Eran Salu v. Generational Equity of California LLC et al
Filing
51
MINUTES OF Motion Hearing held before Judge Christina A. Snyder: The Court DENIES Defendant GW Equity Group's Motion to Dismiss for Lack of Personal Jurisdiction 43 . Court Reporter: Laura Elias. (gk)
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SA CV 12 -1436 CAS (CWx)
Title
ERAN SALU V. GENERATIONAL EQUITY OF CALIFORNIA, LLC
ET AL.
Present: The Honorable
Date
August 26, 2013
CHRISTINA A. SNYDER
Catherine Jeang
Deputy Clerk
Laura Elias
Court Reporter / Recorder
N/A
Tape No.
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants
Brandon Baum
Victor Jih
Jason Tokoro
Proceedings:
I.
MOTION TO DISMISS FOR LACK OF PERSONAL
JURISDICTION (Docket #43, filed July 23, 2013)
INTRODUCTION
On August 31, 2012, plaintiff Eran Salu filed suit against defendant Generational
Equity of California, LLC (“Generational Equity of California”). Dkt 1. The operative
Second Amended Complaint (“SAC”) joined additional defendants Generational Equity,
LLC (“Generational Equity”), GW Equity, LLC, and GW Equity Group, Inc (“GW
Equity Group”). Dkt. 31. Plaintiff asserts claims for (1) copyright infringment under 17
U.S.C. § 501; (2) falsifying copyright management information under 17 U.S.C. §
1202(a); and (3) removal/alteration of copyright management information under 17
U.S.C. § 1202(b).
On July 23, 2013, defendant GW Equity Group filed a motion to dismiss for lack
of personal jurisdiction. Plaintiff filed an opposition on August 5, 2013, and GW Equity
Group filed a reply on August 12, 2013. Plaintiff was granted leave to submit a surreply,
which he filed on August 19, 2013. On August 26, 2013, the Court held a hearing. After
considering the parties’ arguments, the Court finds and concludes as follows.
II.
BACKGROUND
Plaintiff Eran Salu is the owner and operator of the boutique investment bank SG
Capital. SAC ¶ 11. Part of SG Capital’s business involves providing business owners
with information about how to sell their businesses. Much of this information was
CV-11-5465 (07/13)
CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SA CV 12 -1436 CAS (CWx)
Date
August 26, 2013
Title
ERAN SALU V. GENERATIONAL EQUITY OF CALIFORNIA, LLC
ET AL.
published in the form of articles posted on the SG Capital website. SAC ¶ 14; Baum
Decl. Ex. 1. Plaintiff claims that he owns the copyright for this content. SAC ¶ 15.
Defendants are a set of interrelated corporations and limited liability companies.
Defendant GW Equity Group—the defendant at issue in this motion to dismiss—is the
parent and sole member of Generational Equity LLC, which is in turn the sole member of
Generational Equity of California, LLC. Dkt. 16 (Generational Equity of California’s
Notice of Interested Parties). GW Equity Group is a Texas corporation, and claims to be
a pure holding company that engages in no business except through its subsidiaries.
Binkley Decl. ¶¶ 2–8.
Plaintiff alleges that defendants copied content from his SG Capital website to
create their own investment websites. SAC ¶¶ 15–19. Defendants’ websites, like the SG
Capital website, target small business owners looking to sell their businesses. Pl’s. Opp.
3-5. Plaintiff further alleges that defendants use this copied content to solicit customers
for their mergers and acquisition business, which directly competes with SG Capital.
SAC ¶¶ 22–23.
III.
