Aquino v. Breede et al, No. 5:2018cv06916 - Document 42 (N.D. Cal. 2019)
Court Description: ORDER GRANTING 17 DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION; DENYING 19 DEFENDANTS' MOTION FOR SANCTIONS. Signed by Judge Beth Labson Freeman on 8/29/2019. (blflc3S, COURT STAFF) (Filed on 8/29/2019)
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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 SAN JOSE DIVISION 8 9 MICHAEL AQUINO, Plaintiff, 10 v. United States District Court Northern District of California 11 12 Case No. 18-cv-06916-BLF MICHAEL EDWARD BREEDE, et al., Defendants. 13 ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION; DENYING DEFENDANTS’ MOTION FOR SANCTIONS [Re: ECF 17, 19] 14 15 Before the Court are two related motions: Defendants’ Motion to Dismiss for Lack of 16 Personal Jurisdiction (ECF 17) and Defendants’ Motion for Rule 11 Sanctions (ECF 19). The 17 Court heard oral argument on Defendants’ motions on June 27, 2019 (“the Hearing”). Having 18 considered the oral argument, briefing, and relevant law, and for the reasons set forth below, the 19 Court hereby GRANTS Defendants’ motion to dismiss on the grounds that Plaintiff has failed to 20 show that Defendants purposefully directed their allegedly tortious actions at California and 21 DENIES Defendants’ motion for sanctions because the instant action was not filed for an 22 improper or frivolous purpose and is not barred by the Rooker-Feldman doctrine. 23 I. BACKGROUND 24 A. 25 On November 15, 2018, Plaintiff Michael Aquino filed this diversity action against General Background 26 Defendants Michael Edward Breede and Alan Adair Moss (collectively, “Defendants”). See 27 generally Compl., ECF 1. The Complaint alleges a single cause of action: tortious interference 28 with contractual relations. Id. ¶¶ 62–69. Plaintiff is a citizen of New Jersey. Id. ¶ 3. Defendant 1 Breede is a citizen of Connecticut. Id. ¶ 4. Defendant Moss is a citizen of Utah. Id. ¶ 5. 2 Plaintiff’s allegation against Defendants of tortious interference with contractual relations 3 concerns a 2017 sale of assets by Integrated Surgical, LLC (“Integrated Surgical”). According to 4 the Complaint, Integrated Surgical was a privately held medical device development company 5 headquartered in Palo Alto, California, that developed a revolutionary family of electrical medical 6 devices. Compl. ¶ 6. Defendants state that Integrated Surgical is a now-dissolved Connecticut 7 entity, whose business and operations were at all times located in Connecticut, and dispute 8 Plaintiff’s assertion in the Complaint that Integrated Surgical was headquartered in Palo Alto. See 9 Motion to Dismiss (“MTD”) at 3; see also Breede Decl., Ex. A to Request for Judicial Notice1 in 10 Support of Defendants’ Motion to Dismiss (“RJN”), ECF 18. Breede was a managing member of Integrated Surgical. Breede Decl. ¶ 2, Ex. A to RJN, United States District Court Northern District of California 11 12 ECF 18. Moss was a member of Integrated Surgical. Moss Decl. ¶ 2, Ex. C to RJN, ECF 18. 13 Plaintiff was a member of a separate company, No Plume and Gloom, LLC (“NPG”). Compl. 14 ¶ 12. In his capacity as a member of NPG, Plaintiff invested “a significant amount of cash in 15 Integrated Surgical.” Id. Plaintiff was therefore an investor in Integrated Surgical and alleges that 16 he was entitled to receive information about Integrated Surgical’s business. See id. From 2015 to 2017, Defendants indicated that Integrated Surgical’s intellectual property 17 18 (“IP”) assets had significant value. Compl. ¶ 13. In April 2015, NPG purchased an 8% 19 membership interest in Integrated Surgical for $500,000. Id. Plaintiff extrapolates that Integrated 20 Surgical was therefore valued at approximately $6,250,000 at that time. Id. According to the 21 Complaint, Integrated Surgical was represented by counsel in California from Wilson Sonsini 22 Goodrich & Rosati (“WSGR”). Id. ¶ 55. Plaintiff alleges that at least one member of WSGR, 23 Mr. Daniel Koeppen, was a member of WS Investment Company, LLC, which invested in 24 Integrated Surgical. See id. ¶ 9. Mr. Koeppen is an attorney residing within and licensed to 25 practice law in California. Id. Throughout 2016, members of Integrated Surgical made various efforts to sell Integrated 26 27 28 1 As set forth in Section III infra, the Court grants Defendants’ requests for judicial notice. 2 1 Surgical’s IP assets. Compl. ¶ 14. In December 2016, Breede indicated that Integrated Surgical 2 would engage a broker to sell its IP assets. Id. ¶ 15. On February 7, 2017, Breede informed 3 investors that Integrated Surgical had entered an agreement with Gerbsman Partners (“Gerbsman”) 4 to act as a broker for the IP sale. Id. ¶ 16. Plaintiff alleges that Gerbsman is based in California 5 and that Breede, “in cooperation with his California attorneys,” contacted Gerbsman to sell 6 Integrated Surgical’s assets. Id. Plaintiff further alleges that “because Integrated Surgical had 7 limited capital, Breede personally advanced the money to pay Gerbsman for their services and was 8 responsible for providing Gerbsman with the information necessary to perform its function.” Id. United States District Court Northern District of California 9 On or about February 17, 2017, Gerbsman posted a public article online stating that it had 10 been retained to sell the assets of Integrated Surgical, “which was headquartered in Palo Alto;” 11 that the founding partners had invested $1.5 million in Integrated Surgical; and that Integrated 12 Surgical held 5 issued U.S. patents and 14 U.S. non-provisional patent applications. Compl. ¶ 17. 13 The article further stated that two of Integrated Surgical’s products were evolutionary and 14 revolutionary. Id. By June of 2017, two companies were potential bidders for Integrated 15 Surgical’s assets. Id. ¶ 19. However, on or about July 6, 2017, one of the two companies 16 indicated that it would not be making an offer. Id. The remaining company was named 17 “Conmed.” Id. ¶ 20. 18 On or about July 14, 2017, Conmed expressed interest in purchasing the IP assets, but had 19 not proposed a price or terms and conditions. Compl. ¶ 20. On July 17, 2017, Conmed indicated 20 that it would offer only $300,000 to purchase Integrated Surgical’s IP assets. Id. ¶ 22. Several 21 members of Integrated Surgical then expressed their concern that Conmed’s offer was but a 22 fraction of the valuation previously referenced by Breede and Moss in their limited disclosures to 23 the members of Integrated Surgical. Id. On July 18, 2017, Breede indicated that Conmed had 24 increased its offer to $350,000 and needed an answer by the next morning. Id. ¶ 23. 