SA Luxury Expeditions LLC v. Latin America for Less, LLC et al

Filing 27

ORDER ON MOTION BY LATIN AMERICA FOR LESS, LLC TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND CONTINUING HEARING re 9 Motion to Dismiss. Case Management Statement due by 1/22/2015. Supp. brief due by 1/8/2015 and 1/15/2015. Case Manageme nt Conference set for 1/29/2015 08:00 AM in Courtroom 8, 19th Floor, San Francisco. Motion Hearing set for 1/29/2015 08:00 AM in Courtroom 8, 19th Floor, San Francisco before Hon. William Alsup.. Signed by Judge Alsup on November 12, 2014. (whalc1, COURT STAFF) (Filed on 11/12/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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Plaintiff,

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For the Northern District of California

United States District Court

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SA LUXURY EXPEDITIONS LLC, a
California limited liability company,

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No. C 14-04085 WHA

v.
LATIN AMERICA FOR LESS, LLC,
a Texas limited liability company,
BERNARD SCHLEIEN, an individual,
a/k/a Jose Castrellon, and DOES 1–10,
inclusive,

ORDER ON MOTION BY
LATIN AMERICA FOR LESS, LLC
TO DISMISS FOR LACK OF
PERSONAL JURISDICTION AND
CONTINUING HEARING

Defendants.

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INTRODUCTION

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In this action involving alleged false advertising and computer fraud and abuse, one

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defendant moves to dismiss for lack of personal jurisdiction. For the reasons stated herein, the

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motion is HELD IN ABEYANCE. The December 4 hearing is hereby CONTINUED TO JANUARY 29,

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2015.
STATEMENT

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Both plaintiff SA Luxury Expeditions LLC and defendant Latin America for Less, LLC

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(“LAFL”) allegedly compete in selling travel services and expeditions to South America

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(Comp. ¶¶ 1, 16, 23).

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In April 2012, defendant Bernard Schleien (who has not yet appeared) and defendant

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LAFL allegedly began a series of “malicious attacks” against plaintiff, including posting “fake

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consumer reviews,” creating a website containing “defamatory content,” submitting to plaintiff
“fake customer leads,” creating “spam links” to plaintiff’s website, filing a fraudulent trademark

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application, engaging in “click fraud” with respect to plaintiff’s online advertisements, attempting

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to hack plaintiff’s servers, and so forth (Comp. ¶ 3).

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In September 2014, plaintiff commenced this action alleging the following claims for

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relief: (1) false advertising; (2–3) fraud; (4) violation of the Computer Fraud and Abuse Act,

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18 U.S.C. 1030; and (5) interference with business expectancy.

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In October 2014, defendant LAFL moved to dismiss for lack of personal jurisdiction. The

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motion argued that LAFL was a “Texas corporation organized and existing under the laws of the

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State of Delaware” with a “headquarters and principal place of business in Round Rock, Texas”

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(Br. 3). Two declarations were filed in support of the motion. The first declaration, from the
owner of LAFL, stated only that “Latin America for Less, LLC does not have in California any

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For the Northern District of California

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employees, real estate, or personal property, nor did it in 2012 through 2013”

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(McClellan Decl. ¶ 3). The second declaration, from counsel, appended corporate information for

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plaintiff (not defendant) (Wei Exhs. A–B).

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In opposition, plaintiff argued, inter alia, that LAFL purposely availed itself to the laws of

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California by “using California resources to engage in a variety of misconduct targeted at

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California consumers” (Opp. 1).

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In reply, LAFL argued that plaintiff provided no evidence that “LAFL alone registered

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[the] fake accounts,” that “LAFL alone put up fake reviews,” that “LAFL alone allegedly made

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false and disparaging statement about Plaintiff,” that “LAFL alone” misdirected internet traffic,

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and that “LAFL alone submitted any false customer leads to Plaintiff’s website,” and so forth

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(Reply 3–4). LAFL further argued that it did not know of plaintiff’s principal place of business

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until it was served with the complaint. LAFL also argued that it would not be reasonable for it to

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defend itself in California since its owner would be “forced to spend a significant amount of

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money on airfare” (Reply 5). A reply declaration was submitted from the “sole owner and

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employee” of LAFL, David McClellan, which stated (McClellan Decl. ¶¶ 3–5, 8, 13, 16, 18):

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3. [Defendant] Bernard Schelein has not been an owner, officer, or
employee of Latin America For Less, LLC for the years referenced
in Plaintiffs’ [sic] Complaint (2010–2013).
4. Latin America For Less, LLC does not have in California any
employees, real estate, or personal property and has not for any
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time in the years referenced in Plaintiffs’ [sic] Complaint
(2010–2013).

