Farrell v. New Millennium Concepts, LTD

• Court: District Court, E.D. California
• Decided: March 30, 2022
• Docket: 2:21-cv-01691
• Status: Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 10 TARA FARRELL, HENLY VELARDE, No. 2:21-cv-01691-JAM-JPD and DOUGLAS WELLS, 11 individually and on behalf of all others similarly 12 situated, ORDER GRANTING DEFENDANT’S MOTION TO CHANGE VENUE AND 13 Plaintiffs, DENYING AS MOOT DEFENDANT’S MOTIONS TO DISMISS 14 v. 15 NEW MILLENNIUM CONCEPTS, LTD., 16 Defendant. 17

18 Before the Court is New Millennium Concepts, LTD’s (“NMCL” 19 or “Defendant”) Motion to Dismiss under Rule 12(b)(2) for lack of 20 personal jurisdiction; Motion to Dismiss under 12(b)(6) for 21 failure to state a claim; and Motion to Change Venue. See 22 12(b)(2) Mot., ECF No. 11; Mot. to Change Venue, ECF No. 12; 23 12(b)(6) Mot., ECF No. 13. Tara Farrell, Henly Velarde, and 24 Douglas Wells (collectively “Plaintiffs”) opposed these Motions. 25 See Opp’n to 12(b)(2) Mot., ECF No. 18; Opp’n to Mot. to Change 26 Venue, ECF No. 19; Opp’n to 12(b)(6) Mot., ECF No. 17. Defendant 27 replied. See 12(b)(2) Mot. Reply, ECF No. 24; Mot. to Change 28 1 Venue Reply, ECF No. 25; 12(b)(6) Mot. Reply, ECF No. 26. For 2 the reasons set forth below, the Court finds it lacks personal 3 jurisdiction over NMCL and therefore transfers the case to the 4 Northern District of Texas pursuant to 28 U.S.C. § 1631.1 5 I. BACKGROUND 6 NMCL is a Texas based supplier of gravity-fed water 7 filtration systems, best known for its water filter systems under 8 the “Berkey” brand name. Compl. ¶¶ 2, 3, 12, ECF No. 1. 9 Plaintiffs Tara Farrell, Henly Velarde, and Douglas Wells are 10 California residents who purchased NMCL products through Amazon 11 and other resellers. Id. ¶¶ 8-10. NMCL advertises these 12 purification systems as water purifiers that last for 3,000 13 gallons of water per filter. Id. ¶ 2. However, Plaintiffs 14 allege this is false and misleading as the filters fail to 15 adequately reduce contaminants. Id. ¶ 4. 16 Accordingly, Plaintiffs brought this action in the Eastern 17 District of California individually, and on behalf of those 18 similarly situated for: (1) breach of express warranty; 19 (2) breach of the implied warranty of merchantability; (3) unjust 20 enrichment and restitution; (4) violation of California’s Unfair 21 Competition Law; (5) violation of California’s False Advertising 22 Law; and (6) violation of California’s Consumer Legal Remedies 23 Act. 24 NMCL now moves to dismiss for lack of personal jurisdiction 25 and failure to state a claim, or to transfer the case to the 26

27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for January 25, 2022. 1 Northern District of Texas. 12(b)(2) Mot. to Dismiss; 12(b)(6) 2 Mot. to Dismiss; Mot. to Change Venue. 3 II. OPINION 4 A. Legal Standard 5 Rule 12(b)(2) of the Federal Rules of Civil Procedure 6 authorizes a defendant to seek dismissal of an action for lack 7 of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). Plaintiff 8 bears the burden of showing jurisdiction is proper. Morrill v. 9 Scott Fin. Corp., 873 F.3d 1136, 1141 (9th Cir. 2017). Because 10 no evidentiary hearing occurred in this action, “the plaintiff 11 need only make a prima facie showing of jurisdictional facts.” 12 Id. (citing to Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 13 797, 800 (9th Cir. 2004)). In such a case, the court does not 14 assume the truth of allegations in the pleading that are 15 contradicted by affidavit. Marvix Photo, Inc. v. Brand Tech., 16 Inc., 647 F.3d 1218, 1123 (9th Cir. 2011). Factual disputes, 17 however, are resolved in the plaintiff’s favor. Id. If a court 18 concludes it lacks jurisdiction, it may transfer the action to 19 another court in which the action could have been brought to 20 cure a want of jurisdiction if doing so is in the interest of 21 justice. 