Soelect, Inc. v. Hyundai Motor Company

Filing 52

ORDER by Judge Charles R. Breyer granting 24 Motion to Dismiss; finding as moot 26 Motion to Stay. (crblc1, COURT STAFF) (Filed on 9/24/2024)

1
2
3
4
5

IN THE UNITED STATES DISTRICT COURT

6

FOR THE NORTHERN DISTRICT OF CALIFORNIA

7
8

SOELECT, INC.,
Plaintiff,

9

United States District Court
Northern District of California

ORDER GRANTING MOTION TO
DISMISS

v.

10
11

Case No. 23-cv-05405-CRB

HYUNDAI MOTOR COMPANY,
Defendant.

12
13

In this case, Soelect, Inc., a battery company, has sued Hyundai Motor Co. (HMC),

14

a car company, alleging that HMC stole Soelect’s trade secrets in violation of the Defend

15

Trade Secrets Act (DTSA). See Compl. (dkt. 1) ¶¶ 1, 4, 11, 15. HMC now brings two

16

motions: a motion to dismiss, and an alternative motion to stay. See MTD (dkt. 24); MTS

17

(dkt. 26). Because the Court grants the motion to dismiss, it does not reach the motion to

18

stay.

19

I.

BACKGROUND

20

A.

21

Soelect is a Delaware corporation with a principal place of business in North

22

Carolina. Compl. ¶ 16. Soelect “develops revolutionary lithium anode battery technology

23

for rechargeable lithium batteries for high energy applications, such as electric vehicles.”

24

Id. ¶ 4. HMC is a South Korean car company with a principal place of business in South

25

Korea. Id. ¶ 17. HMC’s subsidiary, HATCHI—not a party in this case—is a Michigan

26

corporation with a principal place of business in Michigan. See Walch Decl. Ex. A (dkt.

27

24-3) (HATCHI Compl.) ¶ 3. HATCHI has an office in Santa Clara County, known as the

28

CRADLE office. Compl. ¶ 19; MTD at 5 n.6.

The Relevant Players

1
2
3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

B.

The Dispute

“Lithium Metal Batteries have been called the ‘Holy Grail’ of battery technology,”
because they have the potential to “dramatically extend the range of electric automobiles,
and even power electric aircraft.” Compl. ¶ 4. But lithium tends “to grow dendrites—
microscopic branch-like growths of metal,” which “[w]hen present in a battery . . . can
grow long enough to short circuit the battery’s two electrodes, potentially causing a fire or
explosion.” Id. ¶ 5. And so “substantial efforts” have been undertaken to “mitigate or
prevent dendrite growth in Lithium Metal Batteries.” Id. ¶ 6. Soelect claims to have
developed a “revolutionary” technologies that does “just that.” Id. ¶ 7. Because successful
lithium metal batteries could expand the mileage range for electric vehicles and make them
safer, electric vehicle companies are interested in Soelect’s products. Id.
In February of 2019, a representative from HATCHI approached Soelect regarding
Soelect’s “Lithium-X Anode product.” Id. ¶ 25. The parties entered into a non-disclosure
agreement that prevented HMC and HATCHI from using information about Soelect’s
products. Id. ¶ 26. “HATCI also assured Soelect that HMC was not Soelect’s competitor
and that it did not intend to develop or manufacture its own lithium metal battery
components.” Id. ¶ 27. Soelect and HATCHI spent several months negotiating HMC’s
testing of Soelect’s product. Id. ¶ 28.
In September of 2019, Soelect and HATCHI entered into the Materials Transfer and
Testing Agreement (MTA), which directed Soelect to send materials to HMC at HMC’s
Uiwang Future Energy Research facility in South Korea. Id. ¶ 29. The MTA forbade
HMC and HATCHI “from, among other things, ‘attempt[ing] to determine the
composition or structure of [Soelect’s] Proprietary Material’ and ‘perform[ing] any
characterization testing including . . . scanning electron microscopy [SEM].’” Id. ¶ 30.
The MTA anticipated that the project would take place between September and November
of 2019, but allowed for the parties to alter the timeline. Id. ¶ 31.
Soelect sent samples of its batteries to HMC for testing. Id. ¶ 32. The parties
agreed several times to additional rounds of testing. Id. ¶¶ 33, 36. On October 27, 2020—
2

United States District Court
Northern District of California

1

over a year after entering into the MTA—HMC sent to Soelect’s CEO the results of

2

HMC’s September 2020 testing. Id. ¶¶ 9, 11, 37. That testing showed images that Soelect

3

contends HMC could only have generated “by scanning electron microscopy, a type of

4

testing expressly forbidden by the MTA” because “it can be used to determine the

5

composition and structure of Soelect’s products and reverse engineer those products.” Id.

6

¶¶ 38, 39. Soelect notified HMC and HATCHI that they had breached the MTA. Id. ¶ 40.

7

HMC and its subsidiaries “repeatedly told Soelect that they did not reverse engineer

8

Soelect’s products” and would not do so. Id. ¶ 43. However, on October 4, 2023, “a

9

Korean newspaper reported that HMC was going to begin developing and manufacturing

10

its own lithium metal battery anodes—products similar to those that Soelect

11

manufactures.” Id. ¶ 46. The article mentioned that the batteries were going to be

12

developed at the Uiwang facility, the same facility where Soelect had shipped its samples,

13

and that Soelect was working with HMC. Id. ¶¶ 47, 48.

14
15
16

C.

Procedural History
1.

HATCHI Case

In March of 2022, Soelect filed a one-count complaint in the Northern District of

17

Illinois against HATCHI. See HATCHI Compl. In that case, Soelect alleged that

18

HATCHI breached the MTA because it “allowed its affiliate [HMC] to conduct testing

19

barred by” the MTA. Id. ¶ 15. Soelect alleged that it was entitled to $10,000,000.00 in

20

liquidated damages. Id. ¶¶ 17, 18. On June 10, 2024, Judge Jeremy C. Daniel granted

21

partial summary judgment in Soelect’s favor, holding among other things that “there is no

22

genuine dispute that HATCHI breached the MTA by allowing [prohibited] testing to be

23

performed on Lithium-X samples.” Opp’n to MTS (dkt. 39) at 1 (quoting Soelect, Inc. v.

24

Hyundai Am. Tech. Ctr., Inc., No. 22 CV 1342, 2024 WL 2892905, at *13 (N.D. Ill. June

25

10, 2024) (HATCHI MSJ Order)). Judge Daniel held, however, that the parties disputed

26

“whether the $10 million stipulated sum is a reasonable estimate of the amount of loss that

27

would probably be sustained in the event of a breach,” which “preclude[d] granting

28

summary judgment in either party’s favor” as to the liquidated damages. HATCHI MSJ
3

United States District Court
Northern District of California

1

Order at *15. Trial is set in the HATCHI matter for November 18, 2024. See Reply re

2

MTS (dkt. 44) at 2. The parties here disagree about whether the only issue in that trial is

3

the enforceability of the liquidated damages clause. Compare MTS Opp’n at 3 (“The only

4

issue that remains in that case is the enforceability of the liquidated damages clause in the

5

contract between HATCHI and Soelect.”) with Reply re MTS at 3 (“in the HATCHI

6

Matter, [Soelect] has flatly refused to agree that actual damages are unavailable. . . .

