1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MICHAEL D. FREEMAN, Case No. 21-cv-06838-JSC
8 Plaintiff, ORDER RE: PARTIAL MOTION TO 9 v. DISMISS FOR LACK OF PERSONAL JURISDICTION OR TRANSFER 10 SUMMIT FILTRATION TECHNOLOGY, VENUE LLC, et al., 11 Re: Dkt. No. 19 Defendants.
12 13 Before the Court is Defendants’ partial motion to dismiss for lack of personal jurisdiction 14 or, alternatively, to transfer venue.1 (Dkt. No. 19.)2 After carefully considering the parties’ 15 briefing, and having had the benefit of oral argument on November 18, 2021, the Court DENIES 16 the motion to dismiss for lack of personal jurisdiction and declines to transfer venue. 17 BACKGROUND 18 I. Complaint Allegations 19 Plaintiff is a former employee and former member of Summit Filtration Technology, LLC 20 (“Summit”), which he sues along with its owner and managing member Stanley E. Kieffer.3 (Dkt. 21 No. 8 ¶ 1.) Plaintiff originally filed in Alameda County Superior Court and Defendants removed 22 to federal court on the basis of diversity jurisdiction. (Dkt. No. 1.) Plaintiff then filed the 23 operative First Amended Complaint (“FAC”), the gravamen of which is that Defendants withheld 24
25 1 All parties have consented to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 26 636(c). (Dkt. Nos. 7, 11.) 2 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 27 ECF-generated page numbers at the top of the documents. 1 his wages and other monies in an attempt to pressure Plaintiff to buy out Mr. Kieffer’s majority 2 interest in Summit. (Dkt. No. 8 ¶¶ 3–4, 38–47, 52–61.) Plaintiff brings claims under the laws of 3 California and Wisconsin. (Id. ¶¶ 62–119.) 4 Mr. Kieffer, a citizen of Wisconsin, founded Summit in 2001 and served as its sole 5 member. (Id. ¶¶ 8–9, 20.) In 2006, Summit hired Plaintiff as a W-2 employee. (Id. ¶ 21.) In 6 2007, Plaintiff became a member of Summit; he owned a 40% stake and Mr. Kieffer retained a 7 60% majority stake. (Id. ¶¶ 23, 25–26.) By 2013, Plaintiff had moved to California and become a 8 California citizen. (Id. ¶¶ 29, 7.) That year, Plaintiff and Mr. Kieffer executed the “True-Up 9 Agreement,” which provided that they would earn equal compensation from Summit through 10 different percentages of profits and W-2 wages, allowing Plaintiff to retain 40% control and Mr. 11 Kieffer to retain 60%. (Id. ¶¶ 29–30.) Plaintiff was compensated pursuant to the True-Up 12 Agreement from 2013 through 2019. (Id. ¶ 32.) 13 In 2020, Mr. Kieffer wanted to sell his 60% stake in Summit. (Id. ¶ 38.) Mr. Kieffer 14 discussed selling to Plaintiff, but they did not reach an agreement. (Id. ¶ 39.) Thereafter, Mr. 15 Kieffer caused Summit to withhold Plaintiff’s 2020 wages in order to “strong-arm [Plaintiff] into 16 paying an exorbitant price” and “artificially inflat[e] the value of Summit to make [Mr. Kieffer’s] 17 majority interest look more valuable to potential third-party purchasers in the event he could not 18 come to terms with [Plaintiff].” (Id. ¶¶ 3, 41.) On April 2, 2021, Plaintiff resigned from 19 employment with Summit and dissociated his membership, leaving Mr. Kieffer the sole member 20 of Summit. (Id. ¶¶ 53–55, 9.) Mr. Kieffer caused Summit to not pay out Plaintiff’s membership 21 distribution. (Id. ¶¶ 4, 56–57.) Plaintiff contends he is owed at least $200,000 in wages and 22 $1,666,666.67 in profit distributions. (Id. ¶¶ 47, 66, 87, 95, 102, 106, 112.) 23 II. Mr. Kieffer’s Affidavit 24 In an affidavit supporting Defendants’ motion, Mr. Kieffer attests that he is a citizen of 25 Wisconsin and has never been a citizen of or owned property in California. (Dkt. No. 19-2 ¶¶ 4– 26 6.) According to Mr. Kieffer, Plaintiff lived in Illinois at the time of his hire in 2007. (Id. ¶ 10.) 