What defense could SAC assert to the exercise of personal jurisdiction by the San Joaquin County Superior Court? What does this defense provide? Would this defense be successful in this case?
CAAS leases aircraft to crop dusting businesses through California. CAAS entered into a contract with Shànghai Aircraft Company (SAC), a state-owned enterprise organized pursuant to the laws of the People's Republic of China. The contract provided for the manufacture by SAC and purchase by CAAS of ten crop dusting aircraft at a price of U.S. $2.1 million, a savings of approximately $200,000 compared to crop dusting aircraft available from other manufacturers. One of the aircraft delivered to CAAS was subsequently leased to Central Valley Crop Dusting, Inc. (CVCD), a California corporation. One month later, this aircraft crashed during a CVCD spraying operation resulting in a complete loss of the aircraft and serious injuries to the pilot. The pilot stated that the engine lost power and then caught on fire while he was attempting an emergency landing. Subsequent investigations by federal and state authorities determined the sole cause of the crash to be catastrophic engine failure. CVCD and its pilot subsequently initiated litigation in the San Joaquin County Superior Court against CAAS, claiming breach of numerous provisions within the lease agreement, strict product liability and negligence. CAAS immediately notified SAC regarding the litigation and requested indemnification, but SAC did not respond to this request. CAAS is now contemplating joining SAC as a co-defendant to CVCD's lawsuit.
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