The Facebook, Inc. v. Connectu, Inc et al

Filing 90

Plaintiffs' Opposition to Pacific Northwest Software and Winston Williams' MOTION to Dismiss for Lack of Personal Jurisdiction re 23 filed by Mark Zuckerberg, The Facebook, Inc. (Cooper, Monte) (Filed on 6/25/2007) Text modified on 6/26/2007 to conform to document caption post by counsel (bw, COURT STAFF).

The Facebook, Inc. v. Connectu, LLC et al

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G. HOPKINS GUY, III (State Bar No. 124811) [e-mail] m I. NEEL CHATTERJEE (State Bar No. 173985) [e-mail] MONTE COOPER (State Bar No. 196746) [e-mail] m THERESA A. SUTTON (State Bar No. 211857) [e-mail] YVONNE P. GREER (State Bar No. 214072) [e-mail] ORRICK, HERRINGTON & SUTCLIFFE LLP 1000 Marsh Road Menlo Park, CA 94025 Telephone: [phone] Facsimile: 650-614-7401 Attorneys for Plaintiffs FACEBOOK, INC. and MARK ZUCKERBERG UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

FACEBOOK, INC. and MARK ZUCKERBERG, Plaint iffs, v. CONNECTU, INC. (formerly known as CONNECTU, LLC), CAMERON WINKLEVOSS, TYLER WINKLEVOSS, DIVYA NARENDRA, PACIFIC NORTHWEST SOFTWARE, INC., WINSTON WILLIAMS, WAYNE CHANG, and DAVID GUCWA AND DOES 1-25, Defendants.

Case No. 5:07-CV-01389-RS PLAINTIFFS' OPPOSITION TO PACIFIC NORTHWEST SOFTWARE AND WINSTON WILLIAMS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION Date: Time: Judge: July 11, 2007 9:30 A.M. Honorable Richard Seeborg

PUBLIC-REDACTED VERSION

PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

Dockets.Justia.com

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. III. I. II.

TABLE OF CONTENTS Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FACTS ............................................................................................................................ 2 A. PNS and Williams' Participated in Activities Directed Towards Californians and Related to This Lawsuit ............................................................. 2 1. Facebook Background .............................................................................. 2 2. ConnectU's Initial Attempts to Circumvent Facebook's Security..............3 3. PNS and Williams Are Hired to Engage in Unlawful Activity .................. 4 a. Importer Harvests Facebook Data ................................................. 5 b. Crawler Is Implemented to Extract Further User Data ................... 7 c. Crawler and Importer Are Used With a Third Program to Spam Californians......................................................................... 8 d. PNS and Williams Target Other California Users..........................8 e. PNS and Williams Fully Appreciated the Wrongfulness of Their Activities and Directed Electronic Attacks at Facebook Nonetheless...................................................................8 B. PNS Has a California Presence.............................................................................9 1. PNS Operates Its Business From California..............................................9 2. PNS Has Contracts with Many California Customers ............................. 10 3. PNS Has Entered Into Additional Contracts With California Businesses .............................................................................................. 11 4. Other Contacts........................................................................................12 LEGAL DISCUSSION..................................................................................................12 A. Exercising Specific Jurisdiction over PNS and Williams is Warranted ............... 13 1. Defendants Have Purposefully Directed Their Activities Toward Facebook In California ........................................................................... 13 a. PNS and Williams Committed Intentional Acts...........................14 b. PNS and Williams Aimed and Caused Harm to Californians.......15 2. The Claims Arise Out Of Defendants' Forum-Related Activities ............ 17 B. PNS And Williams Are Individually Subject to This Court's Jurisdiction ........... 17 C. The Court May Properly Exercise General Jurisdiction Over PNS......................18 1. PNS Conducts Substantial Business In California -- The Economic Realities.................................................................................19 D. The Exercise of General and Specific Jurisdiction Is Reasonable........................21 CONCLUSION ............................................................................................................. 22

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TABLE OF AUTHORITIES Page FEDERAL CASES Amoco Egypt Oil Co. v. Leonis Navigation Co., 1 F.3d 848................................................. 21, 22 Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082 ............................... 15, 16, 17, 19 Bird v. Parsons, 289 F.3d 865 (6th Cir. 2002) citing Compuserve, Inc. v. Patterson, 89 F.3d 1257.............................................................13 Brainerd v. Governors of the Univ. of Alta., 873 F.2d 1257........................................... 13, 15, 17 Calder v. Jones, 465 U.S. 783 ................................................................................. 13, 14, 16, 18 Cf. Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316.................................................................16 Colt Studio v. Badpuppy Enter., 75 F.Supp.2d 1104 ............................................................ 17, 18 Davis v. Metro Productions, Inc., 885 F.2d 515 ........................................................................ 18 Dole Foods v. Watts, 303 F.3d 1104.................................................................................... 14, 15 Gates Learjet Corp. v. Jensen, 743 F.2d 1325 ........................................................................... 19 Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114 ..................................................................................................................... 17 Goldberg v. Cameron, et al., 482 F.Supp.2d 1136.....................................................................15 Gordy v. Daily News, L.P., 95 F.3d 829 .................................................................................... 17 Hanson v. Denckla, 357 U.S. 235..............................................................................................17 Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408.............................................19 Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474 (9th Cir. 1986) cited in Bancroft, 223 F.3d at 1086......................................................................................19 Int'l Shoe v. Washington, 326 U.S. 310 ............................................................................... 13, 19 Keeton v. Hustler Magazine, 465 U.S. 770 (1984) citing Calder v. Jones, 465 U.S. 783....................................................................................18 Lake v. Lake, 817 F.2d 1416 ..................................................................................................... 17 Ochoa v. J.B. Martin & Sons Farms, Inc., 287 F.3d 1182..........................................................13 Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 ...................................................... 19 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797............................................. 12, 13, 14 Winery v. Graham, 2007 WL 963252, at 5 ................................................................................ 18 - ii PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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TABLE OF AUTHORITIES (continued) Page STATE CASES Foster v. Mooney Aircraft Corp., 68 Cal.App.3d 887 ................................................................ 19 Mihlon v. Superior Court, 169 Cal.App.3d 703 ......................................................................... 18 Paneno v. Centres for Academic Programmes Abroad Ltd., 118 Cal.App.4th 1447 (2004) citing Vons Companies, Inc. v. Seabest Foods, Inc., 14 Cal.4th 434.....................................19 Seagate Tech. v. A. J. Kogyo Co., 219 Cal.App.3d 696..............................................................18 Taylor-Rush v. Multitech Corp., 217 Cal.App.3d 103................................................................18 STATE STATUTES Cal. Penal Code Section 502 ..................................................................................................... 22

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I.