28 U.S.C. § 1631. 22 B. Analysis 23 In California, federal due process principles determine 24 whether a court may assert personal jurisdiction over a non- 25 consenting defendant. See Daimler AG v. Bauman, 571 U.S. 117, 26 125 (2014) (“California’s long-arm statute allows the exercise 27 of personal jurisdiction to the full extent permissible under 28 the U.S. Constitution.”). Due process requires that the 1 “defendant must have at least ‘minimum contacts’ with the 2 relevant forum such that the exercise of jurisdiction ‘does not 3 offend traditional notions of fair play and substantial 4 justice.’” Schwarzenegger, 374 F.3d at 801 (quoting Int’l Shoe 5 Co. v. Washington, 326 U.S. 310, 316 (1945)). There are two 6 kinds of personal jurisdiction a forum state may exercise over a 7 defendant: general and specific. Morrill, 873 F.3d at 1142. 8 1. General Jurisdiction 9 The first type of personal jurisdiction, general 10 jurisdiction, exists only “if the defendant has ‘continuous and 11 systematic general business contacts’ with a forum state” so as 12 to render them essentially at home in the forum. Id. (internal 13 citations omitted). For a corporation, the paradigm forum for 14 the exercise of general jurisdiction is its place of 15 incorporation and principal place of business. Daimler AG, 571 16 U.S. at 137. Only in an “exceptional” case will a 17 “corporation’s operations in a forum other than its formal place 18 of incorporation or principal place of business [. . .] be so 19 substantial and of such a nature as to render the corporation at 20 home in that State.” Id. at 139 n.19. 21 NMCL is not “at home” in California. It is a Texas limited 22 partnership with its principal place of business in Bedford, 23 Texas. Ex 1. to 12(b)(2) Mot. (“Elliott Decl.”) ¶ 2, ECF No. 24 11-1. This is not an “exceptional” case where NMCL’s contacts 25 with California are so substantial and of such a nature that 26 they render NMCL subject to general jurisdiction in California, 27 as it has no offices, operations, or employees here. Id. ¶ 4. 28 Plaintiffs do not contend otherwise. See Opp’n to 12(b)(2) Mot. 1 at 2. Accordingly, the Court finds general jurisdiction does 2 not exist over Defendant. 3 2. Specific Jurisdiction 4 The second type of jurisdiction, specific jurisdiction, 5 permits a court to exercise jurisdiction when the suit arises 6 out of or relates to the defendant’s contacts with the forum. 7 Bristol-Myers Squibb Co. v. Superior Ct. of Cal., S.F. Cty., 137 8 S. Ct. 1773, 1780 (2017). In the Ninth Circuit, specific 9 jurisdiction is appropriate if: (1) a non-resident defendant 10 purposefully directs their activities towards the forum or 11 performs some act by which they purposefully avail themselves of 12 the privilege of conducting activities in the forum, thereby 13 invoking the benefits and protections of its laws; (2) the claim 14 arises out of or relates to the defendant’s forum related 15 activities; and (3) the exercise of jurisdiction comports with 16 fair play and substantial justice. Schwarzenegger, 374 F.3d at 17 802. The plaintiff bears the burden of satisfying the first two 18 prongs of the test. Id. If the plaintiff fails to satisfy 19 either of these prongs, personal jurisdiction is not established 20 in the forum state. Id. If the plaintiff does satisfy the 21 first two prongs, the burden then shifts to the defendant to 22 present a compelling case that the exercise of jurisdiction 23 would not be reasonable. Id. 24 Plaintiffs contend NMCL purposefully directed its activities 25 toward California. Opp’n to 12(b)(2) Mot. at 4-5. Purposeful 26 direction requires (1) an intentional act, (2) expressly aimed at 27 the forum state, (3) causing harm that the defendant knows is 28 likely to be suffered in the forum state. Yahoo! Inc. v. La 1 Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 2 (9th Cir. 2006). NMCL concedes it committed an intentional act – 3 selling and advertising its products. See Opp’n to 12(b)(2) Mot. 4 at 4; 12(b)(2) Mot. Reply at 1. The issue is whether it 5 expressly aimed such conduct at California. 