Cisco Systems, Inc. et al v. Dexon Computer, Inc.

Filing 203

ORDER by Judge Charles R. Breyer denying 183 Motion to Transfer Case; granting 188 Motion to Dismiss for Lack of Jurisdiction. (crblc2, COURT STAFF) (Filed on 4/21/2023)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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CISCO SYSTEMS, INC., et al.,
Plaintiffs,

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v.

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United States District Court
Northern District of California

Case No. 20-cv-04926-CRB

DEXON COMPUTER, INC., et al.,

ORDER GRANTING MOTION TO
DISMISS AND DENYING MOTION
TO TRANSFER

Defendants.

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Third-party defendant Softnetworks brings a motion to dismiss for lack of personal

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jurisdiction and improper venue pursuant to Federal Rule of Civil Procedure 12(b)(2) and

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12(b)(3). Mot. to Dismiss (dkt. 188). Defendant and third-party plaintiff Dexon

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Computer, Inc. (“Dexon”), anticipating Softnetworks’ motion, brings a motion to transfer

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to the District of Minnesota under 18 U.S.C. § 1404. Mot. to Transfer (dkt. 183).

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As explained below, the Court finds this matter suitable for resolution without oral

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argument pursuant to Civil Rule 7-1(b), VACATES the hearing currently set for April 28,

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2023, GRANTS Softnetworks’ motion to dismiss, and DENIES Dexon’s motion to

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transfer.

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I.

BACKGROUND

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Because the Court and the parties are familiar with the facts of this case, see Cisco

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Sys., Inc. v. Dexon Computer, Inc., 541 F. Supp. 3d 1009, 1013–14 (N.D. Cal. 2021), the

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Court focuses on the facts relevant to the instant motions.

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Dexon is a Minnesota corporation. See Am. Third Party Compl. (dkt. 150) ¶ 2.

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Softnetworks is a New Jersey corporation. See id. ¶ 14; Jiang Decl. (dkt. 188-1) ¶ 2. On

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February 10, 2020, Katy Graber at Dexon emailed Neal Cennamo at Softnetworks,

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ordering 40 Cisco transceivers for $400.00 total. Balthazor Decl. Ex. A (dkt. 194-2) at 71.

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Dexon requested that the transceivers be shipped via Fedex Priority and received the next

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business day. Id. Softnetworks shipped the transceivers from New Jersey to Minnesota.

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Jiang Decl. ¶ 8. Dexon indicates that it sold at least some of the transceivers purchased

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from Softnetworks to SAFE Credit Union on April 24, 2020, and to Claremont McKenna

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College on May 28, 2020. Balthazor Decl. Ex. A at 1, 73–74.
After Cisco filed this action accusing Dexon of trafficking counterfeit Cisco

United States District Court
Northern District of California

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products, Dexon sent a demand for indemnification to Softnetworks. Id. at 1–2. Dexon

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then filed claims against twenty third-party defendants, including Softnetworks, for

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indemnification and contribution because they sold allegedly counterfeit Cisco products to

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Dexon. See Am. Third Party Compl.
Prior to Softnetworks’ motion, other third-party defendants also brought motions to

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dismiss for lack of personal jurisdiction or indicated that they might do so. See, e.g., dkt.

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79, 173. Dexon opted to stipulate to the dismissal of those defendants rather than oppose

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their motions. See, e.g., dkts. 82, 186. This time, however, Dexon has opposed

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Softnetworks’ motion, in addition to bringing its motion to transfer. See Mot. to Transfer;

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Opp’n to Mot. to Dismiss (dkt. 194).

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II.

MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

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A.

Legal Standard

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A federal district court’s jurisdiction over a defendant is the same as “the

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jurisdiction of a court of general jurisdiction in the state where the district court is located.”

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Fed. R. Civ. P. 4(k)(1)(A). California “allows the exercise of personal jurisdiction to the

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full extent permissible under the U.S. Constitution.” Daimler AG v. Bauman, 571 U.S.

