DiscoverOrg Data LLC v. nDivision Services Inc

• Court: District Court, W.D. Washington
• Decided: October 2, 2019
• Docket: 3:19-cv-05508
• Status: Unknown

Opinion

1 HONORABLE RONALD B. LEIGHTON 2 3 4 5

6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 7 AT TACOMA 8 DISCOVERORG DATA LLC, CASE NO. C19-5508RBL 9 Plaintiff, ORDER 10 v. 11 NDIVISION SERVICES INC, 12 Defendant. 13

14 THIS MATTER is before the Court on Defendant nDivision Service’s Motion to Dismiss 15 for Lack of Personal Jurisdiction [Dkt. # 10]. Plaintiff DiscoverOrg is a Vancouver, Washington- 16 based company that compiles “business intelligence” software (databases, including contact 17 information) and sells access to it, in the form of a license. It also has four other U.S. offices, and 18 three overseas offices. 19 nDivision is a Dallas, Texas-based provider of “autonomic manages services and end 20 user help desk services,” helping its clients to replace human labor with digital. It has no 21 employees or agents who live or work in Washington. It has done work with a limited number of 22 national clients that have stores or some presence in Washington, and it worked with a 23 Washington-based law firm as a client (unrelated to this case). 24 1 A non-party nDivision employ (Mario Tanchez) previously worked for a different Texas 2 company which was licensed to access DiscoverOrg’s data. Tanchez used his old password to 3 access DiscoverOrg’s data while he was employed by nDivision. nDivision claims the employee 4 did so from his home, without its knowledge, and that the unauthorized access did not lead to 5 any sales. DiscoverOrg claims the employee stole access to 64,000 files in its database.

6 DiscoverOrg sued, claiming that nDivision is liable for its employee’s unlawful access 7 and theft of data through its online interface. It asserted eight state law and one federal law 8 claims, including claims related to trade secrets. [Dkt. # 1]. 9 nDivision moves to dismiss for lack of personal jurisdiction, arguing that this court does 10 not have general or specific jurisdiction over it. As is usually the case, the real contested issue is 11 specific jurisdiction. 12 A. Standard. 13 When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the 14 plaintiff bears the initial burden of demonstrating that jurisdiction is appropriate, after which the

15 burden shifts to the defendant to demonstrate that jurisdiction is unreasonable. Schwarzenegger 16 v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). A plaintiff cannot simply rest on 17 the bare allegations of its complaint, but rather is obligated to come forward with facts, by 18 affidavit or otherwise, supporting personal jurisdiction. Amba Marketing Systems, Inc. v. Jobar 19 International, Inc., 551 F.2d 784, 787 (9th Cir. 1977). Where the motion is based on written 20 materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing 21 of jurisdictional facts. Schwarzenegger, 374 F.3d at 800. A prima facie showing means that the 22 plaintiff has produced admissible evidence, which, if believed, is sufficient to establish the 23 existence of personal jurisdiction. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). 24 “Conflicts between parties over statements contained in affidavits must be resolved in the 1 plaintiff's favor.” Schwarzenegger, 374 F.3d at 800. However, a district court also may order 2 discovery where “pertinent facts bearing on the question of jurisdiction are controverted or 3 where a more satisfactory showing of the facts is necessary.” Laub v. U.S. Dep't of Interior, 342 4 F.3d 1080, 1093 (9th Cir. 2003) (quoting Butcher's Union Local No. 498 v. SDC Inv., Inc., 788 5 F.2d 535, 540 (9th Cir.1986)).

6 A court’s personal jurisdiction analysis begins with the “long-arm” statute of the state in 7 which the court sits. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 8 1114, 1123 (9th Cir. 2002). Washington's long-arm statute extends the court’s personal 9 jurisdiction to the broadest reach that the United States Constitution permits, so the jurisdictional 10 analysis under state law and federal due process are the same. Byron Nelson Co. v. Orchard 11 Management Corp., 95 Wn.App. 462, 465 (1999); Schwarzenegger, 374 F.3d at 800–01. 12 Personal jurisdiction exists in two forms: general and specific. Dole Food Co. v. Watts, 13 303 F.3d 1104, 1111 (9th Cir.2002). For specific jurisdiction, which is at issue here, the Ninth 14 Circuit applies a three-prong test. Schwarzenegger, 374 F.3d at 802. First, “[t]he non-resident

15 defendant must purposefully direct his activities or consummate some transaction with the forum 16 or resident thereof; or perform some act by which he purposefully avails himself of the privilege 17 of conducting activities in the forum, thereby invoking the benefits and protections of its laws.” 18 Id. Second, “the claim must be one which arises out of or relates to the defendant’s forum-related 19 activities.” Id. Finally, “the exercise of jurisdiction must comport with fair play and substantial 20 justice, i.e. it must be reasonable.” Id. 21 For the first prong, the “purposeful direction” analysis typically applies in tort cases and 22 “usually consists of evidence of the defendant’s actions outside the forum state that are directed 23 at the forum, such as the distribution in the forum state of goods originating elsewhere.” Id. at 24 1 803. To determine if the defendant purposefully directed activities at the forum, the Ninth Circuit 2 applies the “effects test” from Calder v. Jones, 465 U.S. 783 (1984). Under this test, “the 3 defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum 4 state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” 5 Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1228 (9th Cir. 2011) (quoting Brayton

