FILED
NOT FOR PUBLICATION FEB 01 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, ex rel No. 15-55312
John Lee Miller and JOHN LEE MILLER,
D.C. No. 8:10-cv-00526-AG-MLG
Plaintiffs - Appellees,
v. MEMORANDUM*
THE PUBLIC WAREHOUSING
COMPANY KSC, AKA Agility and PWC,
Defendant - Appellant.
Appeal from the United States District Court
for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Argued and Submitted January 4, 2016
Pasadena, California
Before: M. SMITH, WATFORD, and FRIEDLAND, Circuit Judges.
The district court determined that Plaintiff John Lee Miller properly served
process on Defendant, The Public Warehousing Company, K.S.C., (PWC) through
its U.S. subsidiary, Agility Logistics Corporation (Agility), as a “general manager”
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
under California Code of Civil Procedure (CCCP) § 416.10(b). We have
jurisdiction under 28 U.S.C. § 1292(b), and we remand for further development
concerning the relationship between Agility and PWC.
The Federal Rules of Civil Procedure permit service upon a corporation
within the United States as prescribed by the law of the forum state or the state in
which service is made. Fed. R. Civ. P. 4(h)(1)(A) & 4(e)(1). California law, in turn,
permits service upon a corporation by delivering a copy of the summons and the
complaint to “a general manager” of the corporation. CCCP § 416.10(b). A related
service-of-process statute, California Corporations Code (CCC) § 2110, permits
service of process upon a foreign corporation transacting business in California by
serving “its general manager in this state.” The term “general manager” is not
defined in either statute.
In Cosper v. Smith & Wesson Arms Co., the California Supreme Court,
interpreting a predecessor to CCC § 2110, held that the service-of-process statutes are
satisfied if service is effected on an agent “of sufficient character and rank to make it
reasonably certain that the defendant will be apprised of the service made.” 346 P.2d
409, 413 (Cal. 1959) (quoting Eclipse Fuel Eng’g Co. v. Super. Ct., 307 P.2d 739, 745
(Cal. Dist. Ct. App. 1957)). The court further held that an agent meets that
requirement if it provides the defendant with “the opportunity for regular contact with
2
its customers and a channel for a continuous flow of business into the state,” id. at 414
(internal quotation marks omitted), and the defendant enjoys through the agent
“substantially the business advantages that it would have enjoyed ‘if it conducted its
business through its own offices or paid agents in the state.’” Id. (quoting Eclipse
Fuel, 307 P.2d at 742).
The California lower courts’ decisions following Cosper have been less than
perfectly consistent. One line of cases has not permitted service on a parent through
its subsidiary. See, e.g., Gen. Motors Corp. v. Super. Ct., 93 Cal. Rptr. 148 (Cal. Ct.
App. 1971). On the other hand, the most recent decision from the California Court of
Appeal declares outright that “California law allows service on a foreign corporation
by serving its domestic subsidiary.” Yamaha Motor Co., Ltd. v. Super. Ct., 94 Cal.
Rptr. 3d 494, 498 (Cal. Ct. App. 2009) (capitalization altered); see also Gibble v.
Car-Lene Research, Inc., 78 Cal. Rptr. 2d 892 (Cal. Ct. App. 1998); Sims v. Nat’l
Eng’g Co., 34 Cal. Rptr. 537 (Cal. Ct. App. 1963). The Yamaha court acknowledged
the “anomaly” that an agent without “any real control over [its] principal[]” might be
considered a “general manager” of that principal, but considered itself bound by
Cosper and permitted service upon Yamaha-Japan through its American subsidiary.
94 Cal. Rptr. 3d at 501-02.
3
Two features appear to distinguish the latter line of cases from the former.1
First, where service was permitted, the parent corporation was foreign and otherwise
not readily available for service within California. See Gen. Motors, 93 Cal. Rptr. at
151 (“In both Eclipse and Cosper the corporations involved . . . had in effect
attempted to maintain a rather low silhouette within the state by operating through
subsidiaries and contract representatives.”); Yamaha, 94 Cal. Rptr. 3d at 502. Second,
service through a subsidiary as general manager requires a sufficiently close
connection with the parent. This depends upon the frequency and quality of contact
between the parent and the subsidiary, the benefits in California that the parent derives
from the subsidiary, and the overall likelihood that service upon the subsidiary will
provide actual notice to the parent. See Yamaha, 94 Cal. Rptr. 3d at 501; Cosper, 346
P.2d at 414.
