Baton v. Ledger SAS

CourtDistrict Court, N.D. California
DecidedNovember 8, 2021
Docket3:21-cv-02470
StatusUnknown

This text of Baton v. Ledger SAS (Baton v. Ledger SAS) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Baton v. Ledger SAS, (N.D. Cal. 2021).

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 EDWARD BATON, et al., Case No. 21-cv-02470-EMC

8 Plaintiffs, ORDER GRANTING DEFENDANTS’ 9 v. MOTIONS TO DISMISS

10 LEDGER SAS, et al., Docket Nos. 55, 56, 58 11 Defendants.

12 13 14 I. INTRODUCTION 15 Plaintiffs, customers who purchased a hardware wallet to protect cryptocurrency assets, 16 bring a putative class action seeking redress for harms they allegedly suffered stemming from a 17 data breach exposing over 270,000 pieces of personally identifiable information, including 18 customer names, email addresses, postal addresses and telephone numbers. Docket No. 33 (First 19 Amended Complaint or “FAC”). Now pending before the Court are Defendants Shopify USA, 20 Shopify, Inc. and Ledger’s respective motions to dismiss the complaint for, among other reasons, 21 lack of personal jurisdiction. Docket Nos. 55, 56, 58. 22 For the following reasons, the Court finds that it lacks personal jurisdiction over each 23 defendant and that jurisdictional discovery is unwarranted. Therefore, the Court GRANTS the 24 motions to dismiss and dismisses the case with prejudice. 25 II. BACKGROUND 26 A. Summary of Allegations in the FAC 27 Plaintiffs are customers of Defendant Ledger SAS (“Ledger”), a French company based in 1 (“FAC”) ¶ 2, 21. Ledger sells its hardware wallets—the Ledger Nano X and Ledger Nano S— 2 through its e-commerce website, which operates on Defendant Shopify, Inc.’s platform. FAC ¶¶ 3 2, 16-17. Plaintiffs allege they, and several putative classes, each bought a Ledger hardware 4 wallet on Ledger’s e-commerce website, through Shopify’s platform, between July 2017 and June 5 2020. Id. ¶¶ 16-20. When Plaintiffs made their purchases, they provided their name, email 6 addresses, telephone numbers and postal addresses. Id. 7 Plaintiffs’ claims arise of two security incidents involving data breaches exposing 8 Plaintiffs’ contact information. FAC ¶¶ 78, 79, 88. First, Plaintiffs allege that between April and 9 June 2020, rogue Shopify, Inc. employees exported a trove of data, including Ledger’s customer 10 transactional records. Id. ¶¶ 78-79. Shopify allegedly publicly announced the theft on September 11 22, 2020, which involved the data of approximately 272,000 people. Id. ¶¶ 79, 82. Plaintiffs 12 allege that Ledger did not inform them that their data was involved in the Shopify breach at that 13 time. Id. ¶ 83. Second, Plaintiffs allege that Ledger publicly announced that an unauthorized 14 third-party gained access to Ledger’s e-commerce database through an application programming 15 interface key on June 25, 2020 and acquired the email addresses of one million customers and 16 physical contact information of 9,500 customers. Id. ¶ 88. Plaintiffs allege that Ledger did not 17 disclose that the attack on Ledger’s website and the theft of Shopify’s data were connected, that 18 Ledger downplayed the scale of the actual attack, and, as a result, Plaintiffs and putative class 19 members were subject to phishing scams, cyber-attacks, and demands for ransom and threats. Id. 20 ¶¶ 95-118. Plaintiffs contend that Ledger knew that its customer list was highly valuable to 21 hackers, because it was a list of people who have converted substantial wealth into anonymized 22 crypto-assets that are transferrable without a trace. Id. ¶ 5. 23 Plaintiffs allege that despite knowing the high value of its customer list and the need for 24 confidentiality, Ledger did not implement security measures to protect its customers by regularly 25 deleting and/or archiving the customer data to protect that information from online accessibility. 26 FAC ¶ 136, and that Ledger failed to exercise reasonable care in obtaining, retaining, securing, 27 safeguarding, deleting, and protecting its customers personal information that Ledger had in its 1 unauthorized persons, id. ¶ 117. Similarly, Plaintiffs allege Shopify failed to exercise reasonable 2 care in obtaining, retaining, securing, safeguarding, deleting, and protecting their personal 3 information in their possession from being compromised, lost, or stolen, and from being accessed, 4 and misused by unauthorized persons. FAC ¶¶ 78-83. 5 Plaintiffs are five Ledger customers who reside, respectively, in California, Georgia, New 6 York, London, United Kingdom and Tel Aviv, Israel. Id. ¶¶ 26-20. They purport to represent 7 several classes and subclasses, ranging from customers internationally to customers in particular 8 states who suffered particular harms. Id. ¶ 145. Plaintiffs bring claims for, among others, 9 negligence, negligence per se, injunctive relief and remedies under California’s unfair competition 10 law, Georgia’s Fair Business Practices Act and New York’s General Business Law. Id. ¶¶ 168- 11 276. 12 B. Relevant Factual Background Contained in Jurisdictional Declarations 13 Defendants include additional factual background relevant to the Court’s jurisdictional 14 inquiries at the motion to dismiss stage. Shopify USA states that it is incorporated in Delaware, 15 has its principal place of business in Ontario, Canada, and never had a business relationship with 16 Ledger. Docket No. 55-1 (“Harris-John Decl.”) ¶¶ 3-6. Shopify Inc., explains it is a Canadian 17 corporation that it is not registered to do business in California and, does not have any employees 18 in California. Docket No. 56-1 (“McIntomny Decl.”) ¶¶ 2-5. It explains that the “rogue” 19 individuals who were responsible for the data breach of Shopify, Inc.’s platform were not 20 employees of Shopify or any of its affiliated companies, but independent contractors of a company 21 called TaskUs, who were located in the Philippines. Id. ¶¶ 11-12. Ledger explains that it is a 22 French company with no California or U.S. employees. Docket No. 59 (“Ricomard Decl.”) ¶¶ 5, 23 11, 17. 24 C. Procedural Background 25 Defendant Ledger Technologies was voluntarily dismissed from this case. Docket No. 36. 26 Remaining Defendants Shopify USA, Shopify, Inc. and Ledger move to dismiss Plaintiffs’ First 27 Amended Complaint on multiple grounds, including for lack of personal jurisdiction and failure to 1 III. LEGAL STANDARD 2 A. Federal Rule of Procedure 12(b)(2) 3 A defendant may move to dismiss based on lack of personal jurisdiction pursuant to 4 Federal Rule of Civil Procedure 12(b)(2).

5 In opposing a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that 6 jurisdiction is proper. Where, as here, the defendant's motion is based on written materials rather than an evidentiary hearing, the 7 plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss. The plaintiff cannot 8 “simply rest on the bare allegations of its complaint,” but uncontroverted allegations in the complaint must be taken as true. 9 10 Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011); see also Data Disc, 11 Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977) (noting that “[t]he limits 12 which the district judge imposes on the pre-trial proceedings will affect the burden which the 13 plaintiff is required to meet”). In addition, all disputed facts are resolved in favor of the plaintiff. 14 See Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006); see also Freestream 15 Aircraft (Berm.) Ltd. v. Aero Law Grp.,

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