United States District Court, D. Arizona
ORDER
Honorable James A. Soto, United States District Judge.
Pending
before the Court is Cardone Industries, Inc.'s Motion to
Dismiss for Lack of Personal Jurisdiction, or Alternatively,
to Transfer Venue, or Alternatively, to Dismiss for Failure
to State a Claim (Doc. 19). This motion is fully briefed and
ripe for the Court's consideration.
FACTS
[1]
Plaintiff
had its principal place of business in Phoenix, Arizona.
Defendant had its principal place of business in
Philadelphia, Pennsylvania. In 2014 and 2015, Defendant
solicited vendors to work on its Enterprise Resource Planning
system. Defendant selected Plaintiff for the service, and the
parties entered into a contract in 2016. The contract
contained a “Governing Law” section, which states
“The parties hereby consent to the exclusive
jurisdiction of the state courts of the Commonwealth of
Pennsylvania, County of Philadelphia, and the United States
District Court for the Eastern District of Pennsylvania in
connection with any dispute based on, or arising out of, or
in connection with, this Agreement.” (Doc. 1-1 at 12.)
Defendant and its employees, representatives, agents,
officers, or directors did not go to Arizona during the
contract negotiation or implementation.
Plaintiff
performed much of the contracted work in Arizona through
remote access, [2]which allowed it to perform its work in
Arizona, while working with Defendant's employees
elsewhere.[3] In 2018, Defendant rescinded a payment to
Plaintiff. The parties continued to work together and through
electronic and telephonic communications, the parties w ere
ab l e to rea c h an a g reement to repair their working
relationship. This agreement stated “With respect to
all matters arising from or relating to this Amendment, and
in the event of any litigation, or arbitration or other
dispute resolution proceeding under this Amendment, the
parties hereto irrevocably (a) consent and submit to the
exclusive jurisdiction of the United States District Court
for the Eastern District of Virginia (sic) Pennsylvania
sitting in Philadelphia, Pennsylvania or, if there is no
basis for federal jurisdiction, in the Court of Common Pleas,
Philadelphia County, Pennsylvania[.]” (Doc. 1-1 at 22.)
Again, Defendant failed to faithfully abide by the agreement.
All of Defendant's servers and electronically stored
information and programs were and remained in Pennsylvania or
North Carolina. There was no travel by Defendant to Arizona
in connection with the Agreement or with Plaintiff's work
on the Agreement.
On
October 9, 2018, Plaintiff filed a complaint in the United
States District Court for the District of Arizona alleging
breach of contract, copyright infringement, unjust
enrichment, and replevin. (Doc. 1.) On November 8, 2018,
Defendant filed the present motion to dismiss for lack of
personal jurisdiction or to transfer venue or to dismiss for
failure to state a claim (Doc. 19).
LEGAL
STANDARD
The
burden is on plaintiff to demonstrate that a particular
district court has personal jurisdiction over defendant.
Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir.
2008); Schwarzenegger v. Fred Martin Motor Co., 374
F.3d 797, 800 (9th Cir. 2004). If the court does not conduct
an evidentiary hearing, the plaintiff must make a prima facie
showing. Mavrix Photo, Inc. v. Brand Tech. Inc., 647
F.3d 1218, 1223 (9th Cir. 2011); Boschetto, 539 F.3d
at 1015. Uncontroverted allegations in plaintiff's
complaint are taken as true and conflicts over statements in
affidavits are resolved in the plaintiff's favor.
Boschetto, 539 F.3d at 1015;
Schwarzenegger, 374 F.3d at 800.
Personal
jurisdiction in this matter is governed by the general
jurisdictional statute, which applies the state's law
regarding personal jurisdiction. Fed.R.Civ.P. 4(k)(a)(A);
see Axiom Foods, Inc. v. Acerchem Int'l, Inc.,
874 F.3d 1064, 1067 (9th Cir. 2017) (evaluating personal
jurisdiction in a copyright infringement action). Arizona
authorizes the exercise of personal jurisdiction to the full
extent permitted by the Due Process Clause of the United
States Constitution. See Ariz. R. Civ. P. 4.2(a);
Wake Up and Ball LLC. v. Sony Music Entm't Inc.,
119 F.Supp.3d 944, 947 (D. Ariz. 2015).
Under
the Federal Due Process Clause, personal jurisdiction may be
found under two categories: general or specific. Daimler
AG v. Bauman, 571 U.S. 117, 122 (2014); Picot v.
