Wine Bottle Recycling LLC v. Niagra Systems LLC et al

Filing 58

ORDER by Judge Samuel Conti GRANTING in part and DENYING in part 12 South Shore LLC, S.A. Langmack Company, and Individual Defendants' Motion to Dismiss for Lack of Jurisdiction and GRANTING 18 Defendant Niagara Systems LLC's Motion to Dismiss for Failure to State a Claim. (sclc2, COURT STAFF) (Filed on 3/18/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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)
)
WINE BOTTLE RECYCLING, LLC,
)
)
Plaintiff,
)
)
v.
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)
NIAGARA SYSTEMS LLC; SOUTH SHORE )
SYSTEMS, LLC; S.A. LANGMACK
)
COMPANY; J. CHRIS LANGMACK;
)
CLARK LANGMACK; GEORGE STREKAL; )
AND RICHARD J. STARK,
)
)
Defendants.
)
)

Case No. 12-1924 SC
ORDER GRANTING DEFENDANTS'
MOTION TO DISMISS FOR FAILURE
TO STATE A CLAIM AND GRANTING
IN PART AND DISMISSING IN PART
DEFENDANTS' MOTION TO DISMISS
FOR LACK OF JURISDICTION

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I.

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INTRODUCTION
Now before the Court are the above-captioned Defendants'

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motions to dismiss Plaintiff Wine Bottle Recycling LLC's

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("Plaintiff") First Amended Complaint for failure to state a claim

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and lack of personal jurisdiction.

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("12(b)(2) MTD"), 18 ("12(b)(6) MTD").

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briefed.1

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ECF Nos. 10 ("FAC"), 12
The motions are fully

They are also suitable for resolution without oral

ECF No. 45 ("12(b)(6) Opp'n"), 50 ("12(b)(2) Opp'n"), 54 ("Reply
ISO 12(b)(6) MTD"), 55 ("Reply ISO 12(b)(2) MTD"). Several
declarations that Plaintiff cites in its opposition briefs, ECF
Nos. 37, 38, 39, 40, were originally attached to an improper
motion, which was denied by the Court, and were never properly

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argument.

Civ. L.R. 7-1(b).

For the reasons explained below, the

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Court GRANTS Defendant Niagara System LLC's ("NSL") motion to

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dismiss for failure to state a claim and GRANTS in part and DENIES

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in part the remaining Defendants' motion to dismiss for lack of

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personal jurisdiction.2

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for jurisdictional discovery.

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to the extent provided below.

The Court also GRANTS Plaintiff's request
Plaintiff has leave to amend the FAC

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9 II.

Plaintiff is a Sonoma, California-based company that provides

United States District Court

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For the Northern District of California

BACKGROUND

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"renewed wine bottle and delabeling services for the California

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winery industry."

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distribute, and promote bottle-washing machines.

FAC ¶ 1.

Defendants manufacture, sell,
Id.

Defendant NSL, an Ohio company, contracted with Plaintiff to

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supply a bottle-washing machine, as described below.

Defendants

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South Shore Systems LLC ("South Shore") and S.A. Langmack Company

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(so named in the FAC but now called Niagara Custom Built

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Manufacturing Company ("NCB")) (collectively the "Corporate

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Defendants") are Ohio companies that worked with NSL in some

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capacity that is unclear from the facts currently before the Court.

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attached or noticed in this matter. The Court disregards these
declarations because they were not properly put before the Court.
Accordingly, Plaintiff's only declarations properly before the
Court in this matter are the Declaration of Chris Ronson, ECF No.
51 ("Ronson Decl."), and the Supplemental Declaration of Bruce
Stephens, ECF No. 52 ("Suppl. Stephens Decl."). The Court STRIKES
all references to the improperly filed declarations in Plaintiff's
opposition briefs.
2

These Defendants argue in the alternative that the Court should
dismiss certain claims against them under Rule 12(b)(6) and
transfer the rest per forum non conveniens, but the Court need not
and does not reach those arguments in this Order because it
resolves the parties' disputes on jurisdictional grounds.
2

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The "Individual Defendants" in this matter are J. Chris Langmack,

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Clark Langmack, George Strekal, and Richard J. Stark, all alleged

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to be officers or directors of the Corporate Defendants.

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the Individual Defendants reside in Ohio and have no connections to

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California except through the corporate activity discussed below.

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J. Chris Langmack Decl ¶¶ 1-7; Stark Decl. ¶¶ 1-8; ECF No. 15

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(Clark Langmack Decl.) ¶¶ 1-8; ECF No. 17 (Strekal Decl.) ¶¶ 1-8.

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After Plaintiff contacted NSL to order a bottle-washing

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All of

machine, NSL provided Plaintiff with specifications and a price

United States District Court

For the Northern District of California

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quotation on February 3, 2010.

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Bottle Renew ("Proposal")).

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Bottle Washer Model 200 ("Niagara Model 200" or the "machine") had

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a "capacity of 200 bottles per minute" and that it would "wash and

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rinse these bottles and remove the paper or foil label residue" in

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a five-stage process, which included no drying step.

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1.

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references to any sort of drying apparatus or operation.

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at 2.

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ECF No. 10 Ex. A (Proposal for Wine

The Proposal stated that the Niagara

Proposal at

The Proposal mentions a "drying oven" but otherwise makes no
See id.

On March 3, 2010, Plaintiff contracted with NSL to purchase

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the Niagara Model 200.

