Grant v. Kamehameha Schools/Bernice Pauahi Bishop Estate et al

Filing 89

OPPOSITION by Eric Grant to 50 Motion to Dismiss. (Attachments: # 1 Appendix of Non-Standard Authorities, # 2 Declaration of Eric Grant)(Grant, Eric)

Grant v. Kamehameha Schools/Bernice Pauahi Bishop Estate et al

Doc. 89

1 Eric Grant (Bar No. 151064) Attorney at Law 2 8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 3 Telephone: [phone] Facsimile: [phone] 4 E-Mail: [e-mail] 5 James J. Banks (Bar No. 119525) Banks & Watson 6 Hall of Justice Building 813 6th Street, Suite 400 7 Sacramento, California 95814 Telephone: [phone] Facsimile: [phone] E-Mail: [e-mail] 9 Counsel for Plaintiff and 10 Counter-Defendant ERIC GRANT

ERIC GRANT, ATTORNEY AT LAW

11 12 13 14 ERIC GRANT, UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA No. 2:08-cv-00672-FCD-KJM
PLAINTIFF AND COUNTER-DEFENDANT ERIC GRANT'S OPPOSITION TO KSBE DEFENDANTS' MOTION TO DISMISS

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

) ) 15 Plaintiff, ) ) 16 v. ) ) 17 KAMEHAMEHA SCHOOLS/BERNICE ) PAUAHI BISHOP ESTATE; J. DOUGLAS ) 18 ING, NAINOA THOMPSON, DIANE J. ) PLOTTS, ROBERT K.U. KIHUNE, and ) 19 CORBETT A.K KALAMA, in their ) capacities as Trustees of the Kamehameha ) 20 Schools/Bernice Pauahi Bishop Estate; ) JOHN DOE; and JANE DOE, ) 21 ) Defendants. ) 22 ) ) 23 JOHN DOE and JANE DOE, ) ) 24 Counter-Claimants, ) ) 25 v. ) ) 26 KAMEHAMEHA SCHOOLS/BERNICE ) PAUAHI BISHOP ESTATE, et al., ) 27 ) Counter-Defendants. ) 28 )

Hearing Date: Time: Courtroom: Judge:

Oct. 31, 2008 10:00 a.m. 2 Hon. Frank C. Damrell, Jr.

Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

Dockets.Justia.com

1 2

TABLE OF CONTENTS

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3 TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii 4 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 STATEMENT OF RELEVANT FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 7 8 9 10 I. This Court Has Subject-Matter Jurisdiction: The Complaint Frames a Case of Complete Diversity, and There Is No Warrant for "Realigning" the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A. B. II. Realignment Is Not Warranted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Even If Realignment Is Warranted, Severance (Not Dismissal) Is the Proper Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ERIC GRANT, ATTORNEY AT LAW

11 12 13 14 15 16

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

This Court Has Specific Personal Jurisdiction over KSBE . . . . . . . . . . . . . . . . . . . . . . . . 8 A. B. C. KSBE Consummated the Doe-KSBE Settlement Agreement in California and Took Deliberate Action Within this State . . . . . . . . . . . . . . . . . . 10 The Controversy Between Grant and KSBE Arises out of, and Relates to, KSBE's California-Related Activities . . . . . . . . . . . . . . . . . . . . . . . . 16 Exercising Jurisdiction over KSBE in this Litigation Would Be Reasonable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

17 III. 18 19 20 21 22 23 24 25 26 27 28

There Is No Good Reason for the Court to Decline to Entertain Grant's Declaratory Judgment Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 A. B. C. Declaratory Judgment Actions May Appropriately Adjudicate Past Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 The Present Action is Not Pre-Emptive or Reactive Litigation . . . . . . . . . . . . . . 20 The Existence of KSBE's Later-Filed Action in Hawaii Circuit Court Does Not Support Abstention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

i Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 2 3

TABLE OF AUTHORITIES

Page Cases

4 American National Fire Insurance Co. v. Hungerford, 53 F.3d 1012 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Burger King Corp. v. Rudzewicz, 6 471 U.S. 462 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 CE Distribution, LLC v. New Sensor Corp., 380 F.3d 1107 (9th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Certain Underwriters at Lloyd's v. A&D Interests, Inc., 9 197 F. Supp. 2d 741 (S.D. Tex. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Continental Airlines, Inc. v. Goodyear Tire & Rubber Co., 819 F.2d 1519 (9th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Correspondent Services Corp. v. First Equities Corp., 12 338 F.3d 119 (2d Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Cunningham Bros., Inc. v. Bail, 407 F.2d 1165 (7th Cir.), 14 cert. denied, 395 U.S. 959 (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Doe v. Kamehameha Schools/Bernice Pauahi Bishop Estate, 470 F.3d 827 (9th Cir. 2006) (en banc), 16 cert. dismissed, 127 S. Ct. 2160 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Doe v. Unocal Corp., 248 F.3d 915 (9th Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Dolch v. United California Bank, 19 702 F.2d 178 (9th Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Dow Agrosciences LLC v. Bates, 332 F.3d 323 (5th Cir. 2003), 21 rev'd on other grounds, 544 U.S. 431 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Employers Insurance of Wausau v. Crown Cork & Seal Co., 942 F.2d 862 (3d Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Employers Reinsurance Corp. v. Karussos, 24 65 F.3d 796 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Fidelity & Deposit Co. v. City of Sheboygan Falls, 713 F.2d 1261 (7th Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 GEICO v. Dizol, 27 133 F.3d 1220 (9th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ii Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

ERIC GRANT, ATTORNEY AT LAW

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

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2 Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542 (9th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Indianapolis v. Chase National Bank, 314 U.S. 63 (1941) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Maryland Casualty Co. v. Knight, 96 F.3d 1284 (9th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Mayer v. Josiah Wedgwood & Sons, 601 F. Supp. 1523 (S.D.N.Y. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Menken v. Emm, 503 F.3d 1050 (9th Cir. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ERIC GRANT, ATTORNEY AT LAW

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

11 Minnesota Mining & Manufacturing Co. v. Nippon Carbide Industries Co., 63 F.3d 694 (8th Cir. 1995), cert. denied, 516 U.S. 1184 (1996) . . . . . . . . . . . . . . . . . . . . 12 Mitsui Sumitomo Insurance Co. v. Delicato Vineyards, No. CIV. S-06-2891 FCD GGH (E.D. Cal. May 10, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383 (8th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Rodin Properties-Shore Mall, N.V. v. Cushman & Wakefield of Pennsylvania, Inc., 49 F. Supp. 2d 709 (D.N.J. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 Seattle Audubon Society v. Moseley, 80 F.3d 1401 (9th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Smith v. Sperling, 354 U.S. 91 (1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 23 Societe de Conditionnement en Aluminium v. Hunter Engineering Co., 655 F.2d 938 (9th Cir.1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Sony Electronics, Inc. v. Guardian Media Technologies, Ltd., 497 F.3d 1271 (Fed. Cir. 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 26 Sydow v. Acheson & Co., 81 F. Supp. 2d 758 (S.D. Tex. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Thompson v. Ecological Science Corp., 421 F.2d 467 (8th Cir. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
iii Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

