59 F.3d 126.)
Because jurisdiction on this ground is specific rather than general, the acts furnishing the basis for jurisdiction must be related to the cause of action for which jurisdiction is sought. (Pope v. National Aero Finance Co. (1963) 220 Cal. App. 2d 709, 719 [33 Cal. Rptr. 889]; Wells Fargo & Co. v. Wells Fargo Exp. Co., supra, 556 F.2d at p. 420, fn. 14; Meyers v. ASICS Corp., supra, 711 F. Supp. 1001.)
The question in this situation is not whether justification exists to disregard the subsidiary's corporate existence or whether the subsidiary is an agent of the parent but rather whether the parent for all intents and purposes has done an act in the forum state of a nature as to make reasonable the forum state's exercise of jurisdiction over the parent with respect to that act and its consequences.
Thus, some actions of the parent corporation, even though occurring in the context of the parent-subsidiary relationship, will support jurisdiction over the parent because the acts constitute a purposeful availment by the parent of the benefits and protections of the forum state. (AT&T Co. v. Compagnie Bruxelles Lambert (9th Cir. 1996), 94 F.3d at p. 590.)
The critical acts may be taken directly by the parent or indirectly through the subsidiary, but in all events must be attributable to the parent corporation itself.
Thus, the theory does not rest on a finding that the subsidiary is a sham corporation or an agent or representative of the parent. Rather, the focus is on the acts of the parent itself.
This is a fine distinction between availment, agency and alter ego as bases for jurisdiction, and is often not explained in the cases.
The concept has been a part of California law for some time.
In Empire Steel, supra, 56 Cal. 2d 823, the Texas parent corporation was not formally doing business in California.
It had, for business reasons of its own, decided to expand into California, but chose not to do so through an extension of its own corporate structure. Instead, it decided to establish a wholly owned subsidiary incorporated in this state.
It provided the start-up capital and gave unquestionably invaluable support to the subsidiary as the latter commenced operations in California.