Cirana Corporation v. Changshu Jicheng Spinning and Weaving Commodities Co Ltd et al

Filing 46

MINUTES (IN CHAMBERS) by Judge Christina A. Snyder RE: Defendants Unlimited Avenues, Inc. ("United Avenues") and Gary Sachdev's Motion to Dismiss Plaintiff's First Amended Complaint for Lack of Personal Jurisdiction 32 . The Court DENIES Sachdev and Unlimited Avenues' motion to dismiss plaintiff Cirana's complaint for lack of personal jurisdiction. Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:16-cv-4590-CAS(GJSx)

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

Present: The Honorable

Date

‘O’

October 6, 2016

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS) - DEFENDANTS UNLIMITED AVENUES,
INC. AND GARY SACHDEV’S MOTION TO DISMISS
PLAINTIFF’S FIRST AMENDED COMPLAINT FOR LACK OF
PERSONAL JURISDICTION (Dkt. 32, filed September 6, 2016)

The Court finds this motion appropriate for decision without oral argument. Fed.
R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing date of October 17, 2016 is
vacated, and the matter is hereby taken under submission.
I.

INTRODUCTION

On June 24, 2016, plaintiff Cirana Corporation, d/b/a Lapis Clothing, filed this
action against defendants Chiangshu Jicheng Spinning and Weaving Commodities Co.,
Ltd., a/k/a Changshu Jichen Garment, Ltd. (“Changshu”); Ming Jian Chen, a/k/a Jason
Chen; Jie Hua Zhou; Unlimited Avenues, Inc., Gary Sachdev, and Does 1–20. Dkt. 1.
On August 4, 2016, Unlimited Avenues, Inc. and Sachdev (“Unlimited
defendants”) filed a motion to dismiss plaintiff’s complaint for lack of personal
jurisdiction. Dkt. 22. On August 22, 2016, plaintiff filed its first amended complaint.
Dkt. 27 (“FAC”). In light of the filing of the FAC, on August, 25, 2016, the Court ruled
that defendants’ pending motion to dismiss was moot. Dkt. 34.
On September 6, 2016, the Unlimited defendants filed a motion to dismiss the FAC
for lack of personal jurisdiction. Dkt. 32 (“Motion”). On September 26, 2016, plaintiff
filed its opposition to the Unlimited defendants’ motion, dkt. 40 (“Opp’n”), and on
October 4, 2016, the Unlimited defendants filed their reply, dkt. 45 (“Reply”).
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Date

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Case No.

2:16-cv-4590-CAS(GJSx)

October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

Having carefully considered the parties’ arguments, the Court finds and concludes
as follows.
II.

BACKGROUND

Plaintiff is a California corporation, organized under the laws of California, with
its principal place of business in Los Angeles, California. FAC ¶ 7. Unlimited Avenues
is a New York corporation organized under the laws of New York with its principal place
of business in New York, New York. Id. ¶ 12. Sachdev is the sole owner and/or
stockholder of Unlimited. Id. ¶ 14.
In or around late 2007, plaintiff commenced a business relationship with Changshu
for the manufacture and import of garments from China to the United States. Id. ¶ 38.
Plaintiff placed purchase orders with Changshu, which included, inter alia, the number of
units, styles, and colors of garments ordered by plaintiff and the textile fabric designs to
be used in manufacturing the garments. Id. ¶ 39. Plaintiff owns the copyright to
numerous textile designs. Id. ¶ 21. In connection with plaintiff’s purchase orders,
plaintiff supplied Changshu, Chen, and Zhou with its original textile designs. Id. ¶ 39.
Plaintiff alleges that defendants knowingly and intentionally began wrongfully
copying and/or creating derivative works based on seven of plaintiff’s textile designs and
that defendants licensed, manufactured, imported, sold, or offered for sale garments that
were unauthorized reproductions of one or more of those seven designs. Id. ¶ 40. The
infringing garments were sold and/or distributed with hangtags bearing the mark J. Gee,
which is owned by Unlimited Avenues, id. ¶ 15g, and have labels bearing R/N 80353,
which is registered to Unlimited Avenues, id. ¶ 42. Plaintiff further alleges that
defendants sold the infringing garments to one or more of plaintiff’s customers, including
Burlington Coat Factory, at prices below what plaintiff charges for its garments. Id. ¶ 55.
Specifically, plaintiff alleges that Chengshu ships goods, including the infringing
garments, to Unlimited Avenues through the Port of Long Beach, California. Id. ¶ 15b.
Unlimited Avenues consigns those goods, and their own, at the Port of Long Beach and
then causes them to be delivered to a warehouse in Carson, California. Id. ¶ 15d.
Unlimited Avenues sold some of the infringing garments to Burlington Coat Factory,
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Case No.