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2 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Zurn Industries, Inc. v. Acton Construction Co., 847 F.2d 234 (5th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Statutes

6 28 U.S.C. § 1332 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 42 U.S.C. § 1981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Other Authority

9 William W. Schwarzer et al., Rutter Group Practice Guide: Federal Civil Procedure Before Trial (9th Circuit ed. 2008) . . . . . . . . . . . . . . . . . . . . . . . 10

ERIC GRANT, ATTORNEY AT LAW

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
iv Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

1 2

INTRODUCTION

Plaintiff and Counter-Defendant Eric Grant ("Grant") brought this action against KSBE1

3 and against John and Jane Doe ("the Does"), seeking a declaration that he is not liable in any man4 ner to any of those parties for an alleged breach of a settlement agreement between the Does and 5 KSBE resulting from alleged disclosures of confidential information by non-party John Goemans. 6 KSBE has moved to dismiss Grant's claim against it (doc. 50, filed July 9, 2008). As set forth in 7 this opposition, KSBE's motion lacks merit and should be denied. 8 9
STATEMENT OF RELEVANT FACTS

KSBE is a "charitable testamentary trust established [in 1884] by the last direct descendent

10 of King Kamehameha I, Princess Bernice Pauahi Bishop, who left her property in trust for a school

ERIC GRANT, ATTORNEY AT LAW

11 dedicated to the education and upbringing of Native Hawaiians." Doe v. Kamehameha Schools/ 12 Bernice Pauahi Bishop Estate, 470 F.3d 827, 831 (9th Cir. 2006) (en banc), cert. dismissed, 127 13 S. Ct. 2160 (2007). By its own description, KSBE is "the largest private landowner in the state of 14 Hawaii." Declaration of Eric Grant ("Grant Decl.") ¶ 19, at 3 (attached hereto). By KSBE's own 15 report, "the fair value of [its] total endowment grew by $1.39 billion during fiscal year 2007, in16 creasing the overall endowment fair value to $9.06 billion as of year end. Id. ¶ 20, at 3. 17 Grant represented the Does in a federal civil rights lawsuit against KSBE, which lawsuit

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

18 attacked KSBE's "Hawaiians only" admissions policy at its K-12 schools as discrimination on the 19 basis of race in violation of 42 U.S.C. § 1981. The lawsuit was filed in June of 2003 in the United 20 States District Court for the District of Hawaii; it was styled Doe v. Kamehameha Schools/Bernice 21 Pauahi Bishop Estate, et al., No. 1:03-cv-00316-ACK-LEK (the "Underlying Litigation"). Grant 22 Decl. ¶ 5, at 1. While the Underlying Litigation was pending in the district court, KSBE was rep23 resented by California counsel working from California, namely, Kathleen M. Sullivan, then dean 24 of Stanford Law School; she alone argued for KSBE at the one and only hearing before the district 25 court on November 17, 2003. See id. ¶ 6, at 1. 26 "KSBE" stands for Defendant Kamehameha Schools/Bernice Pauahi Bishop Estate, along with 27 Defendants J. Douglas Ing, Nainoa Thompson, Diane J. Plotts, Robert K.U. Kihune, and Corbett A.K. Kalama, in their capacities as Trustees of the Kamehameha Schools/Bernice Pauahi Bishop 28 Estate.
1 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss
1

1

After the district court ruled in favor of KSBE and dismissed the Does' action with preju-

2 dice, Grant appealed on the Does' behalf to the Ninth Circuit in San Francisco, and the Underlying 3 Litigation was pending in that court from December 30, 2003 through December 5, 2006. Grant 4 Decl. ¶ 7, at 1. In that appeal, KSBE was again represented by California counsel working from 5 California, again Ms. Sullivan; she alone argued for KSBE at the oral argument before the 3-judge 6 panel on November 4, 2004 and at the oral argument before the 15-judge en banc court on June 20, 7 2006 in San Francisco. See id. ¶ 8, at 2. After the en banc court ruled 8-to-7 in favor of KSBE and 8 affirmed the district court's dismissal of the Does' claim, Grant filed on the Does' behalf a petition 9 for certiorari in the U.S. Supreme Court. See id. ¶ 9, at 2. In that phase of the litigation, KSBE was 10 again represented by California counsel working from California, again Ms. Sullivan and the law

ERIC GRANT, ATTORNEY AT LAW

11 firm Quinn Emanuel Urquhart Oliver & Hedges, LLP in Redwood Shores, California; Ms. Sullivan 12 was designated "Counsel of Record" (i.e., lead counsel) for KSBE on its brief in opposition to the 13 Does' petition. See id. ¶ 10, at 2. 14 While the Does' petition was under consideration by the Supreme Court, Ms. Sullivan on

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

15 May 3, 2007 contacted Grant at his office in Sacramento County and proposed to continue settle16 ment negotiations. See Grant Decl. ¶ 11, at 2. On May 8, 2007, Ms. Sullivan and Grant met at a 17 restaurant in Pleasanton, California, where they conducted settlement negotiations over a lengthy 18 lunch. See id. Over the course of the following three days, Ms. Sullivan and Grant continued to 19 negotiate by telephone and electronic mail from their respective offices in California; they spoke 20 approximately a dozen times and exchanged at least thirty e-mail messages in that period. See id. 21 ¶ 12, at 2. 22 On May 11, 2007, the parties' negotiations consummated in a written settlement agreement.

23 See id. ¶ 13, at 2. On a separate page of the agreement titled "Approval as to Form," Ms. Sullivan 24 and Grant executed a provision stating: "On behalf of our respective clients, we approve the fore25 going Settlement Agreement and General Release as to form." Id. At KSBE's specific demand, 26 Grant executed a separate declaration confirming that the signatures of both "John Doe" and "Jane 27 Doe" were genuine; these executions were accomplished from counsel's respective offices in Cal28 ifornia. See id.
2 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1

The essence of the settlement was an exchange by which the Does received monetary com-

2 pensation from KSBE for dismissing their pending petition for certiorari. To effect that dismissal, 3 Grant initiated (and Ms. Sullivan joined) a telephone call to the Clerk of the U.S. Supreme Court. 4 See Grant Decl. ¶ 14, at 2. Based on the Clerk's instructions, Ms. Sullivan and Grant executed an 5 "Agreed Stipulation to Dismiss" the petition, which Grant filed with the Clerk by facsimile; based 6 on the stipulation, the Clerk entered an order dismissing the Does' petition. See id. Subsequently, 7 KSBE discharged its financial obligation under the settlement agreement by making payments to 8 Grant's client trust account at Grant's bank in Sacramento; the logistics of such payments were co9 ordinated by Ms. Sullivan and Grant. See id. ¶ 15, at 3. 10 According to KSBE's memorandum in support of its motion to dismiss ("KSBE Mem.,"

