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We consider in this case the issue whether
California courts may exercise personal jurisdiction over owners
of "fast food" restaurant franchises located in another
state, in litigation stemming from several incidents of food
poisoning that occurred in the foreign jurisdiction. We conclude
that the franchisees had sufficient contacts with California
through their relationship with their California franchiser,
and that the tort claims alleged against the franchisees in a
cross-complaint filed in a California action stemming from the
food poisoning incidents were sufficiently related to the franchisees'
contacts in California, to justify this state's exercise of jurisdiction
over the franchisees.
In 1993, customers of *** restaurants in several
states, including Washington, suffered from exposure to Escherichia
coli (E. coli) bacteria traced to hamburgers sold at the restaurants.
*** Foodmaker, Inc. *** is a Delaware corporation with its principal
place of business in San Diego, California. It blamed the E.
coli contamination on its meat suppliers, including the Vons
Companies, Inc. (Vons). Vons processed hamburger patties in its
El Monte, California plant and shipped them to Foodmaker for
use in *** [the] restaurants.
Vons's cross-complaint alleged the injuries
caused by the E. coli contamination would have been avoided had
Foodmaker and its franchisees cooked the hamburgers at the proper
temperature. Specifically, it alleged Foodmaker, Seabest, and
WRMI had failed to follow proper procedures for cooking the meat,
and that their procedures were "systematically deficient
when measured against industry standards." In addition,
it alleged Foodmaker, Seabest, and WRMI had failed to follow
government standards for cooking the meat at a proper temperature,
that Foodmaker had failed to inform its franchisees of the applicable
government regulations, that the "standard" grills
used by Foodmaker, Seabest, and WRMI were below the industry
norm and lacked various safety features, and that Foodmaker,
Seabest, and WRMI failed to require adequate qualifications and
training for their cooks.
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The trial court granted the motions to quash, and the Court of
Appeal affirmed, also ordering Vons to pay Seabest's and WRMI's
costs on appeal. We granted Vons's petition for review [and reverse].
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California's long-arm statute authorizes California courts to
exercise jurisdiction on any basis not inconsistent with the
Constitution of the United States or the Constitution of California.
A state court's assertion of personal jurisdiction over a nonresident
defendant who has not been served with process within the state
comports with the requirements of the due process clause of the
federal Constitution if the defendant has such minimum contacts
with the state that the assertion of jurisdiction does not violate
" 'traditional notions of fair play and substantial justice.'
"
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Personal jurisdiction may be either general or specific. A nonresident
defendant may be subject to the general jurisdiction of the forum
if his or her contacts in the forum state are "substantial
... continuous and systematic." In such a case, "it
is not necessary that the specific cause of action alleged be
connected with the defendant's business relationship to the forum."
Such a defendant's contacts with the forum are so wide-ranging
that they take the place of physical presence in the forum as
a basis for jurisdiction. No question of general jurisdiction
arises, however, in the case before us.
If the nonresident defendant does not have
substantial and systematic contacts in the forum sufficient to
establish general jurisdiction, he or she still may be subject
to the specific jurisdiction of the forum, if the defendant has
purposefully availed himself or herself of forum benefits, and
the "controversy is related to or 'arises out of' a defendant's
contacts with the forum." It is this type of personal jurisdiction
that Vons seeks to establish in this case.
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According to the high [US Supreme] court, it is fair to subject
defendants to specific jurisdiction, because their forum activities
should put them on notice that they will be subject to litigation
in the forum. That is, "[w]hen a corporation 'purposefully
avails itself of the privilege of conducting activities within
the forum State,' [citation] it has clear notice that it is subject
to suit there, and can act to alleviate the risk of burdensome
litigation by procuring insurance, passing the expected costs
on to customers, or, if the risks are too great, severing its
connection with the state." This element of fair warning
gives "a degree of predictability to the legal system that
allows potential defendants to structure their primary conduct
with some minimum assurance as to where that conduct will and
will not render them liable to suit."
The United States Supreme Court has explained,
for example, that a state properly may exercise specific jurisdiction
when it " 'asserts personal jurisdiction over a corporation
that delivers its products into the stream of commerce with the
expectation that they will be purchased by consumers in the forum
State' and those products subsequently injure forum consumers.
Similarly a publisher who distributes magazines in a distant
State may fairly be held accountable in that forum for damages
resulting there from an allegedly defamatory story. And in the
case of litigation arising out of an ongoing franchise agreement,
the high court has found proper a Florida court's exercise of
specific jurisdiction over a franchise operator located in Michigan,
emphasizing that "parties who 'reach out beyond one state
and create continuing relationships and obligations with citizens
of another state' are subject to regulation and sanctions in
the other State for the consequences of their activities."
A state may exercise specific jurisdiction
over a nonresident who purposefully avails himself or herself
of forum benefits, because the state has "a 'manifest interest'
in providing its residents with a convenient forum for redressing
injuries inflicted by out-of-state actors. Moreover, where individuals
'purposefully derive benefit' from their interstate activities
it may well be unfair to allow them to escape having to account
in other States for consequences that arise proximately from
such activities." Further, "because 'modern transportation
and communications have made it much less burdensome for a party
sued to defend himself in a State where he engages in economic
activity,' it usually will not be unfair to subject him to the
burdens of litigating in another forum for disputes relating
to such activity."
Finally, in analyzing the exercise of specific
jurisdiction, "[o]nce it has been decided that a defendant
purposefully established minimum contacts within the forum State,
these contacts may be considered in light of other factors to
determine whether the assertion of personal jurisdiction would
comport with ' fair play and substantial justice.' "Courts
may evaluate the burden on the defendant of appearing in the
forum, the forum state's interest in adjudicating the claim,
the plaintiff's interest in convenient and effective relief within
the forum, judicial economy, and "the 'shared interest of
the several States in furthering fundamental substantive social
policies.' "
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We conclude that this state may exercise specific jurisdiction
over Seabest and WRMI. Indeed, this case closely resembles Burger
King, supra, 471 U.S. 462, which, we believe, largely
governs the outcome here. As we explain, the cross-defendants
here, like the defendants in Burger King, purposefully availed
themselves of benefits in the forum by reaching out to forum
residents to create an ongoing franchise relationship.
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