2011 WI 52
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Supreme Court of Wisconsin |
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Case No.: |
2007AP35 |
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Complete Title: |
David Rasmussen and Lisa A. Lindsay, Plaintiffs-Appellants-Petitioners, v. General Motors Corporation, General Motors of Ltd., Ford Motor Company, Ford Motor Company of Ltd., Toyota Motor Corporation, Inc., Toyota Canada, Inc., Honda Motor Company, Ltd., American 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 National Automobile Dealers Association and Canadian Automobile Dealers Association, Defendants, Nissan Motor Co., Limited, Defendant-Respondent. |
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REVIEW OF A DECISION OF THE COURT OF APPEALS Reported at: 326 (Ct. App. 2010 – Unpublished) |
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Opinion Filed: |
July 1, 2011 |
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Submitted on Briefs: |
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Oral Argument: |
January 5, 2011 |
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Source of Appeal: |
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Court: |
Circuit |
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County: |
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Judge: |
John A. Franke |
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Justices: |
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Concurred: |
ABRAHAMSON, C. J. concurs (Opinion filed). |
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Dissented: |
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Not Participating: |
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Attorneys: |
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For the plaintiffs-appellants-petitioners there were briefs and oral argument by Owen Thomas Armstrong, Jr., von Briesen & Roper, S.C., Milwaukee.
For the defendant-respondent there were briefs and oral argument by Daniel L. Goldberg, Bingham McCutchen, LLP, Boston, MA.
An amicus curiae brief was filed by Katherine Stadler, Bryan J. Cahill and Godfrey & Kahn, S.C., Madison and Andrew C. Cook, Madison for the Wisconsin Civil Justice Council, Inc.
An amicus curiae brief was filed by Jamison E. Lynch and Mayer Brown LLP, Chicago and Dan Himmelfarb (admitted pro hac vice), Brian J. Wong (admitted pro hac vice) and Mayer Brown LLP, Washington, DC. For the Association of International Automobile Manufacturers, Inc. and the Organization for the International Investment.
2011 WI 52
notice
This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 PATIENCE DRAKE ROGGENSACK, J. We review an
unpublished decision of the court of appeals[1]
affirming the circuit court's[2]
order dismissing for lack of personal jurisdiction a defendant, the Japan-based
Nissan Motor Company (Nissan Japan), from David Rasmussen's (Rasmussen)
class-action lawsuit. The issue
presented to this court is whether
¶2 Rasmussen contends that Wisconsin has general personal
jurisdiction over Nissan Japan[5]
under Wis. Stat. § 801.05(1)(d) based on the "substantial and not
isolated activities" of Nissan North America, Inc. (Nissan North America),[6]
Nissan Japan's wholly owned subsidiary. For
the reasons set out below, we conclude that even assuming arguendo that
Nissan North America were the agent of Nissan Japan, absent control by Nissan
Japan sufficient to cause us to disregard the separate corporate identities of
Nissan Japan and Nissan North America, the activities of the subsidiary
corporation are insufficient to subject its nonresident parent corporation to
general personal jurisdiction under § 801.05(1)(d). We also conclude that Rasmussen has not met
his burden to show that the corporate separateness of Nissan
¶3 Because we conclude that the statutory requirements for general personal
jurisdiction have not been met, we need not discuss whether exercising general personal
jurisdiction over Nissan
I. BACKGROUND
¶4 On September 18, 2003, Rasmussen filed a class-action
complaint against numerous automobile companies, including Nissan
¶5 The complaint further alleges that in an effort to advance a
price-fixing scheme, the defendants required their
¶6 On December 22, 2003, Nissan
¶7 On April 5, 2004, a hearing was held on Nissan
¶8 After
more than two years of discovery, the circuit court held a jurisdictional
hearing. At that hearing, Rasmussen
argued that general personal jurisdiction was proper under Wis. Stat. § 801.05(1)(d) for two reasons. First, Rasmussen argued that under the definition
of "manufacturer" in Wisconsin's Lemon Law, Wis. Stat. § 218.0171, Nissan North America is the agent
of Nissan Japan, and therefore it is proper to impute the activities of Nissan
North America to Nissan Japan.[14]
Second, Rasmussen argued that under the
alter-ego theory of jurisdiction, Nissan
¶9 Nissan
¶10 At the conclusion of the hearing, the circuit court made findings of fact on the jurisdictional issues that relate to the conspiracy to price fix that Rasmussen alleged. The findings relevant to this review are:
· "In terms of general jurisdiction under Section 801.05(1)(d), it seems absolutely clear that this section cannot be satisfied directly. It is only satisfied if one accepts the plaintiffs' argument and alleged showing that the activities of the subsidiary should be imputed to the parent."
·
"[A]s to Nissan
· "[T]here has not been a showing that there was not independent decision-making by the subsidiary."
· "There appears to have been observance of formal corporate legal requirements, at least no showing to the contrary."[17]
¶11 Based on these findings of fact, the circuit court concluded that
"there has clearly been a failure to demonstrate the corporate veil ought
to be pierced[,] or that on any other theory, jurisdiction over Nissan
¶12 Rasmussen appealed and the court of appeals affirmed the
dismissal. Rasmussen v. Gen. Motors
Corp., No. 2007AP35, unpublished slip op. (Wis. Ct. App. May 20,
2010). The court of appeals, relying on Insolia
v. Philip Morris Inc., 31 F. Supp. 2d 660 (W.D. Wis. 1998), held that
"the only provision of [Wisconsin's] personal jurisdiction statute
authorizing personal jurisdiction over a parent corporation based on an agency
relationship with its subsidiary is Wis. Stat. § 801.05(4)(a), which allows for specific personal
jurisdiction." Rasmussen,
No. 2007AP35, unpublished slip op., ¶23. Therefore, an agency theory provides no basis
on which to ground general personal jurisdiction pursuant to § 801.05(1)(d), based on
the acts of the nonresident parent's subsidiary.