INTRODUCTION Pacific Northwest Software ("PNS") and Winston Williams ("Williams") are subject to

the jurisdiction of this court. While PNS and Williams claim they have little or no contact with California or with the specific acts causing harm to plaintiffs in California, the facts tell a different story. Under any reasonable interpretation of specific jurisdiction case law, PNS and Williams are subject to the jurisdiction of this court. Both PNS and Williams targeted Californians when inflicting their harm. They helped write a computer program called "Facebook Importer" that was created to harvest email addresses fro m Facebook's California-based website, including its tens of thousands of registered users who were students at California schools. They even documented the extraction of email addresses from California schools. Both PNS and Williams hosted the program on their computers. Williams and PNS, along with the other defendants, attempted to hide their activity by selecting randomized proxy servers to attack Facebook. Some of these servers were based in California. PNS, Williams, and the other defendants then used the email addresses to spam registered Facebook users (and the registered users of three other major California-based social networks) in California. PNS is also subject to the general jurisdiction of this Court. PNS' California-based clients have been a substantial part of PNS' business. PNS has operated regularly and continuously in California through both an independent contractor and a resident quality assurance director whose staff was also located in California. PNS has entered into contracts with California companies, including Google and CraigsList, with California choice of venue obligations. PNS representatives regularly travel to California, contact parties in California, and engage in business in the state. Finally, PNS has a substantial ownership interest and business relationship with San Francisco-based The Records Portal Company. Given the substantial role of PNS in the California economy, the intentional targeting of Facebook by PNS and Williams in California, and the subsequent spamming of California residents orchestrated with the assistance of PNS and Williams, jurisdiction should be exercised over these parties. -1PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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II.

FACTS PNS' and Williams' purposeful activities against Facebook are sufficient to support

minimum contacts necessary for specific jurisdiction. Moreover, when those actions are considered in conjunction with PNS' independent, systemat ic and regular activities within California, general jurisdiction can also be properly found. A. PNS and Williams' Participated in Activities Directed Towards Californians and Related to This Lawsuit. 1. Facebook Background

Facebook is a social network website created in February 2004 to link college students together. Decl. of Monte Cooper In Supp. of Opp'n to Mot. to Dismiss ("Cooper Decl.") Ex. 1 at 119:6-120:20. One of the first three colleges to operate on the site was Stanford University. Id. Ex. 1 at 132:15-133:14; Ex. 2. In June 2004, Zuckerberg relocated Facebook to Silicon Valley, where it eventually incorporated. Id. Ex. 1 at 93:13-94:10, 193:6-11; Ex. 3. As of August 9, 2004, Facebook used servers located in California to host the website. Id. Ex. 1 at 165:13-166:4; Ex. 4. Facebook, Inc.'s principal place of business has, at all times since at least February 2005, been in Palo Alto. Id. Ex. 1 at 214:23-215:8; Ex. 5. Facebook's popularity exploded, and by July 3, 2005, the website had 2.8 to 3 million registered users, many of them students at California schools. Id. Ex. 1 at 245:22-246:12; Ex. 6. Since its founding, Facebook incorporated securit y measures that were designed to prevent users from collecting the profile information, such as email addresses, of other users. Id. Ex. 1 at 124:20-130;10, 133:15-134:9. For instance, Facebook was designed to ensure that a registered user could not see the email addresses or profile information of anyone who was not a friend of the user, or a student at the same school as the user. Id. at 127:14-131:1, 133:15-134:9, 239:6-240:10. Further, when an individual began browsing an inordinate number of profiles, the user was automatically blocked by Facebook in order to ensure that email addresses and profile information were not being harvested for purposes of spamming or harassment. Id. at 127:14130:25, 239:6-240:10.

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2.

ConnectU's Initial Attempts to Circumvent Facebook's Security

ConnectU was formed by Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra. Id. Ex. 7; Ex. 8 at 1, 6. In May 2004, ConnectU engaged iMarc LLC to build a website to compete with Facebook. Id. Ex. 9 at 30:21-31:9. The popularity of Facebook prompted ConnectU's founders to instruct iMarc to "copy Facebook." Id. Ex. 10 at 12.1 Once iMarc built the ConnectU website, ConnectU's founders tried to build its user base by acquiring "fast and free" the email accounts of Facebook's registered users, as well as other information, such as course data, that Facebook gathered for its students. Id. Ex. 9 at 67:9-70:6; Ex. 10 at 798; Ex. 14 at 3865-69. To accomplish this, several defendants hid their identities fro m Facebook by employing the user accounts and passwords of friends to access the Facebook site ­ including, apparently, after Facebook started to operate in California. Id. Ex. 9 at 72:17-76:25; Ex. 11 at 24:10-26:25; Ex. 12 at 30:21-31:11; Ex. 13 at 43:16-44:10, 45:9-47:6. They also engaged friends to surreptitiously harvest email addresses o f Facebook users. Id. Ex. 10 at 659. Realizing that manual efforts to take information was ineffective, ConnectU's founders asked iMarc to develop a software program to gain unauthorized access to the Facebook site and substitute the user's ID "with [other users' ID] numbers to grab people's email addresses." Id. Ex. 10 at 798. iMarc's software engineers refused to do so because they were concerned the email addresses would be used for unlawful spamming. Id. Shortly afterward, as iMarc suspected, ConnectU's founders spammed "thousands" of students whose email addresses had been taken fro m Facebook with invitations to join ConnectU. Id. at 622. Every one of the invitations used false header information ­ what iMarc's engineers described as "a bogus `From' address" ­ from the fictitious students [e-mail], [e-mail], [e-mail], and [e-mail]. Id. This spamming, which was directed at California schools among others, prompted one university to inform ConnectU's founders that
1

