Language Line Services, Inc. v. Language Services Associates, LLC et al, No. 5:2010cv02605 - Document 106 (N.D. Cal. 2010)
Court Description: ORDER DENYING DEFENDANTS CURTIN AND SCHWARTZS MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION re 56 MOTION to Dismiss NOTICE AND MOTION TO DISMISS PLAINTIFF'S COMPLAINT filed by Patrick Curtin, William Schwartz. Signed by Judge James Ware on December 9, 2010. (jwlc1, COURT STAFF) (Filed on 12/9/2010)
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Language Line Services, Inc. v. Language Services Associates, LLC et al Doc. 106 1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION NO. C 10-02605 JW Language Line Services, Inc., 11 ORDER DENYING DEFENDANTS CURTIN AND SCHWARTZ’S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION Plaintiff, v. For the Northern District of California United States District Court 10 12 Language Services Assoc., LLC, et al., 13 Defendants. 14 / 15 I. INTRODUCTION 16 Language Line Services, Inc. (“Plaintiff”) brings this action against Language Services 17 Associates, LLC (“LSA”), Patrick Curtin and William Schwartz (collectively, “Defendants”), 18 alleging, inter alia, misappropriation of trade secrets and conversion. Plaintiff alleges that 19 Defendants stole Plaintiff’s confidential customer list and accompanying pricing information and 20 distributed this information to Defendant LSA’s sales people for use in soliciting more customers. 21 Presently before the Court is Defendants Curtin and Schwartz’s Motion to Dismiss Plaintiff’s 22 Complaint.1 The Court finds it appropriate to take the Motion under submission without oral 23 argument. See Civ. L.R. 7-1(b). Based on the papers submitted to date, the Court DENIES 24 Defendants Curtin and Schwartz’s Motion to Dismiss for lack of personal jurisdiction. 25 26 27 28 1 (hereafter, “Motion to Dismiss,” Docket Item No. 56.) Dockets.Justia.com 1 2 3 II. BACKGROUND A. Factual Allegations In an Amended Complaint filed on November 22, 2010,2 Plaintiff alleges as follows: Plaintiff is a Delaware corporation with its principal place of business in Monterey, 4 5 California. (FAC ¶ 2.) Defendant LSA is a Pennsylvania corporation with its principal place 6 of business in Pennsylvania. (Id. ¶ 5.) Defendant Patrick Curtin is an individual residing in 7 New York, and is an employee of Defendant LSA. (Id. ¶ 3.) Defendant William Schwartz is 8 an individual residing in Williamsville, New York, and is also an employee of Defendant 9 LSA. (Id. ¶ 4.) Plaintiff is the largest provider of language interpretation and translation services in 11 For the Northern District of California United States District Court 10 the United States. (FAC ¶ 10.) Defendant Curtin worked for Plaintiff from August 2007 to 12 August 2008. (Id. ¶¶ 14-18.) Defendant Schwartz worked for Plaintiff from May 2008 to 13 February 2010. (Id. ¶¶ 22-27.) Upon commencing their employment, Defendants Curtin and 14 Schwartz both signed confidentiality agreements. (See id. ¶¶ 14-16, 22-23.) After leaving 15 their employment with Plaintiff, Defendants Curtin and Schwartz became employed with 16 Defendant LSA. (See id. ¶¶ 20, 31.) 17 Defendant Curtin and others at Defendant LSA conspired to recruit Defendant 18 Schwartz, and hired him for the purpose of his bringing with him Plaintiff’s trade secrets. 19 (FAC ¶ 32.) Defendant Schwartz secretly took confidential information regarding hundreds 20 of Plaintiff’s customers, including Plaintiff’s customer list and accompanying pricing 21 information; actual and projected annual volumes of interpretation needs; and actual and 22 projected revenues. (Id. ¶ 33.) Defendant Schwartz gave this information to Defendants 23 Curtin and LSA. (Id. ¶ 34.) Defendant Curtin distributed Plaintiff’s confidential information 24 and trade secrets to Defendant LSA’s sales people for use in soliciting Plaintiff’s customers. 25 (Id. ¶ 36.) 26 27 28 2 (hereafter, “FAC,” Docket Item No. 89.) 2 1 On the basis of the allegations outlined above, Plaintiff alleges six causes of action: (1) 2 Misappropriation of Trade Secrets under the California Uniform Trade Secrets Act (“CUTSA”), Cal. 3 Civ. Code §§ 3426-3426.11; (2) Conversion; (3) Breach of Duty of Confidence; (4) Breach of 4 Fiduciary Duty; (5) Breach of Contract; and (6) Use of False and Misleading Statements in 5 Commerce, 15 U.S.C. § 1125(a). 6 B. Procedural History Restraining Order based on its misappropriation of trade secret claim. (See Docket Item Nos. 1, 3.) 9 On June 14, 2010, the Court denied the ex parte application, but ordered the parties to show cause 10 why a Preliminary Injunction should not issue. (See Docket Item No. 20.) On July 13, 2010, the 11 For the Northern District of California On June 14, 2010, Plaintiff filed its Complaint and applied ex parte for a Temporary 8 United States District Court 7 Court granted Plaintiff’s Motion for a Preliminary Injunction. (See Docket Item No. 50.) 