7

Whether Soelect is entitled to actual damages in the HATCHI Matter implicates evidence

8

and issues relating to, at least, (i) the value of Soelect’s allegedly proprietary technology,

9

(ii) the performance of the Soelect samples at the heart of Soelect’s claims in the HATCHI

10

Matter and here, and (iii) the impact (if any) that HMC’s evaluation of such samples had

11

on Soelect.”). In the meantime, HATCHI has moved for reconsideration of the court’s

12

MSJ ruling, which is set for a hearing on September 25, 2024. Reply re MTS at 4–5.

13

2.

This Case

Soelect brought this case on October 20, 2023. See Compl. The complaint alleges

14
15

that HMC violated the DTSA by misappropriating Soelect’s trade secrets. Id. ¶¶ 51–60.

16

The parties stipulated to stay this case until 30 days after the HATCHI summary judgment

17

decision. See Stipulation (dkt. 34). Two motions are now pending: HMC’s motion to

18

dismiss, and HMC’s motion to stay the case until after the HATCHI trial. See MTD;

19

Opp’n to MTD (dkt. 31); Supp. Opp’n to MTD (dkt. 40); Reply re MTD (dkt. 43); MTS;

20

Opp’n to MTS; Reply re MTS. The Court held a motion hearing on Friday, September 20,

21

2024, and took the matter under submission. Motion Hearing (dkt. 51). The Court now

22

addresses the motion to dismiss.

23

II.

24
25
26

LEGAL STANDARD
HMC brings its motion to dismiss pursuant to Rules 12(b)(2), 12(b)(3), and 12(b)(6)

of the Federal Rules of Civil Procedure
Under Rule 12(b)(2), a party may move to dismiss a complaint for lack of personal

27

jurisdiction. “When a district court acts on a defendant’s motion to dismiss under Rule

28

12(b)(2) without holding an evidentiary hearing, the plaintiff need make only a prima facie
4

United States District Court
Northern District of California

1

showing of jurisdictional facts to withstand the motion to dismiss.” Ballard v. Savage, 65

2

F.3d 1495, 1498 (9th Cir. 1995). A prima facie showing is established if the plaintiff

3

produces admissible evidence that, if believed, would be sufficient to establish personal

4

jurisdiction. See Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d.

5

1122, 1129 (9th Cir. 2003). “[U]ncontroverted allegations in [the plaintiff’s] complaint

6

must be taken as true, and conflicts between the facts contained in the parties’ affidavits

7

must be resolved in [the plaintiff’s] favor.” Brayton Purcell LLP v. Recordon &

8

Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010). However, “bare bones assertions of

9

minimum contacts with the forum or legal conclusions unsupported by specific factual

10

allegations will not satisfy a plaintiff’s pleading burden.” Swartz v. KPMG LLP, 476 F.3d

11

756, 766 (9th Cir. 2007). Additionally, conclusory allegations or “formulaic recitation of

12

the elements” are not entitled to the presumption of truth. Ashcroft v. Iqbal, 556 U.S. 662,

13

681 (2009). “Nor is the court required to accept as true allegations that are . . .

14

unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig.,

15

536 F.3d 1049, 1055 (9th Cir. 2008).

16

In assessing whether personal jurisdiction exists, the court is not limited to a

17

plaintiff’s complaint and may consider evidence presented in affidavits or order discovery

18

on jurisdictional issues. Data Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1285

19

(9th Cir. 1977). Although all uncontroverted allegations are taken as true, a court may not

20

“assume the truth of allegations in a pleading which are contradicted by affidavit.”1 Id. at

21

1284.
Under Rule 12(b)(3), a party may assert the defense of improper venue. “The

22
23

plaintiff bears the burden of showing that venue is proper.” Johnson v. Ford Motor Co.,

24

No. 23-cv-1375-PCP, 2023 WL 8654930, at *1 (N.D. Cal. Dec. 14, 2023). “In ruling on a

25

motion to dismiss for improper venue, the Court need not accept the allegations in the

26

complaint as true and may consider evidence outside of the pleadings.” Id. (citing eBay

27
28

1

Declarations and affidavits are functional equivalents in this context. See LNS Enters.
LLC v. Cont’l Motors, Inc., 22 F.4th 852, 858 (9th Cir. 2022) (citing 28 U.S.C. § 1746).
5

1

Inc. v. Digit. Point Sols., Inc., 608 F. Supp. 2d 1156, 1161 (N.D. Cal. 2009)).
Under Rule 12(b)(6), a party may move to dismiss a complaint for failure to state a

United States District Court
Northern District of California

2
3

claim upon which relief may be granted. The Court may base dismissal on either “the lack

4

of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable

5

legal theory.” Godecke v. Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th Cir. 2019)

6

(cleaned up). A complaint must plead “sufficient factual matter, accepted as true, to state a

7

claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (cleaned up). A claim

8

is plausible “when the plaintiff pleads factual content that allows the court to draw the

9

reasonable inference that the defendant is liable for the misconduct alleged.” Id.

10

“Threadbare recitals of the elements of a cause of action, supported by mere conclusory

11

statements, do not suffice” to survive a 12(b)(6) motion. Id. (citing Bell Atlantic v.

12

Twombly, 550 U.S. 544, 555 (2007)). When evaluating a motion to dismiss, the Court

13

“must presume all factual allegations of the complaint to be true and draw all reasonable

14

inferences in favor of the nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556,

15

561 (9th Cir. 1987). “[C]ourts must consider the complaint in its entirety, as well as other

16

sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in

17

particular, documents incorporated into the complaint by reference, and matters of which a

18

court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.

19

308, 322 (2007).
If a court dismisses a complaint for failure to state a claim, it should “freely give

20
21

leave” to amend “when justice so requires.” Fed. R. Civ. Proc. 15(a)(2). A court may

22

deny leave to amend due to “undue delay, bad faith or dilatory motive on the part of the

23

movant, repeated failure to cure deficiencies by amendment previously allowed, undue

24

prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of

25

amendment.” Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008).

26

III.

27
28

DISCUSSION
In its motion to dismiss, HMC argues that (A) the Court lacks personal jurisdiction

over HMC; (B) this district is an improper venue; (C) the DTSA claim fails for lack of a
6

1

domestic act; and (D) the anti-claim splitting doctrine bars this suit. See MTD.2

2

A.

3

HMC first argues that the Court lacks personal jurisdiction over it. MTD at 4–9.

4

Personal jurisdiction can be either general or specific, see Bristol-Myers Squibb Co. v.

5

Sup. Ct. Cal., San Francisco Cty., 582 U.S. 255, 262 (2017), but here Soelect only asserts

6

specific jurisdiction, see Opp’n to MTD at 3–9. The Ninth Circuit has “established a

7

three-prong test for analyzing a claim of specific personal jurisdiction.” Schwarzenegger

8

v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). In particular:

9

(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.

