Asante Technologies, Inc. v. PMC-Sierra, Inc.

164 F. Supp. 2d 1142 (2001)

United States District Court (N.D. Cal.)

Help me with case brief.

Please write like: 1)name, 2)facts, 3)procedural history, 4)legal issues, 5)Argument or the parties, 5)rule of law,6) holding, 7)reasoning of the court , 8)Your comments

BACKGROUND AND FACTS

The plaintiff, Asante, purchased electronic parts from the defendant, PMC, whose offices and factory were in Canada. Asante placed its orders through defendant's authorized distributor, Unique Technologies, located in California. Asante's order stated that the

contract"shall be governed by the laws of the state shown on buyer's address on this order." PMC's confirmation stated that the contract"shall be construed according to the laws of Canada." Invoices were sent from Unique, and payment remitted to Unique, either in California or Nevada. Asante claimed that the goods did not meet its specifications and filed suit in California state court to have its claim decided under California law. When the case was transferred to a U.S. federal court, Asante requested that the case

be remanded back to state court.

WARE, DISTRICT JUDGE

PLACE OF BUSINESS REQUIREMENT

The Convention on Contracts for the International Sale of Goods ("CISG") is an international treaty which has been signed and ratified by the United States and Canada, among other countries. . . . The CISG applies"to contracts of sale of goods between parties whose places of business are in different States

. . . when the States are Contracting States." CISG Art. 1 (1) (a). Article 10 of the CISG provides that"if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance." CISG Art. 10. . . .

It is undisputed that plaintiff's place of business is Santa Clara County, California. It is further undisputed that . . . defendant's corporate headquarters, inside sales and marketing office, public relations department, principal warehouse, and most of its design and engineering functions were located in Canada. However, plaintiff contends that, pursuant to Article 10 of the CISG, defendant's"place of business"having the closest relationship to the contract at issue is the United States. . . .

Plaintiff asserts that Unique acted in the United States as an agent of defendant, and that plaintiff's contacts with Unique establish defendant's place of business in the U.S. for the purposes of this contract. Plaintiff has failed to persuade the Court that Unique acted as the agent of defendant. . . . To the contrary, a

distributor of goods for resale is normally not treated as an agent of the manufacturer. . . . Furthermore, while Unique may distribute defendant's products, plaintiff does not allege that Unique made any representations regarding technical specifications on behalf of defendant. . . . Plaintiff's dealings with Unique do not establish

defendant's place of business in the United States.

Plaintiff's claims concern breaches of representations made by defendant from Canada. Moreover, the products in question are manufactured in Canada, and plaintiff knew that defendant was

Canadian, having sent one purchase order directly to defendant in Canada by fax. . . . Moreover, plaintiff directly corresponded with defendant at defendant's Canadian address. . . . In contrast, plaintiff has not identified any specific representation or correspondence emanating from defendant's Oregon branch.

For these reasons, the Court finds that defendant's place of business that has the closest relationship to the contract and its performance is British Columbia, Canada. Consequently, the contract at issue in this litigation is between parties from two different Contracting States, Canada and the United States. This

contract therefore implicates the CISG.

CHOICE OF LAW CLAUSE

Plaintiff next argues that, even if the Parties are from two nations that have adopted the CISG, the choice of law provisions in the [buyer's purchase order and seller's confirmation] reflect the Parties' intent to"opt out" of application of the treaty. The Court

finds that the particular choice of law provisions in the"Terms and Conditions" of both parties are inadequate to effectuate an"opt out" of the CISG.

Although selection of a particular choice of law, such as "the California Commercial Code" or the"Uniform Commercial Code" could amount to implied exclusion of the CISG, the choice of law

clauses at issue here do not evince a clear intent to opt out of the CISG. For example, defendant's choice of applicable law adopts the law of British Columbia, and it is undisputed that the CISG is the law of British Columbia. Furthermore, even plaintiff's choice of

applicable law generally adopts the"laws of" the State of California, and California is bound by the Supremacy Clause to the treaties of the United States. Thus, under general California law, the CISG is applicable to contracts where the contracting parties are from different countries that have adopted the CISG. . . .

FEDERAL PREEMPTION

It appears that the issue of whether or not the CISG preempts state law is a matter of first impression. In the case of federal statutes,"the question of whether a certain action is preempted by federal law is one of congressional intent. . . . The Court concludes that the expressly stated goal of developing uniform international

contract law to promote international trade indicates the intent of the parties to the treaty to have the treaty preempt state law causes of action. The availability of independent state contract law causes

of action would frustrate the goals of uniformity and certainty embraced by the CISG. Allowing such avenues for potential liability would subject contracting parties to different states' laws and the very same ambiguities regarding international contracts that the

CISG was designed to avoid. As a consequence, parties to international contracts would be unable to predict the applicable law, and the fundamental purpose of the CISG would be undermined.

Finally, plaintiff appears to confuse the matter of exclusive federal jurisdiction with preemption. . . . Even where federal law completely preempts state law, state courts may have concurrent jurisdiction over the federal claim if the defendant does not remove the case to federal court [citation omitted]. This Court does not hold that it has exclusive jurisdiction over CISG claims.

Decision.The federal court had concurrent jurisdiction over this case (even though the case could also have been heard in state court) because the applicable law was the CISG, an international convention ratified by the United States.