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October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

who offered them for resale on its website and shipped those items through the United
States, including within this judicial district. Id. ¶ 15e.
Plaintiff alleges that Chen, Zhou, and Does 1–10 are the alter egos of Changshu,
and that Sachdev and Does 11–20 are the alter egos of Unlimited Avenues. Id. ¶¶ 17–18.
Plaintiff filed this action, alleging five claims for relief against all defendants: (1)
copyright infringement, (2) contributory copyright infringement, (3) unfair competition
and false designation of origin pursuant to 15 U.S.C. § 1125(a), (4) unfair competition
pursuant to the California Business and Professions Code § 17200 et seq., and (5)
intentional interference with prospective economic advantage. Id. ¶¶ 63–103.
III.

LEGAL STANDARDS
A.

Alter Ego Liability

Under California law, “[a] corporate identity may be disregarded—the ‘corporate
veil’ pierced—where an abuse of the corporate privilege justifies holding the [owner] of a
corporation liable for the acts of the corporation.” Sonora Diamond Corp. v. Super. Ct.,
83 Cal. App. 4th 523, 538 (2000). To state a claim for alter ego liability, a plaintiff must
adequately allege that: “(1) there is such unity of interest that the separate personalities
[of the entity and the shareholder] no longer exist and (2) that failure to disregard [their
separate entities] would result in fraud or injustice.” Doe v. Unocal Corp., 248 F.3d 915,
926 (9th Cir. 2001). When assessing whether there is unity of interest between a
corporation and an individual for the purposes of piercing the corporate veil under the
alter ego doctrine, courts consider, among other factors:
the commingling of funds and other assets; the failure to segregate funds of
the individual and the corporation; the unauthorized diversion of corporate
funds to other than corporate purposes; the treatment by an individual of
corporate assets as his own; the failure to seek authority to issue stock or
issue stock under existing authorization; the representation by an individual
that he is personally liable for corporate debts; the failure to maintain
adequate corporate minutes or records; the intermingling of the individual
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Case No.

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October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.
and corporate records; the ownership of all the stock by a single individual
or family; the domination or control of the corporation by the stockholders;
the use of a single address for the individual and the corporation; the
inadequacy of the corporation's capitalization; the use of the corporation as a
mere conduit for an individual's business; the concealment of the ownership
of the corporation; the disregard of formalities and the failure to maintain
arm’s-length transactions with the corporation; and the attempts to segregate
liabilities to the corporation.

Mid-Century Ins. Co. v. Gardner, 9 Cal. App. 4th 1205, 1213 n.3 (1992).
“Conclusory allegations of ‘alter ego’ status are insufficient to state a claim.
Rather, a plaintiff must allege specifically both of the elements of alter ego liability, as
well as facts supporting each.” Neilson v. Union Bank of California, N.A., 290 F. Supp.
2d 1101, 1116 (C.D. Cal. 2003). However, on a motion to dismiss for lack of personal
jurisdiction, “[b]ecause the facts relating to personal jurisdiction are intertwined with the
merits of its claims, [a plaintiff] need only make a prima facie showing of alter ego
liability in order to defeat [such a] motion.” ADO Fin., AG v. McDonnell Douglas Corp.,
931 F. Supp. 711, 717 (C.D. Cal. 1996).
B.

