Valve Corporation v. Zaiger LLC

• Court: District Court, W.D. Washington
• Decided: August 20, 2024
• Docket: 2:23-cv-01819
• Status: Unknown

Opinion

1 2 3

4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 VALVE CORPORATION, CASE NO. 2:23-cv-01819-JHC 8

Plaintiff, ORDER GRANTING MOTION TO 9 DISMISS (DKT. # 9) v. 10 ZAIGER, LLC and JOHN DOE 11 CORPORATION,

12 Defendant. 13

14 I 15 INTRODUCTION 16 This matter comes before the Court on Defendant Zaiger LLC’s Motion to Dismiss. Dkt. 17 # 9. Plaintiff Valve Corporation alleges that Zaiger, a Connecticut-based law firm, has 18 “weaponize[d] the terms of Valve’s dispute resolution agreement” and “abused the legal process 19 and interfered with Valve’s relationships with its customers.” Dkt. # 1-3 at 1–2. Zaiger 20 contends that the Court lacks personal jurisdiction, and that Valve fails to state a claim upon 21 which relief can be granted. See Dkt. # 9. Because the Court lacks personal jurisdiction over 22 Zaiger, the Court GRANTS the motion. 23 24 1 II BACKGROUND 2 3 The factual background herein derives from the allegations in the complaint. See Dkt. # 1-3. 4 Zaiger is a law firm and a New York limited liability company with its principal place of 5 business in Stamford, Connecticut. Id. at 2 ¶ 3. Valve is a Washington corporation with its 6 principal place of business in King County, Washington. Id. at 1 ¶ 2. Valve operates “Steam,” 7 “an online service through which video game makers can sell and distribute their games to Steam 8 users, who can purchase, download, and play those games through Steam.” Id. at 2 ¶ 10. When 9 someone becomes a Steam user, they agree to the Steam Subscriber Agreement (SSA). Id. at 2 ¶ 10 11; id. at 16–24 (SSA). When a Steam user has an issue with the platform that cannot be 11 resolved through customer support, the SSA provides a dispute resolution process. Id. at 2–3 ¶¶ 12 12–14. Valve and Steam users agree to “make reasonable, good faith efforts to informally 13 resolve” their dispute. Id. at 23; id. at 3 ¶ 17. If the parties are still unable to resolve their 14 dispute, the Steam user may begin binding arbitration. Id. at 3 ¶ 20; id. at 22–23. According to 15 the SSA, Valve covers the arbitration filing fees and costs “for non-frivolous, non-harassing 16 claims seeking up to ten thousand dollars.” Id. at 3 ¶ 21; id. at 23. The SSA prohibits Steam 17 users from bringing or participating in a collective or representative arbitration. Id. at 23. 18 Valve says that Zaiger has “targeted Valve and Steam users . . . because the arbitration 19 clause in the SSA is ‘favorable’ to Steam users in that Valve agrees to pay the fees and costs 20 associated with arbitration.” Id. at 4 ¶ 27 (citing id. at 26–39). Zaiger plans “to recruit 75,000 21 clients and threaten Valve with arbitration on behalf of those clients, thus exposing Valve to 22 potentially millions of dollars of arbitration fees[.]” Id. at 5 ¶ 30. Zaiger has used internet 23 advertisements to target Steam users. Id. at 6 ¶ 38. 24 1 On October 20, 2023, Valve filed this action in King County Superior Court. Dkt. # 1 at 2 2. On November, 27, 2023, Zaiger removed the case to federal court. Id. Valve alleges that 3 Zaiger improperly interfered with the terms of the SSAs “between Valve and Zaiger’s Steam

