California Software Inc. v. Reliability Research, Inc.

631 F. Supp. 1356, 1986 U.S. Dist. LEXIS 27269
CourtDistrict Court, C.D. California
DecidedApril 2, 1986
DocketCV-85-6569-AHS
StatusPublished
Cited by15 cases

This text of 631 F. Supp. 1356 (California Software Inc. v. Reliability Research, Inc.) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
California Software Inc. v. Reliability Research, Inc., 631 F. Supp. 1356, 1986 U.S. Dist. LEXIS 27269 (C.D. Cal. 1986).

Opinion

OPINION AND ORDER ON MOTION TO DISMISS

STOTLER, District Judge.

On October 4, 1985, plaintiffs California Software, Inc. and Reliacomm, Inc. filed a complaint alleging that defendants Reliability Research,.Inc. (hereinafter referred to as “RRI”), James White and Larry Martin made false statements through the use of the telephone, the mails, and a nationwide computer network concerning plaintiffs’ right to market a software program. Defendants moved to dismiss the complaint for lack of personal jurisdiction. The issue presented is whether defendants’ utilization of the foregoing means of communicating with plaintiffs’ prospective customers both in and out of California for the purpose stated supports an exercise of jurisdiction in this forum. By this Order, the Court finds limited jurisdiction over two of these defendants. Accordingly, defendants RRI and White’s motion is denied and defendant Martin’s motion is granted.

I. BACKGROUND

In 1985, Reliacomm employed California Software to provide marketing and consulting services for a new system of computer software known as resCue/MYS (“the *1358 product”). Under the employment contract, California Software agreed to promote and sublicense the product on behalf of Reliacomm. Both plaintiffs are California corporations having their principal places of business in California.

Reliability Research, Inc. (“RRI”), a Nevada corporation with its principal place of business in Vermont, has as its sole business the development of a single software program. RRI granted UCCEL, 1 a Texas corporation, an exclusive license to market the software. RRI employs two individuals, Larry Martin, a citizen of Connecticut, the corporation’s president and vice-president, and James White, a citizen of Vermont, its treasurer.

Plaintiffs brought this action as a result of defendants’ allegedly tortious communications with certain business entities throughout the United States and Canada. Their claims for intentional interference with prospective economic advantage, slander of title, libel, slander, civil conspiracy, unfair competition, and intentional interference with their right to pursue a lawful business arise out of two sets of communications made by defendant White with potential purchasers of the resCue/MVS software.

First, White communicated directly with the following three California residents, each of whom had seriously considered sublicensing plaintiffs’ software: (1) Gibraltar Savings & Loan in Los Angeles, which received a letter dated May 3, 1985; (2) the Atlantic Richfield Company (ARCO) in Los Angeles, which received a telephone call in the Spring of 1985; and (3) Southern California Gas Company in Monterey Park, which received communications by both the mail and the telephone in the Fall of 1985. White told these companies of a title dispute over the product in a New York action and that, if successful, RRI would cancel all sublicenses to the product marketed by California Software and seek damages from plaintiffs and their sublicensees.

Second, on July 23, 1985, White placed a message on a nationally disseminated computer based information service known as the Computer Reliability Forum (the “CRF”), which is operated by defendants. Operators of large computer installations, having a license from UCCEL, utilize the CRF to share information regarding computer hardware and software. Although one may use the CRF to respond to a specific inquiry, the system acts as a bulletin board, its messages being available and visible to all its users.

White’s CRF message stated that RRI was currently attempting to establish its ownership of the resCue/MVS software in a lawsuit filed in New York against California Software. The message further stated that RRI would hold any licensee of the product financially responsible for its use if RRI prevailed in the lawsuit. 2 White’s message was received by at least three users of the CRF network: Pacific Northwest Bell in the State of Washington; Marine Midland Bank in Buffalo, New York; and Canada Trust in Ontario, Canada. White placed the message on the CRF in response to inquiries made by these prospective purchasers of the product. The message was also made available to ARCO in California, although no evidence indicates that this CRF message influenced *1359 ARCO’s decision not to purchase the product. 3

Plaintiffs claim that these communications contained false and malicious information which discouraged those who received the messages from purchasing plaintiffs’ product. Prior to White’s interference, the prospective customers had expressed interest in the resCue/MVS software.

II. DISCUSSION

This Court has diversity jurisdiction over the instant matter pursuant to 28 U.S.C. § 1332. In diversity actions, California courts exert personal jurisdiction over nonresident defendants to the fullest extent permissible under the Fourteenth Amendment to the U.S. Constitution. Cal.Code of Civ.Proc. § 410.10. Thus, it must be determined whether defendants have sufficient contacts with the State of California to satisfy due process requirements such that it is appropriate to exercise general or limited jurisdiction. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1287 (9th Cir.1977). 4

In order for this Court to assert jurisdiction, the non-resident defendants’ contacts with the forum state, though minimal, must be of such quality and quantity that “maintenance of the suit does not offend traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed.2d 95 (1945). A finding of minimum contacts satisfies the due process requirement that the non-resident defendants have “fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign.” Shaffer v. Heitner, 433 U.S. 186, 218, 97 S.Ct. 2569, 2587, 53 L.Ed.2d 683 (1977) (Stevens, J., concurring in judgment); Burger King Corp. v. Rudzewicz, — U.S. -, 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985). The defendants’ “conduct and connection with the forum State [must be] such that [they] should reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).

In the Ninth Circuit, a plaintiff bears the burden of establishing jurisdictional facts, although the plaintiff’s burden may vary according to the nature of the proceeding and the type of evidence the Court permits the plaintiff to present. Data Disc,

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Bluebook (online)
631 F. Supp. 1356, 1986 U.S. Dist. LEXIS 27269, Counsel Stack Legal Research, https://law.counselstack.com/opinion/california-software-inc-v-reliability-research-inc-cacd-1986.