ERIC GRANT, ATTORNEY AT LAW

11 doc. 51, filed July 9, 2008), the "principal issue" in this case "is whether [KSBE] has a claim for 12 breach of the settlement agreement in the underlying litigation." KSBE Mem. 1:5-6. The imme13 diate cause of that breach (if indeed there was a breach) is not in dispute: John Goemans, Grant's 14 some-time co-counsel in the Underlying Litigation, "spoke by telephone with representatives of 15 newspapers and television stations in Hawaii [on February 7, 2008]. In those interviews, Goemans 16 disclosed what he claimed to be the amount of the settlement between the Does and [KSBE]." Id. 17 at 6:4-6. As explained in Grant's pending motion for summary judgment ("Grant MSJ," doc. 81, 18 filed Oct. 3, 2008), insofar as Grant is alleged to be directly liable for the alleged breach resulting 19 from Goemans' disclosures, Grant's liability assertedly arises from one or more of the following 20 alleged acts or omissions by Grant or his attorney: 21 22 23 24 25 · · · Grant told Goemans the amount of the (proposed) settlement payment; an attorney representing Grant breached the confidentiality clause by mailing a copy of the agreement to Goemans last year; and although Grant did obtain from the Sacramento Superior Court a protective order barring Goemans from disclosing any of the confidential terms of the settlement agreement, he did so only "belatedly."

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

26 See Grant MSJ 8:27-10:15; see also Statement of Undisputed Facts ¶¶ 3, 5, 9-10, at 2-4 (doc. 81-3, 27 filed Oct. 3, 2008). To the extent that these acts or omissions took place at all, they took place in 28 California. See Grant Decl. ¶¶ 16-18, at 3.
3 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 2

ARGUMENT

KSBE advances three grounds in support of its motion: (1) the Court lacks subject-matter

3 jurisdiction in that complete diversity will not exist once the Does are "correctly aligned" as plain4 tiffs; (2) the Court lacks personal jurisdiction over KSBE; and (3) the Court ought to exercise its 5 discretion not to entertain Grant's claim for declaratory relief. We address these grounds in turn. 6 7 8 I. This Court Has Subject-Matter Jurisdiction: The Complaint Frames a Case of Complete Diversity, and There Is No Warrant for "Realigning" the Parties. As alleged in the Complaint (¶¶ 4-8, at 2), Plaintiff Grant is a citizen of California, and all

9 Defendants are citizens of Hawaii. KSBE admits as much. See KSBE Mem. 7:15. Accordingly, 10 as framed by the Complaint, this is a case of complete diversity, and the Court has subject-matter

ERIC GRANT, ATTORNEY AT LAW

11 jurisdiction pursuant to 28 U.S.C. § 1332(a)(1).2 12 13 14 15 KSBE does not accept this straightforward analysis: For jurisdictional purposes, the parties must be aligned according to their interests in the principal issue in the litigation. Here, the Does are aligned with Grant, not [KSBE]. Therefore, realignment destroys diversity jurisdiction because [KSBE], a Hawaii citizen, will then be on the opposite side from the Does, who are also Hawaii citizens.

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

16 KSBE Mem. 7:16-20. 17 The faulty aspect of this syllogism is its minor premise, namely, that the Does are in reality

18 "aligned" with Grant as party plaintiffs (not with KSBE as party defendants), and the Court should 19 formally "realign" the parties to reflect this reality. In truth, however, the Complaint reflects the 20 correct alignment of the parties according to the "principal issue" framed therein--whether Grant 21 is liable for Goemans' disclosures of the putative amount and other terms of the Doe-KSBE settle22 ment. Morever, even if the Court were inclined to realign the Does, the proper remedy would not 23 be dismissal of Grant's entire action but rather a severance of the Does' claim against KSBE, leav24 ing Grant free to pursue his claim against KSBE without the Does as a co-plaintiff. As to the amount-in-controversy, the Complaint (¶ 1, at 1:26-27) alleged that "the matter in controversy exceeds the value of $75,000, exclusive of interest and costs." That allegation was well26 founded, not to mention undisputed: Grant's dispute with KSBE concerns as much as $2 million. See KSBE's Memorandum in Opposition to Does' Motion for Preliminary Injunction 5:22, 18:18 27 (doc. 28, filed Apr. 14, 2008); Does' Cross-Claim ¶ 13, at 5 (doc. 13, filed Apr. 3, 2008). Moreover, Grant's dispute with the Does concerns the same amount, see id. ¶¶ 21-24, at 6-7, and in any 28 event at least $100,000, see id. ¶¶ 29-31, at 8. 25
4 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss
2

1 2

A.

Realignment Is Not Warranted.

Like KSBE (see KSBE Mem. 8:1-15), we begin with the Supreme Court's decision in In-

3 dianapolis v. Chase National Bank, 314 U.S. 63, 69-70 (1941), as interpreted by the Ninth Circuit 4 in Dolch v. United California Bank, 702 F.2d 178, 181 (9th Cir. 1983). Dolch stated the govern5 ing standard in these terms: "If the interests of a party named as a defendant coincide with those 6 of the plaintiff in relation to the purpose of the lawsuit, the named defendant must be realigned as 7 a plaintiff for jurisdictional purposes." Id. (citing Indianapolis, 314 U.S. at 69-70). 8 The first question is to what should the Court look in determining the purpose of the law-

9 suit and the various parties' interests in relation to that purpose. Surely, courts may look "beyond 10 the pleadings," because "the parties' own determination of who are plaintiffs and who defendants"

ERIC GRANT, ATTORNEY AT LAW

11 is not controlling on the courts. Indianapolis, 314 U.S. at 69. On the other hand, the pleadings are 12 doubtless the primary evidence of a lawsuit's purpose. See, e.g., Smith v. Sperling, 354 U.S. 91, 13 97 (1957) (opining that the inquiry required by Indianapolis "is resolved by the pleadings and the 14 nature of the dispute"); Correspondent Services Corp. v. First Equities Corp., 338 F.3d 119, 124 15 (2d Cir. 2003) (citing Smith for the proposition that "the determinative factors are the issue of an16 tagonism on the face of the pleadings and the nature of the controversy"); cf. Continental Airlines, 17 Inc. v. Goodyear Tire & Rubber Co., 819 F.2d 1519, 1523 (9th Cir. 1987) (aligning one defendant 18 with the plaintiff on the ground, inter alia, that such defendant "filed papers below supporting [the 19 plaintiff's] winning summary judgment motion"); Dolch, 702 F.2d at 181 (same, where such de20 fendant "in her answer to the complaint admitted all of [the plaintiff's] allegations"). 21 Although the Ninth Circuit has not yet confronted the precise issue, other courts of appeals