12 On August 6, 2010, Defendants Curtin and Schwartz filed a Motion to Dismiss under 13 Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. (See Docket Item No. 56.) On 14 November 19, 2010, by Stipulation and the filing of an Amended Complaint, the portion of 15 Defendants Curtin and Schwartz’s Motion filed under Rule 12(b)(6) was taken off calendar, leaving 16 only the 12(b)(2) portion of the Motion. (See Docket Item No. 87-88.) On November 22, 2010, 17 Plaintiff filed its First Amended Complaint. (See Docket Item No. 89.) 18 19 20 Presently before the Court is Defendants Curtin and Schwartz’s Motion to Dismiss. III. STANDARDS Motions to dismiss for lack of personal jurisdiction are brought pursuant to Rule 12(b)(2) of 21 the Federal Rules of Civil Procedure. Although the defendant ordinarily files such a motion, it is the 22 plaintiff that bears the burden of proof as to the necessary jurisdictional facts. Flynt Distrib. Co. v. 23 Harvey, 734 F.2d 1389, 1392 (9th Cir. 1984). However, the plaintiff need only make a prima facie 24 showing that personal jurisdiction exists if the defendant files its motion to dismiss as an initial 25 response. Data Disc, Inc. v. Systems Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). 26 To make a prima facie showing, the plaintiff need only to demonstrate facts that if true would 27 28 3 1 support jurisdiction over the defendant. Data Disc, 557 F.2d at 1285. The plaintiff must make a 2 prima facie showing as to each defendant. Rush v. Savchuk, 444 U.S. 320, 332 (1980). 3 A federal district court may exercise personal jurisdiction to the same extent as a state court 4 of the state in which the district court sits. Omni Capital Int’l Ltd. v. Rudolf Wolff & Co., Ltd., 484 5 U.S. 97, 108 (1987). Since California courts extend jurisdiction to the very limits of the federal 6 Constitution, federal courts in California need only determine whether the exercise of jurisdiction 7 would comport with due process. See Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 8 784 F.2d 1392, 1396 (9th Cir. 1986) 9 Constitutional due process concerns are satisfied when a nonresident defendant has “certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional 11 For the Northern District of California United States District Court 10 notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 12 316 (1945). Later cases have clarified that the minimum contacts must be “purposeful acts.” Burger 13 King v. Rudzewicz, 471 U.S. 462, 474 (1985). A long-arm statute may, consistent with 14 constitutional due process, allow assertion of personal jurisdiction over owners and officers of a 15 corporation if a court finds those officers to have sufficient minimum contacts with the forum state. 16 See Davis v. Metro Productions, Inc., 885 F.2d 515, 522 (9th Cir. 1989). 17 When a defendant’s contacts are not sufficiently systematic and continuous for a court to 18 assert general jurisdiction, the Ninth Circuit uses the following test to evaluate a defendant’s 19 contacts for purposes of determining whether specific jurisdiction applies: 20 21 22 (1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws. (2) The claim must be one which arises out of or results from the defendant’s forum-related activities. 23 (3) Exercise of jurisdiction must be reasonable. 24 Data Disc, 557 F.2d at 1287. “The plaintiff bears the burden of satisfying the first two prongs of the 25 test.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). “For purposes 26 of plaintiff’s prima facie jurisdictional showing, ‘uncontroverted allegations in . . . [plaintiff’s] 27 28 4 1 complaint must be taken as true, and conflicts between the facts contained in the parties’ affidavits 2 must be resolved in . . . [the plaintiff’s] favor.’” Brayton Purcell LLP v. Recordon & Recordon, 606 3 F.3d 1124, 1129 (9th Cir. 2010) (quoting Rio Props. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th 4 Cir. 2002)). “If the plaintiff succeeds in satisfying both of the first two prongs, the burden then 5 shifts to the defendant to ‘present a compelling case’ that the exercise of jurisdiction would not be 6 reasonable.” Schwarzenegger, 374 F.3d at 802. 7 IV. DISCUSSION (1) Defendants Curtin and Schwartz did not purposely direct their conduct towards this jurisdiction; 10 (2) Plaintiff’s claims do not arise out of their forum-related activities; and (3) the Court’s exercise of 11 For the Northern District of California Defendants Curtin and Schwartz move to dismiss Plaintiff’s Complaint on the grounds that: 9 United States District Court 8 jurisdiction would be unreasonable. (Motion to Dismiss at 1.) The Court considers each ground in 12 turn. 13 A. 14 Purposeful Availment Defendants Curtin and Schwartz contend that this Court does not have personal jurisdiction 15 over them because they did not purposefully avail or direct their conduct towards this jurisdiction. 