25 On July 19, 2017, at approximately 9:15 a.m., Plaintiff, Breede, and others held a 26 teleconference wherein Plaintiff informed Breede that NPG had voted to reject the Conmed deal 27 and that he (Plaintiff) would personally be making an offer to purchase Integrated Surgical’s IP 28 assets. Compl. ¶ 24. Plaintiff advised Defendants that he would pay $360,000 for the assets, 3 1 which was $10,000 greater than the amount offered by Conmed, and that he would agree to the 2 form of Asset Purchase Agreement proposed by Integrated Surgical as an additional inducement. 3 Id. Plaintiff alleges that Breede, Moss, and Koeppen then orally accepted Plaintiff’s offer and 4 stated they would “call again later to finalize the terms.” Id. United States District Court Northern District of California 5 Plaintiff further alleges that on July 19, 2017, at approximately 1:15 p.m., Breede, Moss, 6 Koeppen, and two others participated in an additional teleconference to finalize the agreement 7 with Plaintiff. Compl. ¶ 25. Later that day, at 5:21 p.m., Breede sent Plaintiff an email stating, 8 “can you give me an update?” Id. ¶ 26. At 5:57 p.m., Plaintiff responded, stating, “Ok all set. I 9 will wire 250k into acct tomorrow. I will be away till Sunday with little access to mail or phone 10 all other paperwork can be handled by Dan and John and Mike.” Id. ¶ 27. At 6:01 p.m., Breede 11 responded to Plaintiff, “Thanks for the update and I look forward to the executed document. I will 12 turn it around first thing tomorrow.” Id. ¶ 28. 13 On July 20, 2017, at 11:05 a.m., Breede emailed Plaintiff requesting that Plaintiff send him 14 a copy of the contract so that he had the correct version, and further indicated that he would sign. 15 Compl. ¶ 29. At 11:32 a.m., Breede sent an email to Plaintiff’s attorney, John Cansdale 16 (“Cansdale”), and requested the exact name of the purchasing entity so that the sale documents 17 could be executed. Id. ¶ 30. At 1:20 p.m., Breede emailed Cansdale stating, “I expect to finalize 18 within the hour.” Id. ¶ 31. At 3:57 p.m., Breede followed up with an additional email stating, 19 “Dan [Koeppen] sending now. Please wire.” Id. ¶ 32. At 4:01 p.m., Koeppen sent an email to 20 Cansdale stating, “Please see the asset purchase agreement. The signature pages are to be held in 21 escrow, pending authorization from [] Breede []. Before the signature pages are released, [Breede] 22 needs to see the purchase price of $350,000 wired into WSGR escrow and the signature pages 23 executed by the buyer [Plaintiff].” Id. ¶ 33. 24 The purported sale to Plaintiff did not come to pass. On July 20, 2017, at 5:42 p.m., 25 Breede emailed Plaintiff, stating, “I don’t have confirmation of the wire, but I think the deal is 26 done.” Compl. ¶ 38 (emphasis added and removed). July 20, 2017 was a Thursday. At 6:38 p.m. 27 on July 20, Cansdale informed Breede that Plaintiff could not make the wire transfer until 28 Monday, July 23, 2017, and that Plaintiff would send the signature page when Plaintiff “gets to an 4 1 area w computer / service.” Id. ¶ 40. At 6:43 p.m. on July 20, Koeppen emailed Cansdale, stating, 2 “We need to speak as soon as possible. At this point Integrated [Surgical] has to take its signature 3 pages out of escrow with you since we didn’t get the wire or signature pages today. There is a 4 material development in the deal that [Plaintiff] should be aware of before we decide how to 5 proceed. To be clear – there is no agreement to sell the assets to [Plaintiff] at this point.” Id. 6 ¶ 41 (emphasis added). United States District Court Northern District of California 7 On July 21, 2017, at 9:57 a.m., Plaintiff faxed Koeppen a copy of the Aquino Asset 8 Purchase Agreement (“Aquino APA”) executed by Plaintiff. Compl. ¶ 43. On July 21, 2017, at 9 approximately 12:45 p.m., Plaintiff, Cansdale, Breede, Moss, and Koeppen participated in a 10 teleconference in which Breede described a “heated conference call” with representatives from 11 Conmed. Id. ¶ 44. Plaintiff alleges that Breede indicated he had been “threated verbally with 12 profanities” by Conmed’s representatives and that Conmed had threatened to “sue [Breede] 13 personally and Integrated Surgical if they did not go forward with the deal offered by Conmed.” 14 See id. At approximately 3:00 p.m. on July 21, Plaintiff, Cansdale, Breede, Moss, and Koeppen 15 participated in another teleconference, in which “Breede and Koeppen expressed their growing 16 concerns regarding the threats they had personally received from Conmed.” Id. ¶ 45. 17 Plaintiff alleges that around July 27, 2017, Conmed and Integrated Surgical entered into a 18 separate Asset Purchase Agreement (“Conmed APA”) and that several days thereafter Integrated 19 Surgical “transferred the same IP assets to Conmed which Integrated Surgical had already 20 contracted to sell to [Plaintiff.]” Compl. ¶¶ 48–49. Plaintiff further alleges that the Conmed APA 21 called for closing at the offices of WSGR in San Diego, California, and contained a California 22 forum selection clause naming the Northern District of California. See id. ¶¶ 58, 59. Similarly, 23 according to the Complaint, the Aquino APA would have closed at the offices of WSGR in San 24 Diego, California, and likewise contained a California forum selection clause naming the Northern 25 District of California. See id. ¶¶ 55, 56; see also Aquino APA (Draft) §§ 5, 13(i), Ex. B of Ex. A 26 to RJN, ECF 18. 27 According to the Complaint, on or about July 27, 2017, Breede and Moss informed 28 Plaintiff that they intended to enter into the Conmed APA, even though Conmed’s offer was for a 5 1 lower price and even though Conmed had attempted to require terms that “were significantly more 2 onerous than those in the Aquino APA.” Compl. ¶ 60. Plaintiff now alleges tortious interference 3 with contractual relations against Breede and Moss, on the basis that Breede and Moss did not 4 accept Plaintiff’s higher offer price “because of their concerns about their personal financial 5 standing [due to Conmed’s threat to sue them personally], instead of their concern about the best 6 interests of Integrated Surgical.” Id. ¶ 66. Plaintiff further alleges that “Breede and Moss decided 7 to conspire with Conmed to interfere with the contract between Integrated Surgical and [Plaintiff]” 8 and that “Breede and Moss and Conmed conspired to create a fiction that they were legally 9 entitled to have Integrated Surgical enter into a contract with Conmed to sell the assets to United States District Court Northern District of California 10 Conmed.” Id. ¶¶ 66, 67. 