1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 JULIUS CHERRY, et al., No. 2:22-cv-00999-DAD-DB 12 Plaintiffs, 13 v. ORDER GRANTING, IN PART, DEFENDANTS’ MOTION TO DISMISS AND 14 STRATEGIC PROPERTIES OF NORTH DENYING PLAINTIFFS’ MOTION TO AMERICA, LLC, et al., COMPEL AS HAVING BEEN RENDERED 15 MOOT Defendants. 16 (Doc. Nos. 16, 17, 28)
18 19 This matter is before the court on defendants’ motion to dismiss plaintiffs’ complaint 20 pursuant to Federal Civil Procedure Rules 12(b)(2), 12(b)(3), and 12(b)(6). (Doc. No. 16.)1 On 21 1 The undersigned apologizes for the excessive delay in the issuance of this order. This court’s 22 overwhelming caseload has been well publicized and the long-standing lack of judicial resources 23 in this district long-ago reached crisis proportion. While that situation was partially addressed by the U.S. Senate’s confirmation of district judges for two of this court’s vacancies on December 24 17, 2021 and June 21, 2022, another vacancy on this court with only six authorized district judge positions was created on April 17, 2022 and still remains unfilled. It has now been over 37 25 months since this court had its full complement of authorized district judges. For over twenty- two of those months the undersigned was left presiding over approximately 1,300 civil cases and 26 criminal matters involving 735 defendants. That situation resulted in the court not being able to 27 issue orders in submitted civil matters within an acceptable period of time and continues even now as the undersigned works through the predictable backlog. This has been frustrating to the 28 court, which fully realizes how incredibly frustrating it is to the parties and their counsel. 1 October 10, 2022, defendants’ motion was taken under submission on the papers. (Doc. No. 24.) 2 For the reasons set forth below, the court will grant defendants’ motion to dismiss (Doc. No. 16), 3 in part. The court will also deny plaintiffs’ pending motion to compel arbitration (Doc. No. 28) 4 as having been rendered moot by this order. 5 BACKGROUND 6 On April 27, 2022, plaintiffs Julius Cherry and Gerard Glazer (collectively, “plaintiffs”) 7 filed this action against defendants Strategic Properties of North America (“SPONA”), Saul 8 Kuperwasser (collectively, “defendants”), and Does 1–20 in the Sacramento County Superior 9 Court. (Doc. No. 1-1 at 1.) On June 8, 2022, defendants removed this action to this federal court 10 on the basis of diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441. (Doc. No. 1 at 2.) In 11 their complaint, plaintiffs allege as follows. 12 Plaintiffs are owners of two residential units in a condominium building located at 10 E. 13 Ontario Street in Chicago, Illinois (the “subject condominium”). (Doc. No. 1-1 at ¶ 2.) Plaintiffs 14 reside in the Sacramento area and purchased their condominium units as “retirement/investment 15 property.” (Id. at ¶¶ 2, 8.) Defendant SPONA is a Delaware limited liability company that 16 purchases residential properties and is attempting to purchase the subject condominium. (Id. at 17 ¶ 9.) Defendant Kuperwasser is a principal at SPONA. (Id. at ¶ 10.) 18 The subject condominium consists of 467 residential units. (Id. at ¶ 16.) All of the units 19 and common elements in the subject condominium are owned by the unit owners, who constitute 20 the members of the subject condominium’s residential dwelling community, the Private 21 Residences at Ontario Place Condominium Association (the “Condominium Association”). (Id. 22 at ¶¶ 18, 20.) 23 On February 26, 2020, SPONA sent the subject condominium’s Board of Managers 24 (“BOM”) a letter of intent to purchase all 467 units and common spaces of the subject 25 condominium. (Id. at ¶ 25.) In August 2020, the proposed sale failed to pass a vote by the unit 26 owners of the subject condominium. (Id. at ¶ 29.) Subsequently, SPONA sent the BOM a second 27 letter of intent to purchase the subject condominium, which was put to another vote before the 28 subject condominium’s unit owners—and again failed to pass—on August 26, 2021. (Id. at 1 ¶¶ 30–31.) Despite the two failed attempts to pass the proposed sale of the subject condominium, 2 SPONA “engaged in secret discussions” with members of the BOM, who “met privately to 3 strategize about anyway [sic] to change the vote.” (Id. at ¶¶ 28, 31.) The members of the BOM 4 then, “[w]ith the aid and assistance of SPONA,” extended the vote on the proposed sale through 5 September 10, 2021. (Id. at ¶¶ 31–32.) The BOM and SPONA “railroaded this [extended] vote” 6 and thus were able to “intentionally push through the sale.” (Id. at ¶ 32.) 