HONDA MOTOR COMPANY, INC., HONDA CANADA,
INC., DAIMLER CHRYSLER, DAIMLER CHRYSLER
CANADA, INC., MERCEDES BENZ CANADA, INC.,
NISSAN NORTH AMERICA, INC., NISSAN CANADA,
INC., BMW OF NORTH AMERICA, INC., BMW
CANADA, NATIONAL AUTOMOBILE DEALERS
ASSOCIATION and CANADIAN AUTOMOBILE
DEALERS ASSOCIATION,
Defendants,
NISSAN MOTOR CO., LIMITED,
Defendant-Respondent.
TABLE OF CONTENTS
TABLE OF AUTHORITIES ..................................................
ii
INTRODUCTION ...................................................................
1
ARGUMENT ...........................................................................
6
AS LONG AS CORPORATE FORMALITIES
ARE OBSERVED, THE CORPORATE
SEPARATION DOCTRINE PRECLUDES
ATTRIBUTING A CORPORATION’S ACTS
TO AN AFFILIATED CORPORATION FOR
PURPOSES OF GENERAL JURISDICTION ............
7
Ao
B°
II.
Rasmussen’s Argument Conflicts With
Wisconsin Appellate Case Law ......................... 8
Rasmussen’s Argument Conflicts With
The Law In Other Jurisdictions .......................
12
A BRIGHT-LINE RULE RESPECTING THE
CORPORATE FORM PROVIDES THE
BENEFIT OF CERTAINTY WITHOUT
BARRING MERITORIOUS CLAIMS ......................
13
CONCLUSION .....................................................................
18
RULE 809.19(8)(d) CERTIFICATION ................................ 21
ELECTRONIC FILING CERTIFICATION .........................
22
TABLE OF AUTHORITIES
CASES
Aquila, Inc. v. Superior Court, 148 Cal.
App. 4th 556 (Ct. App. 2007) ............................................
12
Bank of Am. v. Whitney Cent. Nat’l Bank, 261
4
U.S. 171 (1923) ...................................................................
Cannon Mfg. Co. v. Cudahy Packing Co., 267
4
U.S. 333 (1925) ...................................................................
Cemetery Servs., Inc. v. Wis. Dep’t of
Regulation & Licensing, 221 Wis. 2d 817,
586 N.W.2d 191 (Ct. App. 1998) ......................................
10
Cent. States, Se. & Sw. Areas Pension Fund v.
Reimer Express Worm Corp., 230 F.3d 934
(7th Cir. 2000) .............................................................
12, 15
Clement v. United Cerebral Palsy of Se. Wis.,
Inc., 87 Wis. 2d 327, 274 N.W.2d 688 (1979) ........3, 11, 13
Conservatorship of Prom v. Sumitomo Rubber
Indus., Ltd., 224 Wis. 2d 743,592 N.W.2d
657 (Ct. App. 1999) ...................................................
8, 9, 10
Consumer’s Co-op v. Olsen, 142 Wis. 2d 465,
passim
419 N.W.2d 211 (1988) .............................................
ii
Dorsky Hodgson & Partners, Inc. v. Nat’l
Council of Senior Citizens, 766 A.2d 54
12
(D.C. 2001) ........................................................................
Fields v. Playboy Club of Lake Geneva, Inc., 75
Wis. 2d 644, 250 N.W.2d 311 (1977) ...........................
9, 16
Hertz Corp. v. Friend, 130 S. Ct. 1181 (2010) ......................14
Hy Cite Corp v. Badbusinessbureau. com,
L.L.C., 297 F. Supp. 2d 1154 (W.D. Wis.
17
2004) ..................................................................................
Keeton v. Hustler Magazine, Inc., 465 U.S. 770
(1984) ...................................................................................
5
Kopke v. A. Hartrodt S.R.L., 2001 WI 99, 245
16
Wis. 2d 396, 629 N.W.2d 662 ...........................................
Krier v. Vilione, 2009 WI 45, 317 Wis. 2d 288,
766 N.W.2d 517 ...................................................................
7
Milwaukee Toy Co. v. Indus. Comm ’n of
Wisconsin, 203 Wis. 493,234 N.W. 748
(1931) ...................................................................................
