Springboards to Education Inc v. Families in Schools
Filing
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Memorandum Opinion and Order Grants 71 Motion to Dismiss/Lack of Jurisdiction, Motion to Transfer Case Out of District/Division filed by Families in Schools. Accordingly, the court concludes that it lacks in personam jurisdiction and it grants defendant's alternative motion to transfer this lawsuit to the Central District of California, Western Division, pursuant to 28 U.S.C. § 1406(a). (Ordered by Judge Sidney A Fitzwater on 11/15/2017) (ndt)[Transferred from Texas Northern on 11/15/2017.]
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
SPRINGBOARDS TO EDUCATION,
INC.,
Plaintiff,
VS.
FAMILIES IN SCHOOLS,
Defendant.
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Civil Action No. 3:16-CV-2512-D
MEMORANDUM OPINION
AND ORDER
In this suit for trademark infringement and related claims, defendant moves to dismiss
for lack of personal jurisdiction, or, alternatively, to transfer the case to the Central District
of California. This case presents a wrinkle in that the court has already determined in the
default-judgment context that plaintiff has established that the court has personal jurisdiction
based on defendant’s operation of its website. But in the present, non-default-judgment
context, and for the reasons that follow, the court holds that it lacks personal jurisdiction and
grants defendant’s alternative motion to transfer this case to the Central District of California,
Western Division, pursuant to 28 U.S.C. § 1406(a).
I
This dispute stems from the use of the name “Million Word Challenge.” Plaintiff
Springboards to Education, Inc. (“Springboards”) designs, markets, and sells reading and
related educational products under the Springboard brand and its associated federallyregistered trademarks, including the trademarks “Millionaire Reader,” “Million Dollar
Reader,” “Millionaire’s Reading Club,” and “Read A Million Words.” Defendant Families
In Schools (“FIS”) is a California nonprofit organization whose mission is to involve parents
and communities in their children’s education, targeting low-income communities and
communities of color through programs such as, inter alia, the “Million Word Challenge,”
which it maintains is a public awareness campaign “developed in 2002 in response to a lack
of access to bookstores and libraries in Los Angeles’ low-income communities.” D. Br. 4.
FIS contends that, although some of its workshops and programs are offered outside
California, the Million Word Challenge was designed for implementation solely in the Los
Angeles County schools, and that only a single participant—Andre Agassi College
Preparatory Academy in Las Vegas, Nevada—has come from outside the state of California.
In this lawsuit, Springboards sues FIS for trademark counterfeiting, under 15 U.S.C.
§ 1114; trademark infringement, under 15 U.S.C. § 1114; false designations of origin false
descriptions, under 15 U.S.C. § 1125(a); trademark dilution, under 15 U.S.C. § 1125(e);
violation of the Texas anti-dilution statute, Tex. Bus. & Com. Code Ann. § 16.103; common
law trademark infringement; and common law unfair competition. Springboards alleges,
inter alia, that “[t]his Court has personal jurisdiction over Defendant by way of the Texas
long-arm statute because Defendant transacts a sufficient amount of business in Texas
throughout the use of its interactive website and promotional materials.” Compl. ¶ 10.
Springboards served FIS with process in October 2016. After FIS failed to answer
or otherwise respond to Springboards’ complaint, Springboards requested entry of a default
and moved for a default judgment. In April 2017 the court held a hearing on Springboards’
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motion. FIS did not appear.1 During the hearing, Springboards’ counsel presented evidence
on the issue of personal jurisdiction,2 and the court held, in pertinent part:
plaintiff has proved specific in personam jurisdiction by a
preponderance of the evidence based upon the witness’s
testimony that establishes the presence of the interactive website
in Texas and that itself contains infringing material. . . . The
Fifth Circuit when analyzing in personam jurisdiction based on
a website uses a sliding scale that originated in the Zippo case .
. . and the nature of this website is sufficient to establish specific
jurisdiction, and that is supported by the evidence of the way the
website works in relation to a person known to be in Texas and
the content of the website which contains infringing material.