7 On November 7, 2021, SPONA and the BOM entered into an Agreement of Purchase and 8 Sale (“APS”) for the bulk sale of all units in the subject condominium, culminating in a “Fourth 9 Amendment to Agreement of Purchase and Sale” entered into on March 18, 2022 (“amended 10 APS”). (Id. at ¶¶ 39, 42.) Plaintiffs allege that the amended APS has extended the closing date 11 on the proposed sale without plaintiffs’ consent; plaintiffs do not wish to sell their units; and 12 plaintiffs wish to use their own title company in connection with the sale, rather than use 13 SPONA’s choice of title company as set forth in the APS. (Id. at ¶¶ 43, 45.) 14 Based on the foregoing allegations, plaintiffs assert the following claims: (1) intentional 15 infliction of emotional distress; (2) fraud and deceit; (3) conversion; and (4) elder abuse. (Id. at 16 ¶¶ 62–91.) Plaintiffs seek damages and a judicial declaration that, inter alia, the APS is null and 17 void and the proposed sale is canceled. (Id. at ¶¶ 49–61, 91.) 18 On April 27, 2022, plaintiffs initiated this action in the Sacramento County Superior 19 Court. (Doc. No. 1-1 at 1.) Defendants removed this action to this court on June 8, 2022. (Doc. 20 No. 1.) On August 31, defendants filed the pending motion to dismiss plaintiffs’ complaint. 21 (Doc. No. 16). On October 14, 2022, plaintiffs filed their opposition to the pending motion. 22 (Doc. No. 25.) Defendants filed their reply thereto on November 4, 2022. (Doc. No. 26.) 23 LEGAL STANDARD 24 Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may move to 25 dismiss an action for lack of personal jurisdiction. In opposing such a motion, the plaintiff bears 26 the burden of proof to show that jurisdiction is appropriate. Picot v. Weston, 780 F.3d 1206, 1211 27 (9th Cir. 2015); Love v. Assoc. Newspapers, Ltd., 611 F.3d 601, 608 (9th Cir. 2010). When a 28 defendant’s motion to dismiss is based on written materials rather than an evidentiary hearing and 1 is to be decided on the pleadings, affidavits, and discovery materials, the plaintiff need only make 2 a prima facie showing that personal jurisdiction exists in order for the action to proceed. See 3 Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015); Picot, 870 F.3d at 1211. 4 In determining whether a plaintiff has established personal jurisdiction, the court accepts 5 the plaintiff’s allegations as true and resolves any conflicts between the parties over statements 6 contained in affidavits in the plaintiff’s favor. Love, 611 F.3d at 608; Schwarzenegger v. Fred 7 Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). However, where allegations are 8 controverted by a defendant, the plaintiff cannot “simply rest on the bare allegations of [the] 9 complaint, but rather [is] obligated to come forward with facts, by affidavit or otherwise, 10 supporting personal jurisdiction.” Philips v. Pitt Cnty. Mem’l Hosp., Inc., 855 F. App’x 324 (9th 11 Cir. 2021)2 (quoting Amba Mktg. Sys., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). 12 “Where, as here, there is no applicable federal statute governing personal jurisdiction, the 13 law of the state in which the district court sits applies.” Core-Vent Corp. v. Nobel Indus. AB, 11 14 F.3d 1482, 1484 (9th Cir. 1993). “California’s long-arm statute allows courts to exercise personal 15 jurisdiction over defendants to the extent permitted by the Due Process Clause of the United 16 States Constitution.” Core-Vent Corp., 11 F.3d at 1484; see also Cal. Civ. Proc. Code § 410.10 17 (“A court of this state may exercise jurisdiction on any basis not inconsistent with the 18 Constitution of this state or of the United States.”). Thus, only constitutional principles constrain 19 the jurisdiction of a federal court in California. Love, 611 F.3d at 608–09. 20 Under the Fourteenth Amendment’s due process clause, courts may exercise personal 21 jurisdiction over non-resident defendants only so long as there are sufficient “minimum contacts” 22 between the defendant and the forum state “such that maintenance of the suit does not offend 23 ‘traditional notions of fair play and substantial justice.’” World-Wide Volkswagen Corp. v. 24 Woodson, 444 U.S. 286, 292 (1980) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 25 (1945)). “Each defendant’s contacts with the forum State must be assessed individually.” Calder 26 ///// 27 2 Citation to this unpublished Ninth Circuit opinion is appropriate pursuant to Ninth Circuit Rule 28 36-3(b). 1 v. Jones, 465 U.S. 783, 790 (1984).3 “The strength of contacts required depends on which of the 2 two categories of personal jurisdiction a litigant invokes: specific jurisdiction or general 3 jurisdiction.” Ranza, 793 F.3d at 1068. 4 ANALYSIS 5 In the pending motion to dismiss, defendants contend that: (1) this court lacks personal 6 jurisdiction over them; (2) the Eastern District of California is an improper venue; and (3) 7 plaintiffs fail to state any cognizable claims upon which relief can be granted.4 (Doc. No. 16 at 9, 8 15.) 9 A. Personal Jurisdiction Pursuant to Rule 12(b)(2) 10 Defendants contend that plaintiffs’ complaint must be dismissed because this court lacks 11 both general and specific personal jurisdiction over them. (Doc. No. 16 at 10.) In opposition, 12 plaintiffs argue that this court may exercise personal jurisdiction over defendants. (Doc. No. 25 13 at 9.) 