27 Plaintiff traveled to Wisconsin frequently as part of his work for Summit. (Id.) Plaintiff 1 that she move to California.” (Id. ¶ 13.) With Summit’s approval, Plaintiff moved to California in 2 2012, and continued to communicate extensively with Mr. Kieffer and Summit staff in Wisconsin. 3 (Id. ¶¶ 13–15; see Dkt. No. 24-1 ¶¶ 2–5.) 4 III. Plaintiff’s Affidavit 5 In an affidavit supporting his opposition to Defendants’ motion, Plaintiff disputes Mr. 6 Kieffer’s declaration. (Dkt. No. 20-1.) According to Plaintiff, he did not request permission to 7 move, but rather “told Mr. Kieffer of my family’s intention to relocate and discussed with him the 8 possible effects of the move with regard to Summit’s business and operations. Mr. Kieffer did not 9 oppose my move to California. To the contrary, with Mr. Kieffer’s blessing, Summit took 10 advantage of my move and began advertising that Summit now had a formal business presence in 11 California.” (Id.) Plaintiff submits an Illinois K-1-P tax form showing his address in Pleasanton, 12 California as of December 2012. (Id. at 8.) 13 DISCUSSION 14 Defendants move to dismiss Mr. Kieffer for lack of personal jurisdiction or, alternatively, 15 to transfer the case to the Eastern District of Wisconsin. Defendants conceded at oral argument 16 that the Court has personal jurisdiction over Summit. Summit was a citizen of California from at 17 2013 to April 2, 2021, because Plaintiff was a member of Summit and a citizen of California. See 18 Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[A]n LLC is a 19 citizen of every state of which its owners/members are citizens.”). 20 I. Dismissal Under Rule 12(b)(2) 21 When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the 22 burden of demonstrating that the court has jurisdiction over the defendant. See Harris Rutsky & 23 Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128–29 (9th Cir. 2003). “Where, as 24 here, the motion is based on written materials rather than an evidentiary hearing, the plaintiff need 25 only make a prima facie showing of jurisdictional facts.” Schwarzenegger v. Fred Martin Motor 26 Co., 374 F.3d 797, 800 (9th Cir. 2004) (internal quotation marks and citation omitted). Moreover, 27 “for the purpose of this demonstration, the court resolves all disputed facts in favor of the 1 between the parties over statements contained in affidavits must be resolved in the plaintiff’s 2 favor.” Schwarzenegger, 374 F.3d at 800. 3 In diversity jurisdiction cases, federal courts apply the law of the forum state to determine 4 whether they may exercise personal jurisdiction over foreign parties. See Harris Rutsky, 328 F.3d 5 at 1129. “California’s long-arm statute allows courts to exercise personal jurisdiction over 6 defendants to the extent permitted by the Due Process Clause of the United States Constitution. 7 Hence, we need only determine whether personal jurisdiction in this case would meet the 8 requirements of due process.” Id. (internal quotation marks and citations omitted). 9 Plaintiff asserts that the Court may exercise specific personal jurisdiction over Mr. Kieffer. 10 Plaintiff must satisfy two elements. First, that Mr. Kieffer purposefully directed his activities to 11 California, consummated some transaction within California, or performed some act by which he 12 purposefully availed himself of the privilege of conducting activities in California, thereby 13 invoking the benefits and protections of California’s laws. Second, Plaintiff’s claims must arise 14 out of or relate to Mr. Kieffer’s forum-related activities.
Free access — add to your briefcase to read the full text and ask questions with AI
1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MICHAEL D. FREEMAN, Case No. 21-cv-06838-JSC
8 Plaintiff, ORDER RE: PARTIAL MOTION TO 9 v. DISMISS FOR LACK OF PERSONAL JURISDICTION OR TRANSFER 10 SUMMIT FILTRATION TECHNOLOGY, VENUE LLC, et al., 11 Re: Dkt. No. 19 Defendants.
