Products and Ventures International v. Axus Stationary (Shanghai) Ltd. et al

Filing 144

ORDER by Judge Yvonne Gonzalez Rogers granting in part and denying in part 106 Motion to Dismiss; denying 117 Administrative Motion to File Under Seal; granting 128 Motion to Strike. (ygrlc2, COURT STAFF) (Filed on 1/18/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PRODUCTS AND VENTURES INTERNATIONAL, Plaintiff, 8 11 ORDER GRANTING IN PART DENYING IN PART MOTION TO DISMISS; GRANTING MOTION TO STRIKE v. 9 10 Case No. 16-cv-00669-YGR AXUS STATIONARY (SHANGHAI) LTD., ET AL., Re: Dkt. Nos. 106, 117, 128 United States District Court Northern District of California Defendants. 12 13 Plaintiff Products and Ventures International brings this action against defendants1 for 14 alleged breaches of contract and tort claims relating to a wooden pencil distribution agreement. 15 The Court previously dismissed the complaint for lack of personal jurisdiction, but granted leave 16 to amend and provided a period for jurisdictional discovery. (Dkt. No. 72.) Plaintiff filed its 17 amended complaint on September 19, 2016 (Dkt. No. 100, “FAC”), specifically alleging against 18 all defendants: (i) Count One, breach of contract; (ii) Count Two, breach of the implied covenant 19 of good faith and fair dealing; (iii) Count Three, intentional interference with contract; and (iv) 20 Count Four, intentional interference with prospective economic advantage.2 21 1 22 23 24 25 26 Currently, plaintiff has effected service on the following defendants: Axus Stationery (Hong Kong) Ltd. (“Axus HK”), Andre Viegas, Highton Ltd., Roberta Trading Corporation, Kenpark Ltd., Howin Investments Ltd., and Noblesse (Hong Kong) Limited (collectively, the “Served Defendants”). Plaintiff is continuing its efforts to serve other defendants that currently reside in the People’s Republic of China, namely: Axus Stationery (Shanghai) Ltd. (“Axus Shanghai”), Shanghai Marco Stationery Co., Shanghai Laikesheng Pen Material Co. Ltd. (“Shanghai Lexon”), and Brian Peifeng Xu (collectively, the “Unserved Defendants”). The Court’s findings in this Order apply only to the Served Defendants, and shall not be deemed to preclude any arguments that could be made by or against the Unserved Defendants. 2 27 28 Additionally, plaintiff brings a fifth claim for Trade Secret Misappropriation against Axus Shanghai only. Because Axus Shanghai has yet to be served in this matter, the Court does not further address that count here. 1 Currently before the Court is the Served Defendants’ motion to dismiss the FAC on the 2 following grounds: (i) lack of personal jurisdiction as to each Served Defendant under Federal 3 Rule of Civil Procedure 12(b)(2) and (ii) failure to state a claim as to certain claims and 4 defendants under Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 106.) Additionally, 5 defendants have moved to strike certain declarations filed by plaintiff in connection with its 6 opposition to defendants’ motion to dismiss. (Dkt. No. 128.)3 Having carefully reviewed the pleadings, the papers and exhibits submitted on these 7 motions, and oral argument from counsel heard on January 10, 2017, and for the reasons set forth 9 more fully below, the Court GRANTS IN PART and DENIES IN PART Served Defendants’ motions 10 as follows: The Court GRANTS defendants’ motion to strike the declarations of Russell and Liao 11 United States District Court Northern District of California 8 (Dkt. Nos. 114, 115). The Court GRANTS defendants’ motion to dismiss Axus HK, Highton, 12 Howin, and Noblesse for lack of personal jurisdiction, and DENIES the same as to Roberta 13 Trading, Mr. Viegas, and Kenpark. The Court GRANTS defendants’ motion to dismiss for failure 14 to state a claim as to Kenpark and Mr. Viegas with regards to Counts One and Two, and GRANTS 15 the motion to dismiss as to Kenpark and Roberta Trading with regards to Counts Three and Four. 16 Thus, the only claims remaining in this action with respect to the Served Defendants are Counts 17 One and Two against Roberta Trading and Counts Three and Four against Viegas. 18 19 I. BACKGROUND Plaintiff is a worldwide supplier of components for use in the manufacturing of wooden 20 pencils. (FAC ¶ 28.) Plaintiff was incorporated in California in 1995 and had its principal place 21 of business in California from 1995 until April 2009. At such time, it re-incorporated under the 22 laws of Delaware, and then subsequently moved its business operations to Italy. (Id. at ¶¶ 1, 28.) 23 24 25 26 27 28 3 In connection with its opposition to the Served Defendants’ motion to dismiss, plaintiff filed an administrative motion to file under seal certain exhibits designated by defendants as confidential. (Dkt. No. 117.) On November 16, 2016, the Court ordered defendants to file a declaration, as the designating party, establishing that the designated material was sealable. (Dkt. No. 122.) On November 28, 2016, defendants responded to the Court’s order and indicated that they are not requesting that the Court seal such documents and that they consent to the documents being filed on the public docket. (Dkt. No. 131.) Accordingly, the Court DENIES plaintiff’s administrative motion to seal the same. 2 1 In 1997, plaintiff entered into a distribution agreement (Dkt. No. 100-1, the “Agreement”) with defendants Shanghai Marco and Marco Trading4 wherein plaintiff would provide Shanghai 3 Marco with trade secrets regarding advanced processes for slat and pencil manufacturing, and 4 Shanghai Marco would, in return, agree to supply plaintiff exclusively with raw materials used for 5 pencil manufacturing. (FAC ¶¶ 28–44; Agreement § 5.) Shanghai Marco also granted plaintiff 6 the exclusive worldwide right to sell Shanghai Marco’s products, with some limited exceptions. 