Hrg. Tr. 38. Based on these findings and conclusions, the court entered a default judgment
against FIS.
Thereafter, FIS filed, inter alia, a motion to vacate default judgment.
After
conducting a hearing on the motion, the court entered an order stating that it would set aside
the default judgment on the condition that FIS first pay to Springboards its reasonable
attorney’s fees and costs incurred in obtaining the default judgment and opposing FIS’s postjudgment motions. The court also stated that, “[a]fter the default judgment is set aside, FIS
will be permitted to file a timely responsive pleading. The responsive pleading may
1
Because the details are immaterial to the present decision, the court is omitting a
discussion of the insufficient procedures that FIS engaged in before the court entered the
default judgment.
2
Although FIS failed to file a responsive pleading, it did through correspondence
object to the exercise of personal jurisdiction, and, as a result, the court at the default
judgment hearing inquired whether Springboards would present evidence in support of
personal jurisdiction, see Hrg. Tr. 4, which it did.
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challenge the court’s exercise of personal jurisdiction over FIS, and Springboards’ response
may assert that FIS has waived its challenge to the court’s exercise of personal jurisdiction.”
July 6, 2017 Am. Order at 2. The court later entered an order recognizing that FIS had
satisfied the court-imposed condition for setting aside and vacating the default judgment.
FIS now moves to dismiss this action under Fed. R. Civ. P. 12(b)(2) on the ground
that the reach of the “Million Word Challenge” is intended to go no farther than Los Angeles
County, California, and that Springboards cannot make a prima facie showing that FIS
purposefully directed its activities at residents of Texas or that this lawsuit is the result of
alleged injuries that arose out of, or are related to, the use of the “Million Word Challenge,”
as directed to the state of Texas. FIS moves in the alternative to transfer this lawsuit to the
United States District Court for the Central District of California.
II
The court must first determine whether it can exercise personal jurisdiction over FIS.
The Lanham Act does not authorize nationwide service of process. See, e.g.,
Tempur-Pedic Int’l, Inc. v. Go Satellite Inc., 758 F.Supp.2d 366, 371 (N.D. Tex. 2010)
(Fitzwater, C.J.). Accordingly, absent a controlling federal statute regarding service of
process, the determination whether a federal district court has in personam jurisdiction over
a nonresident defendant is bipartite. See Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th
Cir. 1993). The court first decides whether the long-arm statute of the state in which it sits
confers personal jurisdiction over the defendant. If it does, the court next resolves whether
the exercise of personal jurisdiction is consistent with due process under the United States
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Constitution. See Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999).
Because the Texas long-arm statute extends to the limits of due process, the court need
only consider whether exercising jurisdiction over FIS would be consistent with the Due
Process Clause of the Fourteenth Amendment. See id.; see also Alpine View Co. v. Atlas
Copco AB, 205 F.3d 208, 214 (5th Cir. 2000).
The Due Process Clause of the Fourteenth Amendment permits
the exercise of personal jurisdiction over a nonresident
defendant when (1) that defendant has purposefully availed
himself of the benefits and protections of the forum state by
establishing “minimum contacts” with the forum state; and (2)
the exercise of jurisdiction over that defendant does not offend
“traditional notions of fair play and substantial justice.” To
comport with due process, the defendant’s conduct in
connection with the forum state must be such that he “should
reasonably anticipate being haled into court” in the forum state.
Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999) (footnotes omitted) (citing
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).3
A defendant’s contacts with the forum may support either specific or general
jurisdiction over the defendant. Mink, 190 F.3d at 336. For the court to properly exercise
specific personal jurisdiction, the defendant must have “purposefully directed” its activities
at residents of the forum, and the litigation must result from alleged injuries that “arise out
3
To determine whether exercising jurisdiction would satisfy traditional notions of fair
play and substantial justice, the court examines (1) the defendant’s burden, (2) the forum
state’s interests, (3) the plaintiff’s interests in convenient and effective relief, (4) the judicial
system’s interest in efficient resolution of controversies, and (5) the states’ shared interest
in fundamental social policies. Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 421
(5th Cir. 1993).