4 user clients, specifically including the Zaiger clients for whom Zaiger has filed arbitrations.” 5 Dkt. # 1-3 at 12 ¶ 74. Valve brings two causes of action: (1) tortious interference with the 6 “contractual relationships and business expectancies in relation to the customers of its Steam 7 platform”; and (2) abuse of process by bringing “arbitration claims against Valve in 8 contravention of the terms of the” SSA. See id. at 13–14 ¶¶ 76–86. Zaiger moves to dismiss the 9 case under Rule 12(b)(2) and Rule 12(b)(6). Dkt. ## 9, 22. Valve opposes. Dkt. # 20. 10 III LEGAL STANDARDS 11 “Where a defendant moves to dismiss a complaint for lack of personal jurisdiction, the 12 plaintiff bears the burden of demonstrating that jurisdiction is appropriate.” Schwarzenegger v. 13 Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). Unless there has been an evidentiary 14 hearing, the plaintiff’s pleadings and affidavits must “make a prima facie showing of personal 15 jurisdiction.” Id. (quoting Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126, 128 (9th Cir. 16 1995)). To do so, “the plaintiff need only demonstrate facts that if true would support 17 jurisdiction over the defendant[,]” Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995), but the 18 plaintiff cannot “simply rest on the bare allegations of its complaint,” Amba Mktg. Sys., Inc. v. 19 Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977). “Conflicts between parties over statements 20 contained in affidavits must be resolved in the plaintiff’s favor.” Schwarzenegger, 374 F.3d at 21 800. 22 “Where, as here, there is no applicable federal statute governing personal jurisdiction, the 23 district court applies the law of the state in which the district court sits.” Yahoo! Inc. v. La Ligue 24 1 Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006) (citing Fed. R. Civ. 2 P. 4(k)(1)(A); Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir.1998)). Because 3 Washington’s long-arm jurisdictional statute is coextensive with federal due process

4 requirements, the jurisdictional analyses under state and federal due process are the same. See 5 Panavision, 141 F.3d at 1320; RCW 4.28.185. 6 “Due process requires that the defendant ‘have certain minimum contacts’ with the forum 7 state ‘such that the maintenance of the suit does not offend traditional notions of fair play and 8 substantial justice.’” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Int’l Shoe 9 Co. v. Wash., 326 U.S. 310, 316 (1945)). “The strength of contacts required depends on which 10 of the two categories of personal jurisdiction a litigant invokes: specific jurisdiction or general 11 jurisdiction.”1 Ranza, 793 F.3d at 1068; see Bristol-Myers Squibb Co. v. Superior Ct. of 12 California, San Francisco Cnty., 582 U.S. 255, 262 (2017). 13 Specific jurisdiction, requires that the suit “arise out of or relate to the defendant’s 14 contacts with the forum.” Bristol-Myers, 582 U.S. at 262 (brackets omitted) (quoting Daimler 15 AG v. Bauman, 571 U.S. 117, 127 (2014)). That is, there must be “an affiliation between the 16 forum and the underlying controversy[.]” Goodyear Dunlop Tires Operations, S.A. v. Brown, 17 564 U.S. 915, 919 (2011) (brackets omitted) (quoting Arthur T. von Mehren & Donald T. 18 Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 19 (1966)). “For this reason, ‘specific jurisdiction is confined to adjudication of issues deriving 20 from, or connected with, the very controversy that establishes jurisdiction.’” Bristol-Myers, 582 21 U.S. at 262 (quoting Goodyear, 564 U.S. at 919). 22

24 1 Valve does not claim that the Court has general jurisdiction over Zaiger. Dkt. # 20 at 19. 1 The Ninth Circuit employs a three-part test to determine whether a defendant is subject to 2 specific jurisdiction. See Schwarzenegger, 374 F.3d at 802 (quoting Lake v. Lake, 817 F.2d 3 1416, 1421 (9th Cir. 1987)). First, the plaintiff must show that the defendant “purposefully