Exhibit 10 is a compilation of various emails produced by iMarc LLC. Because the jurisdictional discovery cites are extensive and many concern confidential information, Facebook has compiled multiple documents from individual productions as the Exhibits attached to the Declaration of Monte Cooper as Exhibits 10 (iMarc), 14 (ConnectU), 18 (David Gucwa),19 (PNS), 20 (Wayne Chang exemplars), and 25-26 (ConnectU by different production). References to cites in these exhibits are to the Bates Number. E.g., "Ex. 19, at 2096" refers to the document with the bates-number PNS02096. PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND -3WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL
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they were in violation of the Federal Can-Spam Act. Id. Ex. 14 at 7512-17. 3. PNS and Williams Are Hired to Engage in Unlawful Activity

Because iMarc would not engage in unlawful activity, ConnectU hired Defendants PNS and Chang in late 2004 and early 2005 to develop the program iMarc refused to create. The program was named "Importer", and was both written and implemented well after Facebook had re-located in California and incorporated. Importer was part of a broader effort to expand the ConnectU platform. It was designed to harvest Facebook email addresses for spamming via a system called "Social Butterfly." See id. Ex. 9 at 107:2-24; Ex. 15 at 148:20-150:13; Ex. 16 at 72:2-73:20, 86:23-88:21; Ex. 17 at 19:14-20:9; Ex. 18 at 22-25 (15:03:25-18:44:27); Ex. 19 at 1766-77. Importer was hosted both on Williams' own and PNS' servers. Id. Ex. 17 at 45:1449:12, 65:9-69:13, 156:17-157:14, 159:23-16:15. Essentially, Importer was used to access Facebook servers in California and steal California users' email addresses and other profile information from the Facebook website. PNS staffed the ConnectU account with nine people. Id. Ex. 19 at 1766-77, 571135; Ex. 21 at 239:20-23. Of those, at least five of PNS' employees, engineers and consultants -- Defendants Williams, Gucwa, and Chang, as well as Joel Voss and John Taves -- actively participated in the development and implementation of the Importer and Social Butterfly programs. Id. Ex. 14 at 8392; Ex. 16 at 30:6-31:10, 58:8-60:13, 101:15-103:11; Ex. 18 at 48 (11:29:31-11:30:03); Ex. 19 at 15. Chang "led the development of Social Butterfly with David Gucwa." Id. Ex. 14 at 9887, 11073; Ex. 19 at 15, 2096. However, at some point, Williams "took over the project completely."2 Id. Ex. 19, at 15. Williams actively participated in every stage of Importer's design and development, sometimes assisted by Voss. Id. Ex. 9 at 85:22-87:3; Ex. 15 at 148:20-151:3; Ex. 22 at Nos. 3, 4; Ex. 23 at No. 17.1. Taves also was deeply involved in Importer development efforts, including suggesting that Importer invitations be capped each night and progressively increased over time. Id. Ex. 14 at 6537, 8392; Ex. 18 at 134; Ex. 19 at 842-43, 1238. Taves prepared PNS' invoices for payment by ConnectU. Id. Ex. 14 at 9768-69.

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a.

Importer Harvests Facebook Data

Importer harvested Facebook user personal information, including email addresses, sent those Facebook users unsolicited emails wit h false headers, and added the stolen user data to ConnectU's databases. Id. Ex. 16 at 101:15-103:11; Ex. 18 at 22 (15:16:29-15:18-24), 23 (15:19:07-16:07:54); Ex. 19 at 2096. The architecture was set out in a document authored by Defendants, and is illustrated (with annotations added by Facebook's counsel to explain the functions) as follows:

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See id. Ex. 19 at 2096. As reflected in the architecture, Importer logged into Facebook using a borrowed or falsified user account and password, imported profile and email account information from a registered user, and then emplo yed a "grabber" to "grab email addresses from the friends listed on that account," "send out an invite email" and "add the email to a master database." Id. See also Ex. 18 at 57 (12:02:53-12:06:49). PNS and Williams customized portions of the underlying software to run solely against Facebook. Id. Ex. 16 at 175:24-177:21. As a result, many California registered users of Facebook had their profile information and email addresses, as well as the email addresses of their friends, "grabbed" and imported into ConnectU. See, e.g. id. Ex. 19 at 310177; Ex. 26 at 172. PNS and Williams designed the Facebook Importer to avoid detection. PNS used fake or borrowed login credentials to access the California-based Facebook website, masqueraded as a user web browser; and routed these requests through numerous third party servers. Id. Ex. 16 at 101:15-104:20; Ex. 18 at 22 (15:16:29-15:18:24), 23 (15:19:07-16:07:54). Among the fake login credentials PNS employed with Importer to deliberately cause "huge alarms at thefacebook" were email accounts associated with California schools, including UCLA and Stanford. Id. Ex. 18 at 76 (17:34:22-17:57:19). Williams and PNS also designed Importer to hide its existence and source by sending its requests to Facebook through thousands of randomized servers, known as "proxy servers." Id. Ex. 18 at 56 (11:48:39­11:53:44); Ex. 19 at 2096. At least one of these server clusters used by Facebook was located and operated out of California by a Concord-based company called "webquarry.com." Id. Ex. 14 at 4299, 6535; Ex. 24. The use of webquarry was known to PNS. Specifically, in February 2005, Chang received notice from webquarry.com suspending Defendants' account after Facebook had complained about attacks coming from Defendants using webquarry.com servers, and he shared this information with Williams, Taves, Gucwa, Voss and Cameron Winklevoss. Id. Ex. 19 at 842-43. Williams, Chang and Gucwa were then later instructed by Cameron Winklevoss to determine if there was a "way to prevent facebook from telling which accounts have been imported, so they don't reset the password, etc." Id. Ex. 14 at 4243. -6PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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b.