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of or relate to” the defendant’s activities directed at the forum. Archer & White, Inc. v.
Tishler, 2003 WL 22456806, at *2 (N.D. Tex. Oct. 23, 2003) (Fitzwater, J.) (citing Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
General jurisdiction allows a court to exercise personal jurisdiction over a defendant
even when the defendant’s contacts with the forum state are unrelated to the cause of action.
See Mink, 190 F.3d at 336. For a court to exercise general jurisdiction, a defendant’s
contacts must be “continuous and systematic.” Id. (citations omitted). General jurisdiction
over a foreign corporation is proper “only when the corporation’s affiliations with the State
in which suit is brought are so constant and pervasive ‘as to render [it] essentially at home
in the forum State.’” Daimler AG v. Bauman, ___ U.S. ___, 134 S.Ct. 746, 751 (2014)
(alteration in original) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.
915, 919 (2011)).
The district court usually resolves the jurisdictional issue without conducting a
hearing. See Ham, 4 F.3d at 415.
When a court rules on a motion to dismiss for lack of personal
jurisdiction without holding an evidentiary hearing, it must
accept as true the uncontroverted allegations in the complaint
and resolve in favor of the plaintiff any factual conflicts posed
by the affidavits. Therefore, in a no-hearing situation, a plaintiff
satisfies his burden by presenting a prima facie case for personal
jurisdiction.
Latshaw, 167 F.3d at 211 (footnotes omitted). This liberal standard does not require the
court to credit conclusory allegations, even if they remain uncontradicted. See, e.g., Panda
Brandywine Corp. v. Potomac Elec. Power Co., 2000 WL 35615925, at *2 (N.D. Tex. Sept.
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15, 2000) (Fitzwater, J.) (citing Felch v. Transportes Lar-Mex SA DE CV, 92 F.3d 320, 326
n.16 (5th Cir. 1996)), aff’d, 253 F.3d 865, 869 (5th Cir. 2001) (per curiam).
III
The due process inquiry begins with determining whether FIS has sufficient contacts
with the forum state of Texas. See Mink, 190 F.3d at 336. Springboards has the burden of
establishing FIS’s minimum contacts. See Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429,
433 (5th Cir. 2014)
A
Springboards does not appear to rely on general jurisdiction to establish that the court
can exercise in personam jurisdiction over FIS. The court will therefore turn to whether
Springboards has established that the court can exercise specific jurisdiction.
B
FIS’s motion to dismiss turns on whether the operation of its website (“Website”)
constitutes “minimum contacts” with Texas. See Tempur-Pedic, 758 F.Supp.2d at 373. But
before the court decides that question, it must address a procedural matter that involves its
decision at the default judgment stage that Springboards proved specific in personam
jurisdiction by a preponderance of the evidence.
As noted above, the court vacated the default judgment, and, in doing so, it explicitly
concluded that FIS could file a timely responsive pleading that challenges the court’s
exercise of personal jurisdiction over FIS. FIS has challenged this court’s exercise of
personal jurisdiction, so the court is no longer basing its jurisdictional determination solely
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on the uncontested evidence presented at the default judgment hearing. Instead, the court is
deciding the personal jurisdiction question as a contested matter.
The court is opting—as in the usual case—to decide the personal jurisdiction question
without conducting an evidentiary hearing. This means from a substantive standpoint that
Springboards can satisfy its burden merely by presenting a prima facie case for personal
jurisdiction. And from a procedural standpoint, it means that, in deciding FIS’s motion, the
court must accept as true the uncontroverted allegations of Springboards’ complaint and
resolve in Springboards’ favor any factual conflicts posed by the affidavits. Although the
usual formulation of the no-hearing procedure refers to “affidavits,” when considering a
motion to dismiss for lack of personal jurisdiction, a court may consider affidavits,
interrogatories, depositions, oral testimony, or any combination of recognized methods of
discovery. Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002).