14 As an initial matter, the court rejects plaintiffs’ argument that defendants have waived any 15 objection to personal jurisdiction by their participation in this action up until this point. Plaintiffs 16 first contend that by removing this action from state to federal court, defendants waived any 17 objection to this court’s exercise of personal jurisdiction over them. (See id.) While it is true that 18 a defendant can waive an objection to personal jurisdiction by failing to raise it in a timely 19 manner, see Federal Rule of Civil Procedure 12(h), the “standard rule” is that “a defendant does 20 not waive jurisdictional challenges by removing a case to federal court.” Munjy v. Destination XL 21 Grp., Inc., No. 1:14-cv-01557-TLN-SKO, 2015 WL 1021129, at *3 (E.D. Cal. Mar. 9, 2015)
22 3 A plaintiff must also establish personal jurisdiction for “each claim asserted against a 23 defendant.” Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir. 2004). If personal jurisdiction exists over one claim, but not others, the district court may 24 exercise pendent personal jurisdiction over any remaining claims that arise out of the same “common nucleus of operative facts” as the claim for which jurisdiction exists. Id. 25
4 Defendants have also filed a request for judicial notice of several exhibits, which include 26 various filings from other litigation in which plaintiffs are or were involved. (Doc. No. 17.) 27 Because the court is able to resolve the pending motion without reference to these exhibits and ultimately grants defendants’ motion to dismiss without leave to amend, the court will deny 28 defendants’ request for judicial notice. 1 (quoting Naxos Resources (U.S.A.) Ltd. v. Southam Inc., No. 2:96-cv-02314-WJR-MC, 1996 WL 2 662451, at *8 (C.D. Cal. Aug. 16, 1996)); see also Rivera v. Bally’s Park Place, Inc., 798 F. 3 Supp. 2d 611, 615 (E.D. Pa. 2011) (noting that “removal to federal court does not constitute . . . a 4 waiver” to a defendant’s objection to personal jurisdiction); Arizona v. Manypenny, 451 U.S. 232, 5 242 n.17 (1981) (“[I]f the state court lacks jurisdiction over the subject matter or the parties, the 6 federal court acquires none upon removal . . . .”). Plaintiffs next advance the unpersuasive 7 argument that “defendants have engaged in 63 days of settlement discussions, and discussions 8 regarding stipulating to consolidate this case [with a related case], which . . . constitutes an 9 appearance waiving any objection to personal jurisdiction." (Doc. No. 25 at 9.) The sole case 10 plaintiffs cite, ostensibly in support of this contention, pertains to what constitutes a party’s 11 appearance in an action for purposes of default judgment pursuant to Rule 55 and nowhere 12 mentions personal jurisdiction. (See id.) (citing H.F. Livermore Corp. v. Aktiengesellschaf 13 Gebruder Loepfe, 432 F.2d 689, 691 (D.D.C. 1970)). “As a general rule, if a party files a 14 responsive pleading or makes a Rule 12 motion but does not raise personal jurisdiction as a 15 defense, the party waives the right to raise personal jurisdiction.” In re Cathode Ray Tube (CRT) 16 Antitrust Litig., 27 F. Supp. 2d 1002, 1008 (N.D. Cal. 2014) (emphasis added). Participation in 17 settlement and stipulation discussions are a far cry from filing a responsive pleading or a Rule 12 18 motion, and defendants have not waived their objections to personal jurisdiction through any such 19 discussions. See Fed. R. Civ. P. 12(h)(1); In re Cathode Ray Tube (CRT) Antitrust Litig., 27 F. 20 Supp. 2d at 1009 (rejecting the argument that simply by being a part of litigation for over five 21 years, defendant had waived its personal jurisdiction defense by implication). Therefore, the 22 court finds that defendants have not waived their personal jurisdiction objections and timely 23 raised them in their pending motion to dismiss. 24 The court next considers whether this court has personal jurisdiction over defendants. In 25 their complaint, plaintiffs do not proffer any basis—either general or specific—on which this 26 court may exercise personal jurisdiction over the named defendants in this action. Nonetheless, 27 in their opposition to the pending motion, plaintiffs advance arguments only with respect to 28 specific personal jurisdiction, apparently conceding that this court lacks general personal 1 jurisdiction over defendants. (See Doc. No. 25 at 9–15; see also Doc. No. 16 at 10); Lopez v. 2 County of Los Angeles, No. 3:15-cv-03804-TEH, 2016 WL 54123, at *2 (N.D. Cal. 2016) 3 (“[B]ecause Plaintiff failed to oppose many arguments in the instant motion to dismiss, the Court 4 may treat such non-opposition as implicit consent to the merits of the arguments asserted, and 5 consequently as consent to dismissal of the Complaint.”). Accordingly, the court will consider 6 only whether specific jurisdiction over defendants exists in California. 7 The parties do not dispute that defendants are not residents of California. (See Doc. Nos. 8 16 at 10; 25 at 10.) In determining whether a court has specific jurisdiction over a non-resident 9 defendant, the following three-prong test is to be employed: 10 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; 11 or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the 12 benefits and protections of its laws;