4 direct[ed]” its activities toward the forum or “purposefully avail[ed] [itself] of the privilege of 5 conducting activities in the forum.” Id. (quoting Lake, 817 F.2d at 1421). Second, the plaintiff 6 must establish that its claim “arises out of or relates to the defendant’s forum-related 7 activities[.]” Id. (quoting Lake, 817 F.2d at 1421). If the plaintiff satisfies the first two prongs, 8 the third shifts the burden back to the defendant to “present a compelling case” that the exercise 9 of jurisdiction would not “comport with fair play and substantial justice,” or in other words, it 10 would be unreasonable. Id. (first quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-78 11 (1985); and then quoting Lake, 817 F.2d at 1421). 12 III DISCUSSION 13 Zaiger contends that the Court lacks specific personal jurisdiction and moves to dismiss 14 this action. Dkt. # 9 at 14–17. Valve responds that “Zaiger is subject to specific personal 15 jurisdiction in Washington based on the Complaint’s plausible allegations.” Dkt. # 20 at 19. 16 A. Internet Advertisements 17 Zaiger asserts that its internet advertisements targeting aggrieved Steam users—without 18 “something more”—do not suffice to subject it to personal jurisdiction in Washington. Dkt. # 9 19 at 15 (citing Cybersell, Inc. v Cybersell, Inc., 130 F.3d 414, 418 (9th Cir. 1997)). Zaiger says 20 that the “something more” is missing because “Valve makes no specific, nonconclusory 21 allegations about advertisements purposefully directed at Washington.” Id. at 15. Zaiger asserts 22 that even if its nationwide advertising were jurisdictionally relevant, Valve’s claims do not arise 23 out of the advertising itself and specific personal jurisdiction requires a claim to arise out of a 24 1 defendant’s forum-related activities. Id. at 16 (citing Axiom Foods, Inc. v. Acerchem Int’l, Inc., 2 874 F.3d 1064, 1068 (9th Cir. 2017) (“the claim must be one which arises out of or relates to the 3 defendant's forum-related activities”)). Zaiger also clarifies that while it does have clients in

4 Washington, it has filed five arbitrations against Valve and none of those clients reside in 5 Washington. Id.; Dkt. # 11 at 2 ¶ 10; id. at 5–19. 6 Valve does not dispute that none of Zaiger’s arbitration claimants are from Washington, 7 and agrees that nationwide internet-based advertising in not enough to convey personal 8 jurisdiction. Dkt. # 20 at 20–21. But Valve contends that Zaiger ignores the “numerous 9 allegations” in the complaint that describe the requisite “something more” to establish personal 10 jurisdiction. Id. at 20 (citing Briskin v. Shopify, Inc., 87 F.4th 404 (9th Cir. 2023), reh’g en banc 11 granted, opinion vacated, 101 F.4th 706 (9th Cir. 2024)). Citing Briskin, Valve contends that the 12 “nature and structure” of Zaiger’s “business subjects it to personal jurisdiction in Washington[,]”

13 serving as that “something more.” Id. at 20–21.2 According to Valve, the contract-based 14 relationships between Zaiger and its Washington resident clients confer personal jurisdiction. Id. 15 (citing Burger King, 471 U.S. at 473 (quoting Travelers Health Ass’n v. Com. of Va. Ex rel. State 16 Corp. Comm’n, 339 U.S. 643, 647 (1950))). Valve claims that although Zaiger’s Washington 17 clients have not yet filed arbitration claims, it has “plausibly alleged [that] Zaiger’s Washington 18 clients have breached and are actively breaching the SSA by participating . . . in Zaiger’s 19 collective scheme.” Id. at 21. 20 Zaiger replies that its “Washington engagements have nothing to do with Valve’s tortious 21 interference or abuse-of-process claims. None of the five clients that filed arbitrations are in 22

23 2 After the parties’ briefing, the Ninth Circuit vacated this opinion and ordered that it be reheard en banc. Therefore, the Court does not consider Valve’s reliance on this case. See Briskin v. Shopify, 101 24 F.4th 706 (9th Cir. 2024). 1 Washington so [Valve’s Washington clients] could not have breached any informal pre- 2 arbitration negotiation conditions.” Dkt. # 22 at 7 (emphasis in original). Zaiger highlights that 3 under the SSA, the parties must “make reasonable, good faith efforts to informally resolve any

