GeoSolutions B.V. et al v. Sina.Com Online et al, No. 5:2021cv08019 - Document 165 (N.D. Cal. 2023)
Court Description: AMENDED ORDER GRANTING MOTIONS TO DISMISS re 164 Order Dismissing Case. Signed by Judge P. Casey Pitts on 10/27/2023. (nmc, COURT USER) (Filed on 10/27/2023)
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 GEOSOLUTIONS B.V., et al., 7 Plaintiffs, 8 AMENDED ORDER GRANTING MOTIONS TO DISMISS v. 9 SINA.COM ONLINE, et al., 10 Re: Dkt. Nos. 129, 130, 148 Defendants. 11 United States District Court Northern District of California Case No. 21-cv-08019-PCP 12 13 In this case, a Dutch technology business and its holding company bring claims arising out 14 of a joint venture with a Hong Kong corporation involving co-ownership of a Chinese entity based 15 in Shanghai. The threshold questions are whether this Court has jurisdiction over the defendants, 16 and if so, whether Plaintiffs have stated valid claims. Two defendants are California corporations 17 based in Palo Alto, while the remaining thirteen are foreign businesses and individuals. The Court 18 previously dismissed the claims against many of the foreign defendants for lack of personal 19 jurisdiction and against the California defendants for failure to state a claim. Now, following 20 amendment, all but one of the foreign defendants have moved to dismiss for lack of personal 21 jurisdiction and the California defendants seek dismissal for failure to state a claim. For the 22 reasons that follow, the motions are granted and this case is dismissed without leave to amend. 23 I. 24 Background Plaintiffs GeoSolutions B.V. and GeoSolutions Holdings N.V., two Dutch companies, 25 bring this action against thirteen businesses and two executives within what they call the “Sina 26 Group,” a Chinese conglomerate that operates the social media app Weibo. Two of the defendants 27 are California corporations operated out of Palo Alto, California. The others are incorporated 28 abroad and operated out of China. Both executives are citizens and residents of China. United States District Court Northern District of California 1 This dispute arises out of a joint venture between certain Sina entities and GeoSolutions, 2 which makes the following allegations in its amended complaint. Founded in the early 2000s, 3 GeoSolutions had by 2008 developed a mobile app to allow users to track and share their activities 4 and locations with each other. The Sina Group became interested in location-based services and 5 began looking for companies to acquire or partner with. In 2010, after negotiations, Sina.com 6 Technology Co., Ltd. signed a memorandum of understanding agreeing on a plan for a joint 7 venture that would allow Sina entities to leverage GeoSolutions’ location technology. The parties 8 reached a final joint venture agreement in 2011, as well as a separate agreement allowing their 9 jointly owned company, GyPSii Co., to license GeoSolutions’ technology. A third agreement 10 specified that GeoSolutions and its counterparty, Sina Hong Kong Ltd., would share profits and 11 losses in proportion to their 40/60 ownership of GyPSii. 12 GeoSolutions alleges that Sina Hong Kong and other Sina entities did not uphold their end 13 of the deal. In particular, GeoSolutions alleges that the Sina Group set up its own “shadow” 14 location-based services department to siphon GeoSolutions’ technology and know-how and cut 15 GeoSolutions out of any ensuing profits. By 2014, GeoSolutions began to suspect that Sina 16 entities were using GeoSolutions’ technology without paying GyPSii. GeoSolutions identified 17 billions of API calls that had been processed against the technology it had licensed, but for which 18 GyPSii had received no revenue. GeoSolutions demanded an audit and a new compensation 19 model, but nevertheless entered a renewed license agreement in 2014. GeoSolutions alleges the 20 new terms were not honored and that it was only permitted to conduct a “sham” audit. 21 GeoSolutions then initiated arbitration proceedings in the Netherlands and later filed this suit, 22 which was removed to federal court. 23 On March 16, 2023, after hearing five separate motions to dismiss, the Court dismissed the 24 claims against the foreign defendants who had appeared for lack of personal jurisdiction (four 25 other foreign defendants had not yet appeared), and dismissed the claims against the California 26 defendants for failure to state a claim. Dkt. No. 121. Because Plaintiffs had represented that 27 discovery material from a separate arbitration proceeding could be relevant to the jurisdictional 28 questions, the Court granted leave to amend. Plaintiffs thereafter filed their amended complaint. 2 Before the Court now are motions to dismiss by three sets of defendants. In the first motion United States District Court Northern District of California 1 2 (Dkt. No. 129), the foreign defendants against whom Plaintiffs’ claims were previously dismissed 3 for lack of personal jurisdiction seek dismissal for the same reasons, arguing that the amended 4 complaint does not cure the deficiencies previously identified.1 In the second (Dkt. No. 130), the 5 California defendants against whom claims were previously dismissed for failure to state a claim 6 also seek re-dismissal for the same reasons, arguing the complaint remains inadequate.2 Finally, in 7 the third (Dkt. No. 148), three of the four defendants who had not yet been served or appeared at 8 the time of the Court’s last ruling—the “new” foreign defendants—have waived service and argue 9 that the claims against them should be dismissed for lack of personal jurisdiction.3 The final 10 defendant, GyPSii (Shanghai) Co., Ltd., has not appeared or been served. 