1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 National Casualty Company, No. CV-19-04854-PHX-DWL
10 Plaintiff, ORDER
11 v.
12 Burns & Wilcox Limited, et al.,
13 Defendants. 14 15 Pending before the Court are motions to dismiss for lack of personal jurisdiction 16 filed by defendants Burns & Wilcox Limited (“B&W Limited”) and Burns & Wilcox 17 Insurance Services (“B&W Services”) (collectively, “Defendants”). (Docs. 22, 26.) In the 18 alternative, Defendants argue that venue in Arizona is improper. (Id.) For the following 19 reasons, the motions will be granted in part and denied in part and this action will be 20 transferred to the Northern District of California. 21 BACKGROUND 22 I. Factual Background 23 Plaintiff National Casualty Company (“NCC”) is an Ohio corporation with its 24 principal place of business in Arizona. (Doc. 17 ¶ 2.) B&W Limited is a Michigan 25 corporation with its principal place of business in Michigan. (Doc. 24 ¶ 2.) B&W Services 26 is a California corporation with its principal place of business in Michigan.1 (Doc. 27 at
27 1 NCC’s amended complaint alleges that B&W Services is incorporated under the laws of Michigan. (Doc. 17 ¶ 4.) B&W Services submits evidence establishing that 28 California is the state of incorporation (Doc. 24 ¶ 5) and NCC doesn’t argue otherwise in its response (Doc. 32). In fact, the materials attached to NCC’s request for judicial notice 1 2.) 2 In 1982, NCC was one of three insurance companies to enter into a “General Agency 3 Agreement” (hereinafter, “the Agreement”) with B&W Limited. (Doc. 17 ¶ 7; Doc. 32-2 4 at 5-14.) Under the Agreement, B&W Limited gained the ability to “quote, bind, execute, 5 amend, delete, make adjustments and renew insurance contracts” on behalf of NCC. (Doc. 6 32-2 at 5 § I.B.) NCC, in turn, agreed to pay commissions to B&W Limited for the 7 insurance contracts generated on its behalf. (Id. at 6 § ¶ II.A.) 8 The Agreement contains a variety of provisions governing B&W Limited’s conduct 9 and performance. For example, the Agreement specifies that B&W Limited must comply 10 with NCC’s underwriting guidelines. (Doc. 17 ¶ 12; Doc. 32-2 at 5 § 1.B.) These 11 guidelines, in turn, require B&W Limited to “refer the risk to [NCC] for review and 12 approval before binding coverage.” (Doc. 17 ¶ 14.) The Agreement also contains 13 indemnification provisions. (Doc. 17 ¶ 17; Doc. 32-2 at 10 § IX.) Finally, the Agreement 14 requires B&W Limited to provide periodic notifications and accountings to NCC. (Doc. 15 17 ¶ 7.)2 16 The Agreement contains two references to the state of Arizona. First, the 17 Agreement notes that NCC is “located in Scottsdale, Arizona.” (Doc. 32-2 at 5.) Second, 18 the Agreement contains a choice-of-law provision specifying that “[t]he drafting, 19 execution, interpretation, and enforcement of this Agreement shall be governed by the laws 20 of the State of Arizona.” (Doc. 32-2 at 12 § X.K.) There is no evidence in the record 21 concerning where the Agreement was negotiated or executed. 22 At some point after the Agreement was executed in 1982, B&W Services became 23 involved. The parties dispute the nature of that involvement and when it began. NCC 24 asserts that “[o]n October 1, 1995, the Agreement was amended to give [B&W Services] 25 authority to bind coverage on behalf of [NCC] pursuant to the terms and conditions of the
26 identify California as B&W Services’ “domicile state.” (Doc. 33-1 at 9.) 27 2 Specifically, the Agreement requires B&W Limited to “(1) render monthly accounts to [NCC], (2) forward copies of all binders, policies, certificates and endorsements of 28 Contracts to [NCC], (3) report losses to [NCC], (4) notify [NCC] of all liability accepted, and (5) mail notices to [NCC].” (Doc. 17 ¶ 7.) 1 Agreement.” (Doc. 17 ¶ 8. See also Doc. 32 at 2 [same].) B&W Services counters that 2 this claim is “unsupported and conclusory” and that it is not a party to the Agreement at 3 all. (Doc. 27 at 2.) According to B&W Services, the amendment to the Agreement merely 4 identified it as a “recipient of agency authority that NCC and B&W Limited (i.e., the parties 5 to the contract) chose to delegate” and that no legal authority supports the notion “that a 6 contractual amendment delegating authority to an agent somehow transforms that agent 7 into a party to the contract.” (Doc. 41 at 5.) Further, B&W Services argues that NCC’s 8 assertion that the agreement was amended in 1995 is “bizarre[]” because NCC’s own 9 witness states that the agreement was amended to add B&W Services as an agent in 2008. 10 (Doc. 41 at 7 n.3, citing Doc. 32-2 ¶ 3.) 11 In 2015, B&W Services’ office in San Francisco, California issued an NCC car 12 insurance policy to James and Kathy Halsell, residents of Alabama.3 (Doc. 17 ¶ 13; Doc. 13 24 ¶¶ 7-8.) NCC asserts this was in breach of the Agreement because B&W Services didn’t 14 first “refer the risk to [NCC] for review and approval before binding coverage.” (Doc. 17 15 ¶ 14.) Moreover, because Mr. Halsell was a “driver with a poor driving record” (Doc. 32 16 at 3), B&W Services is alleged to have “breached [its] obligations under the 17 Agreement . . . by binding coverage without excluding Mr. Halsell as an insured driver.” 18 (Doc. 17 ¶ 15.) 19 In June 2016, Mr. Halsell was involved in a car accident in Alabama that killed two 20 people. (Doc. 17 ¶ 16.) The decedents’ survivors initiated two lawsuits against Mr. Halsell 21 in Alabama. (Id.) Pursuant to Mr. Halsell’s insurance policy, NCC was “obligated to pay 22 policy benefits” (Doc. 32 at 3) and eventually resolved both suits “by a confidential 23 settlement agreement.” (Doc. 17 ¶ 16.) 24 Because NCC believed that Defendants had breached their obligations under the 25 Agreement, it also believed Defendants were required to indemnify it against the losses 26
27 3 In its amended complaint, NCC attributes the actions discussed here to both Defendants. (Doc. 17 ¶¶ 13-15.) In their papers, however, Defendants make clear that the 28 entity responsible for issuing the insurance policy at issue was B&W Services. (Doc. 23 at 3; Doc. 27 at 4.) 1 incurred in the Halsell litigation. (Doc. 17 ¶ 17.) As a result, NCC sent indemnification 2 demands to B&W Limited (in Michigan) and B&W Services (in California). (Doc. 24 3 ¶ 10.) Each Defendant rejected this demand. (Doc. 17 ¶ 17.) 4 II. Procedural History 5 On July 30, 2019, NCC filed its complaint. (Doc. 1.) After recounting the factual 6 background detailed above, it alleged a single claim of breach of contract against B&W 7 Limited. (Id.) 8 On October 1, 2019, B&W Limited moved to dismiss for lack of personal 9 jurisdiction. (Doc. 10.) That motion was denied as moot (Doc. 20) after NCC filed an 10 amended complaint (Doc. 17). In its amended complaint, NCC added B&W Services as a 11 defendant and added new allegations concerning Defendants’ contacts with Arizona. (Id.) 12 On November 5, 2019, B&W Limited filed a second motion to dismiss for lack of 13 personal jurisdiction, or, in the in alternative, to transfer this action to the Northern District 14 of California. (Doc. 22; Doc. 23 [memorandum in support of the motion to dismiss]). 15 On November 13, 2019, B&W Services made its first appearance in this case by 16 filing its own motion to dismiss or, in the alternative, transfer. (Doc. 26; Doc. 27 17 [memorandum in support of the motion to dismiss]). 18 On December 19, 2019, NCC filed a joint response to Defendants’ motions (Doc. 19 32) and a request for judicial notice (Doc. 33). 