4 dispute before initiating arbitration,” and, according to Zaiger, Valve ignores its own claims that 5 Zaiger’s clients breached the SSA’s “informal dispute resolution procedures” and the SSA’s 6 prohibition on bringing “class, collective or representative arbitration.” See Dkt. # 1-3 at 23; 7 Dkt. # 22 at 7. Zaiger argues that its “Washington clients have not brought or participated in any 8 arbitration, let alone a representative one” and therefore its Washington clients “have nothing to 9 do with the claims alleged.” Dkt. # 22 at 7–8. 10 The Court agrees with Zaiger. 11 In order for a court to exercise specific jurisdiction over a claim, there must be an “affiliation between the forum and the underlying controversy, principally, [an] 12 activity or an occurrence that takes place in the forum State.” Goodyear, 564 U.S., at 919 [] (internal quotation marks and brackets in original omitted). When there 13 is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State. 14 Bristol-Myers, 582 U.S. at 264. 15 Valve’s claims center on Zaiger’s alleged interference with the business relationships 16 Valve has with its Steam users and Zaiger’s alleged abuse of process related to the firm’s 17 arbitration claims against Valve. Dkt. # 1-3 at 13 ¶¶ 76–82. Valve claims that Zaiger 18 “intentionally induced and/or caused Steam users to breach their respective [SSAs]” by violating 19 the SSA’s “dispute resolution clause requiring a good-faith attempt at informal dispute resolution 20 and individualized arbitration.” Id. at 13 ¶¶ 78, 80. Yet the parties do not dispute that no Zaiger 21 clients in Washington have brought arbitration claims against Valve. Although Valve asserts 22 that it has “plausibly alleged [that] Zaiger’s Washington clients have breached and are actively 23 breaching the SSA by participating . . . in Zaiger’s collective scheme[,]” the Court disagrees. 24 1 Dkt. # 20 at 21. Zaiger’s decision to merely contract with Washington clients—without more— 2 is too attenuated to constitute a breach of the SSAs or an abuse of the arbitration process. 3 Bristol-Myers, 582 U.S. at 262 (“[S]pecific jurisdiction is confined to adjudication of issues

4 deriving from, or connected with, the very controversy that establishes jurisdiction.”) (citation 5 and internal quotations omitted). 6 These allegations are not enough to satisfy the second step of the Ninth Circuit specific 7 jurisdiction test, that Valves claims arise out of or relate to the defendant’s forum-related 8 activities. See Schwarzenegger, 374 F.3d at 802 (quoting Lake, 817 F.2d at 1421). There is no 9 sign that the contractual agreements Zaiger may have with its Washington clients relate to 10 Valve’s causes of action. For these reasons, Zaiger’s act of contracting with clients in 11 Washington and nationwide internet advertising campaign, do not give rise to specific 12 jurisdiction in Washington.

13 B. Individualized Targeting and Intent to Harm in Forum State 14 Valve contends that Zaiger targeted Valve in Washington when it sent Valve pre- 15 arbitration letters demanding that Valve enter into settlement discussions. Dkt. # 20 at 21–22 16 (citing Dkt. # 1-3 at 11 ¶ 63); see Dkt. # 1-3 at 55–57. According to Valve, the Ninth Circuit 17 recognizes that when a defendant sends a letter to a plaintiff demanding legal action from that 18 plaintiff, this is sufficient “individualized targeting” to support specific personal jurisdiction. 19 Dkt. # 20 at 22 (citing Bancroft Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082 (9th Cir. 20 2000); Metro. Life Ins. Co. v. Neaves, 912 F.2d 1062 (1990)). 21 Valve also says that Zaiger’s intent to cause harm in Washington alone suffices to convey 22 specific personal jurisdiction. Id. (citing Panavision, 141 F.3d 1316 (defendant’s registration of

23 plaintiff’s trademarks as domain names, plus his demand of $13,000 to release the domain names 24 to it, were acts aimed at plaintiff in California and caused it to suffer injury there)). Valve 1 contends that Zaiger’s “extortion scheme” aimed to target Valve in Washington and that Zaiger 2 knew that harm to Valve would occur in the forum state. Dkt. # 20 at 23. Valve concludes that 3 Zaiger’s intent to cause harm in Washington is enough to establish specific jurisdiction.