12 13 Before the Court is Defendants’ partial motion to dismiss for lack of personal jurisdiction 14 or, alternatively, to transfer venue.1 (Dkt. No. 19.)2 After carefully considering the parties’ 15 briefing, and having had the benefit of oral argument on November 18, 2021, the Court DENIES 16 the motion to dismiss for lack of personal jurisdiction and declines to transfer venue. 17 BACKGROUND 18 I. Complaint Allegations 19 Plaintiff is a former employee and former member of Summit Filtration Technology, LLC 20 (“Summit”), which he sues along with its owner and managing member Stanley E. Kieffer.3 (Dkt. 21 No. 8 ¶ 1.) Plaintiff originally filed in Alameda County Superior Court and Defendants removed 22 to federal court on the basis of diversity jurisdiction. (Dkt. No. 1.) Plaintiff then filed the 23 operative First Amended Complaint (“FAC”), the gravamen of which is that Defendants withheld 24
25 1 All parties have consented to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 26 636(c). (Dkt. Nos. 7, 11.) 2 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 27 ECF-generated page numbers at the top of the documents. 1 his wages and other monies in an attempt to pressure Plaintiff to buy out Mr. Kieffer’s majority 2 interest in Summit. (Dkt. No. 8 ¶¶ 3–4, 38–47, 52–61.) Plaintiff brings claims under the laws of 3 California and Wisconsin. (Id. ¶¶ 62–119.) 4 Mr. Kieffer, a citizen of Wisconsin, founded Summit in 2001 and served as its sole 5 member. (Id. ¶¶ 8–9, 20.) In 2006, Summit hired Plaintiff as a W-2 employee. (Id. ¶ 21.) In 6 2007, Plaintiff became a member of Summit; he owned a 40% stake and Mr. Kieffer retained a 7 60% majority stake. (Id. ¶¶ 23, 25–26.) By 2013, Plaintiff had moved to California and become a 8 California citizen. (Id. ¶¶ 29, 7.) That year, Plaintiff and Mr. Kieffer executed the “True-Up 9 Agreement,” which provided that they would earn equal compensation from Summit through 10 different percentages of profits and W-2 wages, allowing Plaintiff to retain 40% control and Mr. 11 Kieffer to retain 60%. (Id. ¶¶ 29–30.) Plaintiff was compensated pursuant to the True-Up 12 Agreement from 2013 through 2019. (Id. ¶ 32.) 13 In 2020, Mr. Kieffer wanted to sell his 60% stake in Summit. (Id. ¶ 38.) Mr. Kieffer 14 discussed selling to Plaintiff, but they did not reach an agreement. (Id. ¶ 39.) Thereafter, Mr. 15 Kieffer caused Summit to withhold Plaintiff’s 2020 wages in order to “strong-arm [Plaintiff] into 16 paying an exorbitant price” and “artificially inflat[e] the value of Summit to make [Mr. Kieffer’s] 17 majority interest look more valuable to potential third-party purchasers in the event he could not 18 come to terms with [Plaintiff].” (Id. ¶¶ 3, 41.) On April 2, 2021, Plaintiff resigned from 19 employment with Summit and dissociated his membership, leaving Mr. Kieffer the sole member 20 of Summit. (Id. ¶¶ 53–55, 9.) Mr. Kieffer caused Summit to not pay out Plaintiff’s membership 21 distribution. (Id. ¶¶ 4, 56–57.) Plaintiff contends he is owed at least $200,000 in wages and 22 $1,666,666.67 in profit distributions. (Id. ¶¶ 47, 66, 87, 95, 102, 106, 112.) 23 II. Mr. Kieffer’s Affidavit 24 In an affidavit supporting Defendants’ motion, Mr. Kieffer attests that he is a citizen of 25 Wisconsin and has never been a citizen of or owned property in California. (Dkt. No. 19-2 ¶¶ 4– 26 6.) According to Mr. Kieffer, Plaintiff lived in Illinois at the time of his hire in 2007. (Id. ¶ 10.) 27 Plaintiff traveled to Wisconsin frequently as part of his work for Summit. (Id.) Plaintiff 1 that she move to California.” (Id. ¶ 13.) With Summit’s approval, Plaintiff moved to California in 2 2012, and continued to communicate extensively with Mr. Kieffer and Summit staff in Wisconsin. 3 (Id. ¶¶ 13–15; see Dkt. No. 24-1 ¶¶ 2–5.) 