Spotlight on Jurisdiction – The Foreign Manufacturer
In Anderson v. Dassault Aviation, the Eighth Circuit Court of Appeals ruled that a parent company could be ensnared in U.S. Jurisdiction by virtue of its “symbiosis” with a wholly owned subsidiary. This opinion seemingly disregards the doctrine of “corporate separateness” on which many foreign manufacturers have come to rely. Now on Petition of Certiorari to the Supreme Court of the United States, it remains to be seen if the Supreme Court will hear the case and, if so, whether it will become the “law of the land.” Anderson v. Dassault Aviation, Inc., 361 F.3d 449 (8th Cir. 2004), cert. filed Aug. 17. 2004.

In Anderson, Plaintiff, a flight attendant, sustained injuries when the business jet on which she worked underwent a “series of pitch oscillations” during a descent in preparation for landing. Plaintiff brought a product liability action against the manufacturer of the business jet, the distributor of the jet, and the manufacturer of the autopilot. The District Court granted the jet manufacturer’s motion to dismiss for lack of personal jurisdiction.

The Court of Appeals reversed, finding that the defendant, Dassault Aviation, a French corporation, had sufficient minimum contacts with the state of Arkansas to sustain jurisdiction.

In holding that there existed minimum contacts from which to exercise jurisdiction over Dassault, the Court gave significant weight to the “symbiotic relationship” between defendant Dassault Aviation and, its wholly owned subsidiary, Dassault Falcon Jet.  The Court noted that the majority of all business jets manufactured by Dassault arrive in Little Rock before being sold around the western hemisphere for customization at a Dassault Falcon Jet’s Little Rock “completions facility.” The Court also considered various marketing materials, including Dassault’s annual report, the company’s website (jointly operated and administered by Dassault Aviation and Dassault Falcon Jet), and the companies’ similar names and logos.  The Court concluded that the companies “utilize a unified marketing strategy, which highlighted the activities of the Little Rock completion center and marketed various Falcon Jet services to Arkansas customers.”

The Court held that given the importance of the Little Rock distribution center to Dassault’s business world-wide and the “specific and identifiable role in Dassault Aviation’s unified marketing endeavors with Dassault Falcon Jet” it would not violate norms of fair play and substantial justice to assert jurisdiction over Dassault Aviation.  “Dassault Aviation’s nexus with Arkansas and the Little Rock completions center goes well beyond the mere ownership of Dassault Falcon Jet stock.”
Comment.  Foreign manufacturers have typically relied on their ability to set up subsidiary companies in the United States to insulate a foreign parent from jurisdiction in the U.S.  Typically, the foreign parent might “sell” its product to the U.S. subsidiary who would, in turn, sell it to an end user.  Although any number of facts might nonetheless subject the foreign manufacturer to jurisdiction, setting up a U.S. company/distributor arguably cuts off a direct link from the manufacturer to the end-user in the U.S.  This, at least notionally, limits the parent’s “contacts” to the United States.  The traditional test for obtaining jurisdiction over a parent company based upon the conduct of a subsidiary was whether the parent so controlled the subsidiary to the point where they were essentially the same enterprise.  If so, the plaintiff could “pierce the corporate veil” and obtain jurisdiction over the parent.

The court in Anderson disregarded corporate formalities and relied on Dassault Aviation’s (France) own direct contacts with Dassault Falcon Jet (Arkansas, USA) as the basis for asserting jurisdiction over the French parent.  As the state of a major completions center through which nearly all U.S.-sold Falcon aircraft were completed, Dassault was held to benefit directly from its relationship with Dassault Falcon Jet.
We live in a world of increasingly globalized markets, even more so in aviation.  The focus of the Anderson court was not on any control exercised by the parent over the subsidiary, but rather on what it considered to be the direct contacts of the parent, Dassault Aviation, with Arkansas and the benefits derived by Dassault Aviation through its own Arkansas contacts.  Applying the traditional test of whether it would be “fair” to subject Dassault to jurisdiction in Arkansas, the court ruled that it would.  The Supreme Court may now elect to hear this case or let this rule stand in the Eighth Circuit alone by denying certiorari.  Given the current trends in jurisdiction, an affirmance would not be surprising in the event the Supreme Court elects to hear the case.  Should this occur, the jurisdictional vulnerability of a foreign manufacturer having a U.S subsidiary will increase substantially.