Personal Jurisdiction

When a defendant moves to dismiss for lack of personal jurisdiction under Federal
Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating that the
court may properly exercise personal jurisdiction over the defendant. Pebble Beach Co.
v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Where, as here, a court decides such a
motion without an evidentiary hearing, the plaintiff need only make a prima facie
showing of jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage, 65
F.3d 1495, 1498 (9th Cir. 1995); Doe v. Unocal Corp., 27 F. Supp. 2d 1174, 1181 (C.D.
Cal. 1998), aff’d, 248 F.3d 915 (9th Cir. 2001). The plaintiff’s alleged version of the
facts is taken as true for purposes of the motion if not directly controverted. AT & T v.
Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996); Unocal, 27 F. Supp. 2d
at 1181. If the defendant adduces evidence controverting the allegations, however, the
plaintiff may not rely on his pleadings, but must “come forward with facts, by affidavit or
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Case No.

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October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

otherwise, supporting personal jurisdiction.” Scott v. Breeland, 792 F.2d 925, 927 (9th
Cir. 1986) (quoting Amba Mktg. Servs., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th
Cir. 1977)). Any “‘conflicts between the facts contained in the parties’ affidavits must be
resolved in [plaintiff’s] favor for purposes of deciding whether a prima facie case for
personal jurisdiction exists.’” AT & T, 94 F.3d at 588–89 (quoting WNS, Inc. v. Farrow,
884 F.2d 200, 203 (5th Cir. 1989)).
Generally, personal jurisdiction exists if (1) it is permitted by the forum state’s
long-arm statute and (2) the “exercise of that jurisdiction does not violate federal due
process.” Pebble Beach, 453 F.3d at 1154–55 (citing Fireman’s Fund Ins. Co. v. Nat’l
Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996)).
California’s long-arm jurisdictional statute is coextensive with federal due process
requirements, so that the jurisdictional analysis under state law and federal due process
are the same. Cal. Civ. Proc. Code § 410.10; Roth v. Garcia Marquez, 942 F.2d 617, 620
(9th Cir. 1991). In order for a court to exercise personal jurisdiction over a nonresident
defendant, that defendant must have “minimum contacts” with the forum state so that the
exercise of jurisdiction “does not offend traditional notions of fair play and substantial
justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Depending on the
nature of the contacts between the defendant and the forum state, personal jurisdiction is
characterized as either general or specific.
1.

General Jurisdiction

“A court may assert general jurisdiction over foreign (sister-state or
foreign-country) corporations to hear any and all claims against them when their
affiliations with the State are so ‘continuous and systematic’ as to render them essentially
at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 919 (2011). Whether a defendant’s contacts are sufficiently substantial,
continuous, and systematic for an exercise of general jurisdiction depends upon a
defendant’s “[l]ongevity, continuity, volume, economic impact, physical presence, and
integration into the state’s regulatory or economic markets.” Mavrix Photo, Inc. v. Brand
Techs., Inc., 647 F.3d 1218, 1224 (9th Cir. 2011) (quoting Tuazon v. R.J. Reynolds
Tobacco Co., 433 F.3d 1163, 1172 (9th Cir. 2006)); see also Bancroft & Masters, Inc. v.
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Case No.

2:16-cv-4590-CAS(GJSx)

October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

Augusta Nat. Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (“Factors to be taken into
consideration are whether the defendant makes sales, solicits or engages in business in
the state, serves the state’s markets, designates an agent for service of process, holds a
license, or is incorporated there.”). Occasional sales to residents of the forum state are
insufficient to create general jurisdiction. See Brand v. Menlove Dodge, 796 F.2d 1070,
1073 (9th Cir. 1986). This standard is exacting, “because a finding of general jurisdiction
permits a defendant to be haled into court in the forum state to answer for any of its
activities anywhere in the world.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d
797, 801 (9th Cir. 2004).
2.