Id. ¶ 18.

Defendants stated that the

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machine would be delivered "no later than July 30, 2010,"

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apparently in accordance with the Proposal's stated delivery window

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of 120 to 150 days.

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thereafter, on May 3, 2010, Defendant J. Chris Langmack told

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Plaintiff that the Niagara Model 200 could not remove labels

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without the purchase of additional equipment not included in the

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Proposal, even though Defendants apparently told Plaintiff at some

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earlier date that it could.

Id. ¶¶ 1, 22; Proposal at 4.

Id. ¶ 21.

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Shortly

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On or about July 17, 2010, Plaintiff learned that Defendants

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"were not abiding by the agreed schedule of design, manufacture,

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and installation" of the bottle-washing system and that Defendants

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"had not even begun the design of the system," even though

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Plaintiff had already made preparations to commence bottle-washing

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operations in anticipation of the arrival of the bottle-washing

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system.

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Plaintiff on or about October 22, 2010 that Defendants were

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"working overtime to complete the machine" and offered a variety of

Id. ¶ 22.

Defendants Chris and Clark Langmack told

United States District Court

For the Northern District of California

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excuses, though production had apparently stopped by that date.

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Id. ¶ 33.

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The Niagara Model 200 was installed in Plaintiff's Sonoma

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facility "[b]eginning in or around January 2011," shortly after

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which it "broke down, failed, or was inoperable on a daily basis."

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Id. ¶ 47.

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per minute, and on or about March 17, 2011, Defendant Stark told

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Plaintiff that Defendants could "get the speed of the system up,

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but not where they had said it would be."

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mechanical problems abounded, creating frustration and expense for

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Plaintiff.

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Plaintiff that they would repair the system, but despite

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Defendants' efforts, the defects continued and worsened.

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47-48, 52-54.

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200 did not include a blow dryer, claiming that Defendants promised

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it would and insisting that the Proposal included "clear reference"

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to one.

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told Plaintiff on or about March 18, 2011 that Defendants "had

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never made a machine for the beverage industry with a dryer."

It did not, as the Proposal stated, clean 200 bottles

See id.

Id. ¶ 19.

Other

In response to these problems, Defendants told

Id. ¶¶

Further, Plaintiff complains that the Niagara Model

Id. ¶ 20.

Even so, Defendant J. Chris Langmack apparently

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Id.

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From these facts, Plaintiff begins with what seem to be

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obvious claims based on its allegations: breach of warranties and

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negligent design.

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claims in fraud and misrepresentation on the theory that Defendants

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essentially lied about their plans and capabilities, as well as the

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Niagara Model 200's ability to remove labels and dry bottles,

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throughout their relationship with Plaintiff.

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Plaintiff asserts seven causes of action against Defendants: (1)

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intentional misrepresentation; (2) fraud in concealment; (3)

Plaintiff goes further, however, alleging tort

Accordingly,

United States District Court

For the Northern District of California

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negligent misrepresentation; (4) negligence in design manufacture

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and installation of a product; (5) breach of implied warranties of

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merchantability and fitness for intended use; (6) negligent

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interference with a contractual relationship; and (7) intentional

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interference with prospective advantage.

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conceded its "negligent interference" claim.

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to dismiss Plaintiff's FAC, arguing that Plaintiff fails to state

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claims for negligent misrepresentation and intentional interference

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with prospective economic advantage against Defendant NSL, and that

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the Court lacks personal jurisdiction over the other Defendants.

Plaintiff has since
Defendants now move

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21 III.

DISCUSSION

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A.

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NSL, the only named defendant with whom Plaintiff formed a

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contract, does not dispute that the Court has jurisdiction over it.

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However, Defendants move to dismiss Plaintiff's FAC as to South

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Shore, NCB, and the Individual Defendants, arguing that the Court

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lacks personal jurisdiction over those parties.

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Plaintiff makes numerous arguments, discussed below, as to why the

Defendants' 12(b)(2) Motion

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12(b)(2) MTD at 2.

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Court has jurisdiction over Defendants other than NSL.

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12(b)(2) Opp'n at 8-14.

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1.

See

None are convincing.

Legal Standard for Jurisdiction

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Under Rule 12(b)(2) of the Federal Rules of Civil Procedure,

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defendants may move to dismiss for lack of personal jurisdiction.

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The Court may consider evidence presented in affidavits and

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declarations determining personal jurisdiction.

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Corp., 248 F.3d 915, 922 (9th Cir. 2001).

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burden of showing that the Court has personal jurisdiction over

Doe v. Unocal

Plaintiff bears the

United States District Court

For the Northern District of California

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Defendants.

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(9th Cir. 2006).

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make only a prima facie showing of jurisdictional facts to

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withstand the motion to dismiss."

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"[T]he court resolves all disputed facts in favor of the plaintiff

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. . . ."

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rest on the bare allegations of its complaint, but uncontroverted

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allegations in the complaint must be taken as true."

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Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011)

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(quotations omitted).

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coextensive with federal due process requirements, Cal. Civ. Proc.

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Code § 410.10, the personal jurisdiction analysis under state and

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federal law are the same.

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See Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154
"[T]his demonstration requires that the plaintiff

Id. (quotations omitted).

Id. (quotations omitted).

2.