11 B. 12 Plaintiff previously sued Defendants in California state court on substantially similar facts Prior State Court Action 13 and allegations as those now before this Court. See, e.g., Breede Decl., Ex. A to RJN, ECF 18. 14 On August 27, 2018, the Superior Court of California, County of Santa Clara granted Defendant 15 Breede’s Motion to Quash for lack of personal jurisdiction, stating that “Plaintiff has not 16 established by a preponderance of the evidence that this court has personal jurisdiction over Mr. 17 Breede as an individual.” Breede Order at 1, Ex. B to RJN, ECF 18. The Superior Court found 18 that “[a]ll of [Breede’s] alleged activities and executed contractual agreements as relied upon in 19 [P]laintiff’s argument are within Mr. Breede’s capacity as Managing Member of Integrated 20 Surgical. Those contacts with Integrated Surgical do not create minimum contacts for the 21 Managing Member personally. On the other hand, there is substantial evidence making a finding 22 necessary that Mr. Breede is a resident of Connecticut with no personal contacts with Santa Clara 23 County.” Breede Order at 1–2, Ex. B to RJN, ECF 18. 24 Similarly, on October 16, 2018, the Superior Court granted Defendant Moss’s Motion to 25 Quash for lack of personal jurisdiction pursuant to California Code of Civil Procedure 26 § 418.10(a)(1). See Moss Order at 1–2, Ex. D to RJN, ECF 18. Plaintiff subsequently filed the 27 instant action on November 15, 2018. See generally Compl. 28 6 United States District Court Northern District of California 1 II. LEGAL STANDARD 2 A. 3 Federal Rule of Civil Procedure 12(b)(2) authorizes a defendant to seek dismissal of an Personal Jurisdiction 4 action for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). When a defendant moves to 5 dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that 6 jurisdiction is appropriate. Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Where 7 “the defendant’s motion is based on written materials rather than an evidentiary hearing, the 8 plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to 9 dismiss.” Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015) (internal quotation marks and 10 citation omitted). “[T]he plaintiff cannot simply rest on the bare allegations of its complaint.” 11 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (internal quotation 12 marks and citation omitted). However, uncontroverted allegations in the complaint must be taken 13 as true, and factual disputes contained within declarations or affidavits are resolved in the 14 plaintiff’s favor. Schwarzenneger, 374 F.3d at 800. 15 Where no applicable federal statute governs personal jurisdiction, “the law of the state in 16 which the district court sits applies.” Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements 17 Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003). “California’s long-arm statute allows courts to exercise 18 personal jurisdiction over defendants to the extent permitted by the Due Process Clause of the 19 United States Constitution.” Id. The Ninth Circuit has established a three-prong test for whether a 20 court can exercise specific personal jurisdiction: (1) the defendant must have “either purposefully 21 availed itself of the privilege of conducting activities in California, or purposefully directed its 22 activities toward California,” thereby “invoking the benefits and protections of its laws”; (2) the 23 claim must arise out of or relate to the defendant’s forum-related activities; and (3) the exercise of 24 jurisdiction must be reasonable, i.e. it must comport with fair play and substantial justice. 25 Schwarzenegger, 374 F.3d at 802. 26 The plaintiff bears the burden of showing that defendants have purposefully availed 27 themselves of the privileges and burdens of a forum state’s laws and showing that the claim arises 28 out of forum-related activities. Schwarzenegger, 374 F.3d at 802. If the plaintiff’s evidence is 7 1 insufficient to satisfy either prong, personal jurisdiction is improper. Id. However, if the plaintiff 2 presents sufficient evidence to satisfy the first two prongs, the burden shifts to the defendant to 3 “present a compelling case” that jurisdiction in the forum would be unreasonable (i.e. fail to 4 comport with fair play and substantial justice). Id. United States District Court Northern District of California 5 A showing of purposeful availment typically consists of “evidence of the defendant’s 6 actions in the forum, such as executing or performing a contract there. By taking such actions, a 7 defendant ‘purposefully avails itself of the privilege of conducting activities within the forum 8 State, thus invoking the benefits and protections of its laws.’” Schwarzenegger, 374 F.3d at 802 9 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). As a “quid-pro-quo” for such benefits, 10 defendants must “submit to the burdens of litigation in that forum.” Schwarzenegger, 374 F.3d at 11 802 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)); see also Cote v. Wadel, 12 796 F.2d 981, 984 (7th Cir. 1986) (“Personal jurisdiction over nonresidents of a state is a quid for 13 a quo that consists of the state’s extending protection or other services to the nonresident.”). 14 A federal district court may exercise either general or specific personal jurisdiction over a 15 nonresident defendant. Daimler AG v. Bauman, 571 U.S. 117, 127–28 (2014). General 16 jurisdiction exists when the defendant’s contacts “are so continuous and systematic as to render 17 [it] essentially at home in the forum State.” Id. at 139 (internal quotation marks and citation 18 omitted). In contrast, specific jurisdiction exists when the defendant’s contacts with the forum 19 state are more limited, but the plaintiff’s claims arise out of or relate to those contacts. Id. at 128. 20 To satisfy due process, “the defendant’s suit-related conduct must create a substantial connection 21 with the forum State.” Walden v. Fiore, 571 U.S. 277, 284 (2014) (emphasis added). 