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

22 have concluded that the "determination of the `primary and controlling matter in dispute' does not 23 include the cross-claims and counterclaims filed by the defendants. Instead, it is to be determined 24 by plaintiff's principal purpose for filing its suit." Zurn Industries, Inc. v. Acton Construction Co., 25 847 F.2d 234, 237 (5th Cir. 1988) (emphasis added); accord, e.g., Employers Insurance of Wausau 26 v. Crown Cork & Seal Co., 942 F.2d 862, 866 (3d Cir. 1991) (agreeing with Zurn that in general, 27 "courts do not look to cross-claims and counterclaims to determine the primary issue of a dispute"). 28 ///
5 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1

What, then, is the purpose of the Grant's lawsuit, as revealed by the pleadings? In his com-

2 plaint, Grant seeks "a declaration that [he] is not liable in any manner to any Defendant in contract 3 or in tort or on any other basis whatsoever" for Goemans' disclosures. Complaint 6:22-23 (prayer 4 for relief). Similarly, in his pending motion for summary judgment, Grant seeks, with respect to 5 those disclosures, both (a) a judgment "declaring that Grant is not liable in any manner to KSBE 6 in contract or in tort or on any other basis whatsoever"; and (b) a judgment, "declaring, on Grant's 7 Claim for Relief, that Grant is not liable in any manner to the Does in contract or in tort or on any 8 other basis whatsoever." Grant MSJ, at i:15-16, i:21-22. The pleadings thus reveal that Grant is 9 "aligned" against both KSBE and the Does, in that Grant seeks (in parallel fashion) to establish his 10 non-liability to both of them--regardless of their liability vel non to each other.

ERIC GRANT, ATTORNEY AT LAW

11

The factual premise of KSBE's realignment argument is the idea that "the Does and Grant

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12 (as their interests are framed by their September 2007 settlement agreement) share an interest in 13 establishing that [KSBE] has no claim for breach of the Settlement Agreement based upon Goe14 mans' disclosures." KSBE Mem. 8:27-9:1. This premise is false. As Grant's pending motion for 15 summary judgment makes clear, Grant's interest (vis-à-vis KSBE) is to establish that KSBE has no 16 claim against him for breach of the Settlement Agreement. Nothing in Grant's lengthy argument 17 for his non-liability to KSBE, see Grant MSJ 7-14, depends on his establishing that KSBE has no 18 such claim against the Does (or against anyone else). In other words, Grant is legally indifferent 19 to the outcome of the dispute between KSBE and the Does: he intends to pay both parties nothing 20 in any event. Moreover, Grant's contractual dispute with the Does over his duty to defend them 21 against KSBE, see id. at 17-18, is logically independent of the merits of the Doe-KSBE dispute. 22 Given the foregoing, it is easy to show that the realignment cases cited by KSBE are dis-

23 tinguishable. In Dolch, to start with, Marguerite sued both the Bank and her sister Catherine. With 24 the Ninth Circuit's approval, the district court realigned Catherine as a plaintiff for three reasons: 25 26 27 28 (1) "she had the same interest in this action as Marguerite"; (2) "Catherine, not Marguerite, was the `driving force' behind the action"; and (3) "[b]oth Catherine and Marguerite would benefit from a decision against the Bank," in that "both would receive a one-third interest in [certain] renewal rights if [certain] assignments were invalidated."
6 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 702 F.2d at 181. 2 None of these reasons holds in the present case. First, as noted above, the Does do not have

3 the same interest in this action as Grant. To the contrary, Grant has sued the Does and seeks relief 4 against them distinct from any relief he may obtain against KSBE. The Does, in response, have as5 serted counter-claims against Grant that seek relief distinct from any relief they may obtain against 6 KSBE. See, e.g., Doe Cross-Claim ¶ 31, at 8:7-8 (alleging that "Grant has an obligation to pay for 7 the first $100,000 of the defense of [KSBE's] claims against the Does"). Contrast that obvious ad8 versity with the situation in Dolch, where Catherine "in her answer to the complaint admitted all of 9 Marguerite's allegations." 702 F.2d at 181. Second, Grant, not the Does, was the "driving force" 10 behind his own action. Grant conceived the idea on his own and sought neither the approval nor

ERIC GRANT, ATTORNEY AT LAW

11 the endorsement of the Does. See Grant Decl. ¶ 22, at 4. Finally, the Does would not necessarily 12 benefit from a decision against KSBE in favor of Grant. As stated above, Grant does not seek to 13 establish that no one is liable to KSBE for Goemans' disclosures--only that he is not so liable. 14 Also distinguishable are classic indemnity cases like Continental Airlines, as discussed in

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15 KSBE Mem. 9-10. As the Ninth Circuit described the situation in that case, both the federal plain16 tiff and one of the federal defendants "had an identical interest in proving the validity and scope 17 of [the plaintiff's] exculpatory clause. Indeed [that defendant] filed papers below supporting [the 18 plaintiff's] winning summary judgment motion, and the two parties arranged to be represented by 19 the same counsel on this appeal." 819 F.2d at 1523. It is obvious that the situation is far different 20 here: Grant and the Does do not have an "identical interest," for Grant can be (and should be) ab21 solved of liability to KSBE without determining whether the Does are liable to KSBE. And rather 22 than filing papers supporting Grant's summary judgment motion, the Does are some of the targets 23 of that motion. Finally, of course, Grant and the Does are (and will continue to be) represented by 24 different counsel. See Grant Decl. ¶ 23, at 4. 25 "In sum," argues KSBE, "the Does and Grant must be aligned together because they share

26 a common interest in defeating [KSBE] with respect to the main dispute." KSBE Mem. 11:22-23. 27 But one could just as easily say that KSBE and Grant must be aligned together because they share 28 a common interest in imposing monetary liability on the Does. Or that the Does and KSBE must
7 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 be aligned together because they share a common interest in imposing monetary liability on Grant. 2 How to determine which is, as KSBE puts it, the "main dispute"? As explained above, that is "to 3 be determined by plaintiff's principal purpose for filing its suit." Zurn Industries, 847 F.2d at 237. 4 Grant's principal purpose--as clearly and consistently revealed by the pleadings--is to be totally 5 absolved of liability to both KSBE and the Does without regard to the dispute between those par6 ties. Therefore, the Does are correctly aligned as defendants with KSBE, and there is no warrant 7 for the Court to realign them. 8 9 10 B. Even If Realignment Is Warranted, Severance (Not Dismissal) Is the Proper Remedy.