4 III. Plaintiff’s Affidavit 5 In an affidavit supporting his opposition to Defendants’ motion, Plaintiff disputes Mr. 6 Kieffer’s declaration. (Dkt. No. 20-1.) According to Plaintiff, he did not request permission to 7 move, but rather “told Mr. Kieffer of my family’s intention to relocate and discussed with him the 8 possible effects of the move with regard to Summit’s business and operations. Mr. Kieffer did not 9 oppose my move to California. To the contrary, with Mr. Kieffer’s blessing, Summit took 10 advantage of my move and began advertising that Summit now had a formal business presence in 11 California.” (Id.) Plaintiff submits an Illinois K-1-P tax form showing his address in Pleasanton, 12 California as of December 2012. (Id. at 8.) 13 DISCUSSION 14 Defendants move to dismiss Mr. Kieffer for lack of personal jurisdiction or, alternatively, 15 to transfer the case to the Eastern District of Wisconsin. Defendants conceded at oral argument 16 that the Court has personal jurisdiction over Summit. Summit was a citizen of California from at 17 2013 to April 2, 2021, because Plaintiff was a member of Summit and a citizen of California. See 18 Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[A]n LLC is a 19 citizen of every state of which its owners/members are citizens.”). 20 I. Dismissal Under Rule 12(b)(2) 21 When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the 22 burden of demonstrating that the court has jurisdiction over the defendant. See Harris Rutsky & 23 Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128–29 (9th Cir. 2003). “Where, as 24 here, the motion is based on written materials rather than an evidentiary hearing, the plaintiff need 25 only make a prima facie showing of jurisdictional facts.” Schwarzenegger v. Fred Martin Motor 26 Co., 374 F.3d 797, 800 (9th Cir. 2004) (internal quotation marks and citation omitted). Moreover, 27 “for the purpose of this demonstration, the court resolves all disputed facts in favor of the 1 between the parties over statements contained in affidavits must be resolved in the plaintiff’s 2 favor.” Schwarzenegger, 374 F.3d at 800. 3 In diversity jurisdiction cases, federal courts apply the law of the forum state to determine 4 whether they may exercise personal jurisdiction over foreign parties. See Harris Rutsky, 328 F.3d 5 at 1129. “California’s long-arm statute allows courts to exercise personal jurisdiction over 6 defendants to the extent permitted by the Due Process Clause of the United States Constitution. 7 Hence, we need only determine whether personal jurisdiction in this case would meet the 8 requirements of due process.” Id. (internal quotation marks and citations omitted). 9 Plaintiff asserts that the Court may exercise specific personal jurisdiction over Mr. Kieffer. 10 Plaintiff must satisfy two elements. First, that Mr. Kieffer purposefully directed his activities to 11 California, consummated some transaction within California, or performed some act by which he 12 purposefully availed himself of the privilege of conducting activities in California, thereby 13 invoking the benefits and protections of California’s laws. Second, Plaintiff’s claims must arise 14 out of or relate to Mr. Kieffer’s forum-related activities. See Schwarzenegger, 374 F.3d at 801– 15 02; Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1485 (9th Cir. 1993). If Plaintiff satisfies 16 those elements, then specific personal jurisdiction is present unless Mr. Kieffer demonstrates that 17 the Court’s exercise of personal jurisdiction would be unreasonable. Schwarzenegger, 374 F.3d at 18 802; Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985). 19 A. Purposeful Availment and Direction 20 “Under the first prong of the specific-jurisdiction inquiry, . . . [p]urposeful availment 21 generally provides a more useful frame of analysis for claims sounding in contract, while 22 purposeful direction is often the better approach for analyzing claims in tort.” Glob. Commodities 23 Trading Grp., Inc. v. Beneficio de Arroz Choloma, S.A., 972 F.3d 1101, 1107 (9th Cir. 2020). 24 “However, our cases do not impose a rigid dividing line . . . . When both contract and tort claims 25 are at issue, both tests are relevant. At bottom, both purposeful availment and purposeful direction 26 ask whether defendants have voluntarily derived some benefit from their interstate activities such 27 that they will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated 1 contract) and tort (e.g., breach of fiduciary duty), so both tests are relevant. (Dkt. No. 8 at 11–19.) 