7 (See Agreement § 5.) Additionally, the Agreement had a term of eight years, and PVI had “sole 8 discretion to exercise an option to renew” for an additional eight year term, so long as it satisfied 9 certain minimum annual sales quota requirements. (Id. at ¶ 44.) In 2005, plaintiff exercised this 10 option to renew the Agreement for another term. Relevant to the instant motions, the Agreement 11 United States District Court Northern District of California 2 also contained a choice-of-law provision and a forum-selection clause.5 Mr. Xu executed the 12 Agreement on behalf of Shanghai Marco, and Mr. Viegas on behalf of Marco Trading. (Id. at ¶¶ 13 33–34.) 14 Plaintiff alleges that during its second term under the Agreement, Shanghai Marco and its 15 assignees under the Agreement—namely, Axus Shanghai and Shanghai Lexon—began breaching 16 their obligations under the Agreement. (Id. at ¶¶ 153–54.) Specifically, plaintiff alleges that such 17 parties “stopped making sufficient product available to fulfill [plaintiff’s] orders by deliberately 18 not obtaining sufficient raw materials.” (Id. at ¶ 155.) Instead, Shanghai Marco and its assignees 19 began “selling their product directly to [plaintiff’s] customers (or its customer’s customers) 20 without [plaintiff’s] consent as required under the [Agreement].” (Id. at ¶ 157.) Additionally, 21 throughout this period, at least one other defendant, Kenpark, had direct involvement in the 22 contractual relationship between plaintiff and the signatory defendants. For instance, Mr. Viegas 23 24 25 4 Plaintiff alleges, and defendants do not contest, that for all intents and purposes, Marco Trading has become and is currently known as Roberta Trading. (See FAC ¶ 15.) 5 26 27 28 The choice-of-law provision provides thus: “The applicable law of this contract is the law of the State of California.” (Agreement § 14.) The forum-selection clause provides thus: “If the parties are unable to agree to continue mediation, whether or not with a new mediator, then either party shall be entitled to file suit in state or federal court in San Francisco, State of California.” (Id. at § 15(e).) 3 1 instructed plaintiff “to pay parts of its invoices owed to Shanghai Marco not to Shanghai Marco 2 itself, but to Kenpark as ‘commission’ payments.” (Id. at ¶ 69.) Additionally, Kenpark allegedly 3 provided certain services connected to the Agreement, such as managing the sale of slats from 4 Shanghai Marco and its assignees to plaintiff. (See Dkt. No. 118-1, Viegas Dep. Tr. 222:2–224:9; 5 Dkt. No. 116-15, Emails re: Kenpark bank account.) As to all other defendants, plaintiff contends that they are liable and subject to personal 6 7 jurisdiction in this forum based on its theory that all defendants are alter egos of each other. 8 Generally, plaintiff alleges that “there is such a unity of interest and ownership” among the 9 corporate defendants here that “separate identities of each” “no longer exist.” (Id. at ¶ 144.) According to plaintiff, because the two signatory defendants under the Agreement—now Shanghai 11 United States District Court Northern District of California 10 Marco and Roberta Trading—have been “dissolved, no one would be held to answer for the 12 misconduct alleged” and such would also “condone their repeated practice of transferring money 13 outside of China in an effort to hide it from Chinese tax authorities.” (Id. at ¶ 145.) 14 II. 15 MOTION TO STRIKE In connection with plaintiff’s opposition to the Served Defendants’ motion to dismiss, it 16 filed two declarations purporting to offer interpretations of Chinese law as applied to the evidence 17 gleaned from jurisdictional discovery, namely the declarations of Ronghua Liao (Dkt. No. 114) 18 and Julian Russell (Dkt. No. 115). Defendants argue that such declarations constitute improper 19 expert opinions on Chinese law and should, therefore, be stricken from the record. 20 Under Federal Rule of Civil Procedure 44.1, the Court “may consider any relevant material 21 or source, including testimony, whether or not submitted by a party or admissible under the 22 Federal Rules of Evidence” in determining foreign law. The Ninth Circuit has explained that Rule 23 44.1 requirements are “intended to be ‘flexible and informal’ to ‘encourage the court and counsel 24 to regard the determination of foreign law as a cooperative venture requiring an open and 25 unstructured dialogue among all concerned.” de Fontbrune v. Wofsy, 838 F.3d 992, 997 (9th Cir. 26 2016) (internal citation omitted). The Ninth Circuit further held that the district court has an 27 “independent obligation” to ascertain the relevant foreign law. Id. Thus, courts must still 28 determine whether submissions from parties are sufficiently reliable. See, e.g., Tome Engenharia 4 1 E. Transportes, Ltda. v. Malki, No. 94-CV-7427, 2003 WL 21372466, at *6–7 (N.D. Ill. June 12, 2 2003) (finding inadequate affidavit regarding foreign law where declarant did not disclose nature 3 of legal practice giving him expertise in such law, failed to attach a translation of the guidelines 4 and laws cited, and did not offer any authoritative support for applying guidelines consistent with 5 his opinion) (citing Twohy v. First Nat’l Bank of Chicago, 758 F.2d 1185 (7thCir. 