22 B. 23 The Rooker-Feldman doctrine bars a federal district court from reviewing the final 24 determinations of a state court. See District of Columbia Court of Appeals v. Feldman, 460 U.S. 25 462, 476 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413, 415–16 (1923). “Rooker-Feldman 26 may also apply where the parties do not directly contest the merits of a state court decision, as the 27 doctrine prohibits a federal district court from exercising subject matter jurisdiction over a suit that 28 is a de facto appeal from a state court judgment.” Reusser v. Wachovia Bank, N.A., 525 F.3d 855, Rooker-Feldman Doctrine 8 United States District Court Northern District of California 1 859 (9th Cir. 2008) (internal quotation marks and citation omitted). In other words, any final 2 judgment issued by a state court is barred from de facto appeal in federal district court. See id. 3 However, the Supreme Court has held that application of the Rooker-Feldman doctrine “is 4 confined to . . . cases brought by state-court losers complaining of injuries caused by state-court 5 judgments rendered before the district court proceedings commenced and inviting district court 6 review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 7 U.S. 280, 284 (2005) (emphasis added). 8 C. 9 Rule 11 of the Federal Rules of Civil Procedure imposes upon attorneys a duty to certify Rule 11 10 that they have read any pleadings or motions they file with the court and that such 11 pleadings/motions are well-grounded in fact, have a colorable basis in law, and are not filed for an 12 improper purpose. Fed. R. Civ. P. 11(b); Business Guides, Inc. v. Chromatic Comm. Enters., Inc., 13 498 U.S. 533, 542 (1991). If a court finds that Rule 11(b) has been violated, the court may impose 14 appropriate sanctions to deter similar conduct. Fed. R. Civ. P. 11(c)(1); see also Cooter & Gell v. 15 Hartmarx Corp., 496 U.S. 384, 393 (1990) (“[T]he central purpose of Rule 11 is to deter baseless 16 filings in district court.”). However, “Rule 11 is an extraordinary remedy, one to be exercised 17 with extreme caution.” Operating Eng’rs Pension Trust v. A-C Co., 859 F.2d 1336, 1345 (9th Cir. 18 1988). Rule 11 sanctions should be reserved for the “rare and exceptional case where the action is 19 clearly frivolous, legally unreasonable or without legal foundation, or brought for an improper 20 purpose.” Id. at 1344. “Rule 11 must not be construed so as to conflict with the primary duty of 21 an attorney to represent his or her client zealously.” Id. 22 In determining whether Rule 11 has been violated, a “court must consider factual questions 23 regarding the nature of the attorney’s pre-filing inquiry and the factual basis of the pleading.” 24 Cooter, 496 U.S. at 399. However, courts should “avoid using the wisdom of hindsight and 25 should test the signer’s conduct by inquiring what was reasonable to believe at the time the 26 pleading, motion, or other paper was submitted.” Fed. R. Civ. P. 11 Advisory Comm. Notes 27 (1983 Amendment). “[T]he imposition of a Rule 11 sanction is not a judgment on the merits of an 28 action. Rather, it requires the determination of a collateral issue: whether the attorney has abused 9 1 the judicial process, and, if so, what sanction would be appropriate.” Cooter, 496 U.S. at 396. 2 III. The Court may take judicial notice of documents referenced in the complaint, as well as 3 United States District Court Northern District of California REQUESTS FOR JUDICIAL NOTICE 4 matters in the public record, without converting a motion to dismiss into one for summary 5 judgment. See Lee v. City of LA., 250 F.3d 668, 688–89 (9th Cir. 2001), overruled on other 6 grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119, 1125–26 (9th Cir. 2002). In addition, 7 the Court may take judicial notice of matters that are either “generally known within the trial 8 court’s territorial jurisdiction” or “can be accurately and readily determined from sources whose 9 accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Public records, including 10 judgments and other court documents, are proper subjects of judicial notice. See, e.g., United 11 States v. Black, 482 F.3d 1035, 1041 (9th Cir. 2007). However, “[j]ust because the document 12 itself is susceptible to judicial notice does not mean that every assertion of fact within that 13 document is judicially noticeable for its truth.” Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 14 988, 999 (9th Cir. 2018). 15 Defendants request judicial notice of two filings and two orders in state court proceedings 16 involving the parties. See ECF 18; ECF 20. Because these are court documents properly subject 17 to judicial notice, the Court hereby GRANTS Defendants’ Requests for Judicial Notice. 18 IV. 19 DISCUSSION Defendants bring the following two motions: (1) Motion to Dismiss for Lack of Personal 20 Jurisdiction (“MTD”); and (2) Motion for Rule 11 Sanctions (“MFS”). See generally MTD, 21 ECF 17; MSF, ECF 19. The Court addresses each motion in turn. For the reasons discussed 22 below, the Court GRANTS Defendants’ motion to dismiss and DENIES Defendants’ motion for 23 sanctions. 24 A. 25 Defendants assert that there is no jurisdiction over Defendants in California and seek an 26 order dismissing this action with prejudice “because the jurisdictional defects cannot be cured.” 27 See MTD at 2. Defendants argue that “[t]he Complaint neither asserts that California has personal 28 jurisdiction over Defendants nor alleges sufficient facts to show that exercise of jurisdiction over Motion to Dismiss (ECF 17) 10 1 Defendants in California is proper,” id. at 6, pointing out that “a California State Court already 2 determined that Defendants are not subject to personal jurisdiction in this state,” id. at 7. 3 Defendants’ personal jurisdiction argument consists of three prongs: (1) that Defendants are not 4 subject to general personal jurisdiction in California; (2) that Defendants are not subject to specific 5 personal jurisdiction in California; and (3) that the Rooker-Feldman doctrine bars the instant 6 action from proceeding. See id. at 7, 9, 12. Plaintiff counters2 that “[s]pecific personal jurisdiction exists over Defendants because United States District Court Northern District of California 7 8 they interfered with [Plaintiff’s] attempt to contract with [Integrated Surgical] based on marketing 9 invoking Palo Alto, California as [Integrated Surgical’s] place of business” and that the Rooker- 10 Feldman doctrine does not apply because the state court’s rulings were without prejudice. See 11 Opp’n at 2, ECF 21. The Court briefly addresses general personal jurisdiction, followed by the 12 Rooker-Feldman doctrine and specific personal jurisdiction, respectively. 13 1. General Personal Jurisdiction Defendants argue that general personal jurisdiction over them does not exist in California 14 15 because they do not reside in California, they were not personally parties to either the Aquino 16 APA or the Conmed APA, and no other “traditional bas[is] for general personal jurisdiction” 17 applies. See MTD at 7–9. In his opposition brief, Plaintiff does not dispute Defendants’ assertion 18 that general personal jurisdiction is inapplicable. See generally Opp’n. The Court agrees with 19 Defendants’ unopposed argument that Plaintiff has not demonstrated that Breede or Moss is 20 subject to general jurisdiction in California, and that amendment on this issue would be futile. 