¶13 We granted review and now affirm the court of appeals.
II. DISCUSSION
A. Standard of Review
¶14 Whether there is personal jurisdiction under
B.
Long-Arm Personal Jurisdiction Principles
¶15 Under
¶16 In determining whether personal jurisdiction may be exercised over
a nonresident defendant, we employ a two-step inquiry. Kopke, 245
¶17 The plaintiff has a "minimal burden" of showing that the
statutory and constitutional requirements are met.
C.
¶18 Pursuant to Wis. Stat. § 801.05(1),
¶19 In evaluating whether general personal jurisdiction lies over a
nonresident defendant pursuant to Wis. Stat. § 801.05(1)(d), we must determine whether the
defendant has engaged in "substantial and not isolated activities" in
¶20 Although we do not discuss due process directly in the first step of a personal jurisdiction analysis, the legislative history underlying Wis. Stat. § 801.05(1)(d) shows that the statutory criteria and due process are intertwined. This is so because § 801.05 "was intended to provide for the exercise of jurisdiction over nonresident defendants to the full extent consistent with the requisites of due process of law."[22] Flambeau Plastics Corp. v. King Bee Mfg. Co., 24 Wis. 2d 459, 464, 129 N.W.2d 237 (1964), overruled on other grounds by Pavalon v. Thomas Holmes Corp., 25 Wis. 2d 540, 131 N.W.2d 331 (1964); see also Vt. Yogurt, 107 Wis. 2d at 607 (explaining that "the legislature's purpose in creating the various subsections of the long-arm statute was to codify the due process requirements of 'minimum contacts' required under International Shoe Co. v. Washington, 326 U.S. 310 (1945)").
¶21 The five factors that we have considered in our due process
analysis are: (1) the quantity of
defendant's contacts; (2) the nature and quality of defendant's contacts; (3)
the source and connection of the cause of action with those contacts; (4) the
interests of
¶22 Occasionally, the "substantial and not isolated
activities" language has been examined in light of the activities of
someone other than the defendant for whom personal jurisdiction is sought, such
as an agent of a corporation or the subsidiary of a nonresident parent
corporation. In those circumstances, we
examine the relationship between the nonresident defendant and the alleged
agent or corporation who conducted activities in
¶23 In Pavalon v. Fishman, 30 Wis. 2d 228, 140 N.W.2d 263
(1966), we were asked to determine whether the brokerage firm that handled
Pavalon's purchase of a note and stock warrant was the agent of the defendant
so that the court had specific personal jurisdiction over the defendant under
Wis. Stat. § 262.05(5)(e)
(1965).[23]
¶24 While Pavalon could be cited as support for the premise that
the acts of an agent may be sufficient to support specific personal
jurisdiction over a nonresident defendant under some circumstances, no
Wisconsin appellate court has held that an agency relationship, without
consideration of any other factor, is sufficient to support general personal
jurisdiction over a nonresident defendant.[24] As Insolia correctly notes, no other
provision of
¶25 Although the concept of piercing the corporate veil generally is
associated with attaching liability for corporate actions to someone other than
the corporation, the analysis is somewhat similar to the analysis we employ in
evaluating whether there is general personal jurisdiction under Wis. Stat. § 801.05 over a
nonresident defendant for the acts of another. Consider, for example, Consumer's Co-op of
Walworth County v. Olsen, 142
¶26 The relationship between corporations has generated significant
discussion about the conditions under which the actions of one corporation are
sufficient to impute those actions to another corporation. For example, in Kerl v. Dennis Rasmussen,
Inc., 2004 WI 86, 273 Wis. 2d 106, 682 N.W.2d 328, we examined the
relationship between a franchisor and franchisee when plaintiffs asserted a
vicarious liability claim against the franchisor based on the alleged
negligence of the franchisee. We
concluded that "a franchisor may be held vicariously liable for the
tortious conduct of its franchisee only if the franchisor has control or a
right of control over the daily operation of the specific aspect of the
franchisee's business that is alleged to have caused the harm."
¶27 In Conservatorship of Prom v. Sumitomo Rubber Industries, Ltd.,
224 Wis. 2d 743, 592 N.W.2d 657 (Ct. App. 1999), the court of appeals
discussed whether a corporation that distributed its tires through a wholly
owned subsidiary transacted business in Wisconsin such that the Secretary of
State was a proper agent for service of process on the corporation. In its discussion, the court of appeals
affirmed the long held rule that "[t]he mere existence of a
parent-subsidiary relationship between two corporations is not sufficient to
provide a court with jurisdiction."
D. Application of
¶28 In regard to whether Wis. Stat. § 801.05(1)(d) accords general personal jurisdiction over Nissan Japan, Rasmussen argues that the "substantial and not isolated activities" of Nissan North America are imputed to Nissan Japan either through an agency theory[26] or because Nissan Japan exercised sufficient control over Nissan North America to override the corporate integrity of Nissan North America.[27]
¶29 In a jurisdictional analysis under Wisconsin's long-arm statute, we
generally consider the quantity of contacts; the nature and quality of the
contacts; the source and connection of the cause of action with those contacts;
the interests of Wisconsin in the action; and the convenience to the parties of
employing a Wisconsin forum. Clement,
87
¶30 However, here, there is no dispute that Nissan North America has
had contacts with Wisconsin that are sufficient to afford general personal
jurisdiction over Nissan North America.