"The plaintiff cannot simply

Mavrix Photo,

Since California's long-arm statute is

General Jurisdiction

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General jurisdiction applies where a defendant's activities in

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the state are "substantial" or "continuous and systematic," even if

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the cause of action is unrelated to those activities.

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Inc. v. Sys. Techs. Assocs., Inc., 557 F.2d 1280, 1287 (9th Cir.

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1977) (internal quotations omitted).

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Data Disc,

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For general jurisdiction to exist over a
nonresident defendant . . . , the defendant
must engage in "continuous and systematic
general business contacts," . . . that
"approximate physical presence" in the forum
state . . . . This is an exacting standard,
as it should be, because a finding of
general jurisdiction permits a defendant to
be haled into court in the forum state to
answer for any of its activities anywhere in
the world.

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Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th

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Cir. 2004) (citations omitted).

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Circuit has regularly declined to find general jurisdiction even

This is a high standard: the Ninth

United States District Court

For the Northern District of California

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where the contacts were quite extensive.

See, e.g., Amoco Egypt

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Oil Co. v. Leonis Navigation Co., 1 F.3d 848, 851 n.3 (9th Cir.

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1993) (citing cases).

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whether the defendant makes sales, solicits or engages in business

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in the state, serves the state's markets, designates an agent for

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service of process, holds a license, or is incorporated there."

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Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082,

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1086 (9th Cir. 2000).

"Factors to be taken into consideration are

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Plaintiff argues that there are seven bases for exercising

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general jurisdiction over NCB: (1) NCB's use of a website link that

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captures site visitors' names for marketing purposes; (2) its use

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of a California-based web-hosting provider; (3) the fact that

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California is a major wine production and bottle-recycling state;

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(4) Defendant J. Chris Langmack's possession of two YouTube (a

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California-based company) accounts that he uses to demonstrate

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bottle-washing machines; (5) a corporate registration for a

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different company listing Defendant J. Chris Langmack's Ohio

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address as the address for process; (6) a failed negotiation with

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Plaintiff to set up a California distributorship; and (7) alleged

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sale of a product to a California winery.
Plaintiff claims that, in the aggregate, these allegations

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support a finding of substantial contacts in California such that

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the Court could lawfully exercise jurisdiction over Niagara Custom

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Built.

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The Court finds otherwise.

Plaintiff's arguments about NCB's website, web-hosting

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provider, and YouTube accounts, points (1), (2), and (4), are

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contrary to established law because Plaintiff did not show that any

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of these activities were targeted specifically at California

United States District Court

For the Northern District of California

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residents.

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11–1046 PJH, 2012 WL 4051128, at *8 (N.D. Cal. Sept. 13, 2012)

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(citing Mavrix, 647 F.3d at 1229); American Auto. Ass'n, Inc. v.

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Darba Enter., Inc., No. C 09–00510 SI, 2009 WL 1066506, at *4 (N.D.

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Cal. Apr. 21, 2009).

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directed into California are insufficient to establish personal

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jurisdiction over a defendant.

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See, e.g., DFSB Kollective Co. Ltd. v. Bourne, No. C

Passive web properties not specifically

See id.

Under point (3), the fact that Defendants market products that

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are most useful in California is irrelevant.

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that NCB or South Shore actually directed activities into

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California to such a degree that the Court is justified in

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exercising general jurisdiction over those Defendants.

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fails to do so.

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Plaintiff has to show

Plaintiff

Per point (5), Plaintiff states that the Court may properly

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exercise jurisdiction because NCB registered a corporation,

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"Corrillion of California," with the California Secretary of State,

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with Defendant J. Chris Langmack serving as the registered agent

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for service at an address in Ohio.

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does not explain which state's jurisdiction the corporation was

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12(b)(2) Opp'n at 9.

Plaintiff

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organized under, what it did, or whether it is still active.

Nor

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does it offer any other factors that would justify the exercise of

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jurisdiction based on an old corporate registration for a non-

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Defendant.

Plaintiff's allegations are insufficient.

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Regarding point (6), Plaintiff alleges that a failed

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negotiation between NCB and Plaintiff demonstrates NCB had an

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intent to be a presence in the California market.

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enough to show that the Court has general jurisdiction over NCB,

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especially since Plaintiff itself apparently initiated these

United States District Court

For the Northern District of California

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This is not

discussions.
As to point (7), NCB's alleged "history of sales of its

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products in the forum (Ferrara Winery)," Plaintiff does not explain

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how, when, or by whom those sales were made.

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is not a basis for jurisdiction.

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Accordingly, the Court finds that Plaintiff has failed to show
sufficient bases for exercising general jurisdiction over NCB.
3.

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This bare allegation

Specific Jurisdiction

Where general jurisdiction is inappropriate, a court may still

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exercise specific personal jurisdiction depending on "the nature

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and quality of the defendant's contacts in relation to the cause of

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action."

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three-prong test when analyzing a claim of specific jurisdiction:

Data Disc, 557 F.2d at 1287.

The Ninth Circuit applies a

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(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;

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2
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and
(3) the exercise of jurisdiction must comport with
fair play and substantial justice, i.e. it must be
reasonable.

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Schwarzenegger, 374 F.3d at 802.

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satisfying the first two prongs, and if he or she fails to satisfy

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either, specific jurisdiction is not established.

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plaintiff satisfies these prongs, the burden shifts to the

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defendant "to present a compelling case" that the exercise of

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jurisdiction would not be reasonable.