If the Court were to realign the Does with Grant, then of course complete diversity would

ERIC GRANT, ATTORNEY AT LAW

11 no longer exist. There is no requirement, however, that the "case must be dismissed" in that cir12 cumstance. KSBE Mem. 11:24. Rather, Federal Rule of Civil Procedure 21 expressly authorizes 13 the Court to sever Grant's dispute with KSBE from the Does' dispute with KSBE: "On motion or 14 on its own, the court may at any time, on just terms, add or drop a party. The court may also sever 15 any claim against a party." See also Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832 16 (1989) ("it is well settled that Rule 21 invests district courts with authority to allow a dispensable 17 nondiverse party to be dropped at any time, even after judgment has been rendered"). 18 Given the relative ease of resolving the Grant-KSBE dispute by means of summary judg-

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19 ment, and given the alternative forum in Hawaii for the Does and KSBE to litigate their dispute, 20 severance of the Does' cross-claim against KSBE is a reasonable solution if the Court determines 21 that realignment is warranted. In any event, dismissal is inappropriate, and so KSBE's motion to 22 dismiss must be denied. 23 24 II. This Court Has Specific Personal Jurisdiction over KSBE. KSBE challenges this Court's personal jurisdiction over it. See generally KSBE Mem. 12-

25 22. In the face of such a challenge, the plaintiff "bears the burden of demonstrating that jurisdic26 tion is appropriate." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). 27 Unless and until an evidentiary hearing is held on the jurisdictional dispute, a "plaintiff need only 28 make a prima facie showing of jurisdictional facts"; that is, courts "only inquire into whether [the
8 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 plaintiff's] pleadings and affidavits make a prima facie showing of personal jurisdiction." Id. In 2 this context, "[c]onflicts between parties over statements contained in affidavits must be resolved 3 in the plaintiff's favor." Id. (emphasis added). This brings us to the governing standard: 4 5 6 7 8 Where, as here, there is no applicable federal statute governing personal jurisdiction, the district court applies the law of the state in which the district court sits. Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same. For a court to exercise personal jurisdiction over a nonresident defendant, that defendant must have at least "minimum contacts" with the relevant forum such that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.

9 Id. at 800-01 (citations omitted). Minimum contacts are typically analyzed under the headings of 10 "general jurisdiction" and "specific jurisdiction." Having had the opportunity to conduct discov-

ERIC GRANT, ATTORNEY AT LAW

11 ery on the issue, Grant does not contend that this Court has general jurisdiction over KSBE. 12 It is readily apparent, however, that this Court has specific jurisdiction over KSBE. As an-

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13 alyzed in detail below, the settlement agreement giving rise to this action was negotiated entirely 14 in California by California attorneys retained voluntarily by their respective clients; the one-time 15 obligations imposed by the agreement were performed completely in California, with the expecta16 tion that future obligations would likewise be performed in substantial part in California. Under 17 well-established law, these facts are more than sufficient to subject KSBE to specific jurisdiction 18 in California for an action (like this one) arising out of or relating to that agreement. 19 20 21 22 23 24 25 The Ninth Circuit has set out a three-pronged test for specific jurisdiction: (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (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.

26 Id. at 802. The plaintiff "bears the burden of satisfying the first two prongs of the test"; if he does, 27 "the burden then shifts to the defendant to `present a compelling case' that the exercise of jurisdic28 tion would not be reasonable." Id. We consider the three prongs in turn.
9 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 2 3

A.

KSBE Consummated the Doe-KSBE Settlement Agreement in California and Took Deliberate Action Within this State.

Just last year, the Ninth Circuit opined that "in contract cases, we typically inquire whether

4 a defendant `purposefully avails itself of the privilege of conducting activities' or `consummates a 5 transaction' in the forum, focusing on activities such as delivering goods or executing a contract." 6 Menken v. Emm, 503 F.3d 1050, 1057 (9th Cir. 2007). Moreover, in an action alleging breach of 7 contract, "the `purposeful availment' requirement is satisfied if the defendant has taken deliberate 8 action within the forum state." CE Distribution, LLC v. New Sensor Corp., 380 F.3d 1107, 1113 9 (9th Cir. 2004). In the present action, KSBE consummated a transaction in California and other10 wise took deliberate action within this state.

ERIC GRANT, ATTORNEY AT LAW

11

KSBE's California counsel working from California contacted Grant at his office in Sacra-

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12 mento County and proposed to resume settlement negotiations on behalf of their respective clients. 13 See Grant Decl. ¶ 11, at 2. The two lawyers met face-to-face in Northern California, see id., after 14 which they engaged in three days of intensive negotiations by telephone and electronic mail from 15 their respective offices in California. See id. ¶ 12, at 2. The negotiations consummated in the Doe16 KSBE settlement agreement on May 11, 2007. See id. ¶ 13, at 2. Both Grant and KSBE's counsel 17 executed a provision by which they approved the agreement "as to form" on behalf of their respec18 tive clients; at KSBE's specific demand, Grant executed a separate declaration confirming that the 19 signatures of "John Doe" and "Jane Doe" were genuine. See id. All of these executions occurred 20 in California, see id., as KSBE had to have known they would. 21 The one-time obligations imposed by the Doe-KSBE settlement agreement were performed

22 in California. For its part, KSBE bargained for a dismissal of the Does' pending petition for cer23 tiorari. See Grant Decl. ¶ 14, at 2. That dismissal was put in motion by a telephone call, initiated 24 by Grant and then joined by KSBE's California counsel working from California, to the Clerk of 25 the Supreme Court; it was substantially complete when both counsel executed in their respective 26 California offices an "Agreed Stipulation to Dismiss" the petition; and it was finally accomplished 27 (as far the parties' own actions) by Grant's facsimile filing of that stipulation with the Clerk from 28 Grant's office in Sacramento County. See id. For their part, the Does bargained for compensation
10 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 from KSBE. See id. That obligation was performed in full when KSBE later subsequently made 2 payments to Grant's client trust account at his bank in Sacramento. See id. ¶ 15, at 3. 3 The Doe-KSBE settlement agreement imposed additional, ongoing obligations as well. As

4 KSBE describes it, "the agreement provided that no signatory or releasee--`including counsel'-- 5 would disclose . . . any term of the Settlement Agreement." KSBE Mem. 4:4-6. As emphasized 6 by KSBE itself, the continuing obligation of counsel not to make certain disclosures was expressly 7 contemplated. KSBE knew (or reasonably should have known) that both of the individuals who 8 had for four years been identified as the Does' counsel (Grant and Goemans) were then California 9 residents. See, e.g., Declaration of Eric Grant (doc. 81-4, filed Oct. 3, 2008), Exh. 1 (cover page 10 of brief filed on March 27, 2007, identifying Does' counsel as Eric Grant of Sacramento and John

ERIC GRANT, ATTORNEY AT LAW

11 Goemans of Beverly Hills, California). In other words, in KSBE's view, the settlement agreement 12 expressly created ongoing obligations between KSBE and residents of this state. 13 Finally, it is fair to say that the Doe-KSBE settlement agreement "related to" litigation in

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14 California. Menken, 503 F.3d at 1058. To be sure, the Underlying Litigation began in Hawaii, but 15 it moved on to California, pending nearly three years in the Ninth Circuit in San Francisco, where 16 Grant and KSBE's California counsel argued before the 15-judge en banc court on June 20, 2006. 17 See Grant Decl. ¶¶ 7-8 at 1. Furthermore, preserving the Ninth Circuit's favorable judgment was 18 KSBE's principal object in settling the litigation, as KSBE's Trustees themselves repeatedly em19 phasized in announcing the settlement: "This means that the Circuit Court ruling stands . . . . The 20 ruling from the 9th Circuit Court is a pono one for Kamehameha Schools and for kanaka maoli." 21 Id. ¶ 21, at 3. 22 The federal courts have routinely sustained the exercise of personal jurisdiction in similar