1985)). Here, the declarations submitted by both Russell and Liao do not appear to be sufficiently 6 7 reliable to establish the points of law upon which they purport to opine. Although Liao avers to 8 his relevant legal experience and identifies some Chinese laws upon which he bases his opinions, 9 Liao does not provide the text of such laws nor does he provide any authorities in support of his conclusions regarding such laws. Russell’s declaration lacks even more indicia of reliability, 11 United States District Court Northern District of California 10 failing to cite to any specific laws or to identify relevant legal experience. Accordingly, the Court 12 GRANTS the motion to strike the declarations of both Russell and Liao. 13 In the normal course, such would not discharge the Court’s duty to ascertain the relevant 14 foreign law, and the Court may require further submissions from the parties or engage in its own 15 independent research. See de Fontbrune, 838 F.3d at 997; Tome, 2003 WL 21372466, at *6–7. 16 However, none of the foreign law issues raised in either declaration are relevant to the Court’s 17 rulings as to the Served Defendants’ motion to dismiss. Thus, any further exploration of the same 18 would be an unnecessary expenditure of the parties’ and the Court’s limited resources. 19 III. 20 21 MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION A. Legal Framework A motion under Federal Rule of Civil Procedure 12(b)(2) challenges a court’s exercise of 22 personal jurisdiction over a defendant. Fed. R. Civ. P. 12(b)(2). Where no federal statute governs 23 personal jurisdiction, the Court applies the law of the state in which it sits. 24 Here, California law applies. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 25 800 (9th Cir. 2004). California law allows for the exercise of “jurisdiction on any basis not 26 inconsistent with the Constitution of [California] or of the United States.” Cal. Civ. Proc. Code § 27 410.10. Due process requires that the non-resident defendant have “minimum contacts with [the 28 forum state] such that the maintenance of the suit [would] not offend traditional notions of fair 5 1 play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal 2 quotations omitted). “In judging minimum contacts, a court properly focuses on ‘the relationship 3 among the defendant, the forum, and the litigation.’” Calder v. Jones, 465 U.S. 783, 788 (1984) 4 (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). Personal jurisdiction may be either 5 general or specific. Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223 F.3d 1082, 1086 (9th Cir. 6 2000). The Supreme Court has also acknowledged that, because “the personal jurisdiction 7 requirement is a waivable right, there are a ‘variety of legal arrangements’ by which a litigant may 8 give ‘express or implied consent to the personal jurisdiction of the court.’” Burger King Corp. v. 9 Rudzewicz, 471 U.S. 462, 472 n.14 (1985) (citation omitted). “Parties frequently stipulate in advance to submit their controversies for resolution within a particular jurisdiction,” and “[w]here 11 United States District Court Northern District of California 10 such forum-selection provisions have been obtained through ‘freely negotiated’ agreements and 12 are not ‘unreasonable and unjust,’ their enforcement does not offend due process.” Id. (internal 13 citations omitted). 14 Plaintiff does not contend that defendants are subject to general personal jurisdiction, but 15 rather argue that defendants are subject to jurisdiction either because defendants have consented to 16 jurisdiction or they have met the requirements of specific jurisdiction. 17 Where, as here, the motion to dismiss is based on written submissions the plaintiff need 18 only make a prima facie showing of jurisdiction. Schwarzenegger, 374 F.3d at 800. A plaintiff 19 makes a “prima facie” showing by producing admissible evidence which, if believed, would be 20 sufficient to establish the existence of personal jurisdiction. Ballard v. Savage, 65 F.3d 1495, 21 1498 (9th Cir. 1995). In deciding whether such a showing has been made, a district court must (i) 22 accept as true the uncontroverted allegations in the complaint and (ii) resolve conflicts between 23 facts contained in the parties’ affidavits in a plaintiff’s favor. AT&T v. Compagnie Bruxelles 24 Lambert, 94 F.3d 586, 588 (9th Cir. 1996). In rare circumstances, the contacts of one party may 25 be attributed to another upon a showing that the other party is an “alter ego” of the other. See 26 Ranza v. Nike, Inc., 793 F.3d 1059, 1065 (9th Cir. 2015). 27 28 6 1 2 B. Discussion The Served Defendants move this Court to dismiss them from this action for lack of 3 personal jurisdiction. In its opposition, plaintiff argues that the Court can exercise jurisdiction 4 over Roberta Trading, Kenpark, and Mr. Viegas directly, under either a consent or specific 5 jurisdiction theory. As to the other Served Defendants, plaintiff argues that personal jurisdiction is 6 proper because they are all alter egos of each other. The Court addresses both issues, in turn. 1. Direct Jurisdiction as to Roberta Trading, Kenpark, and Viegas 7 8 9 Plaintiff contends that the forum selection clause included in the Agreement constitutes consent, at least as to Roberta Trading, one of the signatories of the Agreement. As to Kenpark and Mr. Viegas, plaintiff argues that both should be considered bound by the forum selection 11 United States District Court