4 Zaiger replies that Valve’s reliance on Bancroft, 223 F.3d 1082, is misplaced as it is no 5 longer good law given Walden v. Fiore, 571 U.S. 277, 289–90 (2014). Dkt. # 22 at 8 (citing 6 Bluestar Genomics v. Song, No. 21-cv-04507-JST, 2023 WL 4843994, at *21 (N.D. Cal. May 7 25, 2023), motion to certify appeal denied, No. 21-CV-04507-JST, 2024 WL 54701 (N.D. Cal. 8 Jan. 4, 2024)). Zaiger contends that Valve’s approach, “impermissibly allows a plaintiff’s 9 contacts with the defendant and forum to drive the jurisdictional analysis.” Id. (citing Walden, 10 581 U.S. at 289). Zaiger says that the critical inquiry is instead “whether Zaiger intentionally 11 directed its conduct at the forum, not whether Zaiger directed its conduct at Valve (which 12 happens to reside in Washington).” Id. at 8–9.

13 Zaiger asserts that Valve’s reliance on any pre-arbitration letters Zaiger sent to Valve 14 “inviting Valve to negotiate the represented users’ grievances in good faith” is also misplaced. 15 Id. at 9. Zaiger contends that the letters do not “give rise to either cause of action in the 16 Complaint” because no breach of the SSA may occur without first filing an arbitration. Id. 17 Zaiger says that the letters were not “expressly aimed” at the forum state, but were instead aimed 18 at Valve. Id. (citing Esters v. Vanguard Clinical, Inc., 2023 WL 6930640, at *5 (S.D. Cal. Oct. 19 18, 2023); Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1144-45 (9th Cir. 2017)). 20 Walden v. Fiore reframed the way courts consider minimal contacts for the exercise of 21 specific personal jurisdiction. 571 U.S. 277 (2014). There, respondents were traveling from 22 Puerto Rico to their residences in California and Nevada; while in transit, Transportation

23 Security Administration agents searched respondents’ carry-on bags and found $97,000 in cash. 24 Id. at 279–80. After boarding their connecting flight in Atlanta, Walden, an airport law 1 enforcement officer, seized respondents’ cash and informed them that it would be returned if 2 respondents could prove a legitimate source of the earnings. Id. at 280. At some point after the 3 seizure, Walden helped draft a false probable cause affidavit for the forfeiture of the funds and

4 forwarded that affidavit to a United States Attorney’s Office in Georgia. Id. at 288. 5 Respondents later filed a Bivens suit against Walden in Nevada, see Bivens v. Six Unknown Fed. 6 Narcotics Agents, 403 U.S. 388 (1971), which the district court dismissed for lack of personal 7 jurisdiction. Walden, 571 U.S. at 281. The Ninth Circuit reversed, concluding that petitioner 8 “expressly aimed” his submission of the allegedly false affidavit at the forum state by submitting 9 the affidavit with knowledge that it would affect persons with a significant connection to 10 Nevada. Fiore v. Walden, 688 F.3d 558, 581 (9th Cir. 2012), rev’d, 571 U.S. 277 (2014) 11 (relying on Bancroft, 223 F.3d 1082 and Metropolitan Life, 912 F.2d 1062). 12 The Supreme Court reversed, holding that “the plaintiff cannot be the only link between