23 circumstances. In Minnesota Mining & Manufacturing Co. v. Nippon Carbide Industries Co., 63 24 F.3d 694 (8th Cir. 1995) ("3M"), cert. denied, 516 U.S. 1184 (1996), the parties "entered into ex25 tensive negotiations to discuss a way to settle [their] dispute." Id. at 697. "Part of those negotia26 tions took place in Minnesota," and the two parties eventually "came to an agreement, which was 27 finally executed in Minnesota." Id. On these facts, the court of appeals found that the defendant 28 "came voluntarily to Minnesota with the business purpose of terminating on-going litigation"; in
11 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 other words, "the defendant's activities in Minnesota were directed toward the consummation of 2 the contract in dispute." Id. at 697, 698. Given these findings, the court concluded that the defend3 ant had minimum contacts with the forum state: "By coming into the State of Minnesota and by 4 negotiating a contract which could be enforced under the laws of Minnesota, [the defendant] pur5 posefully availed itself of the laws of the State." Id. at 698. 6 Similarly, in Thompson v. Ecological Science Corp., 421 F.2d 467, 469 (8th Cir. 1970), the

7 parties held a two-day conference in Arkansas to negotiate the basic terms of the contract at issue, 8 followed by several telephone conversations. The contract was prepared in Arkansas and executed 9 there by the plaintiff. Thereafter, the defendant executed the contract in another state. In holding 10 that the defendant was subject to specific jurisdiction in Arkansas, the court of appeals observed

ERIC GRANT, ATTORNEY AT LAW

11 that the "defendant's activities in Arkansas were directed toward the consummation of the contract 12 in question." Id. at 470. Furthermore, the "fact that the actual final execution of the contract may 13 have been in Florida, rather than in Arkansas, is immaterial." Id. at 469. In the present case, the 14 activities of KSBE's California counsel in California were directed toward the consummation of 15 the settlement agreement in question. The fact that the parties (though not their counsel) executed 16 the agreement in Hawaii, see KSBE Mem. 3:14-16, is "immaterial." 17 3M and Thompson are only two of many opinions to uphold personal jurisdiction on facts

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18 similar to those here. See also, e.g., Sydow v. Acheson & Co., 81 F. Supp. 2d 758, 767 (S.D. Tex. 19 2000) (holding that "because the alleged contracts envisioned Texas performance, . . . Defendants 20 availed themselves of the privilege of conducting business in Texas and invoked the protections of 21 Texas law"); Rodin Properties-Shore Mall, N.V. v. Cushman & Wakefield of Pennsylvania, Inc., 22 49 F. Supp. 2d 709, 718 (D.N.J. 1999) ("By hiring local counsel, Reid purposefully availed itself 23 of the privilege of conducting activities in New Jersey and invoked the benefits and protections of 24 New Jersey law."); Mayer v. Josiah Wedgwood & Sons, 601 F. Supp. 1523, 1531 (S.D.N.Y. 1985) 25 ("Preliminary negotiations in New York that are `essential to the existence of the contract' provide 26 sufficient contact to establish . . . personal jurisdiction over the nondomiciliary defendant."). 27 KSBE does not dispute the above-documented facts, nor does it contradict the above-stated

28 authority. KSBE rather proffers several reasons why, in the teeth of the facts and the law, it would
12 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 have this Court conclude that KSBE "has not purposely availed itself of the privilege of conduct2 ing activities relating to the Does in California." KSBE Mem. 16:1-2. These reasons lack merit. 3 First, KSBE contends that "to the extent that [it] engaged in any activities related to Cali-

4 fornia in connection with this action, those activities cannot confer personal jurisdiction because 5 they were merely fortuitous and attenuated events that occurred during [KSBE's] efforts to resolve 6 Hawaii litigation between Hawaii parties." KSBE Mem. 16:3-6 (emphasis added). In this regard, 7 KSBE deems it "purely fortuitous" that it "chose to be represented in Hawaii by a lawyer residing 8 in California." Id. at 16:14-15. Moreover, KSBE asserts that its "settlement payment to Grant's 9 client trust account in California was also fortuitous and attenuated." Id. at 17:11-12. In general, 10 KSBE appears to think activities and events are fortuitous if they "could have been accomplished

ERIC GRANT, ATTORNEY AT LAW

11 anywhere," not just in California. Id. at 18:28. 12 It is apparent that KSBE misunderstands the terms fortuitous and attenuated. They come

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13 from the Supreme Court's oft-quoted maxim that the " `purposeful availment' requirement ensures 14 that a defendant will not be haled into a jurisdiction solely as a result of `random,' `fortuitous,' or 15 `attenuated' contacts." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). As used here, 16 fortuitous is the opposite of purposeful or deliberate. KSBE's engagement of California counsel 17 was its own purposeful or deliberate choice--not something thrust on it randomly, like "the fortu18 itous circumstance that a single Audi automobile, sold in New York to New York residents, hap19 pened to suffer an accident while passing through Oklahoma." World-Wide Volkswagen Corp. v. 20 Woodson, 444 U.S. 286, 295 (1980). The same is true of KSBE's settlement payment: it did not 21 just happen to be sent to California; that destination was the result of an express contractual pro22 vision to which KSBE agreed. See Declaration of Jane Doe (doc. 9-2, filed Apr. 3, 2008), Exh. 1, 23 ¶ 2, at 2 (directing KSBE to make payment to a specified bank account in Sacramento). Indeed, 24 the same is true of all of the activities described above: they resulted from KSBE's purposeful and 25 deliberate choices to accomplish its goals in California. 26 Second, KSBE invokes the principle that the "unilateral activity of another party or a third

27 person is not an appropriate consideration when determining whether a defendant has sufficient 28 contacts with a forum State to justify an assertion of jurisdiction." Helicopteros Nacionales de
13 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 Colombia, S. A. v. Hall, 466 U.S. 408, 417 (1984), quoted in KSBE Mem. 16:10-12. In this regard, 2 KSBE describes various actions of others as "unilateral." See id. at 16:8-10 ("It was the Does who 3 sued [KSBE] in Hawaii, but then appealed an unfavorable decision to the Ninth Circuit, compel4 ling [KSBE] to respond in California."); id. at 17:20-21 (asserting that it was the "Does and Grant 5 who specified where the settlement payment was to be sent"); id. at 18:5-6 ("Grant's communica6 tion with the U.S. Supreme Court from California to dismiss the Does' petition for certiorari [is] 7 irrelevant to the issue of jurisdiction over [KSBE]."). 8 It is apparent that KSBE also misunderstands the term unilateral. It is irrelevant whether

