1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MARC COHODES, Case No. 3:22-cv-00368-JD
8 Plaintiff, ORDER RE PERSONAL 9 v. JURISDICTION
10 MIMEDX GROUP, INC., et al., Defendants. 11
12 13 Plaintiff Marc Cohodes is a “hedge fund manager” and “short seller” who says he “has 14 exposed many publicly traded companies” engaged in fraud and other nefarious conduct. Dkt. No. 15 1 ¶ 1. Defendant Daniel Guy is an officer and director of a hedge fund that is said to have lost 16 money after Cohodes exposed one of its investment companies. Id. ¶ 4. Cohodes alleges that Guy 17 hired defendant Derrick Snowdy, a private eye, to spy on him in California for information that 18 could be used to get back at Cohodes for the investment loss. Id. Cohodes says defendant 19 MiMedx Group hired Snowdy for the same purposes in response to Cohodes’s investigation into 20 that company, which did not involve Guy or his fund. Id. ¶ 5. Cohodes alleges that Guy and 21 Snowdy violated the California Invasion of Privacy Act, Cal. Penal Code § 630 et seq., and the 22 federal Wiretap Act, 18 U.S.C. § 2511, and committed defamation and a common law invasion of 23 privacy. Id. ¶¶ 86-137. 24 Guy states that he is a Canadian citizen who lives in Bermuda, and has no ties to 25 California. Dkt. No. 49 at 1. He asks to dismiss the claims against him under Federal Rule of 26 Civil Procedure 12(b)(2), for lack of personal jurisdiction. Id. 27 The parties agree that the question of personal jurisdiction over Guy hinges on whether 1 Cohodes in California. See Dkt. No. 49 at 1-2; Dkt. No. 53 at 1; see also Dkt. No. 1 ¶ 14 (alleging 2 in the complaint that the Court “has personal jurisdiction over Guy because Snowdy was at all 3 relevant times herein acting as Guy’s agent and at Guy’s direction”). The record presently before 4 the Court is an underdeveloped patchwork of conflicting facts and claims. Consequently, a period 5 of jurisdictional discovery targeted specifically at the agency issue is warranted. The motion to 6 dismiss is denied without prejudice to renewal after the discovery is conducted. 7 “When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the 8 plaintiff bears the burden of demonstrating that jurisdiction is appropriate.” Will Co., Ltd. v. Lee, 9 47 F.4th 917, 921 (9th Cir. 2022). “When the Defendant’s motion is based on written materials 10 rather than an evidentiary hearing, as is the case here, ‘we only inquire into whether [the 11 plaintiff’s] pleadings and affidavits make a prima facie showing of personal jurisdiction.’” Id. 12 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)). 13 Uncontroverted allegations in the complaint must be taken as true, and “[c]onflicts between the 14 parties over statements contained in affidavits must be resolved in the plaintiff’s favor.” 15 Schwarzenegger, 374 F.3d at 800; see also McCarthy v. Intercontinental Exch., Inc., No. 20-cv- 16 05832-JD, 2022 WL 4227247, at *1 (N.D. Cal. Sept. 13, 2022). On the other hand, the Court 17 “may not assume the truth of allegations in a pleading which are contradicted by affidavit.” 18 Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) (quotation omitted); 19 see also Daramola v. Oracle Am., Inc., No. 19-cv-07910-JD, 2020 WL 5577146, at *1 (N.D. Cal. 20 Sept. 16, 2020). 21 When, as here, no federal statute authorizes personal jurisdiction, the Court applies the law 22 of the state in which it sits. See Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 23 1998). California’s long-arm statute, Cal. Code Civ. Proc. § 410.10, is coextensive with the limits 24 of the Constitution’s due process clause, so the Court need only ensure that that clause permits the 25 exercise of jurisdiction over defendant. See Schwarzenegger, 374 F.3d at 800-01; see also 26 Gevorkyan v. Bitmain Techs. Ltd., No. 18-cv-07004-JD, 2022 WL 3702093, at *2 (N.D. Cal. Aug. 27 26, 2022). 1 Personal jurisdiction comes in two varieties, general and specific. See Ford Motor Co. v. 2 Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021). Cohodes argues only that specific 3 jurisdiction exists over Guy. Dkt. No. 53. “For cases sounding in tort, as here, a defendant has 4 sufficient minimum contacts with the forum state to establish specific personal jurisdiction if: (1) 5 the defendant purposefully directs activities toward the forum state, (2) the plaintiff’s claim arises 6 out of or relates to those activities, and (3) an exercise of jurisdiction would be reasonable.” Burri 7 Law PA v. Skurla, 35 F.4th 1207, 1212 (9th Cir. 2022). 