Specific Jurisdiction

A court may assert specific jurisdiction over a claim for relief that arises out of a
defendant’s forum-related activities. Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir.
1993). The test for specific personal jurisdiction has three parts:
(1) The defendant must perform an act or consummate a transaction within
the forum, purposefully availing himself of the privilege of conducting
activities in the forum and invoking the benefits and protections of its laws;
(2) The claim must arise out of or result from the defendant’s forum-related
activities; and
(3) Exercise of jurisdiction must be reasonable.
Id.; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475–76 (1985). The
plaintiff bears the burden of satisfying the first two prongs, and if either is not satisfied,
personal jurisdiction is not established. Schwarzenegger, 374 F.3d at 802.
In contracts cases, courts conduct a “purposeful availment” analysis to determine
the first prong of the specific jurisdiction test. Id. Because a contract is “ordinarily but
an intermediate step serving to tie up prior business negotiations with future
consequences which themselves are the real object of the business transaction,” a court
must evaluate four factors to determine whether purposeful availment has occurred: (1)
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Case No.

2:16-cv-4590-CAS(GJSx)

October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

prior negotiations, (2) contemplated future consequences, (3) the terms of the contract,
(4) the parties’ actual course of dealing. Burger King, 471 U.S. at 478–79. A single
contract for the sale of goods to a plaintiff in the forum state may be sufficient for
specific jurisdiction over a defendant, but only where the contract creates a “substantial
connection” with the forum state. Boschetto v. Hansing, 539 F.3d 1011, 1017 (9th Cir.
2008). “The foreseeability of causing injury in another state is not a sufficient basis on
which to exercise jurisdiction,” without more. Gray & Co. v. Firstenberg Mach. Co.,
Inc., 913 F.2d 758, 760 (9th Cir. 1990).
In tort cases, by contrast, courts conduct a “purposeful direction” analysis.
Schwarzenegger, 374 F.3d at 802. Purposeful direction is analyzed under the “effects
test.” Calder v. Jones, 465 U.S. 783, 787–89, (1984); Dole Food Co. v. Watts, 303 F.3d
1104, 1111 (9th Cir. 2002). Under the “effects” test, “the defendant must have allegedly:
(1) committed an intentional act; (2) expressly aimed at the forum state; (3) causing harm
that the defendant knows is likely to be suffered in the forum state.” Yahoo! Inc. v. La
Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006)
(quoting Schwarzenegger, 374 F.3d at 803). A foreign act with foreseeable effects in the
forum state does not always gives rise to specific jurisdiction; there must be “something
more.” Bancroft & Masters, 223 F.3d at 1087. “‘[S]omething more’ is what the Supreme
Court described as ‘express aiming’ at the forum state.” Id. The “express aiming”
requirement is satisfied “when defendant is alleged to have engaged in wrongful conduct
targeted at a plaintiff whom the defendant knows to be a resident of the forum state.” Id.;
see also Dole Food, 303 F.3d at 1111.
If the plaintiff establishes the first two prongs regarding purposeful availment and
the defendant’s forum-related activities, then it is the defendant’s burden to “present a
compelling case” that the third prong, reasonableness, has not been satisfied.
Schwarzenegger, 374 F.3d at 802 (quoting Burger King, 471 U.S. at 477). The third
prong requires the Court to balance seven factors: (1) the extent of the defendant’s
purposeful availment, (2) the burden on the defendant, (3) conflicts of law between the
forum state and the defendant's state, (4) the forum's interest in adjudicating the dispute,
(5) judicial efficiency, (6) the plaintiff’s interest in convenient and effective relief, and
(7) the existence of an alternative forum. Roth, 942 F.2d at 623.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:16-cv-4590-CAS(GJSx)

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

IV.

Date

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October 6, 2016

ANALYSIS
A.