7
Mitchell v. Airline Reservations Inc., 265 Wis.
313, 61N.W.2d 496 (1953) .......................................
4, 8, 11
Oxmans’ Erwin Meat Co. v. Blacketer, 86
Wis. 2d 683,273 N.W.2d 285 (1979) .................................
2
Pavalon v. Fishman, 30 Wis. 2d 228, 140
N.W.2d 263 (1966) ....................................................
4, 8, 11
ooo
111
Vermont Yogurt Co. v. Blanke Baer Fruit &
Flavor Co., 107 Wis. 2d 603,321 N.W.2d
315 (Ct. App. 1982) .............................................................
2
World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286 (1980) ..........................................................
18
STATUTES
Wis. Stat. § 801.05(1)(d) ...............................................
1, 2, 11
17
Wis. Stat. § 801.05(2)-(5) ......................................................
OTHER AUTHORITIES
1 William Meade Fletcher, Fletcher Cyclopedia
of the Law of Corporations § 36 (perm. ed.,
7
rev. vol. 2006) ......................................................................
iv
INTRODUCTION
Respect for the corporate form compels affirmance of
the decisions of the circuit court and the court of appeals
dismissing Nissan Motor Co., Ltd. ("Nissan Japan") for lack
of personal jurisdiction. David Rasmussen’s position asks
this Court to adopt a new rule requiring complete disregard
for the legal distinction between parent and subsidiary
corporations, equating subsidiaries with employees.
Rasmussen’s proposed rule conflicts with well-settled
Wisconsin law and constitutional due process, and it would
have adverse effects on Wisconsin’s economy and the law of
corporations in Wisconsin.
At the outset, it is important to be clear as to what this
appeal is about--and what it is not. First, this appeal
concerns general personal jurisdiction under Wis. Stat.
§ 801.05(1)(d), the statute that authorizes the exercise of
general jurisdiction (i.e., jurisdiction regardless of the nexus
of the claim to Wisconsin) based on the "local presence" of a
non-resident corporation because of its "substantial and not
isolated activities" in Wisconsin. See Vermont Yogurt Co. v.
Blanke Baer Fruit & Flavor Co., 107 Wis. 2d 603,613,321
N.W.2d 315 (Ct. App. 1982) (Bablitch, J.) (concluding that
general jurisdiction under section 801.05(1)(d) did not exist
over a defendant that sold products nationwide, earning about
three percent of its revenue from Wisconsin sales).
The appeal does not address specific personal
jurisdiction--that is, jurisdiction over parties engaging in acts
in or affecting Wisconsin. See Oxmans ’ Erwin Meat Co. v.
Blacketer, 86 Wis. 2d 683,691,273 N.W.2d 285 (1979).
Whatever this Court’s holding, it will not implicate the
authority of courts to exercise specific personal jurisdiction
over foreign defendants engaged in acts in or directed towards
Wisconsin. The issue presented is narrow.
2
Second, Rasmussen’s appeal asks this Court to effect a
profound and radical change to the well-settled law of general
jurisdiction in Wisconsin. This Court has long held that the
forum contacts of a subsidiary are imputed to a parent
corporation for jurisdictional purposes only if."
the parent corporation utterly disregards the
corporate form, so that the corporate veil may
be pierced and the subsidiary treated as the
"alter ego" of the parent, Consumer’s Co-op v.
Olsen, 142 Wis. 2d 465,474, 483-84, 419
N.W.2d 211 (1988); or
one entity so dominates and controls the
decision-making of another that, whether
labeled its "alter ego" or not, the controlled
entity has no presence in Wisconsin
independent of the controlling entity, Clement v.
United Cerebral Palsy of Se. Wis., Inc., 87
Wis. 2d 327, 336-38, 274 N.W.2d 688 (1979).
Likewise, this Court, relying on a long line of U.S.
Supreme Court precedent, has stated that agency cannot be
the basis for general jurisdiction. Mitchell v. Airline
Reservations Inc., 265 Wis. 313,314-15, 61 N.W.2d 496
(1953) ("The mere fact that.., there are agents or
subsidiaries within the state who deal with its products or
merchandise, does not establish the defendant’s corporate
presence within the state in a manner so that it was doing or
conducting business within this state .... ") (citing, inter alia,
Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333
(1925); Bank of Am. v. Whitney Cent. Nat’l Bank, 261 U.S.
