Abundant Living Family Church v. Live Design

• Court: District Court, C.D. California
• Decided: June 15, 2022
• Docket: 5:22-cv-00140
• Status: Unknown

Opinion

Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Pagelof12 Page ID #:205

1 "0! 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 | ABUNDANT LIVING FAMILY 9+22-cv—~00140-RSWL-MRWx

3 CHURCH, ORDER re: Plaintiff, DEFENDANTS’ MOTION TO 14 DISMISS FOR LACK OF 15 PERSONAL JURISDICTION AND 16 | LIVE DESIGN, INC., et al., | IMPROPER VENUE [18] 17 Defendants. 88. $A 19 Plaintiff Abundant Living Family Church (“ALFC”) 0 brings this Action [1] against Defendants Live Design, Inc. (“Live Design”), Sayam Sotelo, and J. Frank Sotelo 29 (collectively, “Defendants”) asserting trademark 53 infringement and other related claims. DA Currently before the Court is a Motion to Dismiss 55 Sayam Sotelo and J. Frank Sotelo (“the Sotelos”) from 26 this Action for lack of personal jurisdiction and 57 improper venue (“Motion”) [18] filed by Defendants. 28 Having reviewed all papers submitted pertaining to the

Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 2 of 12 Page ID #:206

1 Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the

2 Court GRANTS the Motion.

3 I. BACKGROUND 4 A. Factual Background 5 ALFC alleges the following in its Complaint: 6 ALFC is a non-denominational Christian church with 7 locations in Rancho Cucamonga, California, and Pomona, 8 California. Compl. ¶ 1, ECF No. 1. ALFC’s principal 9 place of business is in San Bernardino, California. Id. 10 ¶¶ 1, 4. Live Design is a Florida corporation with its 11 principal place of business in Coral Springs, Florida. 12 Id. ¶ 5. The Sotelos are officers of Live Design and 13 reside in Parkland, Florida. Id. ¶¶ 6-7. 14 In 2016, ALFC created the domain name, 15 www.alfcrancho.church, referencing only the Rancho 16 Cucamonga location. Id. ¶¶ 12-13. In 2018, because 17 ALFC planned to open its Pomona, California location, 18 ALFC sought to streamline its online presence via a new 19 domain name, www.alfc.church (“Domain Name”). Id. ¶¶ 20 13-14. When ALFC went to change its website to the 21 Domain Name, however, ALFC found that the Domain Name 22 was already in use by Live Design. Id. ¶¶ 14-15. 23 In January 2019, ALFC contacted Live Design to 24 inquire about purchasing the Domain Name. Id. ¶ 16. 25 Live Design did not agree. See id. ¶ 17. In May 2020, 26 following a cyberattack to www.alfcrancho.church, ALFC 27 contacted Live Design for assistance in restoring the 28 website. Id. ¶¶ 18-19. The parties then entered into 2 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 3 of 12 Page ID #:207

1 two contracts whereby ALFC would pay a monthly fee to

2 Live Design in exchange for the Domain Name and other

3 website design services. See id. ¶¶ 19-21. J. Frank 4 Sotelo signed both contracts on behalf of Live Design. 5 Id. 6 Live Design did not perform under the contracts as 7 it had represented. Id. ¶ 24. ALFC then requested that 8 Live Design deliver the Domain Name to ALFC in its then- 9 current form so that ALFC could move forward without 10 incurring monthly service charges. Id. Live Design 11 refused. Id. ¶¶ 24-25. 12 B. Procedural Background 13 ALFC filed its Complaint [1] on January 24, 2022. 14 On May 5, 2022, Defendants filed the instant Motion 15 [18]. ALFC filed its Opposition [19] on May 17, 2022. 16 On June 2, 2022, Defendants replied [20]. 17 II. DISCUSSION 18 A. Legal Standard 19 Federal Rule of Civil Procedure 12(b)(2) authorizes 20 dismissal of an action for lack of personal 21 jurisdiction. Once a defendant moves to dismiss for 22 lack of personal jurisdiction, the plaintiff bears the 23 burden of demonstrating that jurisdiction is 24 appropriate. Schwarzenegger v. Fred Martin Motor Co., 25 374 F.3d 797, 800 (9th Cir. 2004). Where the motion is 26 “based on written materials rather than an evidentiary 27 hearing, the plaintiff need only make a prima facie 28 showing of jurisdictional facts” to survive dismissal. 3 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 4 of 12 Page ID #:208