8 “When a plaintiff relies on specific jurisdiction, he must establish that jurisdiction is proper 9 for each claim asserted against a defendant.” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 10 2015) (internal quotation and citation omitted). “If personal jurisdiction exists over one claim, but 11 not others, the district court may exercise pendent personal jurisdiction over any remaining claims 12 that arise out of the same ‘common nucleus of operative facts’ as the claim for which jurisdiction 13 exists.” Id. (citation omitted). 14 Agency is a legal relationship in which an agent acts “on the principal’s behalf and subject 15 to the principal’s control.” Williams v. Yamaha Motor Co., 851 F.3d 1015, 1024 (9th Cir. 2017) 16 (citing Restatement (Third) of Agency § 1.01 (2006)). The principal must have the right to 17 substantially control the agent’s activities for an agency relationship to arise. See id. at 1025. The 18 Supreme Court has recognized that agency relationships “may be relevant to the exercise of 19 specific jurisdiction.” Daimler AG v. Bauman, 571 U.S. 117, 135 n.13 (2014) (emphasis omitted); 20 see also CZ Servs., Inc. v. Anthem Ins. Cos., Inc., No. 19-cv-04453-JD, 2022 WL 4126281, at *2 21 (N.D. Cal. Sept. 9, 2022). The Ninth Circuit has stated that, “[f]or purposes of personal 22 jurisdiction, the actions of an agent are attributable to the principal.” Sher v. Johnson, 911 F.2d 23 1357, 1362 (9th Cir. 1990); see also Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68, 85 24 (2d Cir. 2018) (imputing contacts to principal from agent acting “for the benefit of, with the 25 knowledge and consent of, and under some control by, the nonresident principal” would be 26 “consonant with the due process principle that a defendant must have purposefully availed itself of 27 the privilege of doing business in the forum”) (internal quotations and citations omitted). 1 Applying these principles here, an argument can be made, as Guy suggests, that the 2 complaint is not necessarily rock solid on personal jurisdiction facts. The complaint says that Guy 3 “hired Snowdy to investigate whether a group of short sellers -- including Cohodes -- was acting 4 in concert to manipulate the share price of Concordia Healthcare,” and paid Snowdy “$25,000 per 5 month, plus expenses, for his services.” Dkt. No. 1 ¶ 23. It also says that Snowdy went to 6 California “as part of the ongoing scheme to surveil Cohodes.” Id. ¶¶ 26-27.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MARC COHODES, Case No. 3:22-cv-00368-JD
8 Plaintiff, ORDER RE PERSONAL 9 v. JURISDICTION
10 MIMEDX GROUP, INC., et al., Defendants. 11
12 13 Plaintiff Marc Cohodes is a “hedge fund manager” and “short seller” who says he “has 14 exposed many publicly traded companies” engaged in fraud and other nefarious conduct. Dkt. No. 15 1 ¶ 1. Defendant Daniel Guy is an officer and director of a hedge fund that is said to have lost 16 money after Cohodes exposed one of its investment companies. Id. ¶ 4. Cohodes alleges that Guy 17 hired defendant Derrick Snowdy, a private eye, to spy on him in California for information that 18 could be used to get back at Cohodes for the investment loss. Id. Cohodes says defendant 19 MiMedx Group hired Snowdy for the same purposes in response to Cohodes’s investigation into 20 that company, which did not involve Guy or his fund. Id. ¶ 5. Cohodes alleges that Guy and 21 Snowdy violated the California Invasion of Privacy Act, Cal. Penal Code § 630 et seq., and the 22 federal Wiretap Act, 18 U.S.C. § 2511, and committed defamation and a common law invasion of 23 privacy. Id. ¶¶ 86-137. 