171 (1923)). In contrast, this Court has established that a
principal can be subject to specific jurisdiction in Wisconsin
based on the acts of its agent. Pavalon v. Fishman, 30
Wis. 2d 228, 236, 140 N.W.2d 263 (1966).
Notwithstanding this well-settled body of law,
Rasmussen contends that general jurisdiction over Nissan
Japan should be based on the contacts of Nissan North
America, Inc. ("Nissan America") with Wisconsin simply
because, with no factual or other authority, Rasmussen
declares Nissan America an "agent" of Nissan Japan.
4
Rasmussen’s theory is not well founded and violates
the Supreme Court’s instruction that"[e]ach defendant’ s
contacts with the forum State must be assessed individually."
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13
(1984). Rasmussen’s theory of general jurisdiction--that
Wisconsin courts can exercise jurisdiction over a foreign
parent corporation merely because one of its subsidiaries
conducts business in Wisconsin and is labeled an "agent" of
the parent--would be an unwarranted expansion of the law of
general jurisdiction.
Worse, Rasmussen’s theory--if adopted as the law of
Wisconsin--would represent an unprecedented disregard for
the corporate form: parent and subsidiary corporations are
separate legal entities. In addition, adopting Rasmussen’s
theory of general jurisdiction would introduce substantial
uncertainty to the structure of corporate relationships and
international corporations, without a corresponding benefit to
Wisconsin citizens or businesses. Rasmussen’s proposed
departures from established Wisconsin case law, fundamental
principles of personal jurisdiction, and black-letter corporate
law are unwarranted and require affirmance of the court of
appeals.
ARGUMENT
The Wisconsin Civil Justice Council ("WCJC")
represents a broad spectrum of the Wisconsin business
community. Its members include numerous Wisconsin trade
associations representing businesses, large and small,
throughout Wisconsin. The WCJC was formed to represent
Wisconsin business interests in civil litigation, serving the
goals of fairness and equity, reduced costs for doing business
in Wisconsin, and to enhance Wisconsin’s image as a place to
live and work.
The Wisconsin Civil Justice Council urges this Court
to retain the bright-line rule in Wisconsin that a foreign parent
corporation is not subject to general personal jurisdiction
merely because it holds the stock of a subsidiary corporation
doing business in Wisconsin, as long as the parent maintains
and respects the separate corporate form of the subsidiary.
I.
AS LONG AS CORPORATE FORMALITIES
ARE OBSERVED, THE CORPORATE
SEPARATION DOCTRINE PRECLUDES
ATTRIBUTING A CORPORATION’S ACTS TO
AN AFFILIATED CORPORATION FOR
PURPOSES OF GENERAL JURISDICTION.
A "choice to create separate [corporate] entities must
be honored," even if affiliated corporations "are intertwined
and the success of one is dependent on that &the other."
Krier v. Vilione, 2009 WI 45, ¶¶ 27-28, 317 Wis. 2d 288, 766
N.W.2d 517 (citing 1 William Meade Fletcher, Fletcher
Cyclopedia of the Law of Corporations ("Fletcher
Cyclopedia") § 36 at 95-96 (perm. ed., rev. vol. 2006)). The
fiction of the corporate entity and limited shareholder liability
"must not be dispensed with lightly" as "the corporation is a
separate entity and is treated as such under all ordinary
7
circumstances." Consumer’s Co-op, 142 Wis. 2d at 474-76
(citing Milwaukee Toy Co. v. Indus. Comm "n of Wisconsin,
203 Wis. 493,495,234 N.W. 748 (1931)).
Rasmussen’s attempt to impute Nissan America’s
activities to Nissan Japan, however, conflicts with these basic
principles of corporate law and respect for the corporate form,
a fundamental part of Wisconsin law for at least 80 years.
A.
Rasmussen’s Argument Conflicts With
Wisconsin Appellate Case Law.