United States District Court

For the Northern District of California

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The plaintiff bears the burden of

Id.

If the

Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 476–78 (1985).

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Plaintiff first argues that NCB and South Shore have met the

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first prong of Schwarzenegger's specific jurisdiction test, which

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itself includes two separate tests: the "purposeful direction" test

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used in tort matters, and the "purposeful availment" test for

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contract issues.

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L'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (discussing

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the use of the two different standards) (citing Schwarzenegger, 374

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F.3d at 802-05).
a.

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See Yahoo! Inc. v. La Ligue Contre Racisme et

Purposeful Direction

The Ninth Circuit applies the following three-part test to

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evaluate specific jurisdiction in tort cases: "the defendant

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allegedly must have (1) committed an intentional act, (2) expressly

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aimed at the forum state, (3) causing harm that the defendant knows

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is likely to be suffered in the forum state."

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Circuit calls this a "purposeful direction" analysis,

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distinguishing it from the "purposeful availment" analysis in

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contract cases.

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"something more than mere foreseeability" of an effect in the forum

See id.

Id.

The Ninth

When considering the first prong,

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state is necessary.

Schwarzenegger, 374 F.3d at 805 (internal

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citation and quotation omitted).
Plaintiff alleges that NCB "long availed itself of personal

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jurisdiction in California by intentional acts done to promote

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products that had utility to a market almost exclusively in

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California."

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purposeful direction.

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matter under this prong, and in any event, Plaintiff contacted NCB

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to ask NCB to do business in California -- not the other way

United States District Court

For the Northern District of California

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12(b)(2) Opp'n at 12.

This is insufficient to show

The market for NCB's products does not

around.

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Plaintiff further argues that "[i]f the design and manufacture

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and installation of the [Niagara Model 200] was deficient, [and] if

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the representations made by [Defendants] were false (as later

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admitted by at least one [Individual Defendant]), then [Defendants]

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would have known that [Plaintiff] would likely suffer the injury in

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California."

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attenuated to meet the Ninth Circuit's standard for purposeful

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direction: Plaintiff has failed to explain how their chain of

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reasoning actually shows intention or express aiming on Defendants'

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part.

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12(b)(2) Opp'n at 12.

This argument is far too

The Court accordingly finds that Plaintiff has failed to show

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purposeful direction as to its tort claims against Defendants, such

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that it has failed to meet the standard for exercising specific

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jurisdiction.

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b.

Purposeful Availment

As for purposeful availment, the contract standard for the

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first prong of the specific jurisdiction test, the Ninth Circuit

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asks the Court to consider whether a defendant "'purposefully

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avails itself of the privilege of conducting activities' or

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'consummate[s][a] transaction' in the forum, focusing on activities

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such as delivering goods or executing a contract."

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at 1206 (quoting Schwarzenegger, 374 F.3d at 802).

Yahoo, 433 F.3d

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Plaintiff first claims that NCB and South Shore functioned as

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a single entity with NSL, and since NSL actually formed a contract

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in California, NCB and South Shore should be held to have

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"purposefully availed" themselves of jurisdiction as well.

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12(b)(2) Opp'n at 13.

See

In support of this contention, Plaintiff

United States District Court

For the Northern District of California

10

states, " "[t]he inclusion of South Shore and [NCB's] entity titles

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in e-mails, reports, .pdf drawings sent to [Plaintiff] is

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indicative that the two entities were interchangeable."

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Plaintiff's arguments are merely conclusory, and they do not prove

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that NCB, South Shore, or NSL were interchangeable.

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Plaintiff must provide factual support for its arguments, not

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vague, unsupported assertions.

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Id.

To do so

Plaintiff also argues that "South Shore played a major role in

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performing and administering the contract," explaining that South

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Shore "provided the engineering and design services" for the

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bottle-washing system in California, sending numerous employees to

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the site.

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Plaintiff cites to support these claims, however, states in a

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vaguer and more limited fashion that South Shore communicated with

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Plaintiff about the project "on many occasions," that South Shore

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employees visited Plaintiff's California production facility "at

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least three times," and that on a separate occasion, Defendant

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Stark (allegedly an employee of both South Shore and NCB) told

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Plaintiff that "defendants" were responsible for delayed delivery

Id. (citing Suppl. Stephens Decl. ¶ 8).

12

The evidence

1

of the Niagara Model 200 because they "put priority on other

2

customers' projects."

3

includes emails alleged to be from Defendant Stark, discussing

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shipments of parts for the Niagara Model 200 from South Shore and

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information about when the machine would be ready, though the

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latter email includes an NSL signature line.

Suppl. Stephens Decl. ¶ 8.3

Plaintiff also

Id. Ex. B.

7

The Court finds that these facts indicate that South Shore was

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directly involved in designing and delivering the Niagara Model 200

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to Plaintiff, thereby "avail[ing] itself of the privilege of

United States District Court

For the Northern District of California

10

conducting activities" in California.

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(quoting Schwarzenegger, 374 F.3d at 802).
c.

12

Yahoo!, 433 F.3d at 1206

Remaining Factors as to South Shore

The Court therefore proceeds to the remaining two steps of the

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Ninth Circuit's specific jurisdiction analysis as to South Shore:

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(2) whether Plaintiff's claim arose out of or relates to the

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defendant's forum-related activities, and (3) whether the exercise

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of jurisdiction comports with fair play and substantial justice.