Rather, the question presented is whether the relationship between
Nissan
¶31 We begin by underscoring that Rasmussen is seeking general personal
jurisdiction over Nissan
¶32 It is true that in Pavalon liability was grounded in an
agency relationship, that of a broker and client. However, we accorded only specific personal
jurisdiction, i.e., a limited jurisdiction that focuses on specific acts
of an agent in a specifically delineated agency relationship. Pavalon, 30
¶33 Rasmussen asks us to extend the jurisprudence attendant to specific
personal jurisdiction that applies to acts of an alleged agent to general
personal jurisdiction based on the acts of an alleged agent. Agency is grounded in the "manifestation
of consent by one person to another that the other shall act on his behalf and
subject to his control, and consent by the other so to act." Marten Trans., Ltd. v. Hartford Specialty
Co., 194
¶34 We note that Wis. Stat. § 801.05(4)
provides for specific personal jurisdiction based on the acts of an agent so
that a Wisconsin forum is not denied when the facts show that a
¶35 However, in order to accord general personal jurisdiction over a
nonresident corporate defendant based on an alleged agency relationship, there
must be something more than merely an agency relationship. As in other circumstances where general
personal jurisdiction is sought for a nonresident defendant based on the acts
of another in an alleged agency relationship with a subsidiary, there also must
be control by the nonresident parent corporation sufficient to cause us to
disregard the separate corporate identities of the subsidiary and the parent
corporations. See Conservatorship
of Prom, 224
¶36 Furthermore, Rasmussen has provided us with no reason why we should expand the law that provides a Wisconsin forum under principles applicable to specific personal jurisdiction to also accord a forum based on general personal jurisdiction, and we perceive none. Accordingly, even if we were to assume, arguendo, that Nissan North America were the agent of Nissan Japan, we decline to expand Wisconsin law attendant to specific personal jurisdiction such that general personal jurisdiction may rest solely on an alleged agency relationship.
¶37 However, as Rasmussen also asserts, we have ascribed actions of
another to a corporation when sufficient factors were present to cause us to
disregard the corporate existence. See
Clement, 87
¶38 As we consider the applicable law and apply it to the facts found,
we note that in assessing corporate separateness, Wisconsin courts have focused
most directly on the amount of control that one corporation exercises or has
the right to exercise over the other; whether both corporations employ
independent decision-making; whether corporate formalities were observed; whether
the corporations operated as one corporation; and whether observing the
corporate separateness would facilitate fraud.
See Consumer's
Co-op, 142
¶39 Here, the circuit court found no factor that would weigh in favor of ignoring the separate corporate identities of Nissan Japan and Nissan North America. To the contrary, the circuit court found that: (1) Nissan Japan did not have "complete control" or "domination" of Nissan North America; (2) requisite corporate formalities were observed; (3) there was no showing that Nissan North America did not exercise independent decision-making; (4) there was no showing that corporate legal requirements were not followed; and (5) there was no showing of fraud or undercapitalization. These findings have not been challenged, and in addition, our examination of the record shows that they are not clearly erroneous.
¶40 Given the law, which presumes corporate separateness, and the facts found about the relationship between Nissan Japan and Nissan North America, we conclude that Nissan Japan did not have control over Nissan North America sufficient to cause us to disregard the separate corporate identities of the nonresident parent and the subsidiary such that we impute the acts of the subsidiary to the parent. The reasoning of Insolia is consistent with our conclusion.
¶41 The issue in Insolia was whether
courts confronted with this issue . . . have focused on an additional factor: whether the parent managed the subsidiary with a degree of control greater than that normally associated with common ownership and directorship. This factor is borrowed from the so-called "alter-ego" doctrine, applicable to shareholders who exert "not mere majority or complete stock control, but complete domination . . . so that the corporate entity [has] . . . no . . . separate existence of its own."
Insolia, 31 F. Supp. 2d
at 669 (quoting Consumer's Co-op, 142
¶42 Here too, the facts found by the circuit court demonstrate the corporate integrity of Nissan North America has not been overridden by Nissan Japan's control of its subsidiary.
¶43 The reasoning in Conservatorship of Prom, which addressed
under what factual scenario service of process on the Secretary of State is
sufficient to accord personal jurisdiction over a nonresident corporation, is
also helpful when examining corporate separateness. Conservatorship of Prom, 224
¶44 Accordingly, based on the facts found, the law applicable and the
reasoning we have held to be persuasive, we conclude that Rasmussen has not met
his burden of showing a basis for disregarding the corporate integrity of
Nissan North America. He has provided no
evidence of control by Nissan
¶45 Rasmussen cites Huck v. Chicago, St. Paul, Minneapolis &
Omaha Railway Co., 4
¶46 In Huck, the issue was whether
¶47 Similarly, in Lau, we concluded that under the same statute
at issue in Huck, there was general personal jurisdiction over a
¶48 Rasmussen also points us to Clement. In Clement, we held that
¶49 Control sufficient to cause a court to disregard separate corporate identities is the sine qua non of the alter-ego theory for piercing the corporate veil.[30] And, while the alter-ego theory of personal jurisdiction was not mentioned in Clement, the amount of control exercised by United Cerebral Palsy over Wisconsin Cerebral Palsy mirrors the control parent corporations have over subsidiaries in cases where courts have disregarded the separateness of corporate identities.[31]
¶50 We are not persuaded that the decisions Rasmussen cited should lead
us to the conclusion he seeks.