10
11
United States District Court
Northern District of California

Personal Jurisdiction

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Id. (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)) (emphasis added). “The
plaintiff bears the burden on the first two prongs,” and once those are established, the
defendant must show a “‘compelling case’ that the exercise of jurisdiction would not be
reasonable.” Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th 972, 983 (9th Cir. 2021) (quoting
Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008) (quoting Schwarzenegger, 374
F.3d at 802)). “If any of the three requirements is not satisfied, jurisdiction in the forum
would deprive the defendant of due process of law.” Omeluk v. Langsten Slip &
Batbyggeri A/S, 52 F.3d 267, 270–71 (9th Cir. 1995) (adding that court did not analyze
reasonableness requirement where first two requirements were not met).
This order will address (1) the “purposeful direction” prong; (2) the “arises out of”
prong; (3) the “reasonableness” prong; as well as (4) Soelect’s request for jurisdictional
discovery.

27
28

2

The Court does not reach HMC’s anti-claim splitting argument.
7

1.

1
2
3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11

For “suits sounding in tort,” the Ninth Circuit generally applies the “purposeful
direction analysis.” AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1208 (9th Cir.
2020) (quotation omitted); see also Davis v. Cranfield Aerospace Sols., Ltd., 71 F.4th
1154, 1162 (9th Cir. 2023) (recognizing that there is not a “rigid dividing line” between
purposeful availment and purposeful direction) (internal quotation marks omitted), cert.
denied, 144 S. Ct. 826 (2024).
Purposeful direction, or the “effects test,” requires that a defendant have “[a]
committed an intentional act, [b] expressly aimed at the forum state, [c] causing harm that
the defendant knows is likely to be suffered in the forum state.” Schwarzenegger, 374
F.3d at 803 (citing Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)).
a.

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Purposeful Direction

Intentional Act by the Defendant

The first part of the purposeful direction test is whether HMC has committed an
intentional act. See id. To satisfy the intentional act prong, “the defendant must act with
the ‘intent to perform an actual, physical act in the real world.’” Picot v. Weston, 780 F.3d
1206, 1214 (9th Cir. 2015) (quoting Schwarzenegger, 374 F.3d at 806). “The threshold of
what constitutes an intentional act is relatively low.” AirWair Int’l Ltd. v. Schultz, 73 F.
Supp. 3d 1125, 1233 (N.D. Cal. 2014). HMC does not challenge the intentional act
element, for good reason—HMC’s testing of Soelect’s product samples is an intentional
act.
b.

Express Aiming

The second part of the purposeful direction test turns on whether HMC “expressly
aimed” its intentional acts at the forum. See Schwarzenegger, 374 F.3d at 802.
i.

The Law on Express Aiming

The express aiming inquiry centers on whether the defendant specifically targeted
the forum state. See Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1143 (9th Cir. 2017)
(citing Walden, 571 U.S. at 284). The Supreme Court has explained that the contacts
supporting purposeful direction “must be the defendant’s own choice and not [be]
8

United States District Court
Northern District of California

1

‘random, isolated, or fortuitous.’” Ford Motor Co., 592 U.S. at 359 (quoting Keeton, 465

2

U.S. at 774). The defendant must have “reached out beyond its home—by, for example,

3

exploiting a market in the forum state.” Id. (quotations and alterations omitted).

4

Therefore, a defendant does not purposefully direct its activities at the forum state when

5

the unilateral activity of the plaintiff or a third party is all that connects the defendant to

6

the forum state. See Walden, 571 U.S. at 284–85 (citing World-Wide Volkswagen Corp.

7

v. Woodson, 444 U.S. 286, 291–92, (1980)). Rather, the focus is on the defendant’s “own

8

contacts,” i.e., “contacts that the ‘defendant’ himself creates with the forum state.” See id.

9

at 284 (emphasis in original) (internal quotations omitted) (quoting Burger King Corp. v.

10

Rudzewicz, 471 U.S. 462, 475 (1985)); see also Axiom Foods, Inc. v. Acerchem Int’l, Inc.,

11

874 F.3d 1064, 1070 (9th Cir. 2017) (“The Court made clear that we must look to the

12

defendant’s ‘own contacts’ with the forum, not to the defendant’s knowledge of a

13

plaintiff’s connections to a forum.”) (quoting Walden, 571 U.S. at 289).

14

Nor does a defendant purposefully direct its activities at the forum state merely by

15

directing those activities at a person who happens to reside in the forum state, even if the

16

defendant knows that the person resides there. See Walden, 571 U.S. at 285. Instead, “it

17

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

18

Id. In Calder v. Jones, 465 U.S. 783, 790 (1984), the Supreme Court “made clear that

19

mere injury to a forum resident is not a sufficient connection to the forum.” Walden, 571

20

U.S. at 290. “Regardless of where a plaintiff lives or works, an injury is jurisdictionally

21

relevant only insofar as it shows that the defendant has formed a contact with the forum

22

State.” Id. Thus, “[t]he proper question is not where the plaintiff experienced a particular

23

injury or effect but whether the defendant’s conduct connects him to the forum in a

24

meaningful way.” Id.

25

Courts are to focus on the defendant’s actual contacts with the forum, and the

26

“quality and nature” of those activities. See Hanson v. Denckla, 357 U.S. 235, 253 (1958).

27
28

ii.

Express Aiming Analysis

HMC argues that there are only two sets of allegations in the complaint “that even
9

1

arguably posit connections between HMC and California”: (1) an October 27, 2020 Zoom

2

meeting attended by “Hyundai personnel from the United States and Korea,” and (2) the

3

negotiations between HATCHI and Soelect over the MTA. MTD at 5. HMC argues that

4

neither set of allegations shows express aiming at California. Id.

United States District Court
Northern District of California

5

As to (1) the October 27, 2020 Zoom meeting in which “Hyundai presented slides

6

showing scanning electron microscope images of the Soelect samples, in contravention of

7

the MTA,” Compl. ¶ 2, that meeting does not represent express aiming at California.

8

Because the meeting occurred after the SEM imaging at the center of this case, there is no

9

possibility that “any confidential information was misappropriated” at that meeting. See

10

E*Healthline.com, Inc. v. Pharmaniaga Berhad, No. 2:18-cv-01069-MCE-EFB, 2018 WL

11

5296291, at *5 (E.D. Cal. Oct. 23, 2018). Indeed, it was at that meeting that “Hyundai

12

personnel” disclosed to Soelect that it had done the imaging that Soelect alleges “can be

13

used to . . . reverse engineer [Soelect’s] products.” Compl. ¶¶ 2, 39. Nor does

14

participation in a Zoom meeting confer jurisdiction in any case. First, the HMC employees

15

apparently joined the Zoom from South Korea. See Seo Decl. (dkt. 24-10) ¶ 2 (“I attended

16

this virtual meeting from South Korea, as did all other attendees from HMC.”). And

17

second, “ordinary use of the mails, telephone, or other international communications

18

simply do not qualify as purposeful activity invoking the benefits and protections of the

19

[forum] state.” Serenium, Inc. v. Zhou, No. 20-cv-02132-BLF, 2021 WL 3111758, at *4

20

(N.D. Cal. July 22, 2021) (quoting Medimpact Healthcare Sys., Inc. v. Iqvia Holdings,

21

Inc., No. 19-cv-1865-GLC (LL), 2020 WL 1433327, at *8 (S.D. Cal. March 24, 2020)

22

(quoting Roth v. Garcia Marquez, 942 F.2d 617, 622 (9th Cir. 1991))). In its opposition

23

brief, Soelect does not even rely on the October 27, 2020 Zoom meeting for express

24

aiming. See Opp’n to MTD at 6–7.