LEGAL STANDARD
California’s long-arm jurisdictional statute is coextensive with federal due process
requirements, so that the jurisdictional analysis under state law and federal due process
are the same. Cal. Civ. Proc. Code § 410.10; Roth v. Garcia Marquez, 942 F.2d 617, 620
(9th Cir. 1991). In order for a court to exercise personal jurisdiction over a nonresident
defendant, that defendant must have “minimum contacts” with the forum state so that the
exercise of jurisdiction “does not offend traditional notions of fair play and substantial
justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Depending on the
nature of the contacts between the defendant and the forum state, personal jurisdiction is
characterized as either general or specific. A court has general jurisdiction over a
nonresident defendant when that defendant’s activities within the forum state are
“substantial” or “continuous and systematic,” even if the cause of action is “unrelated to
the defendant’s forum activities.” Perkins v. Benguet Consol. Mining Co., 342 U.S. 437,
446-47 (1952); Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1287 (9th Cir.
1977).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SA CV 12 -1436 CAS (CWx)
Date
August 26, 2013
Title
ERAN SALU V. GENERATIONAL EQUITY OF CALIFORNIA, LLC
ET AL.
The standard for establishing general jurisdiction is “fairly high” and requires that
the defendant’s contacts be substantial enough to approximate physical presence.
Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).
“Factors to be taken into consideration are whether the defendant makes sales, solicits or
engages in business in the state, serves the state’s markets, designates an agent for service
of process, holds a license, or is incorporated there.” Id. (finding no general jurisdiction
when the corporation was not registered or licensed to do business in California, paid no
taxes, maintained no bank accounts, and targeted no advertising toward California).
Occasional sales to residents of the forum state are insufficient to create general
jurisdiction. See Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986).
A court may assert specific jurisdiction over a claim for relief that arises out of a
defendant’s forum-related activities. Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir.
1993). The test for specific personal jurisdiction has three parts:
(1)
(2)
(3)
The defendant must perform an act or consummate a transaction
within the forum, purposefully availing himself of the privilege of
conducting activities in the forum and invoking the benefits and
protections of its laws;
The claim must arise out of or result from the defendant’s forum-related
activities; and
Exercise of jurisdiction must be reasonable.
Id.; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985). The
plaintiff bears the burden of satisfying the first two prongs, and if either of these prongs is
not satisfied, personal jurisdiction is not established. Schwarzenegger v. Fred Martin
Motor Co., 374 F.3d 797, 802 (9th Cir. 2004).
If the plaintiff establishes the first two prongs regarding purposeful availment and
the defendant’s forum-related activities, then it is the defendant’s burden to “present a
compelling case” that the third prong, reasonableness, has not been satisfied.
Schwarzenegger, 374 F.3d at 802 (quoting Burger King, 471 U.S. at 477). The third
prong requires the Court to balance seven factors: (1) the extent of the defendant’s
purposeful availment, (2) the burden on the defendant, (3) conflicts of law between the
forum state and the defendant’s state, (4) the forum’s interest in adjudicating the dispute,
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SA CV 12 -1436 CAS (CWx)
Date
August 26, 2013
Title
ERAN SALU V. GENERATIONAL EQUITY OF CALIFORNIA, LLC
ET AL.
(5) judicial efficiency, (6) the plaintiff’s interest in convenient and effective relief, and
(7) the existence of an alternative forum. Roth v. Garcia Marquez, 942 F.2d 617, 623
(9th Cir. 1991).
Where, as here, a court decides a motion to dismiss for lack of personal jurisdiction
without an evidentiary hearing, the plaintiff need only make a prima facie showing of
jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage, 65 F.3d 1495,
1498 (9th Cir. 1995); Doe v. Unocal Corp., 27 F. Supp. 2d 1174, 1181 (C.D. Cal. 1998),
aff’d, 248 F.3d 915 (9th Cir. 2001). Plaintiff’s version of the facts is taken as true for
purposes of the motion if not directly controverted, and conflicts between the parties’
affidavits must be resolved in plaintiff’s favor for purposes of deciding whether a prima
facie case for personal jurisdiction exists. AT & T v. Compagnie Bruxelles Lambert, 94
F.3d 586, 588 (9th Cir. 1996); Unocal, 27 F. Supp. 2d at 1181.