Accordingly, we conclude that Rasmussen has provided no factual or legal
predicates for disregarding the separate corporate identities of Nissan
III. CONCLUSION
¶51 We conclude that even assuming arguendo that Nissan North
America were the agent of Nissan Japan, absent control by Nissan Japan
sufficient to cause us to disregard the separate corporate identities of Nissan
Japan and Nissan North America, the activities of the subsidiary corporation
are insufficient to subject its nonresident parent corporation to general
personal jurisdiction under Wis. Stat. § 801.05(1)(d). We also conclude that Rasmussen has not met
his burden to show that the corporate separateness of Nissan
¶52 Because we conclude that the statutory requirements for general personal
jurisdiction have not been met, we need not discuss whether exercising general
personal jurisdiction over Nissan
By the Court.——The decision of the court of appeals is affirmed.
¶53 SHIRLEY S. ABRAHAMSON, C.J. (concurring). General personal jurisdiction over a parent corporation "is an important and controversial area that lies at the intersection of civil procedure and corporate law."[32]
¶54 I write separately to put the issue of general personal jurisdiction over a parent corporation in context, to explore the complicated nature of the issue presented, and to raise concern about the majority opinion's references to "agency."
¶55 The issue presented is the circuit court's general personal
jurisdiction over a parent corporation for the continuous and substantial acts
of its wholly owned subsidiary corporation in
¶56 The instant case raises a question of jurisdiction over the parent corporation, not the liability of the parent for the conduct of the subsidiary. In other words, the case does not concern substantive rights against the parent corporation.[35]
¶57 To establish that a Wisconsin circuit court has general personal
jurisdiction over a defendant, including a parent corporation, two criteria
must be met: jurisdiction must be
authorized by the
¶58 The essence of the analysis of general personal jurisdiction over a corporation is whether the corporation has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'"[39]
¶59 In the present case, there is no dispute that general personal
jurisdiction lies over Nissan
¶60 The issue of a trial court's general personal jurisdiction over a parent corporation on the basis of the conduct of a subsidiary has been and continues to be the subject of numerous cases in federal and state courts at least since 1925, when the United States Supreme Court decided Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333 (1925).[40]
¶61 In Cannon, a complainant attempted to establish jurisdiction
in
¶62 The case law (as well as academic commentary) is not consistent in the interpretation or application of Cannon. Some cases refuse to attribute the activities of the subsidiary corporation to a parent corporation as long as the corporation has followed the formal requirements mandated by state law.[46] Other cases do not adhere to the strict formalistic approach in Cannon and view Cannon as authorizing the examination of the nature of the relationship between the two corporations to determine whether the exercise of jurisdiction is warranted.[47]
¶63 Still other cases have questioned the continued validity of the Cannon case after International Shoe Co. v. Washington, 326 U.S. 310, 320 (1945), and view International Shoe as altering or eroding the jurisdictional test of Cannon. Some of these cases conclude that the only due process limitations on the exercise of state court jurisdiction are the minimum contacts with the state and fairness standards of International Shoe.[48]
¶64 Regardless of whether a court uses the Cannon or International Shoe approach, an analysis of general personal jurisdiction over a parent corporation begins with the deeply rooted principle of law that a corporation is a separate juridical entity. A corporation is a legal entity distinct from its shareholders and employees. Corporations are legal fictions, granting limited liability to the owners of the corporation. Although a legal fiction, a corporation is also a legal fact. Thus, ordinarily a shareholder, including a parent corporation as a shareholder, is not subject to the jurisdiction of a court on the basis of the activities of the corporation. Jurisdiction over a wholly owned subsidiary does not automatically establish jurisdiction over the parent corporation in any forum in which the subsidiary has continuous and substantial contacts.[49]
¶65 Courts and commentators (as well as the parties and the amici in the present case, and the majority opinion) have articulated and purport to apply numerous tests to impute jurisdiction over the parent corporation based upon the acts of the subsidiary: the subsidiary is the parent's alter ego,[50] agent,[51] adjunct,[52] creature, dummy, tool, mere department,[53] or instrumentality;[54] the corporate veil should be "pierced";[55] the parent exercises a high degree of day-to-day control over the subsidiary notwithstanding formal corporate separateness;[56] and the enterprise theory based on economic integration of parent and subsidiary.[57]
¶66 Several of these "tests" are borrowed from substantive fields of law such as contract and tort liability. The meaning of these tests in substantive law cases might be different from the meaning of these tests in general personal jurisdiction cases.[58]
¶67 Thus, the circuit court and the majority opinion tread in murky waters when they use indeterminate substantive legal tests, such as piercing the corporate veil, to determine whether general personal jurisdiction lies. Tying the jurisdictional test to a substantive legal test such as piercing the corporate veil seems "to allow consideration of a wide and freewheeling variety of veil-piercing factors for jurisdictional purposes, divorced from any meaningful appraisal of the defendant's conduct in relation to the litigation and the forum."[59] "The standards by which we measure whether to pierce the corporate veil tell us nothing about the various interests that must be balanced in the constitutional evaluation of judicial jurisdiction."[60]
¶68 Using
an analysis based upon the extent of control to determine whether the parent
company has sufficient contacts with the forum state (through the control of
the subsidiaries actions in the state), as opposed to determining whether the
corporate entities should be merged or the corporate veil pierced, moors the
jurisdictional analysis to jurisdictional principles and avoids the potentially
confusing interplay of using a substantive legal test for jurisdictional
analyses.