11 II. Legal Standards 12 Under Federal Rule of Civil Procedure 4(k)(1)(a), in the absence of a federal statute 13 providing personal jurisdiction the Court applies the California statute authorizing personal 14 jurisdiction “on any basis not inconsistent” with the federal or state constitutions. Cal. Code Civ. 15 Proc. § 410.10. “Because California’s long-arm jurisdictional statute is coextensive with federal 16 due process requirements, the jurisdictional analyses under state law and federal due process are 17 the same.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800–01 (9th Cir. 2004). Due 18 process prohibits a state court from exercising jurisdiction unless a defendant has sufficient 19 “contacts” with the State such that “maintenance of the suit” is “reasonable, in the context of our 20 federal system of government,” and “does not offend traditional notions of fair play and 21 substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316–17 (1945). 22 There are two forms of personal jurisdiction: general and specific. “A court may assert 23 general jurisdiction over foreign … corporations to hear any and all claims against them when 24 25 26 27 28 1 The foreign defendants are: (1) Weibo Corporation; (2) Sina Corporation; (3) New Wave MMXV Limited; (4) Sina Group Holding Company Limited; (5) Sina (Beijing) Information Technology Co., Ltd.; (6) Sina.com Technology (China) Co., Ltd.; (7) Sina Hong Kong Limited; (8) Beijing Sina Internet Information Service Company Ltd.; and (9) Guowei Cao. 2 The California defendants are: (1) Sina.com Online and (2) Weibo R&D Limited. 3 The new foreign defendants are: (1) Beijing New Media Technology Information Company; (2) Beijing Weimeng Technology Co., Ltd.; and (3) Gaofei Wang. 3 United States District Court Northern District of California 1 their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at 2 home.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). For 3 corporations, the “paradigm” bases for general jurisdiction are “the place of incorporation and 4 principal place of business,” although operations in another state might also be “so substantial and 5 of such a nature as to render the corporation at home.” Daimler AG v. Bauman, 571 U.S. 117, 137, 6 139 n.19 (2014). Specific jurisdiction “covers defendants less intimately connected with a State, 7 but only as to a narrower class of claims”: for a court to have specific personal jurisdiction, the 8 defendant “must take some act by which it purposefully avails itself of the privilege of conducting 9 activities” in the state, and the claims “must arise out of or relate to the defendant’s contacts with 10 the forum.” Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024–25 (2021) 11 (cleaned up). 12 On a motion to dismiss, the plaintiff has the burden to show that the Court has jurisdiction. 13 In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 741 (9th Cir. 2013). Only “a 14 prima facie showing of jurisdictional facts” is required to withstand dismissal, and “the court 15 resolves all disputed facts in favor of the plaintiff.” Id. (quoting Doe v. Unocal Corp., 248 F.3d 16 915, 922 (9th Cir. 2001) and Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006)). 17 When there are multiple defendants, “[t]he jurisdictional inquiry must decouple 18 defendants, considering whether each individual defendant has had sufficient ‘minimum contacts’ 19 with the forum state to justify an exercise of jurisdiction.” Burri Law PA v. Skurla, 35 F.4th 1207, 20 1213 (9th Cir. 2022). In cases involving related business entities, “a parent-subsidiary relationship 21 is insufficient, on its own, to justify imputing one entity’s contacts with a forum state to another 22 for the purpose of establishing personal jurisdiction.” Ranza v. Nike, Inc., 793 F.3d 1059, 1070 23 (9th Cir. 2015). “A basic tenet of American corporate law is that the corporation and its 24 shareholders are distinct entities” and this “corporate separateness insulates a parent corporation 25 from liability created by its subsidiary.” Id. (cleaned up). 26 This veil separating affiliated entities may be pierced, however, if they are “not really 27 separate entities” but instead have an “alter ego” relationship. Ranza, 793 F.3d at 1071. To 28 establish that two separate entities are alter egos, “a plaintiff must make out a prima facie case 4 1 (1) that there is such unity of interest and ownership that the separate personalities of the two 2 entities no longer exist and (2) that failure to disregard their separate identities would result in 3 fraud or injustice.” Id. at 1073 (cleaned up). Courts consider several factors to determine whether 4 there is sufficient unity between two entities, including: 5 (1) the commingling of funds and other assets of the entities, (2) the holding out by one entity that it is liable for the debts of the other, (3) identical equitable ownership of the entities, (4) use of the same offices and employees, (5) use of one as a mere shell or conduit for the affairs of the other, (6) inadequate capitalization, (7) disregard of corporate formalities, (8) lack of segregation of corporate records, and (9) identical directors and officers. 