13 (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and 14 (3) the exercise of jurisdiction must comport with fair play and 15 substantial justice, i.e. it must be reasonable. 16 Picot, 780 F.3d at 1211 (citing Fred Martin Motor Co., 374 F.3d at 802) (emphasis added). 17 Plaintiff has the burden of establishing the first two of these prongs, and a “strong showing on 18 one axis will permit a lesser showing on the other.” Yahoo! Inc. v. La Ligue Contre Le Racisme 19 Et L’Antisemitisme, 433 F.3d 1199, 1210 (9th Cir. 2006) (en banc). If plaintiff meets this burden, 20 the burden then shifts to defendant on the third prong to show that the exercise of jurisdiction 21 would not be reasonable. CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th 22 Cir. 2011). 23 1. Purposeful Direction of Activities 24 The analysis under this first prong of the three-step inquiry differs depending on whether 25 the action involves allegations of tortious conduct or contractual obligations. See Ziegler v. 26 Indian River Cnty., 64 F.3d 470, 473 (9th Cir. 1995); Sinatra v, National Enquirer, Inc., 854 F.2d 27 1191, 1195 (9th Cir. 1988). A “purposeful availment” analysis is typically applied in suits 28 sounding in contract, and a “purposeful direction” analysis is typically applied in suits sounding 1 in tort. See Fred Martin Motor Co., 374 F.3d at 802. Because plaintiffs’ claims asserted in this 2 action sound in tort, the court will apply the purposeful direction analysis. See Bunting v. Carter- 3 Bunting, No. 3:11-cv-00414-L-WMC, 2012 WL 460458, at *3 (S.D. Cal. Feb. 13, 2012) 4 (applying purposeful direction analysis where plaintiff’s claims included fraud and elder abuse); 5 Mitilier v. Kaminsky, No. 3:09-cv-01720-JAH-AJB, 2010 WL 11508244, at *4 (S.D. Cal. Feb. 6 16, 2010) (applying purposeful direction analysis where plaintiff’s claims included intentional 7 infliction of emotional distress); Hall v. Nelson Aircraft Sales, Inc., No. 1:05-cv-01529-REC- 8 LJO, 2006 WL 902449, at *3, 6 (E.D. Cal. Apr. 5, 2006) (describing plaintiff’s claims for fraud 9 and deceit as giving rise to a tort action); Mee Indus., Inc. v. Adamson, No. 2:18-cv-003314-CAS- 10 JC, 2018 WL 6136813, at *4 (C.D. Cal. Feb. 5, 2019) (“[B]ecause plaintiff’s claim[] for . . . 11 conversion . . . sound[s] in tort, purposeful direction is the proper analytical framework.”). 12 “Where allegedly tortious conduct takes place outside the forum and has effects inside the 13 forum,” courts in the Ninth Circuit examine purposeful direction by using the three-part “effects” 14 test set forth by the Supreme Court in Calder v. Jones, 465 U.S. 783 (1984). AMA Multimedia, 15 LLC v. Wanat, 970 F.3d 1201, 1208 (9th Cir. 2020), cert. denied, No. 20-1430, ––– U.S. ––––, 16 142 S. Ct. 76 (2021). This “Calder effects test” asks whether the defendant is alleged to have (1) 17 committed an intentional act (2) that was expressly aimed at the forum state and (3) that caused 18 harm the defendant knew was likely to be suffered in the forum state. Fred Martin Motor Co., 19 374 F.3d at 803. 20 Under the first element, “[t]he meaning of the term ‘intentional act’ . . . is essentially the 21 same as in the context of intentional torts; namely, the defendant must act with the ‘intent to 22 perform an actual, physical act in the real world.’” Picot, 780 F.3d at 1214 (quoting Fred Martin 23 Motor Co., 374 F.3d at 806). Here, taking the facts alleged in the complaint in the light most 24 favorable to plaintiffs, the court concludes that plaintiffs have sufficiently alleged that defendants 25 committed an intentional act by entering into the APS, amended APS, and pursuing the purchase 26 of the subject condominium. See, e.g., Thomas v. Thomas, No. 8:14-cv-01096-JLS-RNB, 2015 27 WL 12681311, at *2, 4 (C.D. Cal. May 8, 2015) (trustee’s alleged transfer of trust assets 28 constitutes an intentional act); Eighteen Seventy L.P. v. Jayson, 532 F. Supp. 3d 1125, 1138 (D. 1 Wyo. 2020) (defendant’s alleged misrepresentations to investors made in order to induce 2 investment in a company constitute intentional acts); Loomis v. Slendertone Dist., Inc., 420 F. 3 Supp. 3d 1046, 1068 (S.D. Cal. 2019) (development, advertising, and sale of a product constitutes 4 an intentional act). 5 Under the second element of the Calder effects test, express aiming at the forum state, the 6 focus of the court’s analysis is on the “defendant’s contacts with the forum state itself, not the 7 defendant’s contacts with persons who reside there.” Walden v. Fiore, 571 U.S. 277, 285 (2014). 