This Court has long recognized that a foreign
corporation is not subject to general jurisdiction in Wisconsin
based solely on a wholly owned subsidiary’s sale of goods
here. See Mitchell, 265 Wis. at 315. It is only under specific
jurisdiction that a principal can be held subject to jurisdiction
in Wisconsin based on the acts of its agent. Pavalon, 30
Wis. 2d at 236.
Relying on well-settled principles of Wisconsin law
defining the principles of corporate separateness, the court of
appeals, in the service of process context, has considered and
rejected Rasmussen’s argument. See Conservatorship of
Prom v. Sumitomo Rubber Indus., Ltd., 224 Wis. 2d 743,
758-61,592 N.W.2d 657 (Ct. App. 1999).
The plaintiff in Prom served process on the Secretary
of State, arguing that a Japanese parent was "transacting
business" in Wisconsin for purposes of the service of process
statute because of the subsidiary’s sales and shipments of
products to Wisconsin. Prom, 224 Wis. 2d at 759-60.1 The
court agreed that the parent-subsidiary relationship did not
establish the subsidiary as an "agent" for service of process
purposes. Id. at 760. In partial reliance on Consumer’s
Co-op, the Court held that the parent "is a separate legal
l Although the factors relevant to whether a corporation transacts
business in Wisconsin, such that it must apply for a certificate of
authority under chapter 180 of the Wisconsin Statutes, differ from the
factors relevant to the exercise of personal jurisdiction consistent with
due process, Prom, 224 Wis. 2d at 759 (citing Fields v. Playboy Club of
Lake Geneva, Inc., 75 Wis. 2d 644, 658, 250 N.W.2d 311 (1977)), that
difference has no bearing on the reasoning and conclusion in Prom that
the subsidiary’s activities cannot be imputed to the parent without a
showing that the parent has disregarded separate corporate identities.
See Prom, 224 Wis. 2d at 760-61.
entity" and that "[t]he mere existence of a parent-subsidiary
relationship between two corporations is not sufficient to
provide a court with jurisdiction." Id.
Rather, "the record must establish that the parent
corporation had control over the subsidiary ... to such an
extent that the separate corporate identity of the subsidiary
should be disregarded ...." Id. The court articulated fifteen
factors potentially relevant to the control exercised by a
parent over a subsidiary corporation.2 Id. at 760-61 (citing
Cemetery Servs., Inc. v. Wis. Dep’t of Regulation &
Licensing, 221 Wis. 2d 817, 827, 586 N.W.2d 191 (Ct. App.
1998).
2 Those factors are: "(1) common stock ownership, (2) overlapping
directors and officers, (3) combined use of corporate offices,
(4) capitalization of the subsidiary by the parent, (5) financing of the
subsidiary by the parent, (6) control of the subsidiary’s stock by the
parent, (7) use of the subsidiary’s property by the parent,
(8) intercorporate loans, (9) parental incorporation of the subsidiary,
(10) consolidated tax returns, (11) independent decision making by the
subsidiary, (12) independent decision making by the directors of the
subsidiary, (13) observance of formal corporate legal requirements,
(14) contracts between the subsidiary and parent, and (15) fraud or
injustice to third parties." Prom, 224 Wis. 2d at 760-61.
10
The fifteen-factor Prom test approximates Wisconsin’s
requirements for piercing the corporate veil or treating an
affiliated entity or shareholder as an alter ego. See
Consumer’s Co-op, 142 Wis. 2d at 482-86 & nn.4-5 (piercing
the corporate veil is proper when the corporation is a "mere
instrumentality or tool" of the shareholder or parent);
Clement, 87 Wis. 2d at 336-38.
Prom thus confirms that Wisconsin law supports the
decision of the court of appeals here because: (1) as Clement
and Consumer’s Co-op instruct, a court should not disregard a
parent-subsidiary relationship without a basis for
veil-piercing or an alter ego finding; and (2) as Mitchell,
Pavalon and section 801.05(1)(d) instruct, agency is not a
foundation for the exercise of general (as opposed to specific)
jurisdiction.
As such, this Court should affirm the rules set forth in
its prior decisions and clarify that they extend to the
11
relationships between not only parents and subsidiaries but
also to affiliated corporations for purposes of general personal
jurisdiction.