Weston, 780 F.3d 1206, 1211 (9th Cir. 2015).
General
jurisdiction provides jurisdiction over defendant in matters
unrelated to its litigation-related contacts. Daimler
AG, 571 U.S. at 121-22. General jurisdiction requires
that defendants have contacts that are so “continuous
and systematic” as to render them “at home”
in the forum state. Id. at 138; Mavrix Photo,
Inc., 647 F.3d at 1223. The United States Court of
Appeals for the Ninth Circuit suggests that courts look to
the contact's “[l]ongevity, continuity, volume,
economic impact, physical presence, and integration into the
[forum] state's regulatory or economic markets, ”
when considering this exacting standard. Mavrix Photo,
Inc., 647 F.3d at 1224 (first alteration in original)
(quoting Tuazon v. R.J. Reynolds Tobacco
Co., 433 F.3d 1163, 1172 (9th Cir. 2006)). Corporations
are generally “at home” where they are
incorporated or have their principal place of business.
See Daimler AG, 571 U.S. at 139.
Specific
jurisdiction provides jurisdiction over defendants in forums
with case-linked contacts. Walden v. Fiore, 571 U.S.
277, 283-84 (2014); Axiom Foods, Inc., 874 F.3d at
1068. Specific jurisdiction requires that courts ensure that
the defendant has “minimum contacts” with a forum
to ensure that litigating in the jurisdiction “does not
offend ‘traditional notions of fair play and
substantial justice.'” Axiom Foods, Inc.,
874 F.3d at 1068 (quoting Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)); see
Boschetto, 539 F.3d at 1015-16. The crux of the inquiry
is the defendant's contact with the forum and not the
defendant's contacts with the plaintiff or
plaintiff's contacts with the forum. Walden, 571
U.S. at 284; Axiom Foods, Inc., 874 F.3d at 1068.
“[A] plaintiff's contacts with the forum State
cannot be ‘decisive in determining whether the
defendant's due process rights are
violated[.]'” Walden, 571 U.S. at 279
(quoting Rush v. Savchuk, 444 U.S. 320, 332 (1980)).
The
Ninth Circuit has created and implemented a three-prong test
to determine if a court has specific personal jurisdiction
over a defendant. Axiom Foods, Inc., 874 F.3d at
1068 (applying the Schwarzenegger test);
Boschetto, 539 F.3d at 1016. “(1) the
defendant must either ‘purposefully direct his
activities' toward the forum or ‘purposefully
avail[ ] himself of the privileges of conducting activities
in the forum'; (2) ‘the claim must be one which
arises out of or relates to the defendant's forum-related
activities'; and (3) ‘the exercise of jurisdiction
must comport with fair play and substantial justice, i.e. it
must be reasonable.'” Axiom Foods, Inc.,
874 F.3d at 1068 (alteration in original) (quoting Dole
Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir.
2002)); see Picot, 780 F.3d at 1211. The first two
prongs are the plaintiff's burden to show, while the
third prong requires the defendant to “present a
compelling case.” Schwarzenegger, 374 F.3d at
802 (citation omitted). Pendant personal jurisdiction may be
extended to from claims with jurisdiction if the claims share
a “common nucleus of operative facts.”
Picot, 780 F.3d at 1211 (quoting Action
Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d
1174, 1181 (9th Cir. 2004)). If plaintiff's arguments
fail under the first prong, then the court is not obligated
to consider the remaining prongs. Pebble Beach Co. v.
Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006).
The
first prong can be satisfied in two separate ways, depending
on the type of case. Axiom Foods, Inc., 874 F.3d at
1069 (applying the purposeful direction test as copyright
infringement is a tort); Picot, 780 F.3d at 1212;
Pebble Beach Co., 453 F.3d at 1155. When both
contract and tort claims are presented, if either test is
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