¶69 Although the
various "tests," often borrowed from the substantive law, at base may
function to determine the extent of control of the parent, what must not be
lost in using these "tests" for jurisdictional purposes is that they
are being applied to determine whether jurisdictional principles (minimum
contacts, fair play, and substantial justice) are met, not whether substantive
law principles are met. The majority
opinion relies on the tests developed in substantive law cases and does not
acknowledge that the tests for substantive and jurisdictional law are not
necessarily one and the same.
¶70 Furthermore, the majority opinion relies on tests, such as "piercing the corporate veil," that are considered worn and meaningless epithets and metaphors.[61] Justice Benjamin Cardozo (then Judge of the New York Court of Appeals) warned in 1926 against using worn epithets and metaphors as a substitute for rigorous analysis as follows:
The whole problem of the relation between parent and subsidiary corporations is one that is still enveloped in the mists of metaphor. Metaphors in law are to be narrowly watched, for starting as devices to liberate thought, they end often by enslaving it.
Berkey v. Third Ave. Ry. Co., 155 N.E. 58, 61 (1926) (a substantive tort-liability case).
¶71 The rationale for the exercise of jurisdiction over the parent
corporation, regardless of the name given the test, is that the parent
exercises "such domination and control over its subsidiary 'that they do
not in reality constitute separate and distinct corporate entities but are one
and the same corporation for purposes of jurisdiction.'"[62] The
focus should be on the control of the parent over the subsidiary as it relates
to the minimum contacts necessary to establish jurisdiction over the parent
under the pertinent general personal jurisdictional principles (a long-arm
statute and constitutional principles of fairness).
¶72 Evidence of parental control over the day-to-day operations of the subsidiary's contacts in the forum would rightly be considered a relevant fact in determining whether the parent corporation has sufficient minimum contacts with the forum. If a parent controls the acts of a subsidiary in the state, then the parent ostensibly acts in the state, and the state has an interest in exercising jurisdiction over the parent corporation.
¶73 In other words, when the parent corporation's control over the subsidiary in the forum state is such that the entities should be treated as one and the same for purposes of exercising general personal jurisdiction over the parent, the subsidiary's forum contacts are treated as the parent's forum contacts. The Restatement (Second) of Conflicts of Laws states the rule as follows:
Judicial jurisdiction over a subsidiary corporation does not of itself give a state judicial jurisdiction over the parent corporation. This is true even though the parent owns all of the subsidiary's stock. So a state does not have judicial jurisdiction over a parent corporation merely because a subsidiary of the parent does business within its territory.
. . . .
Judicial jurisdiction over a subsidiary corporation will [] give the state judicial jurisdiction over the parent corporation if the parent so controls and dominates the subsidiary as in effect to disregard the latter's independent corporate existence.
Restatement (Second) of Conflicts of Laws § 52, cmt. b (1971).
¶74 I write to stress that no one has formulated a mechanical rule that furnishes a certain jurisdictional test. "Because every corporate relationship may differ significantly from every other corporate relationship, generalizations about the characteristics that will or will not indicate the existence of the requisite lack of separateness or the existence of sufficient control are almost impossible to draw."[63]
¶75 To disregard corporate separateness and assert general personal jurisdiction over the parent corporation on the basis of the activities of the subsidiary in the forum, all that can be stated is that a court must closely examine the nature and character of the relationship between the parent and subsidiary corporations, the nature of the forum contacts of the subsidiary, and the degree of control exercised by the parent over the subsidiary in relation to those forum contacts.[64] A court's inquiry is necessarily fact dependent.[65]
¶76 This analysis, in contrast with the use of the various substantive legal "tests" often used by the courts, begins and ends with the appropriate question: Does the extent and continuity of what the parent corporation has done in the forum state make it reasonable to bring that parent corporation before a court in the forum?
¶77 The
circuit court in the present case discussed numerous tests and theories,
recognizing numerous approaches and expressing frustration that it was
uncertain about the appropriate test. It
expressed the confusion surrounding the analysis of general personal
jurisdiction as follows: "There is
a significant issue as to whether or not the activities of the
¶78 After
examining and applying various approaches, the circuit court analyzed the
parent corporation's control over the subsidiary in the present case. Although using the language of "piercing
the corporate veil," the circuit court concluded that the facts do
not demonstrate pervasive, day-to-day, or dominating control by Nissan
¶79 I should be able to end this concurrence at this point. I cannot do so, however, because I have not yet analyzed the point of dispute between the parties in this court and their main arguments.
¶80 The parties debate the significance of an agency relationship between a parent and subsidiary corporation in determining general personal jurisdiction over the parent corporation.