1 Id. (internal quotation marks omitted). The court may

2 consider evidence presented in affidavits to assist in

3 its determination of jurisdictional issues. Data Disc, 4 Inc. v. Sys. Tech. Ass’n, Inc., 557 F.2d 1280, 1285 (9th 5 Cir. 1977). Although the plaintiff cannot rely on the 6 bare allegations of the complaint, uncontroverted 7 allegations in the complaint must be taken as true and 8 conflicts between statements contained in the parties’ 9 affidavits must be resolved in the plaintiff’s favor. 10 Schwarzenegger, 374 F.3d at 800. 11 B. Discussion 12 1. Personal Jurisdiction 13 District courts in California may exercise personal 14 jurisdiction over a nonresident defendant to the extent 15 permitted by the Due Process Clause of the United States 16 Constitution. Cal. Civ. Prov. Code § 410.10. The Due 17 Process Clause permits courts to exercise personal 18 jurisdiction over any defendant who has sufficient 19 “minimum contacts” with the forum such that the 20 “maintenance of the suit [would] not offend traditional 21 notions of fair play and substantial justice.” Int’l 22 Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). 23 Personal jurisdiction may be founded on either 24 general jurisdiction or specific jurisdiction. Mulato 25 v. Wells Fargo Bank, N.A., 76 F. Supp. 3d 929, 944 (N.D. 26 Cal. 2014). Here, ALFC does not dispute that the Court 27 lacks general jurisdiction over the Sotelos. See 28 generally Opp’n, ECF No. 19. Accordingly, the Court 4 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 5 of 12 Page ID #:209

1 focuses only on whether it may exercise specific

2 jurisdiction over the Sotelos.

3 In the Ninth Circuit, a court may exercise specific 4 jurisdiction over a nonresident defendant if: (1) the 5 defendant purposefully availed himself of the privileges 6 of conducting activities in the forum; (2) the claim 7 arises out of or results from the defendant’s forum- 8 related activities; and (3) the exercise of jurisdiction 9 is reasonable. Apple Inc. v. Allan & Assocs. Ltd., 445 10 F. Supp. 3d 42, 51 (N.D. Cal. 2020) (citation omitted). 11 The plaintiff bears the burden of satisfying the first 12 two elements. Mulato, 76 F. Supp. 3d at 944. Only 13 after the first two elements are met does the burden 14 shift to the defendant to satisfy the third element. 15 Id. Here, ALFC has not met its burden to satisfy the 16 first element regarding purposeful availment. 17 Accordingly, the Court GRANTS Defendants’ Motion to 18 Dismiss the Sotelos from this Action for lack of 19 personal jurisdiction. 20 a. Purposeful Availment and the Fiduciary 21 Shield Doctrine 22 “Purposeful availment analysis examines whether the 23 defendant’s contacts with the forum are attributable to 24 his own actions or are solely the actions of the 25 plaintiff.” Sinatra v. National Enquirer, 854 F.2d 26 1191, 1195 (9th Cir. 1988). “Purposeful availment 27 requires that the defendant engage in some form of 28 affirmative conduct allowing or promoting the 5 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 6 of 12 Page ID #:210

1 transaction of business within the forum state.” Wolf

2 Designs, Inc. v. DHR Co., 322 F. Supp. 2d 1065, 1070

3 (C.D. Cal. 2004) (citing Decker Coal Co. v. Commonwealth 4 Edison Co., 805 F.2d 834, 840 (9th Cir. 1986)). The 5 focus on the affirmative conduct of the defendant is 6 designed to ensure that the defendant is not “haled into 7 court as the result of random, fortuitous or attenuated 8 contacts, or on account of the unilateral activities of 9 third parties.” Id. (citing Shute v. Carnival Cruise 10 Lines, 897 F.2d 377, 381 (9th Cir. 1990), rev’d on other 11 grounds, 499 U.S. 585 (1991)). 12 ALFC argues that this Court has specific 13 jurisdiction over the Sotelos because the Sotelos 14 purposefully directed business activities at California. 15 Mot. 7:20-28. The Sotelos oppose, arguing that they 16 acted on behalf of Live Design and are therefore 17 protected by the fiduciary shield doctrine. Mot. 20:3- 18 9. In response, ALFC asserts that the “guiding spirit” 19 exception to the fiduciary shield doctrine applies and 20 that the Sotelos should not be insulated from 21 jurisdiction simply because they acted on behalf of Live 22 Design. Opp’n 11:14-12:4. 23 “The fiduciary shield doctrine protects individuals 24 from being subject to jurisdiction solely on the basis 25 of their employers’ minimum contacts within a given 26 jurisdiction.” Winery v. Graham, No. C 06-3618 MHP, 27 2007 WL 963252, *5 (N.D. Cal. Mar. 2007) (citation 28 omitted). Thus, “[u]nder the fiduciary shield doctrine, 6 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 7 of 12 Page ID #:211