In this case, Springboards has alleged in its complaint that the court has personal
jurisdiction over FIS through “the use of [FIS’s] interactive website and promotional
materials,” Compl. ¶ 10, and FIS has refuted Springboards’ allegations through the affidavit
of its President and Chief Executive Officer, D. App. 268-273. Because the allegations of
Springboards’ complaint are controverted, it must introduce evidence that, accepted as true,
makes a prima facie showing of personal jurisdiction. Rather than present supporting
affidavits, Springboards relies on the evidence that it introduced at the default judgment
hearing. The question thus becomes whether this evidence, accepted as true, is sufficient to
make a prima facie showing of personal jurisdiction when assessed against FIS’s
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controverting evidence.
C
When specific jurisdiction is based on online interactions via an Internet website, the
Fifth Circuit follows the sliding scale adopted in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952
F.Supp. 1119, 1124 (W.D. Pa. 1997). See Am. Eyewear, Inc. v. Peeper’s Sunglasses &
Accessories, Inc., 106 F.Supp.2d 895, 900-01, 900 n.10 (N.D. Tex. 2000) (Fitzwater, J.)
(citing Mink, 190 F.3d at 336 (interpreting Zippo)). Zippo requires the court to assess the
level of interactivity of the defendant’s website and prescribes a separate course of action for
each of the three categories of websites: (1) where a website is nothing more than a passive
advertisement, the court must decline to exercise personal jurisdiction; (2) where a website
facilitates contractual relationships and the knowing and repeated transmission of computer
files over the Internet, personal jurisdiction is proper; and (3) where a website falls
somewhere in between, “the exercise of jurisdiction is determined by the level of interactivity
and commercial nature of the exchange of information that occurs on the [w]ebsite.” Mink,
190 F.3d at 336.
The FIS Website falls in the middle of the Zippo sliding scale. Springboards
maintains that FIS operates an “interactive website” and contends that, at the default
judgment hearing, it “established the interactivity of Defendant’s website, negating any
argument that such was merely passive.” P. Br. 4-5. FIS does not dispute that its Website
is “interactive.” Nor does it dispute evidence presented at the default judgment hearing that
the Website has a landing page where visitors can input their email addresses to receive a
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newsletter from FIS; that visitors to the Website can make a donation to FIS via the Website;
or that visitors to the Website can request information on FIS’s products and services. The
court concludes that this evidence “establish[es] that the Website does more than passively
exist for advertising purposes.” Autoflex Leasing-Dall. I, LLC v. Autoflex LLC, 2017 WL
713667, at *4 (N.D. Tex. Feb. 23, 2017) (Fitzwater, J.). But the Website only permits users
to communicate and exchange contact, credit, and payment information with FIS. Id.
Therefore, the Website falls in the middle of the Zippo scale. Id. (citing Am. Eyewear, 106
F.Supp.2d at 901); see also People Sols., Inc. v. People Sols., Inc., 2000 WL 1030619, at
*3-4 (N.D. Tex. July 25, 2000) (Lindsay, J.) (holding that interactive website allowing users
to view products, download brochures, fill out forms, and place orders online fell in the
Zippo middle ground).
Having determined that the Website falls in the middle of the Zippo scale, the court
next examines the interactivity and commercial nature of exchanged information. See Mink,
190 F.3d at 336. “In undertaking that examination, ‘[t]he critical inquiry, . . . as with any
personal jurisdiction case, is whether the contacts suggest that the nonresident defendant
purposefully directed its activities toward the forum state or purposefully availed itself of the
privilege of conducting activities within the forum state.’” Springboards to Educ., Inc. v.
Hamilton Cnty. Read 20, 2017 WL 3023489, at *4 (N.D. Tex. July 14, 2017) (Boyle, J.)
(alteration and ellipses in original) (quoting Mothers Against Drunk Driving v. DAMMADD,
Inc., 2003 WL 292162, at *5 (N.D. Tex. Feb. 7, 2003) (Fish, C.J.)).