24 Guy states that he is a Canadian citizen who lives in Bermuda, and has no ties to 25 California. Dkt. No. 49 at 1. He asks to dismiss the claims against him under Federal Rule of 26 Civil Procedure 12(b)(2), for lack of personal jurisdiction. Id. 27 The parties agree that the question of personal jurisdiction over Guy hinges on whether 1 Cohodes in California. See Dkt. No. 49 at 1-2; Dkt. No. 53 at 1; see also Dkt. No. 1 ¶ 14 (alleging 2 in the complaint that the Court “has personal jurisdiction over Guy because Snowdy was at all 3 relevant times herein acting as Guy’s agent and at Guy’s direction”). The record presently before 4 the Court is an underdeveloped patchwork of conflicting facts and claims. Consequently, a period 5 of jurisdictional discovery targeted specifically at the agency issue is warranted. The motion to 6 dismiss is denied without prejudice to renewal after the discovery is conducted. 7 “When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the 8 plaintiff bears the burden of demonstrating that jurisdiction is appropriate.” Will Co., Ltd. v. Lee, 9 47 F.4th 917, 921 (9th Cir. 2022). “When the Defendant’s motion is based on written materials 10 rather than an evidentiary hearing, as is the case here, ‘we only inquire into whether [the 11 plaintiff’s] pleadings and affidavits make a prima facie showing of personal jurisdiction.’” Id. 12 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)). 13 Uncontroverted allegations in the complaint must be taken as true, and “[c]onflicts between the 14 parties over statements contained in affidavits must be resolved in the plaintiff’s favor.” 15 Schwarzenegger, 374 F.3d at 800; see also McCarthy v. Intercontinental Exch., Inc., No. 20-cv- 16 05832-JD, 2022 WL 4227247, at *1 (N.D. Cal. Sept. 13, 2022). On the other hand, the Court 17 “may not assume the truth of allegations in a pleading which are contradicted by affidavit.” 18 Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) (quotation omitted); 19 see also Daramola v. Oracle Am., Inc., No. 19-cv-07910-JD, 2020 WL 5577146, at *1 (N.D. Cal. 20 Sept. 16, 2020). 21 When, as here, no federal statute authorizes personal jurisdiction, the Court applies the law 22 of the state in which it sits. See Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 23 1998). California’s long-arm statute, Cal. Code Civ. Proc. § 410.10, is coextensive with the limits 24 of the Constitution’s due process clause, so the Court need only ensure that that clause permits the 25 exercise of jurisdiction over defendant. See Schwarzenegger, 374 F.3d at 800-01; see also 26 Gevorkyan v. Bitmain Techs. Ltd., No. 18-cv-07004-JD, 2022 WL 3702093, at *2 (N.D. Cal. Aug. 27 26, 2022). 1 Personal jurisdiction comes in two varieties, general and specific. See Ford Motor Co. v. 2 Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021). Cohodes argues only that specific 3 jurisdiction exists over Guy. Dkt. No. 53. “For cases sounding in tort, as here, a defendant has 4 sufficient minimum contacts with the forum state to establish specific personal jurisdiction if: (1) 5 the defendant purposefully directs activities toward the forum state, (2) the plaintiff’s claim arises 6 out of or relates to those activities, and (3) an exercise of jurisdiction would be reasonable.” Burri 7 Law PA v. Skurla, 35 F.4th 1207, 1212 (9th Cir. 2022). 8 “When a plaintiff relies on specific jurisdiction, he must establish that jurisdiction is proper 9 for each claim asserted against a defendant.” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 10 2015) (internal quotation and citation omitted). “If personal jurisdiction exists over one claim, but 11 not others, the district court may exercise pendent personal jurisdiction over any remaining claims 12 that arise out of the same ‘common nucleus of operative facts’ as the claim for which jurisdiction 13 exists.” Id. (citation omitted). 14 Agency is a legal relationship in which an agent acts “on the principal’s behalf and subject 15 to the principal’s control.” Williams v. Yamaha Motor Co., 851 F.3d 1015, 1024 (9th Cir. 2017) 16 (citing Restatement (Third) of Agency § 1.01 (2006)). The principal must have the right to 17 substantially control the agent’s activities for an agency relationship to arise. See id. at 1025. The 18 Supreme Court has recognized that agency relationships “may be relevant to the exercise of 19 specific jurisdiction.” Daimler AG v. Bauman, 571 U.S. 117, 135 n.13 (2014) (emphasis omitted); 20 see also CZ Servs., Inc. v. Anthem Ins. Cos., Inc., No. 19-cv-04453-JD, 2022 WL 4126281, at *2 21 (N.D. Cal. Sept. 9, 2022). The Ninth Circuit has stated that, “[f]or purposes of personal 22 jurisdiction, the actions of an agent are attributable to the principal.” Sher v. Johnson, 911 F.2d 23 1357, 1362 (9th Cir. 1990); see also Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68, 85 24 (2d Cir. 2018) (imputing contacts to principal from agent acting “for the benefit of, with the 25 knowledge and consent of, and under some control by, the nonresident principal” would be 26 “consonant with the due process principle that a defendant must have purposefully availed itself of 27 the privilege of doing business in the forum”) (internal quotations and citations omitted). 