1 a person’s mere association with a corporation that

2 causes injury in the forum state is not sufficient in

3 itself to permit that forum to assert jurisdiction over 4 the person.” Davis v. Metro Prods., Inc., 885 F.2d 515, 5 520 (9th Cir. 1989) (citations omitted). However, the 6 fiduciary shield doctrine does not inherently shield 7 employees from suit for acts they commit in their 8 individual capacities. Arcona, Inc. v. Farmacy Beauty, 9 LLC, No. 217CV07058ODWJPR, 2018 WL 1441155, at *3 (C.D. 10 Cal. Mar. 22, 2018) (citations omitted). Employees may 11 be individually liable where: (1) the corporation is the 12 agent or alter ego of the individual defendant; or (2) 13 the individual controlled or directly participated in 14 the alleged activities. Wolf Designs, 322 F. Supp. 2d 15 at 1072 (citations omitted). “[M]ere knowledge of 16 tortious conduct by the corporation is not enough to 17 hold a director or officer liable for the torts of the 18 corporation absent other unreasonable participation in 19 the unlawful conduct by the individual.” Id. (citation 20 and internal quotation marks omitted). Rather, in 21 determining whether to exercise specific jurisdiction 22 over a nonresident defendant acting on behalf of a 23 corporation, the central determination is whether the 24 nonresident defendant was a primary participant or 25 “guiding spirit” in the alleged wrongdoing. Id. 26 (citation omitted). 27 Contrary to ALFC’s allegations, the Court finds 28 that the Sotelos are protected under the fiduciary 7 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 8 of 12 Page ID #:212

1 shield doctrine. In analogous cases where courts have

2 declined to extend the fiduciary shield doctrine,

3 plaintiffs have put forth evidence showing the 4 individual defendants’ direct involvement in the alleged 5 wrongdoing. See Wolf Designs, 322 F. Supp. 2d at 1073 6 (exercising personal jurisdiction where a nonresident 7 officer-defendant was the sole proprietor of his 8 corporation and had the “final say” as to the 9 corporation’s policies); Arcona, 2018 WL 1441155, at *4 10 (exercising personal jurisdiction over nonresident 11 officer-defendants who played a “central role” in the 12 wrongdoing, directed the corporation’s business in the 13 forum, and educated employees in the forum regarding the 14 infringing product); LTC Now, LLC v. Relyfy Corp., No. 15 820CV00351JLSADS, 2020 WL 5167757, at *4 (C.D. Cal. June 16 26, 2020) (exercising personal jurisdiction over 17 nonresident officer-defendant where he was the “sole 18 owner and CEO” of the corporation and evidence confirmed 19 no other employees of the corporation were involved in 20 the negotiations giving rise to the lawsuit). But such 21 is not the case here. ALFC has not met its burden to 22 show that Live Design is the alter ego of the Sotelos or 23 that the Sotelos primarily participated in the alleged 24 wrongdoing. The Complaint contains no allegations 25 addressing the Sotelo’s specific involvement in the 26 alleged trademark infringement whatsoever. ALFC only 27 notes that J. Frank Sotelo signed the contracts 28 assigning the trademark rights to ALFC on behalf of Live 8 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 9 of 12 Page ID #:213

1 Design, and makes a single conclusory statement that the

2 Sotelos “are and were instrumentalities and alter egos

3 of each other and Live Design . . . and were direct 4 participants” in the alleged wrongdoing. Compl. ¶¶ 8, 5 19, 20. This is insufficient to show that the Sotelos 6 were the moving force behind the infringing activity. 7 See Apple, 445 F. Supp. 3d at 57 (holding that a 8 nonresident officer-defendant did not avail himself of 9 the benefits of a particular forum where he had only 10 signed and performed a contract on behalf of a 11 corporation). 12 ALFC’s Opposition is similarly deficient in 13 evidence of the Sotelos’ involvement in the infringing 14 activity. ALFC merely recites the standard for the 15 “guiding spirit” analysis while contending that the 16 Sotelos are subject to jurisdiction in California simply 17 because they are executives at Live Design and were 18 involved in the business relationship between ALFC and 19 Live Design. See Opp’n 14:18-15:13. Again, more is 20 required to establish personal jurisdiction over the 21 Sotelos, and ALFC has not met its burden. See Fasugbe 22 v. Willms, No. CIV. 2:10-2320 WBS, 2011 WL 3667440, at 23 *4 (E.D. Cal. Aug. 22, 2011) (dismissing individual 24 defendant for lack of personal jurisdiction where 25 plaintiff had alleged, without more, that the defendant 26 was the “guiding spirit,” “central figure,” and “made 27 all final decisions”); Shenzhen Riitek Tech. Co. v. 28 AERB, Inc., No. 818CV00645JLSJDE, 2018 WL 5264077, at *7 9 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 10 of 12 Page ID #:214

