HealthMarkets, Inc. v. Superior Court tries to add clarity to parent-subsidiary jurisdictional questions

I must apologize. I know that you have been wondering whether a parent company purposefully avails itself of a forum solely because a subsidiary does so. And it took me hours to bring the answer to you. For that, I am ashamed. But the opportunity for redemption is at hand, as the Court of Appeal (Second Appellate District, Division Three) answered that question in HealthMarkets, Inc. v. Superior Court (Berman) (March 9, 2009).

After providing a basic primer on general personal jurisdiction, specific personal jurisdiction and the current condition of California law on the jurisdictional impact of subsidiaries, the Court held: “A parent company purposefully avails itself of forum benefits through the activities of its subsidiary, as required to justify the exercise of specific personal jurisdiction, if and only if the parent deliberately directs the subsidiary’s activities in, or having a substantial connection with, the forum state.” (Slip op., at pp. 10-11.) You’d think that a holding this absolute would take care of jurisdictional questions about subsidiaries, but I expect that what we will get, instead, are complaints with generic allegations about how the parent corporation “deliberately directed” the activities of its subsidiary in the forum state. And the never-ending chess game continues.