16 (Motion to Dismiss at 9-11.) 17 Under the first prong of the three-part specific jurisdiction test, the Ninth Circuit most 18 frequently employs a “purposeful availment” analysis in contract actions and a “purposeful 19 direction” or “effects” test analysis in tort actions. Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 20 F.3d 1199, 1206 (9th Cir. 2006). Under the “effects” test, “the defendant allegedly [must] have (1) 21 committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the 22 defendant knows is likely to be suffered in the forum state.” Id. 23 Here, although Plaintiff has brought both contract and tort claims against Defendants Curtin 24 and Schwartz, the Court will apply the “effects” test because the focus of Plaintiff’s First Amended 25 Complaint is on Defendants’ alleged trade secret misappropriation. See, e.g., Menken v. Emm, 503 26 F.3d 1050, 1059 (9th Cir. 2007). First, Defendants Curtin and Schwartz committed intentional acts, 27 28 5 1 as they admit to taking and using Plaintiff’s trade secret list.3 Second, Defendants Curtin and 2 Schwartz’s conduct was expressly aimed at this district, as Plaintiff maintains its principal place of 3 business in Monterey, California. (FAC ¶ 2.) Moreover, many of Plaintiff’s customers listed in the 4 misappropriated trade secret report are located in this district and in California.4 Third, Plaintiff 5 suffered harm in the forum state, as Defendants allegedly used Plaintiff’s trade secrets in an attempt 6 to steal California clients from a California corporation.5 (Gilhooly Decl. ¶ 2.) Finally, Defendants 7 Curtin and Schwartz were on notice that harm would be felt in this forum, as Defendants were 8 formerly employed by Plaintiff and knew Plaintiff was headquartered here.6 9 Defendants Curtin and Schwartz’s reliance on Schwarzenegger7 is misplaced. (Motion to Dismiss at 10.) In Schwarzenegger, the Ninth Circuit held that the defendant’s use of Arnold 11 For the Northern District of California United States District Court 10 Schwarzenegger’s image in a local Ohio newspaper was insufficient to confer jurisdiction because 12 the advertisement “was expressly aimed at Ohio rather than California.” 374 F.3d at 807. The court 13 found that there was no “express aiming” at California because “[t]he Advertisement was never 14 circulated in California, and . . . [the defendant] had no reason to believe that any Californians would 15 see it.” Id. Defendants Curtin and Schwartz, on the other hand, allegedly stole a client list with the 16 intent of competing with a California corporation and stealing its clients, many of whom are also 17 located in Northern California. Given these facts, Defendants’ actions cannot be characterized as 18 3 19 (Declaration of Patrick Curtin in Support of Motion to Dismiss ¶¶ 21-22, hereafter, “Curtin Decl.,” Docket Item No. 58; Declaration of William Schwartz in Support of Motion to Dismiss ¶ 28, hereafter, “Schwartz Decl.,” Docket Item No. 57.) 20 4 21 22 23 24 25 26 27 28 (Declaration of Karen Gilhooly in Support of Memorandum in Opposition to Defendants Curtin and Schwartz’s Motion to Dismiss ¶ 2, hereafter, “Gilhooly Decl.,” Docket Item No. 91.) 5 Defendants Curtin and Schwartz contend that the harm element is not satisfied because Plaintiff is a large corporation and provides services throughout the U.S. (Motion to Dismiss at 10.) With respect to the harm requirement, however, “[i]f a jurisdictionally sufficient amount of harm is suffered in the forum state, it does not matter that even more harm might have been suffered in another state.” Yahoo! Inc., 433 F.3d at 1207. Thus, the Court rejects Defendants’ contention. 6 (Declaration of Adrian Jaworski in Support of Memorandum in Opposition to Defendants Curtin and Schwartz’s Motion to Dismiss ¶ 6, Ex. 1, hereafter, “Jaworski Decl.,” Docket Item No. 92.) 7 374 F.3d at 799. 6 1 localized in New York, where Defendants Curtin and Schwartz happen to reside. Thus, the Court 2 finds that Plaintiff has met its burden to establish that Defendants Curtin and Schwartz purposefully 3 directed their conduct towards this jurisdiction. 4 B. Whether the Claims Arise Out of Forum Related Activities 5 Defendants Curtin and Schwartz contend that the Court does not have personal jurisdiction 6 over them because Plaintiff’s claims do not arise out of activities related to this forum. (Motion to 7 Dismiss at 11.) 8 In evaluating whether a claim asserted in the litigation “arises out of forum-related . . . conduct directed toward” the plaintiff in that forum. Panavision Int’l, L.P. v. Toeppen, 141 F.3d 11 For the Northern District of California activities,” a court determines if the plaintiff “would not have been injured ‘but for’ the defendant’s 10 United States District Court 9 1316, 1322 (9th Cir. 1998). 