Northern District of California 10 clause because of their close connection to the contractual relationship between plaintiff and 12 Roberta Trading. a. Consent to Jurisdiction per Forum Selection Clause as to Roberta Trading 13 14 15 16 17 18 19 20 21 22 Plaintiff contends that the following clause in the Agreement constitutes consent to jurisdiction in California, at least as to Roberta Trading: “If the parties are unable to agree to continue mediation, whether or not with a new mediator, then either party shall be entitled to file suit in state or federal court in San Francisco, State of California.” (Agreement § 15(e).) Defendants argue that such language is insufficient under California law to constitute consent to jurisdiction. See Global Packaging, Inc. v. Superior Court, 196 Cal. App. 4th 1623 (2011).6 As an initial matter, the parties disagree on whether federal or state law applies in determining the validity and interpretation of a forum selection clause. Defendants raise two arguments in this regard: 23 24 25 26 27 28 6 The Court notes that, even within California, there appears to be a conflict as to the specificity required in an agreement to constitute consent to jurisdiction. Compare Global Packaging, 196 Cal. App. 4th at 1627 (finding that a forum-selection clause must contain a specific consent to personal jurisdiction) with Berard Constr. Co. v. Municipal Court, 49 Cal. App. 3d 710, 721–22 (1975) (finding that a waiver of venue in a forum-selection clause sufficiently constitutes waiver of personal jurisdiction). 7 First, defendants argue that courts in the Ninth Circuit have applied state law in 2 interpreting forum selection clauses, citing Colonial Leasing Co. of New England, Inc. v. Pugh 3 Brothers Garage, 735 F. 2d 380, 381–83 (9th Cir. 1984). However, in light of the Ninth Circuit’s 4 more recent decision in Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509 (9th Cir. 5 1988), defendants do not persuade. In Manetti, the Ninth Circuit addressed the very issue of 6 whether state or federal law applies to the validity and interpretation of a forum selection clause, 7 and explicitly recognized that it had previously applied state law to enforce a forum selection 8 clause in Colonial Leasing. Id. at 512–13. The Ninth Circuit then conducted an Erie analysis and 9 determined that the “federal procedural issues raised by forum selection clauses significantly 10 outweigh the state interests” and, thus, federal law “controls enforcement of forum clauses in 11 United States District Court Northern District of California 1 diversity cases.” Id. (holding additionally that because “enforcement of a forum clause necessarily 12 entails interpretation of the clause before it can be enforced, federal law also applies to 13 interpretation of forum selection clauses”). Defendants have not found other controlling cases to 14 the contrary, and the Court is aware of none.7 Thus, the Court is bound by Manetti and 15 acknowledges that, as a general matter, federal law governs the enforcement and interpretation of 16 a forum selection clause. 17 Second, defendants argue that where there is a choice of law provision, as here, courts in 18 the Ninth Circuit apply the law of the parties’ choosing in interpreting forum selection clauses, 19 citing E&J Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 994 (9th Cir. 2006) (“As stated 20 above, the contract clearly contains a California choice-of-law clause; thus the validity of the 21 forum selection clause should be decided by California law, as the law of the contract, rather than 22 by Ecuadorian law.”). In E&J Gallo, the Ninth Circuit did not opine on the issue at hand here. 23 Rather, the quoted material was made in passing reference during a discussion of comity.8 24 7 25 26 27 The only other case cited by defendants within this circuit for the proposition that state law applies is General Insurance Co. of America v. Fort Lauderdale Partnership, 740 F. Supp. 1483, 1487 (W.D. Wash. 1990) (citing Colonial Leasing, 735 F.2d at 382). Although Ft. Lauderdale was published after Manetti, it fails to address the Ninth Circuit’s decision in Manetti, and, therefore, this Court finds that it is unpersuasive. 8 28 Specifically, the Ninth Circuit in E&J Gallo was asked to review a district court’s denial of a preliminary injunction seeking to enjoin defendant from proceeding with litigation in 8 1 Further, the Ninth Circuit reversed the district court for not enforcing a forum-selection clause 2 quite similar to the one here.9 Thus, the Ninth Circuit’s decision in E&J Gallo did not implicate 3 the concerns addressed in Manetti, in which the Ninth Circuit decided that, where there is a 4 conflict between federal and state law with regards to forum selection clauses, federal law 5 controls. See also WF Capital, Inc. v. Barkett, No. 10-CV-524-RSL, 2010 WL 3064413, at *6 6 (W.D. Wash. Aug. 2, 2010) (applying federal law to enforcement and interpretation of forum 7 selection clause despite Washington choice-of-law provision) (citing Manetti, 858 F.2d at 513). 