8 In this case, the court concludes that plaintiffs have not carried their burden of sufficiently 9 alleging that the named defendants expressly aimed their intentional conduct at California. See 10 Picot, 780 F.3d at 1211. In their opposition to the pending motion, plaintiffs assert that the 11 following allegations constitute sufficient contacts between defendants and California for 12 personal jurisdiction over them to exist here: 13 1. A number of unit owners reside in California. 14 2. Any lease agreement is required to be approved by SPONA. 15 3. Extensive answers to questions were provided by SPONA to the [BOM] and sent to the [unit] owners all over the world. 16 4. SPONA is required by law to use plaintiffs’ title company and 17 title officer and work with them. 18 5. Only plaintiffs and SPONA can engage in arbitration of the value of plaintiffs’ units. . . . 19 6. Plaintiffs voted on the APS in California. Materials and voting 20 packages were sent to plaintiffs in California. 21 7. All board meetings regarding the sale were held in California via Zoom. 22 23 (Doc. No. 25 at 12.) Contrary to plaintiffs’ unsupported assertions, the fact that an unspecified 24 number of unit owners reside in California does not “on its face” confer jurisdiction. (See id.); 25 see also Walden, 571 U.S. at 285. Similarly, SPONA’s potential legal obligations with respect to 26 the proposed bulk purchase of the subject condominium in Illinois—such as SPONA being 27 “required” to approve unspecified lease agreements, using certain title company selection 28 procedures pursuant to Illinois law, and being subject to an arbitration agreement—do not, 1 without more, demonstrate that defendants have expressly aimed any contact whatsoever at 2 California. In addition, and notably, none of these seven alleged contacts actually describe 3 activities alleged to have been taken by defendants and aimed at California (or even at plaintiffs). 4 As alleged, defendant SPONA provided information about the proposed purchase to the BOM, 5 and the BOM then sent that information to unit owners, including plaintiffs. (See id. at 12.) A 6 prospective buyer providing information to a seller relating to the purchase of real property in 7 Illinois can hardly be deemed to be an activity expressly aimed at the state of California. 8 Similarly, plaintiffs, not defendants, voted on the APS in California, and plaintiffs conveniently 9 decline to state whether defendants were the ones to mail the materials and voting packages to 10 California, instead omitting that information. (See id.; but see Doc. No. 1-1 at ¶¶ 29–37) 11 (describing the BOM’s actions with respect to disseminating information about the prospective 12 sale of the subject condominium to unit owners and collecting votes). Finally, plaintiffs appear to 13 contend that simply because plaintiffs joined the BOM’s Zoom meetings pertaining to the 14 proposed sale while in California, defendants—who plaintiffs do not even allege attended these 15 virtual meetings, or even if they did attend, had any knowledge that plaintiffs were joining the 16 meetings from California—expressly aimed their conduct toward California. 17 In short, the court agrees with defendants that “[a]n Illinois homeowners’ association who 18 sends an email to someone with multiple homes in multiple states to participate in an online 19 Zoom meeting with hundreds of other individuals regarding the possible sale of Illinois real 20 property is hardly engaging in conduct such that the [prospective buyers] should reasonably 21 anticipate being haled into a California court.” (Doc. No. 26 at 5.) Thus, even taking the facts 22 alleged in their complaint in the light most favorable to plaintiffs, the court finds that defendants’ 23 alleged activities in connection with this action are at most, “‘random,’ ‘fortuitous,’ or 24 ‘attenuated’ contacts.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (quoting 25 Keeton v. Hustler Magazine, Inc., 462 U.S. 770, 774 (1984) and World-Wide Volkswagen Corp., 26 444 U.S. at 299). 27 Plaintiffs also advance the unpersuasive argument that defendants “clearly attempt[ed] to 28 promote or transact business in California” because they “actively, continuously and aggressively 1 attempted and continue to attempt to force plaintiffs . . . to sell their property.” (Doc. No. 25 at 2 12.) Although plaintiffs refer to themselves as “known California residents and citizens” (id.), 3 they do not specifically allege that defendants knew that plaintiffs—two owners of condominium 4 units in a 467-unit condominium property located in Illinois—also maintained residences in 5 California. In any event, the express aiming requirement is clearly not satisfied merely “by a 6 defendant’s knowledge that harm may be inflicted on a plaintiff in a particular forum.” AMA 7 Multimedia, LLC, 970 F.3d at 