13 the defendant and the forum. Rather, it is the defendant’s conduct that must form the necessary 14 connection with the forum State that is the basis for its jurisdiction over him.” Walden, 571 U.S. 15 at 285 (citing Burger King, 471 U.S. at 478 (“If the question is whether an individual’s contract 16 with an out-of-state party alone can automatically establish sufficient minimum contacts in the 17 other party’s home forum, we believe the answer clearly is that it cannot”); Kulko v. Superior 18 Court of Cal., City and County of San Francisco, 436 U.S. 84 (1978) (declining to “find personal 19 jurisdiction in a State . . . merely because [the plaintiff in a child support action] was residing 20 there”)). The Court reasoned, 21 To be sure, a defendant’s contacts with the forum State may be intertwined with his transactions or interactions with the plaintiff or other parties. But a defendant’s 22 relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction. See [Rush v. Savchuk, 444 U.S. 320 (1980)] (“Naturally, the 23 parties’ relationships with each other may be significant in evaluating their ties to the forum. The requirements of International Shoe, however, must be met as to 24 each defendant over whom a state court exercises jurisdiction”). 1 Id. at 286 (emphasis added). 2 The Supreme Court determined that the Ninth Circuit had thereby erred, stating that its 3 approach

4 to the “minimum contacts” analysis impermissibly allows a plaintiff’s contacts with the defendant and forum to drive the jurisdictional analysis. Petitioner’s actions in 5 Georgia did not create sufficient contacts with Nevada simply because he allegedly directed his conduct at plaintiffs whom he knew had Nevada connections. Such 6 reasoning improperly attributes a plaintiff’s forum connections to the defendant and makes those connections “decisive” in the jurisdictional analysis. See Rush, 7 [444 U.S. at 332]. It also obscures the reality that none of petitioner’s challenged conduct had anything to do with Nevada itself. 8 Id. at 289 (emphasis added). “When viewed through the proper lens—whether the defendant’s 9 actions connect him to the forum—petitioner formed no jurisdictionally relevant contacts with 10 Nevada.” Id. Because “[p]etitioner’s relevant conduct occurred entirely in Georgia, . . . the mere 11 fact that his conduct affected plaintiffs with connections to the forum State does not suffice to 12 authorize jurisdiction.” Id. at 291. 13 After Walden, the Ninth Circuit has adapted its personal jurisdiction jurisprudence, 14 holding “that while a theory of individualized targeting may remain relevant to the minimum 15 contacts inquiry, it will not, on its own, support the exercise of specific jurisdiction, absent 16 compliance with what Walden requires.” Axiom Foods, 874 F.3d at 1070 (citing Picot, 780 F.3d 17 at 1214–15 (applying Walden to express aiming prong of purposeful direction test)). 18 Under the first prong of the specific personal jurisdiction test, plaintiffs must show that 19 defendants purposefully directed their activities to the forum state. Typically, a “purposeful 20 direction” test is applied when the claims arise from alleged tortious conduct. Morrill, 873 F.3d 21 at 1142. “Purposeful direction ‘requires that the defendant ... have (1) committed an intentional 22 act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to 23 be suffered in the forum state.’” Id. (emphasis added). 24 1 In Morrill v. Scott Financial Corporation, Morrill was an attorney who resided in 2 Arizona and worked at a law firm in Arizona. 873 F.3d at 1139. He represented certain Nevada 3 residents and Nevada corporations linked with a failed condominium construction project in Las

4 Vegas, Nevada. Id. Morrill alleged that during this Nevada litigation, five defendants based in 5 Nevada engaged in a campaign to harm him and his firm in retaliation for his role as counsel in 6 the Nevada litigation. Id. Morrill brought claims in the District of Arizona for abuse of process 7 and wrongful institution of civil proceedings. Id. 8 The district court dismissed the action, concluding there was no personal jurisdiction over 9 any defendant. The Ninth Circuit then considered whether defendants’ actions were 10 purposefully directed at Arizona. On appeal, Morrill claimed that defendants “engaged in 11 conduct that was sufficient to show that they ‘committed an intentional act’ expressly aimed at 12 the forum state of Arizona.” Id. at 1141. That conduct included: filing actions, motions, and