Crawler Is Implemented to Extract Further User Data

Another algorithm utilized by Importer was a "Crawler" program Id. Ex. 19 at 2096. Crawler retrieved Facebook user ids and then grabbed the profile information for each id in order to import email addresses associated with the user's "friends." Id. Ex. 18 at 75 (16:44:12­ 17:02:47). Crawler permitted Williams and PNS to complete a "mass mailer" that, in conjunction with Crawler, "started snatching up [Facebook] emails by the huge scoop." Id. Ex. 19 at 1768-69. The PNS billing records show that Defendants scooped up "millions of files (literally)" from Facebook, including the profiles of thousands of students at California schools. Id. at 1769. PNS and Williams expressly targeted Facebook's California users with Crawler in earlyto-mid 2005. See, e.g., id. Ex. 14 at 10359, 8392, 8657; Ex. 19 at 1767-69, 310455, 310177-79, 310185-86. The database log generated on PNS' computers by the importer/crawler code establishes this fact. For instance, that log generated the following information about one California student whose Facebook profile was imported: grabbed crawled "[e-mail]";3" 8 profiles in Ms. Tamaunt, including some from friends at 1. other California schools; and

"imported" the profiles into ConnectU's database.

Cooper Decl. Ex. 19 at 310177 (log generated by the code in Cooper Decl. Ex. 19 at 281469-73). As the log indicates, the script started at "/home/www/connectu.com/Importer/fetch/python/ dynacrawl.py" and accessed "http://www.thefacebook.com/." Id. The log further shows repeated access to Ms. Tamaoki's Facebook account in order to grab, scan and import her friends' profiles. Id. The log also reports when Defendants' script was unable to complete the import because Facebook actually was trying to stop the attack. Facebook became aware of ConnectU's attempts to circumvent its security and took various preventative measures. Id. Ex. 1 at 244:5-19. As a result, PNS and Williams "counter-attacked," and inserted into the source code a funct ion that would print out "no e-mail found, fb suck ..." whenever importer's crawler function encountered Facebook email accounts that were at that time blocked from being harvested. Id. Ex. 19 at
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Claremo nt-McKenna College is located outside Los Angeles, California. PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND -7WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL
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281472-73, 310177. This was apparently the case for at least two of Ms. Tamaoki's friends' profiles. Id. at 310177. c. Crawler and Importer Are Used With a Third Program to Spam Californians

Importer and Crawler were also used by a third tool created by PNS and Williams branded "Social Butterfly." Using the imported email addresses from Facebook that had been grabbed and scanned, PNS and Williams then programmed Social Butterfly to send invitat ions to Facebook's registered users to join ConnectU. Id. Ex. 15 at 148:20-150:16; Ex. 16 at 124:19127:25; Ex. 19 at 2096; Ex. 25 at 1380-83; Ex. 26 at 2972. These invitations were sent to California students and residents by ConnectU's "webmaster" masquerading as a "friend," with misleading header information to create the appearance of a genuine e-mail message. Id. Ex. 1 at 241:8-242:24; Ex. 26 at 172. Students, including California students, were fooled into believing they had received an email from someone they knew. Id. See also Ex. 19 at 310177. In response, Facebook again took preventative measures to try and block ConnectU's spamming. Id. Ex. 1 at 241:8-244:1. d. PNS and Williams Target Other California Users

PNS and Williams also used Importer to create other tools to import email account and profile information from other large California-based social networking websites, including San Francisco's Friendster and Hi5 social networks, and Los Angeles-based Myspace.com. Id. Ex. 16 at 93:25-95:1, 210:22-212:15; Ex. 19 at 2096. This permitted PNS, Williams and the other Defendants to reach even more California residents and citizens. e. PNS and Williams Fully Appreciated the Wrongfulness of Their Activities and Directed Electronic Attacks at Facebook Nonetheless

Defendants knew that their efforts to steal email addresses and then spam were unlawful. Id. Ex. 10 at 798; Ex. 14 at 4243; Ex. 19 at 15, 842-43. From the beginning, they acknowledged that they would have to play "cat and mouse" because, "once thefacebook" caught on, Facebook would "shut out [their] script." Id. Ex. 18 at 23 (16:08:06­16:09:10). In fact, Facebook did "catch on" and tried to prevent Defendants from hacking into its computers. Id. Ex. 1 at 241:8-8PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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244:1; Ex. 19 at 842-43, 281472-73, 310177. Williams spent an entire day "fixing" the program to circumvent new protective measures developed by Facebook. Id. Ex. 19 at 1767. Williams even admitted in his billing records that he "[tried] to get into Facebook" and to "put together [a] javascript engine to decode e-mail addresses" because Facebook locked them out. Id. He eventually "fixed Importer to pull profiles from thefacebook," and added a feature to Importer that would save Facebook users' email passwords. Id. Voss worked alongside Williams on these efforts. Id. Ex 16 at 58:3-18; Ex. 19 at 571138 ("finished Importer with joel"). In May, 2005, reflecting on the combined efforts of Williams, PNS, the development team, and ConnectU, Chang noted to Taves that Social Butterfly "illegally uses logins and passwords procured from [ConnectU] users who use [Social Butterfly] to log into the other networks so it can spider" friends from other networks, particularly Facebook Id. Ex. 19 at 15 (emphasis added). At almost the same time, PNS and Williams' statistics show that on one day alone in May, 2005, there were 10,195 imports by ConnectU, 279,641 queued email invitations, 204,589 rows in PNS' database field checked, and 148,142 invitations actually sent by ConnectU. Id. Ex. 26 at 2972. B. PNS Has a California Presence

Beyo nd the repeated and extensive contacts PNS developed with California, in general, and Facebook, in particular, through its development and hosting of Importer and Social Butterfly and the millions of files it downloaded and millions of invitations it sent, PNS also has substantial, cont inuous and systematic contacts with the state via other business. In support of its Motion to Dismiss, Taves wrote that PNS does not "own" any office space in California. Taves Decl., ¶¶ 4-5. PNS' website boasts, however, that it "provides virtual development teams to many companies," including in California. Cooper Decl. Ex. 27. As set forth below, PNS' presence ­ virtual or otherwise -- in California is substantial and continuous. 1. PNS Operates Its Business From California