20 On January 16, 2020, B&W Limited filed its reply. (Doc. 42.) The same day, B&W 21 Services filed a reply that joined B&W Limited’s reply, only adding a few fact-specific 22 arguments. (Doc. 41.) 23 On July 13, 2020, the Court issued a tentative order. (Doc. 48.) 24 On July 16, 2020, the parties filed a stipulation to waive oral argument, which had 25 been scheduled for July 21, 2020, and “submit to the Court’s Tentative Ruling.” (Doc. 49.) 26 … 27 … 28 … 1 ANALYSIS 2 I. Personal Jurisdiction 3 Federal courts generally have jurisdiction over non-resident defendants to the extent 4 allowed by the states in which they sit. Walden v. Fiore, 571 U.S. 277, 283 (2014). In 5 Arizona, the jurisdictional limit of the state long-arm statute is coextensive with that of the 6 United States Constitution. Ariz. R. Civ. P. 4.2(a). Therefore, the Court need only 7 determine whether exercising personal jurisdiction here would comport with federal due 8 process. Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1141 (9th Cir. 2017). 9 Due process requires that a defendant “have certain minimum contacts with [the 10 forum state] such that the maintenance of the suit does not offend traditional notions of fair 11 play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) 12 (citation and internal quotation marks omitted). Such contacts may give rise to either 13 general or specific jurisdiction. Bristol-Myers Squibb Co. v. Superior Ct. of Cal., S.F. Cty., 14 137 S. Ct. 1773, 1779-80 (2017). 15 General (or “all-purpose”) jurisdiction allows a court to hear any claim against that 16 defendant, irrespective of the underlying claim’s connection to the forum state. Id. at 1780. 17 A court has general jurisdiction where a defendant’s “affiliations with the State are so 18 continuous and systematic as to render them essentially at home in the forum State.” 19 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal 20 quotation marks omitted). For an individual, this typically refers to one’s domicile; for a 21 corporation, the “paradigm all-purpose forums” include its place of incorporation and 22 principal place of business. Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). General 23 jurisdiction beyond these locations, although possible, would be “an exceptional case.” Id. 24 at 139 n.19. 25 Specific (or “case-based”) jurisdiction allows a court to hear a particular case that 26 arises out of or relates to the defendant’s contacts with the forum. Id. at 127 (quotation 27 omitted). This inquiry “focuses on the relationship among the defendant, the forum, and 28 the litigation.” Walden, 571 U.S. at 283-84 (citation and internal quotation marks omitted). 1 That is, “the defendant’s suit-related conduct must create a substantial connection with the 2 forum State.” Id. at 284. See also Bristol-Myers Squibb, 137 S. Ct. at 1780 (“In other 3 words, there must be ‘an affiliation between the forum and the underlying controversy, 4 principally, [an] activity or an occurrence that takes place in the forum State and is therefore 5 subject to the State’s regulation.’”) (citation omitted). Mere contact with a plaintiff will 6 not suffice. Walden, 571 U.S. at 290 (“The proper question is not where the plaintiff 7 experienced a particular injury or effect but whether the defendant’s conduct connects him 8 to the forum in a meaningful way.”). 9 In either case, “the plaintiff bears the burden of demonstrating that the court has 10 jurisdiction over the defendant.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th 11 Cir. 2006). The plaintiff need only make a prima facie showing of jurisdictional facts to 12 avoid dismissal. Id. The court must accept all uncontroverted statements in the complaint 13 as true while resolving any affidavit-based factual conflicts in the plaintiff’s favor. 14 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). 15 Here, NCC has waived any argument as to general jurisdiction. (Doc. 32 at 14 n.1.) 16 Thus, the only question is whether Defendants are subject to specific jurisdiction. The 17 Ninth Circuit assesses specific jurisdiction using the following three-part test: 18 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform 19 some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and 20 protections of its laws; 21 (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and 22 (3) the exercise of jurisdiction must comport with fair play and substantial 23 justice, i.e. it must be reasonable. 24 Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015). The plaintiff bears the burden of 25 establishing the first two prongs. Id. If the plaintiff meets this burden, the burden shifts to 26 the defendant to show it would still be unreasonable for the court to exercise jurisdiction. 27 Id. at 1211-12. “Personal jurisdiction over each defendant must be analyzed separately.” 28 Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129-30 (9th 1 Cir. 2003). 2 A. B&W Limited 3 1. Purposeful Availment 4 “The exact form of [the] jurisdictional inquiry depends on the nature of the claim at 5 issue.” Picot, 780 F.3d at 1212. Where, as here, a claim sounds in contract, courts 6 “generally apply a ‘purposeful availment’ analysis and ask whether a defendant has 7 ‘purposefully avail[ed] [himself] of the privilege of conducting activities within the forum 8 State, thus invoking the benefits and protections of its laws.’” Id. (citation omitted). “[A] 9 contract alone does not automatically establish minimum contacts in the plaintiff’s home 10 forum.” Boschetto v. Hansing, 539 F.3d 1011, 1017 (9th Cir. 2008). “Rather, there must 11 be ‘actions by the defendant himself that create a substantial connection with the forum 12 State.” Picot, 780 F.3d at 1212 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 13 475 (1985)). See also Walden, 571 U.S. at 284 (“We have consistently rejected attempts 14 to satisfy the defendant-focused ‘minimum-contacts’ inquiry by demonstrating contacts 15 between the plaintiff . . . and the forum State.”). Random, fortuitous, or attenuated contacts 16 are insufficient—instead, “[a] defendant must have performed some type of affirmative 17 conduct which allows or promotes the transaction of business within the forum state.” 18 Picot, 780 F.3d at 1212 (citation omitted). A showing of purposeful availment “typically 19 consists of evidence of the defendant’s actions in the forum, such as executing or 20 performing a contract there.” Schwarzenegger, 374 F.3d at 802. 21 As an initial matter, NCC argues that its agency relationship with B&W Limited, 22 standing alone, is enough to trigger specific jurisdiction. (Doc. 32 at 6-8.) This argument 23 lacks merit. It’s true that the Supreme Court has recognized “[a]gency relationships . . . 24 may be relevant to the exercise of specific jurisdiction.” Daimler, 571 U.S. at 135 n.13 25 (emphasis omitted). However, Daimler considered whether a subsidiary’s contacts could 26 be imputed to a defendant parent company, not the relevance of an agency relationship 27 between a defendant and a plaintiff. Id. at 135-36 (discussing the relationship between 28 1 Daimler and one of its subsidiaries).4 As a result, other courts faced with agency 2 agreements between the plaintiff and defendant have not found jurisdiction based on the 3 agency relationship. Instead, they have analyzed the defendant’s broader conduct and 4 contacts with the forum. See, e.g., Am. Gen. Life Ins. Co. v. Crosswhite, 2009 WL 3756956, 5 *4 (S.D. Tex. 2009). Further, the agency relationship, standing alone, can’t be 6 dispositive—otherwise, it would create a gaping hole in the rule that “a contract alone does 7 not automatically establish minimum contacts,” Boschetto, 539 F.3d at 1017, and 8 undermine the settled notion that the “plaintiff cannot be the only link between the 9 defendant and the forum,” Walden, 571 U.S. at 285. See also Burger King, 471 U.S. at 10 478 (“The Court long ago rejected the notion that personal jurisdiction might turn on 11 ‘mechanical’ tests . . . .”). 