13 oppositions, in Arizona, as well as “making phone calls, sending letters, mailing pleadings and 14 discovery documents, and sending emails to [p]laintiffs in Arizona.” Id. at 1142–43. After 15 considering the changes ushered in by Walden, the Ninth Circuit determined that 16 The facts of this case may not be as clear-cut as those in Walden: The Walden defendant had “never traveled to ... or sent anything or anyone to” the forum state. 17 Here, Defendants did both. However, they did so in the course of complying with procedural requirements for advancing litigation being prosecuted entirely in 18 another state, not as a separate action in which substantive claims were presented. Therefore, as in Walden, the forum state was only implicated by the happenstance 19 of Plaintiffs’ residence; if other states had procedural rules similar to those that were in place in Arizona at the time that the [Nevada litigation] was pending and 20 Plaintiffs resided in one of them, they would have “experienced this same [alleged tortious conduct] in California, or Mississippi, or wherever else they might have 21 [resided].”

22 Morrill, 873 F.3d at 1145–46 (citation omitted). 23 The Ninth Circuit concluded that its analysis does not conflict with the “well-established 24 rule” that when a “defendant engages in tortious activity toward a plaintiff in the state where that 1 plaintiff resides, the defendant is subject to personal jurisdiction there.” Id. at 1148 (citing 2 Brainerd v. Governors of the Univ. of Alberta, 873 F.2d 1257, 1258–60 (9th Cir. 1989)). 3 Defendants’ conduct in Arizona occurred as part of the required process for pursuing discovery and serving Plaintiffs in connection with the litigation in 4 Nevada. The outcome would be different if, as suggested by the hypothetical presented by the dissent, an attorney had traveled to Arizona, not to appear at a 5 hearing on a motion to quash a subpoena, but to throw a rock through the window of the Arizona residence of opposing counsel in litigation that was pending in 6 Nevada. The reason for such inappropriate conduct could have been the animosity between counsel that resulted from their interaction during the litigation in Nevada. 7 However, the throwing of the rock would not have been required, or in any manner justified, by the litigation process there. 8 Id. 9 The Ninth Circuit then held that Morrill failed to make a prima-facie showing that 10 defendants’ alleged actions were directed at the forum state, and not just directed at individuals 11 who resided there. Id. at 1148–49; see also Freestream Aircraft (Bermuda) Ltd. v. Aero L. Grp., 12 905 F.3d 597, 607 (9th Cir. 2018) (“Because the Nevada litigation [in Morrill] required the 13 defendants to conduct activity in Arizona (where the plaintiffs happened to reside), and the 14 defendants thus were not in the forum state of their own volition, they had not availed 15 themselves of the forum under the minimum contacts test.”) (emphasis in original). 16 Here, Valve contends that demand letters sent to Valve in Washington suffice to establish 17 that Zaiger purposefully directed its activities to Washington. But the SSA requires any “party 18 who intends to seek arbitration must first send the other a written notice that describes the nature 19 and basis of the claim or dispute and sets forth the relief sought.” Dkt. # 1-3 at 23. Further, the 20 letter provided to the Court states that it is a written notice of the initiation of the 30-day good 21 faith negotiation period set forth in the SSA. Id. at 55. Under the SSA, if this dispute is not 22 resolved within 30 days, the parties may commence arbitration. Id. at 23. 23 24 1 As in Morrill, Zaiger’s letters complied with the required process for the commencement 2 of a dispute resolution process between Valve and Steam Users. Of course, as discussed in 3 Morrill, the Court’s consideration would be different if Zaiger sent a letter to Washington, not to