PNS hired Keith Benedict, a California resident, as an independent contractor. Id. Ex. 21 at 249:24-250:4, 251:16-22. Benedict has been working for PNS for at least two years. Id. at 233:17-19. Benedict is a developer lead for PNS, writes software for California clients, engages -9PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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in client development efforts on behalf of PNS, has signature authority to enter into contracts for PNS, and communicates "regularly" with PNS principals in Washington state. Id. at 249:24250:2, 233:17-23, 251:12-15, 228:11-229:1, 250:20-22. PNS purchased equipment for Benedict to enable him to perform his work, and reimburses his business expenses. Id. at 251:25-252:13. PNS also previously engaged California resident Greg Deacon as a Quality Assurance Manager. Id. at 246:6-20. Deacon received assignments directly from Tom Hayner, a PNS principal. Id. at 247:11-15. Deacon worked for PNS for at least two years, and had staff who assisted him in his work for PNS. Id. at 234:1-4, 249:3-5. Deacon's staff included, at least, David Perkins, Fred Pampo, Joel Stair, and Sam Oh, all of whom are California residents. Id. Ex. 19 at 386; Ex. 21 at 255:16-256:2; Ex. 22 at No. 2. In Deacon's role, he and his team supported at least one California company, Records Portal. Id. Ex. 19 at 386. Deacon's QA team also apparently supported all large projects for PNS, including a project for Credit Suisse. Id. at 1149. PNS purchased equipment for Deacon to enable him to perform his work for PNS, and PNS reimbursed his expenses. Id. Ex. 21 at 248:16-25. 2. PNS Has Contracts with Many California Customers

PNS has several California-based clients, which have generated at least $600,000 for PNS in the last two years. Cooper Decl. Ex. 21 at 306:24-307:1; Ex. 22 at No. 2. PNS' Californiabased income amounts to approximately 7.5% of the total revenue generated by PNS since its inception, and approximately 33% of its average annual gross revenue.4 Since 2005, PNS has had relationships with the following California companies: Southern California's Chula Vista Elementary School District (developing 50 websites in 43 district schools for $64,449) (id. Ex. 19 at 400; Ex. 21 at 288:3-7; Ex. 22 at No. 2; Ex. 30); Los Angeles' Application Science and Technology (AST) (developing website for $103,646) (id. Ex. 19 at 387; Ex. 22 at No. 2); San
4

In his declaration, Taves suggested that only 2% of PNS' revenue could be attributed to PNS' California business. Taves Decl., ¶ 11. In PNS' deposition, Taves testified that he came up with this estimate in "seconds" from his memory, made no effort to calculate the actual figure or talk to any of his colleagues to ensure it was accurate, and admitted that he failed to include relevant data. Cooper Decl. Ex. 21 at 237:18-238:13, 258:5-20, 270:7-271:7. This is not the first time false factual statements have been made in this case with respect to jurisdiction. At the case management conference, Facebook will discuss a more serious and alarming situation with other defendants related to a jurisdictional challenge in this case which will likely give rise to a motion for sanctions. PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND - 10 WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL
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Diego's Wireless Knowledge, Inc. (website development services for $200,000) (id. Ex. 21 at 305:22-306:2, 306:24-307:1)5; Examkrackers (website development for at least $83,270) (id. Ex. 22 at No. 2; Ex. 31); Know-the-Course(website development for $30,500) (id. Ex. 22 at No. 2; Ex. 32); City Ticket Exchange, located in California (website development for $37,000) (id. Ex. 22 at No. 2; Ex. 33); Nomad Cows ($12,000 for services), Michele Miller ($3,375 for services), Chadstar ($47,427 for services), and New Country Financial ($12,150 for services) (id. Ex. 22 at Nos. 1-2). In addition to the extensive California client list above, one company is worthy of particular note. San Francisco's The Records Portal Company and PNS have a business relationship. Id. Ex. 19 at 398. In 2005 PNS acquired a 10 percent ownership interest in the entity. Id. At that time, PNS also became Records Portal's exclusive provider of software development services -- PNS considered itself Records Portal's "engineering department." Id. Ex. 19 at 398; Ex. 21 at 266:25-5. Mike Hayner, a PNS principal, is a member of Records Portal's management team (id. Ex. 28), and PNS is the administrative contact for Records Portal's domain registration. Id. Ex. 19 at 398; Ex. 29. Records Portal was not listed in PNS' interrogatory responses as a California-based contact. Id. Ex. 22 at Nos. 1, 2. 3. PNS Has Entered Into Additional Contracts With California Businesses

PNS entered into at least one contract each with Google and craigslist.com, both California-based companies. Id. Ex. 21 at 249:7-13; Ex. 34. PNS admits that all of its advertising is accomplished through Google, and PNS has been advertising with Google since at least 2005. Id. Ex. 19, at 768; Ex. 21 at 277:4-17. An agreement is required in order to post advertisements on Google's website. Id. Ex. 34. In 2005, PNS' advertising budget with Google was $120/day (or, approximately $45,000/year). Id. Ex. 19 at 768. PNS generated many inquiries from its Google ad. Id. Ex. 21 at 288:10-18. In order to use CraigsList, PNS was required to agree to CraigsList's Terms of Use, which are governed by California law. Id. Ex. 35.
5

PNS did not include Wireless Knowledge in its interrogatory response as a California contact. When questioned about this omission, Taves stated he made no effort to consult with his colleagues or review PNS' records to determine if its interrogatory responses were complete and accurate. Cooper Decl. Ex. 21 at 303:13-307:21. PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND - 11 WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL
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4.