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5. I, David McClellan, in my representative capacity as the sole
owner of Latin America For Less, LLC, have never visited
California or actively conducted business in California for the years
referenced in Plaintiffs’ [sic] Complaint (2010–2013).
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8. Latin America For Less, LLC engages in the operation of a
passive collections company that does not advertise in any specific
location for the years referenced in Plaintiffs’ [sic] Complaint
(2010–2013).

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13. Latin America For Less, LLC as simply a collections company,
alone or through its sole owner and employee never submitted or
authorized the submission of any false customer leads on Plaintiff’s
website for the years referenced in Plaintiffs’ [sic] Complaint
(2010–2013).

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16. Latin America For Less, LLC as simply a collections company,
alone or through its sole owner and employee never engaged in
clicking on Plaintiff’s online advertisements or authorized such
action for the years referenced in Plaintiffs’ [sic] Complaint
(2010–2013).

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18. Latin America For Less, LLC as simply a collections company,
alone or through its sole owner and employee never has never [sic]
posted or authorized the posting of any reviews of any other travel
agency on any other website for the years referenced in Plaintiffs’
[sic] Complaint (2010–2013).

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ANALYSIS
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Personal jurisdiction may exist if the non-resident defendant has either a continuous and
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systematic presence in the state (general jurisdiction), or minimum contacts with the forum state
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such that the exercise of jurisdiction “does not offend traditional notions of fair play and
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substantial justice” (specific jurisdiction). International Shoe Co. v. State of Washington,
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326 U.S. 310, 316 (1945). Plaintiff bears the burden of demonstrating that personal jurisdiction is
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appropriate. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004).
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The parties agree that there is no general jurisdiction over LAFL (Br. 4, Opp. 8). Where
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the parties disagree is whether there is specific jurisdiction over LAFL. The problem, however, is
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that plaintiff’s opposition contains a lot of attorney argument lacking evidentiary support and

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defendant’s declarations dodge the key issues with artful wording. Accordingly, this order finds

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that discovery is needed to clarify the issue of personal jurisdiction.

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CONCLUSION
For the reasons discussed, LAFL’s motion to dismiss for lack of personal jurisdiction is

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HELD IN ABEYANCE. The December 4 hearing is hereby CONTINUED TO JANUARY 29, 2015 AT

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8:00 A.M. The parties shall conduct discovery on whether there is personal jurisdiction, and on

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that specific issue, each side can take up to three depositions over a total of nine hours (not

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counting breaks). In addition, each side may request a reasonable and limited number of
documents, up to nine narrowly and reasonably-directed document requests. Please note that if

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For the Northern District of California

United States District Court

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the discovery sought has a substantial relation to the issue of personal jurisdiction, it shall not be a

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proper objection that the discovery sought also bears upon the merits.

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LAFL’s supplemental brief is due by JANUARY 8, 2015. Plaintiff’s response is due by

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JANUARY 15, 2015. The parties shall append all relevant declarations, portions of deposition

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transcripts, and documents regarding jurisdiction. No replies, please. An initial case

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management conference is set for JANUARY 29, 2015 AT 8:00 A.M. Please report to Courtroom 8,

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on the 19th Floor, Phillip Burton Federal Building, 450 Golden Gate Avenue, San Francisco, CA

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94102. Please file a joint case management statement at least seven days before the conference.

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The joint case management conference should identify when and where each named defendant

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was served. All initial disclosures under Rule 26 must be completed by JANUARY 8, 2015, on

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pain of preclusion under Rule 37(c), including full and faithful compliance with Rule

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26(a)(1)(A)(iii).

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IT IS SO ORDERED.
Dated: November 12, 2014.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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