¶81 The plaintiff argues that the subsidiary in the present case is the
agent of the parent corporation and that therefore the circuit court has
jurisdiction over the parent corporation based on the
¶82 The defendant parent corporation, Nissan
¶83 Thus the parties debate whether an agency relationship between the
two corporations will give the forum general personal jurisdiction over the
parent corporation. The majority
addresses the parties' dispute by "assuming arguendo that Nissan
North America were the agent of Nissan
¶84 To address the parties' dispute, I have to begin by explaining that
the word "agent" can have more than one legal meaning; the word is
not self-explanatory.[66] "Agency encompasses a wide and diverse
range of relationships and circumstances."[67] The
concept of agency in the broadest sense includes every relationship in which
one person or entity acts for or represents another.[68]
¶85 A
corporation can act only through another, either through an individual
or through another corporation (which in turn acts through an individual or a
corporation). Under general legal principles, a corporate subsidiary, even a
wholly owned subsidiary, is not automatically an agent of a parent corporation.[69]
¶86 Agency hinges on a principal's right to control the actions of the agent.[70] "A principal's right to control the agent is a constant across relationships of agency, but the content or specific meaning of the right varies."[71] "The fact that the substantive law may make the defendant vicariously liable for the act of someone else does not necessarily mean that the one who acted was the agent of the defendant for long-arm jurisdiction purposes."[72] To assert general personal jurisdiction over a parent corporation based on the forum contacts of a subsidiary, the complainant must demonstrate that the parent corporation exerts significant control over the actions of the subsidiary.[73] Evidence of a parent corporation's significant control over the forum contacts of the subsidiary, not the indeterminacy of labeling a wholly owned subsidiary an agent of the parent corporation, is determinative of imputing the forum contacts of the subsidiary to the parent corporation for purposes of general personal jurisdiction.
* * * *
¶87 In sum, I write separately to highlight that the analysis for imputing the contacts of a wholly owned subsidiary to a parent corporation for purposes of general personal jurisdiction is not necessarily the same as the analysis for a corporate parent's substantive liability for the acts of its wholly owned subsidiary.
¶88 The majority opinion recognizes the distinction between
jurisdiction and substantive liability.
But in discussing jurisdictional concepts, the majority opinion
references principles that are applicable to substantive analyses without
making a distinction in applying those principles to the jurisdictional
analysis. These references in the
majority opinion are, in my opinion, potentially confusing. The analysis of general personal
jurisdiction and the analysis of substantive liability in situations involving
a wholly owned subsidiary and its parent should not be confused as being one
and the same.
¶89 No
one has formulated a mechanical rule that furnishes a certain general personal
jurisdictional test in the parent and subsidiary context. The
essence of the answer to the question whether general personal jurisdiction
over a parent corporation lies because of the forum contacts of its subsidiary
is the degree of control of the parent over the forum contacts of the
subsidiary.
¶90 For the reasons set forth, I write separately.
[1] Rasmussen v. Gen. Motors Corp., No. 2007AP35, unpublished slip op. (Wis. Ct. App. May 20, 2010).
[2] The Honorable John A.
Franke of
[3] Rasmussen seeks only general personal jurisdiction before us; however, at the circuit court, Rasmussen sought both general personal jurisdiction and specific personal jurisdiction.
[4] All subsequent references to the Wisconsin Statutes are to the 2007-08 version unless otherwise indicated.
[5] Nissan
[6] Nissan North America,
Inc. was formerly known as Nissan
[7] Compl., ¶¶72-73.
[8]
[9]
[10]
[11] For the purposes of this
opinion, the relevant portions of
Personal jurisdiction, grounds for generally. A court of this state having jurisdiction of
the subject matter has jurisdiction over a person served in an action pursuant
to s. 801.11 under any of the following circumstances:
(1) Local presence or status. In any action whether
arising within or without this state, against a defendant who when the action
is commenced:
. . .
(d) Is engaged in substantial and not isolated activities within this state, whether such activities are wholly interstate, intrastate, or otherwise.
[12] The Honorable Dennis P.
Moroney of
[13] Rasmussen filed a
motion to compel discovery on June 4, 2004. On June 24, 2004, the circuit court
ordered Nissan
[14] At the circuit court
hearing, Rasmussen acknowledged that this was the first time
[15] At oral arguments to
this court, however, Rasmussen mentioned a slightly different agency-based
ground on which he contended that Wisconsin courts have general personal jurisdiction
over Nissan
[16] Counsel for Nissan
[17] These findings of fact have not been challenged on appeal.
[18] Rasmussen advanced two
additional arguments to the court of appeals:
(1) that there was specific personal jurisdiction over Nissan
Japan pursuant to Wis. Stat. § 801.05(4);
and (2) that if the court concluded that there was no personal jurisdiction
over Nissan Japan, the case should be remanded to allow Rasmussen to conduct
jurisdictional discovery directly on Nissan Japan. Rasmussen, No. 2007AP35, unpublished
slip op., ¶¶24-31. The court of appeals held against Rasmussen
on both accounts. Rasmussen does not
challenge the conclusion that there is no basis for specific personal jurisdiction
over Nissan
[19] "Personal
jurisdiction" is distinct from "subject matter jurisdiction" in
that personal jurisdiction refers to the court's power to exercise jurisdiction
over a given individual. See generally,
State v. Muentner, 138
[20] Other subsections of Wis.
Stat. § 801.05
provide for the exercise of specific personal jurisdiction over a particular
defendant. E.g., § 801.05(4). Specific personal jurisdiction is proper "when
the case itself arises out of or is related to the defendant's contact with the
state." Druschel v. Cloeren,
2006 WI App 190, ¶18, 295
[21] Wisconsin Stat. § 801.05(1)(d)
"corresponds in a general way to the 'doing business' statute common in
other states." Nagel v.
Crain Cutter Co., 50
[22] In Flambeau Plastics
Corp. v. King Bee Manufacturing Co., 24
[23] Wisconsin Stat. § 262.05(5)(e) (1965), a provision involving specific personal jurisdiction, is not part of the current statutory scheme relative to personal jurisdiction of nonresident defendants.