2 Plaintiff relies primarily on the True-Up Agreement to show purposeful availment and 3 direction. (Dkt. No. 20 at 14.) The Agreement was executed in 2013, (Dkt. No. 8 ¶ 29), at which 4 point Plaintiff was a citizen of California, (see Dkt. No. 24 at 4 n.3). Plaintiff argues that the 5 Agreement evinces a long-term, continuing business relationship that ties Mr. Kieffer to 6 California. But the Agreement focused on the terms of Mr. Kieffer and Plaintiff’s compensation 7 through Summit, (Dkt. No. 8 ¶¶ 29–30), which falls short of purposeful availment or direction on 8 Mr. Kieffer’s part. “[A] contract alone does not automatically establish minimum contacts in the 9 plaintiff’s home forum.” Boschetto v. Hansing, 539 F.3d 1011, 1017 (9th Cir. 2008) (finding no 10 purposeful availment where defendant made a “lone transaction for the sale of one item”). Rather, 11 the plaintiff must show the defendant has “business activities [that] reach out beyond one state and 12 create continuing relationships and obligations.” Id. (citation omitted). Courts use “a highly 13 realistic approach” to evaluate the “prior negotiations and contemplated future consequences, 14 along with the terms of the contract and the parties’ actual course of dealing.” Burger King, 471 15 U.S. at 479. In particular, the analysis does not “allow[] a plaintiff’s contacts with the defendant 16 and forum to drive the jurisdictional analysis.” Walden v. Fiore, 571 U.S. 277, 289 (2014). The 17 “inquiry is limited to examining contacts that proximately result from actions by the 18 defendant himself.” Picot v. Weston, 780 F.3d 1206, 1213 (9th Cir. 2015) (internal quotation 19 marks and citation omitted). 20 Picot is instructive. There, the parties made an oral agreement for the plaintiff to pay for 21 the defendant’s services. Id. at 1212. “The agreement was formed in Michigan, where 22 [defendant] lived, where it was understood [defendant] would perform the majority of his work, 23 and where [defendant] did indeed discharge most of his contractual duties.” Id. The plaintiff 24 argued that the defendant had minimum contacts in California because “[plaintiff], a co-party to 25 the agreement, fulfilled his obligations under the agreement by seeking out investors and buyers in 26 California.” Id. at 1213. The Ninth Circuit rejected the argument: “that a contract envisions one 27 party discharging his obligations in the forum state cannot, standing alone, justify the exercise of 1 dealing” did not support minimum contacts; the defendant’s two trips to the forum state were not 2 envisioned in the initial agreement, “grew incidentally out of broader efforts,” and had “no special 3 place in his performance under the agreement as a whole.” Id. 4 Here, the True-Up Agreement’s only link to California is Plaintiff’s domicile. That link 5 does not result from actions that Mr. Kieffer himself took and thus it cannot, without more, satisfy 6 minimum contacts. See id.; Walden, 571 U.S. at 289 (“Such reasoning improperly attributes a 7 plaintiff’s forum connections to the defendant and makes those connections decisive in the 8 jurisdictional analysis.”); cf. Glob. Commodities, 972 F.3d at 1108–09 (finding minimum contacts 9 where defendant undertook “lengthy and ongoing course” of “commodities transactions” from the 10 forum state). “[A] defendant does not purposefully direct its activities at the forum state when the 11 unilateral activity of the plaintiff or a third party is all that connects the defendant to the forum 12 state. . . . [I]t is the defendant’s own conduct that must form the necessary connection[.]” Cisco 13 Sys., Inc. v. Dexon Comput., Inc., No. 20-cv-04926-CRB, 2021 WL 2207343, at *3 (N.D. Cal. 14 June 1, 2021) (internal quotation marks and citations omitted). 