12 Instead, as with any contract case, jurisdiction turns on “prior negotiations and 13 contemplated future consequences, along with the terms of the contract and the parties’ 14 actual course of dealing.” Burger King, 471 U.S. at 479. In Burger King, the Supreme 15 Court applied these factors and determined that a Florida court had jurisdiction over a 16 Michigan franchisee. Id. at 478-82. The franchisee had executed a 20-year franchise 17 agreement with Burger King, a Florida corporation. Id. at 465-68. When the franchisee 18 fell behind on payments, Burger King terminated the agreement, but the franchisee 19 continued to conduct business under the Burger King name, prompting Burger King to file 20 suit in Florida. Id. The Supreme Court found “substantial record evidence supporting the 21 District Court’s conclusion that the assertion of personal jurisdiction” over the franchisee 22 was appropriate. Id. at 478. Although the franchisee had “no physical ties to Florida,” he 23
24 4 This is also how the Ninth Circuit has, post-Daimler, addressed the relevance of agency relationships for purposes of assessing specific jurisdiction. See, e.g., Williams v. 25 Yamaha Motor Co. Ltd., 851 F.3d 1015, 1024-25 (9th Cir. 2017) (“[U]nder any standard for finding an agency relationship, the parent company must have the right to substantially 26 control its subsidiary’s activities. [Plaintiffs] neither allege nor otherwise show that [defendant] YMC had the right to control [its subsidiary] YMUS’s activities in any manner 27 at all. Consequently, even assuming [post-Daimler] the validity of some formulation of agency analysis such that a subsidiary’s contacts could be attributed to its parent, 28 [plaintiffs] failed to establish specific jurisdiction over YMC.”); Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1071 n.5 (9th Cir. 2017) (same). 1 had “deliberately reached out” to Florida and “negotiated with a Florida corporation for the 2 purchase of a long-term franchise and the manifold benefits that would derive from 3 affiliation with a nationwide organization.” Id. at 479-80. “Upon approval, he entered into 4 a carefully structured 20-year relationship that envisioned continuing and wide-reaching 5 contacts with Burger King in Florida,” including regulation of the franchisee’s business, 6 contract provisions that stated “[t]his Agreement . . . shall be deemed made and entered 7 into in the State of Florida,” and provisions that required “all relevant notices and payments 8 . . . be sent” to Florida. Id. at 479-482. Importantly, because “the contract documents 9 themselves emphasize that Burger King’s operations are conducted and supervised from 10 the Miami headquarters,” the franchisee couldn’t have reasonably believed he wasn’t 11 dealing with a Florida corporation. Id. Finally, the Court noted that the contracts contained 12 a choice of law provision stating they were governed by Florida law. Id. at 481-82. 13 Although this wasn’t dispositive, it could “reinforce” the franchisee’s “deliberate 14 affiliation with the forum state.” Id. 15 In NCC’s view, this case is virtually identical to, and thus controlled by, Burger 16 King. (Doc. 32 at 7 [“Burger King . . . confirms jurisdiction is proper here. There, the 17 court found jurisdiction over an out-of-state company because the Defendant benefitted 18 from a long-term business relationship with an in-state company . . . . That is exactly the 19 situation here.”].)5 B&W Limited disagrees, arguing that Burger King is distinguishable 20 because (1) the franchisee in that case “reached out” to Florida to apply for and negotiate 21 the contract, whereas “NCC presented no evidence” in this case concerning how or where 22 the Agreement was negotiated,6 and (2) Burger King emphasized the importance of the 23 5 NCC also argues that Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements, Ltd., 24 328 F.3d 1122 (9th Cir. 2003), supports its position (Doc. 32 at 5-6), but the Ninth Circuit found specific jurisdiction in that case because the defendant’s contacts with a California 25 company were for the specific purpose of gaining access to the California insurance market. 328 F.3d at 1130. Here, the Agreement does not suggest that B&W Limited 26 contracted with NCC in the hope of gaining access to the Arizona insurance market. 6 Although B&W Limited correctly points out in the argument section of its reply that 27 NCC “presented no evidence” concerning where the Agreement was negotiated or executed (Doc. 42 at 7-8), B&W Limited makes a different claim in factual section of its 28 reply—there, it contends it is “undisputed” that “[t]he Agreement was not negotiated in Arizona or executed in Arizona.” (Doc. 42 at 1.) This assertion is inaccurate. Evidentiary 1 parties’ “course of dealing” following execution of the contract, and here the Agreement 2 authorized B&W Limited to issue NCC policies in all 50 states and did not require it to 3 issue any policies in Arizona. (Doc. 42 at 7-9.) B&W Limited acknowledges that this case 4 does share some factual similarities with Burger King, such as the presence of a choice-of- 5 law provision in the contract and the existence of trips, mailings, and other communications 6 directed toward the forum state, but it argues that such factors are insufficient to establish 7 purposeful availment. (Doc. 23 at 7-11.) 8 Although B&W Limited is correct that this case isn’t factually identical to Burger 9 King, the logic of Burger King compels the conclusion that purposeful availment exists 10 here. B&W Limited entered into a decades-long contract with NCC, which was identified 11 in the Agreement as a corporation “located in Scottsdale, Arizona” (Doc. 32-2 at 5), and 12 agreed the relationship “shall be governed by the laws of the State of Arizona” (Id. at 12 § 13 X.K). To be sure, those factors alone do dictate a finding of purposeful availment,7 but 14 there is more here—the substance of the parties’ contractual relationship was that (1) NCC 15 would, from Arizona, promulgate underwriting guidelines that B&W Limited was required 16 to follow, and (2) B&W Limited would regularly transmit information back to NCC in 17 Arizona to confirm its compliance with those guidelines. 18 It is this aspect of the parties’ relationship that B&W Limited glosses over in its 19 moving papers. B&W Limited repeatedly emphasizes the fact that it wasn’t required, under 20 the Agreement, to issue any insurance policies to Arizona residents.8 This is true but misses 21 the point. Every time B&W Limited wished to issue an NCC insurance policy, it was 22 contractually obligated—irrespective of the residence of the policyholder—to comply with 23
