Background
Approximately 200 insurers brought subrogation claims after paying policyholders for thefts and attempted thefts of certain Hyundai and Kia vehicles from model years 2011 through 2022. In a putative nationwide products-liability and consumer-protection class action within multidistrict litigation, the insurers alleged that the vehicles were defectively designed because they lacked engine immobilizers and therefore could be stolen using a method popularized on social media.
The insurers sued the Korean manufacturers, Hyundai Motor Company and Kia Corporation, as well as their American subsidiaries. The district court dismissed the Korean entities for lack of personal jurisdiction, denied jurisdictional discovery and leave to amend, and entered a final judgment as to those defendants. The insurers appealed.
The Court’s Holding
The Ninth Circuit reversed. At the pleading stage, the complaint plausibly alleged purposeful availment and purposeful direction because the Korean entities were identified as the shippers of thousands of vehicle shipments to and through California ports and had designed the allegedly defective vehicles specifically for the U.S. market. The combination of deliberate California-bound shipments and U.S.-specific design went beyond merely placing products into the stream of commerce.
The insurers also adequately alleged that their claims arose from the manufacturers’ California contacts. Given allegations that more than 70 percent of the manufacturers’ U.S. vehicle shipments traveled through California ports, the court found it reasonable to infer that many vehicles underlying California losses arrived through those ports. The manufacturers forfeited any appellate argument that the jurisdictional analysis should differ for claims based on insureds’ out-of-state losses.
The panel nevertheless left the final reasonableness inquiry to the district court because that court had not addressed it and the parties had not briefed it on appeal. The Ninth Circuit also agreed that the district court properly disregarded complaint allegations about advertising and distribution control that defendants’ declarations contradicted and plaintiffs did not support with competing evidence.
Key Takeaways
- A foreign manufacturer’s deliberate shipment of products to and through a forum’s ports can establish purposeful forum contacts even when title and risk of loss passed abroad.
- Forum-bound shipments combined with a U.S.-specific product design sufficiently alleged conduct beyond passive placement into the stream of commerce.
- Once plaintiffs adequately allege purposeful forum contacts and claim-relatedness, defendants bear the burden of making a compelling case that exercising jurisdiction would be unreasonable.
Why It Matters
The decision clarifies how foreign manufacturers may become subject to specific jurisdiction in California when they deliberately route allegedly defective products through the state, even if American subsidiaries formally purchase, import, and distribute those products.
The ruling returns the insurers’ claims against the Korean manufacturers to the district court, which must decide in the first instance whether exercising jurisdiction would comport with fair play and substantial justice.