6 7 8 9 10 Yih v. Taiwan Semiconductor Mfg. Co., Ltd., No. 20-CV-04184-EJD, 2020 WL 6290377 (N.D. Cal. Oct. 27, 2020). Rule 12(b)(6) governs dismissal for “failure to state a claim upon which relief can be United States District Court Northern District of California 11 12 granted.” A complaint must “plausibly suggest” that the plaintiff is entitled to relief, meaning “the 13 pleaded factual content allows the court to draw the reasonable inference that the defendant is 14 liable.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 681 (2009). In considering the sufficiency of a 15 pleading, the Court must “accept all factual allegations in the complaint as true and construe the 16 pleadings in the light most favorable to the nonmoving party.” Rowe v. Educ. Credit Mgmt. Corp., 17 559 F.3d 1028, 1029–30 (9th Cir. 2009). Legal conclusions “can provide the complaint’s 18 framework,” but the Court will not assume they are correct unless “supported by factual 19 allegations.” Iqbal, 556 U.S. at 664. 20 III. 21 The Court Lacks Personal Jurisdiction Over the Appearing Foreign Defendants. Plaintiffs do not contend that any of the foreign defendants are at home in California. 22 Instead, they argue that general jurisdiction can be asserted over the foreign defendants because 23 the foreign and California defendants are alter egos and the California defendants’ ties to this 24 forum may thus be imputed to the foreign defendants. The Court determined that the previous 25 complaint failed to plead a unity of interest establishing an alter ego relationship between either of 26 the California defendants and any of the foreign defendants who had appeared. The Court now 27 considers the new allegations to determine whether they change this analysis. Additionally, three 28 foreign defendants had not appeared or been served when the Court issued its previous order but 5 1 have now waived service. Accordingly, the Court considers the jurisdictional allegations as to 2 these defendants as well. 3 4 5 Plaintiffs have added several factual allegations regarding the California defendants and their relationships with foreign defendants to the complaint, including: • 6 structure, and participates in the VIE structure via its contractual arrangements with 7 other Sina Group companies.” 8 • Sina.com Online operates “sina.com” for all Sina Group businesses. 9 • Sina.com Online shares the same CEO and CFO with Sina Corp, and the shared CFO is also Sina.com’s registered agent for accepting service. 10 United States District Court Northern District of California Each of the California defendants “is an essential part of the Sina Group’s VIE 11 • Sina Corp. has listed Sina.com Online as a subsidiary in public filings. 12 • Weibo R&D shares the same CFO as Weibo Corp, and the shared CFO is a significant 13 shareholder of Beijing Sina. 14 None of these allegations establishes unity of interest or ownership between either of the 15 California defendants and any of the foreign defendants. Allegations that Sina.com and Weibo 16 R&D are an “essential part” of the Sina Group are vague and conclusory. Allegations regarding 17 contractual relationships between the California and foreign defendants (without further 18 explanation) if anything indicate separation rather than unity. Likewise, the Court previously 19 concluded that “operating a shared website merely shows that Sina.Com Online assisted with 20 administrative functions for the broader Sina Group, not that any other Sina entity had control 21 over Sina.com Online or vice versa.” And, as the Court previously explained, “allegations of 22 ‘ownership and shared management personnel’ are insufficient to establish the required level of 23 control.” See Ranza, 793 F.3d at 1073. Finally, the complaint does not allege any direct 24 relationships between any of the three new foreign defendants and either of the California 25 defendants. 26 Accordingly, as before, Plaintiffs have failed to plead a unity of interest between either of 27 the California defendants and any of the foreign defendants. There is therefore no basis for the 28 Court to exercise general personal jurisdiction over any of the foreign defendants. 6 1 2 be if the Court had specific jurisdiction with respect to the claims against them. The Court 3 previously determined that the Plaintiffs had not shown that their claims arose out of any of the 4 foreign defendants’ California contacts. The amended complaint includes a few additional 5 allegations of contacts with California by Sina Corp. and Weibo Corp., including that both 6 companies employ agents in California and elsewhere in the United States, and that both 7 companies maintain servers in Santa Clara County that house databases and applications including 8 the technology at issue in this case. As the Court previously explained, however, “the mere storage 9 of that technology on the servers [in California] is too far removed from the alleged wrongdoing to 10 11 United States District Court Northern District of California The only other basis for exercising jurisdiction over any of the foreign defendants would establish but for causation.” The Court previously recognized that under Yamashita v. LG Chemical, Ltd., 62 F.4th 496 12 (9th Cir. 2023), Plaintiffs could also establish a sufficient nexus by showing that their claims 13 “relate to” defendants’ forum contacts—an issue that had not been addressed in the previous 14 briefing. But Plaintiffs have still failed to show that their claims closely “relate to” any of the 15 foreign defendants’ California contacts. 