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In its brief, Springboards contends that
[a]s shown at the hearing, there was actual contacts and/or
contracts between a Texas resident and Defendant’s interactive
website; there was nothing hypothetical al-a Autoflex. It is
beyond “mere possibility” that a Texas resident would be
targeted by Defendant’s interactive website and would in fact
contact and/or contract with Defendant, it happened, as shown
by testimony at the hearing.
P. Br. 5. Although Springboards does not cite any evidence in support of its arguments, the
court assumes that the “actual contacts and/or contracts” to which Springboards refers are
the contacts that occurred and contracts created when its attorney visited FIS’s website and
made a donation to FIS in order to establish personal jurisdiction for purposes of this lawsuit.
See Hrg. Tr. 9-11 (testimony of Valerie Wilde, Esq. (“Wilde”) that she had visited FIS’s
website “quite a bit,” and that details the ways in which a Texas resident—i.e., Wilde—could
interact with FIS via its website). This evidence, however, “fail[s] to meet the minimum
threshold for specific jurisdiction.” Springboards to Educ., 2017 WL 3023489, at *4
(citation omitted).
Under Zippo personal jurisdiction is based on actual Internet sales to forum residents,
not the mere possibility of sales. See Mink, 190 F.3d at 337 (“Absent a defendant doing
business over the internet or sufficient interactivity with residents of the forum state, we
cannot conclude that personal jurisdiction is appropriate.”). As in Autoflex, there is no
evidence that FIS has made any sales of its products in the state of Texas or to Texas
residents. To the extent Springboards relies on its local attorney’s donation to FIS via the
Website, judges of this court have held that “voluntary donations . . . reflect a lack of regular
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commercial activity required to exercise in personam jurisdiction based on Internet contacts.”
Springboards to Educ., 2017 WL 3023489, at *4 (citing Mothers against Drunk Driving,
2003 WL 292162, at *5). And while it is hypothetically possible that a Texas resident could
purchase FIS’s products—assuming that FIS, in fact, offers products for purchase on its
Website—Springboards has not alleged that any Texas resident ever has. In fact, FIS has
produced uncontroverted evidence that of the many hundreds of schools and students who
have participated in the Million Word Challenge since 2011, only a single participant has
come from outside California. In sum, Springboards “fails to allege, let alone offer prima
facie proof, that a single disinterested Texas resident purchased an infringing product on
Defendant’s website or, for that matter, accessed the website at all.” Id. at *4 (citing CMC
Steel Fabricators, Inc. v. Franklin Inv. Corp., 2016 WL 3418974, at *2 (N.D. Tex. June 22,
2016) (Boyle, J.)). The allegations of Springboards’s complaint and the evidence that
Springboards introduced at the default judgment hearing fail to show that there is any
connection between FIS’s Website and Texas or to identify any actual sales to Texas
residents. Thus the court concludes that FIS has failed to make a prima facie showing of the
minimum contacts necessary for the court to exercise specific personal jurisdiction over FIS.
See, e.g., Autoflex, 2017 WL 713667, at *5.
D
In response to FIS’s motion, Springboards requests “leave to amend a first amended
complaint of curable facts.” P. Br. 1.
In deciding FIS’s motion, the court has considered not only the jurisdictional
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allegations of Springboards’ complaint but the evidence and arguments in support of personal
jurisdiction that Springboards presents in its response brief and presented during the defaultjudgment hearing. In moving for leave to amend, Springboards makes no attempt to explain
what additional facts it would allege that would show that this court has in personam
jurisdiction over FIS. Nor has it explained why, if it had those facts in its possession, it was
unable to assert them in response to FIS’s motion to dismiss. Because the court in deciding
FIS’s motion has already considered more than just the bare assertion of personal jurisdiction
in Springboards’ complaint, and because Springboards has not attempted to show what
additional jurisdictional facts it would plead if permitted to do so in an amended complaint,
the court denies the motion for leave to amend.