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117, 125 (2014); see also Cal. Civ. Proc. Code § 410.10. Under the Due Process Clause,

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“a tribunal’s authority depends on the defendant’s having such ‘contacts’ with the forum

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State that ‘the maintenance of the suit’ is ‘reasonable, in the context of our federal system

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of government,’ and ‘does not offend traditional notions of fair play and substantial

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justice.’” Ford Motor Co. v. Mont. Eighth Judicial Dist. Ct., 141 S. Ct. 1017, 1024 (2021)
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(quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316–17 (1945)). This inquiry “has

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long focused on the nature and extent of ‘the defendant’s relationship with the forum

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state.’” Id. (quoting Bristol-Myers Squibb Co. v. Super. Ct. of Cal., 582 U.S. 255, 262

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(2017)). And that “focus” has resulted in “two kinds of personal jurisdiction: general

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(sometimes called all-purpose) jurisdiction and specific (sometimes called case-linked)

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jurisdiction.” Id. Because the parties agree that general jurisdiction is not applicable here,

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Mot. to Dismiss at 4; Opp’n to Mot. to Dismiss at 7–11, the Court focuses on the

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requirements of specific jurisdiction.

United States District Court
Northern District of California

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Specific jurisdiction “covers defendants less intimately connected with a State,”

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than general jurisdiction, but “only as to a narrower class of claims.” Ford Motor Co., 141

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S. Ct. at 1024. While general jurisdiction depends on the relationship between the

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defendant and the forum, specific jurisdiction depends on the relationship between “the

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defendant, the forum, and the litigation.” Walden v. Fiore, 571 U.S. 277, 284 (2014)

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(quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984)).

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With those principles in mind, the Ninth Circuit has “established a three-prong test
for analyzing a claim of specific personal 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.
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (quoting

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Lake v. Lake, 817. F.2d 1416, 1421 (9th Cir. 1987)). The party asserting jurisdiction (in
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this case, Dexon) bears the burden of satisfying the first two prongs of the test. Id. (citing
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Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)). If that party fails to satisfy either
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prong, personal jurisdiction is not established. Id. If that party satisfies both prongs, the
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burden then shifts to the party challenging jurisdiction, who must “present a compelling

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case” that the exercise of jurisdiction would not be reasonable. Id. (quoting Burger King

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

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B.

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Because Dexon has failed to satisfy the second prong—that its claim arises out of

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Softnetworks’ forum-related activities—Dexon has failed to carry its burden, and

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Softnetworks’ motion is granted.
Dexon only provides three pieces of evidence linking Softnetworks to California

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United States District Court
Northern District of California

Discussion

consumers: (1) Softnetworks “operates and maintains an interactive website accessible and

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directed to California consumers”; (2) Softnetworks “routinely visits the Cisco website”;

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and (3) Softnetworks “executes and performs contracts” in California, including using a

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California choice of law provision and arbitration clause in the terms on its website.

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Opp’n to Mot. to Dismiss at 4–5.
Dexon’s claims do not “arise out of or relate to” any of these asserted contacts.

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Dexon does not assert that it used Softnetworks’ website to order the Cisco products at

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issue; thus, the interactivity (or lack thereof) and whether the website is accessible to or

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directed at California consumers is immaterial.1 Further, whether and to what extent

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Softnetworks ever visits the Cisco website (which is presumably based in California) is

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irrelevant to the whether Softnetworks’ sale to Dexon relates to or arises out of

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Softnetworks’ California contacts.
Instead, Dexon argues that because the product it purchased from Softnetworks

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“made its way to California consumers,” then its claims “relate to Softnetworks’ forum-

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related activities.” Opp’n to Mot. to Dismiss at 10. But it was Dexon who sold

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Softnetworks’ product to California consumers; Softnetworks had no control over where

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the product was sold after it sold the product to Dexon. Because Dexon’s claims must

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The terms on Softnetworks’ current website that reference California law are also irrelevant for
this reason, and for the additional reason that they were not on Softnetworks’ website when Dexon
purchased the products at issue. See Jiang Supp. Decl. (dkt. 196-1) ¶ 11.

