Unpublished Disposition, 911 F.2d 738 (9th Cir. 1990)

MEMORANDUM^** 

The district court dismissed David Raths' negligence, warranty and strict liability claims against Avant-Garde Optics, Inc., Luxottica S.P.A. of Italy and Luxottica Group S.P.A. (collectively "the Luxottica appellees") for lack of personal jurisdiction. The court later granted the United States' motion for summary judgment on Raths' claim under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 1346(b), because the court determined that the FTCA's foreign country exception, 28 U.S.C. § 2680(k), applied. Raths appeals, and we affirm.

* David Raths purchased a pair of eyeglasses at Rhein Main Air Force Base in Germany from Max Rader. Rader was under contract with the United States to provide optical services at the air force base. Raths brought the eyeglasses with him to his family farm in Roundup, Montana. In May of 1985, Raths tried to pull a vehicle out of mud with a tractor. The tractor "wheelied," and Raths' head hit the tractor's steering wheel. His eyeglasses shattered, and as a result he is now blind in both eyes.

Raths brought suit against Luxottica S.P.A. of Italy, Luxottica Group S.P.A., Avant-Garde Optics, Inc., and the United States. Luxottica S.P.A. of Italy manufactured the eyeglass frames Raths purchased in Germany. Luxottica S.P.A. of Italy is a wholly-owned subsidiary of Luxottica Group S.P.A. Avant-Garde Optics, Inc. is also a wholly-owned subsidiary of Luxottica Group S.P.A., and it is the exclusive United States distributor of Luxottica frames. However, Avant-Garde Optics does not manufacture, market, distribute or sell the type of frames purchased by Raths in Germany.

The district court granted a motion to dismiss the Luxottica appellees for lack of personal jurisdiction. It then granted the United States' motion for summary judgment based on the foreign country exception to the FTCA. We review de novo whether Raths satisfied his burden of showing a prima facie case of personal jurisdiction. Farmers Insurance Exchange v. The Portage La Prairie Mutual Insurance Co., No. 89-35409, slip op. 6831, 6835 (9th Cir. July 9, 1990). We also review the district court's decision to grant summary judgment de novo. Self Directed Placement Corp. v. Control Data Corp., No. 89-55337, slip op. 6919, 6922 (9th Cir. July 10, 1990).

II

Personal jurisdiction has both statutory and constitutional dimensions. After a court determines that a state's statutory jurisdictional requirements are satisfied, the court must then decide if exercising personal jurisdiction is consistent with due process. Farmers Insurance Exchange, No. 89-35409, slip op. at 6835. In this case, the Luxottica appellees concede that Montana's long-arm statute confers personal jurisdiction to the full extent permitted by due process. See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 838-9 (9th Cir. 1986). They maintain that exercising personal jurisdiction over them would be inconsistent with due process.

Due process requires that nonresident defendants have certain minimum contacts with the forum so that "maintenance of [a] suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citations omitted). When a nonresident defendant's contacts with the forum state are substantial or continuous and systematic, courts can exercise "general" jurisdiction over the defendant and entertain claims unrelated to forum activities. Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 1392, 1396 (9th Cir. 1986). When a nonresident defendant's contacts with the forum state are not substantial, courts can exercise only "limited" or "specific" jurisdiction over the defendant for causes of action which arise out of the defendant's forum-related activities. Id. at 1397.

Specific jurisdiction exists when: "(1) the non-resident defendant does some act by which it purposefully avails itself of the privilege of conducting activities in the forum, 2) the claim arises out of the defendant's forum-related activities, and 3) the exercise of jurisdiction is reasonable." Farmers Insurance, slip op. at 6836. Because Raths does not argue that general jurisdiction is appropriate, we will only determine whether the district court correctly held that it lacked specific jurisdiction over the Luxottica appellees. We will first examine whether the district court should have exercised personal jurisdiction over Luxottica S.P.A. of Italy and Luxottica Group S.P.A., and then we will discuss whether the district court should have exercised personal jurisdiction over Avant-Garde Optics.

Raths argues that exercising specific jurisdiction over Luxottica S.P.A. of Italy and Luxottica Group S.P.A. is proper for three reasons: because his injury occurred in Montana, because Luxottica S.P.A. of Italy and Luxottica Group S.P.A. placed the eyeglass frames in the stream of commerce, and because Luxottica Group S.P.A. has a wholly-owned subsidiary, Avant-Garde Optics, Inc., a New York corporation, which distributes eyeglass frames in Montana and which contracted with an independent contractor in Montana to act as a local sales agent in that state.