16 As the Yamashita court explained, the phrase “‘relate to’ does not mean anything goes. To 17 the contrary, to give ‘relate to’ too broad a scope would risk collapsing the core distinction 18 between general and specific personal jurisdiction…. [R]elatedness requires a close connection 19 between contacts and injury.” 62 F.4th at 506 (cleaned up). Here, the California contact that 20 appears to relate most closely to this case is certain defendants’ alleged use of California servers. 21 Nothing in the amended complaint or briefing, however, changes the Court’s previous 22 determination that this contact is “far removed” from the alleged wrongdoing: misappropriation of 23 GeoSolutions’ technology. There are no allegations, for example, that the alleged “shadow 24 department” responsible for siphoning GeoSolutions’ technology operated in any way out of 25 California, or that California servers provided a means for the misappropriation. As the Court 26 previously concluded, the “mere storage” of the allegedly misappropriated technology on servers 27 that happen to be located in California is “far removed” from the focal point of the alleged 28 wrongdoing. Without more, these attenuated alleged California contacts are neither a but-for cause 7 1 nor closely related to the alleged wrongdoing that underlies Plaintiffs’ claims. Accordingly, Plaintiffs have established no adequate basis for this Court to exercise 2 3 specific personal jurisdiction over any of the previously or newly appearing foreign defendants. 4 IV. Unlike for the foreign defendants, this Court has personal jurisdiction over Sina.com 5 6 Online and Weibo R&D Limited, both California corporations operated out of Palo Alto, 7 California. The question, then, is whether Plaintiffs have stated a claim against either of these 8 defendants. The Court dismissed GeoSolutions’ previous complaint against the California defendants 9 United States District Court Northern District of California The Complaint Fails To State A Claim Against the California Defendants. 10 “for the simple reason” that Plaintiffs “have not pleaded that the California defendants participated 11 in the alleged misconduct.” Because Plaintiffs had not successfully pleaded an alter ego theory, the 12 foreign entities’ actions could not be imputed to the California defendants, and the previous 13 complaint “contain[ed] no allegations that the California Defendants participated in any RICO 14 predicates, participated in misappropriating trade secrets, made any misrepresentations, or took 15 part in any misconduct that Plaintiffs raise under the UCL.” The amended complaint fares no better. The amendments that pertain to the California 16 17 defendants all seem geared towards establishing that the California defendants are alter egos of 18 some or all of the foreign defendants. For the reasons discussed above, GeoSolutions has still 19 failed to establish alter ego status, so none of the other Sina entities’ conduct can be imputed to the 20 California defendants. And a careful review of the amendments to the complaint makes clear that 21 Plaintiffs have not added any new allegations that either of the California defendants participated 22 directly in any of the alleged misconduct. Accordingly, for the same reasons as before, the claims 23 against the California defendants are dismissed under Rule 12(b)(6). 24 V. 25 The Remaining Defendant Has Not Been Served. There remains one defendant that has still not been served: GyPSii (Shanghai) Co., Ltd. 26 Plaintiffs say they are still attempting service under the Hague Convention, but more than two 27 years have passed since the complaint was filed. Plaintiffs are ordered to show cause within 30 28 days why the claims against GyPSii should not be dismissed without prejudice. See Sport Lisboa e 8 1 Benfica-Futebol SAD v. Doe 1, 2018 WL 4043182, at *4 (C.D. Cal. Aug. 21, 2018) (“[T]he court 2 may set ‘a reasonable time limit for service in a foreign country.’”). 3 VI. United States District Court Northern District of California 4 Conclusion The claims against the foreign defendants—Weibo Corporation; Sina Corporation; New 5 Wave MMXV Limited; Sina Group Holding Company Limited; Sina (Beijing) Information 6 Technology Co., Ltd.; Sina.com Technology (China) Co., Ltd.; Sina Hong Kong Limited; Beijing 7 Sina Internet Information Service Company Ltd.; Guowei Cao, a.k.a. Charles Chao; Beijing New 8 Media Technology Information Company; Beijing Weimeng Technology Co., Ltd.; and Gaofei 9 Wang—are dismissed without prejudice for lack of personal jurisdiction. The claims against the 10 California defendants— Sina.com Online and Weibo R&D Limited—are dismissed with prejudice 11 for failure to state a claim. These dismissals are without further leave to amend. 12 13 Plaintiffs shall, within 30 days, show cause why the claims against GyPSii (Shanghai) Co., Ltd. should not be dismissed without prejudice for failure to serve. 14 15 16 IT IS SO ORDERED. Dated: October 27, 2023 17 18 P. Casey Pitts United States District Judge 19 20 21 22 23 24 25 26 27 28 9
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