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Schwarzenegger, 374 F.3d at 802.

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arises out of forum-related activities, courts apply a 'but for'

20

test," under which the Court is to consider whether Plaintiff's

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3

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"To determine whether a claim

Defendants object to this portion of the Supplemental Stephens
Declaration, arguing that it is irrelevant, lacks foundation, lacks
personal knowledge, and is inadmissible hearsay. ECF No. 56
("Objections") at 2-3. The Court OVERRULES this objection. As
Chief Executive Officer of Wine Bottle Recycling LLC, Stephens
claims to have personal knowledge of his company's business
dealings with South Shore, indicating that his use of "us" or "we"
in his Declaration implies that he has knowledge of his company's
dealings. The disputed statements have evidentiary foundation
because Stephens stated his familiarity with the company, and the
cited emails indicate correspondence as to South Shore's business
dealings. Further, any statement from Defendants here is
admissible over a hearsay objection as a statement of a partyopponent.

13

1

claim would have arisen but for South Shore's contacts with

2

California.

Unocal, 248 F.3d at 924.

At this point, Plaintiff's arguments fail.

3

In discussing this

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prong, Plaintiff's opposition brief shifts from discussing South

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Shore specifically and simply claims that all Defendants

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misrepresented facts regarding caustic chemicals to be used in the

7

Niagara Model 200; defects in the machine's design, manufacturing,

8

and installation; and facts about the machine's specifications,

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speed, and the time it would take to be built.

12(b)(2) Opp'n at

United States District Court

For the Northern District of California

10

14.

Plaintiff never specifies how any of these conclusory

11

statements relate to South Shore's activity, or how "but for" South

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Shore's involvement Plaintiff's claims would not have arisen.

13

resolving all disputes in Plaintiff's favor, the Court simply

14

cannot evaluate Plaintiff's argue on this point because there are

15

no facts to consider, only bare legal conclusions.

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provide evidence about South Shore's shipments of parts to

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California, but this does not suffice to show that South Shore was

18

responsible for any of the negligent design or other torts alleged

19

in the FAC.

Even

Plaintiff did

20

Without facts regarding the true extent of South Shore's

21

involvement in NSL's undisputed relationship with Plaintiff, it is

22

not clear whether Plaintiff's causes of action would have arisen

23

absent South Shore's involvement.

24

cites in the FAC or its Declarations suggest that South Shore was a

25

necessary part of the arrangement, e.g., that NSL would not have

26

supplied the allegedly defective machine or made the statements it

27

did without South Shore's involvement.

28

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None of the facts Plaintiff

1

The Court therefore finds that Plaintiff has failed to show

2

that "but for" South Shore's involvement, its claims would never

3

have arisen.

4

as to this prong, the Court need not discuss whether exercising

5

jurisdiction over South Shore would be reasonable.

Since Plaintiff fails to make a satisfactory showing

6

Because Plaintiff fails to meet the first prong of the

7

specific jurisdiction test as to NCB and the second prong as to

8

South Shore, the Court finds that it does not have specific

9

jurisdiction over those Defendants.
4.

United States District Court

For the Northern District of California

10
11

Jurisdiction Over the Individual Defendants

Plaintiff further claims that the Individual Defendants are

12

not protected by the fiduciary shield doctrine, which protects

13

corporate agents and employees from liability for the corporation's

14

torts, because they "personally directed or participated in the

15

tortious conduct at issue here."

16

U.S. Liab. Ins. Co. v. Haldinger Hayes, Inc., 1 Cal. 3d 586, 595

17

(Cal. 1970)).

18

personally liable for all torts which he authorizes or directs or

19

in which he participates, notwithstanding that he acted as an agent

20

of the corporation and not on his own behalf."

21

Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 734 (9th

22

Cir. 1999).

23

12(b)(2) Opp'n at 16-17 (citing

"A corporate officer or director is, in general,

Coastal Abstract

Nothing Plaintiff asserts here has merit as to any Individual

24

Defendant.

Plaintiff notes that the Individual Defendants were

25

present at certain discussions or operated machinery during a

26

demonstration, but Plaintiff never moves beyond conclusory

27

allegations that the Individual Defendants' behavior was tortious.

28

No Individual Defendant has sufficient contacts with California, no

15

1

emails or statements at issue were made in California, and

2

Plaintiff never alleges with any specificity that any Individual

3

Defendant, except J. Chris Langmack, made a fraudulent or otherwise

4

actionable statement.

5

never addresses the issue of whether he purposefully availed

6

himself of or purposefully directed his actions toward California.

7

The same is true of the other Defendants.

8

Court cannot find that it has jurisdiction over the Individual

9

Defendants.

With regard to J. Chris Langmack, Plaintiff

Without such facts the

United States District Court

For the Northern District of California

10

The conduct Plaintiff describes does not suggest that the

11

Individual Defendants were "guiding spirit[s]" or "active directing

12

hand[s]" in the alleged torts such that the Court could justify

13

exercising jurisdiction over them.

14

Timberwork Oregon LLC, No. C 08–04078 CW, 2009 WL 1033818, at *4

15

(N.D. Cal. Apr. 16, 2009) (citing Int'l Mfg. Co. v. Landon, Inc.,

16

336 F.3d 723, 728 (9th Cir. 1964)).

17

that Plaintiff has failed to show that the Court has jurisdiction

18

over any Individual Defendant.
5.