Other Contacts

PNS routinely engaged in business in California. Earlier in 2007, PNS prepared a proposal to solicit business from Mark Monitor, a California company. Id. Ex. 19 at 1848. That project, if won, would have earned PNS upwards of $140,000. PNS currently has at least one other potential California client, Shapely Shadow (from which it already has collected at least $1,440). Id. Ex. 21 at 257:12-14; Ex. 22 at No. 2. PNS also provided significant development work for Defendant ConnectU and i2Hub. Id. Exs. 19 at 1766-77, 1768. Both of these companies, though not based in California, target California schools and tens of thousands of California students. See, e.g., id. Ex. 19 at 15; Ex. 26 at 172. In fact, the spam invitations that California Facebook users received as a result of PNS' and Williams efforts on Social Butterfly stated "ConnectU also has features that other networks don't have, like ... integration with the #1 online collaboration service on college campuses ­ i2hub." Id. Ex. 26 at 172. Similarly, PNS developed a program "that allowed [PNS customer] Asentrix to participate in Operation Chimera for [Los Angeles] County." Id. Ex. 19 at 388. III. LEGAL DISCUSSION The current proceedings are based on written materials. When a motion to dismiss for personal jurisdiction is based on written materials rather than on an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). In such cases, the Court need only inquire into whether the plaintiff's pleadings and affidavits make a prima facie showing of personal jurisdiction. Id. Although the plaintiff cannot rest on the bare allegations of the complaint, uncontroverted allegations in the complaint must be taken as true. Id. Significant ly, conflicts between the parties over statements contained in affidavits must be resolved in the plaintiff's favor. Id. Thus, virtually all conflicts between statements in Taves' and Williams' Declarations, and the statements made from the documents attached to the Declaration of Monte Cooper referenced herein, must be resolved in favor of Facebook. A. Exercising Specific Jurisdiction over PNS and Williams is Warranted

The Ninth Circuit has a three-part standard for finding specific jurisdiction: 1) that the - 12 PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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out-of-state defendant purposefully directed its activities toward residents of the forum state or otherwise established contacts with the forum state; 2) that the plaintiff's cause of action arises out of or from the defendant's forum-related contacts; and 3) that the forum's exercise of personal jurisdiction in the particular case is reasonable. Brainerd v. Governors of the Univ. of Alta., 873 F.2d 1257, 1259 (9th Cir. 1989).6 These standards are to be applied "flexibly." See Ochoa v. J.B. Martin & Sons Farms, Inc., 287 F.3d 1182, 1188 n.2 (9th Cir. 2002). When applying this standard to a corporation, such as PNS, contacts can be assessed according to the contacts of its agents and employees. Int'l Shoe v. Washington, 326 U.S. 310, 316-317 (1945). If the acts of PNS' agents and employees are within the course and scope of their employment, their acts will be attributed to the corporation for jurisdictional purposes. See id. Defendants incorrectly argue that to prove jurisdiction Facebook must show that they "purposefully availed themselves of the benefits and protections of California law." Mot. to Dismiss at 5. Rather, courts exercise jurisdiction over defendants in tort actions where defendants' act has an effect in the forum state, even if the act itself takes place outside state boundaries. Schwarzenegger, 374 F.3d at 802-03. 1. Defendants Have Purposefully Directed Their Activities Toward Facebook In California

"A showing that a defendant purposefully directed his conduct toward a forum state ... usually consists of evidence of the defendant's actions outside the forum state that are directed at the forum. . . ." Schwarzenegger, 374 F.3d at 803. "Purposeful direction" is established by (1) Defendants' commission of an intentional act; (2) Defendants' express aiming at the forum state; and (3) Defendants' causing harm that they know is likely to be suffered in California. Id., citing Calder v. Jones, 465 U.S. 783 (1984). Defendants' acts meet all three parts. a. PNS and Williams Committed Intentional Acts

Defendants intentionally tried to harvest email addresses of California college students
6

When a defendant purposefully directs activities into the forum, personal jurisdiction is presumed to be reasonable. Brainerd, 873 F.2d at 1260, citing Burger King, 471 U.S. at 477; see also Bird v. Parsons, 289 F.3d 865, 875 (6th Cir. 2002) citing Compuserve, Inc. v. Patterson, 89 F.3d 1257, 1268 (6th Cir. 1996). - 13 PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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fro m a California based website service using (at times) California proxy servers, and then sent them unso licited email. See Schwarzenegger, 374 F.3d at 806. Defendants incorrectly argue their actions were random, fortuitous or attenuated contacts over which they had no control. See Calder, 465 U.S. at 789. To be sure, PNS and Williams "are not charged with mere untargeted negligence. Rather, their intentional, and ... tortious, actions were expressly aimed at California" as well as elsewhere Id. See, e.g., Cooper Decl. Ex. 10 at 798; Ex. 14 at 4243; Ex. 18 at 22 (15:16:29-15:18-24), 23 (15:19:07-16:07:54); Ex. 19 at 15, 842, 2096, 310177; Ex. 26 at 172. Specifically, Facebook alleges that Defendants (1) provided a means for accessing Facebook's computers (FAC ¶¶ 17, 29); engaged in unauthorized access of the Facebook website (FAC ¶¶ 18, 19, 27); (3) took extensive amounts of data from Facebook's computers (FAC ¶¶ 18, 28, 34, 53); (4) used the pilfered data (FAC ¶¶ 22, 29, 34); and (5) sent unso licited commercial email to California residents (FAC ¶¶ 22, 43, 52). These allegations alone are sufficient to meet the first prong of the effects test. Dole Foods v. Watts, 303 F.3d 1104, 1111-12 (9th Cir. 2002) (holding that allegations of intentional acts are sufficient to satisfy first prong of the Calder test). In addition, jurisdictional discovery has shown that PNS and Williams designed and implemented the software utility to access the Facebook website without authorization and to steal email account information from Facebook while Facebook was operating in California. Cooper Decl. Ex. 14 at 10359, 8392; Ex. 16 at 59:3-18; Ex. 19 at 2096, 310455. Such access was gained by repeated and deliberate circumvention of Facebook's security mechanisms. Id. Ex. 14 at 4243, 11039; Ex. 16 at 101:15-104:20; Ex. 18 at 22 (15:16:29-15:18-24), Ex. 23 (15:19:0716:07:54), 56 (11:48:39­11:53:44). Even after Facebook made deliberate efforts to prevent PNS and Williams from hacking into its computers, PNS and Williams went out of their way to find "solutions." Id. Ex. 1 at 244:5-19; Ex. 10 at 798; Ex. 14 at 4243; Ex. 18 at 22 (15:16:29-15:1824), 23 (15:19:07-16:07:54); Ex. 19 at 15, 842, 2096, 310177; Ex. 26 at 172. Indeed, PNS and Williams logged many hours scooping up "millions (literally)" of Facebook emails and files, for which ConnectU paid PNS. Id. Ex. 19 at 1768-69. PNS and Williams then used the stolen email addresses to send "invitations" to Facebook users, including those in California, in an effort to entice them to join ConnectU's competing website. Id. Ex. 1 at 241:8-242:25; Ex. 15 at 148:20- 14 PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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150:16; Ex. 16 at 124:19-127:25; Ex. 19 at 2096, 310177; Ex. 25 at 1380-83; Ex. 26 at 172, 2972. b. PNS and Williams Aimed and Caused Harm to Californians.

