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Wang v. Saitama Bank

filed: July 25, 1991.

ROBERT WANG, PLAINTIFF-APPELLANT
v.
SAITAMA BANK, LTD, A JAPANESE CORPORATION, DEFENDANT AND SADAO HONDA, DEFENDANT-APPELLEE; ROBERT WANG, PLAINTIFF-APPELLANT, V. SAITAMA BANK, LTD., A JAPANESE CORPORATION; SHIGETAKE ITJICHI; TAKUYA MORI; TAKEO MASUNO; RYOTA IWAI; SHIGEHIKO YOSHINO; SHUNSUKE HAKURI; KOICHI AKITA; HISANORI KIMURA; AKIRA IINO; TOSHIO SATO; EIJI NEGISHI; KATSUMI KAWANO; KYOSUKE NAGASHIMA; TSUNESHIRO OOKI; TOMOIKU TSUNEMI; HIROMI KITIGAWA; TADASHI TANAKA; KENZO HAMAJIMA; SOJIN HIRATSUKA HISAHARU ARAI; HIROYOSHII NOMURA DEFENDANTS -APPELLEES



Appeal from the United States District Court for the Central District of California; John G. Davies, District Judge, Presiding; D.C. No. CV-90-0948-JGD.

Reinhardt, Fernandez, Circuit Judges, and Crocker, Senior District Judge.*fn**

MEMORANDUM

Robert Wang appeals the district court's dismissal pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction of his shareholder's derivative action against the directors ("Directors") of foreign banking corporation Saitama Bank, Ltd. ("Bank").

STATEMENT OF CASE

Wang, a California resident, brought a shareholder derivative suit against the Directors of the Bank. The Bank is organized under the laws of Japan with its headquarters and principal place of business in Japan. Each of the Directors is a citizen of Japan and not of California.

Wang's complaint alleges that the Directors of the Bank caused TOA Finance Company, a Japanese corporation, to purchase from Koshin, also a Japanese corporation, ten million shares of the outstanding and issued common stock of Janome Sewing Machine Industrial Company, another Japanese corporation. One week after this transaction, Wang purchased 1,000 shares of the Bank's common stock. Wang argues that the sale price of the Janome stock purchased by TOA exceeded the stock's fair market value and that in causing TOA to purchase the Janome stock from Koshin, the Directors of the Bank violated Japanese antitrust and securities laws and thereby breached statutory and official duties owed to the Bank under Japanese law.

The Directors moved to dismiss Wang's complaint for lack of personal jurisdiction. The district court granted their motion. It held that the directors had insufficient minimum contacts with California to subject them to personal jurisdiction in the California courts. The district court also rejected Wang's reliance on Cal. Corps. Code § 2116 as a basis of the court's jurisdiction. The court held that the statute did not confer personal jurisdiction in the absence of a defendant's minimum contacts with California.

Discussion

Wang concedes that, unless they have consented to jurisdiction, the Directors have insufficient minimum contacts with California to subject them to personal jurisdiction. Wang argues that jurisdiction exists over the Directors because, by agreeing to become directors of a foreign corporation qualified to transact intrastate business in California, they have consented to jurisdiction pursuant to Cal. Corp. Code § 2116. Section 2116 states:

The directors of a foreign corporation transacting intrastate business are liable to the corporation, its shareholders, creditors, receiver, liquidator or trustee in bankruptcy for the making of unauthorized dividends, purchase of shares or distribution of assets or false certificates, reports or public notices or other violation of official duty according to any applicable laws of the state or place of incorporation or organization, whether committed or done in this state or elsewhere. Such liability may be enforced in the courts of this state.

It is the second sentence, Wang claims, that confers personal jurisdiction by consent.

However, a fair reading of section 2116 reveals that it does not attempt to subject foreign corporate directors to personal jurisdiction in California. Rather, the statute provides a shareholder cause of action against corporate directors for violations of their official duties and declares that the cause of action may be enforced in California. E.g. Saracco Tank & Welding Co. v. Platz, 65 Cal. App. 2d 306, 315, 150 P.2d 918 (1944) (predecessor statute to § 2116, § 412); Pratt v. Odell & Co., 49 Cal. App. 2d 550, 559, 122 P.2d 684 (1942) (§ 412); Barney v. Buswell, 236 Cal. App. 2d 208, 210, 45 Cal. Rptr. 908 (1965) (predecessor statute to § 2116, § 6601). Because the statute does not expressly purport to subject directors to personal jurisdiction in California, there is no reason to treat it as anything other than a subject matter jurisdiction or forum non conveniens statute. See Flick v. Exxon Corp., 58 Cal. App. 3d 212, 220, 129 Cal. Rptr. 760 (1976) (court does not rely upon section 2116 in deciding question of jurisdiction over foreign directors).

If the California Legislature had intended section 2116 to operate as a consent to jurisdiction statute, it knew how to be more explicit. For example, in Cal. Corp. Code § 2203, the legislature said: "Any foreign corporation which transacts [unauthorized] intrastate business . . . shall be deemed to consent to the jurisdiction of the courts of California in any civil action arising in this state in which the corporation is named a party defendant." Other California statutes have been equally explicit. E.g. Cal. Corp. Code § 1502(b) (requiring corporations to designate an agent for service of process in California); Cal. Civ. Proc. Code § 1293 (making of an agreement in California providing for arbitration to be had in California shall be deemed a consent of the parties to California jurisdiction to enforce the arbitration agreement and resulting award); Cal. Veh. Code § 17451 (nonresident's acceptance of rights and privileges of operation or ownership of a motor vehicle operated in California constitutes appointment to the director of department of motor vehicles as his agent for service of process in California). See also Armstrong v. Pomerance, 423 A.2d 174 (Del. Sup. 1980) (discussion of a statute which clearly conferred personal jurisdiction over directors).

In fine, the statute does not declare that directors of foreign corporations have consented to personal jurisdiction over them ...


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