Quanta Computer Inc. v. Japan Commc'ns Inc.
21 Cal. App. 5th 438
Cal. Ct. App. 5th2018Background
- Quanta Computer Inc. (Taiwan) contracted to manufacture 70,000 smartphones for Japanese Communications Inc. (JCI, Japan); contract included choice-of-law (California) and mandatory forum selection clause (California courts).
- Delivery, manufacture, warranty obligations, and alleged quality issues all arose in Asia (manufacture in China, sales and end-users in Japan); notices directed to Taiwan and Japan.
- JCI accepted deliveries but withheld payment claiming ~14,246 devices had quality defects; parties entered an MOU with the same California forum clause, which Quanta says JCI breached by not paying.
- JCI sued Quanta in Japan the same day Quanta sued in Los Angeles; JCI moved in California to dismiss or stay on forum non conveniens grounds, arguing no nexus to California.
- The superior court dismissed Quanta’s California suit sua sponte under Code Civ. Proc. § 410.30, finding suitable alternative forums (Japan, China, Taiwan, Singapore) and that California had no public interest in hearing the dispute.
- The Court of Appeal affirmed, rejecting Quanta’s reliance on The Bremen and concluding the trial court did not abuse its discretion in declining to exercise jurisdiction despite the forum clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the mandatory California forum-selection clause must be enforced | Quanta: clause is a freely negotiated, mandatory clause that should be enforced; The Bremen favors enforcement absent unreasonableness | JCI: clause lacks nexus to California and enforcement would be unreasonable/inconvenient; traditional forum non conveniens factors warrant dismissal | Court: clause is enforceable but enforcement not dispositive; traditional factors do not override clause when defendant proposed forum, yet court may still decline jurisdiction in discretion |
| Whether a California court may sua sponte dismiss under forum non conveniens | Quanta: trial court should not decline jurisdiction where parties agreed to California forum | JCI: court may dismiss in interest of substantial justice | Court: Yes; § 410.30(a) authorizes dismissal on party motion or the court’s own motion; trial court acted within discretion |
| Whether suitable alternative forums exist (jurisdiction/statute-of-limitations) | Quanta: California chosen as a neutral forum; alternatives less convenient | JCI: Japan (and other Asian forums) are available and suitable; JCI already filed in Japan | Court: Japan (and others) are suitable; jurisdiction exists there and limitations not shown to bar relief |
| Whether California has a public interest in retaining the case despite foreign connections | Quanta: choice of California expresses parties’ intent; public interest neutral because California is a neutral forum | JCI: California has no connection or public interest; burdening courts is unwarranted | Court: Public interest favors dismissal — no California residents or interests implicated; foreign countries have greater interest in resolving dispute |
Key Cases Cited
- Smith, Valentino & Smith, Inc. v. Superior Court, 17 Cal.3d 491 (Cal. 1976) (forum-selection clauses generally enforceable absent unreasonableness)
- The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (U.S. 1972) (freely negotiated international forum clauses should be given effect)
- Stangvik v. Shiley Inc., 54 Cal.3d 744 (Cal. 1991) (plaintiff’s foreign residency reduces deference to forum choice; compare public-interest allocation)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (U.S. 1981) (forum non conveniens: plaintiff’s foreign residency diminishes choice weight; public-interest factors govern)
- Berg v. MTC Electronics Technologies, 61 Cal.App.4th 349 (Cal. Ct. App. 1998) (mandatory forum clauses shift inquiry to fairness/unreasonableness rather than full convenience balancing)
- Aghaian v. Minassian, 234 Cal.App.4th 427 (Cal. Ct. App. 2015) (alternative forum is suitable if defendant is subject to jurisdiction and statute of limitations does not bar the claim)
- Appalachian Ins. Co. v. Superior Court, 162 Cal.App.3d 427 (Cal. Ct. App. 1984) (forum non conveniens protects public interest as well as private convenience)