15 Accordingly, Plaintiff has not made a prima facie showing of purposeful availment or 16 direction, the first prong of the specific jurisdiction analysis. 17 1. Guiding Spirit 18 Under an alternative theory of personal jurisdiction, Plaintiff argues that Mr. Kieffer was 19 the “guiding spirit” behind the conduct of Summit, which is subject to personal jurisdiction in 20 California. “Under the fiduciary shield doctrine a person’s mere association with a corporation 21 that causes injury in the forum state is not sufficient in itself to permit that forum to assert 22 jurisdiction over the person.” Davis v. Metro Prods., Inc., 885 F.2d 515, 520 (9th Cir. 1989). 23 However, “[c]orporate officers can be liable for corporate actions where they are the guiding spirit 24 behind the wrongful conduct, or the central figure in the challenged corporate activity.” In re 25 Boon Glob. Ltd., 923 F.3d 643, 651 (9th Cir. 2019) (internal quotation marks and citation 26 omitted). “[T]ortious acts by corporate officers that create contact with the forum state are not 27 only acts of the corporation but also acts of the individual, and may be considered contacts of the 1 individual.” j2 Glob. Commc’ns, Inc. v. Blue Jay, Inc., No. C 08-4254 PJH, 2009 WL 29905, at 2 *7 (N.D. Cal. Jan. 5, 2009) (citing Seagate Tech. v. A. J. Kogyo Co., 268 Cal. Rptr. 586 (Cal. Ct. 3 App. 1990)). 4 The complaint’s allegations support a plausible inference that Mr. Kieffer was the guiding 5 spirit behind Summit’s alleged tortious acts. Plaintiff alleges that Mr. Kieffer, who owned a 6 majority stake in Summit, caused the company to withhold Plaintiff’s wages for Mr. Kieffer’s 7 personal financial gain. He also alleges that, after Plaintiff had dissociated from Summit and Mr. 8 Kieffer was the sole member, Mr. Kieffer caused Summit to not pay out Plaintiff’s membership 9 distribution. Plaintiff also submits an email sent by Mr. Kieffer to Plaintiff in August 2020, which 10 includes the following:
11 I feel you are being unreasonable so here is what I am prepared to 12 do.
13 I have already instructed Lauren to pay us the majority of the cash on hand . . . 60/40. 14 If you do not take the offer I will pay us by our legal agreement . . . 15 Straight 60/40 moving forward from now on. Salary & Ownership distribution. NO equalization. 16 Per our contract. I will cancel your credit cards so you will need to use your own & 17 submit expense reports for my approval. If needed I can redirect your phone calls to the office. . . . 18 19 (Dkt. No. 20-1 at 12 (emphasis by Plaintiff).) Taken together, the complaint allegations, 20 affidavits, and email make out a prima facie showing that Mr. Kieffer was the central figure in the 21 challenged activity—the improper withholding of Plaintiff’s wages and membership distribution. 22 See Boon Glob., 923 F.3d at 652; Alexis v. Rogers, No. 15cv691-CAB-BLM, 2016 WL 11707630, 23 at *4–6 (S.D. Cal. Feb. 26, 2016) (finding guiding spirit personal jurisdiction, where defendants 24 hired, fired, drew and mailed paychecks, and sexually assaulted and harassed plaintiff); Matsunoki 25 Grp., Inc. v. Timberwork Or., Inc., No. C 08–04078 CW, 2009 WL 1033818, at *3–5 (N.D. Cal. 26 Apr. 16, 2009) (same, where defendant had “significant if not complete control over” company 27 decisions); Wolf Designs, Inc. v. DHR Co., 322 F. Supp. 2d 1065, 1072–73 (C.D. Cal. 2004) 1 that defendant “personally directed, participated in, and authorized the alleged infringing 2 activity”). 3 Defendants argue that Walden precludes personal jurisdiction over Mr. Kieffer. 