24 silence is different from affirmative proof that the negotiation and execution occurred outside Arizona. 25 7 See, e.g., Burger King, 471 U.S. at 481-82 (stating that although a choice-of-law provision “standing alone would be insufficient to confer jurisdiction,” “[n]othing in our 26 cases . . . suggests that a choice-of-law provision should be ignored in considering whether a defendant has” engaged in purposeful availment). 27 8 B&W Limited has also submitted evidence showing that “the NCC policies issued 28 and bound in Arizona constitute only 0.1% of the B&W Limited corporate family’s gross business with NCC” from 2010-15. (Doc. 42 at 7, citing Doc. 45 ¶ 7.) 1 underwriting guidelines that were promulgated by NCC in Arizona and to demonstrate its 2 compliance by sending proof to NCC in Arizona. Thus, B&W Limited’s contention that 3 its contacts with Arizona were “random, fortuitous, or attenuated” (Doc. 23 at 7) is 4 inaccurate. Burger King, 471 U.S. at 480 (“In light of Rudzewicz’ voluntary acceptance 5 of the long-term and exacting regulation of his business from Burger King’s Miami 6 headquarters, the ‘quality and nature’ of his relationship to the company in Florida can in 7 no sense be viewed as ‘random,’ ‘fortuitous,’ or ‘attenuated.’”) (emphasis added). 8 For these reasons, this case is also distinguishable from the post-Burger King cases 9 on which B&W Limited relies. For example, in Wegbreit Group LLC v. Rite-Kem Inc., 10 2019 WL 3457719 (D. Ariz. 2019), “the parties did not have a long-term contract” and 11 “there were no provisions in any contract between the parties specifying that Arizona law 12 would apply to any disputes between the parties.” Id. at *4-5. Additionally, and perhaps 13 most important, although the defendant periodically sent communications to the plaintiff’s 14 representatives in Arizona, those communications were merely “the ‘normal incidents’ of 15 a business relationship” because the recipients were not “doing anything in Arizona related 16 to” the parties’ contractual relationship. Id. at *5. This meant “[t]his case is . . . unlike 17 Burger King, where Burger King was conducting and supervising franchise operations out 18 of its headquarters in Florida.” Id. Here, of course, NCC was providing such supervision 19 from Arizona. 20 Similarly, in McGlinchey v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988), the 21 Ninth Circuit affirmed a California court’s conclusion that it lacked specific jurisdiction 22 over “a nonresident, London-based firm” being sued for breach of contract because “the 23 contract was negotiated in England,” “the contract makes no reference to California or to 24 the United States, either as [plaintiffs’] place of residence or as a forum for dispute 25 settlement,” and “[t]here are no terms in the contract which would indicate that [the 26 defendant] contemplated an effect in California, much less that any such effect should be 27 considered a material term of agreement.” Id. at 816-17. Here, in contrast, the Agreement 28 specifically references Arizona, states that it will be governed by Arizona law, and 1 contemplates that NCC will engage in “the long-term and exacting regulation of [B&W 2 Limited’s] business from [its Arizona] headquarters.” Burger King, 471 U.S. at 480. 3 Finally, in Colmen Fin. Servs. v. Charter Equip. Leasing Corp., 708 F. Supp. 664 4 (E.D. Pa. 1989), Colmen (a Pennsylvania-based consulting firm) sent an unsolicited 5 advertisement to Charter (a California-based company). Id. at 666. The parties thereafter 6 entered into a contract under which Colmen agreed, in return for a consulting fee, to attempt 7 to locate a third-party company to acquire Charter. Id. Although Colmen eventually 8 identified an acquiror, which was based in Delaware, the parties could not reach an 9 agreement concerning the size of the consulting fee. Id. As a result, Colmen sued Charter 10 in federal court in Pennsylvania. Id. The court dismissed, holding that it lacked specific 11 jurisdiction over Charter because (1) the mere fact that Charter entered into a contract with 12 a Pennsylvania-based counterparty was not, standing alone, sufficient to show purposeful 13 availment, and (2) although Colmen thereafter directed some of its activities toward 14 Pennsylvania, this was “unilateral” conduct that could not be attributed to Charter because 15 it had requested “a nationwide search.” Id. at 667-68. In reaching this conclusion, the 16 court emphasized that “there was no mention in the contract of the place of the parties’ 17 performance. There was no choice of law clause, and the contract did not contemplate a 18 long-term relationship as it did in Burger King.” Id. at 668. Here, of course, the contract 19 did contain an Arizona choice-of-law clause, the contract created a long-term relationship, 20 and the contract contemplated that NCC would, from Arizona, engage in the exacting 21 regulation of B&W Limited’s performance. 22 The Court acknowledges that this case presents a close call. Because NCC has 23 presented no evidence concerning where the Agreement was negotiated or executed, there 24 is not as strong of an argument for purposeful availment as there was in Burger King. 25 Additionally, there is a fine line between emails, trips, and other communications directed 26 to the forum state that are mere incidents of a normal business relationship, and thus 27 immaterial when assessing purposeful availment, and communications and trips that are so 28 integral to the performance of the contract at issue that they have jurisdictional 1 significance. In the final analysis, this case has enough similarities to Burger King—and 2 just enough dissimilarities from the post-Burger King cases cited by B&W Limited—to 3 conclude that NCC has met its burden under the first prong of the specific-jurisdiction test. 4 2. Claims Arise From Forum-Related Activities 5 NCC next must demonstrate that its “claim[s] arise[] out of or relate[] to [B&W 6 Limited’s] forum-related activities.” Picot, 780 F.3d at 1211. The Ninth Circuit relies “on 7 a ‘but for’ test to determine whether a particular claim arises out of forum-related 8 activities.” Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995). Under that test, “a 9 lawsuit arises out of a defendant’s contacts with the forum state if a direct nexus exists 10 between those contacts and the cause of action.” Fireman’s Ins. Fun. Co. v. Nat’l Bank of 11 Coops., 103 F.3d 888, 894 (9th Cir. 1986). 12 B&W Limited argues that NCC’s claim in this action doesn’t arise from its forum- 13 related contacts because none “of the alleged breaches of the Agreement . . . occur[ed] in 14 Arizona.” (Doc. 23 at 12.) In B&W Limited’s view, “[a]ll of the allegedly wrongful acts 15 on which NCC’s claim is based occurred outside the forum state: (1) the bind request for 16 an NCC policy was fulfilled . . . in California . . . ; (2) the resulting policy was issued to 17 [two] insureds in Alabama, who then had a car accident in Alabama; (3) NCC claims it was 18 injured because it paid money to settle two related litigations venued in Alabama; and (4) 19 B&W Limited did not accept NCC’s indemnity demand, which NCC issued to executives 20 located in Michigan and California.” (Doc. 42 at 9-10, emphasis and citations omitted.) 21 Although these arguments have surface appeal, they focus on the wrong question. 22 The but-for test doesn’t focus on the specific acts triggering a claim, but on whether that 23 claim “arises out of or relates to” the defendant’s forum-related contacts. Picot, 780 F.3d 24 at 1211. Here, B&W Limited’s forum-related contacts are its decades’ worth of dealings 25 with, and regulation by, an Arizona-based contractual partner. Under the Agreement, 26 B&W Limited agreed to comply with underwriting guidelines promulgated in Arizona, to 27 verify its compliance by directing communications to Arizona, and to indemnify its 28 Arizona-based contractual partner in certain circumstances. The claims in this lawsuit can 1 easily be said to “relate[] to” these forum-related contacts—NCC is suing B&W Limited 2 for breaching the Agreement by failing to comply with the underwriting guidelines and by 3 failing to provide indemnification. 