21 2. Rooker-Feldman Doctrine The Superior Court of California, County of Santa Clara previously found that neither 22 23 Breede nor Moss was subject to personal jurisdiction in the County of Santa Clara under 24 essentially the same facts and allegations at issue here. See Breede Order, Ex. B to RJN, ECF 18; 25 Moss Order, Ex. D to RJN, ECF 18. Defendants point out that “the same jurisdictional issues are 26 27 28 2 The parties additionally dispute whether venue is proper in the Northern District of California under Defendants’ alternative request to dismiss this action for improper venue. See MTD at 13; Opp’n at 2. However, because the Court grants Defendants’ motion to dismiss, the Court need not and does not reach the parties’ venue arguments. 11 1 present” here as were at issue in the state action. See MTD at 13. Therefore, Defendants assert 2 that “[t]he issue of whether Breede or Moss are subject to jurisdiction in Santa Clara County has 3 already been adjudicated” and that Plaintiff’s decision to pursue this action in federal court runs 4 afoul of the Rooker-Feldman doctrine because “[it] is akin to seeking review of the State Action.” 5 Id. at 12–13. Plaintiff counters that “the Rooker-Feldman doctrine only applies if the federal court 6 is asked to act as an appellate court over a state court judgment or order” and that here “this Court 7 is not being asked to review the state court’s decision.” See Opp’n at 17. Plaintiff further 8 contends that the state court’s orders dismissing Breede and Moss were “without prejudice” and 9 therefore “the Rooker-Feldman doctrine does not apply because there is no judgment or order that United States District Court Northern District of California 10 is on appeal.” See id. at 17–18. 11 The Court agrees with Plaintiff that the Rooker-Feldman doctrine is inapplicable to the 12 instant dispute. The Rooker-Feldman doctrine “is confined to . . . cases brought by state-court 13 losers complaining of injuries caused by state-court judgments rendered before the district court 14 proceedings commenced and inviting district court review and rejection of those judgments.” 15 Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005) (emphasis added). 16 Meanwhile, California Code of Civil Procedure § 581(h) provides that “[t]he court may dismiss 17 without prejudice . . . when dismissal is made pursuant to Section 418.10.” Cal. Civ. Proc. 18 Code § 581(h) (emphasis added). Here, the Superior Court granted Breede and Moss’s respective 19 motions to quash for lack of personal jurisdiction pursuant to California Code of Civil Procedure 20 § 418.10(a)(1). See Breede Order, Ex. B to RJN, ECF 18; Moss Order, Ex. D to RJN, ECF 18. 21 Both dismissal orders were without prejudice—neither order states that it is with prejudice, and 22 neither order sets any limitations or parameters on Plaintiff’s ability to refile the action. See 23 generally id. Indeed, Defendants could not credibly argue and do not argue that the Superior 24 Court’s orders were made with prejudice. 25 In other words, the Superior Court’s dismissal orders were without prejudice and therefore 26 do not constitute “judgments.” Accordingly, the Rooker-Feldman doctrine does not bar the instant 27 action. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). 28 12 1 United States District Court Northern District of California 2 3. Specific Personal Jurisdiction The Court considers Defendants’ argument that Defendants are not subject to specific 3 personal jurisdiction in California under the Ninth Circuit’s three-prong test: (1) purposeful 4 availment or purposeful direction; (2) arising out of forum-related activities; and 5 (3) reasonableness. See Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 6 2004). Regarding prong one, the Ninth Circuit “often use[s] the phrase ‘purposeful availment,’ in 7 shorthand fashion, to include both purposeful availment and purposeful direction.” See id. 8 However, “availment and direction are, in fact, two distinct concepts.” Id. Which concept to 9 apply depends on the nature of the suit. “A purposeful availment analysis is most often used in 10 suits sounding in contract.” Id. On the other hand, “[a] purposeful direction analysis [] is most 11 often used in suits sounding in tort.” Id. Put differently, the Ninth Circuit “appl[ies] different 12 purposeful availment tests to contract and tort cases.” Ziegler v. Indian River County, 64 F.3d 13 470, 473 (9th Cir. 1995). 14 The instant action sounds in tort, not contract. Plaintiff brings a single tort claim, tortious 15 interference with contractual relations against Defendants. See generally Compl. No contract 16 claims or other claims are asserted. Moreover, Plaintiff does not allege that Defendants contracted 17 with or attempted to contract with Plaintiff. Rather, the only parties to the Conmed APA are 18 Conmed and Integrated Surgical, and the only parties to the proposed Aquino APA are Plaintiff 19 and Integrated Surgical. See id. ¶¶ 60–63; see also Aquino APA (Draft), Ex. B of Ex. A to RJN, 20 ECF 18. In other words, under either of the APA’s, there would not have been a contractual 21 relationship between Plaintiff and Defendants. Accordingly, although the parties’ briefing 22 generally follows the “purposeful availment” analysis and not the “purposeful direction” analysis, 23 the Court is obligated under Ninth Circuit law to apply the “purposeful direction” analysis to this 24 tort action. See Picot v. Weston, 780 F.3d 1206, 1213–14 (9th Cir. 2015) (applying “purposeful 25 direction” analysis and three-part “effects” test to a claim of tortious interference with contract); 26 Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218, 1228 (9th Cir. 2011) (explaining 27 that because the plaintiff alleged a tort-like cause of action, purposeful direction “is the proper 28 analytical framework”). 13 1 2 direction test and therefore fails to meet the burden of demonstrating that jurisdiction is 3 appropriate, see Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). 