Nibirutech Ltd v. Jang et al

Filing 45

ORDER by Judge Hamilton granting 32 Motion to Dismiss (pjhlc1, COURT STAFF) (Filed on 2/23/2015)

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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NIBIRUTECH LTD,

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No. C 14-3091 PJH

v.

ORDER GRANTING MOTION TO
DISMISS FOR FORUM NON
CONVENIENS

ANDREW JANG, et al.,
Defendants.
_______________________________/

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For the Northern District of California

United States District Court

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Plaintiff,

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Before the court is defendants' renewed motion for an order dismissing the above-

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entitled action for forum non conveniens. Having read the parties' papers and carefully

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considered their arguments and the relevant legal authority, the court hereby GRANTS the

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motion.

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BACKGROUND
Plaintiff NibiruTech Ltd. ("NibiruTech") is a Chinese company located in Chengdu,

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Sichuan Province, People's Republic of China ("PRC"). NibiruTech, which was founded in

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2008, develops and builds mobile video games based on Android and iOS operating

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systems. Cplt ¶ 1.

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Defendants Andrew Jang and Maggie Jang reside in California, and defendant

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HJClan, Inc. ("HJClan") is a California corporation with its principal place of business in

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Millbrae, California. NibiruTech alleges that HJClan is "owned" by Maggie Jang. Cplt ¶ 2.

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Starting at some point in 2011, Andrew Jang, a United States citizen, was hired to serve as

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NibiruTech's marketing director in China. At that time, Andrew Jang was enrolled in (or had

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just completed) an MBA program at a Chinese university. Cplt ¶ 12.

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NibiruTech alleges that Andrew Jang was authorized to select and hire third-party
vendors on behalf of NibiruTech, and that from October 2012 until October 2013, while he

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was employed at NibiruTech, he conspired with Maggie Jang to create fictitious invoices

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and to cause NibiruTech to issue checks to HJClan. Cplt ¶¶ 2, 18. NibiruTech asserts that

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Andrew Jang caused some $813,833 to be unlawfully diverted to HJClan – money that

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NibiruTech had intended for its third-party vendors and service providers in the United

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States and Europe. Cplt ¶¶ 20-24.

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Defendants' position is that the fictitious invoices and supporting e-mails were openly

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created at NibiruTech, with full knowledge and approval of NibiruTech's top management.

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They claim that the fictitious invoices and e-mails were necessary to bypass Chinese

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government regulations and reporting requirements, and restrictions on the level of activity
in NibiruTech's bank accounts and NibiruTech's payment to entities outside China.

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For the Northern District of California

United States District Court

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Defendants also assert that HJClan never deliberately failed or refused to pay NibiruTech's

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third-party vendors the full amounts that were owed to them by NibiruTech as invoiced by

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the third-party vendors.

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NibiruTech filed the complaint in this action on July 8, 2014, asserting claims of

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breach of fiduciary duty (against Andrew Jang), fraud (against Andrew Jang and Maggie

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Jang), civil conspiracy (against all three defendants), and conversion (against all three

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defendants). NibiruTech seeks recovery of the allegedly misappropriated $813,833, plus

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$5 million in punitive damages.

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Defendants moved for an order dismissing the complaint for improper venue (based

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on a purported forum-selection clause in Andrew Jang's employment agreement with

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NibiruTech) or for forum non conveniens. On December 2, 2014, the court issued an order

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denying the motions. With regard to the motion to dismiss for forum non conveniens, the

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court found that while the relevant factors appeared to favor dismissal so that the case

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could be filed and heard in China, defendants had not established that China was an

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"available alternative forum" because they had not shown that there was personal

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jurisdiction over all defendants in China. The court added that "[t]he result might be

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different should all defendants agree in writing to submit to the jurisdiction of an appropriate

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Chinese court and to be bound by its judgment."
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On December 11, 2014, defendants filed a statement indicating that they agreed to

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"submit to the jurisdiction of an appropriate Chinese court, and to be bound by its

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judgment, subject only to the caveat that [they] would reserve the right to seek judicial

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review of any failure by the Chinese court to abide by its procedural and legal

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requirements."
Defendants subsequently filed an answer to the complaint, as well as the present

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motion to dismiss for forum non conveniens.
DISCUSSION

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Legal Standard
In general, “[a] district court has discretion to decline to exercise jurisdiction in a

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For the Northern District of California

United States District Court

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A.

case where litigation in a foreign forum would be more convenient for the parties.” Lueck v.