1209, n.5 (citing Axiom, 874 F.3d at 1068–70; Walden, 571 U.S. at 8 286); see also Fred Martin Motor Co., 374 F.3d at 807 (finding that while “[i]t may be true that 9 [defendant’s] intentional act eventually caused harm to [plaintiff] in California . . . . this does not 10 confer jurisdiction”). Accordingly, plaintiffs have not established the express aiming prong of the 11 Calder effects test. 12 As for the third and final element of the Calder effects test, which concerns the 13 sufficiency of allegations of harm, “‘something more’ than mere foreseeability” is required. Fred 14 Martin Motor Co., 374 F.3d at 804–05 (quoting Bancroft & Masters, 223 F.3d 1082, 1087 (9th 15 Cir. 2000)). An action taken outside the forum state with foreseeable effects within the forum 16 state does not per se give rise to specific personal jurisdiction. Id. As the Supreme Court has 17 made clear, “mere injury to a forum resident is not a sufficient connection to the forum. 18 Regardless of where a plaintiff lives or works, an injury is jurisdictionally relevant only insofar as 19 it shows that the defendant has formed a contact with the forum State.” Walden, 571 U.S. at 290. 20 Accordingly, “[t]he proper question is not where the plaintiff experienced a particular injury or 21 effect but whether the defendant’s conduct connects him to the forum in a meaningful way.” Id. 22 Because plaintiffs have not alleged facts establishing that defendants expressly aimed their 23 conduct at California, the court has no basis upon which to find that it would have been 24 foreseeable that defendants’ actions in Illinois regarding the purchase of property in Illinois 25 would cause harm to plaintiffs in California. See Maeda v. Pinnacle Foods Inc., 390 F. Supp. 3d 26 1231, 1246 (D. Haw. 2019) (finding that it was foreseeable that a Hawaii plaintiff would suffer 27 harm in Hawaii, where the defendant expressly aimed its conduct, but it was not foreseeable that 28 a California plaintiff would suffer harm in California, where the defendant did not expressly aim 1 its conduct); cf. Loomis, 420 F. Supp. 3d at 1070 (finding that it was foreseeable that defendant’s 2 conduct targeted at California would cause harm in that state). The third element of the Calder 3 effects test is not met where, as here, the only connection between defendants’ conduct and the 4 forum state is an injury to plaintiffs who happen to reside in the forum state. See Walden, 571 5 U.S. at 290. Moreover, in their opposition to the pending motion plaintiffs do not provide any 6 arguments or authority relating to this third element of the Calder test.5 Accordingly, the court 7 finds that plaintiff have not met their burden of demonstrating the elements of the Calder effects 8 test,6 and as a result, have failed to allege facts establishing that defendants purposefully directed 9 their activities toward California. 10 2. Claim Arises Out of or Relates to Forum-Related Activities 11 To satisfy the second prong of the specific jurisdiction analysis, plaintiffs must show that 12 their claims arise out of or relate to the non-resident defendant’s forum-related activities. Bristol- 13 Myers Squibb Co. v. Superior Ct. of California, San Francisco Cty., ––– U.S. –––, 137 S. Ct. 14 1773, 1780 (2017); Picot, 780 F.3d at 1211. The Supreme Court has provided the following 15 guidance with regard to this prong: 16 The first half of that standard asks about causation; but the back half, after the “or,” contemplates that some relationships will support 17 jurisdiction without a causal showing. That does not mean anything goes. In the sphere of specific jurisdiction, the phrase ‘relate to’ 18 incorporates real limits, as it must to adequately protect defendants foreign to a forum. But again, we have never framed the specific 19 jurisdiction inquiry as always requiring proof of causation— i.e., proof that the plaintiff ’s claim came about because of the 20 defendant’s in-state conduct. 21 Ford Motor Co. v. Montana Eighth Judicial District Court, ––– U.S. ––––, 141 S. Ct. 1017, 1026
22 5 Rather, plaintiffs simply contend that “defendants were fully aware that they could be ‘haled 23 into Court’ in the forum state, California, if their activities to known residents there were fraudulent or otherwise tortious.” (See Doc. No. 25 at 12.) This conclusory statement falls well 24 short of demonstrating that defendants caused harm that they knew was likely to be suffered in the forum state or that defendants’ conduct connects them to California in a meaningful way, as is 25 required by the third element of the Calder effects test. See Fred Martin Motor Co., 374 F.3d at 805; Walden, 571 U.S. at 290. 26