25
26
27
28

As to (2) the negotiations between HATCHI and Soelect over the MTA, there are
two reasons that it does not evidence express aiming.
First, it was HATCHI, a Michigan company with an office in California, who
negotiated the MTA with Soelect, not HMC. See Compl. ¶¶ 28–29. “The existence of a
10

1

parent-subsidiary relationship is insufficient, on its own, to justify imputing one entity’s

2

contacts with a forum state to another for the purpose of establishing personal

3

jurisdiction.” Ranza v. Nike, Inc., 793 F.3d 1059, 1070 (9th Cir. 2015). “As a general

4

principle, corporate separateness insulates a parent corporation from liability created by its

5

subsidiary, notwithstanding the parent’s ownership of the subsidiary.” Id.; see also Opp’n

6

to MTD at 5 (agreeing). That veil can be pierced under limited circumstances.

7

Historically, “this circuit permitted a plaintiff to pierce the corporate veil for jurisdictional

8

purposes and attribute a local entity’s contacts to its out-of-state affiliate under one of two

9

separate tests”—the agency test and the alter ego test. Ranza, 793 F.3d at 1071.
Soelect does not assert that the alter ego test applies and instead relies entirely on

United States District Court
Northern District of California

10
11

the agency test. See Opp’n to MTD at 5. But the agency test might no longer be valid.

12

See Ranza, 793 F.3d at 1071 (explaining that because the agency test “stacks the deck” in

13

favor of jurisdiction, “[t]he Supreme Court invalidated this test” in Daimler AG v.

14

Bauman, 571 U.S. 117 (2014)3); Williams v. Yamaha Motor Co. Ltd., 851 F.3d 1015,

15

1024 (9th Cir. 2017) (“Notwithstanding Daimler’s express reservation on the question of

16

agency theory’s application to specific jurisdiction, more than one district court within our

17

circuit has expressed some uncertainty on that point post-Daimler, as ‘the rationale set

18

forth in Daimler . . . would seem to undermine application of [our agency test] even in

19

specific jurisdiction cases.’”; “Daimler’s reasoning is clearly irreconcilable with the

20

agency test set forth in Unocal.”); MSP Recovery Claims v. Actelion Pharm. US, Inc., No.

21

3:22-cv-07604-JSC, 2024 WL 3408221, at *4 (N.D. Cal. 2024) (“the Ninth Circuit has . . .

22

rejected the agency test in the context of specific personal jurisdiction.”).

23

Even if the agency test is still valid, see Williams, 851 F.3d at 1024 (assuming in

24

the alternative that “some standard of agency” was relevant), Soelect has not sufficiently

25

demonstrated an agency relationship here. Soelect assigns significant weight to

26
27
28

3

To be clear, the Supreme Court added that “Agency relationships . . . may be relevant to
the existence of specific jurisdiction. . . . a corporation can purposefully avail itself of a
forum by directing its agents or distributors to take action there.” Id. at 135 n.13.
11

1

HATCHI’s general counsel’s statement that “[HMC], not HATCHI, directs Hyundai

2

CRADLE’s projects and business activities.” Opp’n to MTD at 5 (citing Opp’n to MTD

3

Ex. A (dkt. 31-2) ¶ 4).4 But that statement does not demonstrate that HMC exercises

4

“higher than normal oversight” over HATCHI, akin to control over “day-to-day

5

operations.” See Sunderland v. Pharmacare U.S., Inc., No. 23-cv-1318-JES (AHG), 2024

6

WL 2116069, at *4 (S.D. Cal. May 10, 2024) (holding that if agency theory persists after

7

Daimler, it requires “substantial control,” which is “a showing higher than ‘normal

8

oversight of a parent over a subsidiary’ and more akin to ‘control of day-to-day

9

operations.’”) (quoting In re Cal. Gasoline Spot Mkt. Antitrust Litig., No. 20-cv-03131-

10

JSC, 2021 WL 4461199, at *2 (N.D. Cal. Sept. 29, 2021)).
Moreover, a declaration from HMC’s Chaeyeol Lee specifically states that HMC

United States District Court
Northern District of California

11
12

does not exercise that kind of control over HATCHI. See Lee Decl. (dkt. 24-11) ¶¶ 6

13

(“HMC and HATCHI are separate and distinct corporate entities, and observe corporate

14

formalities”), 7 (“HMC and HATCHI are led by distinct and non-overlapping

15

individuals”), 8 (“HATCHI maintains its own bank accounts, financial records, and

16

corporate records, separate from HMC”), 9 (“HMC does not control HATCHI’s day-to-

17

day operations.”). Soelect argues (and insinuated at the motion hearing) that the Lee

18

declaration and the general counsel statement are in conflict, in which case “[c]onflicts

19

between parties over statements contained in affidavits must be resolved in the plaintiff’s

20

favor.” MTD Opp’n at 6 (quoting Schwarzenegger, 374 F.3d at 800). But the statements

21

are not in conflict—the Court understands them to say that HMC directs the projects that

22

HATCHI works on, but HATCHI is its own independent entity. See HDT Bio Corp. v.

23

Emcure Pharm., Ltd., No. C22-0334JLR, 2023 WL 9094355, at *11 (W.D. Wash. Dec. 4,

24

2023) (“shap[ing] [] broader business objectives” and “broader strategic planning”

25

“insufficient to establish an agency relationship for purposes of specific jurisdiction.”).5

26
27
28

4

At the motion hearing, Soelect’s counsel provided additional context for this declaration,
explaining that the magistrate judge in the Northern District of Illinois had directed
HATCHI to file it in light of HATCHI’s professed inability to produce certain materials.
5
To the extent that Soelect suggests that the HATCHI MSJ Order supports an agency
12

United States District Court
Northern District of California

1

Second, even if HATCHI’s act of entering into the MTA with Soelect could be

2

imputed to HMC, that act alone does not demonstrate express aiming by HMC into

3

California. HATCHI and Soelect negotiated the MTA “in part” in California. See Compl.

4

¶ 19. But HMC is a South Korean company, HATCHI is a Michigan company, Soelect is

5

a North Carolina company, and the relevant testing occurred when Soelect shipped

6

samples (presumably from North Carolina) to HMC in South Korea. That the MTA itself

7

was negotiated “in part” in California seems rather incidental.6 See Ford Motor Co., 592

8

U.S. at 359 (contacts cannot be “random, isolated, or fortuitous.”). A party entering into

9

“a contractual relationship that ‘envisioned continuing and wide-reaching contacts’ in the

10

forum State” can certainly be sufficient for a forum state court to exercise jurisdiction over

11

the party. See Walden, 571 U.S. at 285. But here, there was “no contemplation that

12

California would play a role in any of” the resulting conduct between the parties. See

13

E*Healthline.com, 2018 WL 5296291, at *5; see also Picot v. Weston, 780 F.3d 1206,

14

1213 (9th Cir. 2015) (no jurisdiction over Michigan-based defendant who took two trips to

15

California “to develop and market the technology” but undertook tasks agreed to in the

16

contract in Michigan); Serenium, 2021 WL 3111758, at *1, 4 (even where plaintiff was

17

based in California, and parties had frequent communication, where contract was for

18

defendant to develop products in Japan, South Korea, China, and Taiwan, there was no

19

jurisdiction over defendant in California).