8 9 10 The Court thus next turns to whether, under federal law, the forum selection clause at issue is sufficient to constitute consent to jurisdiction in California: Plaintiff contends that federal courts in this circuit have found language similar to the United States District Court Northern District of California 11 language at issue here sufficient to constitute consent to personal jurisdiction. For instance, in 12 Chan v. Society Expeditions, Inc., 39 F.3d 1398 (9th Cir. 1994), the district court found that the 13 forum selection clause was insufficient because it dealt only “with venue, not jurisdiction.” Id. at 14 1406. The Ninth Circuit reversed, explaining that challenges “to personal jurisdiction may be 15 waived by either express or implied consent.” Id. The Ninth Circuit held that such a clause, 16 where obtained through freely negotiated agreements and not “unreasonable and unjust,” are 17 enforceable and can constitute consent to jurisdiction. Id.; see also Perlman v. Jackson Hewitt 18 Inc., No. 10-CV-051-LRS, 2010 WL 5470804, at *3 n.4 (E.D. Wash. July 30, 2010) (noting that a 19 “waiver of objection to venue is meaningless if it does not also contemplate a waiver of objection 20 to personal jurisdiction”). 21 22 23 24 25 26 Ecuador. Id. at 984. The Ninth Circuit explained that international principles of comity did not bar the entry of an anti-suit injunction in situations where the parties agreed to litigate their disputes in a certain forum. Id. at 994. The Ninth Circuit also took issue with the district court’s holding that the Ecuadorian court is more competent to decide the key issue, and in so stating, indicated that the choice-of-law clause in the contract specifically identified Californian, not Ecuadorian, law. 9 27 28 The clause indicated that suit “shall be brought only in a court having jurisdiction and venue at the home offices of Winery.” Id. at 987. There was no explicit reference that the foreign company consented to jurisdiction. 9 1 Defendants attempt to distinguish plaintiff’s cited authorities on the ground that the clauses at issue were mandatory forum selection clauses, rather than a permissive forum selection clause 3 as is present here. See Petersen v. Boeing Co., 715 F.3d 276, 278–80 (9th Cir. 2013) (applying 4 federal law to construe a clause “requiring” contract disputes to be resolved in Saudi Arabia); WF 5 Capital, 2010 WL 3064413, at *6 (applying federal law to construe clauses “selecting the federal 6 and state courts of King County, Washington as the forum”); Perlman, 2010 WL 5470804, at *3 7 (applying federal law to clauses making “venue exclusive and mandatory in the federal and state 8 courts of New Jersey”). Defendants contend that the difference between the “treatment of 9 permissive and mandatory clauses is dispositive.” (Dkt. No. 123 at 8.) However, defendants do 10 not actually cite any federal cases creating such a distinction, nor do they articulate why such a 11 United States District Court Northern District of California 2 distinction would ultimately matter. 12 Defendants’ arguments do not persuade. The Agreement explicitly provides contractual 13 permission to file suit in California. (Agreement § 15(e).) Such entitlement would be nullified 14 unless the parties also consented to jurisdiction in this forum. Thus, the Court finds that the forum 15 selection clause here constitutes consent to jurisdiction in California, at least as to Roberta Trading 16 as a signatory to the Agreement. 17 18 b. Binding Effect of Forum Selection Clause as to Kenpark and Viegas Having found that Roberta Trading has effectively consented to jurisdiction in California, 19 the Court next turns to whether Kenpark and Mr. Viegas, by virtue of their connection to the 20 contractual arrangement, should also be bound by the forum selection clause. 21 Specifically, plaintiff argues that in the Ninth Circuit, both parties and non-parties to an 22 agreement can benefit from and be subject to a forum selection clause. See Manetti, 858 F.2d at 23 514 n.5 (“[A] range of transaction participants, parties and non-parties, should benefit from and be 24 subject to forum selection clauses.” (citation omitted)). The Ninth Circuit in Manetti held that 25 certain non-parties to the agreement were subject to the forum selection clause where the alleged 26 conduct was “closely related to the contractual relationship.” Id. (applying forum selection clause 27 to related companies and directors of the same). Similarly, in Holland America Line Inc. v. 28 Wartsila North America, Inc., 485 F.3d 450 (9th Cir. 2007), the Ninth Circuit again held that a 10 1 forum selection clause applied to non-signatories where the “transactions between those entities 2 and [plaintiff] took place as part of the larger contractual relationship between [plaintiff] and 3 [signatory defendant].” Id. at 456 (citing Manetti, 858 F.2d at 511). 4 Defendants argue only that non-signatories are generally not bound by contracts to which 5 they are not parties. See Egan v. Mut. of Omaha Ins. Co., 24 Cal. 3d 809, 824 (1979) (reversing 6 judgments against defendants because they were only agents of the signatory corporation, not 7 actual parties to the contract); Henry v. Ass’d Indem. Corp., 217 Cal. App. 3d 1405 (1990). 8 Defendants, however, do not address the Ninth Circuit precedent in Manetti and Holland America, 9 which specifically hold that, with regards to forum selection clauses, non-signatories can be bound and considered to have consented to jurisdiction where their alleged conduct is closely related to 11 United States District Court Northern District of California 10 the contractual relationship. 12 Here, the Court finds that both Mr. Viegas’s and Kenpark’s alleged conduct is so closely 13 related to the contractual relationship that they too should be bound by the forum-selection clause. 