6 In assessing specific jurisdiction through Internet conduct, 7 “the common thread [. . .] is that the likelihood that personal 8 jurisdiction can be constitutionally exercised is directly 9 proportionate to the nature and quality of the commercial 10 activity that an entity conducts over the Internet.” Cybersell, 11 Inc. v. Cybersell, Inc., 130 F.3d 414, 419 (9th Cir. 1997) 12 (internal quotation marks and citation omitted). Courts have 13 adopted a sliding scale when assessing whether operating a 14 website can give rise to sufficient minimum contacts with the 15 forum:

16 At one end of the scale are “passive” websites which merely display information, such as an advertisement. 17 Personal jurisdiction is not appropriate when a website is merely [. . .] passive. At the other end of the 18 scale are “interactive” websites which function for commercial purposes and where users exchange 19 information. Personal jurisdiction is appropriate when an entity is conducting business over the internet. 20 21 j2 Cloud Servs., Inc. v. Fax87, No. 13-05353 DDP (AJWX), 2017 WL 22 1535083, at *6 (C.D. Cal. Apr. 27, 2017) (quoting American Auto. 23 Ass’n, Inc. v. Darba Enter., Inc., No. C 09-510, 2009 WL 1066506, 24 at *4 (N.D. Cal. Apr. 21, 2009)). Internet advertisements alone 25 are insufficient. Cybersell, Inc., 130 F.3d 414 at 418. 26 Something more is required. Id. 27 Plaintiffs, relying on Loomis v. Slendertone Dist., Inc., 28 420 F.Supp.3d 1046 (S.D. Cal. 2019), argue NMCL’s website, at the 1 time, provided enough interactive features such that personal 2 jurisdiction in California is appropriate. Opp’n to 12(b)(2) 3 Mot. at 6. These interactive features were tailored to customer 4 support. Specifically, the website enabled a consumer to report 5 a defective product under warranty. Ex. 7 to Opp’n to Mot. to 6 Change Venue at 10-122, ECF No. 23-1. If approved, the website 7 indicated the consumer would be contacted by email with return 8 instructions. Id. at 12-13. Additionally, the website provided 9 customer services’ contact information, information about the 10 products, and a store locator that provided information of where 11 authorized dealers’ stores could be found, including in 12 California. Id. 13 In Loomis, the Court found specific jurisdiction over Flex 14 Belt was warranted in California. 420 F.Supp.3d at 1070. 15 Specifically, the Court found Flex Belt maintained an interactive 16 website, since its products were sold through the site. Id. 17 Moreover, Flex Belt directly targeted California through its 18 advertisements by stating “We put The Flex Belt in the hands of 19 the best Trainers in Los Angeles” and “Ellen K from the Ryan 20 Seacrest Show uses The Flex Belt - #1 Female DJ in Los Angeles.” 21 Id. The Court noted that “[b]y placing Flex Belt in the hands of 22 California-specific individuals, Defendant ha[d] targeted a 23 California fitness community to help advertise its product and 24 thus went beyond merely making a connection between Defendant and 25 Plaintiff.” Id. Because “Defendant operated an interactive, 26 commercial website that expressly targeted California through 27 2 The page numbers referenced are to those issued by the Court on 28 top of the exhibit. 