Cisco Systems, Inc. v. Dexon Computer, Inc.

• Court: District Court, N.D. California
• Decided: April 21, 2023
• Docket: 3:20-cv-04926
• Status: Unknown

Opinion

1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 CISCO SYSTEMS, INC., et al., Case No. 20-cv-04926-CRB

9 Plaintiffs,

ORDER GRANTING MOTION TO 10 v. DISMISS AND DENYING MOTION TO TRANSFER 11 DEXON COMPUTER, INC., et al., 12 Defendants.

13 Third-party defendant Softnetworks brings a motion to dismiss for lack of personal 14 jurisdiction and improper venue pursuant to Federal Rule of Civil Procedure 12(b)(2) and 15 12(b)(3). Mot. to Dismiss (dkt. 188). Defendant and third-party plaintiff Dexon 16 Computer, Inc. (“Dexon”), anticipating Softnetworks’ motion, brings a motion to transfer 17 to the District of Minnesota under 18 U.S.C. § 1404. Mot. to Transfer (dkt. 183). 18 As explained below, the Court finds this matter suitable for resolution without oral 19 argument pursuant to Civil Rule 7-1(b), VACATES the hearing currently set for April 28, 20 2023, GRANTS Softnetworks’ motion to dismiss, and DENIES Dexon’s motion to 21 transfer. 22 I. BACKGROUND 23 Because the Court and the parties are familiar with the facts of this case, see Cisco 24 Sys., Inc. v. Dexon Computer, Inc., 541 F. Supp. 3d 1009, 1013–14 (N.D. Cal. 2021), the 25 Court focuses on the facts relevant to the instant motions. 26 Dexon is a Minnesota corporation. See Am. Third Party Compl. (dkt. 150) ¶ 2. 27 Softnetworks is a New Jersey corporation. See id. ¶ 14; Jiang Decl. (dkt. 188-1) ¶ 2. On 1 ordering 40 Cisco transceivers for $400.00 total. Balthazor Decl. Ex. A (dkt. 194-2) at 71. 2 Dexon requested that the transceivers be shipped via Fedex Priority and received the next 3 business day. Id. Softnetworks shipped the transceivers from New Jersey to Minnesota. 4 Jiang Decl. ¶ 8. Dexon indicates that it sold at least some of the transceivers purchased 5 from Softnetworks to SAFE Credit Union on April 24, 2020, and to Claremont McKenna 6 College on May 28, 2020. Balthazor Decl. Ex. A at 1, 73–74. 7 After Cisco filed this action accusing Dexon of trafficking counterfeit Cisco 8 products, Dexon sent a demand for indemnification to Softnetworks. Id. at 1–2. Dexon 9 then filed claims against twenty third-party defendants, including Softnetworks, for 10 indemnification and contribution because they sold allegedly counterfeit Cisco products to 11 Dexon. See Am. Third Party Compl. 12 Prior to Softnetworks’ motion, other third-party defendants also brought motions to 13 dismiss for lack of personal jurisdiction or indicated that they might do so. See, e.g., dkt. 14 79, 173. Dexon opted to stipulate to the dismissal of those defendants rather than oppose 15 their motions. See, e.g., dkts. 82, 186. This time, however, Dexon has opposed 16 Softnetworks’ motion, in addition to bringing its motion to transfer. See Mot. to Transfer; 17 Opp’n to Mot. to Dismiss (dkt. 194). 18 II. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION 19 A. Legal Standard 20 A federal district court’s jurisdiction over a defendant is the same as “the 21 jurisdiction of a court of general jurisdiction in the state where the district court is located.” 22 Fed. R. Civ. P. 4(k)(1)(A). California “allows the exercise of personal jurisdiction to the 23 full extent permissible under the U.S. Constitution.” Daimler AG v. Bauman, 571 U.S. 24 117, 125 (2014); see also Cal. Civ. Proc. Code § 410.10. Under the Due Process Clause, 25 “a tribunal’s authority depends on the defendant’s having such ‘contacts’ with the forum 26 State that ‘the maintenance of the suit’ is ‘reasonable, in the context of our federal system 27 of government,’ and ‘does not offend traditional notions of fair play and substantial 1 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316–17 (1945)). This inquiry “has 2 long focused on the nature and extent of ‘the defendant’s relationship with the forum 3 state.’” Id. (quoting Bristol-Myers Squibb Co. v. Super. Ct. of Cal., 582 U.S. 255, 262 4 (2017)). And that “focus” has resulted in “two kinds of personal jurisdiction: general 5 (sometimes called all-purpose) jurisdiction and specific (sometimes called case-linked) 6 jurisdiction.” Id. Because the parties agree that general jurisdiction is not applicable here, 7 Mot. to Dismiss at 4; Opp’n to Mot. to Dismiss at 7–11, the Court focuses on the 8 requirements of specific jurisdiction. 9 Specific jurisdiction “covers defendants less intimately connected with a State,” 10 than general jurisdiction, but “only as to a narrower class of claims.” Ford Motor Co., 141 11 S. Ct. at 1024. While general jurisdiction depends on the relationship between the 12 defendant and the forum, specific jurisdiction depends on the relationship between “the 13 defendant, the forum, and the litigation.” Walden v. Fiore, 571 U.S. 277, 284 (2014) 14 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984)). 15 With those principles in mind, the Ninth Circuit has “established a three-prong test 16 for analyzing a claim of specific personal jurisdiction”:

17 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum 18 or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting 19 activities in the forum, thereby invoking the benefits and protections of its laws; 20 (2) the claim must be one which arises out of or relates to the 21 defendant’s forum-related activities; and

22 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 23 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (quoting 24 Lake v. Lake, 817. F.2d 1416, 1421 (9th Cir. 1987)). The party asserting jurisdiction (in 25 this case, Dexon) bears the burden of satisfying the first two prongs of the test. Id. (citing 26 Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)). If that party fails to satisfy either 27 prong, personal jurisdiction is not established. Id. If that party satisfies both prongs, the 1 burden then shifts to the party challenging jurisdiction, who must “present a compelling 2 case” that the exercise of jurisdiction would not be reasonable. Id. (quoting Burger King 3 Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985)). 4 B. Discussion 5 Because Dexon has failed to satisfy the second prong—that its claim arises out of 6 Softnetworks’ forum-related activities—Dexon has failed to carry its burden, and 7 Softnetworks’ motion is granted. 8 Dexon only provides three pieces of evidence linking Softnetworks to California 9 consumers: (1) Softnetworks “operates and maintains an interactive website accessible and 10 directed to California consumers”; (2) Softnetworks “routinely visits the Cisco website”; 11 and (3) Softnetworks “executes and performs contracts” in California, including using a 12 California choice of law provision and arbitration clause in the terms on its website. 13 Opp’n to Mot. to Dismiss at 4–5. 14 Dexon’s claims do not “arise out of or relate to” any of these asserted contacts. 15 Dexon does not assert that it used Softnetworks’ website to order the Cisco products at 16 issue; thus, the interactivity (or lack thereof) and whether the website is accessible to or 17 directed at California consumers is immaterial.1 Further, whether and to what extent 18 Softnetworks ever visits the Cisco website (which is presumably based in California) is 19 irrelevant to the whether Softnetworks’ sale to Dexon relates to or arises out of 20 Softnetworks’ California contacts. 21 Instead, Dexon argues that because the product it purchased from Softnetworks 22 “made its way to California consumers,” then its claims “relate to Softnetworks’ forum- 23 related activities.” Opp’n to Mot. to Dismiss at 10. But it was Dexon who sold 24 Softnetworks’ product to California consumers; Softnetworks had no control over where 25 the product was sold after it sold the product to Dexon. Because Dexon’s claims must 26