[24] In
Pavlic v. Woodrum, 169
[25] We
did note one exception to that rule of agency, the nondelegable duty exception. When the agent performs nondelegable duties
of the principal as an independent contractor, the agent may subject the
principal to vicarious liability. Kerl
v. Dennis Rasmussen, Inc., 2004 WI 86, ¶20 n.2, 273
[26] Rasmussen did not
advance arguments to this court as to why Nissan North America was Nissan
Nissan
[27] Rasmussen
also contends that, for the purposes of ch. 801, Wis. Stat. § 801.03(1)
defines "defendant" as "the person named as defendant in a civil
action, and where in this chapter acts of the defendant are referred to, the
reference attributes to the defendant any person's acts for which acts the
defendant is legally responsible."
Rasmussen then contends that because Wis. Stat. § 801.05(1)(d)
accords general personal jurisdiction over any defendant who "is engaged
in substantial and not isolated activities" in
[28] Cemetery Services,
Inc. v. Wisconsin Department of Regulation & Licensing, 221
Wis. 2d 817, 586 N.W.2d 191 (Ct. App. 1998), suggested the following
factors for consideration when a court is asked to assess corporate
integrity: (1) whether there is common
stock ownership; (2) whether the corporations have overlapping directors and
officers; (3) whether the corporations combine their use of corporate offices;
(4) whether the capitalization of the subsidiary was sufficient; (5) whether
the operations of the subsidiary are financed by the parent; (6) whether the
parent has a controlling interest in the subsidiary's stock; (7) whether the
parent has use of the subsidiary's property; (8) the extent of inter-corporate
loans; (9) whether the parent was the incorporator of the subsidiary; (10)
whether the parent files consolidated tax returns; (11) whether the subsidiary
exercises independent decision-making; (12) whether the directors of the
subsidiary exercise independent decision-making; (13) whether formal corporate
legal requirements are observed; (14) whether there are contracts between the
subsidiary and parent; and (15) whether the observance of corporate integrity
will result in fraud or injustice to third-parties.
[29] The statute that was repealed
in 1975 stated that Wisconsin courts had jurisdiction over a foreign
corporation if it "is doing business in
[30] As we mentioned above in paragraph 25, piercing the corporate veil is generally associated with attaching liability for corporate actions to someone other than the corporation. However, the analysis of control employed therein is similar to that employed in assessing the issue of control when general personal jurisdiction is at issue. Insolia v. Philip Morris Inc., 31 F. Supp. 2d 660, 669 (W.D. Wis. 1998).
[31] See Consumer's
Co-op of Walworth Cnty. v. Olsen, 142
[32] Jennifer A. Schwartz, Piercing
the Corporate Veil of an Alien Parent for Jurisdictional Purposes: A Proposal
for a Standard that Comports with
[33] See
[34] The development of
multinational private enterprises raises a conflict between the power of the enterprise
and the power of any nation over the enterprise. In the
[35] Henry W. Ballantine, Separate
Entity of Parent and Subsidiary Corporations, 14
Phillip I. Blumberg, The Law of Corporate Groups: Procedural Problems in the Law of Parent and Subsidiary Corporations (1983 & Supp. 2000), addresses the law of parent and subsidiary corporations in the area of procedure; concern with substantive liability and limited liability is rarely involved.
[36]
[37] Int'l Shoe Co. v.
[38] Schroeder v. Raich, 89
[39] Int'l Shoe, 326
[40] For discussions and
compilations of cases addressing this issue, see Blumberg, supra
note 4;
Robert C. Casad & William
B. Richman, Jurisdiction in Civil Actions § 4-3[5], at 496-98 (3d
ed. 2004); 1 William Meade Fletcher, Fletcher Cyclopedia of the Law
of Corporations § 43.70,
at 323-34 (2006 rev. ed.); 4A Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 1069.4 (3d ed. 2002); Schwartz,
supra note 1;
Lonny Sheinkopf Hoffman, The
Case Against Vicarious Jurisdiction, 152 U.
[41] Cannon Manufacturing
Co. v. Cudahy Packing Co., 267
[42] At that time the
constitutional basis for jurisdiction was presence. Pennoyer v. Neff, 95
[43] The federal common law for diversity jurisdiction analysis was abolished by Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938).
[44]
[45] Daniel G. Brown, Jurisdiction
Over A Corporation on the Basis of the Contacts of an Affiliated
Corporation: Do You Have To Pierce the
Corporate Veil?, 61 U. Cin. L. Rev. 595, 602 (1992-93); Lea Brilmayer &
Kathleen Paisley, Personal Jurisdiction and Substantive Legal Relations:
Corporations, Conspiracies, and Agency, 74
[46] See, e.g., Hoffman, supra note 9, at 1042 (discussing disagreement about holding of Cannon); Voxman, supra note 9, at 330-31, 337 (1992).
[47] Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983) (the degree of control by the parent must be greater than that normally associated with common ownership and directorship); Voxman, supra note 9, at 337-39 (1992).
[48] See, e.g., Energy Reserves Group, Inc. v. Superior Oil Co., 460 F. Supp. 483 (D. Kan. 1978); Voxman, supra note 9, at 331-36, (1992).
[49] Hadari, supra note 3, at 770-71.
[50] For discussions of the alter ego theory of jurisdiction and case law, see Bauman v. DaimlerChrysler Corp., ___ F.3d. ___, ___, 2011 WL 1879210 (9th Cir. May 18, 2011); Casad & Richman, supra note 9, § 4-3[5], at 496-98; Schwartz, supra note 1, at 746-48; Voxman, supra note 9, at 348.