1 capitalizing on its influential fitness community”, and had a 2 designated agent for service of process and registration with the 3 California Secretary of State, the Court found Flex Belt had 4 purposefully directed its activities towards California. Id. 5 Here, unlike Loomis, NMCL does not sell its products online 6 nor have marketing or advertising campaigns deliberately 7 targeting California consumers. Elliott Decl. ¶¶ 5-7, 18-19. 8 That California residents could go online and submit a warranty 9 claim or contact customer support is insufficient to establish 10 personal jurisdiction in California. See Marvix Photo, Inc., 647 11 F.3d at 1231 (“Not all material placed on the Internet is, solely 12 by virtue of its universal accessibility, expressly aimed at 13 every state in which it is accessed.”). Plaintiffs point to 14 various blogposts on NMCL’s website discussing current events 15 concerning water and their impact on various states, including 16 California. Ex. 1 to Opp’n to Mot. to Change Venue ¶¶ 3(i)-(t) 17 (“Bruce Decl.”), ECF No. 19-1. The Court finds this insufficient 18 to conclude NMCL targeted California. 19 Plaintiffs also argue that specific jurisdiction is 20 warranted under an agency theory. Opp’n to 12(b)(2) Mot. at 6-8. 21 Specifically, that because authorized dealers sold NMCL’s 22 products in California, those contacts should be imputed to NMCL. 23 Id. As NMCL points out, while the Supreme Court left open 24 whether a plaintiff may establish specific jurisdiction under an 25 agency theory, the Ninth Circuit “has expressed serious doubts as 26 to whether any agency theory creates specific jurisdiction under 27 the Daimler standard.” 12(b)(2) Reply at 3 (quoting Doe v. 28 Compania Panamena de Aviacion, No. CV 21-2536 PSG (PLAx), 2021 WL 1 3012849, at *3 (C.D. Cal. July 14, 2021)). Regardless, 2 Plaintiffs have failed to make out a prima facie case for any 3 agency relationship. “Fundamental tenets of agency theory 4 require that an agent ‘act on the principal’s behalf and subject 5 to the principal’s control.’” Williams v. Yamaha Motor Co. Ltd., 6 851 F.3d 1015, 1024 (9th Cir. 2017) (quoting Restatement (Third) 7 of Agency § 1.01 (2006)). Plaintiffs have failed to demonstrate 8 that NMCL had the right to control the authorized dealers’ 9 activities. See Elliott Decl. ¶¶ 20, 21. Accordingly, they have 10 failed to establish purposeful direction or availment. See LNS 11 Enter. LLC v. Cont’l Motors, Inc., 22 F.4th 852, 863 (9th Cir. 12 2022) (finding relationship with third party repair shops 13 insufficient to supply minimum contacts with the forum). 14 Because Plaintiffs have not carried their burden on the 15 first two prongs, they have not demonstrated personal 16 jurisdiction over NMCL is proper in this state. Schwarzenegger, 17 374 F.3d at 802. NMCL is a Texas limited partnership with its 18 principal place of business in Bedford, Texas. See Mot. to 19 Change Venue at 2. Thus, the Northern District of Texas will 20 have general jurisdiction over it. Accordingly, transfer to the 21 Northern District of Texas is appropriate. See Miller v. 22 Hambrick, 905 F.2d 259, 262 (9th Cir. 1990) (noting that usually 23 transfer will be in the interest of justice because dismissal of 24 an action that could be brought elsewhere is time consuming and 25 justice defeating). 26 III. ORDER 27 For the reasons set forth above, Defendant’s Motion to 28 Change Venue is GRANTED and this action shall be transferred to em REI OIE I OSI III EEE NI IE IEE EIEIO eee eee

1 the Northern District of Texas pursuant to 28 U.S.C. § 1631 to 2 cure a lack of personal jurisdiction. Defendants’ Motions to 3 Dismiss and Plaintiffs’ request for jurisdictional discovery are 4 DENIED as MOOT. 5 IT IS SO ORDERED. 6 Dated: March 29, 2022 kA Geren aaa pebrsacr 00k 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10