4 The Ninth Circuit’s decision in Haisten v. Grass Valley Med. Reimbursement Fund, 5 784 F.2d 1392 (9th Cir. 1986), suggests the but-for test is satisfied under these 6 circumstances. In Haisten, a California-based doctor purchased a malpractice policy from 7 a Cayman Islands provider. Id. at 1395. One year later, the doctor’s wife sued him for 8 malpractice. Id. She won a $185,000 arbitration award, after which the doctor declared 9 bankruptcy. Id. The wife then sought satisfaction of her award by filing suit in federal 10 court in California against the foreign insurance provider. Id. The insurance provider 11 argued the court lacked specific jurisdiction but the Ninth Circuit rejected this argument. 12 Id. at 1396-1402. The court first examined the insurance provider’s contacts with 13 California and concluded that, based on the insurance contract, the insurance provider had 14 purposefully availed itself of the forum state’s laws. Id. at 1399-1400. It then turned to 15 the question of whether the dispute arose from those contacts. Id. at 1400. Because the 16 plaintiff was “suing the [defendant] on the basis of its contract to provide indemnity” and 17 the defendant’s “forum-related activity consists of the contract,” the Ninth Circuit held 18 “that [the plaintiff] meets the second prong of the limited jurisdiction test.” Id. The same 19 logic applies here. 20 B&W Limited’s arguments to the contrary are unavailing. It cites Hummingbird 21 Def. Sys. v. Ye, 2007 WL 1876378 (D. Ariz. 2007), for the proposition that a defendant’s 22 visits to Arizona cannot, standing alone, subject that defendant to personal jurisdiction in 23 Arizona in a breach-of-contract action. (Doc. 23 at 11-12.) That conclusion is 24 unremarkable and misses the point. In Hummingbird, the court concluded the defendant 25 had not purposefully availed himself of Arizona law. 2007 WL 1876378 at *3. In the 26 alternative, the court evaluated whether the plaintiff’s breach of contract claim was related 27 to what the court identified as the defendant’s relevant forum-related activities—visits to 28 Arizona. Id. Because “[t]he [contract] claims d[id] not arise out of the simple act of 1 coming to Arizona to look at products,” the court concluded that the plaintiff’s claim did 2 not arise from the defendant’s forum-related activities. Id. Here, in contrast, B&W 3 Limited has purposely availed itself of Arizona law through the Agreement and NCC’s 4 claim in this case relates to B&W Limited’s forum-related conduct. Thus, Hummingbird 5 is inapposite. NCC has satisfied the second prong of specific jurisdiction.9 6 3. Whether The Exercise Of Jurisdiction Is Reasonable 7 When “it has been decided that a defendant purposefully established minimum 8 contacts with a forum, he must present a compelling case that the presence of some other 9 considerations would render jurisdiction unreasonable in order to defeat personal 10 jurisdiction.” Harris Rutsky, 328 F.3d at 1132 (internal citation and quotation marks 11 omitted, emphasis added). The Ninth Circuit has established seven factors to guide the 12 reasonableness analysis: 13 (1) the extent of the defendants purposeful injection into the forum state’s affairs; (2) the burden on the defendant of defending in the forum; (3) the 14 extent of conflict with the sovereignty of the defendants’ state; (4) the forum 15 state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the 16 plaintiff’s interest in convenient and effective relief; and (7) the existence of 17 an alternative forum. 18 Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1488-89 (9th Cir. 1993). “No one 19 factor is dispositive.” Harris Rutsky, 328 F.3d at 1132. Instead, the Court must balance 20 all seven. Id. 21 … 22 … 23
24 9 Both B&W Limited and NCC refer to where the breach of the contract occurred. (Doc. 23 at 11-12 [“Likewise, B&W Limited’s alleged breached of the Agreement clearly 25 did not occur in Arizona”]; Doc. 32 at 11 [Defendants’ “contractual breaches had the effect of injuring National Casualty in Arizona”].) This, however, conflates the purposeful 26 availment test for contract claims, which focuses on “whether a defendant has ‘purposefully avail[ed] [himself] of the privilege of conducting activities within the forum 27 State, thus invoking the benefits and protections of its laws,’” Picot, 780 F.3d at 1212, with the purposeful direction test for torts, which, among other things, looks to whether a harm 28 was likely to be suffered in the forum state, Menken v. Emm, 503 F.3d 1050, 1059 (9th Cir. 2007). 1 a. Extent Of B&W Limited’s Purposeful Injection 2 Even though the Court has concluded that B&W Limited purposefully availed itself 3 of Arizona law, “the degree of interjection is nonetheless a factor in assessing the overall 4 reasonableness of jurisdiction.” Id. “The smaller the element of purposeful interjection, 5 the less is jurisdiction to be anticipated and the less reasonable is its exercise.” Ins. Co. of 6 N. Am. v. Marina Salina Cruz, 649 F.2d 1266, 1271 (9th Cir. 1981). 7 Here, as noted, the first prong of the purposeful availment test presented a close 8 call—NCC has produced no evidence as to who drafted the Agreement, where it was 9 negotiated, or where it was executed. Compare Harris Rutsky, 328 F.3d at 1132 10 (concluding this factor weighed in favor of jurisdiction because defendant “drafted the 11 contract at the heart of the dispute, and that contract was consummated and for the most 12 part performed in [the forum state]” and citing the fact that 20% of defendants’ business 13 was done in California as evidence that defendant’s contacts with the forum state were 14 “fairly extensive”). Thus, the overall “degree of interjection” is low, which cuts against 15 the exercise of jurisdiction. Id. That said, the Court “cannot say it weighs heavily in [B&W 16 Limited’s] favor given [the] assumption that [the contacts] were sufficient to meet the 17 purposeful availment prong.” Core-vent, 11 F.3d at 1488. 18 b. Burden On B&W Limited Of Defending In Arizona 19 The Court next considers the burden on B&W Limited of defending this lawsuit in 20 Arizona. Core-Vent, 11 F.3d at 1488. “Modern means of communication and 21 transportation have tended to diminish the burden of defense of a lawsuit in a distant 22 forum.” Marina Salina Cruz, 649 F.2d at 1271. This factor weighs most heavily in the 23 defense’s favor when a defendant would be forced to litigate in a foreign country. Asahi 24 Metal Indus. Co., Ltd. v. Superior Court of Cal., Solano Cty., 480 U.S. 102, 114 (1987) 25 (“The unique burdens placed upon one who must defend oneself in a foreign legal system 26 should have significant weight in assessing the reasonableness of stretching the long arm 27 of personal jurisdiction over national borders.”). On the other hand, the relative burden 28 between defendants and plaintiffs is typically equal when it’s a matter of travel between 1 two states. Ziegler v. Indian River Cty., 64 F.3d 470, 475 (9th Cir. 1995) (“The burden to 2 defendants from litigating in California is equal to the burden facing [plaintiff] from 3 litigating in Florida.”); Terracom v. Valley Nat’l Bank, 49 F.3d 555, 561 (9th Cir. 1995) 4 (“[I]t is as burdensome for [defendant] and its witnesses to travel to California as it is for 5 [plaintiff] and its witnesses to travel to Kentucky.”). 