14 Specifically: As to Mr. Viegas, not only did he personally negotiate the Agreement and signed it 15 on behalf of Roberta Trading, he also owned significant interests in Roberta Trading and Shanghai 16 Marco and its assignees throughout the parties’ performance under the Agreement. (Dkt. No. 118- 17 1, Viegas Dep. Tr. 34:22–35:16, 38:5–10, 40:18–41:15, 43:8–11, 121:10–14; Dkt. No. 116-28 at 18 4–5, Roberta Trading’s Responses to Interrogatories; Agreement at p. 10.) Additionally, Mr. 19 Viegas had an active role in the relationship between the parties: he personally managed slat sales 20 to plaintiff (see Dkt. No. 118-1, Viegas Dep. Tr. 24:4–11, 225:24–226:6, 229:7–14; Dkt. No. 118- 21 2, Viegas Dep. Tr. 19:19–24); instructed plaintiff as to how much and which entities to pay for its 22 orders (see Dkt. No. 118-1, Viegas Dep. Tr. 222:2–240:24; Dkt. Nos. 116-10–16, Emails re: 23 payments from PVI); and traveled to California to discuss the business relationship and receive 24 technical assistance from plaintiff (see Dkt. No. 118-1, Viegas Dep. Tr. 136:9–137:13; Dkt. No. 25 113, Declaration of Fairbanks at ¶¶ 9–14). And as to Kenpark, plaintiff alleges that it paid 26 portions of its invoices to Kenpark as “commissions” and Kenpark managed the slat sales in the 27 shipments to plaintiff. (See Dkt. No. 118-1, Viegas Dep. Tr. 222:2–224:9; Dkt. No. 116-15, 28 Emails re: Kenpark bank account.) 11 1 Accordingly, the Court finds that Mr. Viegas and Kenpark are bound by the forum- 2 selection clause in the Agreement and can be considered to have consented to jurisdiction in 3 California by virtue of the same.10 2. Alter Ego Jurisdiction as to other Served Defendants 4 5 Plaintiff argues that the Court may properly exercise personal jurisdiction over Axus HK, 6 Highton, Howin, and Noblesse on the theory that they are each alter egos of the other, as well as of 7 Roberta Trading, Kenpark, and Mr. Viegas. A plaintiff must make a prima facie showing that the 8 following criteria are met to survive a Rule 12(b)(2) motion on an alter ego theory: (1) treating the 9 corporations as separate entities would result in inequity or injustice; and (2) a unity of interest and ownership between the corporations such that their separate personalities do not actually exist. 11 United States District Court Northern District of California 10 Ranza, 793 F.3d at 1073 (citing Doe v. Unocal, 248 F.3d 915, 926 (9th Cir. 2001)). Because the 12 Court finds that plaintiff has not met its burden with regards to the “inequity” prong, it does not 13 address the “unity of interest” prong below. 14 “To establish inequity in the absence of alter ego liability, a plaintiff must plead facts 15 sufficient to demonstrate that ‘conduct amounting to bad faith makes it inequitable for the 16 corporate owner to hide behind the corporate form.” Stewart v. Screen Gems-EMI Music, Inc., 81 17 F. Supp. 3d 938, 963 (N.D. Cal. 2015) (finding inequity where owner treated companies as a 18 single enterprise to “significantly and unfairly reduc[e] the amount of royalties to which [p]laintiff 19 [was] entitled) (citation omitted). Plaintiff argues only in this regard that an inequitable result 20 would occur if the Court does not pierce the corporate veil because the signatory companies were 21 dissolved several years ago, and therefore, plaintiff may not be able to obtain full recovery. See 22 Axon Sols., Inc. v. San Diego Data Processing Corp., No. 09-CV-2543-JM, 2010 WL 1797028, at 23 *2–3 (S.D. Cal. May 4, 2010) (finding city liable under alter ego theory); Las Palmas Assocs. v. 24 Las Palmas Ctr. Assocs., 235 Cal. App. 3d 1220, 1249 (1991) (applying alter ego explaining it 25 10 26 27 28 Because the Court has found that Roberta Trading, Kenpark, and Mr. Viegas have consented to jurisdiction in California, the Court need not reach whether they would also satisfy the requirements of specific jurisdiction. Nevertheless, the Court notes that each would likely be subject to jurisdiction in California under a specific jurisdiction analysis given Roberta Trading’s and Viegas’s entry into the Agreement, and the conduct of all three defendants under the same. 12 would be “unjust to permit those who control companies to treat them as a single or unitary 2 enterprise and then assert their corporate separateness in order to commit frauds and other 3 misdeeds with impunity”). Such is insufficient to satisfy the inequity prong of the alter ego test. 4 See AngioScore, Inc. v. TriReme Medical, Inc., 87 F. Supp. 3d 986, 1014 (N.D. Cal. 2015) 5 (finding alter ego unavailable where there was insufficient evidence to support a finding that 6 “incorporation was undertaken in bad faith or that observing the corporate form would produce an 7 inequitable result”). One of the cases cited by plaintiff also acknowledges the insufficiency of 8 such an allegation: “Difficulty in enforcing a judgment or collecting a debt does not satisfy the 9 requirement of an inequitable act.” Axon Sols., 2010 WL 1797028, at *3 (applying alter ego 10 theory based on allegation that the city intended to dissolve an agency to “wrongfully avoid 11 United States District Court Northern District of California 1 liability for the monies owed to [plaintiff]”); see also Las Palmas, 235 Cal. App. 3d at 1250 12 (applying alter ego where there was “substantial evidence to support that [defendants] formed a 13 single enterprise for the purpose of committing a continuing fraud against buyers”).11 Despite an amended complaint after several months of jurisdictional discovery and several 14 15 rounds of briefing, plaintiff has not been