12 Here, Plaintiff would not have been injured but for Defendants Curtin and Schwartz’s 13 conduct directed toward California. Defendants Curtin and Schwartz both entered into employment 14 agreements with a corporation headquartered in this district and were entrusted with Plaintiff’s trade 15 secret information.8 Defendant Schwartz misappropriated a comprehensive customer list created in 16 California and sent to Defendant Schwartz from California. (Jaworski Decl. ¶¶ 3-5.) Defendants 17 Curtin and Schwartz allegedly distributed that list to Defendant LSA’s sales people with the intent of 18 competing with a California corporation and stealing its clients, many of whom are located in 19 Northern California. (See, e.g., FAC ¶¶ 38-52; Gilhooly Decl. ¶ 2.) Thus, the Court finds that 20 Plaintiff has met its burden to establish that its claims arise out of forum-related activities. 21 C. 22 23 24 The Fairness of Jurisdiction Defendants Curtin and Schwartz contend that this Court’s exercise of jurisdiction over them would be unfair and unreasonable. (Motion to Dismiss at 12-13.) In addressing the question whether the exercise of jurisdiction is reasonable, a court 25 26 8 27 (Declaration of Steven Weinberg in Support of Memorandum in Opposition to Defendants Curtin and Schwartz’s Motion to Dismiss, Exs. 1-2, hereafter, “Weinberg Decl.,” Docket Item No. 93.) 28 7 1 considers seven factors: (1) the extent of a defendant’s purposeful interjection; (2) the burden on the 2 defendant in defending in the forum; (3) the extent of conflict with the sovereignty of the 3 defendant’s state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient 4 judicial resolution of the controversy; (6) the importance of the forum to the plaintiff’s interest in 5 convenient and effective relief; and (7) the existence of an alternative forum. Burger King, 471 U.S. 6 at 476-77. In considering these factors, “[n]o one factor is dispositive; a court must balance all 7 seven.” Panavision, 141 F.3d at 1323. 8 9 Here, it appears that Defendants Curtin and Schwartz may be burdened by having to litigate in this district, as both are based in New York, currently suspended from employment and have limited resources.9 However, all of the remaining relevant factors favor jurisdiction. For example, 11 For the Northern District of California United States District Court 10 Defendants Curtin and Schwartz purposefully interjected themselves into the forum because they 12 knew that Plaintiff was a California-based corporation and that misappropriating its trade secrets 13 would cause injury to Plaintiff in this district. Moreover, California has a strong interest in 14 adjudicating a dispute involving misappropriation of the trade secrets of a California-based 15 corporation. See Sinatra v. National Enquirer, Inc., 854 F.2d 1191, 1200 (9th Cir. 1988) 16 (“California maintains a strong interest in providing an effective means of redress for its residents 17 [who are] tortiously injured”). In addition, exercising jurisdiction over Defendants Curtin and 18 Schwartz is the most efficient judicial resolution of the controversy, as the Court is already 19 adjudicating Plaintiff’s additional claims against Defendant LSA premised on the same facts. 20 Finally, Plaintiff’s interest in convenient and effective relief favors jurisdiction as Plaintiff is based 21 here. Thus, the Court finds that Defendants Curtin and Schwartz have not met their burden to 22 establish that exercise of jurisdiction is unreasonable. 23 Accordingly, the Court DENIES Defendants Curtin and Schwartz’s Motion to Dismiss. 24 25 26 27 28 9 (Curtin Decl. ¶ 24; Schwartz Decl. ¶ 30.) 8 1 V. CONCLUSION 2 The Court DENIES Defendants Curtin and Schwartz’s Motion to Dismiss for lack of 3 personal jurisdiction. 4 5 Dated: December 9, 2010 JAMES WARE United States District Judge 6 7 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 1 THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO: 2 Cheryl Stephanie Chang chang@blankrome.com Christopher Joseph Marino cmarino@cdas.com Danielle Ochs-Tillotson dot@ogletreedeakins.com Lawrence Curtis Hinkle hinkle-l@blankrome.com Mark J. Nagle mnagle@murphyrosen.com Paul D. Murphy pmurphy@murphyrosen.com Robert L. Meylan rmeylan@murphyrosen.com Sarah Rebecca Nichols sarah.nichols@ogletreedeakins.com Steven Marc Weinberg smweinberg@cdas.com Thomas H R Denver tdenver@mediationmasters.com 3 4 5 6 7 8 Dated: December 9, 2010 Richard W. Wieking, Clerk 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 By: /s/ JW Chambers Elizabeth Garcia Courtroom Deputy
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