Vons Companies, Inc. v. Seabest Foods, Inc

In Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal. 4th 434, a meat processor, faced with potential liability in a California lawsuit for an outbreak of E. coli connected with the meat it sold to a California-based company (Foodmaker), cross-complained against two foreign cross-defendants. Although the bulk of the foreign cross-defendants' economic activities were in the State of Washington, they had contacts with California because they entered into franchise agreements with Foodmaker. As part of their franchise agreements with Foodmaker, they received training and instructions from, and were required to adhere to the standards established by, Foodmaker in preparing the food they purchased from Foodmaker, and made payments to Foodmaker. ( Vons, supra, 14 Cal. 4th at pp. 440-443.) Vons cross-complained against the foreign cross-defendants, alleging they improperly prepared the food carrying the E. coli bacteria for which Vons was potentially liable. On these facts, the Vons court found the foreign cross-defendants purposefully availed themselves of the benefits of conducting business within the California forum, noting that if Foodmaker had sued the foreign cross-defendants for breach of the franchise agreement, California would have specific jurisdiction to adjudicate the claims. 9 ( Id. at pp. 450-451.) The Vons court refined the analytical framework for evaluating the issue of specific jurisdiction by explaining that a court must first examine whether the nonresident defendant has purposefully availed itself of forum benefits, noting: "The United States Supreme Court has described the forum contacts necessary to establish specific jurisdiction as involving variously a nonresident who has 'purposefully directed' his or her activities at forum residents ( Burger King, supra, 471 U.S. at p. 472 85 L.Ed. 2d at p. 541), or who has 'purposefully derived benefit' from forum activities ( id. at p. 473 85 L.Ed. 2d at p. 541), or ' "purposefully availed himself or herself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." ' ( Id. at p. 475 85 L.Ed. 2d at p. 542 .) The court also has referred to the requisite forum contact as involving a nonresident defendant who ' "deliberately" has engaged in significant activities within a State or has created "continuing obligations" between himself and residents of the forum ' (id. at pp. 475-476 L. Ed. 2d at p. 543), concluding that in such cases the defendant 'manifestly has availed himself of the privilege of conducting business in the forum, and because his activities are shielded by "the benefits and protections" of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.' " (Vons, supra, 14 Cal. 4th at p. 446.) The California Supreme Court stated that the assertion of personal jurisdiction by a California court 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." ' "The requirement of minimum contacts is satisfied, subjecting the nonresident defendant 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.'" ( Id. at p. 446.) The California Supreme Court explained that the second prong of the test for specific jurisdiction is satisfied if "there is a substantial nexus or connection between the defendant's forum activities and the plaintiff's claim." (Vons, supra, 14 Cal.4th at p. 456.) "A claim need not arise directly from the defendant's forum contacts in order to be sufficiently related to the contact to warrant the exercise of specific jurisdiction. Rather, as long as the claim bears a substantial connection to the nonresident's forum contacts, the exercise of specific jurisdiction is appropriate." (Id. at p. 452.) "For the purpose of establishing jurisdiction the intensity of forum contacts and the connection of the claim to those contacts are inversely related. ... 'As the relationship of the defendant with the state seeking to exercise jurisdiction over him grows more tenuous, the scope of jurisdiction also retracts, and fairness is assured by limiting the circumstances under which the plaintiff can compel him to appear and defend.'" (Ibid.)