27 6 Indeed, plaintiffs do not address the “Calder effects test” in their briefing on the pending motion at all, further supporting the court’s conclusion that plaintiffs have not met their burden in 28 establishing purposeful direction, the first prong of the specific jurisdiction analysis. 1 (2021) (“Ford Motor”). In other words, “although the plaintiff’s claims must arise out of or relate 2 to the defendant’s contacts with the forum, a strict causal relationship between the defendant’s 3 activities in the forum and the harm is not required.” Wesch v. Yodlee, Inc., No. 3:20-cv-05991- 4 SK, 2021 WL 3486128, at *5 (N.D. Cal. Aug. 5, 2021) (citing Ford Motor, 141 S. Ct. at 1025- 5 26). Rather, “there must be ‘an affiliation between the forum and the underlying controversy, 6 principally, [an] activity or an occurrence that takes place in the forum State and is therefore 7 subject to the State’s regulation.’”7 Ford Motor, 141 S. Ct. at 1025 (quoting Bristol-Myers 8 Squibb, 137 S. Ct. at 1780). 9 Because plaintiffs fail to allege any contacts by defendants with California, they likewise 10 fail to allege that their claims arise out of defendants’ California-related activities. See Picot, 780 11 F.3d at 1215 (finding that “none of [defendant’s] challenged conduct had anything to do with 12 [California] itself” where the defendant’s suit-related conduct was all conducted “from his 13 residence in Michigan, without entering California, contacting any person in California, or 14 otherwise reaching out to California”); LNS Enterprises LLC v. Continental Motors, Inc., 22 F. 15 4th 852, 863–64 (9th Cir. 2022) (“Given that there are no material contacts that Plaintiffs have 16 put into the record, [defendant’s] alleged contacts with Arizona are inadequate to render 17 [defendant] subject to jurisdiction in Arizona.”). Accordingly, the court finds that, as alleged, 18 defendants’ actions in this case do not connect them with California in a way sufficient to support 19 the assertion of personal jurisdiction over them here. See Picot, 780 F.3d at 1215. 20 ///// 21 /////
22 7 Before the Supreme Court’s decision Ford Motor, courts in the Ninth Circuit required a 23 showing of but-for causation, i.e., but for defendant’s alleged contacts with and activities within the forum state, plaintiff’s cause of action would not have arisen. Talavera Hair Prods., Inc. v. 24 Taizhou Yunsung Elec. Appliance Co., No. 3:18-cv-823-JLS-JLB, 2021 WL 3493094, at *10 (S.D. Cal. Aug. 6, 2021) (“[C]ourts within the Ninth Circuit have traditionally applied a ‘but for’ 25 test to determine whether a claim ‘arises out of or relates to’ a defendant’s contacts with a forum.”); Clarke v. Dutton Harris & Co., PLLC, No. 2:20-cv-00160-JAD-BNW, 2021 WL 26 1225881, at *4 (D. Nev. Mar. 31, 2021) (“Historically, courts in the Ninth Circuit exclusively 27 relied on a ‘but for’ test to determine whether a particular claim arises out of forum-related activities. But the Supreme Court appears to have recently done away with that approach 28 in [Ford Motor].”). 1 3. Reasonableness 2 “In opposition to a defendant’s motion to dismiss for lack of personal jurisdiction, the 3 plaintiff bears the burden of establishing that jurisdiction is proper.” Boschetto v. Hansing, 539 4 F.3d 1011, 1015 (9th Cir. 2008). Having failed to satisfy the first two prongs of the specific 5 jurisdiction analysis, plaintiffs have failed to establish that defendants are subject to personal 6 jurisdiction in California with respect to the claims asserted in their complaint. Accordingly, the 7 court need not address reasonableness, the third element of the specific jurisdiction analysis. 8 B. Jurisdictional Discovery 9 In their opposition to defendants’ motion, plaintiffs request that if the court grants 10 defendants’ motion to dismiss for lack of personal jurisdiction, that plaintiffs be granted leave to 11 conduct “limited discovery regarding the personal jurisdiction issue.” (Doc. No. 25 at 23.) 12 Discovery should ordinarily be granted where “pertinent facts bearing on the question of 13 jurisdiction are controverted or where a more satisfactory showing of the facts is necessary.” 14 Butcher’s Union Local No. 498, United Foods & Commercial Workers v. SDC Inv., Inc., 788 15 F.2d 535, 540 (9th Cir.1986) (quoting Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 16 1285 n.1 (9th Cir. 1977)). “[W]here a plaintiff’s claim of personal jurisdiction appears to be both 17 attenuated and based on bare allegations in the face of specific denials made by defendants, the 18 Court need not permit even limited discovery.” Terracom v. Valley Nat’l Bank, 49 F.3d 555, 562 19 (9th Cir. 1995) (alteration in original) (quoting Rich v. KIS Cal., Inc., 121 F.R.D. 254, 259 20 (M.D.N.C. 1988); see also Boschetto, 539 F.3d at 1020 (affirming the denial of a request for 21 jurisdictional discovery “based on little more than a hunch that [discovery] might yield 22 jurisdictionally relevant facts”). Thus, limited discovery should not be permitted to conduct a 23 “fishing expedition.” Mackovich v. United States, No. 1:06-cv-00422-SMS (PC), 2008 WL 24 2053978, at *1 (E.D. Cal. May 13, 2008) (denying discovery where plaintiff made “no showing 25 that if further discovery were allowed, the outcome of the resolution of Defendant’s motion to 26 dismiss would be affected”) (citing Laub v. U.S. Dep’t of the Interior, 342 F.3d 1080, 1093 (9th 27 Cir. 2003)). 