PNS and Williams expressly aimed their conduct at Facebook in California and caused the intended harm. Courts find express aiming (and therefore specific jurisdiction) "where the defendants knew that their actions would have a potentially devastating effect on the plaintiff, who resided in California, and that the brunt of the injury caused by their actions would be felt in California." Brainerd, 873 F.2d at 1259, citing Calder, 465 U.S. at 790. See also Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1087 (9th Cir. 2000). PNS and Williams' actions were expressly aimed at Facebook, which was operating in California, and were even partially generated from California servers. See Goldberg v. Cameron, et al., 482 F. Supp. 2d 1136, 1145-46 (N.D. Cal. 2007) (Whyte, J.) (express aiming requirement satisfied by defendants' intentional scheme against plaintiff, designed to have "worldwide" effect, including in California, even though defendants did not know that the plaintiff was within the specific district). PNS, operating through its contractors and employees, knowingly facilitated repeated attacks on Facebook's California-based servers, as well as thefts of email account information and other data from those computers. See Section II(A), supra. PNS received volumes of relevant communications related to Importer, learned of complaints from both Facebook and webquarry.com (a California-based proxy service) that Facebook was being attacked, and learned that the program PNS developed and hosted was being used to illegally download user accounts and passwords for the purpose of "spidering" other networks. Cooper Decl. Ex. 14 at 4243; Ex. 17 at 104:9-105:18; Ex. 19 at 15, 842-43, 1767. When Facebook tried to stop the attacks on its California business, Williams and PNS simply "fixed importer again (they tried to lock us out)," and happily billed for their efforts. Id. Ex. 19 at 1767. Rather than abandoning ConnectU's initiative, PNS' CEO contributed ideas on how to make Importer more effective in its attacks on Facebook, and called it "cool" when he learned the program "imports profiles from thefacebook, friendster, etc. into your CU account." Id. Exs. 14 at 6537, 8392; 18 at 134 (19:08:35-19:09:23); 19 at 842, 1238. - 15 PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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The evidence also demonstrates that PNS and Williams expressly targeted Facebook's California users in early-to-mid 2005, providing a separate basis for foreseeability. See, e.g., Cooper Decl. Exs. 19 at 1767-69, 310455, 310185-86, 310177-79; 14 at 10359, 8392, 8657. The very fact that PNS' CEO, whose company offers software and website development, was told the importer program attacked not merely one major California-based social network (i.e. Facebook), but another well-known one as well (Friendster) also located in the heart of Silicon Valley, reflects that PNS and Williams at all times knew or should have known that their actions would have a substantial and profound impact in California generally, and on Facebook specifically. Id. Ex. 18 at 134 (19:08:35-19:09:23). Cf. Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1321 (9th Cir. 1998) (purposeful availment under the "effects doctrine" of Calder was satisfied because Defendant should have known that Panavision, a Delaware partnership in the movie industry who had its principal place of business in California, would be particularly harmed where "the heart of the theatrical motion picture and television industry is located"). Like the plaintiff in Panavision, Facebook's principal place of business at the time of PNS' and Williams attacks was in Palo Alto, California, in the heart of Silicon Valley, the nation's leading technology center. The harm to Facebook was thus even greater than in other locations, given the nature of its' business. Indeed, further substantiating such harmful effects, the evidence adduced above demonstrates that registered users of Facebook at California schools were targeted, and that their California email addresses were harvested, sometimes using false log-in information ident ified by California universities. See Cooper Decl. Ex. 1 at 241:8-242:24; Ex. 18 at 76 (17:34:2217:57:19); Ex. 19 at 281469-73, 310177; Ex. 26 at 172. On one day alone in May, 2005, there were 10,195 imports by ConnectU, 279,641 queued email invitations, 204,589 rows in PNS' database field checked, and 148,142 invitations actually sent by ConnectU. Id. Ex. 26 at 2972. Other courts have found "express aiming" with far fewer intentional acts. For example, the Bancroft court exercised specific jurisdiction over a defendant who sent a letter to Virginia that had effects in California because it individually targeted -- and was "intended to affect" -- a California corporation. Bancroft, 223 F.3d at 1087-88. Similarly, the Brainerd court found that even though the defendants had not initiated telephone calls to the plaintiff, the statements they - 16 PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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made during the conversations were "purposefully directed ... into the forum," therefore making the exercise of personal jurisdiction reasonable. Brainerd, 873 F.2d at 1260; see also Gordy v. Daily News, L.P., 95 F.3d 829, 833 (9th Cir. 1996) (holding that specific jurisdiction existed in light of evidence of `targeting' of the plaintiff, who was a forum resident); Lake v. Lake, 817 F.2d 1416, 1422-23 (9th Cir. 1987) (holding that specific jurisdiction existed where defendant performed foreign acts for the purpose of having their consequences felt in the forum state). Here, ConnectU aimed its activities at virtually all 2.8 to 3 million of Facebook's registered users. 2. The Claims Arise Out Of Defendants' Forum-Related Activities.

A claim "arises out of" activity if injury to the plaintiff would not have occurred "but for" the defendant's forum-related activities. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002) ("court exercises specific jurisdiction where the cause of action arises out of or has a substantial connection to the defendant's contacts with the forum"), citing Hanson v. Denckla, 357 U.S. 235, 251 (1958). Defendants' actions, which were directed at Facebook in California, instituted to affect Facebook's California users, and executed by taking advantage of servers in California, caused the complained of harm. B. PNS And Williams Are Individually Subject to This Court's Jurisdiction.