B.
Rasmussen’s Argument Conflicts With The
Law In Other Jurisdictions.
Each jurisdiction’s formulation varies slightly, but the
underlying principle is the same: before the activities of the
subsidiary can form the basis of general jurisdiction over a
parent corporation, the parent must exercise control of the
day-to-day activities of the subsidiary, such that it is a mere
instrument of the parent. See, e.g., Cent. States, Se. & Sw.
Areas Pension Fund v. Reimer Express World Corp., 230
F.3d 934, 943-44 (7th Cir. 2000) (in addition to an affiliation
between two corporations, due process requires that the
foreign corporation "dominate the subsidiary"); Aquila, Inc.
v. Superior Court, 148 Cal. App. 4th 556, 576-77 (Ct. App.
2007) (requiring "highly pervasive degree of control" that
"must veer into management and day-to-day operations");
12
Dorsky Hodgson & Partners, Inc. v. Nat’l Council of Senior
Citizens, 766 A.2d 54, 56 (D.C. 2001).
While some of the cases Rasmussen cites use the term
"agency," courts rely not on a traditional principal-agent
analysis, but on a dominance and control-based veil-piercing
or alter ego analysis akin to Clement and Consumer’s Co-op.
Here, the record contains no evidence of parental
domination and control. Indeed, Rasmussen has abandoned
any argument that Nissan Japan’s corporate veil should be
pierced or that Nissan America is an alter-ego of Nissan
Japan. Rasmussen v. Gen. Motors Corp., 2010 WI App 84,
¶ 12 n.3,326 Wis. 2d 264, 787 N.W.2d 59 (unpublished).
II.
A BRIGHT-LINE RULE RESPECTING THE
CORPORATE FORM PROVIDES THE BENEFIT
OF CERTAINTY WITHOUT BARRING
MERITORIOUS CLAIMS.
A decision by this Court reaffirming the bright-line
rule that the acts of a subsidiary cannot confer general
jurisdiction over the parent--absent disregard of corporate
13
formalities--benefits Wisconsin’s economy and judicial
system without jeopardizing anyone’s rights--citizens or
businesses.
Clear jurisdictional rules benefit the judicial system
and litigants. "Complex jurisdictional tests complicate a case,
eating up time and money as the parties litigate, not the merits
of their claims, but which court is the right court to decide
those claims." Hertz Corp. v. Friend, 130 S. Ct. 1181, 1193
(2010). This case--filed in 2003--illustrates the value of a
rule precluding the attribution of a corporation’s activities to
an affiliated entity under general agency principles for
purposes of general jurisdiction.
Clear jurisdictional rules likewise benefit investment
in and growth of the Wisconsin economy. "Simple
jurisdictional rules also promote greater predictability.
Predictability is valuable to corporations making business and
investment decisions." Id. As the Seventh Circuit has
14
recognized, although "’mechanical’ tests generally should not
be relied upon[,]" "constitutional due process requires that
personal jurisdiction cannot be premised on corporate
affiliation or stock ownership alone where corporate
formalities are substantially observed and the parent does not
exercise an unusually high degree of control over the
subsidiary." Cent. States, 230 F.3d at 943.
At least two considerations justify this bright line rule.
First, as long as the "parent does not dominate the subsidiary,
[they] are two separate entities and the acts of one cannot be
attributed to the other." Id. at 944. Second, where, as here,
the subsidiary remains a party and available (along with five
other major motor vehicle manufacturers and distributors) to
satisfy any judgment that may issue, the parent should not
"reasonably anticipate being [haled] into a foreign forum .... "
Id. Both reasons apply in this case, supporting the circuit
15
court’s dismissal of Rasmussen’s complaint against Nissan
Rasmussen’s theory of general jurisdiction promotes
uncertainty without advancing the interests of Wisconsin
citizens and businesses, who can, in addition to pursuing
subsidiaries doing business in Wisconsin, bring suit and
secure jurisdiction over foreign entities under various theories
of specific jurisdiction. These include but are not limited to:
A products liability action where the allegedly
defective product makes its way to Wisconsin
in the ordinary course of trade, including by
means of a distribution network that includes
subsidiaries and affiliates of the foreign
defendant. See Fields v. Playboy Club of Lake
Geneva, lnc., 75 Wis. 2d 644, 649-50, 250
N.W.2d 311 (1975).