19

See Matsunoki Grp. v.

The Court accordingly finds

Agency/Alter Ego

Plaintiff asserts that the Court may also take jurisdiction

20
21

over South Shore and NCB because they are agents or alter egos of

22

NSL.

23

"is not sufficient to establish personal jurisdiction over the

24

parent on the basis of the subsidiaries' minimum contacts with the

25

forum."

26

subsidiary are not really separate entities [i.e., alter egos], or

27

one acts as an agent of the other, the local subsidiary's contacts

Generally, the existence of a parent-subsidiary relationship

Unocal, 248 F.3d at 925.

28

16

However, "if the parent and

1

with the forum may be imputed to the foreign parent corporation."

2

Id. at 926 (quotations omitted).

3

To satisfy the alter ego exception to the general rule, "the

4

plaintiff must make out a prima facie case (1) that there is such

5

unity of interest and ownership that the separate personalities [of

6

the two entities] no longer exist and (2) that failure to disregard

7

[their separate identities] would result in fraud or injustice."

8

Id. (quotations omitted).
The agency exception applies where "the subsidiary functions

9

United States District Court

For the Northern District of California

10

as the parent corporation's representative in that it performs

11

services that are sufficiently important to the foreign corporation

12

that if it did not have a representative to perform them, the

13

corporation's own officials would undertake to perform

14

substantially similar services."

Id. at 928 (quotations omitted).

Plaintiff does not clarify whether it is asserting that the

15
16

Court has jurisdiction over South Shore and NCB under the agency or

17

alter ego exception, but its arguments fail under either theory.

18

See 12(b)(2) Opp'n at 15-16.

19

considered in alter ego cases, but never cites facts to which those

20

factors might apply.

21

conclusory assertion that NCB and South Shore used NSL as a shell.

22

See 12(b)(2) Opp'n at 15-16.

23

satisfy the alter ego exception.

24

Similarly, Plaintiff points to no facts suggesting that the agency

25

exception applies.

26

ego therefore fail.

27

///

28

///

See id.

Plaintiff cites factors courts have

Instead, Plaintiff makes a

This is plainly insufficient to
See Doe, 248 F.3d at 925.

Plaintiff's arguments about agency and alter

17

1

6.

Jurisdictional Discovery

2

The district court has discretion to allow a plaintiff to

3

conduct jurisdictional discovery.

Wells Fargo & Co. v. Wells Fargo

4

Exp. Co., 556 F.2d 406, 430 n.24 (9th Cir. 1977).

5

such discovery should ordinarily be granted "where pertinent facts

6

bearing on the question of jurisdiction are controverted . . . or

7

where a more satisfactory showing of the facts is necessary."

8

(quotations omitted).

9

discovery "[w]here a plaintiff's claim of personal jurisdiction

Requests for

Id.

However, a district court need not permit

United States District Court

For the Northern District of California

10

appears to be both attenuated and based on bare allegations in the

11

face of specific denials made by the defendants . . . ."

12

v. Valley Nat. Bank, 49 F.3d 555, 562 (9th Cir. 1995).

13

Terracom

Defendants argue that Plaintiff's request for jurisdictional

14

discovery should be denied because Plaintiff relies on an

15

inapposite case to support its request; Plaintiff has failed to

16

establish facts likely to be obtained through discovery that might

17

assist its claims; and despite having had its previous, improper

18

motion for jurisdictional discovery denied and having been

19

instructed on how to proceed in this matter, Plaintiff fails to

20

provide a discrete itemization of discovery requests.

21

Rule 12(b)(2) MTD at 12-13.

22

Reply ISO

Plaintiff do not respond to these arguments, but they note in

23

their opposition brief that the Court cannot fairly determine

24

whether or not NCB or South Shore are alter egos or agents of NSL

25

-- over which the Court indisputably has jurisdiction -- without

26

additional discovery into matters like undercapitalization or

27

commingling of funds.

28

rightly point out that Plaintiff fails to substantiate its agency

See 12(b)(2) Opp'n at 16.

18

Defendants

1

or alter ego theories, but Defendants do not explicitly deny

2

Plaintiff's allegations, and the core facts as to the Defendants'

3

interrelationships are controverted.

4

(requests for jurisdictional discovery should be granted if

5

pertinent jurisdictional facts are controverted).

6

deserves the opportunity to show facts pertinent to the agency and

7

alter ego exceptions.

See Terracom, 49 F.3d at 562

Plaintiff

8

However, it is entirely unclear whether Plaintiff is also

9

asking for jurisdictional discovery as to the Individual Defendants

United States District Court

For the Northern District of California

10

when it states, "Plaintiff here seeks to establish that the

11

fiduciary shield doctrine does not apply to the individual

12

defendants by establishing the agency / alter ego exception."

13

12(b)(2) Opp'n at 24.

14

only to the Individual Defendants, and the agency and alter ego

15

exceptions only to the Corporate Defendants.

16

evidence Plaintiff appears to request -- facts about whether NCB,

17

NSL, and South Shore were in a joint venture, or whether those

18

corporations were undercapitalized or commingling funds, for

19

example -- are relevant to the Individual Defendants, the Court

20

will not grant jurisdictional discovery as to them.

21
22
23
24

The fiduciary shield doctrine is relevant

Since none of the

Therefore the Court finds jurisdictional discovery appropriate
as to Plaintiff's alter ego claims against South Shore and NCB.
7.