6 Here, neither NCC nor B&W Limited “gives . . . evidence as to the extent of [the] 7 burden” they would suffer if forced to litigate outside their home state. Haisten, 784 F.2d 8 at 1402.10 Further, NCC has already indicated that it is open to handling some aspects of 9 this case in California (Doc. 32 at 12) and B&W Limited’s representatives are alleged to 10 travel to Arizona with some frequency (Doc. 17 ¶ 10; Doc. 24 ¶ 12 [disavowing that any 11 travel was related to the insurance policy at issue but otherwise not denying that travel to 12 Arizona occurred].) Thus, the burden on NCC of litigating in California is equal to the 13 burden on B&W Limited of litigating in Arizona. Cf. Harris Rutsky, 328 F.3d at 1133-32 14 (stating that “frequent[] travel to California” tended to mitigate the burden on defendants 15 of litigating there); Dole Foods Co., Inc. v. Watts, 303 F.3d 1104, 1115 (9th Cir. 2002) 16 (noting that past travel to the forum, even if only “some” was related to the case, 17 “mitigate[d] the burden” of defending a case in a foreign forum). 18 “Where burdens are equal, this factor tips in favor of the defendants.” Ziegler, 64 19 F.3d at 475. Thus, this factor weighs slightly in B&W Limited’s favor. 20 c. Conflict With The Defendant’s State’s Sovereignty 21 “The reasonableness of jurisdiction . . . depends also in part upon the seriousness of 22 the potential affront to the sovereignty of a defendant’s state.” Marina Salina Cruz, 649 23 F.2d at 1272. Although courts “do not minimize the sovereignty of the states within our 24 federal system,” id., “litigation against an alien defendant creates a higher jurisdictional 25 barrier than litigation against a citizen from a sister state,” Harris Rutsky, 328 F.3d at 1133. 26 Further, where there is “minimal conflict” with another U.S. state’s sovereignty, this factor 27 10 Although B&W Limited has submitted evidence establishing that various witnesses 28 are located outside Arizona (Doc. 24 ¶ 13), it has not submitted any evidence attempting to quantify the burden of litigating in Arizona. 1 weighs in favor of the plaintiff. Terracom, 49 F.3d at 561; Menken v. Emm, 503 F.3d 1050, 2 1060 (9th Cir. 2007) (“[T]he parties agree that there is no conflict between Nevada and 3 Arizona regarding sovereignty. This factor weighs in favor of [the plaintiff].”). 4 Here, neither party argues there is any conflict between the sovereignty of California 5 and Arizona. (Doc. 23 at 13; Doc. 32 at 12-13.) Because both fora are in the United States, 6 whatever conflict may exist is best accommodated through means other “than jurisdictional 7 rules.” Gray & Co. v. Firstenberg Mach. Co., Inc., 913 F.3d 758, 761 (9th Cir. 1990). 8 This factor favors NCC. 9 d. Arizona’s Interest In Adjudicating This Dispute 10 “In assessing reasonableness,” the Court also considers “the interests of the forum 11 State and of the plaintiff in proceeding with the cause in plaintiff’s forum of choice.” 12 Marina Salina Cruz, 649 F.2d at 1272 (internal quotation marks omitted). 13 Arizona has an “interest in seeing that its residents are provided an effective means 14 of redress when they are injured by a breach of contract,” and this interest “supports the 15 reasonableness of jurisdiction in Arizona.” Corp. Inv. Bus. Brokers v. Melcher, 824 F.2d 16 786, 791 (9th Cir. 1987). Moreover, the Arizona choice-of-law provision in the Agreement 17 gives Arizona “a substantial interest in adjudicating this dispute.” Jacobs/Kahan & Co. v. 18 Marsh, 740 F.2d 587, 592-93 (7th Cir. 1984) (cited with approval by FDIC v. British- 19 American Ins. Co,, Ltd., 828 F.2d 1439, 1444 (9th Cir. 1987)). 20 Most important, because NCC’s “principal place of business is [Arizona], this 21 factor favors” NCC. Dole Foods, 303 F.3d at 1115-16. “The fact that [NCC], both directly 22 and through wholly owned subsidiaries, conducts business in many [states] does not alter 23 this conclusion.” Id. Nor does the fact that NCC is incorporated under the laws of Ohio. 24 Cf. id. at 1108, 1115-16 (holding that this factor favored the exercise of jurisdiction in 25 California even though plaintiff was a Hawaii corporation, because plaintiff’s principal 26 place of business was in California). 27 … 28 … 1 e. Efficient Judicial Resolution 2 The Court next considers “which forum could most efficiently resolve this dispute.” 3 Harris Rutsky, 328 F.3d at 1133. This determination is primarily based on “the location of 4 the evidence and the witnesses.” Id. 5 B&W Limited has demonstrated that several key witnesses are located in California. 6 (Doc. 24 ¶ 13.) Although NCC responds that it is “based in Arizona, and its witnesses and 7 evidence are located in Arizona” (Doc. 32 at 13), it seems clear to the Court—as discussed 8 in Part II infra—that bulk of the witnesses and evidence are located in California. Thus, 9 this factor tips in B&W Limited’s favor.11 10 f. Importance Of The Forum To The Plaintiff 11 “The convenience and effectiveness of relief for the plaintiff comprise the sixth 12 factor.” Menken, 503 F.3d at 1061. “[I]n this circuit, the plaintiff’s convenience is not of 13 paramount importance.” Dole Foods, 303 F.3d at 1116. This factor weighs most strongly 14 in favor of the plaintiff if the chosen forum presents the only means of litigating a claim, 15 or if refusing to exercise jurisdiction would force the plaintiff to pursue the case in multiple 16 locations. Menken, 503 F.3d at 1061 (“Menken argues that Arizona may be the only forum 17 that can hear his claim . . . therefore, he may not get effective relief in another forum.”); 18 Dole Foods, 303 F.3d at 1116 (“If California is not a proper forum, then Dole would be 19 required, in all likelihood, to litigate separate suits in at least two different countries, for 20 there does not appear to be any other single forum that could exercise jurisdiction over both 21 [defendants].”). Conversely, “[t]his aspect may . . . be less weighty if a plaintiff has the 22 power to select a different forum.” Marina Salina Cruz, 649 F.2d at 1273. For example, 23 if the choice of forum is between two states, litigating a claim outside a plaintiff’s home 24 “present[s] an obvious inconvenience,” Harris Rutsky, 328 F.3d at 1133, but because “no 25 doctorate in astrophysics is required to deduce that trying a case where one lives is almost 26 always a plaintiff’s preference,” this factor would only slightly favor the plaintiff, Roth v. 27 11 “Note, however, that this factor is no longer weighed heavily given the modern 28 advances in communication and transportation.” Harris Rutsky, 328 F.3d at 1133 (internal quotation marks omitted). 1 Garcia Marquez, 942 F.2d 617, 624 (9th Cir. 1991). 2 Here, this factor favors NCC, but only slightly. It’s obvious that NCC would prefer, 3 for reasons of convenience, to try its case where its principal place of business is located, 4 but there’s no indication that litigating in California would create an undue hardship. 5 Further, California’s courts are just as capable as this Court of providing the relief NCC 6 seeks. 7 g. Adequate Alternative Forum 8 “Finally, [the Court] must determine whether an adequate alternative forum exists.” 9 Harris Rutksy, 328 F.3d at 1133. “If a plaintiff wishes to argue the unavailability of an 10 alternative forum as a factor increasing the reasonableness of jurisdiction in the forum, he 11 must carry the burden of going forward on this issue.” Marina Salina Cruz, 649 F.2d at 12 1273. See also Harris Rutsky, 328 F.3d at 1133-34 (“The plaintiff bears the burden of 13 proving the unavailability of an alternative forum.”). 14 Ninth Circuit law is unclear on whether this factor is always considered, or if it is 15 only considered after a defendant has otherwise made a showing of unreasonableness. 