20

Moreover, as HMC points out, “express aiming ‘depends, to a significant degree, on

21

the specific type of tort or other wrongful conduct at issue,” and a defendant must have

22

“‘expressly aimed its tortious conduct at the forum.’” MTD at 7–8 (quoting

23
24
25
26
27
28

relationship, see MTD Supp. Opp’n at 2 (“the court notes that the MTA ‘contemplates an
express delegation of HATCHI’s obligations to the HMC scientists who actually received
and tested the materials’”) (quoting HATCHI MSJ Order at *12), it does not. Judge
Daniel was addressing HATCHI’s argument that it was not liable for testing done by HMC
because the contract did not list HMC as a recipient of the product samples. See HATCHI
MSJ Order at *10–12. That the MTA anticipated that HMC would be testing the samples
does not mean that HATCHI was HMC’s agent for the purposes of specific jurisdiction.
6
Moreover, the MTA is governed by North Carolina law and sets Illinois as the venue.
See Compl. Ex. B (dkt. 1-2) (MTA) at 1, 3, 5.
13

United States District Court
Northern District of California

1

E*Healthline.com, 2020 WL 5495284, at *4; Alexandria Real Estate Equities, Inc. v.

2

RUNLABS (UK) Ltd., No. 18-cv-07517-LHK, 2019 WL 4221590, at *13 (N.D. Cal. Sept.

3

5, 2019)). Indeed, in E*Healthline.com, 2020 WL 5495284, at *5, the court held that an

4

allegation that a defendant misappropriated confidential information through an employee

5

located in the forum was insufficient because the allegation “fail[ed] to demonstrate that

6

[that employee] performed any specific act on behalf of [the defendant], let alone an act

7

related to the misappropriation of plaintiff’s confidential information.” Here, while

8

Soelect alleges that HMC negotiated the MTA through HATCHI in this forum, it does not

9

allege either that HMC/HATCHI engaged in any wrongdoing in the course of the

10

contracting process, or that any misappropriation took place in California. Aiming non-

11

tortious conduct at the forum is insufficient. See Picot, 780 F.3d at 1214.7
Soelect adds a third potential basis for express aiming: that HMC at one point

12
13

“invited Soelect into the forum to discuss business opportunities.” Opp’n to MTD at 7

14

(citing Ex. B (dkt. 31-3) (Email Chain)). But a single invitation to California is not enough

15

to demonstrate express aiming. See Picot, 780 F.3d at 1213 (no jurisdiction despite two

16

trips to California). Moreover, the invitation came after the parties had entered into the

17

MTA. Compare Email Chain (with dates ranging between October 21, 2019 and

18

November 5, 2019) with MTA at 3 (signed September 1, 2019 and September 24, 2019).

19

And the invitation had nothing to do with the MTA or even with the parties’ specific

20

relationship. See Email Chain at 4 (invitation was to a “Mobility Innovators Forum”).

21

Soelect does not allege that the invitation is evidence of misappropriation of Soelect’s

22

trade secrets. See E*Healthline.com, 2020 WL 5495284, at *4; see also Pray, Inc. v.

23

Christian Care Ministry, Inc., No. 2:23-cv-10660, 2024 WL 1680053, at *5 (C.D. Cal.

24
25
26
27
28

7

The opposition responds that “The hook that HMC used to reel in Soelect’s proprietary
materials—the MTA contract—was negotiated in California.” MTD Opp’n at 6; see also
id. at 5 (“The genesis of HMC’s theft was a contract negotiated by the CRADLE office of
HMC’s subsidiary CRADLE in California—an intentional act aimed at California.”). But
this is an entirely new spin—the complaint does not allege that HATCHI negotiated the
MTA in order to trick Soelect into sharing its trade secrets so that, one year later, HMC
could steal them.
14

1

Apr. 5, 2024) (allegation of “three meetings in California” that “provides little detail about

2

the content of these meetings,” absent “other allegations linking [defendant’s executives]

3

to California” was insufficient for personal jurisdiction); Hempel v. Cydan Dev., Inc., No.

4

3:13-cv-00008-MMD-CBC, 2018 WL 5777491 (D. Nev. Nov. 2, 2018) (visit to Nevada

5

did not support personal jurisdiction where it was “not challenged conduct nor [was] it

6

integral to any of” the claims). Nor does Soelect even allege that it accepted the

7

invitation.8
Because Soelect fails to identify sufficient contacts that HMC itself created with

8
9

California, Soelect has failed to show express aiming. See Walden, 571 U.S. at 284.

10

c.

The third part of the purposeful direction test is whether HMC knew that its

11
United States District Court
Northern District of California

Harm

12

intentional act would cause harm in the forum. See Schwarzenegger, 374 F.3d at 803. The

13

focus of the inquiry “is not the magnitude of the harm, but rather its foreseeability.”

14

Lindora, LLC v. Isagenix Int’l, LLC, 198 F.Supp.3d 1127, 1141 (S.D. Cal. 2016). For

15

jurisdictional purposes, a corporation incurs economic loss in the forum of its principal

16

place of business. See CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1079

17

(9th Cir. 2011). “If a jurisdictionally sufficient amount of harm is suffered in the forum

18

state, it does not matter that even more harm might have been suffered in another state.”

19

Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1207 (9th

20

Cir. 2006).

21

HMC argues that Soelect “‘does not allege that [HMC] injured [it] in California.’”

22

See MTD at 8 (quoting Kovalenko v. Kirkland & Ellis LLP, No. 22-cv-05990-HSG, 2023

23

WL 5444728, at *14 (N.D. Cal. Aug. 23, 2023)). That is correct. Soelect, a Delaware

24

corporation with its principal place of business in North Carolina, see Compl. ¶ 16, alleges

25
26
27
28

8

Also, the HATCHI MSJ Order’s language about the MTA “contemplat[ing] an express
delegation of HATCHI’s obligations to the HMC scientists who actually received and
tested the materials,” which Soelect characterizes as a delegation of “performance from
California to South Korea,” does not accomplish what Soelect wishes. See MTD Supp.
Opp’n at 2. If anything, it suggests that HMC’s conduct was aimed away from California.
15

United States District Court
Northern District of California

1

only that “Soelect has suffered harm as a direct and proximate result of HMC’s use and

2

disclosure of Soelect’s trade secrets, and . . . HMC has gained, both financially and

3

reputationally, as a market leader in the lithium metal anode area, from this use or

4

disclosure,” id. ¶ 59. In Kovalenko, 2023 WL 5444728, at *14, where the plaintiff did not

5

live in California, worked in several other states, and only intended to relocate to

6

California, Judge Gilliam held that the plaintiff failed to allege that the defendant injured

7

the plaintiff in California, and so had failed to allege forum-state harm. Soelect similarly

8

fails to allege any forum-state harm here.