IV.
ANALYSIS
GW Equity Group argues that it is a Texas corporation, and is therefore not subject
to personal jurisdiction in California because it lacks “minimum contacts” with the state.
Int’l Shoe Co. v. Washington, 326 U.S. at 316. GW Equity Group avers that it is solely a
holding company and that its only relationship to this case is through its subsidiaries and
co-defendants Generational Equity and Generational Equity of California. GW Equity
Group claims that it has no employees, conducts no independent business, and has no
physical presence in California. Decl. Ryan Binkley ¶¶ 2-8. As a purely passive holding
company, then, it could not have done anything that would create minimum contacts with
California.
In its opposition, plaintiff does not contend that GW Equity Group is subject to
general jurisdiction in California. Instead, plaintiff advances two theories for why GW
Equity Group should be subject to specific jurisdiction in California. First, plaintiff
contests the factual basis of GW Equity Group’s argument against specific jurisdiction.
Plaintiff claim that, rather than being a passive holding company, GW Equity Group in
fact operated the allegedly infringing websites at issue in this case. Operating the
websites, in turn, subjects GW Equity Group to specific jurisdiction in California. In the
alternative, plaintiff argues that GW Equity Group is subject to personal jurisdiction in
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SA CV 12 -1436 CAS (CWx)
Date
August 26, 2013
Title
ERAN SALU V. GENERATIONAL EQUITY OF CALIFORNIA, LLC
ET AL.
California because of the acts of its subsidiaries Generational Equity and Generational
Equity of California.1
The Court finds plaintiff’s first theory persuasive. As discussed above, specific
jurisdiction requires that (1) GW Equity Group purposefully directed its activities to
California, (2) the claims in this case arise out of GW Equity Group’s California-related
activities, and (3) the exercise of personal jurisdiction “comport with fair play and
substantial justice, i.e., it must be reasonable.” CollegeSource, Inc. v. AcademyOne, Inc.,
653 F.3d 1066, 1076 (9th Cir. 2011) (quoting Schwarzenegger, 374 F.3d at 802).
On the first prong, plaintiff bears the burden of showing that GW Equity Group
purposefully directed its activities at California. Schwarzenegger, 374 F.3d at 802. Here,
plaintiff, who is a citizen of California, alleges that GW Equity Group intentionally
copied substantial quantities of copyrighted material from the SG Capital website. GW
Equity Group then infringed his copyright by publishing this material on its own
websites. In support of these allegations, plaintiff has attached a screenshot depicting one
of the allegedly infringing websites. Baum. Decl. Ex. 4. This screenshot indicates that
the URL of this website was GWEquity.com. At the bottom of the screenshot, the
website bears the copyright caption: “Copyright © - 2005 GW Equity - All Rights
Reserved.” Plaintiff also proffers an “Assumed Name Certificate” which was filed with
the Texas Secretary of State on July 25, 2005. Id. Ex. 5. This certificate states that GW
Equity Group, Inc. adopted “GW Equity” as an assumed name under which to do
business.
GW Equity Group responds that this evidence does not prove that it owned or
operated the allegedly infringing website. In particular, GW Equity Group avers that it is
not the only “GW Equity” involved in this case: until 2009, GW Equity Group’s codefendant Generational Equity also did business under the name “GW Equity.” GW
Equity Group maintains that it was instead Generational Equity that operated
GWEquity.com. Likewise, defendant contends that Generational Equity, rather than GW
Equity Group, is the “GW Equity” identified in the website’s copyright caption. Because
1
In light of the Court’s conclusions herein, it declines to reach plaintiff’s alternative
argument regarding GW Equity Group’s subsidiaries.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SA CV 12 -1436 CAS (CWx)
Date
August 26, 2013
Title
ERAN SALU V. GENERATIONAL EQUITY OF CALIFORNIA, LLC
ET AL.
plaintiff has not introduced any evidence specifically identifying GW Equity Group as
the infringer, defendant contends that plaintiff has not met its burden of showing that GW
Equity Group purposefully directed activities at California.