4 United States District Court Northern District of California As discussed below, the Court finds that Plaintiff has failed to satisfy the purposeful In determining whether a defendant purposefully directs his activities at the forum state, 5 the Ninth Circuit applies an “effects” test that focuses on the forum in which the defendant’s 6 actions were felt, whether or not the actions themselves occurred within the forum. Mavrix, 647 7 F.3d at 1228 (internal quotations and citations omitted). The “effects” test requires that “the 8 defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum 9 state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Id. 10 (internal quotations and citations omitted). The Court discusses each element of the “effects” test 11 in turn, followed by a short conclusion. Although the Court finds that Plaintiff has carried his 12 burden as to the first two elements, Plaintiff has failed to show the third element—that 13 Defendants’ alleged acts caused harm that Defendants know is likely to be suffered in California. 14 15 a. Intentional Act As to the first prong of purposeful direction, Plaintiff has alleged facts sufficient to support 16 a finding that Defendants “committed an intentional act.” According to the Complaint, 17 Defendants entered into the Conmed APA with full knowledge that Conmed’s offer was for a 18 lower price than Plaintiff’s offer and that Conmed had attempted to require terms that “were 19 significantly more onerous than those in the Aquino APA.” Compl. ¶ 60. In addition, Plaintiff 20 alleges that Defendants did not accept Plaintiff’s higher offer price “because of their concerns 21 about their personal financial standing [due to Conmed’s threat to sue them personally], instead of 22 their concern about the best interests of Integrated Surgical.” Id. ¶ 66. Plaintiff further alleges 23 that “Breede and Moss decided to conspire with Conmed to interfere with the contract between 24 Integrated Surgical and [Plaintiff]” and that “Breed and Moss and Conmed conspired to create a 25 fiction that they were legally entitled to have Integrated Surgical enter into a contract with 26 Conmed to sell the assets to Conmed.” Id. ¶¶ 66, 67. These alleged facts support the Court’s 27 finding the Defendants committed an intentional act. 28 14 1 United States District Court Northern District of California 2 b. Expressly Aimed at the Forum State Next, by a slim margin and drawing all permissible inferences for Plaintiff, the Court finds 3 that Defendants’ acts described above were “expressly aimed” at California, the forum state. 4 Defendants argue that “there is no relationship whatsoever between Defendants and California 5 related to the claims asserted by [Plaintiff].” MTD at 10. Defendants point out that “[t]he 6 ‘contract’ that [Plaintiff] alleges exists is between [Plaintiff] and Integrated Surgical, not Breede 7 or Moss.” Id. (emphasis in original). Defendants further argue that “none of the alleged tortious 8 contract interference by Breede and Moss is alleged to have occurred in California.” Id. Plaintiff 9 counters that “Defendants clearly marketed [Integrated Surgical] as a Palo Alto based company 10 through Gerbsman.” Opp’n at 13. Plaintiff further argues that “the [Aquino APA] in favor of 11 [P]laintiff was to be performed [in California], [] the offending contract with Conmed was actually 12 performed [in California] . . . and [] all of the agreements required venue to be predicated [in 13 California].” See Opp’n to MFS at 5 (emphasis removed), ECF 22. 14 As an initial matter, the Court agrees with Defendants that actions taken by Defendants in 15 California in only their capacity as members of Integrated Surgical would not subject Defendants 16 to personal jurisdiction in California in their individual capacity. Here, neither Breede nor Moss is 17 a party to the Conmed APA or the proposed Aquino APA. See generally Aquino APA (Draft); 18 see also Compl. ¶¶ 58–59. Thus, the mere existence of the Conmed APA set to close in California 19 with a California forum selection clause to which Integrated Surgical was a party does not on its 20 own show that Defendants personally aimed their acts at California. 21 However, Defendants do not fully address the thrust of Plaintiff’s allegations. Plaintiff 22 specifically alleges that Defendants acted outside of their capacity as members of Integrated 23 Surgical—i.e., that Defendants reneged on the Aquino APA, which was more favorable to 24 Integrated Surgical, to make a deal to sell Integrated Surgical’s assets to Conmed at a lower price 25 precisely “because of [Defendants’] concerns about their personal financial standing.” See 26 Compl. ¶ 66 (emphasis added). Plaintiff alleges that these concerns were based on “threats [] 27 personally received from Conmed.” See id. ¶ 45. Plaintiff does not allege that the threats 28 themselves were delivered in California by Conmed or received in California by Breede or Moss. 15 1 However, Plaintiff alleges that the conversations between Conmed, Breed, and Moss led “Breede 2 and Moss and Conmed [to] conspire[] to create a fiction that they were legally entitled to have 3 Integrated Surgical enter into a contract with Conmed to sell [Integrated Surgical’s] assets to 4 Conmed.” See id. ¶ 67. Plaintiff further alleges that Conmed, Breede, and Moss consummated the 5 conspiracy in California—by arranging for closing and actually closing the Conmed APA in 6 California. See id. ¶¶ 58–61. United States District Court Northern District of California 7 The Court is skeptical that the alleged “conspiracy” between Conmed, Breede, and Moss is 8 plausible as pled. Plaintiff essentially alleges that Defendants capitulated to Conmed’s demands 9 under threat of personal suit. See Compl. ¶¶ 65–67. That said, whether Plaintiff has plausibly 10 alleged a conspiracy is tangential to the instant personal jurisdiction analysis, and the Court must 11 take all uncontroverted allegations in the complaint as true and resolve factual disputes at this 12 stage in the plaintiff’s favor, Schwarzenneger, 374 F.3d at 800. Thus, here, although Plaintiff’s 13 allegations of a conspiracy are weak, the Court will credit Plaintiff’s pleading that a conspiracy 14 existed for purposes of the instant analysis. In addition, it is uncontroverted that both the Conmed 15 APA and the proposed Aquino APA called for closing in California. See, e.g., Aquino APA 16 (Draft) § 5, Ex. B of Ex. A to RJN, ECF 18. Indeed, Plaintiff submits testimony from Breede in 17 which Breede admitted that the Conmed APA called for “closing [to] occur at the Wilson Sonsini 18 office in San Diego, California.” See Breede Depo. at 117:19–23, Ex. A to Brower Decl., 19 ECF 21-1. 