Alter Ego Liability

Plaintiff alleges that Sachdev is individually liable under the alter ego doctrine.
FAC ¶ 18f. To state a claim for alter ego liability, plaintiff must adequately allege that:
“(1) there is such unity of interest that the separate personalities [of the entity and the
shareholder] no longer exist and (2) that failure to disregard [their separate entities]
would result in fraud or injustice.” Unocal Corp., 248 F.3d at 926.
Plaintiff avers that there was a unity of interest and ownership because Sachdev
dominated, controlled, and influenced Unlimited Avenues; Unlimited Avenues is a mere
shell that Sachdev has used for his personal business; and Sachdev has converted the
profits of Unlimited Avenues. FAC ¶ 18. Plaintiff specifically contends, and the
Unlimited defendants confirm, that Sachdev is the sole shareholder of Unlimited
Avenues. Id. ¶ 14; Motion at 10. Plaintiff also alleges that Sachdev uses his personal
residential address as Unlimited Avenues’ business address. Opp’n at 16. A plaintiff
need only plead two or three factors to adequately plead unity of interest. See Daewoo
Elecs. Am. Inc. v. Opta Corp., No. 3:13-cv-1247-JSW, 2013 WL 3877596, at *5 (N.D.
Cal. July 25, 2013) (finding a pleading of two factors in support of unity of interest
sufficient); Pac. Mar. Freight, Inc. v. Foster, No. 3:10-cv-00578-BTM-BLM, 2010 WL
3339432, at *6 (S.D. Cal. Aug. 24, 2010) (citing authority holding that the identification
of unity of interest plus two or three factors was adequate). Therefore, the Court
concludes that plaintiff has made a prima facie showing, for the purposes of jurisdiction,
there is a unity of interest between Unlimited Avenues and Sachdev.
Next, “California courts generally require some evidence of bad faith conduct on
the part of defendants before concluding that an inequitable result justifies an alter ego
finding.” Neilson, 290 F. Supp. 2d at 1117. Where an individual defendant is the sole
shareholder in the corporate defendant, and the individual defendant alone would benefit
from the alleged wrongful conduct, a plaintiff has satisfied the inequitable prong of the
alter ego test. Johnson v. Serenity Transp., Inc., 141 F. Supp. 3d 974, 986 (N.D. Cal.
2015).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

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Case No.

2:16-cv-4590-CAS(GJSx)

October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

While plaintiff may not be able to prove on the merits that Sachdev was Unlimited
Avenues’ alter ego, the Court concludes that plaintiff has sufficiently pleaded its alter ego
allegations to defeat the Unlimited Defendants’ motion.
B.

Personal Jurisdiction
1.

General Jurisdiction

The Unlimited defendants argue that this Court lacks general personal jurisdiction
because they do not have substantial, continuous, or systematic contacts with California.
Motion at 2. The Unlimited defendants further contend that the facts that Unlimited
Avenues is registered to do business in California and that Unlimited Avenues has an
agent for service of process in California are insufficient to subject the Unlimited
defendants to general personal jurisdiction in California. Id. at 2–3.
The Court agrees that plaintiff has not established that the Unlimited defendants’
affiliations with California are “so ‘continuous and systematic’ as to render them
essentially at home in the forum State.” See Goodyear, 564 U.S. at 919. Furthermore,
plaintiff does not contend that the Unlimited defendants are subject to general personal
jurisdiction. The Court thus concludes that may not exercise general personal jurisdiction
over the Unlimited defendants.
2.

Specific Jurisdiction
a.

Purposeful Direction

When assessing whether it may exercise specific jurisdiction, the Court looks first
to whether the Unlimited defendants have purposely availed themselves of the privilege
of conducting activities in this district or purposefully directed its activities into this
district. “The Ninth Circuit has noted that purposeful availment and purposeful direction
are two distinct concepts.” Lang v. Morris, 823 F. Supp. 2d 966, 970 (N.D. Cal. 2011).
Specifically, the “purposeful availment analysis is most often used in suits sounding in
contract,” where as the “purposeful direction analysis . . . is most often used in suits
sounding in tort.” Schwarzenegger, 374 F.3d at 802.
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Case No.