This argument misconstrues plaintiff’s burden at this stage. To establish specific
jurisdiction, plaintiff need not prove the merits of its claim against GW Equity Group.
Instead, plaintiff “need make only a prima facie showing of jurisdictional facts.” Ballard,
65 F.3d at 1498. Here, plaintiff has done so. The allegedly infringing website’s URL
and copyright caption, taken together with the assumed name certificate stating the GW
Equity Group did business under the name GW Equity, are sufficent to support an
inference that GW Equity Group operated GWEquity.com. Furthermore, the Court must
take these facts as true unless directly controverted. Unocal, 27 F. Supp. 2d at 1181.
Here, GW Equity Group has not directly controverted plaintiff’s allegations. At best, its
argument that there were multiple “GW Equity” entities provides an alternative
explanation for plaintiff’s facts. But while this alternative explanation could prove to be
a strong defense on the merits of plaintiff’s claims, it does not defeat personal
jurisdiction.
Taking plaintiff’s allegations as true, then, plaintiff has met his burden of showing
that GW Equity Group purposefully directed its activities at California. Copyright
infringement that directly targets the website of a California citizen constitutes purposeful
direction. See, e.g., Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124 (9th
Cir. 2010). This is especially true where, as here, plaintiff alleges that defendants are
exploiting their infringing copies of plaintiff’s works to compete with plaintiff’s business.
See id. at 1130; Salu Decl ¶ 12.
Turning to the second prong of the specific-jurisdiction analysis, the Court finds
that plaintiff has also satisfied his burden of showing that the claims in this case arise out
of GW Equity Group’s California-related activities. Plaintiff claims that GW Equity
Group infringed his copyrights, and, as discussed above, this alleged infringement is what
subjects GW Equity Group to personal jurisdiction in California.
Because plaintiff has met his burden on the first and second prongs, the burden on
the third prong shifts to GW Equity Group to show why subjecting it to personal
jurisdiction in California would be unreasonable. Schwarzenegger, 374 F.3d at 802. In
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.
SA CV 12 -1436 CAS (CWx)
Date
August 26, 2013
Title
ERAN SALU V. GENERATIONAL EQUITY OF CALIFORNIA, LLC
ET AL.
considering whether GW Equity Group has met its burden, the court considers: (1) the
extent of GW Equity Group’s purposeful availment in California, (2) the burden on the
GW Equity Group, (3) conflicts of law between California and Texas, (4) California’s
interest in adjudicating the dispute, (5) judicial efficiency, (6) the plaintiff’s interest in
convenient and effective relief, and (7) the existence of an alternative forum. Roth, 942
F.2d at 623. GW Equity Group argues, among other things, that jurisdiction would be
unreasonable because California has no particular interest in adjudicating this dispute, it
would force a Texas corporation to litigate in California, and Texas offers an alternative
forum.
Looking to the reasonableness factors enumerated in Roth, the Court finds that
requiring GW Equity to litigate in California would not impose an unreasonable burden.
GW Equity shares common counsel and common personnel with its Californian codefendants Generational Equity and Generational Equity of California. Baum Decl. Exs.
11, 12. Furthermore, both efficient judicial resolution of this dispute and plaintiff’s
interest in convenient and effective relief favor keeping all of the related “Equity” codefendants collected in a single action. Accordingly, GW Equity Group has not
presented a “compelling case” that exercising personal jurisdiction over it in California
would be unreasonable. Burger King, 471 U.S. at 477.
V.
CONCLUSION
In accordance with the foregoing, the Court DENIES defendant GW Equity
Group’s motion to dismiss for lack of personal jurisdiction.
IT IS SO ORDERED.
00
Initials of Preparer
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:
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CMJ
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