20 Plaintiff further alleges that several days after Conmed and Integrated Surgical entered into 21 the Conmed APA, Integrated Surgical “transferred the same IP assets to Conmed which Integrated 22 Surgical had already contracted to sell to [Plaintiff.]” Compl. ¶¶ 48–49. Accordingly, the alleged 23 conspiracy to sell Integrated Surgical’s assets to Conmed and not Plaintiff touched on California 24 by virtue of the Conmed APA, which called for closing in California. And according to the 25 Complaint, Defendants proceeded with the Conmed deal for Defendants’ personal gain. See, e.g., 26 Compl. ¶ 66. 27 28 Thus, resolving factual disputes in Plaintiff’s favor, the Court finds that Defendants as individuals “expressly aimed” their actions at California, at least on the basis of setting the 16 1 Conmed APA for closing in California. Mavrix, 647 F.3d at 1229. This activity did not simply 2 “engag[e] an attorney or a broker who resides in California” as Defendants argue, see Reply at 4– 3 5, ECF 23, but rather focused on accomplishing the transaction—closing the Conmed APA— 4 within the forum state. Although a close call, resolving factual disputes in Plaintiff’s favor, 5 Defendants took “express aim” at the forum state in their personal capacities in setting the 6 Conmed APA for closing in California. 7 United States District Court Northern District of California 8 c. Harm Defendants Know is Likely to be Suffered in the Forum State The Court now turns to the question of harm, the third element of the “effects” test. To 9 satisfy this element, Defendants must have allegedly caused harm that Defendants know is likely 10 to be suffered in the forum state. Mavrix, 647 F.3d at 1228. The Ninth Circuit has explained that 11 “the effects test requires that the brunt of the harm have occurred within the forum state, or [at 12 least] that some significant amount of harm have occurred there.” Dole Food Co., Inc. v. Watts, 13 303 F.3d 1104, 1113 (9th Cir. 2002). Defendants argue that they did not commit acts “that they 14 knew would likely cause harm in the forum state.” Reply at 3. In addition, Defendants point out 15 that Plaintiff admitted that “‘Defendants’ actions were directed to and caused harm to [Plaintiff] in 16 New Jersey.’” Reply at 9 (citing and quoting Opp’n at 21). Meanwhile, Plaintiff appears to make 17 a single argument in support of harm—“that Defendants advertised [Integrated Surgical] as having 18 a Palo Alto address and committed an intentional tort related to a California company [that] harms 19 California residents.” See Opp’n at 14; see also Compl. ¶ 6 (alleging that Integrated Surgical was 20 headquartered in Palo Alto). 21 Plaintiff’s argument in support of harm is unavailing. First of all, none of the parties to 22 this action is a citizen of California. Plaintiff is a citizen of New Jersey. Compl. ¶ 3. Breede is a 23 citizen of Connecticut. Id. ¶ 4. Moss is a citizen of Utah. Id. ¶ 5. Plaintiff does not allege that 24 any of the parties to this action suffered harm in California—to the contrary, Plaintiff affirmatively 25 states that “[Plaintiff] is a resident of New Jersey and Defendants’ actions were directed to and 26 caused harm to [Plaintiff] in New Jersey.” Opp’n at 21. Thus, Plaintiff is not a “California 27 resident” who allegedly suffered harm due to Defendants’ alleged tort. 28 Second, Plaintiff’s theory that non-party Integrated Surgical suffered harm in California 17 United States District Court Northern District of California 1 because it is a “California company” fails because the record shows that Integrated Surgical never 2 was a California company. The parties took jurisdictional discovery in the prior state action. Kazi 3 Decl. ¶ 3, ECF 17-1. In the state action, Breede submitted testimony that “Integrated Surgical is 4 and always has been a limited liability company formed and existing under the laws of the State of 5 Connecticut, with its principal place of business in Ridgefield, Connecticut.” Breede Decl. ¶ 2, 6 Ex. A to RJN, ECF 18. Indeed, on August 21, 2017, Integrated Surgical filed a Certificate of 7 Dissolution with the Secretary of the State of Connecticut. See Certificate of Dissolution, Ex. A to 8 Breede Decl. Breede further submitted that “Integrated Surgical never had any offices in 9 California. To the extent Integrated Surgical had a main office, which also could be referred to as 10 its ‘headquarters,’ its headquarters were always maintained and located in Connecticut.” Breede 11 Decl. ¶ 4. Similarly, Moss submitted testimony in the state action that Integrated Surgical is “a 12 Connecticut limited liability company that has its principal place of business in Ridgefield, 13 Connecticut.” Moss Decl. ¶ 2, Ex. C to RJN, ECF 18. Moss further submitted that “Integrated 14 Surgical’s headquarters were always located in Connecticut.” Id. ¶ 4. In addition, Breede and 15 Moss submitted testimony that nearly all of Integrated Surgical’s assets and operations were 16 located in Canada, that most of its prototype testing occurred in Canada, and that some testing 17 occurred in New York and Colorado. See id. ¶ 4; Breede Decl. ¶ 4. 18 This direct evidence contradicts Plaintiff’s allegation in the Complaint that Integrated 19 Surgical was headquartered in Palo Alto, California. In demonstrating that jurisdiction is 20 appropriate, “the plaintiff cannot simply rest on the bare allegations of its complaint.” 21 Schwarzenegger, 374 F.3d at 800. Here, Plaintiff offers nothing more than such bare allegations. 22 Although it is undisputed that Gerbsman (who was engaged by Integrated Surgical to sell its IP 23 assets) marketed Integrated Surgical as headquartered in Palo Alto, there is no factual dispute as to 24 whether Integrated Surgical actually was headquartered in Palo Alto—it was not. Mere sophistry 25 by an outside salesman is not sufficient to invoke personal jurisdiction. Similarly, Plaintiff’s 26 allegation that Noah Minskoff was “the primary contributor of the IP assets” and “primarily 27 operated from an office in Palo Alto, California which was leased by another company in which 28 Breede was a member,” see Compl. ¶ 11, does not support Plaintiff’s theory that Integrated 18 United States District Court Northern District of California 1 Surgical was headquartered in California. 2 Accordingly, economic harm suffered by non-party Integrated Surgical due to Defendants 3 alleged “bad acts” would have been felt in Connecticut, where Integrated Surgical was organized 4 and maintained its principal place of business. See Mavrix, 647 F.3d at 1231–32. While a 5 company can suffer jurisdictionally sufficient economic harm in multiple fora, including where the 6 bad act occurred, see id. at 1231, Plaintiff fails to allege any theory of harm other than Plaintiff’s 7 “California company” assertion. Moreover, no facts in the record support a finding that Integrated 8 Surgical suffered jurisdictionally sufficient economic harm in California under a separate theory. 