9 KSBE had to "respond" to the Doe's appeal, for Grant does not predicate personal jurisdiction on 10 KSBE's defending an appeal in the Ninth Circuit. Personal jurisdiction is predicated on KSBE's

ERIC GRANT, ATTORNEY AT LAW

11 entirely voluntarily and wholly self-motivated decision to approach Grant in California, negotiate 12 with him in California, cause him to execute and to perform the resulting settlement agreement in 13 California, and seek to impose on him continuing obligations that he necessarily must perform in 14 California. As for the destination of the settlement payment, it is just false to assert that the Does 15 and Grant specified where it was to be sent. As documented above, the destination was specified 16 by contract.3 (Is this $9 billion entity suggesting that it lacked bargaining power vis-à-vis two an17 onymous individuals and the solo practitioner who represented them?) As for Grant's communi18 cation with the Supreme Court, it was not just something he thought up for fun: it was precisely 19 what the very first substantive paragraph of the settlement agreement expressly required of him; 20 KSBE could not reasonably have expected him to do otherwise. 21 Third, KSBE argues that the "Ninth Circuit's decision in Sher [v. Johnson, 911 F.2d 1357

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22 (9th Cir. 1990)] confirms the lack of jurisdiction here." KSBE Mem. 18:13. Actually, Sher con23 firms the existence of jurisdiction here. As KSBE observes, Sher held that "the mere existence of 24 a contract with a party in the forum state does not constitute sufficient minimum contacts for juris25 In this context, KSBE observes that "[m]ere payments into the forum normally do not create per26 sonal jurisdiction." KSBE Mem. 17:12-13. Of course not, but it is untenable to suggest that Grant is relying on "mere payment" here. See Northrup King Co. v. Compania Productora Semillas Al27 godoneras Selectas, S.A., 51 F.3d 1383, 1388 (8th Cir. 1995) ("In determining whether there is personal jurisdiction, the courts consider the defendant's contacts with the forum in the aggregate, 28 not individually; they look at the totality of the circumstances.").
14 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss
3

1 diction." Id. at 1362. Of course, Grant does not argue that the "mere existence" of putative con2 tractual relationship between himself and KSBE suffices. Like the Ninth Circuit, he would have 3 this Court "look to `prior negotiations and contemplated future consequences, along with the terms 4 of the contract and the parties' actual course of dealing.' " Id. (quoting Burger King, 471 U.S. at 5 479), quoted in KSBE Mem. 18:17-18. As documented above, significant pre-execution negotia6 tions (including face-to-face ones) occurred in California as the result of KSBE's "deliberate" de7 cision to initiate and continue contact with Grant in that state. Sher, 911 F.2d at 1362. As further 8 documented above (and as amplified in the following paragraphs), the contemplated future conse9 quences of that contact were indeed "continuing obligations" between Grant and KSBE. 10 Finally, KSBE argues that for purposes of minimum contacts, "activities are not considered

ERIC GRANT, ATTORNEY AT LAW

11 significant unless they create substantial or `continuing' obligations toward residents of the forum 12 state." KSBE Mem. 19:1-2 (emphasis added). This rule assertedly exonerates KSBE because its 13 "only continuing obligations are toward residents of Hawaii, the Does. [It] has no continuing ob14 ligations toward residents of California, including Grant." Id. at 20:3-4. KSBE misreads the law: 15 contacts are significant if they create continuing obligations not just toward forum residents, but 16 more generally between forum residents and the defendant, which includes obligations from such 17 residents to the defendant. Thus, Burger King ruled that where the defendant "created `continuing 18 obligations' between himself and residents of the forum, . . . it is presumptively not unreasonable 19 to require him to submit to the burdens of litigation in that forum as well." 471 U.S. at 476 (em20 phasis added). Indeed, KSBE itself quotes the Ninth Circuit's application of Burger King in Gray 21 & Co. v. Firstenberg Machinery Co., Inc., 913 F.2d 758 (9th Cir. 1990), which held that there was 22 no personal jurisdiction because, in part, "[t]here is no evidence the sale contemplated a continu23 ing relationship between Gray and the defendants." Id. at 761 (emphasis added), quoted in KSBE 24 Mem. 19:3-5.4 25 KSBE deceptively argues that 3M supports a "toward" rule because the Eighth Circuit found that 26 "in settling [defendant] NCI had undertaken `continuing obligations' toward [forum resident] 3M." KSBE Mem. 20:1 (citing 3M, 63 F.3d at 697-99). The opinion does not say anything like that. It 27 opines that the minimum contacts test "is met if a defendant has deliberately engaged in activities, such as having created continuing obligations, and such actions invoke the benefits and protection 28 of a state's law." 63 F.3d at 697 (emphasis added) (citing Burger King, 471 U.S. at 475-76).
15 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss
4

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1

In the present case, of course, the settlement agreement contemplated (in KSBE's view) a

2 continuing relationship between KSBE and Grant in that the agreement imposed on Grant a con3 tinuing obligation to KSBE to keep confidential the amount and other terms of the Doe-KSBE set4 tlement. See, e.g., KSBE Mem. 4:4-6 (asserting that "the agreement provided that no signatory or 5 releasee--`including counsel'--would disclose . . . any term of the Settlement Agreement"). That 6 putative obligation to KSBE on the part of a California resident is precisely what permitted KSBE 7 (under its view of the agreement) to "invok[e] the benefits and protections of [California's] laws," 8 a hallmark of purposeful availment. Gray & Co., 913 F.3d at 760. 9 As noted above, the "purposeful availment" requirement ensures that a defendant will not

10 be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts. As we

ERIC GRANT, ATTORNEY AT LAW

11 have shown. KSBE had numerous contacts with California--consisting of KSBE's own deliberate 12 actions--that far exceed such threshold. The first prong of specific jurisdiction is satisfied. 13 14 15 B. The Controversy Between Grant and KSBE Arises out of, and Relates to, KSBE's California-Related Activities.

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Next, a plaintiff must show that his claim "arises out of or relates to the defendant's forum-

16 related activities." Fred Martin Motor Co., 374 F.3d at 802. The Ninth Circuit has said that "[t]o 17 determine whether a claim arises out of forum-related activities, courts apply a `but for' test," that 18 is, asking whether Grant's "claims would have arisen but for [KSBE's] contacts with California." 19 Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001). In the present litigation, that question is 20 trivial: but for consummating the Doe-KSBE settlement agreement in California, KSBE would not 21 be holding over Grant's head the threat of a suit for an alleged breach of that agreement, and Grant 22 would not be seeking a declaratory judgment in response to such threat. 23 Without actually addressing the Ninth Circuit's "but for" test, KSBE attempts to shift the

24 focus of this litigation from the settlement agreement (and its breach) to the Underlying Litigation. 25 Doubtless that litigation did involve a dispute that began in Hawaii between residents of Hawaii. 26 The present action, however, does not arise from KSBE's racially exclusionary admissions policy 27 or the Does' challenge to that policy. Rather, it is arises solely out of a settlement agreement ne28 gotiated by California attorneys in California and for the alleged breach of which KSBE has been
16 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1 harassing a California resident, namely, Grant. As described above, the agreement was the result 2 of KSBE's California-related activities. The second prong of specific jurisdiction is also satisfied. 3 4 5 C. Exercising Jurisdiction over KSBE in this Litigation Would Be Reasonable.