Conclusion as to Defendants' 12(b)(2) Motion

Defendants' 12(b)(2) Motion is DENIED as to NCB and South

25

Shore and GRANTED as to the Individual Defendants.

26

leave to conduct limited jurisdictional discovery as to whether NCB

27

or South Shore are agents or alter egos of NSL.

28

reargue its bases for jurisdiction or seek discovery as to any

19

Plaintiff has

Plaintiff may not

1

other Defendant.

2

B.

Defendants' 12(b)(6) Motion

3

Because Plaintiff concedes its claim for negligent

4

interference with contractual relationship, 12(b)(2) Opp'n at 5,

5

the two claims now in dispute as to Defendants' 12(b)(6) motion are

6

for negligent misrepresentation and intentional interference with a

7

prospective economic relationship.

8

lacks jurisdiction over all Defendants except NSL, the following

9

discussion pertains only to that Defendant.
1.

United States District Court

For the Northern District of California

10
11

Since the Court found that it

Rule 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure

12

12(b)(6) "tests the legal sufficiency of a claim."

Navarro v.

13

Block, 250 F.3d 729, 732 (9th Cir. 2001).

14

on the lack of a cognizable legal theory or the absence of

15

sufficient facts alleged under a cognizable legal theory."

16

Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

17

1988).

18

should assume their veracity and then determine whether they

19

plausibly give rise to an entitlement to relief."

20

Iqbal, 556 U.S. 662, 679 (2009).

21

must accept as true all of the allegations contained in a complaint

22

is inapplicable to legal conclusions.

23

elements of a cause of action, supported by mere conclusory

24

statements, do not suffice."

25

Twombly, 550 U.S. 544, 555 (2007)).

26

generally "limited to the complaint, materials incorporated into

27

the complaint by reference, and matters of which the court may take

28

judicial notice."

"Dismissal can be based

"When there are well-pleaded factual allegations, a court

Ashcroft v.

However, "the tenet that a court

Threadbare recitals of the

Id. (citing Bell Atl. Corp. v.
The court's review is

Metzler Inv. GMBH v. Corinthian Colls., Inc.,

20

1

540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor

2

Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).
2.

3
4

Rule 9(b)

Claims sounding in fraud are subject to the heightened

5

pleading requirements of Federal Rule of Civil Procedure 9(b),

6

which requires that a plaintiff alleging fraud "must state with

7

particularity the circumstances constituting fraud."

See Kearns v.

8

Ford Motor Co., 567 F. 3d 1120, 1124 (9th Cir. 2009).

"To satisfy

9

Rule 9(b), a pleading must identify the who, what, when, where, and

United States District Court

For the Northern District of California

10

how of the misconduct charged, as well as what is false or

11

misleading about [the purportedly fraudulent] statement, and why it

12

is false."

13

Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks

14

and citations omitted).

15

3.

16

United States ex rel Cafasso v. Gen. Dynamics C4 Sys.,

Negligent Misrepresentation

The elements of negligent misrepresentation are: (1)

17

misrepresentation of a past or existing material fact, (2) without

18

reasonable grounds for believing it to be true, (3) with intent to

19

induce another's reliance on the misrepresentation, (4) ignorance

20

of the truth and justifiable reliance on the misrepresentation by

21

the party to whom it was directed, and (5) resulting damage.

22

K. Jackson Inc. v. Roe, 273 F.3d 1192, 1200 n.2 (9th Cir. 2001).

23

Negligent misrepresentation claims are subject to Rule 9(b).

24

e.g., Dietz v. Comcast Corp., No. C 06-06352 WHA, 2006 WL 3782902,

25

at *6 (N.D. Cal. Dec. 21, 2006) (citing cases).

26

Glenn

See,

Plaintiff alleges that Defendants misrepresented that they had

27

the experience to construct and furnish a wine-bottle-washing

28

machine, that they were competent and had the experience and

21

1

expertise to produce such a machine that could remove labels from

2

bottles, and that the machine would process 200 bottles per minute.

3

FAC ¶¶ 38-40.

4

Plaintiff appears to add that Defendants made various

5

misrepresentations about the amount of caustic chemical necessary

6

to operate the Niagara Model 200 -- an assertion not made in the

7

FAC.

8

Defendants made these representations without knowing if they were

9

true or false, and that Plaintiff relied on those representations

United States District Court

For the Northern District of California

10
11

In its opposition to Defendants' 12(b)(2) motion,

See 12(b)(2) Opp'n at 17-18.

and was harmed by them.

Plaintiff then asserts that

Id. ¶¶ 41-43.

Plaintiff's pleadings, without more, are formulaic recitations

12

of a negligent misrepresentation claim's elements.

13

U.S. at 554-55.

14

Rule 9(b): Plaintiff did not specify "the who, what, when, where,

15

and how" of the fraud.

16

Plaintiff must actually cite statements, provide their speakers and

17

dates, and explain why they were false.

18

Plaintiff's facts in the FAC or declarations included in the

19

opposition briefs demonstrate the requisite particularity.

20

addition to all of these pleading deficiencies, Plaintiff's newly

21

added assertions about Defendants' statements regarding the

22

necessary amount of caustic chemical were improperly raised, and

23

the Court cannot now consider them without converting this Rule

24

12(b)(6) motion to dismiss to a Rule 56 motion for summary

25

judgment.