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Sundstrand Corp., 236 F.3d 1137, 1142 (9th Cir. 2001) (citing Gulf Oil Corp. v. Gilbert, 330

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U.S. 501, 504 (1947)). Once a district court determines that the appropriate forum is

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located in a foreign country, the court may dismiss the case. Cheng v. Boeing Co., 708

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F.2d 1406, 1409 (9th Cir. 1983).

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Before dismissing an action based on forum non conveniens, district courts analyze

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whether an adequate alternative forum exists, and whether the balance of private and

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public interest factors favors dismissal. Lueck, 236 F.3d at 1142; see also Gutierrez v.

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Advanced Medical Optics, Inc., 640 F.3d 1025, 1029 (9th Cir. 2011).

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The "private interest" factors include the plaintiff's choice of forum, the residence of

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the parties and witnesses, the ease of access to evidence, the availability of compulsory

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process, and the cost of transporting witnesses. See Boston Telecom. Group, Inc. v.

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Wood, 588 F.3d 1201, 1206-07 (9th Cir. 2009). The "public interest" factors include court

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congestion, imposition of jury duty on the community, local interest in resolving the

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controversy, the interest in having a diversity case decided in the forum familiar with the

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relevant law, and avoiding conflicts of law problems. See Gemini Capital Group v. Yap

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Fishing Corp., 150 F.3d 1088, 1094 (9th Cir. 1998). In Lueck, the court added that "[t]he

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district court should look to any or all of the above factors which are relevant to the case
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before it, giving appropriate weight to each . . . in arriving at a balanced conclusion." Lueck,

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236 F.3d at 1145-46.

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B.

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Defendants' Motion
Defendants argue that the complaint should be dismissed based on forum non

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conveniens. Defendants' motion is supported by declarations by Andrew Jang, Maggie

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Jang, and defendants' "legal expert," Professor Anna M. Han.

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Andrew Jang contends that he and other NibiruTech employees submitted invoices

authorized payment but only after scrutinizing the required documentation; that as part of

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his duties at NibiruTech, he (Jang) participated with other employees in creating fictitious

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For the Northern District of California

for payment to third-party vendors, and that NibiruTech's CEO Xiangji Kevin Yang

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United States District Court

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invoices and matching supporting fictitious emails (including invoices to HJClan), with full

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knowledge of NibiruTech's top management; that the fictitious invoices and emails were

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created as part of an effort to evade government regulations; and that Yang made false

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accusations against him, and orchestrated a campaign of misinformation about him.

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In their motion, defendants argue that the case should be dismissed for forum non

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conveniens because there is an adequate alternative forum available, and because the

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balance of "private-interest" and "public-interest" factors favors litigating the dispute in

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China rather than in the United States. With regard to the availability of an adequate

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alternative forum, defendants assert (relying on the report of their expert Professor Han)

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that China has a court system in place where NibiruTech can file its claims with the local

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Intermediate Court, and where the court can adjudicate NibiruTech's claims; that China has

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a contract law and a tort law; that while the discovery process is different than in U.S.

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courts, discovery is available; and that NibiruTech can seek monetary damages in China,

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and courts routinely award such damages to the winning claimant. Thus, they contend,

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China provides an adequate alternative forum, given that they have shown that they are

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"amenable to process" in China.

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Defendants also argue that both the private-interest factors and the public-interest
factors weigh in favor of having this litigation heard in China. With regard to the private4

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interest factors, Andrew Jang first lists ten witnesses in his declaration, nine of whom reside

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in China and speak little or no English. These witnesses are current or former NibiruTech

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employees. Jang describes the job duties of each, and discusses the information each

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allegedly has with regard to NibiruTech's business and the matter of the third-party invoices

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and payment documentation.