Here, the former requirement is met: PWC is a foreign corporation that is
otherwise not readily available for service within California. But on the latter
requirement, the record shows merely that PWC holds itself and its subsidiaries out
1
The concurrence makes much of the distinction between CCC § 2110 and
CCCP § 416.10. We are not persuaded, however, that the two District Court of
Appeal cases cited by the concurrence provide a sound basis for reading “a general
manager” in CCCP § 416.10 significantly more narrowly than how the California
Supreme Court defined “general manager in this State” in Cosper, 346 P.2d at 413-
14.
4
as a single integrated global “Group,” and that the Group issues a single financial
statement consolidating the finances of PWC and all its subsidiaries. On remand, the
district court shall permit Miller to obtain and introduce evidence concerning the
nature of the relationship between Agility and PWC—specifically, considering the
factors articulated by Cosper, 346 P.2d at 414—before determining whether service
upon Agility was sufficient to effect service upon PWC. The district court may also
consider whether service was adequate on other grounds. Each party shall bear its own
costs on appeal.
VACATED and REMANDED.
5
FILED
USA ex rel. Miller v. The Public Warehousing Co., 15-55312 FEB 1 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FRIEDLAND, Circuit Judge, concurring in the judgment:
I agree that the district court’s order should be vacated and remanded. But I
would instruct the district court to apply the definition of Cal. Corp. Code § 2110’s
phrase “general manager in this state” provided in Cosper v. Smith & Wesson Arms
Co., 346 P.2d 409 (1959) (in bank), only if the court finds that PWC is doing
business in California.
In my view, the district court erred when it imported the definition for
“general manager in this state” as used in Cal. Corp. Code § 2110 into the separate
service-of-process statute, Cal. Code Civ. P. § 416.10(b), which provides for
service on an entity’s “general manager.” In Cosper, the California Supreme Court
set forth a two-part test for evaluating whether an agent qualifies as a foreign
corporation’s “general manager in this state” within the meaning of the predecessor
to § 2110 so that service on that agent could constitute valid service on the
defendant corporation: (1) the agent must be “of sufficient character and rank to
make it reasonably certain that the defendant will be apprised of the service made,”
and (2) the agent must be “performing services for [the foreign corporation] and
providing it with the opportunity for ‘regular contact with its customers and a
channel for a continuous flow of business into the state.’” 346 P.2d at 413-14
(quoting Sales Affiliates v. Super. Ct., 214 P.2d 541, 542 (Cal. Ct. App. 1950))
(analyzing the statutory predecessor to § 2110). In my view, the second
component is intertwined with the threshold requirement for service under § 2110
that the foreign corporation be engaged in intrastate business in California.
Cosper, 346 P.2d at 412-13 (“The validity of the service of process pursuant to [the
predecessor to § 2110] depends first on whether the foreign corporation is ‘doing
business in this State’ within the meaning of the statute.”); see Cal. Corp. Code §
2100.
If PWC is not doing business in California, I believe service must be
evaluated under § 416.10(b). Although few California courts have defined the
term “general manager” in that provision, those that have done so have required
that the agent on whom process is served be engaged in managing the defendant
corporation’s business as a whole in order for service on that defendant to be
effective. See Bakersfield Hacienda, Inc. v. Super. Ct., 18 Cal. Rptr. 812, 816
(Cal. Ct. App. 1962) (defining “general manager” as used in the predecessor to
§ 416.10(b) as “one who has general direction and control of the business of the
corporation as distinguished from one who has the management only of a
particular branch of the business”); Brovelli v. Super. Ct., 12 Cal. Rptr. 374, 379
(Cal. Ct. App. 1961), vacated on other grounds, 364 P.2d 462 (Cal. 1961) (in
bank) (“The history of [the predecessor to § 416.10(b)] . . . demonstrates that the
Legislature did not intend to provide for service of process upon any agent of a
corporation who had some managerial function, but only upon one whose
functions are to manage the corporation’s affairs in general.”). 1
I agree with the majority that, if the district court on remand determines that
service was not effectuated under § 2110 or § 416.10(b), it should consider
whether PWC has been properly served through other means.
1
Though vacated, the Court of Appeal decision retains instructive value for issues
not addressed on review. See Grupe v. Cal. Coastal Comm’n, 212 Cal. Rptr. 578,
588 n.9 (Cal. Ct. App. 1985).