9

In response, Soelect argues that “where intellectual property is stolen, a projected

10

negative effect on the marketplace in a state is sufficient to demonstrate harm is likely to

11

occur in the forum.” Opp’n to MTD at 7. Soelect cites in support of that point DFSB

12

Kollective Co. v. Bourne, 897 F. Supp. 2d 871, 885 (N.D. Cal. 2012), a copyright case in

13

which Judge Hamilton held that the plaintiff, who was not a California resident, had

14

adequately alleged harm in California because it had alleged that “by offering unauthorized

15

copies of Plaintiffs’ works, Defendant has affected Plaintiffs’ large California market by

16

‘decreasing the volume of sales and corresponding revenue there appreciably.’” See

17

Opp’n to MTD at 7 (emphasis added). Soelect argues that “California is one of the largest

18

electric vehicle marketplaces in the United States” and that because HMC stole its battery

19

technology, Soelect has a decreased ability to participate in the electric vehicle

20

marketplace. Id. (citing https://cleantechnica.com/2024/02/22/california-rises-to-21-4-bev-

21

market-share-33-8-of-us-bev-market/, which does not mention Hyundai or Soelect).
This is unpersuasive. As an initial matter, this theory of harm is attenuated: Soelect

22
23

makes batteries, batteries are important for electric vehicles, there is a big market for

24

electric vehicles in California, therefore Soelect was harmed by not being able to

25

participate in the California car market.9 It is also nowhere in the complaint, which

26
27
28

9

It is also unclear why the issue is Soelect’s ability to participate in California’s electric
car market and not its ability to participate in California’s HMC electric car market.
Presumably HMC sells electric cars in California, but the Court has seen nothing about
that in the complaint or elsewhere in the parties’ briefing.
16

United States District Court
Northern District of California

1

touches only on how important effective lithium metal batteries are to the “multi-billion-

2

dollar electric vehicle marketplace.” See Compl. ¶¶ 4–7. If the Court’s focus is

3

foreseeability, then the complaint does not plead foreseeable harm in California. See

4

Lindora, 198 F.Supp.3d at 1141. Soelect insists that its inability to participate in

5

California’s electric vehicle market because of HMC’s misappropriation “is a forum-

6

specific harm unique to California.” Opp’n to MTD at 7. But it does not feel “unique to

7

California”—by that reasoning, Soelect could argue that it suffered harm everywhere

8

electric vehicles are sold. As to California specifically, unlike in DFSB, where the

9

plaintiff already had a “large California market,” which the defendant impacted by offering

10

unauthorized copies of the plaintiffs’ works, see DFSB Kollective, 897 F. Supp. 2d at 885,

11

Soelect apparently has no California market, see Statement of Undisputed Material Facts

12

in HATCHI Matter (No. 22-cv-01342 in N.D. Ill.) (dkt. 138) (“Soelect admits that it is not

13

selling its products commercially yet, but that is immaterial to this dispute.”).

14

Accordingly, the standard rule applies: a corporation incurs economic loss in the forum of

15

its principal place of business—here, North Carolina. See CollegeSource, 653 F.3d at

16

1079.

17

Soelect has therefore failed to allege forum-specific harm.

18

Because Soelect failed to show express aiming at California, and failed to allege

19

harm suffered in California, Soelect has failed the “purposeful direction” prong. Soelect

20

has therefore failed to satisfy the three-prong test for specific personal jurisdiction. See

21

Schwarzenegger, 374 F.3d at 802.

22
23

2.

Arises Out Of

Claims “arise out of” the defendant’s contacts with the forum state when there is a

24

causal connection between the contacts and the claims. See Bristol-Myers, 582 U.S. at

25

255. Claims that do not “arise out of” the defendant’s contacts may nonetheless “relate to”

26

those contacts. Ford Motor Co., 592 U.S. at 362. “The ‘arises out of or relates to’

27

standard requires a connection, relationship, or nexus between the plaintiff’s claims and

28

the defendant’s contacts with the forum.” Bluestar Genomics v. Song, No. 21-CV-0450717

1

JST, 2024 WL 54701, at *7 (N.D. Cal. Jan 4, 2024). Because Soelect has not met its

2

burden on the “purposeful direction” prong, the Court need not reach the “arises out of”

3

prong. See Omeluk, 52 F.3d at 270–71.

4

Reasonableness

5

“The plaintiff bears the burden on the first two prongs,” and once those are

6

established, the defendant must make a “‘compelling case’ that the exercise of jurisdiction

7

would not be reasonable.” Ayla, 11 F.4th at 983–84. Because Soelect has not met its

8

burden on the “purposeful direction” prong, the Court need not reach the reasonableness

9

prong. See Omeluk, 52 F.3d at 270–71.

10
11
United States District Court
Northern District of California

3.

12

The Court therefore GRANTS the motion to dismiss based on lack of personal
jurisdiction.
4.

Jurisdictional Discovery

13

Soelect argues that if the Court does not deny the motion to dismiss outright, it

14

should give Soelect the opportunity to take jurisdictional discovery. MTD Opp’n at 9.

15

A district court has “broad discretion to permit or deny [jurisdictional] discovery, . .

16

. and its decision will not be reversed except ‘upon the clearest showing that denial of

17

discovery results in actual and substantial prejudice to the complaining litigant.’”

18

Butcher’s Union Loc. No. 498, United Food & Com. Workers v. SDC Inv., Inc., 788 F.2d

19

535, 540 (9th Cir. 1986) (quoting Data Disc, 557 F.2d at 1285 n.1). “Prejudice is

20

established if there is a reasonable probability that the outcome would have been different

21

had discovery been allowed.” Laub v. U.S. Dep’t of Interior, 342 F.3d 1080, 1093 (9th

22

Cir. 2003). “[A] refusal to grant discovery to establish jurisdiction is not an abuse of

23

discretion when ‘it is clear that further discovery would not demonstrate facts sufficient to

24

constitute a basis for jurisdiction.’” Id. (quoting Wells Fargo & Co. v. Wells Fargo Exp.

25

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

26

A plaintiff must establish a “colorable” basis for personal jurisdiction before

27

jurisdictional discovery will be allowed, offering “‘some evidence’ tending to establish

28

personal jurisdiction over the defendant.” Jeong v. Nexo Fin. LLC, No. 21-cv-02392-BLF,
18

1

2022 WL 174236, at *15 (N.D. Cal. Jan. 19, 2022) (citation omitted). “This ‘colorable’

2

showing should be understood as something less than a prima facie showing.” Id. (citation

3

omitted). But where a plaintiff’s request for discovery is based on “little more than a

4

hunch that it might yield jurisdictionally relevant facts,” its denial is within the district

5

court’s discretion. See Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008).
Soelect’s one-paragraph request for jurisdictional discovery asserts that it has

United States District Court
Northern District of California

6
7

already “proffered documents showing that HMC directed California-based CRADLE’s

8

business activities, including the [MTA]” and that “CRADLE10 brought Soelect into

9

California to discuss business relations.” MTD Opp’n at 9. It then argues that those

10

documents “must be resolved in [Soelect’s] favor,” and, at a minimum, show that Soelect

11

is “entitled to jurisdictional discovery.” Id. (quoting Schwarzenegger, 374 F.3d at 800).