16 Dole Foods, 303 F.3d at 1116. This factor isn’t dispositive, so the Court need not produce 17 a treatise on the topic, but because the Court is required to “balance all seven” factors in 18 determining reasonableness, this tends to indicate the seventh factor should be considered 19 regardless of whether B&W Limited has otherwise made a showing of unreasonableness. 20 Harris-Rutsky, 328 F.3d at 1132. 21 On this factor, NCC has failed to carry its burden. It provides no real argument on 22 the subject. (Doc. 32 at 13-14 [“Finally, Defendants assert there are alternative forums in 23 California and Michigan. Even assuming that is true, this factor is neutral at best.”].) 24 Without more, the Court cannot conclude that no other forum could adequately handle 25 NCC’s claim. Because NCC has failed to carry its burden, this factor weighs in favor of 26 B&W Limited. Freestream Aircraft (Bermuda) Ltd. v. Aero Law Grp., 905 F.3d 597, 609 27 (9th Cir. 2018); Harris Rutsky, 328 F.3d at 1134. 28 … 1 h. Conclusion 2 In the final tally, B&W Limited notches wins on the fifth and seventh factors, along 3 with smaller wins on the first and second factors. NCC carries the third, fourth, and sixth 4 factors. This results in what is essentially a wash. A wash falls short of the “compelling 5 case” necessary to defeat jurisdiction. Freestream, 905 F.3d at 609; Harris Rutsky, 328 6 F.3d at 1134. See also Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126, 129 (9th Cir. 7 1995) (“Neither party is clearly favored in the final balance. However, given the closeness 8 of the factors, we conclude that [defendant] has not presented a ‘compelling case’ that 9 exercising jurisdiction would be unreasonable.”). Thus, the Court may exercise specific 10 jurisdiction over B&W Limited. 11 B. B&W Services 12 Superficially, the foregoing analysis would apply equally to B&W Services. 13 However, there’s a wrinkle—only B&W Limited, and not B&W Services, is listed as a 14 party to the Agreement. B&W Services only became involved later and the nature of that 15 involvement is in dispute. NCC maintains that B&W Services was subject to the same 16 provisions of the Agreement as B&W Limited. (Doc. 32 at 8.) B&W Services disagrees, 17 arguing that it was only an “authorized agent” and that NCC has provided no evidence of 18 the offer and acceptance necessary to forge a contract. (Doc. 41 at 4-8.) As such, B&W 19 Services argues, the Agreement cannot serve as the basis for jurisdiction over it. (Id.) 20 Although NCC bears the burden of proving jurisdiction, it need only make “a prima 21 facie showing of jurisdictional facts to withstand the motion to dismiss.” Marvix Photo, 22 Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). For purposes of this 23 showing, “the [C]ourt resolves all disputed facts in favor of the plaintiff.” Pebble Beach, 24 463 F.3d at 1154. 25 Here, the key factual dispute is B&W Services’ involvement with the Agreement. 26 The disputed evidence on this point is a pair of “Branch Office Authorized 27 States/Binding/Authority/Commission Exhibits” attached to the declaration of John 28 Steiner, a senior director of contract underwriting at NCC. (Doc. 32-2 ¶¶ 1, 3.) These 1 exhibits are expressly contemplated by the Agreement, which refers to them as “Branch 2 Office ABC Exhibits” and states they are meant to “incorporate[]” B&W Limited’s 3 “departments, divisions, regional offices, subsidiaries, affiliates, or parent company” into 4 the Agreement in order to “facilitate the operations” of B&W Limited in quoting, binding, 5 executing, amending, deleting, making adjustments to, and renewing insurance contracts. 6 (Doc. 32-2 at 5, § I.B.) 7 The first “Branch Office ABC Exhibit” indicates that B&W Services was 8 “Incorporated Into the General Agreement” effective October 1, 1995. (Doc. 32-2 at 16.) 9 It also reflects several subsequent amendments, with the most recent made on January 1, 10 2019. (Id.) The second “Branch Office ABC Exhibit” again incorporates B&W Services 11 into the Agreement, this time effective December 15, 1997. (Doc. 32-2 at 22.) It reflects 12 a single amendment in 2007. (Id.) Of note, under “special conditions of binding 13 authority/commission,” the exhibit indicates that B&W Services may issue “[h]igher limits 14 . . . on a per risk basis, but must first be approved and expressed in writing by [NCC].” 15 (Id.) It also notes that “commission may vary on [i]ndividual polices, if so negotiated by 16 the parties.” (Id.) 17 These exhibits establish a prima facie case that B&W Services was subject to the 18 same regulation as B&W Limited under the Agreement. These exhibits incorporated B&W 19 Services into the Agreement, thus signaling its “voluntary acceptance of the long-term and 20 exacting regulation of [its] business from [NCC’s Arizona] headquarters.” Burger King, 21 471 U.S. at 480. As with B&W Limited, the substance of the NCC’s relationship with 22 B&W Services was that NCC would, from Arizona, promulgate policies (i.e., underwriting 23 guidelines) that B&W Services was required to follow and that B&W Services would 24 regularly transmit information back to NCC in Arizona to confirm its compliance with 25 those policies. B&W Services also benefited—the exhibits indicate that it collected 26 commissions under the Agreement, just as B&W Limited did, and the Agreement itself 27 envisions this structure. (Doc. 32-2 at 6, § II.A, emphasis added [“As full compensation 28 for Contracts placed by the Agent with the Company, the Company will pay the Agent (or 1 its affiliate) Commissions in accordance with the attached Home (or Branch) Office ABC 2 Commission Exhibit.”]). 3 B&W Services seeks to evade this conclusion by citing Mirabel Golf Club v. 4 Altman, 2013 WL 12284598, *3 (D. Ariz. 2013), for the proposition that specific 5 jurisdiction may not be premised on a contract that does “not specify . . . essential terms 6 which bind the Defendant.” (Doc. 41 at 5-7.) But here, the Agreement makes specific 7 mention of the possibility that additional entities could be added through “Branch Office 8 ABC Exhibits.” Thus, the specific terms lacking in Mirabel are present here. 9 B&W Services also argues that a “glaring absence of any indication of acceptance 10 by B&W [Services]” is fatal to jurisdiction premised on the Agreement. (Doc. 41 at 7.) 11 But B&W Services admits it was responsible for issuing the insurance policy at issue in 12 this case. (Doc. 27 at 4.) NCC has also provided affidavits indicating B&W Services 13 collects commissions from NCC (Doc. 37 ¶ 3) and B&W Services doesn’t dispute such 14 receipt (Doc. 45 [declaration refuting some of NCC’s accounting, but not denying that 15 commissions were paid to B&W Services]). 16 Next, B&W Services argues that the date of revision—January 1, 2019—listed on 17 one of the exhibits is “crucial” because it meant B&W Services’ incorporation into the 18 Agreement happened after the conduct in question. (Doc. 41 at 7, citing Doc. 32-2 at 16.) 19 On that same page, though, the “effective” date for the incorporation is October 1, 1995, 20 which defeats B&W Services’ temporal argument. The “revision” date simply indicates 21 the last time B&W Services’ authority under the Agreement was altered. 