IV
Because Springboards has failed to make a prima facie showing of in personam
jurisdiction, the court now decides whether this case should be dismissed or transferred.
A
When a district court lacks personal jurisdiction, it can dismiss the case pursuant to
Rule 12(b)(2). See Herman v. Cataphora, 730 F.3d 460, 466 (5th Cir. 2013). Alternatively,
if the court determines that transfer is “in the interest of justice,” it can transfer the action to
“any district or division in which it could have been brought.” See id. (citation omitted)
(quoting 28 U.S.C. § 1406(a)). Under § 1406(a), a court can order the transfer regardless of
whether it has personal jurisdiction over the defendants. Nationwide Bi-Weekly Admin., Inc.
v. Belo Corp., 512 F.3d 137, 140 (5th Cir. 2007) (citing Goldlawr, Inc. v. Heiman, 369 U.S.
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463, 466 (1962)). Section 1406(a) specifically applies when an action “lay[s] venue in the
wrong division or district.” 28 U.S.C. § 1406(a). Accordingly, transfer is proper when an
obstacle prevents prompt adjudication of the case in the district where it was brought
originally. See Bentz v. Recile, 778 F.2d 1026, 1028 (5th Cir. 1985) (citing Dubin v. United
States, 380 F.2d 813, 815-16 (5th Cir. 1967)). Lack of personal jurisdiction is one such
obstacle. See id. Thus § 1406(a) facilitates transfer from a federal court lacking personal
jurisdiction to one possessing it. See Herman, 730 F.3d at 466.
District courts have broad discretion in deciding whether to order a transfer. See In
re Volkswagen of Am., Inc., 545 F.3d 304, 311 (5th Cir. 2008) (en banc). In some cases, “the
interests of justice may be best served by requiring the plaintiffs to begin at the beginning in
the proper forum.” Caldwell v. Palmetto State Sav. Bank of S.C., 811 F.2d 916, 919 (5th Cir.
1987) (citations omitted). In others, “the ‘interest of justice’ instructs courts to transfer cases
to the appropriate judicial district, rather than dismiss them.” Chenevert v. Springer, 2009
WL 2215115, at *4 (S.D. Tex. July 22, 2009) (citations omitted). The decision to transfer
is often made to prevent waste of time, energy, and money and to protect litigants, witnesses,
and the public against unnecessary inconvenience and expense. See, e.g., Mex. Foods, LLC
v. Mi Rancho Meat Mkt., 2015 WL 891666, at *1 (N.D. Tex. Mar. 3, 2015) (Fitzwater, J.).
Courts generally prefer transfer to dismissal. Wolf Network, LLC v. AML Diagnostics, Inc.,
2016 WL 1357742, at *3 (N.D. Tex. Apr. 5, 2016) (Boyle, J.) (citing Scott v. U.S. Army,
2008 WL 3914835, at *1 (W.D. Tex. June 30, 2008)) (noting trend favoring transfer over
dismissal).
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B
The court concludes that this case should be transferred rather than dismissed. As
noted, FIS is a California corporation, regularly conducts business in California, and the
events giving rise to Springboards’ claims occurred in California. The California court can
exercise personal jurisdiction over FIS. See Burger King, 471 U.S. at 472; Daimler, 134
S.Ct. at 751. The transfer saves both the parties and courts time and money. See Mex.
Foods, 2015 WL 891666, at *1. And California is a proper venue for this lawsuit. See 28
U.S.C. § 1391(b)(1)-(3) (stating that venue is proper in judicial district where (1) defendants
reside, (2) a substantial part of the events giving rise to the claim occurred, or (3) a court can
exercise personal jurisdiction). The court therefore transfers this case to the Central District
of California, Western Division.
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*
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Accordingly, the court concludes that it lacks in personam jurisdiction and it grants
defendant’s alternative motion to transfer this lawsuit to the Central District of California,
Western Division, pursuant to 28 U.S.C. § 1406(a).
SO ORDERED.
November 15, 2017.
_________________________________
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE
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