[51] For discussions of the agency
theory of general personal jurisdiction, see Bauman v. DaimlerChrysler Corp.,
___ F.3d. ___, ___, 2011 WL 1879210 (9th Cir. May 18, 2011); Gordon v.
Greenview Hosp., Inc., 300 S.W.3d 635, 653 (
[52] See, e.g., In re Genetically Modified Rice Litigation, 576 F. Supp. 2d 1063, 1072 (E.D. Mo. 2008).
[53] See, e.g., Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Co., 751 F.2d 117 (2d Cir. 1984).
[54] See generally Frank v. U.S. West, Inc., 3 F.3d 1357, 1362 n.2 (10th Cir. 1993) (describing agency test, alter ego test, instrumentality test and entity test, tests courts developed to determine substantive liability to determine jurisdiction); Gordon, 300 S.W.3d at 652 n.14.
[55] For a discussion of the "piercing the corporate veil" theory of jurisdiction and case law, see generally Casad & Richman, supra note 9, § 4-3[5], at 496-98; Schwartz, supra note 1, at 746-48.
[56] Factors used to determine the extent of the parent's control include: whether a parent arranges financing for and capitalization of a subsidiary; whether the corporations keep separate books, tax returns, and financial statements; whether the officers ad directors are the same; whether the parent holds its subsidiary as an agent; the method of payment made to the parent by the subsidiary; and the extent of control over the daily affairs of the subsidiary. Courts are generally more likely to assert jurisdiction when the subsidiary is undercapitalized or the complainant would suffer injustice absent personal jurisdiction over the foreign parent. Schwartz, supra note 1, at 748-49.
[57] For discussions of the enterprise theory examining the corporate group as a unit, see Blumberg, supra note 4, § 1.03, at 23-25; Schwartz, supra note 1, at 735; Brilmayer & Paisley, supra note 14, at 30.
[58] Commentators and courts explain that the justifications for holding or not holding a parent corporation substantively liable for the acts of a subsidiary may be different than the justifications for exercising general personal jurisdiction over the parent. See, e.g., 1 Fletcher, supra note 9, § 43.70 at 326-27. Furthermore, commentators argue that if the same standard is used for jurisdictional and substantive law issues, then the jurisdictional ruling may be used as collateral estoppel, preventing the parties from relitigating the issue in the determination of liability. See, e.g., Brown, supra note 14, at 621.
[59] Hoffman, supra note 9, at 1094.
[60]
[61] "When the haze of jurisdictional law collides with the metaphor-filled fog of the 'piercing the corporate veil' doctrine, the result is, predictably, a smog of the thickest variety. . . . Few areas of the law are as clouded by the use of metaphors in place of substantive legal analysis as is the area of piercing the corporate veil." Brown, supra note 14, at 595, 598.
The doctrine of piercing the corporate veil has been
analogized to lightning: "rare, severe, and unprincipled." Frank H. Easterbrook & Daniel R. Fischel,
Limited Liability and the Corporation, 52 U. Chi. L. Rev. 89, 89 (1985).
Piercing the corporate veil "has been derisively called many things: 'unprincipled,' 'defy[ing] any attempt at rational explanation,' 'not entirely comprehensible,' 'dysfunctional,' and 'freakish[].'" Hoffman, supra note 9, at 1075 (internal citations omitted).
[62] Hargrave, 710 F.2d at 1159 (quoting 2 James Wm. Moore & Jo Desha Lucas, Moore's Federal Practice ¶4.25[6], at 4-273 (2d ed. 1982).
[63] Casad & Richman, supra note 9, § 3-2(b)(ix), at 359.
[64] See, e.g., 1 Fletcher, supra note 9, § 43.70, at 323.
[65] 4A Wright & Miller, supra note 9, § 1069.4, at 164, 185.
[66] Doe v. Holy See, 557 F.3d 1066, 1080 (9th Cir. 2009) ("[T]he standard for determining that a natural person is the agent of another differs from the standard for attribution of the actions of a corporation to another entity.").
[67] Restatement (Third) of Agency § 1.01 cmt. c, at 19 (2006).
[68] See, e.g., Gordon,
300 S.W.3d at 653;
St. Clair Intermediate Sch. Dist. v. Intermediate Educ. Assoc./Mich. Educ.
Ass'n, 581 N.W.2d 707,
716 (
[69] See cases cited at Reporter's
Note, Restatement (Third) of Agency § 1.01, at 45-46 (2006); Blumberg, supra note 4, § 1.02.2
at 21-23 (traditional agency almost always does not exist between a parent
corporation and a subsidiary; the word "agency" is often misused in
jurisdiction cases and linked with other metaphors, like alter ego or piercing
the corporate veil that establish a common legal identity).
Despite an agency relationship, a principal and agent retain separate legal personalities. Restatement (Third) of Agency § 1.01 cmt. c, at 20 (2006).
[70] Restatement (Third) of Agency § 1.01 cmt. c, at 20 (2006).
[71]
[72] Casad
& Richman, supra note 9,
§ 4-3[5], at 479 ("The agency question for [jurisdictional] basis
purposes is distinct from the agency question for process purposes, and both
are distinct from the question of alter ego or piercing the corporate veil,
although the distinctions often are blurred in the cases."
[73] Coca-Cola
Co. v. Proctor & Gamble Co., 595 F. Supp. 304, 306 (N.D.