12

Soelect’s conclusory argument is unpersuasive. Schwarzenegger held that

13

“[c]onflicts between parties over statements contained in affidavits must be resolved in the

14

plaintiff’s favor,” see Schwarzenegger, 374 F.3d at 800, but, as already discussed, there is

15

no conflict between the statement that HMC directs HATCHI’s projects and business

16

activities and the statement that HMC does not control HATCHI’s day-to-day operations,

17

see Lee Decl. ¶ 9; MTD Opp’n Ex. A ¶ 4. Further discovery into HMC’s control over

18

HATCHI (not CRADLE, which is just an office) could theoretically support Soelect’s

19

agency theory of jurisdiction,11 but that theory might not even remain viable in this Circuit.

20

See Williams, 851 F.3d at 1024; MSP Recovery Claims, 2024 WL 3408221, at *4. And,

21

as discussed above, even if HATCHI’s act of negotiating the MTA could be imputed to

22

HMC, that act still does not demonstrate express aiming of tortious conduct into

23

California. See Ford Motor Co., 592 U.S. at 359 (contacts cannot be “random, isolated, or

24

fortuitous.”); E*Healthline.com, 2018 WL 5296291, at *5 (“no contemplation that

25
26
27
28

10

Notably the complaint alleges that HATCHI, not CRADLE, solicited Soelect’s business.
See Compl. ¶ 25. HATCHI is a Michigan corporation with a principal place of business in
Michigan. See HATCHI Compl. ¶ 3.
11
Along these lines, Soelect argued at the motion hearing that if HMC’s control over
HATCHI was “so extensive,” then it would have “stepped into the shoes” of HATCHI.
19

1

California would play a role in any of” the resulting conduct between the parties); Picot,

2

780 F.3d at 1213 (no jurisdiction over Michigan-based defendant who took two trips to

3

California to develop and market technology where the tasks agreed to in the contract

4

occurred outside California). Soelect’s request for jurisdictional discovery is therefore

5

“based on little more than a hunch,” see Boschetto, 539 F.3d at 1020, and fails to offer

6

“‘some evidence’ tending to establish personal jurisdiction over the defendant,” see Jeong,

7

2022 WL 174236, at *15.

8

United States District Court
Northern District of California

9

A separate reason the Court is disinclined to allow jurisdictional discovery is that
Soelect already received discovery from HATCHI about the MTA in the HATCHI Matter.

10

See Stipulated Order Regarding Production of Documents and Electronically Stored

11

Information in HATCHI Matter (No. 22-cv-01342 in N.D. Ill.) (dkt. 31). Soelect also took

12

some discovery from HMC in the HATCHI Matter, although perhaps not as much as

13

Soelect would have liked. See Order on Motion to Compel in HATCHI Matter (No. 22-

14

cv-01342 in N.D. Ill.) (dkt. 78) (noting that Soelect believed that production from HMC

15

was incomplete and that Soelect “may attempt to get additional documents”); Parties’

16

Stipulation to Conduct Certain Depositions Following the Close of Deadlines in HATCHI

17

Matter (No. 22-cv-01342 in N.D. Ill.) (dkt. 97) ¶ 4 (“HATCHI was informed that [HMC]

18

will agree to voluntarily make certain witnesses available for depositions in Korea”).

19

Soelect has not articulated how “there is a reasonable probability that the outcome would

20

[be] different [if further] discovery [was] allowed.” See Laub, 342 F.3d at 1093.

21

B.

22

HMC next argues that this district is an improper venue. MTD at 10.

23

In a civil action, venue is proper: (1) in a judicial district in which any defendant

Venue

24

resides, (2) in a judicial district “in which a substantial part of the events or omissions

25

giving rise to the claim occurred, or a substantial part of property that is the subject of the

26

action is situated,” or (3) “in a judicial district in which any defendant is subject to the

27

court’s personal jurisdiction” if there is no district in which an action may otherwise be

28

brought. See 28 U.S.C. § 1391(b)(1)–(3). HMC resides in South Korea, and it is the only
20

1

defendant in this case, so 28 U.S.C. § 1391(b)(1) is unmet. As discussed above, HMC is

2

not subject to the Court’s jurisdiction, and so 28 U.S.C. § 1391(b)(3) is unmet. The only

3

question is whether Soelect satisfies 28 U.S.C. § 1391(b)(2). “[I]t is sufficient that a

4

substantial part of the events occurred in the challenged venue, even if a greater part of the

5

events occurred elsewhere.” Vigg v. Jaddou, No. 21-cv-02678-KAW, 2022 WL 3581930,

6

at *2 (N.D. Cal. Aug. 10, 2022) (internal quotations omitted).
The complaint alleges that “[v]enue is appropriate in the Northern District of

United States District Court
Northern District of California

7
8

California pursuant to 28 U.S.C. § 1391 because the contract under which HMC was

9

permitted to perform limited testing of Soelect’s products was negotiated, in part, in

10

California by HMC’s subsidiary company in Santa Clara County.” Compl. ¶ 19. But

11

HATCHI and Soelect partially negotiating the MTA in this district was not “a substantial

12

part of the events . . . giving rise to the claim.” See 28 U.S.C. § 1391(b)(2); Elofson v.

13

Bivens, No. 15-cv-05761-BLF, 2017 WL 566323, at *14 (N.D. Cal. Feb. 13, 2017) (28

14

U.S.C. § 1391(b)(2) not met where the events that occurred in the Northern District of

15

California “[made] up a very small part of the overall circumstances giving rise to this

16

action”). The negotiation of the MTA was not “a substantial part of the events” here.12

17

The complaint does not allege that HATCHI negotiated the MTA in bad faith in order to

18

lure Soelect into sharing its trade secrets so that HMC could steal them a year later. See

19

Compl. ¶¶ 9–11.

20

In addition, Soelect’s injury did not take place in California. Soelect is a Delaware

21

corporation with a principal place of business in North Carolina. See Compl. ¶ 16; Myers

22
23
24
25
26
27
28

12

Soelect complains that HMC “cites no meaningful authority” as to venue, but then itself
cites only one case: Uffner v. La Reunion Francaise, S.A., 244 F.3d 38, 42 (1st Cir. 2001).
See MTD Opp’n at 9. In that case, the First Circuit held that “venue may be proper in any
number of districts” and that courts are to look “not to a single ‘triggering event’
prompting the action, but to the entire sequence of events underlying the claim.” Uffner,
244 F.3d at 42. In Uffner, an insured’s boat caught fire and sank, the insured filed a claim
with his insurer, and the insurer denied the claim. Id. The First Circuit concluded that the
loss of the boat was “a substantial event giving rise to the claim,” and so venue was proper
in the district where the boat sank. Id. at 42–43. That holding does not move the needle
on the venue question here. Uffner would be more relevant if the First Circuit had held
that venue was proper in the district where the insured entered into the insurance contract.
21

United States District Court
Northern District of California

1

v. Bennett Law Offices, 238 F.3d 1068, 1075–76 (9th Cir. 2001) (“at least one court has

2

found that in a tort action, the locus of the injury was a relevant factor” under 28 U.S.C. §

3

1391(b)(2)). All of HMC’s conduct occurred in South Korea. See Compl. ¶¶ 37–38

4

(testing), 58 (use). Where the misappropriation and injury all occurred elsewhere and only

5

the contract was signed here, venue is not proper here. See Zike, LLC v. Catalfumo, No.