22 Finally, B&W Services argues that the exhibits attached to NCC’s response aren’t 23 adequate evidence because they “appear[] to be [] document[s] created solely by NCC” 24 and do not “contain a signature from B&W [Services], nor any other indication of [B&W 25 Services’] acceptance of any obligation or liability to NCC under the Agreement.” (Doc. 26 41 at 7.) True, the exhibits appear to be fairly cursory business records, and the 27 accompanying declaration doesn’t explain them in great detail. But that declaration does 28 aver to their veracity. (Doc. 32-2 ¶ 3.) B&W Services has offered no conflicting affidavit 1 averring that the “Branch Office ABC Exhibits” are fraudulent. 2 In short, NCC has presented evidence that the “Branch Office ABC Exhibits” 3 incorporated B&W Services into the Agreement and subjected it to the Agreement’s terms 4 and conditions. Although NCC could (and should) have developed this evidentiary issue 5 more fully, the Court must resolve disputed facts in its favor. When resolved in NCC’s 6 favor, the disputed facts show that although B&W Services was not originally a party to 7 the Agreement, it was subsequently incorporated into the Agreement and subjected to the 8 Agreement’s requirements. The Court is satisfied that the Agreement can serve as a 9 jurisdictional contact for B&W Services. 10 Given this conclusion, the remainder of the analysis is simple. The first and second 11 elements of the specific jurisdiction test are satisfied for the same reasons they were 12 satisfied as to B&W Limited. As for the third element, although B&W Services was not 13 originally a party to the Agreement, this only slightly strengthens its argument that 14 jurisdiction would be unreasonable and fails to generate a “compelling case” of 15 unreasonableness. Accordingly, specific jurisdiction over B&W Services is appropriate. 16 II Venue 17 In the alternative, Defendants argue that Arizona is not a proper venue for this case. 18 (Doc. 23 at 15-16; Doc. 27 at 15-16.) As a remedy, they seek dismissal or a transfer to the 19 Northern District of California. (Id.) As another alternative, they ask that this case be 20 transferred, even if venue if proper, out of convenience to the parties. 21 A. Whether Venue Is Proper 22 Venue is proper in “(1) a judicial district in which any defendant resides, if all 23 defendants are residents of the State in which the district is located; (2) a judicial district 24 in which a substantial part of the events or omissions giving rise to the claim occurred, or 25 a substantial part of property that is the subject of the action is situated; or (3) if there is no 26 district in which an action may otherwise be brought as provided in this section, any judicial 27 district in which any defendant is subject to the court’s personal jurisdiction with respect 28 to such action.” 28 U.S.C § 1391(b). “When venue is challenged, the court must determine 1 whether the case falls within one of the three categories set out in § 1391(b). If it does, 2 venue is proper; if it does not, venue is improper.” Atl. Maine Const. Co., Inc. v. U.S. Dist. 3 Ct. for W. Dist. of Tex., 571 U.S. 49, 56 (2013). The plaintiff carries the burden of 4 demonstrating that venue is proper. Piedmont Label Co. v. Sun Garden Packing Co., 598 5 F.2d 491, 496 (9th Cir. 1979); Medbox Inc. v. Kaplan, 2013 WL 6094577, *2 (D. Ariz. 6 2013). Here, venue turns on the second category—neither Defendant resides in Arizona 7 and Arizona is not the only district in which NCC could bring its claim. 8 Although a “substantial” portion of events may take place in several districts, district 9 courts are cautioned to “take seriously the adjective ‘substantial.’ Gulf Ins. Co. v. 10 Glasbrenner, 417 F.3d 353, 356-57 (2d Cir. 2005).12 Because courts must “construe the 11 venue statute strictly,” “significant events or omissions material to the plaintiff’s claim 12 must have occurred in the district in question.” Id. “It would be error, for instance, to treat 13 the venue statute’s ‘substantial part’ test as mirroring the minimum contacts test employed 14 in personal jurisdiction inquiries.” Id. In essence, this creates a two-step test: (1) “the court 15 should identify the nature of the claim and the acts or omissions that the plaintiff alleges 16 give rise to those claims; and (2) the court should determine whether a substantial part of 17 those acts or omissions occurred in the district where suit was filed.” Ultimate Creations, 18 Inc. v. Wright, 2006 WL 2547324, *4 (D. Ariz. 2006). 19 Here, NCC asserts a single claim for breach of contract. Relevant acts or omissions 20 in contract disputes include where the contract was negotiated, where it was executed, the 21 place of performance, and where the events leading to the alleged breach actually took 22 place. Medbox, 2013 WL 6094577 at *3-4. Importantly, where the effects of the alleged 23 breach were felt is immaterial for venue purposes. Id. (“[T]he [venue] statute directs the 24 Court to consider ‘events or omissions,’ not impact.”). Cf. Walden, 571 U.S. at 290 (“The 25 proper question is not where the plaintiff experienced a particular injury or effect but 26 whether the defendant’s conduct connects him to the forum in a meaningful way.”). 27 12 Glasbrenner has gained some popularity in this District as the standard for 28 analyzing the substantiality requirement of § 1391(b)(2). See, e.g., Medbox, 2013 WL 6094577 at *2; Ultimate Creations, Inc. v. Wright, 2006 WL 2547324, *4 (D. Ariz. 2006). 1 As discussed, NCC has failed to offer any evidence as to where the contract was 2 negotiated, drafted, or executed. On the other hand, it is clear where the material events 3 giving rise to the alleged breach occurred—B&W Services issued an insurance policy from 4 its San Francisco offices and Defendants’ representatives in California and Michigan 5 thereafter rejected NCC’s indemnification requests. On this record, NCC has failed to 6 carry its burden in demonstrating that venue is proper in Arizona—although some Arizona- 7 based conduct forms a part of the story, the significant events took place elsewhere. 8 B. Disposition 9 Because venue in Arizona is improper, the Court must decide how to dispose of this 10 case. “The district court of a district in which is filed a case laying venue in the wrong 11 division or district shall dismiss, or if it be in the interest of justice, transfer such case to 12 any district or division in which it could have been brought.” 28 U.S.C. § 1406(a). 13 Whether to transfer or dismiss is left to the discretion of the Court. Cook v. Fox, 537 F.2d 14 370, 371 (9th Cir. 1976). 15 In general, transfer is preferable to dismissal. 14D Wright & Miller, Fed. Practice 16 & Proc. § 3827 (2020). It saves the parties time, energy, money, and inconvenience. Id. 17 at n.32.50. This is particularly true “when it is clear wherein proper venue would be laid.” 18 Metropa Co., Ltd. v. Choi, 458 F. Supp. 1052, 1055-56 (S.D.N.Y. 1978). 19 Here, the parties agree that the Northern District of California is a proper venue for 20 this case. Defendants are amenable to transfer and doing so would save the parties time 21 and expense. As such, the Court will transfer this case to the Northern District of California 22 rather than dismiss it. 23 … 24 … 25 … 26 … 27 … 28 … 1 Accordingly, IT IS ORDERED that Defendants’ motions (Docs. 22, 26) are 2|| granted in part and denied in part: 3 (1) | Defendants’ motions to dismiss for lack of personal jurisdiction are denied; 4 (2) | Defendants’ motions to transfer for improper venue are granted; and 5 (3) This case shall be transferred to the Northern District of California. 6 Dated this 17th day of July, 2020. 7 8 Lm ee” 9 f t _o——— Dominic W, Lanza 10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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