able to allege any other bases that could satisfy the 16 inequity prong of the alter ego test. Accordingly, the Court finds that alter ego is not available 17 here. Because plaintiff does not argue any other bases upon which the Court may exercise 18 jurisdiction over Axus HK, Highton, Howin, and Noblesse, the Court finds that such parties are 19 not subject to personal jurisdiction in this forum and DISMISSES the same. 20 IV. 21 22 23 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM A. Legal Framework Pursuant to Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief may be granted. Dismissal for failure to state a claim under Federal Rule of Civil 24 11 25 26 27 28 Additionally, here, the Court has found that Mr. Viegas is subject to personal jurisdiction on other grounds. Plaintiff conceded at oral argument that the inclusion of the same would reduce the risk of an inequitable result. Moreover, the parties whom plaintiff alleges were Shanghai Marco’s assignees under the Agreement—Shanghai Lexon and Axus Shanghai—have yet to be served, and may yet be proper parties in this action. The inclusion of such parties may further reduce the risk that plaintiff would be unable to recover any damages to which it may be entitled. 13 1 Procedure 12(b)(6) is proper if there is a “lack of a cognizable legal theory or the absence of 2 sufficient facts alleged under a cognizable legal theory.” Conservation Force v. Salazar, 646 F.3d 3 1240, 1242 (9th Cir. 2011) (citing Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 4 1988)). The complaint must plead “enough facts to state a claim [for] relief that is plausible on its 5 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face 6 “when the plaintiff pleads factual content that allows the court to draw the reasonable inference 7 that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 8 (2009). If the facts alleged do not support a reasonable inference of liability, stronger than a mere 9 possibility, the claim must be dismissed. Id. at 678–79; see also In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (stating that a court is not required to accept as true “allegations 11 United States District Court Northern District of California 10 that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences”). 12 “Federal Rule of Civil Procedure 8(a)(2) requires only a ‘short and plain statement of the 13 claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of 14 what the . . . claim is and the grounds upon which it rests.’” Twombly, 550 U.S. at 554–55 15 (quoting Fed. R. Civ. P. 8(a)(2)) (alteration in original). Even under the liberal pleading standard 16 of Rule 8(a)(2), “a plaintiff’s obligation to provide the grounds of his entitlement to relief requires 17 more than labels and conclusions, and a formulaic recitation of the elements of a cause of action 18 will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986) 19 (internal brackets and quotation marks omitted)). The Court will not assume facts not alleged, nor 20 will it draw unwarranted inferences. Iqbal, 556 U.S. at 679 (“Determining whether a complaint 21 states a plausible claim for relief [is] a context-specific task that requires the reviewing court to 22 draw on its judicial experience and common sense.”). 23 24 25 B. Discussion 1. Contract Claims: Counts One and Two Plaintiff brings two contract-based claims against defendants, namely, Count One for 26 breach of contract and Count Two for breach of the implied covenant of good faith and fair 27 dealing. Defendants argue that because Shanghai Marco and Roberta Trading are the only 28 defendants who signed the agreements, they are the only parties that can be bound by, and 14 1 therefore be held liable under, the Agreement. See Egan, 24 Cal. 3d at 824 (reversing judgments 2 against defendants because they were only agents of the signatory corporation, not actual parties to 3 the contract). On such bases, defendants move to dismiss Counts One and Two against all other 4 defendants. 5 Plaintiff first argues that the other defendants are liable under Counts One and Two under 6 the alter ego theory of liability. The Court has already rejected plaintiff’s alter ego argument with 7 regards to personal jurisdiction, and does so again here. 8 Plaintiff then argues that, with regards to Viegas, he should not be dismissed from the action because he was the guiding spirit in the wrongdoing alleged, citing Coastal Abstract Serv., 10 Inc. v. First Am. Title Ins. Co., 173 F.3d 725 (9th Cir. 1999). However, Coastal does not address 11 United States District Court Northern District of California 9 contractual liability for signatory officers. Rather, Coastal holds that officers cannot “hide behind 12 the corporation where [the officer was] an actual participant in the tort.” Id. at 734. Plaintiff 13 provides no other authority for the proposition that Viegas can be held liable under contractual 14 causes of action as an officer of a signatory corporation. Accordingly, the Court DISMISSES 15 Counts One and Two as to Viegas. 16 With regards to Kenpark, plaintiff argues that Kenpark can be held directly liable because 17 it assumed obligations under the Agreement to manage slat sales to PVI, and also earned fees for 18 providing such management services to Shanghai Marco and Shanghai Lexon. However, plaintiff 19 offers no support for finding that Kenpark can, in these circumstances, be held liable under any 20 contractual causes of action. See Henry, 217 Cal. App. 3d at 1416–17 (“There was no direct 21 contractual relationship between [plaintiff] and the [u]nderwriters from which either a breach of 22 the covenant of good faith and fair dealing or a breach of contract action could properly spring.” 