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As for documents, defendants assert (again relying on the Jang declaration) that the

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vast majority of key corporate records and documents that contain information material to

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their defenses in this case (sales and marketing contracts, vendor reports and contracts,

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invoices and supporting emails, marketing campaign documents, bank and other financial
documents, revenue and income reports, and financial statements) are primarily in the

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For the Northern District of California

United States District Court

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Chinese language, and would need to be accurately translated into English for use in any

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litigation in California. Jang contends that many corporate records and documents are

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maintained in the Finance section and in the Marketing section at NibiruTech's

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headquarters in Chengdu.

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With regard to the availability of compulsory process for the attendance of unwilling

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witnesses, and the cost of obtaining attendance of willing witnesses, defendants argue that

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because almost all the key witnesses are located in China, it would be significantly more

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convenient for the witnesses and the parties if this action could be prepared for trial and

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tried in China, rather than 7,000 miles away in California. They also assert that all the key

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witnesses are past or present employees of NibiruTech, and that neither the former

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employees nor the current employees that are not high-level employees could be

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compelled to testify in California; and in addition, that not many current or former

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employees are likely to volunteer to testify. They contend that because most of the

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witnesses are beyond the reach of this court's compulsory process, they would have no

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way of obtaining their testimony.

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With regard to "other practical problems that make trial of a case easy, expeditious,

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and inexpensive," defendants reiterate that wherever this case is litigated, the vast majority

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of discovery will come from China, where most of the key witnesses and related documents
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are located. They assert that comparatively little discovery will come from witnesses or

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documents located in California, and that the lawyers for the parties would have to travel to

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China to take depositions of numerous key witnesses, and then would have to fly those key

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witnesses to California for the trial (assuming they could obtain visas), and feed and house

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them while they were here. In addition, since most of the Chinese witnesses speak little if

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any English, the parties would also have to hire proficient, qualified Chinese language

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interpreters. Defendants also contend that all of NibiruTech's documents are written in

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Chinese, and would have to be translated by official translators, which would be expensive

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and would add to the delay.
Defendants argue that the public-interest factors also favor dismissing this case.

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For the Northern District of California

United States District Court

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With regard to local interest in having localized controversies decided at home, and the

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unfairness of burdening citizens in an unrelated forum with jury duty, defendants contend

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that China has a strong interest in, and connection to, this litigation, as most of the

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allegations of wrongful actions involve actions taken in China while Andrew Jang was

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employed by NibiruTech, and any monetary damage or harm to NibiruTech would have

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occurred in China where it is located. By comparison, they assert, any American interest in

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the outcome of this litigation would be limited and not sufficient to burden the citizens of

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California with jury services in "the extended trial this matter would necessitate."

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With regard to administrative difficulties flowing from court congestion, defendants

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argue that the need to utilize Chinese interpreters for almost all the witnesses, and the

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need to translate all the voluminous Chinese documents, could be obviated if this case

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were dismissed and refiled in China. They claim that not having to preside over this case

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will greatly unburden this court's calendar.

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With regard to local interest in having the trial of a diversity case in a forum that is at

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home with the law that must govern the action, and the avoidance of unnecessary

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problems in conflict of laws or the application of foreign law, defendants' expert Professor

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Han states that given that the employment contract was entered in China, that the

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relationship of employer and employee occurred in China, and that the alleged fraud was
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committed in China, Chinese courts would apply Chinese law in the case. Defendants also

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note that while the complaint alleges that Andrew Jang committed various acts and

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omissions – some in China and some in California – it does not allege facts showing that

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any other defendant committed any act or omission in California. Under these

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circumstances, defendants speculate, this court might decide it was required to apply

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Chinese law. Because of this potential entanglement between U.S. and Chinese law,

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defendants argue that this factor favors dismissal and refiling in China.