571 U.S. 4 at 283–91. But Walden analyzed traditional purposeful availment and direction, not the “guiding 5 spirit” theory of personal jurisdiction, and the Ninth Circuit’s explanation of that theory in Boon 6 Global, 923 F.3d 643, post-dates Walden. Moreover, the facts in Walden show a much more 7 attenuated relationship between the defendant and the forum state than in this case. There, the 8 defendant stopped the plaintiffs at a Georgia airport on their way home to Nevada. The defendant 9 “never traveled to, conducted activities within, contacted anyone in, or sent anything or anyone to 10 Nevada. In short, when viewed through the proper lens—whether the defendant’s actions connect 11 him to the forum—[he] formed no jurisdictionally relevant contacts with Nevada.” Walden, 571 12 U.S. at 289. The defendant’s only connection to Nevada was that the plaintiffs had experienced 13 harm there as a result of the defendant’s actions in Georgia. Here, by contrast, there is a prima 14 facie showing that Mr. Kieffer conducted business with Plaintiff (who was in California) over a 15 period of years and directed Summit (a California citizen) to withhold monies that would 16 necessarily harm Plaintiff in California. E.g., Atkins v. Calypso Sys., Inc., No. CV-14-02706- 17 PHX-NVWD, 2015 WL 5856881, at *5, 7 (D. Ariz. Oct. 8, 2015) (distinguishing Walden). 18 Accordingly, there is a prima facie showing that Mr. Kieffer was the guiding spirit behind 19 Summit’s alleged wrongful conduct of withholding Plaintiff’s pay and distribution; Summit’s 20 contacts with California (including that it was a California citizen until Plaintiff resigned earlier 21 this year) can be imputed to Mr. Kieffer for personal jurisdiction purposes. The Court cautions 22 that it is not holding that it has personal jurisdiction of Mr. Kieffer merely because he was a 23 member of an LLC that also had a California member; rather, it is because the allegations support 24 a prima facie showing that Mr. Kieffer was the guiding spirit behind the LLC’s alleged wrongful 25 conduct directed at its California member. 26 2. Alter Ego 27 Plaintiff also contends that specific personal jurisdiction exists under an alter ego theory. 1 of interest and ownership that the individuality, or separateness, of the said person and corporation 2 has ceased; and, second, where adherence to the fiction of the separate existence of the corporation 3 would sanction a fraud or promote injustice.”4 Boon Glob, 923 F.3d at 653. “Alter ego is an 4 extreme remedy, sparingly used.” Sonora Diamond Corp. v. Superior Court, 99 Cal. Rptr. 2d 824, 5 836 (Cal. Ct. App. 2000). 6 Plaintiff does not allege facts that suggest fraud or injustice if Mr. Kieffer is not subjected 7 to personal jurisdiction based on his use of Summit’s corporate form. He does allege that, in 8 August 2020, Mr. Kieffer caused Summit to be undercapitalized “for at least a period of time” by 9 directing an improper cash distribution. (Dkt. No. 8 ¶ 15.) But that does not suggest that Plaintiff 10 would have any present difficulty enforcing a judgment against Summit or that injustice would 11 result if Mr. Kieffer “hide[s] behind the corporate form.” Sonora Diamond, 99 Cal. Rptr. 2d at 12 837. Accordingly, Plaintiff has not made a prima facie showing that Mr. Kieffer and Summit were 13 alter egos in order for the Court to exercise personal jurisdiction over Mr. Kieffer. 14 B. Claims Arising Out of Forum-Related Activities 15 Plaintiff’s claims arise out of Mr. Kieffer’s forum-related activities as the guiding spirit 16 behind Summit. See Schwarzenegger, 374 F.3d at 801–02. But for Mr. Kieffer’s causing Summit 17 to withhold monies, Summit—then a California citizen—would not have injured Plaintiff in 18 California. See Ziegler v. Indian River County, 64 F.3d 470, 474 (9th Cir. 1995). 19 C. Reasonableness 20 Because the first and second prongs of specific personal jurisdiction are met, then the 21 Court may exercise personal jurisdiction over Mr. Kieffer unless Defendants demonstrate that 22 doing so would be unreasonable. Schwarzenegger, 374 F.3d at 802. Defendants must present a 23 “compelling case” based on the seven factors derived from Burger King. 471 U.S. at 477; Core- 24 Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1487–88 (9th Cir. 1993). 