28 ///// 1 Here, plaintiffs have not met their burden of establishing the existence of personal 2 jurisdiction over defendants. Moreover, plaintiffs have not explained how limited discovery 3 would likely reveal contacts that would give rise to general or specific personal jurisdiction over 4 defendants. Indeed, plaintiffs do not provide any argument or explanation whatsoever for their 5 request to conduct jurisdictional discovery. Plaintiffs have therefore not established that 6 authorizing jurisdictional discovery is justified in this case, and the court will not permit the 7 entirely speculative discovery plaintiffs seek. See Scanlon v. Curtis Int’l, 465 F. Supp. 3d 1054, 8 1067–68 (E.D. Cal. 2020) (denying a request for jurisdictional discovery based on the mere 9 speculation that discovery might reveal facts that support personal jurisdiction). 10 C. Leave to Amend 11 “Courts are free to grant a party leave to amend whenever ‘justice so requires,’ and 12 requests for leave should be granted with ‘extreme liberality.’” Moss v. U.S. Secret Serv., 572 13 F.3d 962, 972 (9th Cir. 2009) (quoting Fed. R. Civ. P 15(a)(2) and Owens v. Kaiser Found. 14 Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)). There are several factors a district court 15 considers in determining whether to grant leave to amend, including undue delay, the movant’s 16 bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously 17 allowed, undue prejudice to the opposing party, and futility. Brown v. Stored Value Cards, Inc., 18 953 F.3d 567, 574 (9th Cir. 2020) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Of the 19 factors from Foman, the court should particularly consider prejudice to the opposing party. Id.; 20 Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 21 In plaintiffs’ opposition to the pending motion to dismiss, they argue that if the court were 22 to find that certain of their allegations—specifically, their allegations with respect to the fraud 23 claim or with respect to defendant Kuperwasser’s alleged collusion with defendant SPONA and 24 the BOM—are deficient, that such defects could be “remedied by amendment.” (Doc. No. 25 at 25 15, 22.) Notably, plaintiffs advance no such argument with respect to the court’s ability—or lack 26 thereof—to exercise personal jurisdiction over defendants based on their alleged contacts with 27 California. Indeed, apart from the narrow issues of fraud and defendant Kuperwasser’s 28 involvement in proposed purchase, plaintiffs do not otherwise request leave to amend. The court 1 finds this silence telling. Given that plaintiffs have not pled facts supporting the assertion of 2 personal jurisdiction in this action, do not suggest that they could cure the defects with respect to 3 personal jurisdiction by amending their complaint, and do not even request leave to amend their 4 complaint in this regard, the court finds that the granting of leave to amend here would be futile. 5 Therefore, defendants’ motion to dismiss for lack of personal jurisdiction will be granted without 6 leave to amend. 7 D. Improper Venue Pursuant to Rule 12(b)(3) and Failure to State a Claim Pursuant to 8 Rule 12(b)(6) 9 Having concluded that the court lacks personal jurisdiction over defendants, the court will 10 not address defendants’ arguments advanced in support of their motion brought pursuant to Rules 11 12(b)(3) and 12(b)(6). Accordingly, defendants’ pending motion to dismiss will be denied to the 12 extent it rests on the remaining bases for dismissal argued therein as having been rendered moot 13 by this order. 14 E. Plaintiffs’ Motion to Compel 15 On January 5, 2023, plaintiffs filed a motion to compel arbitration and stay this action 16 pending conclusion of such arbitration. (Doc. No. 28.) Because the court grants defendants’ 17 motion to dismiss for lack of personal jurisdiction without leave to amend, the court will deny 18 plaintiffs’ pending motion to compel arbitration (Doc. No. 28) as having been rendered moot by 19 this order. 20 CONCLUSION 21 For the reasons stated above: 22 1. Defendants’ motion to dismiss for lack of personal jurisdiction (Doc. No. 16) is 23 granted without leave to amend; 24 2. The remainder of defendants’ motion to dismiss (Doc. No. 15) is denied as having 25 been rendered moot by this order; 26 3. Defendants’ request for judicial notice (Doc. No. 17) is denied as unnecessary; 27 ///// 28 ///// 1 2 4. Plaintiffs’ motion to compel (Doc. No. 28) is denied as having been rendered moot 3 by this order; and 4 5. The Clerk of the Court is directed to close this case. 5 IT IS SO ORDERED. ° | Dated: February 13, 2023 Dab A. 2, aol 7 UNITED STATES DISTRICT JUDGE 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17