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NibiruTech's opposition is supported by two declarations – a declaration by
NibiruTech CEO Xiangji Kevin Yang, and an declaration by Lan Yan. Both declarants state
that they also provided declarations in support of NibiruTech's opposition to defendants'

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For the Northern District of California

United States District Court

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prior motion to dismiss for forum non conveniens, and both state that they "incorporate by

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reference" all statements made in those prior filings. However, NibiruTech does not specify

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which portions of those prior declarations it wishes to have considered by the court.

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Additionally, Lan Yan, who states that she is in-house counsel for NibiruTech in China,

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provides a number of "opinions" in her declaration – e.g., that Andrew Jang engaged in

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criminal behavior, and that Andrew Jang is unlikely to return to China because he fears

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criminal prosecution. She claims to have consulted with two Chinese law firms regarding

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Andrew Jang's civil and criminal liability, and attaches what she claims are their legal

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opinions (in Chinese, untranslated). She purports to translate some excerpts from those

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opinions, but there is no evidence that she actually did the translating, that she is qualified

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to be a translator, that she accurately translated the documents, or that the documents are

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what they purport to be.

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NibiruTech argues that defendants' agreement to submit to the jurisdiction of a court

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in China does not alter the fact that it would be substantially inconvenient for both

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NibiruTech and defendants to litigate the issues raised in NibiruTech's complaint in a

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Chinese court. The reason, NibiruTech asserts, is that all the relevant activities of

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defendants that underlie the complaint occurred in the United States, and thus, all the

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relevant witnesses and documents are also in the United States. This is essentially the
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same position NibiruTech took in its opposition to the prior motion to dismiss.
NibiruTech contends that neither the private-interest factors nor the public-interest

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factors favor dismissal. With regard to the private-interest factors, NibiruTech contends,

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first, that the residence of the parties and "key witnesses" favors NibiruTech's choice of

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forum. Apart from Andrew Jang and Maggie Jang, NibiruTech identifies two individuals

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whose names appear on emails transmitting invoices from HJClan to NibiruTech – Shobeir

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Shobeiri, identified as Director of Business Development for HJClan, and Billy Shipp, who

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had an email address at hjclan.com (suggesting an affiliation with HJClan). Both these

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individuals appear to be located in California, and also appear to have had some
involvement with a company called Iddiction, which is mentioned on some invoices

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For the Northern District of California

United States District Court

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(possibly as a third party vendor). NibiruTech describes the nature of the relationship

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between HJClan and Iddiction as "mysterious" and claims that the role of Shobeiri and

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Shipp "may lead to additional controversies."

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NibiruTech argues that China would not be a more convenient forum for either side,

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given that Andrew Jang, Maggie Jang, Shobeir Shobeiri, and Billy Shipp are located in

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California. Of these, only Maggie Jang understands Chinese – the others would require

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translators. NibiruTech also asserts that "[t]here is no evidence" that Shipp or Shobeiri is a

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high-level employee of HJClan, and thus, that there would be no way to compel their

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attendance in China, and speculates that neither of them would voluntarily come forward,

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because "their testimony might put their own interests at risk." NibiruTech also contends

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that the actual location of the evidence (whether testifying witnesses or documents) is not a

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compelling consideration in view of the feasibility of videotaping depositions and electronic

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communications.

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NibiruTech contends that none of the present and former NibiruTech employees

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listed by defendants as "key" witnesses can provide relevant information or testimony

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regarding the claims asserted in the complaint, and that none of the documents maintained

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by NibiruTech in China will have any bearing on the trial of those claims. NibiruTech

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argues that the fact that Andrew Jang was present in China during the time of the alleged
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fraud is irrelevant to the question of a convenient forum for the claims asserted in this

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action, as is defendants' claim regarding invoices being "photoshopped" in China by

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NibiruTech employees. NibiruTech asserts that Andrew Jang knows many people at

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NibiruTech from the time he spent working there, and claims that defendants' list of key

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witnesses is "simply a strategy for the [d]efendants to distract the [c]ourt's attention from

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the main issues of the case."