1 (C.D. Cal. July 18, 2018) (dismissing individual

2 defendant for lack of personal jurisdiction where

3 plaintiffs only alleged that the individual defendant 4 was employed by the corporation and owned the alleged 5 infringing trademark). 6 Because the Sotelos are protected under the 7 fiduciary shield doctrine and ALFC has not otherwise 8 shown how the Sotelos purposefully directed their 9 actions at California, ALFC has failed to meet its 10 burden. As such, the Court need not discuss the second 11 and third factors required for specific jurisdiction and 12 DISMISSES the Sotelos from this Action for lack of 13 personal jurisdiction. 14 b. Jurisdictional Discovery 15 ALFC argues that limited jurisdictional discovery 16 should be permitted if the Court requires additional 17 jurisdictional facts to rule on the Motion. Opp’n 18:1- 18 13. “A district court, however, need not allow 19 jurisdictional discovery where ‘it is clear that further 20 discovery would not demonstrate facts sufficient to 21 constitute a basis for jurisdiction,’ unless there are 22 contested jurisdictional facts or more facts are 23 needed.” Apple, 445 F. Supp. 3d at 58 (quoting Laub v. 24 U.S. Dep't of Interior, 342 F.3d 1080, 1093 (9th Cir. 25 2003)). Further, “where a plaintiff’s claim of personal 26 jurisdiction appears to be both attenuated and based on 27 bare allegations in the face of specific denials made by 28 the defendants, the Court need not permit even limited 10 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 11 of 12 Page ID #:215

1 discovery . . . .” Terracom v. Valley Nat. Bank, 49

2 F.3d 555, 562 (9th Cir. 1995) (citation omitted).

3 The Court will not allow limited jurisdictional 4 discovery here. Clearly, the Sotelos do not have 5 minimum contacts with California. As stated, any 6 contacts the Sotelos had with California were made in 7 the course and scope of their employment with Live 8 Design, and such activities are protected by the 9 fiduciary shield doctrine. To the extent the Sotelos 10 have any personal contacts with California, their 11 contacts are weak and attenuated at best and cannot 12 support the exercise of personal jurisdiction. See Mot. 13 21:17-20. In the face of the Sotelos’ specific denials 14 of personal jurisdiction, ALFC has not made any 15 additional showing to establish jurisdiction. Further 16 jurisdictional discovery would not reveal facts 17 demonstrating a basis for personal jurisdiction over the 18 Sotelos, and therefore the Court DENIES ALFC’s request 19 to conduct limited jurisdictional discovery. 20 2. Leave to Amend 21 “The court should give leave [to amend] freely when 22 justice so requires.” Fed. R. Civ. P. 15(a)(2). In the 23 Ninth Circuit, “Rule 15’s policy of favoring amendments 24 to pleadings should be applied with ‘extreme 25 liberality.’” United States v. Webb, 655 F.2d 977, 979 26 (9th Cir. 1981). However, the court is not required to 27 grant leave to amend if it determines that permitting a 28 plaintiff to amend would be an exercise in futility. 11 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 12 of 12 Page ID #:216

1 See, e.g., Rutman Wine Co. v. E. & J. Gallo Winery, 829 2 F.2d 729, 738 (9th Cir. 1987) (“Denial of leave to amend

3 is not an abuse of discretion where the pleadings before 4 the court demonstrate that further amendment would be 5 futile.”). 6 Here, further amendment would be futile. As 7 stated, ALFC cannot bring forth more facts to establish 8 jurisdiction over the Sotelos because the Sotelos simply 9 do not have minimum contacts with California. Leave to 10 amend is DENIED. 11 III. CONCLUSION 12 Based on the foregoing, the Court GRANTS the 13 Defendants’ Motion to Dismiss the Sotelos from this 14 Action for lack of personal jurisdiction and DENY ALFC’s 15 request for limited jurisdictional discovery. The Court 16 need not address Defendants’ remaining arguments 17 regarding venue given the discussion on personal 18 jurisdiction. Leave to amend is also DENIED. In the 19 interest of clarity, the Court notes that the Action 20 will still proceed against Live Design in light of the 21 disposition of this Motion. 22 IT IS SO ORDERED. 23 24 DATED: June 15, 2022 25 26 _/s_/ _R_on_a_ld_ _S_.W_._ L_e_w________________ 27 HONORABLE RONALD S.W. LEW 28 Senior U.S. District Judge 12