Grant having satisfied the first two prongs, "the burden then shifts to [KSBE] to `present

6 a compelling case' that the exercise of jurisdiction would not be reasonable." Fred Martin Motor 7 Co., 374 F.3d at 802. KSBE cannot present that compelling case. 8 9 10 The Ninth Circuit has identified seven factors as relevant to the reasonableness analysis: (1) the extent of the defendants' purposeful interjection into the forum state's affairs; (2) the burden on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of the defendants' 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.

ERIC GRANT, ATTORNEY AT LAW

11 12

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

13 CE Distribution, 380 F.3d at 1112. As set out below, a majority of these factors weigh in favor of 14 the exercise of jurisdiction. 15 Factor (1) weights in favor of exercising jurisdiction. As described above, KSBE purpose-

16 fully interjected itself into California by (in its view) imposing continuing obligations on Grant, a 17 California resident. 18 Factor (2) also weighs in favor of exercising jurisdiction. As an entity that has $9.1 billion

19 in assets, see Grant Decl. ¶ 20, at 3, and that was already represented by at least three California 20 law firms before this action was filed, see Declaration of Eric Grant ¶¶ 17-18, at 3 (doc. 36-2, filed 21 Apr. 15, 2008); id. ¶¶ 22-23, at 4, KSBE will suffer little burden in defending itself here. As for 22 the convenience of the Does and putative witnesses who reside in Hawaii, see KSBE Mem. 21:4-6, 23 we address that issue in our concurrently filed opposition to KSBE's motion to transfer. 24 Factor (3) also weighs in favor of exercising jurisdiction. Because this dispute arose out of

25 litigation in the federal courts involving a federal claim, the sovereignty of the State of Hawaii is 26 not implicated. That the Underlying Litigation "generated intense interest in Hawaii," id. at 21:9, 27 hardly poses any "conflict with the sovereignty of defendant's state," id. at 20:16. 28 ///
17 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss

1

Factor (4) also weighs in favor of exercising jurisdiction. California "has a substantial in-

2 terest in adjudicating the dispute of one of its residents who alleges injury due to the tortious con3 duct of another." CE Distribution, 380 F.3d at 1112. The tortious conduct here is KSBE's legally 4 and factually groundless threat to sue Grant for a breach of the Doe-KSBE settlement agreement. 5 See generally Grant MSJ 7-14. 6 Factor (5) also weighs in favor of exercising jurisdiction. As set out in detail in our con-

7 currently filed opposition to KSBE's motion to transfer, this controversy can most efficiently be 8 resolved here. 9 Factor (6) favors jurisdiction here. Grant is a solo practitioner who resides and practices

10 law in Sacramento County, and he is a member of the Bar of this Court. See Grant Decl. ¶¶ 3-4, at

ERIC GRANT, ATTORNEY AT LAW

11 1. Litigating this dispute in Hawaii Circuit Court, where he is not admitted to practice and must 12 therefore hire counsel, would be inconvenient and expensive. That Grant might be subject to per13 sonal jurisdiction in Hawaii, see KSBE Mem. 21:24-22:4, does not make that forum convenient. 14 Factor (7) alone weighs against exercising jurisdiction. Hawaii is an alternative forum, if

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

15 an inconvenient one for Grant. 16 Accordingly, KSBE cannot present a case, let alone a compelling case, that the exercise of

17 jurisdiction over it would not be reasonable. For that reason, and because the first two prongs of 18 specific jurisdiction are satisfied as well, this Court has specific personal jurisdiction over KSBE 19 as to Grant's claim. 20 21 22 III. There Is No Good Reason for the Court to Decline to Entertain Grant's Declaratory Judgment Claim. Finally, KSBE argues that "even if subject matter and personal jurisdiction exist, the Court

23 should exercise its discretion to decline to entertain Grant's declaratory judgment claim." KSBE 24 Mem. 22:10-11 (section heading). According to KSBE, the Court should so exercise its discretion 25 for three reasons, which we address in turn.5 26 Grant has addressed at some length the propriety of his seeking declaratory relief against KSBE 27 --and particularly the fact that there is an "actual controversy" between Grant and KSBE--in his pending motion for summary judgment. See Grant MSJ 3-7. The present discussion is confined 28 to the two specific points raised in Part III.C of KSBE's motion to dismiss.
18 Plaintiff and Counter-Defendant Eric Grant's Opposition to KSBE Defendants' Motion to Dismiss
5

1 2 3

A.

Declaratory Judgment Actions May Appropriately Adjudicate Past Conduct.

As its first basis for urging the Court to decline jurisdiction, KSBE proffers the notion that

4 "courts generally decline to exercise jurisdiction over a declaratory relief action unless the plaintiff 5 is able to show that a declaratory judgment would enable it to change its conduct to avoid damages 6 that have not accrued." Id. at 22:19-21. In other words, according to KSBE, it is "inappropriate" 7 to bring a declaratory judgment action "solely to adjudicate past conduct." Id. at 23:4. In support 8 of this notion, KSBE offers what might charitably be called a dearth of authority: a 1969 opinion 9 from the Seventh Circuit, a 1991 opinion from a district court in Pennsylvania, and an unpublished 10 opinion from a district court in Missouri. See id. at 22:21-23:4. There is good reason for this poor

ERIC GRANT, ATTORNEY AT LAW

11 showing: KSBE's notion is flatly wrong. 12 In truth, nothing precludes a declaratory judgment plaintiff from "seeking an exculpatory

8001 Folsom Boulevard, Suite 100 Sacramento, California 95826 Telephone: [phone]

13 ruling that he is not liable" in connection with what KSBE calls "past conduct." Id. at 23:6. As the 14 Ninth Circuit has explained, "the Act is intended to allow earlier access to federal courts in order 15 to spare potential defendants from the threat of impending litigation." Seattle Audubon Society v. 16 Moseley, 80 F.3d 1401, 1405 (9th Cir. 1996) (per curiam). That such litigation may concern "past 17 conduct" is obvious from one of the few Ninth Circuit cases on which KSBE relies here, namely, 18 Maryland Casualty Co. v. Knight, 96 F.3d 1284 (9th Cir. 1996), quoted in KSBE Mem. 23:14-17. 19 In that case, Knight "obtained a policy of fire insurance from [Maryland] on a commercial

20 building he owned in San Diego"; in May of 1991, that building "was heavily damaged by fire." 21 96 F.3d at 1286. Knight claimed under the policy; Maryland made substantial payments on those 22 claims, but Knight demanded more. Accordingly, in March of 1992, "Maryland filed its complaint 23 i