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NibiruTech argues that this case involves only the activities of HJClan employees

and HJClan receiving payment for those false invoices in California. NibiruTech claims that

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the sole proof that HJClan provided "services" to NibiruTech (as Andrew Jang contends) is

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For the Northern District of California

preparing false invoices in California, before those invoices were presented to NibiruTech,

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United States District Court

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in the sole possession of HJClan, and is located in California, as are the personnel who

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performed those services.

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NibiruTech also asserts that the Chinese court procedure will not allow NibiruTech to

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obtain any information about HJClan's business activities. According to NibiruTech, the

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courts in China generally have no provision for discovery, although the courts can order

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preservation of evidence. NibiruTech asserts that all communication between Andrew Jang

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and HJClan took place via Andrew Jang's private email account, rather than his NibiruTech

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e-mail account, and that "it must be concluded that email messages between HJClan and

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Andrew Jang are accessible only through devices used by Andrew Jang and HJClan

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according to court rules regarding the preservation of evidence."

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NibiruTech argues that "[t]he cost of bringing witnesses to trial, enforceability of

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judgment and all other practical problems that make trial of a case easy, expeditious and

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inexpensive" favor retaining this case in this forum. NibiruTech claims that it will be

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expensive for "all the aforementioned key witnesses" to travel to China, and that because

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those witnesses cannot speak Mandarin Chinese and the two countries have "significant

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cultural differences in their legal systems," the defendants and third-party witnesses will

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require skilled legal interpreters and capable lawyers who speak both English and

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Mandarin fluently and understand both the applicable law of the United States and the law
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of China in order for the defendants and third-party witnesses to understand the court

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proceedings and the charges against them, "which will be a very difficult task and the

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process will be time consuming and expenditure inefficient."

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With regard to the public-interest factors, NibiruTech argues that there is a strong

of the allegedly fraudulent invoices occurred there, and the payment was received there;

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the defendants are all located in California, as is what NibiruTech refers to as "the

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electronic documentary evidence presently located in Andrew Jang's electronic

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communication devices." NibiruTech asserts that "[t]here is a strong local interest in

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California in having its citizens and corporations being brought to task for committing

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For the Northern District of California

connection between California and the events alleged in the complaint, as the preparation

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United States District Court

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fraudulent acts, and providing a forum for those who have been defrauded to seek

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redress." NibiruTech does not discuss the factor of the court's familiarity with the governing

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law, or the burden on local courts and juries.

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Finally, NibiruTech argues that if the court decides to grant defendants' motion, it

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should stay the case and impose certain conditions on defendants, as previously proposed

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in the motion to dismiss the original complaint.

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The motion is GRANTED. On balance, both the private-interest and the public-

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interest factors favor dismissing this case so that it can be brought in China. With regard to

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the private-interest factors, the court notes that the plaintiff's choice of forum is given little

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weight when the plaintiff is a foreign entity. See Piper Aircraft v. Reyno, 454 U.S. 235, __

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(1981); Sinochem Int'l Co., Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 430; Lueck,

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236 F.3d at 1145.

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The factor of relative ease of access to sources of proof favors China. NibiruTech's

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claims are based on allegations regarding the "fictitious" invoices prepared by HJClan.

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However, to the extent that Andrew Jang was involved in the preparation of fictitious

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invoices, that involvement occurred in China. Moreover, Jang asserts that the preparation

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of fictitious invoices was standard operating procedure at NibiruTech; that even the

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invoices prepared by HJClan were subject to approval by, and followed a format prescribed
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by, NibiruTech's finance department; that numerous NibiruTech employees in China were

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involved in or were aware of this practice; and that most of the relevant information

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regarding invoices and financial records is in NibiruTech's possession in China – e.g., sales

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and marketing contracts, vendor reports and contracts, invoices and supporting emails,

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marketing reports and documents, bank and other financial documents, and revenue and

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income reports.