4 comply with the terms of the SSA, but to engage in some other type of tortious activity 5 disconnected from its representation of Steam users. As in Walden and Morrill, Washington was 6 only implicated by the happenstance of Valve’s place of business; if Valve had been located in 7 another state, it would have “experienced this same [alleged tortious conduct] in California, or 8 Mississippi, or wherever else they might have” their headquarters. Morrill, 873 F.3d at 1145–46. 9 Because Zaiger’s conduct in Washington occurred as part of the required process for pursuing 10 arbitration for its clients, Valve has failed to show that Zaiger’s acts were directed at 11 Washington, rather than acts directed at an entity under the SAA. See Bluestar Genomics, 2023 12 WL 4843994, at *21 (“Bancroft is no longer good law. It has been overturned by the Supreme

13 Court’s holding in Walden that ‘mere injury to a forum resident is not a sufficient connection to 14 the forum’ and that ‘the proper question is not where the plaintiff experienced a particular injury 15 or effect but whether the defendant’s conduct connects him to the forum in a meaningful way.’”). 16 Further, Zaiger’s alleged intent to cause harm in Washington cannot justify personal 17 jurisdiction. Valve’s reliance on a Panavision, 141 F.3d 1316—a case that precedes Walden by 18 more than 15 years—is not compelling. In Panavision, the Ninth Circuit applied the “effects 19 test” under Calder v. Jones, 465 U.S. 783 (1984), and held that it could properly exercise 20 personal jurisdiction because the defendant’s actions had been intentionally executed to extort 21 money and that the defendant knew his conduct “had the effect of injuring Panavision in 22 California where Panavision has its principal place of business[.]” Panavision, 141 F.3d at

23 1321–22. The law has evolved since Panavision was issued in 1998, with Walden narrowing the 24 effect of the Calder “effects” test on the personal jurisdiction analysis. See Walden, 571 U.S. at 1 290 (“Unlike the broad publication of the forum-focused story in Calder, the effects of 2 petitioner’s conduct on respondents are not connected to the forum State in a way that makes 3 those effects a proper basis for jurisdiction.”).

4 As a result, whether Valve intended to cause harm in Washington is immaterial, “the 5 proper focus of the minimum contacts inquiry in intentional-tort cases is the relationship among 6 the defendant, the forum, and the litigation.” Id. at 291 (citations and internal quotations 7 omitted); cf. Axiom Foods, 874 F.3d at 1070 (“The foreseeability of injury in a forum ‘is not a 8 “sufficient benchmark” for exercising personal jurisdiction.’”) (quoting Burger King, 471 U.S. at 9 474). The Court must therefore look to Zaiger’s contacts with the forum, not “the defendant’s 10 knowledge of a plaintiff’s connections to a forum.” Axiom Foods, 874 F.3d at 1070. And, as 11 discussed above, because Zaiger lacks meaningful connections with Washington to confer 12 personal jurisdiction, Valve’s use of Panavision is unavailing.

13 Given the foregoing, the Court concludes that Zaiger does not have any jurisdictionally 14 relevant contacts with Washington. Valve has therefore failed to satisfy the first two prongs of 15 the specific jurisdiction test, see Schwarzenegger, 374 F.3d at 802, and the Court need not 16 address whether Zaiger has presented a compelling case that the exercise of jurisdiction would 17 not “comport with fair play and substantial justice[.]” Id. 18 IV CONCLUSION 19 For these reasons, the Court GRANTS the motion, see Dkt. # 9, and Valve’s claims are 20 DISMISSED without prejudice.3 21

22 3 Zaiger also seeks dismissal on the merits under Rule 12(b)(6). See Dkt. # 9 at 17–27. Because the Court lacks personal jurisdiction over Zaiger, the Court does not address these arguments. Cf. 23 Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 575 (1999) (“Personal jurisdiction . . . is an essential element of district court jurisdiction, without which the court is powerless to proceed to an adjudication.”) 24 (citing Emps. Reinsurance Corp. v. Bryant, 299 U.S. 374 (1937)). l Dated this 20th day of August, 2024. 2 Jock. 4. Chuan John H. Chun 3 United States District Judge 4 5 6 7 8 9 10 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 ORDER GRANTING MOTION TO DISMISS (DKT. # 9) - 16