23 (citing Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 576 (1973)).12 24 25 26 27 28 12 In certain circumstances, parties can be considered to have assumed liability under the contract when a “party accepts the rights and privileges of a contract.” Pacini v. Nationstar Mortg., LLC, No. 12-CV-4606-SI, 2013 WL 2924441, at *6–7 (N.D. Cal. June 13, 2013). To support an implied assumption of liability theory, “plaintiffs must allege that liabilities were not limited in the transfer of assets, and that the intent of the parties was that they should be transferred.” Id. Here, plaintiff has not presented any facts supporting a theory that Kenpark or Viegas assumed liability under the contract. Merely participating in the contractual relationship or 15 Accordingly, the Court GRANTS defendants’ motion to dismiss Counts One and Two as to 1 2 Viegas and Kenpark. 2. Tort Claims: Counts Three and Four 3 4 Plaintiff brings two tort claims against all defendants, namely Count Three for intentional 5 interference with contract and Count Four for intentional interference with prospective economic 6 advantage. Defendants argue that plaintiff alleges wrongdoing only by Shanghai Marco, its 7 assignees—Shanghai Lexon and Axus Shanghai—Viegas, and Xu, of which only Viegas has been 8 served thus far. As to all other parties, plaintiff bases liability under Counts Three and Four on its 9 alter ego theory, which the Court has already rejected. Plaintiff raises no further arguments in this regard. Accordingly, the Court DISMISSES Counts Three and Four as to Roberta Trading and 11 United States District Court Northern District of California 10 Kenpark. 12 V. 13 LEAVE TO AMEND “Although a district court should grant the plaintiff leave to amend if the complaint can 14 possibly be cured by additional factual allegations, ‘[d]ismissal without leave to amend is proper if 15 it is clear that the complaint could not be saved by amendment.” Zixiang Li v. Kerry, 710 F.3d 16 995, 998 (9th Cir. 2013)) (citations omitted) (alteration in original). “A district court’s discretion 17 to deny leave to amend is ‘particularly broad’ where the plaintiff has previously amended.” 18 Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir. 2013) (quoting Sisseton-Wahpeton 19 Sioux Tribe v. United States, 90 F.3d 351, 355 (9th Cir. 1996)). 20 This is plaintiff’s second opportunity to establish personal jurisdiction and allege facts 21 sufficient to satisfy its alter ego theories of liability after several months of jurisdictional discovery 22 involving several depositions and thousands of pages of document production. Despite such 23 extensive procedures, plaintiff was unable to amend sufficiently its complaint with regards to 24 personal jurisdiction over many of the Served Defendants. However, the Court recognizes that 25 26 27 28 accepting some benefits of certain transactions are insufficient to sustain such a theory. See id. (finding insufficient allegations that defendant accepted “the benefits of the contract”). 16 1 plaintiff received several thousand pages of documents after the close of discovery.13 2 Accordingly, the Court DENIES WITHOUT PREJUDICE plaintiff’s request for leave to amend. 3 Plaintiff may later file a motion for leave to amend should further development of the record 4 warrant such a request. 5 VI. 6 CONCLUSION For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART the motions as 7 follows: 8 1. The Court GRANTS defendants’ motion to strike the declarations of Russell and Liao (Dkt. Nos. 114, 115). 9 10 United States District Court Northern District of California 11 2. The Court GRANTS defendants’ motion to dismiss Axus HK, Highton, Howin, and Noblesse for lack of personal jurisdiction, and DENIES the same as to Roberta Trading, Mr. Viegas, and Kenpark. 12 3. The Court GRANTS defendants’ motion to dismiss for failure to state a claim as to Kenpark and Mr. Viegas with regards to Counts One and Two. 13 4. The Court GRANTS the motion to dismiss as to Kenpark and Roberta Trading with regards to Counts Three and Four. 14 Thus, the only claims remaining in this action with respect to the Served Defendants are 15 Counts One and Two against Roberta Trading and Counts Three and Four against Viegas. 16 Plaintiff does not have leave to amend, but may later file a motion for leave to file an amended 17 complaint.14 18 This Order terminates Docket Numbers 106, 117, and 128. 19 IT IS SO ORDERED. 20 Dated: January 18, 2017 21 ______________________________________ YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE 22 23 13 24 25 26 27 28 The parties raise several disputes over the nature and circumstances surrounding such late discovery. The Court need not address the validity of such disputes here. 14 Plaintiff also requests that the Court allow an evidentiary hearing should it determine that plaintiff’s alter ego allegations are insufficient to allow plaintiff the opportunity essentially to cross-examine Mr. Viegas. Because the Court’s basis for rejecting plaintiff’s alter ego theory does not rely on Mr. Viegas’ testimony concerning the legality of certain corporate practices, the Court finds that an evidentiary hearing on the same would be unnecessary and therefore DENIES such request. 17

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