9 Cf. Mavrix, 647 at 1231–32 (finding that the plaintiff, a Florida corporation, suffered 10 jurisdictionally sufficient harm in California due to copyright infringement in California that 11 “destroyed” plaintiff’s California-specific market share). Here, unlike the plaintiff corporation in 12 Mavrix, Defendants’ alleged bad acts did not subject Integrated Surgical to California-specific 13 harm. In sum, the Court finds that Plaintiff has failed to show that non-party Integrated Surgical 14 suffered jurisdictionally sufficient economic harm in California. 15 Third, even if Integrated Surgical were subject to a measure of harm in California, any 16 such limited harm to this non-party would not plausibly constitute the “brunt of the harm” or even 17 “some significant amount of harm,” see Dole Food, 303 F.3d at 1113, relative to the harm Plaintiff 18 claims to have suffered “in excess of $5 million,” see Compl. at Prayer for Relief. In other words, 19 the additional $10,000 that Plaintiff alleges he would have paid Integrated Surgical for its IP 20 (compared to what Integrated Surgical received from Conmed) is but a tiny fraction of the harm 21 Plaintiff alleges to have suffered in New Jersey, see Opp’n at 21. Thus, Plaintiff has come 22 nowhere close to showing that a sufficient “proportion of the overall harm[] [was] suffered in 23 California.” See Dole Food, 303 F.3d at 1112. 24 25 26 27 28 Accordingly, for multiple independent reasons, the Court finds that Plaintiff has failed to meet his burden of showing that Defendants meet the third element of the “effects” test. d. Conclusion re Specific Personal Jurisdiction The Court finds that the “purposeful direction” inquiry applies to this tort action and therefore applies the “purposeful direction” inquiry in analyzing prong one of specific personal 19 1 jurisdiction. The Court finds that Plaintiff has not carried his burden of showing that the third 2 element of the “purposeful direction” inquiry is met. Thus, Plaintiff has failed to show that 3 Defendants “purposefully directed” their activities at the forum state. 4 5 Accordingly, the Court need not and does not address the final two prongs of the specific jurisdiction analysis. 6 United States District Court Northern District of California 7 4. Conclusion re Motion to Dismiss In conclusion, the Court finds that although the Rooker-Feldman doctrine does not apply to 8 the instant action, Plaintiff has nonetheless failed to show that Defendants are subject to either 9 general or specific personal jurisdiction in California. Thus, the Court hereby GRANTS 10 Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction. Accordingly, the Court need 11 not and does not reach Defendants’ alternative request for dismissal based on improper venue. 12 In addition, the Court finds that amendment to allege facts to establish personal jurisdiction 13 over Defendants in California would be futile, as Plaintiff has already obtained jurisdictional 14 discovery in the prior state action and did not seek additional jurisdictional discovery in the instant 15 action. Moreover, Plaintiff was already afforded an opportunity to allege new facts in support of 16 personal jurisdiction in California by virtue of the instant action, which Plaintiff filed after Breede 17 and Moss were dismissed from the prior state court action for lack of personal jurisdiction. 18 Accordingly, Plaintiff’s Complaint is DISMISSED WITHOUT PREJUDICE to refiling in any 19 court with lawful jurisdiction over these matters. The Court’s instant ruling is not meant to have 20 any bearing on the state court’s prior rulings of dismissal without prejudice. 21 B. 22 In the Ninth Circuit, Rule 11 sanctions are appropriately imposed where: (1) a paper is Motion for Sanctions (ECF 19) 23 filed with the court for an improper purpose; or (2) the paper is “frivolous.” Townsend v. Holman 24 Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990) (en banc). A “frivolous” argument or 25 claim is one that is “both baseless and made without a reasonable and competent inquiry.” Id. 26 (emphasis added). Accordingly, when sanctions are sought on the basis of a complaint, the Court 27 must determine: “(1) whether the complaint is legally or factually ‘baseless’ from an objective 28 perspective, and (2) if the attorney has conducted ‘a reasonable and competent inquiry’ before 20 1 signing and filing it.” Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002). 2 Defendants move for Rule 11 sanctions on the basis that Plaintiff brings the instant action 3 “despite the fact that a California state court already determined that there in no jurisdiction over 4 non-residents Breede and Moss in [California] in connection with Aquino’s claims.” See MFS 5 at 1, ECF 19. Plaintiff counters that the prior state court action was dismissed “without prejudice” 6 and that “an objective attorney could find the Complaint before this Court to be well-founded.” 7 See Opp’n to MFS at 3, 4, ECF 22. The Court finds that Defendants’ motion for sanctions is unwarranted. Defendants rely 8 United States District Court Northern District of California 9 primarily on the orders in the prior state court action to support their argument in favor of 10 sanctions, alleging that Plaintiff displayed “blatant disregard for this judicial determination.” See 11 MFS at 1. However, as discussed in Section IV.A.2 supra, Breede and Moss were dismissed from 12 the state court action without prejudice. Accordingly, the Court found in Section IV.A.2 supra 13 that the instant action is not barred by the Rooker-Feldman doctrine. Although the Court 14 ultimately disagrees with Plaintiff that Defendants are subject to personal jurisdiction in 15 California, the Court does not find that Plaintiff filed the instant action for a frivolous or improper 16 purpose. Thus, Defendant’s motion for sanctions is hereby DENIED. 17 V. ORDER 18 For the foregoing reasons, Defendants’ Motion to Dismiss for Lack of Personal 19 Jurisdiction is GRANTED. Plaintiff’s Complaint is DISMISSED WITHOUT PREJUDICE to 20 refiling in any court with lawful jurisdiction over these matters. In addition, Defendants’ Motion 21 for Rule 11 Sanctions is DENIED. 22 The Clerk shall close the case file. 23 24 25 26 27 IT IS SO ORDERED. Dated: August 29, 2019 ______________________________________ BETH LABSON FREEMAN United States District Judge 28 21
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