2:16-cv-4590-CAS(GJSx)

October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

Plaintiff’s copyright claims sound in tort. See Wash. Shoe Co. v. A-Z Sporting
Goods Inc., 704 F.3d 668, 674 (9th Cir. 2012) (“We have characterized copyright
infringement as a ‘tort,’ and suggested that willful infringement is an intentional tort.”)
(internal citations omitted); Broadcast Music Inc. v. Blumonday, Inc., 818 F. Supp.
1352, 1353 (D. Nev.1993) (“At common law, a cause of action for copyright
infringement was analogous to several tort actions”). Therefore, the Court addresses the
first prong of the specific jurisdiction test under the purposeful direction approach for
suits sounding in tort. See Goldberg v. Cameron, 482 F. Supp. 2d 1136, 1144 (N.D. Cal.
2007) (“A claim for copyright infringement sounds in tort, and therefore a purposeful
direction analysis is appropriate.”).
To satisfy the purposeful direction “effects” test, “the defendant allegedly [must]
have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing
harm that the defendant knows is likely to be suffered in the forum state.” Yahoo!, 433
F.3d at 1206.
“An intentional act is an external manifestation of the actor’s intent to perform an
actual, physical act in the real world, not including any of its actual or intended results.”
Wash. Shoe, 704 F.3d at 674. Here, plaintiffs allege that the Unlimited defendants
committed an intentional act by intentionally (1) importing the infringing garments from
Chanshu in China to the Port of Long Beach; (2) transferring the infringing garments to
Unlimited’s warehouse in Carson, California; (3) placing Unlimited’s R/N label on the
garments, and (4) selling the infringing garments to customers in the government of the
United States. Opp’n at 6. The Unlimited defendants argue that these allegations “have
no foundation and are mere speculation and conjecture.” Reply at 4. While the
Unlimited defendants argue that plaintiff has not met its burden of proof, they do not, at
any point, introduce any facts to refute plaintiff’s allegations. See id. at 4–6. Plaintiff
need only make a prima facie showing of jurisdictional facts and, because those facts are
not refuted, the Court takes plaintiff’s alleged version of the facts as true for purposes of
this motion. See AT & T, 94 F.3d at 588. Therefore, the Court concludes that plaintiff
has adequately alleged an “intentional act” as required by the “effects” test.
The Court next considers whether the acts of the Unlimited defendants were
expressly aimed at California. The Unlimited defendants argue that any alleged
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Case No.

2:16-cv-4590-CAS(GJSx)

October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

copyright infringement was not expressly aimed at California because they sold their
goods only on the East Coast and never intended their goods to be sold in California.
Motion at 6. However, the Ninth Circuit has held that “[w]hen copyrights are held by
corporations, the ‘right to control the work’ will typically be exercised where the
corporation is located. The impact of an intentional violation of that right is necessarily
directed at that location.” Wash. Shoe., 704 F.3d at 678. The Ninth Circuit elaborated:
“Because the harm caused by an infringement of the copyright laws must be felt at least
at the place where the copyright is held, we think that the impact of a willful infringement
is necessarily directed there as well.” Id. Here, plaintiff is the copyright holder, is
located in California, and alleges willful copyright infringement. See FAC ¶¶ 40, 54
(alleging that defendants “knowingly and intentionally” improperly copied and/or created
derivative works based on plaintiff’s designs, and that defendants’ acts of infringement
were “willful and deliberate”). Accordingly, the Court concludes that the Unlimited
defendants’ intentional acts were expressly aimed at California.
The Court next considers whether defendants’ conduct caused foreseeable harm in
California. “The economic loss caused by the intentional infringement of a plaintiff’s
copyright is foreseeable.” Mavrix Photo, 647 F.3d at 1231. “It is foreseeable that the loss
will be inflicted both in the forum where the infringement took place . . . and where the
copyright holder has its principal place of business.” Wash. Shoe., 704 F.3d at 679
(emphasis added). The Unlimited defendants do not address this prong of the effects test.
Therefore, the Court concludes that it was foreseeable that plaintiff’s loss would be
inflicted in California.
In sum, the Court concludes that plaintiff has presented a prima facie case of
purposeful direction by the Unlimited defendants sufficient to survive a motion to dismiss
for lack of personal jurisdiction.
b.