6 Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010)). 7 In cases involving online commerce, the Ninth Circuit has held that simply maintaining a 8 passive website is not enough to satisfy the express aiming prong. Id. at 1229. But “a passive 9 website in conjunction with ‘something more’—conduct directly targeting the forum—is 10 sufficient.” Id. (quoting Rio Properties, Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1020 (9th Cir. 11 2002)). Knowingly taking advantage of the forum state’s consumer market, id. at 1230, or 12 competing directly with the plaintiff in the forum state may qualify as “something more.” See 13 CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1077 (9th Cir. 2011). However, it is 14 not enough that the defendant merely infringed on the plaintiff’s intellectual property rights

15 while knowing of the plaintiff’s location in the forum state. Axiom Foods, Inc. v. Acerchem Int'l, 16 Inc., 874 F.3d 1064, 1070 (9th Cir. 2017). 17 B. Discussion. 18 nDivision argues that DiscoverOrg’s conclusory claims about tortious acts “committed in 19 Washington” and its claim that” nDivision directs its products and services through the stream of 20 commerce into Washington” are not enough to establish specific personal jurisdiction. It argues 21 that it has no connection with Washington; even the servers upon which DiscoverOrg’s files are 22 stored are located outside of Washington. It argues that the fact the harm may have been suffered 23 in Washington is not by itself enough, where the employee had no knowledge that he was 24 stealing information from Washington. It disputes that the harm was felt in Washington any 1 more than it was felt in any of DiscoverOrg’s other offices or “HQs.” It also argues that sending 2 an email to a Washington recipient is “too attenuated and isolated” to support jurisdiction; the 3 foreseeability of in jury in a forum is not by itself a “sufficient benchmark” for asserting 4 jurisdiction. Citing Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 19068 (9th Cir. 5 2017).

6 nDivision claims that, as was true in DiscoverOrg v. Timlin, 2018 WL 3240958 (W.D. 7 Wash., July 3, 2018), DiscoverOrg has failed to make the requisite showing of sufficient contact 8 between the defendant and the forum under Calder to support the exercise of personal 9 jurisdiction. 10 DiscoverOrg argues that it has the first two Schwarzenegger inquiries, and that nDivision 11 has failed to demonstrate that the exercise of jurisdiction over it in these circumstances would be 12 unreasonable. It argues that one engaging in virtual theft of its data in Washington is as much 13 subject to jurisdiction here as one who physically broke into DiscoverOrg’s Vancouver office for 14 the same purpose: “Whether tortious conduct is committed via the internet or in more traditional

15 means, does not change the inquiry of the location where Defendants purposely aimed their 16 alleged cyberactivity.” Dkt. 13 at 9, citing Christie v. National Institute for Newman Studies, 258 17 F. Supp. 3d 494, 500 (D.N.J. 2017). And it argues that in Christie the fact that the plaintiff’s 18 servers were actually in California did not mean that the hacker did not purposefully direct its 19 tortious actions toward New Jersey. The crucial question, it argues, is “whether nDivision 20 purposefully directed its tortious actions at forum state residents, regardless of the server’s actual 21 location.” So long as the defendant knows, or should know, where the plaintiff victim resides, it 22 cannot be fairly argued that the defendant’s activity is “aimlessly” targeted into cyberspace. 23 Christie 258 F. Supp. 3d at 506-7. 24 1 DiscoverOrg also argues that the Ninth Circuit recently reversed a district court’s order 2 dismissing for lack of personal jurisdiction in a similar case, DEX Systems, Inc. v. Deutsche Post 3 AG, 727 F. App’x 276, 278 (Mar 13, 2018) (unpublished). The Ninth Circuit held that “while the 4 defendant certainly had limited contacts with California, its contacts include the allegedly 5 tortious conduct in California that gave rise to DEX’s claims.” It claims that in DEX, and here,

6 the defendant’s virtual contacts with the forum state are enough to establish specific personal 7 jurisdiction. 8 nDivision responds, persuasively, that there has been no showing whatsoever that 9 Tanchez “knew or should have known” that any injury resulting from his unauthorized access of 10 DiscoverOrg’s database would be felt in Washington. DiscoverOrg’s website makes no mention 11 of Vancouver or Washington; it instead has a list of eight offices and a 1-800 phone number. 12 Tanchez claims he had no knowledge of DiscoverOrg’s location when he used his old password, 13 and while it can be inferred that he intended to damage or cheat DiscoverOrg, there is no 14 showing and no reasonable inference that he intended to direct his illicit activities toward

15 Washington. Absent such a showing, it is not reasonable to exercise personal jurisdiction over 16 nDivision. 17 The Motion to Dismiss for Lack of Personal Jurisdiction is GRANTED and this case is 18 DISMISSED without prejudice to re-file in the proper forum (presumably Texas). 19 IT IS SO ORDERED. 20 Dated this 2nd day of October, 2019. 21 A 22 Ronald B. Leighton 23 United States District Judge