An action arising out of a foreign defendant’s
negligent services performed anywhere in the
world where the defendant had reason to know
that the potential harm caused by its negligence
might be felt in Wisconsin. See Kopke v.
A. HartrodtS.R.L., 2001 WI 99, ¶¶ 1, 5-6,
30-32, 245 Wis. 2d 396, 629 N.W.2d 662.
16
¯
An action alleging the defendant committed an
intentional tort, such as defamation, the effects
of which are primarily suffered in Wisconsin.
See Hy Cite Corp v. Badbusinessbureau. com,
L.L.C., 297 F. Supp. 2d 1154, 1165 (W.D. Wis.
2004).
Any of the bases for exercising jurisdiction
specifically identified in Wis. Stat.
§ 801.05(2)-(5).
As these examples of specific jurisdiction show, many
claims will confer jurisdiction over a foreign parent
corporation not present in Wisconsin if, unlike Nissan Japan
here, the parent engages in an act in or affecting Wisconsin
that causes harm to a Wisconsin consumer or business.
If this Court adopts Rasmussen’s novel argument for
exercising general personal jurisdiction, it will damage
Wisconsin’s reputation as a favorable home for businesses
and impair economic development. Neither result is
necessary to protect the citizens and businesses of Wisconsin.
The law already gives them a forum for their jurisdictionally
legitimate claims.
17
CONCLUSION
The touchstone of personal jurisdiction is whether a
corporation or other defendant should reasonably anticipate
being haled into a foreign forum. See World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (the
exercise of personal jurisdiction is consistent with due
process when "the defendant’s conduct and connection with
the forum State are such that he should reasonably anticipate
being haled into court there"). Rasmussen’s theory, however,
discards predictability and foreseeability as jurisdictional
factors, relegating traditional principles of personal
jurisdiction and due process to the dust heap.
For example, under Rasmussen’s theory, Nissan Japan
could be haled into a Wisconsin court to defend a products
liability action arising from a Wisconsin resident’s
automobile accident in Europe, South America, or anywhere
else in the world based solely on Nissan America’s activities
18
in Wisconsin. If such broad long-arm jurisdiction were the
law, every foreign manufacturer should take heed--if you sell
products to a subsidiary, which then sells some of those
products in Wisconsin, you have unwittingly submitted to
jurisdiction in Wisconsin over an action arising anywhere in
the world, so best to avoid Wisconsin at all costs.
The Wisconsin Civil Justice Council asks this Court to
retain the long-standing rule that a foreign parent corporation
is not subject to general personal jurisdiction merely because
it owns a subsidiary corporation doing business in Wisconsin,
as long as the parent maintains and respects the separate
corporate form of the subsidiary.
19
Dated this 17th day of December, 2010.
Kat~er~ne Stadler
State Bar No. 1030775
Bryan J. Cahill
State Bar No. 1055439
GODFREY & KAHN, S.C.
One East Main Street, Suite 500
Post Office Box 2719
Madison, WI 53701-2719
Phone: 608-257-3911
Fax: 608-257-0609
[email protected]
Andrew C. Cook
State Bar No. 1071146
10 East Doty Street, Suite 500
Madison, WI 53703
Phone: 608-310-5325
Attorneys for the Wisconsin Civil
Justice Council, Inc.
20
RULE 809.19(8)(d) CERTIFICATION
I hereby certify that this brief conforms to the rules
contained in §§ 809.19(7) and 809.19(8)(b) and (c) for a brief
produced with a proportional serif font. The length of those
portions of this brief referred to in s. 809.19(1)(d), (e), and (f)
is 2,879 words.
Bryan J. Cahill
State Bar No. 1055439
21
ELECTRONIC FILING CERTIFICATION
I hereby certify, pursuant to Wis. Stat. § 809.19(12)(0,
that the text of the electronic copy of the brief is identical to
the text of the paper copy of the brief.
Bryan J. Cahill
State Bar No. 1055439
5767030_1
22