“But for” Causation

The Court next considers whether plaintiff’s claims arise out of or result from the
Unlimited defendants’ forum-related activities. “To determine whether a claim arises out
of forum-related activities, courts apply a ‘but for’ test.” Unocal, 248 F.3d at 924.
Plaintiff alleges that it was harmed because defendants sold infringing garments to one or
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October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

more of plaintiff’s clients at a price below what plaintiff charges. FAC ¶¶ 55, 59.
Plaintiff argues that its claims would not have arisen if the Unlimited defendants had not
imported the infringing garments, stored them at a warehouse in Carson, placed
Unlimited Avenues’ labels on the garments, and resold of the garments to plaintiff’s
customers. Opp’n at 10. The Unlimited defendants argue, in turn, that the conduct that
plaintiff alleges is not sufficient to be a “but for” cause of plaintiff’s injury because
defendants “could have shipped the garments to any forum for consignment, had
warehouse space rented in any form, or registered themselves to do business in any
forum, and the alleged injury would have still occurred by the same alleged conduct of
the Defendants.” Motion at 7–8. The Unlimited defendants misstate the “but for” test.
That plaintiff would have been harmed had defendants engaged in the same conduct in a
different forum does not alter the fact that plaintiff was harmed by the Unlimited
defendants’ conduct in California. The Court therefore concludes that plaintiff has
presented a prima facie case that its claims arise out of the Unlimited defendants’ forumrelated activities.
c.

Reasonableness

The final requirement for specific jurisdiction is reasonableness. Because plaintiff
has satisfied the first two prongs of the specific jurisdiction test, the Unlimited defendants
bear the burden of “present[ing] a compelling case” that the exercise of jurisdiction is not
reasonable. Schwarzenegger, 374 F.3d at 802. The reasonableness determination
requires the consideration of seven factors: (1) the extent of the defendant’s purposeful
interjection into the forum state, (2) the burden on the defendant in defending in the
forum, (3) the extent of the conflict with the sovereignty of the defendant’s state, (4) the
forum state’s interest in adjudicating the dispute, (5) the most efficient judicial resolution
of the controversy, (6) the importance of the forum to the plaintiff’s interest in convenient
and effective relief, and (7) the existence of an alternative forum. Roth, 942 F.2d at 623;
Bancroft, 223 F.3d at 1088 (citing Burger King, 471 U.S. at 476). The Unlimited
defendants argue that jurisdiction is unreasonable because they perform their sales and
business in New York, they do not have bank accounts or real property in California, and
they have not aimed their actions at California or California residents. Motion at 8. The
Unlimited defendants focus only on the first factor – the extent of their interjection into
the forum state. “This is inadequate to discharge Burger King’s requirement that the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:16-cv-4590-CAS(GJSx)

October 6, 2016

Title

CIRANA CORPORATION v. CHANGSHU JISHENG SPINNING AND
WEAVING COMMODITIES CO., LTD. ET AL.

defendant demonstrate a ‘compelling case,’ focused on the seven specific factors listed
above, in order to establish unreasonableness.” Bancroft, 223 F.3d at 1089. The
Unlimited defendants have not demonstrated any hardship or any other specific factor
suggesting that jurisdiction in California would be unreasonable. Accordingly, the Court
finds that the reasonableness requirement is met.
Because the three-part test for specific jurisdiction has been satisfied, the Court
concludes that it may exercise jurisdiction over the Unlimited defendants.
IV.

CONCLUSION

In accordance with the foregoing, the Court DENIES Sachdev and Unlimited
Avenues’ motion to dismiss plaintiff Cirana’s complaint for lack of personal jurisdiction.
IT IS SO ORDERED.
00
Initials of Preparer

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:

00

CMJ

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