25 26 4 The parties agree that the tests under California and Wisconsin law are interchangeable here. 27 (Dkt. No. 19-1 at 15–16; Dkt. No 20 at 17–18); see Consumer’s Co-op. of Walworth Cnty. v. 1 Defendants have not met that burden. First, the extent of interjection into the forum state 2 was moderate. See Ziegler, 64 F.3d at 475; see also Roth v. Garcia Marquez, 942 F.2d 617, 623 3 (9th Cir. 1991) (suggesting that where purposeful availment or an alternative theory is satisfied, 4 then analysis of first reasonableness factor is “redundant”). Second, Mr. Kieffer’s burden of 5 litigating in California is equal to Plaintiff’s burden of litigating elsewhere, weighing slightly 6 against jurisdiction. See Ziegler, 64 F.3d at 475. The third and fourth factors counterbalance one 7 another. See id. Although Wisconsin has a sovereignty interest in disputes related to LLCs that 8 are located in and citizens of Wisconsin, the forum state has a countervailing interest because 9 Summit and Plaintiff were also citizens of California. Moreover, Plaintiff’s claims arise under the 10 laws of both states. Fifth, efficient resolution of the controversy weighs slightly against 11 jurisdiction because witnesses and evidence may be located in Wisconsin, although much of the 12 evidence is likely store electronically. See id. at 475–76. Sixth, Plaintiff’s interest in convenient 13 and effective relief weighs slightly, if at all, in favor of jurisdiction; there is no indication that 14 relief would be unavailable to Plaintiff in Wisconsin. See id. at 476. Seventh, likewise, an 15 alternative forum exists. See id. In sum, factors 1, 4, and 6 weigh slightly in favor of jurisdiction 16 while factors 2, 3, 5, and 7 weigh slightly against. Thus, Defendants have not presented a 17 “compelling case” to rebut the “presumption” that the exercise of personal jurisdiction over Mr. 18 Kieffer is reasonable. Roth, 942 F.2d at 625. 19 Accordingly, the Court may exercise personal jurisdiction over Mr. Kieffer consistent with 20 the requirements of due process. Defendants’ motion to dismiss for lack of personal jurisdiction is 21 DENIED. 22 II. Transfer 23 In the alternative, Defendants ask the Court to transfer this case to the Eastern District of 24 Wisconsin pursuant to 28 U.S.C. § 1404(a). Section 1404(a) permits transfer “to any other district 25 or division where [the case] might have been brought,” subject to the court’s “individualized, case- 26 by-case consideration of convenience and fairness.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 27 22, 29 (1988) (citation omitted). Plaintiff does not dispute that his claims could have been brought 1 Defendants argue that the following factors related to convenience and fairness weigh 2 || strongly in favor of transfer: convenience of the parties; convenience of witnesses; ease of access 3 || to evidence; local interest in the controversy; and differences in the cost of litigation in the two 4 || forums. See Jones v. GNC Franchising, 211 F.3d 495, 498-99 (9th Cir. 2000). Given the 5 || practical realities of this case, which is essentially a business dispute between a person who lives 6 || in California and a person who lives in Wisconsin, there is no apparent fairness or justice interest 7 || in transferring the case from one state to the other. See Decker Coal Co. v. Commonwealth Edison 8 Co., 805 F.2d 834, 843 (9th Cir. 1986) (“[T]ransfer would merely shift rather than eliminate the 9 || inconvenience.”). While Summit’s office is in Wisconsin, Defendants have not rebutted 10 || Plaintiff's assertion that most if not all of the relevant records are stored electronically and could 11 be accessed anywhere. (Dkt. No. 20-1 7-8.) Nor have they explained with particularity which 12 || witnesses, if any, they expect will be called on to participate in this case and who would be 13 inconvenienced by litigating in California. (See id. ¥ 9.) 14 Accordingly, the Court finds that transfer is not in the interests of justice. 3 15 CONCLUSION a 16 For the reasons explained above, the Court DENIES Defendants’ partial motion to dismiss 17 || for lack of jurisdiction and declines to transfer venue. Zz 18 This Order disposes of Docket No. 19. 19 IT IS SO ORDERED. 20 Dated: November 19, 2021
ACQUELINE SCOTT CO 22 United States Magistrate Judge 23 24 25 26 27 28