We can easily reject Raths' contention that we should exercise personal jurisdiction over Luxottica S.P.A. of Italy and Luxottica Group S.P.A. because they caused an injury which occurred in Montana. The Supreme Court has already explained that the place of injury does not control whether personal jurisdiction is appropriate. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (Oklahoma court cannot exercise personal jurisdiction over a New York automobile dealer merely because an automobile sold by the dealer was in an accident in Oklahoma).

We also do not believe that personal jurisdiction is proper because Luxottica S.P.A. of Italy and Luxottica Group S.P.A. placed the eyeglasses in the stream of commerce with the intent to reach throughout the world. A plurality of the Supreme Court rejected the stream of commerce argument in Ashai Metal Industry Co. v. Superior Court, 480 U.S. 102, 108-113 (1987). Even if we were to apply the stream of commerce rationale, it would be difficult to conclude that these appellees expected to be haled into a United States court concerning an injury caused by eyeglasses not sold in the United States. See Ashai, 480 U.S. at 117 (Brennan, J., concurring) (advocating the stream of commerce rationale where the defendant "is aware that the final product is being marketed in the forum State").

Moreover, eight members of the Ashai court expressed a particular hesitancy to reach across international boundaries in an exercise of personal jurisdiction: "The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders." Id. at 114. The Court expressed an "unwillingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum State. Great care and reserve should be exercised when extending our notions of personal jurisdiction into the international field." Id. at 115 (citations omitted). Thus reasonableness considerations also counsel against exercising personal jurisdiction.

Finally, we decline to accept Raths' invitation to "ignore the formal way the corporations are set up and allow the case to proceed against all the various corporations which are involved in the distribution of Luxottica brand eyeglasses." The district court found no evidence that Luxottica Group S.P.A. exercised a degree of control over Avant-Garde Optics which would justify disregarding their independent corporate entities. On appeal, Raths has given us no reason to pierce the corporate veil. The mere existence of a parent-subsidiary relationship is insufficient to establish personal jurisdiction. A court cannot exercise personal jurisdiction over a parent corporation solely because it could exercise jurisdiction over its subsidiary. Transure, Inc. v. Marsh and McLennan, Inc., 766 F.2d 1297, 1299 (9th Cir. 1985). Because Luxottica S.P.A. of Italy and Luxottica Group S.P.A. did not purposefully avail themselves of the privilege of conducting business in Montana, we agree with the district court that it could not constitutionally exercise personal jurisdiction over them.

The district court concluded that it could not exercise personal jurisdiction over Avant-Garde Optics either. We agree. Even assuming that Avant-Garde Optics purposefully availed itself of the privilege of conducting business in Montana through its Montana sales agent, Raths' cause of action did not "arise out of" that corporation's contacts with Montana. Avant-Garde Optics did not sell the particular eyeglass frames which caused Raths' injury. It did not even carry frames of that style. There simply is no relationship between Raths' injury and Avant-Garde Optics' contacts with Montana.¹ 

III

The district court granted the summary judgment motion of the United States because Raths' FTCA claim was barred by the FTCA's foreign country exception. 28 U.S.C. § 2680(k). That section states that the FTCA does not apply to "any claim arising in a foreign country." On appeal, Raths argues that claims "arise" where the injury occurred, not where the negligence occurred. Alternatively, Raths contends that if a claim arises where the negligence occurred, there are genuine issues of material fact concerning whether the government's negligence occurred in the United States. We reject both arguments.

We have already held that under the FTCA's foreign country exception, claims "arise" where the negligence occurred, not where the injury occurred. Leaf v. United States, 588 F.2d 733, 736 (9th Cir. 1978). Here, we need only decide whether genuine issues of fact remain concerning where the government's alleged negligence occurred.

Raths argues on appeal:

It is impossible, prior to discovery, to determine or to state with accuracy what the factual situation is concerning negligent conduct occurring in the United States which may have had a bearing on the distribution of the eyeglasses at the air force base in Germany. The United States did require the optical service to conform to impact resistance requirements of the Food and Drug Administration. What effort was made on the part of the United States to see that the contract provision was adhered to or whether or not any general policy having to do with the inclusion of such language or the enforcement of those contract requirements were made, could well have originated in the United States.

These bare allegations are insufficient to withstand the government's motion for summary judgment. Raths has been unable to identify any allegedly negligent governmental action which occurred in the United States which had even the slightest connection with Raths' injury. Summary judgment was proper because Raths has failed "to make a showing sufficient to establish the existence of" negligence on the part of the United States. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).² 

AFFIRMED.