1 Applying these principles here, an argument can be made, as Guy suggests, that the 2 complaint is not necessarily rock solid on personal jurisdiction facts. The complaint says that Guy 3 “hired Snowdy to investigate whether a group of short sellers -- including Cohodes -- was acting 4 in concert to manipulate the share price of Concordia Healthcare,” and paid Snowdy “$25,000 per 5 month, plus expenses, for his services.” Dkt. No. 1 ¶ 23. It also says that Snowdy went to 6 California “as part of the ongoing scheme to surveil Cohodes.” Id. ¶¶ 26-27. Overall, this is a bit 7 thin, and the rather conclusory allegation that Snowdy conducted surveillance “at the direction of 8 Guy, while acting as Guy’s agent or employee,” id. ¶ 91, does not materially advance the personal 9 jurisdiction analysis. See Williams, 851 F.3d at 1025 n.5. 10 Even so, Cohodes filed exhibits in opposition to Guy’s motion that included 11 communications between Guy and another hedge fund manager which discuss Snowdy and his 12 investigation. Dkt. No. 53-1 ¶¶ 6-7; Dkt. No. 53-6. In one message, Guy wrote: “my guy still has 13 a good relationship with these pricks if you want to get him wired up . . . that can be done. I 14 recently did that on another file with him and the FBI and that guy is now behind bars.” Dkt. No. 15 53-6 at 11. In another message, Guy responds to concerns that his “pi” is a “double agent”: “If he 16 took any money from anyone on the other side. He will go to jail.” Id. at 17. The context of the 17 conversation indicates that “my guy” refers to Snowdy. Id. at 19, 24. There are also several 18 messages in which Guy says that he could not “control” Snowdy. Id. at 24, 26-27. 19 Guy suggests that Cohodes “deceivingly” quoted these materials and that the record does 20 not indicate facts sufficient to establish personal jurisdiction. See Dkt. No. 56 at 4-5. This is why 21 development of the evidence is warranted. “A court may permit discovery to aid in determining 22 whether it has in personam jurisdiction.” Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 23 1285 n.1 (9th Cir. 1977). “‘Discovery may be appropriately granted where pertinent facts bearing 24 on the question of jurisdiction are controverted or where a more satisfactory showing of the facts 25 is necessary.’” Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008) (quoting Data Disc, 26 539 F.3d at 1285 n.1). There is “more than a hunch” here that discovery will yield jurisdictionally 27 relevant facts. Id. 1 Consequently, limited jurisdictional discovery is ordered. Cohodes may conduct discovery 2 || targeted at the pertinent facts as discussed in this order. The Court emphasizes that the discovery 3 should be tightly focused, and must be completed by February 27, 2023. Any discovery disputes 4 || should be raised using the letter brief process described in the Court’s civil discovery standing 5 order. 6 After the jurisdictional discovery is completed, Cohodes should file an amended complaint 7 that includes the facts he will rely on for specific jurisdiction over Guy. The amended complaint 8 must be filed by March 13, 2023. Guy may renew the motion to dismiss as warranted by 9 developments. The Court defers resolution of whether specific jurisdiction may be exercised over 10 || Cohodes’s claim against Guy for defamation -- which is not premised on Snowdy’s contacts with 11 California -- and if so, whether pendant personal jurisdiction could be exercised over the other 12 || three claims. 5 13 IT IS SO ORDERED. || Dated: October 27, 2022
16 JAMEYPONATO 17 Unitedf$tates District Judge 18 19 20 21 22 23 24 25 26 27 28