26

Twombly, 550

Further, they are not specific enough to satisfy

Cafasso, 637 F.3d at 1055.

See id.

To do so

None of

In

The Court finds that Plaintiff has failed to plead a claim for

27

negligent misrepresentation under Rule 9(b).

28

Plaintiff's negligent misrepresentation claim is DISMISSED.

22

Accordingly,
The

1

Court gives Plaintiff leave to amend this claim to correct the

2

noted deficiencies.

3
4
5

4.

Intentional Interference with Prospective Economic
Advantage

Defendants argue that Plaintiff fails to plead the tort of

6

intentional interference with prospective economic advantage,

7

because Plaintiff's pleading as to this claim "is so bereft of

8

factual content that the Court could not draw any inferences

9

whatsoever about [NSL's] conduct in relation to [Plaintiff's]

United States District Court

For the Northern District of California

10
11

prospective advantages with third parties."

12(b)(6) MTD at 7.

To prevail on this claim, a plaintiff must show the following

12

elements: (1) an economic relationship between the plaintiff and

13

some third party, with the probability of future economic benefit

14

to the plaintiff; (2) the defendant's knowledge of the

15

relationship; (3) intentional acts on the part of the defendant

16

designed to disrupt the relationship; (4) actual disruption of the

17

relationship; and (5) economic harm to the plaintiff proximately

18

caused by the acts of the defendant.

19

Martin Corp., 29 Cal. 4th 1134, 1153 (Cal. Ct. App. 2003) (internal

20

citation and quotation marks omitted).

Korea Supply Co. v. Lockheed

21

Plaintiff fails to plead even the first element here.

Nowhere

22

in the FAC or the opposition brief does Plaintiff clarify what

23

actual, non-speculative economic relationship between Plaintiff and

24

a third party was harmed.

25

California wine industry" are insufficient.

26

does Plaintiff ever indicate whether or how Defendants knew of such

27

a relationship, how Defendants' acts could possibly be taken to be

28

intentionally geared toward interfering with Plaintiff's economic

Vague gestures toward "members of the

23

See FAC ¶ 61.

Nor

1

advantage, that the relationship was disrupted, or that Plaintiff

2

was even harmed.

3

their claim is that Defendants "cite no authority for their

4

argument that the third party must be specifically named" in this

5

cause of action because they claim that no such authority exists.

6

12(b)(6) Opp'n at 4-5.

7

California that a plaintiff must establish an existing economic

8

relationship or a protected expectancy with a third person, not

9

merely a hope of future transactions.

In their opposition, Plaintiff's only support for

This is false.

"[I]t is well settled in

Such an existing

United States District Court

For the Northern District of California

10

relationship must be pleaded to state a claim for intentional

11

interference with prospective economic advantage."

12

Streivor, Inc., No. C 10–00655 WHA, 2010 WL 2077203 (N.D. Cal., May

13

21, 2010).

Halton Co. v.

14

Even if Plaintiff were able to plead an existing relationship

15

or expectancy, the Court does not find it plausible that Plaintiff

16

could show intent.

17

Plaintiff's claim for intentional interference with prospective

18

economic advantage is DISMISSED WITH PREJUDICE.

Amendment would be futile and prejudicial.

19
20 IV.

CONCLUSION

21

For the reasons explained above, Defendants South Shore

22

Systems LLC, S.A. Langmack Company (a.k.a. "Niagara Custom Built

23

Manufacturing Company"), J. Chris Langmack, Clark Langmack, George

24

Strekal, and Richard J. Stark's motion to dismiss Plaintiff Wine

25

Bottle Recycling LLC's First Amended Complaint for lack of personal

26

jurisdiction is GRANTED as to all Defendants except South Shore

27

Systems LLC and Niagara Custom Built Manufacturing Company, as to

28

whom Defendants' motion is DENIED without prejudice.

24

1

Plaintiff's request for jurisdictional discovery is GRANTED as

2

to facts relevant to whether the agency or alter ego exceptions

3

apply to Defendants South Shore Systems LLC or Niagara Custom Built

4

Manufacturing Company.

5

ninety (90) days of this Order's Signature Date.

6

discovery is complete, Defendants may again move to dismiss

7

pursuant to Rule 12(b)(2).

8

over any defendants except South Shore Systems LLC and Niagara

9

Custom Built Manufacturing Company.

United States District Court

For the Northern District of California

10

Plaintiff must complete discovery within
Once that

Plaintiff may not reargue jurisdiction

Plaintiff's negligent misrepresentation claim is DISMISSED

11

with leave to amend.

12

prospective economic advantage claim is DISMISSED WITH PREJUDICE.

13

Plaintiff's intentional interference with

Plaintiff has thirty (30) days from this Order's signature

14

date to file its amended complaint, or the Court may dismiss the

15

deficient portions of the FAC with prejudice.

16

amendments are to be strictly tailored to address the deficiencies

17

described in this Order.

18

of the Court.

19

the Court is subject to Rule 11 of the Federal Rules of Civil

20

Procedure.

21

Rules with regard to filing documents and formatting briefs.

Plaintiff's

All additional amendments require leave

Plaintiff is on notice that everything filed before

Plaintiff is instructed to review the Court's Local

22
23

IT IS SO ORDERED.

24
25

18
Dated: March ___, 2013

26

UNITED STATES DISTRICT JUDGE

27
28

25