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“arise out of or relate to [Softnetworks’] contacts with the forum,” not Dexon’s contacts

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with the forum, Dexon has failed to meet its burden on this element. Ford Motor Co., 141

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S. Ct. at 1025 (quoting Bristol-Myers, 582 U.S. at 262); see also Walden, 571 U.S. at 285

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(“But the plaintiff cannot be the only link between the defendant and the forum. Rather, it

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is the defendant’s conduct that must form the necessary connection with the forum State

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that is the basis for its jurisdiction over him.”).

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United States District Court
Northern District of California

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Because Dexon has failed to meet its burden on the second prong, the Court need
not address the first and third prongs of the test. See Schwarzenegger, 374 F.3d at 802.
C.

Jurisdictional Discovery

In the alternative, Dexon requests jurisdictional discovery into “the nature and

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extent of all [Softnetworks’] business activities, such as where sales are conducted, what

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products are sold and to whom, [and] where and how the products are marketed . . . .”

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Opp’n to Mot. to Dismiss at 11–12 (quoting Riviera Distributors, Inc. v. High-Top

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Amusements, Inc., No. 07-1239, 2008 WL 687385, at *10 (C.D. Ill. Mar. 11, 2008)). But

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the Court decides this motion not on the first prong of the personal jurisdiction test—

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whether the defendant has “purposefully availed [itself] of the privilege of conducting

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activities in the forum”—but the second prong, the relationship between Softnetworks’

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forum activities and the sale in question. That sale involved emails exchanged and

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products shipped between New Jersey (Softnetworks) and Minnesota (Dexon). Dexon has

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not put forth any evidence that Softnetworks’ California contacts had anything to do with

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that sale—except that Dexon then sold those products in California. Opp’n to Mot. to

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Dismiss at 10. Jurisdictional discovery is not warranted “based on little more than a hunch

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that it might yield jurisdictionally relevant facts.” Boschetto v. Hansing, 539 F.3d 1011,

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1020 (9th Cir. 2008).

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Accordingly, Softnetwork’s motion to dismiss for lack of personal jurisdiction is
granted.

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III.

MOTION TO TRANSFER
A.

Legal Standard

“For the convenience of parties and witnesses, and in the interest of justice, a

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district court may transfer any civil action to any other district or division where it might
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have been brought or to any district of division to which all parties have consented.” 28
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U.S.C. § 1404(a). A court must “weigh multiple factors in its determination whether
transfer is appropriate in a particular case,” including: “(1) the location where the relevant

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agreements were negotiated and executed, (2) the state that is most familiar with the
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governing law, (3) the plaintiff’s choice of forum, (4) the respective parties’ contacts with
the forum, (5) the contacts relating to the plaintiff’s cause of action in the chosen forum,

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(6) the differences in the costs of litigation in the two forums, (7) the availability of
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United States District Court
Northern District of California

compulsory process to compel attendance of unwilling non-party witnesses, and (8) the
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ease of access to sources of proof.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498–

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499 (9th Cir. 2000).
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B.

Discussion

Dexon argues that transfer to the District of Minnesota is proper at this juncture
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because it has brought claims against third-party defendants for selling allegedly
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counterfeit Cisco products to Dexon in Minnesota. These third-party claims, and the
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jurisdictional issues surrounding them, do not alter the Court’s past decision to deny
Dexon’s prior motion to transfer. Cisco Sys., Inc. v. Dexon Computer, Inc., 541 F. Supp.

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3d 1009, 1019 (N.D. Cal. 2021).
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As in 2021, when the Court denied Dexon’s original motion to transfer, the vast

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majority of the factors weigh against transfer: Cisco still asserts claims under both federal
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and California, and not Minnesota, law; “many of the transactions giving rise to Cisco’s
claims were consummated in California”; Dexon has meaningful contacts with California;
and California is still Cisco’s choice of forum. See id. The only factor that has changed is
Dexon’s third-party claims for indemnification and contribution against the remaining

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third-party defendants, which Dexon contends alters the transfer calculus in its favor.
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