27 1 The terms on Softnetworks’ current website that reference California law are also irrelevant for 1 “arise out of or relate to [Softnetworks’] contacts with the forum,” not Dexon’s contacts 2 with the forum, Dexon has failed to meet its burden on this element. Ford Motor Co., 141 3 S. Ct. at 1025 (quoting Bristol-Myers, 582 U.S. at 262); see also Walden, 571 U.S. at 285 4 (“But the plaintiff cannot be the only link between the defendant and the forum. Rather, it 5 is the defendant’s conduct that must form the necessary connection with the forum State 6 that is the basis for its jurisdiction over him.”). 7 Because Dexon has failed to meet its burden on the second prong, the Court need 8 not address the first and third prongs of the test. See Schwarzenegger, 374 F.3d at 802. 9 C. Jurisdictional Discovery 10 In the alternative, Dexon requests jurisdictional discovery into “the nature and 11 extent of all [Softnetworks’] business activities, such as where sales are conducted, what 12 products are sold and to whom, [and] where and how the products are marketed . . . .” 13 Opp’n to Mot. to Dismiss at 11–12 (quoting Riviera Distributors, Inc. v. High-Top 14 Amusements, Inc., No. 07-1239, 2008 WL 687385, at *10 (C.D. Ill. Mar. 11, 2008)). But 15 the Court decides this motion not on the first prong of the personal jurisdiction test— 16 whether the defendant has “purposefully availed [itself] of the privilege of conducting 17 activities in the forum”—but the second prong, the relationship between Softnetworks’ 18 forum activities and the sale in question. That sale involved emails exchanged and 19 products shipped between New Jersey (Softnetworks) and Minnesota (Dexon). Dexon has 20 not put forth any evidence that Softnetworks’ California contacts had anything to do with 21 that sale—except that Dexon then sold those products in California. Opp’n to Mot. to 22 Dismiss at 10. Jurisdictional discovery is not warranted “based on little more than a hunch 23 that it might yield jurisdictionally relevant facts.” Boschetto v. Hansing, 539 F.3d 1011, 24 1020 (9th Cir. 2008). 25 Accordingly, Softnetwork’s motion to dismiss for lack of personal jurisdiction is 26 granted. 27 III. MOTION TO TRANSFER 1 A. Legal Standard 2 “For the convenience of parties and witnesses, and in the interest of justice, a 3 district court may transfer any civil action to any other district or division where it might 4 have been brought or to any district of division to which all parties have consented.” 28 5 U.S.C. § 1404(a). A court must “weigh multiple factors in its determination whether 6 transfer is appropriate in a particular case,” including: “(1) the location where the relevant 7 agreements were negotiated and executed, (2) the state that is most familiar with the 8 governing law, (3) the plaintiff’s choice of forum, (4) the respective parties’ contacts with 9 the forum, (5) the contacts relating to the plaintiff’s cause of action in the chosen forum, 10 (6) the differences in the costs of litigation in the two forums, (7) the availability of 11 compulsory process to compel attendance of unwilling non-party witnesses, and (8) the 12 ease of access to sources of proof.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498– 13 499 (9th Cir. 2000). 14 B. Discussion 15 Dexon argues that transfer to the District of Minnesota is proper at this juncture 16 because it has brought claims against third-party defendants for selling allegedly 17 counterfeit Cisco products to Dexon in Minnesota. These third-party claims, and the 18 jurisdictional issues surrounding them, do not alter the Court’s past decision to deny 19 Dexon’s prior motion to transfer. Cisco Sys., Inc. v. Dexon Computer, Inc., 541 F. Supp. 20 3d 1009, 1019 (N.D. Cal. 2021). 21 As in 2021, when the Court denied Dexon’s original motion to transfer, the vast 22 majority of the factors weigh against transfer: Cisco still asserts claims under both federal 23 and California, and not Minnesota, law; “many of the transactions giving rise to Cisco’s 24 claims were consummated in California”; Dexon has meaningful contacts with California; 25 and California is still Cisco’s choice of forum. See id. The only factor that has changed is 26 Dexon’s third-party claims for indemnification and contribution against the remaining 27 third-party defendants, which Dexon contends alters the transfer calculus in its favor. 1 The Court is not persuaded. While Dexon’s principal place of business is in 2 || Minnesota, that third-party defendants are scattered, with only one principally in 3 || Minnesota (and four located in California). See Mot. to Transfer at 7-8; Am. Third-Party 4 || Compl. ¥§ 3-22. Even assuming there is personal jurisdiction over all third-party 5 || defendants in Minnesota—which is not guaranteed—tt is not at all clear that most of the 6 || proof and witnesses relating to Dexon’s third-party claims will be found in Minnesota, as 7 || Dexon claims. See Softnetworks Opp’n to Mot. to Transfer (dkt. 189) at 6—8.? 8 The Court is aware, as it was in 2021, that Minnesota would be more convenient 9 || forum for Dexon to resolve this litigation. But because it remains a less convenient forum 10 || for nearly all of the other parties in this case, Dexon’s motion to transfer is again denied. 11 |) Iv. CONCLUSION 12 For the foregoing reasons, Softnetworks’ motion to dismiss for lack of jurisdiction

€ 13 |} is GRANTED and Dexon’s motion to transfer is DENIED.

14 IT ISSO ORDERED. iE

15 Dated: April 21, 2023 g CHARLES R. BREYER 16 United States District Judge 5 17 18 19 20 21 22 23 24 ? Dexon’s delay in bringing this renewed motion to transfer, while not dispositive, is also worth noting. Dexon first brought its third-party claims in 2021. See dkt. 43. It has long known that 75 || Jurisdictional issues may arise with haling these defendants to court in California, after facing two prior motions to dismiss for lack of personal jurisdiction before the present motion. See dkts. 79; 26 173. In that time, the Court and the parties have expended significant resources on this case. See, e.g., dkts. 87, 106, 127, 141, 152. “[I]t is common sense that the party seeking a change of venue 27 || should act with reasonable promptness,” and the Court is not convinced that Dexon did so here. Procedure for Transfer, 15 Fed. Prac. & Proc. § 3844 (4th ed.). 28