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As for witnesses, NibiruTech has identified only the Jangs (who have agreed to

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appear in China) and the "mysterious" Shipp and Shobeiri, whom defendants contend were

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not HJClan employees or extensively involved with HJClan, and about whom NibiruTech
appears to have little if any knowledge. For their part, defendants have identified ten

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For the Northern District of California

United States District Court

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current or former NibiruTech employees with knowledge of NibiruTech's operations, nine of

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whom speak no English or limited English. NibiruTech cannot be compelled to produce the

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former employees or the lower-level current employees here, and thus, defendants would

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likely be deprived of the opportunity to put on a defense. While video depositions could

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presumably be taken in China (assuming defendants can locate the witnesses), it would be

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costly, and those witnesses would not be available for trial.

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As for "other practical problems that make trial of a case easy, expeditious and

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inexpensive," the necessity of having testimony and documents translated by qualified

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translators would add significantly to the cost, likely duration, and complexity of litigating the

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case here. Moreover, the court notes that even during the early stages of this litigation, the

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parties have several times raised concerns with regard to whether the translation of

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particular documents is accurate.

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With regard to the public-interest factors, there is only a slight connection between

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the parties' dispute and California, as Andrew Jang was employed in China by a Chinese

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company at the time of the events that gave rise to the lawsuit. It is true that HJClan, the

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entity to whom NibiruTech claims the funds were diverted, is a California corporation, and

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its "president," Maggie Chang, is a California resident. However, according to NibiruTech,

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the alleged fraud was masterminded by Andrew Jang while he was employed in China.
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Thus, there is minimal, if any, local (California) interest in this case.
The Chinese courts would have a significantly greater interest in resolving such a

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dispute, as well as examining the issue of the parties' admitted creation of fictitious

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business documents to evade Chinese currency restrictions (which defendants contend

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does not involve California). In addition, the burden on California courts and juries would

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be greater than the burden on the Chinese courts, since qualified interpreters would be

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required for most aspects of the case in California, and a Chinese court would be more

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competent to hear NibiruTech's claims because of its familiarity with Chinese language and

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Chinese law.
The additional conditions that NibiruTech proposes be imposed on defendants

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For the Northern District of California

United States District Court

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include requiring defendants to agree to comply with discovery and "evidence submission"

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orders of the Chinese court; to make past and present employees of HJClan available to

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testify in the Chinese court at defendants' cost; and to make documents in defendants'

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possession in the United States available for inspection in China, at defendants' expense.

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NibiruTech also requests that the court order that the statute of limitations be tolled for the

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time the case is pending in the Chinese court; that depositions in the United States proceed

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under California Code of Civil Procedure § 2029; and that defendants pay any final

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judgments rendered in the Chinese actions.

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This court has no authority with regard to how the case proceeds in China. Thus,

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the court will not impose conditions regarding discovery and evidence, testimony of

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witnesses, depositions, or production of documents in the Chinese court. As for making

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past and present employees available to testify in the Chinese court, HJClan has no control

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over any past employees and would have no way of making them available, and outside of

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a pending legal action, the court would have no authority to issue such an order. As for

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requiring that defendants agree to pay any final judgments rendered in the Chinese action,

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that also lies outside this court's jurisdiction. NibiruTech may find it necessary to file a

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separate action seeking enforcement of any judgment.

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The court agrees that the statute of limitations should be tolled for some reasonable
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period of time while the case is pending in China. It appears that both sides may be

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attempting to manipulate the system. It is possible, as alleged by defendants, that

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NibiruTech created fictitious invoices to avoid Chinese governmental regulations or

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restrictions on transfer of funds, in which case NibiruTech might not be eager to file another

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action in China. Alternatively, it may be true, as NibiruTech claims, that the Jangs have

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embezzled funds from NibiruTech, and are thus unlikely to actually appear to defend

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against any civil action brought against them in China (or against any criminal action for

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that matter). If defendants do fail to appear in the Chinese action (notwithstanding having

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agreed to do so), that would establish the lack of an available alternative forum, and the
court would permit NibiruTech to refile the case here.

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For the Northern District of California

United States District Court

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Accordingly, the running of the limitations period will be tolled for four years from the

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date of the dismissal of this action. However, if no action is filed in China within six months

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from the date of this order, the limitation period will not be tolled.

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IT IS SO ORDERED.

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Dated: February 23, 2015
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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