6

6:11-1841-TMC, 2012 WL 12867973, at *3 (D.S.C. Feb. 29, 2012) (venue not proper in

7

South Carolina, even though “[d]efendants made trips to South Carolina during which the

8

NDA was signed,” where trade secret misappropriation all occurred “in Florida or

9

elsewhere”); cf. Power Integrations, Inc. v. Penbrothers Int’l Inc., No. 19-cv-2700-SVK,

10

2019 WL 13202217, at *3 (N.D. Cal. Nov. 1, 2019) (notwithstanding that plaintiff was

11

headquartered in this district and would feel harms in this district, “the location of the

12

threatened misappropriation would appear to be where the Individual Defendants are

13

working, i.e., in the Philippines and/or San Diego” and so “any . . . misappropriation of

14

PI’s trade secrets . . . would have taken place in the Philippines and/or San Diego, not this

15

District.”).

16

Accordingly, Soelect has not met 28 U.S.C. § 1391(b)(2), and the Northern District

17

of California is an improper venue. The Court therefore GRANTS the motion to dismiss

18

based on improper venue.

19

C.

20

Finally, HMC argues that the complaint should be dismissed pursuant to Rule

Failure to State a DTSA Claim

21

12(b)(6) because Soelect fails to state a claim under the DTSA. See MTD at 15. In order

22

for the DTSA to apply to conduct outside of the United States, there must be an “act in

23

furtherance” of the misappropriation that was “committed in the United States.” 18 U.S.C.

24

§ 1837. HMC argues that while “Soelect alleges that ‘HMC has used [its] trade secrets

25

without Soelect’s consent and thereby misappropriated them in violation of the DTSA,’”

26

“Soelect fails to allege that any such use, or any act in furtherance thereof, occurred

27

domestically.” MTD at 15 (quoting Compl. ¶ 58). The Court agrees.

28

Soelect argues that the document that created the duty for HMC “to maintain the
22

United States District Court
Northern District of California

1

secrecy” of Soelect’s product samples, the MTA, was negotiated and executed within the

2

United States. Opp’n to MTD at 12–13 (quoting 18 U.S.C. § 1839(5)(B)(ii)(II)).13 The

3

problem with this is that it was HATCHI, not HMC, who negotiated and executed the

4

MTA. Also, as stated repeatedly above, the complaint does not allege that HATCHI did

5

anything improper in the contracting process. “[A]n act that occurs before the [allegedly

6

wrongful] operation is underway or after it is fully completed is not an act in furtherance of

7

the misappropriation.” Bepex Int’l, LLC v. Micron BV, No. 19-cv-2997 (KMM/JFD),

8

2023 WL 2975699, at *5, 7 (D. Minn. Apr. 17, 2023) (internal quotation marks omitted).

9

“[A]n act in furtherance of misappropriation must manifest that the offense is at work and

10

is not simply a project in the minds of the offenders.” Id. (internal quotation marks

11

omitted). Soelect also argues that “other acts in furtherance of the misappropriation . . .

12

occurred domestically,” but it points only to “the communications that led up to Soelect’s

13

decision to ship its samples to HMC.” Opp’n to MTD at 13. But again, those

14

communications were with HATCHI, and Soelect does not allege that those

15

communications were part of the misappropriation.
Soelect cites to a single case that it says supports is position here: Medcenter

16
17

Holdings Inc. v. WebMD Health Corp., No. 1:20-cv-0053 (ALC), 2021 WL 1178129, at

18

*6 (S.D.N.Y. Mar. 29, 2021). Id. In Medcenter, though, in connection with acquisition

19

talks, the defendant entered into a nondisclosure agreement through which the plaintiff

20

shared its database structure and allowed the defendant to interview the plaintiff’s senior

21

leadership and see those employees’ confidential employment terms. Id. at *2. One of

22

those employees attended a conference in Miami attended by the defendant’s CEO, got

23

access to the plaintiff’s data key, and then resigned abruptly and joined the defendant’s

24

company. Id. at *3. The plaintiff then learned that the employee had used the data key to

25

access, download, retain, and steal substantial amounts of confidential data from the

26

plaintiff, which the defendant used. Id. The court concluded that the plaintiff had

27
28

13

Soelect incorrectly cites to 18 U.S.C. § 1939(5)(B)(ii)(II)). Id.
23

United States District Court
Northern District of California

1

sufficiently alleged a domestic act in furtherance of the misappropriation by way of the

2

allegations of “the meeting between [the employee and the defendant’s CEO] in Miami,

3

FL; the negotiation of the NDA in New York, which [the plaintiff] contends was a Trojan

4

Horse for [the defendant] to learn about [the plaintiff’s] employees and proprietary

5

databases; and [the employee’s] consulting work with [the defendant], which her contract

6

indicates would take place partly in the United States.” Id. at *6. Those allegations are far

7

more extensive than what Soelect has alleged here. Here, it was the defendant’s subsidiary

8

who negotiated the contract; here, there is no suggestion that the contracting process was

9

in any way nefarious; here, the alleged misappropriation happened entirely in South Korea;

10

and here, there is no alleged use of the misappropriated data in the United States. If

11

Medcenter is the best case that Soelect can point to, Soelect has failed. See also ProV Int’l

12

Inc. v. Lucca, No. 8:19-cv-978-T-23AAS, 2019 WL 5578880, at *3 (M.D. Fla. Oct. 29,

13

2019) (dismissing DTSA claim for failure to state a claim where there was “no allegation

14

suggesting that the defendants attempted to recruit an employee from the United States,

15

that the defendants acquired in the United States the [plaintiff’s] ‘trade secrets,’ or that the

16

defendants used the trade secrets in the United States.”).
Because Soelect has not alleged a domestic act in furtherance of the

17
18

misappropriation, the Court GRANTS the motion to dismiss for failure to state a claim.

19

Soelect asks that “if the Court has concerns about the sufficiency of Soelect’s allegations

20

in this regard,” it should give Soelect leave to amend. Opp’n to MTD at 13. If failure to

21

state a claim was the only basis for dismissal, the Court would do so. However, because

22

Soelect has also failed as to personal jurisdiction and venue, leave to amend would be

23

futile. See Leadsinger, 512 F.3d at 532.

24

IV.

25

CONCLUSION
For the foregoing reasons, the Court GRANTS the motion to dismiss based on lack

26

of personal jurisdiction, improper venue, and failure to state a claim. The Court does not

27

grant either jurisdictional discovery or leave to amend, and it does not reach the alternative

28

//
24

1

motion to stay.

2

IT IS SO ORDERED.

3

24 2024
Dated: September ___,

CHARLES R. BREYER
United States District Judge

4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
25