PNS and Williams incorrectly argue that because ConnectU hired PNS, and Williams was a PNS employee taking direction from ConnectU, neither can be held to have purposefully availed themselves of California's benefits. Mot. to Dismiss at 5, 7. ConnectU cites Colt Studio v. Badpuppy Enter., 75 F. Supp.2d 1104, 1111 (C.D. Cal. 1999), to support this faulty assertion. Colt and other relevant authority actually belie PNS' and Williams' arguments. Colt simply recognizes that under California law a corporate officer or director, as opposed to an employee, cannot be subject to jurisdiction solely because of official actions taken on behalf of the corporation. However, as the very California authority cited by Colt further recognizes, "California case law concerning personal jurisdiction over employees of foreign corporations does not expressly state the rule that employees are to be treated differently than officers and directors, but it is clear that employees have not received the same `official capacity' immunity that officers and directors receive." Mihlon v. Superior Court, 169 Cal. App. 3d 703, 713 (1985). - 17 PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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Neither PNS nor Williams were officers or directors of ConnectU, nor was Williams an officer or director of PNS. They are not "shielded," let alone "doubly shielded," from personal jurisdiction by virtue of their acts.7 Indeed, the United States Supreme Court has totally "reject[ed] the suggestion that employees who act in their official capacity are somehow shielded from suit in their individual capacity." Keeton v. Hustler Magazine, 465 U.S. 770, 781 n.13 (1984), citing Calder v. Jones, 465 U.S. 783, 790 (1984); see also Davis v. Metro Productions, Inc., 885 F.2d 515, 521 (9th Cir. 1989). In fact, the Supreme Court in Calder actually found jurisdiction over employees who were "primary part icipants in an alleged wrongdoing intentionally directed at a California resident." Calder, 465 U.S. at 790; see also Winery v. Graham, 2007 WL 963252, at *5 (N.D. Cal. 2007) (citing Calder at 790). As a result, the assertion of personal jurisdiction based on the primary participant theory is appropriate where the individual had "control of, and direct participation in the alleged activities." Winery, 2007 WL 963252, at *5 (citing Wolf Designs, Inc. v. DHR Co., 322 F. Supp. 2d 1065, 1072 (C.D. Cal. 2004)). Like the petitioners in Calder, PNS and Williams were primary participants and should be held accountable in California for their actions. For the same reason, defendants' cases relying upon alter ego analysis are irrelevant. Mot. to Dismiss, 7:17, 7:27-28. PNS and Williams actively participated in the scheme to steal email addresses from a California company, including email addresses of Californians, and then proceed to use the email addresses. PNS and Williams are individually liable for their participation in the wrongful acts alleged in this action. C. The Court May Properly Exercise General Jurisdiction Over PNS

PNS contends that "PNS has no appreciable contacts with California." Mot. to Dismiss at 5:12-13. Given the totality of the contacts between PNS and California residents just by virtue of PNS development of Importer and Social Butterfly, and contrary to the inaccurate declarat ion of
7

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Moreover, other courts in California have subsequently recognized that even the fiduciary shield argument of Mihlon and its progeny such as Colt is dicta, and in fact an inaccurate statement concerning personal jurisdiction. Seagate Tech. v. A. J. Kogyo Co., 219 Cal. App. 3d 696, 701 (1990) ("Our review of the relevant legal principles convinces us that this dictum in Mihlon is wrong"); Taylor-Rush v. Multitech Corp., 217 Cal. App. 3d 103, 116-117 (1990) (holding that some corporate officers/directors were subject to personal jurisdiction, and criticizing Mihlon). PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND - 18 WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL
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John Taves, general jurisdiction over PNS is appropriate. Yet when PNS' other contacts are considered, the evidence of general jurisdiction is overwhelming. General jurisdiction exists over a defendant where it has engaged in "continuous and systematic general business contacts" in the forum. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 416 (1984) (citing Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952)). In considering whether it has general jurisdiction over a defendant, the court should look at all of the defendant's activities that impact the state, including whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there. See Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1478 (9th Cir. 1986), cited in Bancroft, 223 F.3d at 1086. Indeed, "`[p]resence' in the state ... has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given." Int'l Shoe Co, 326 U.S. at 317. 1. PNS Conducts Substantial Business In California -- The Economic Realities

In analyzing whether PNS' contacts are "substantial" or "systematic and continuous," the Court must determine whether the "contacts constitute sufficient activity in [California] to conclude that the defendants `may in fact be said already to be `present' [in California].'" Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1331 (9th Cir. 1984). In examining business contacts with the forum state a court must "focus upon the `economic reality' of defendants' act ivit ies rather than a mechanical checklist." Id. Even indirect contact with forum residents is sufficient where the defendant engages in economic activity that generates gross income. Foster v. Mooney Aircraft Corp., 68 Cal. App. 3d 887, 892-93 (1977); see also Paneno v. Centres for Academic Programmes Abroad Ltd., 118 Cal. App. 4th 1447, 1455 (2004), citing Vons Companies, Inc. v. Seabest Foods, Inc., 14 Cal.4th 434, 446 (1996). PNS has substant ially exploited California businesses and residents for its own economic gain. Though Taves contends in his declaration that "PNS does not own, lease or maintain an - 19 PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL JURIS. CASE NO. 5:07-CV-01389-RS

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office, residence or place of business in California, and has not owned, leased or maintained an office, or place of business in California," the evidence demonstrates otherwise.8 Taves Decl. ¶ 4. PNS has now, or has had in the past, several California "virtual offices." See Section II.B.1, supra. Benedict, a current PNS contractor, lives and works in California, and has done so for at least two years. Id. He engages in client development on PNS' behalf, is authorized to enter into contracts on PNS' behalf, performs software development services from his home office in California, and "[i]f Keit h got the work he can tell himself what to do." Id.; see also Cooper Decl. Ex. 21 at 251:12-13. PNS has engaged at least five other contractors in the last few years who lived and worked in California, including Greg Deacon, Sam Oh, Joel Stair, Fred Pampo, and David Perkins. See Section II.B.1, supra. PNS also has routinely purchased equipment (such as computers) for its contractors to use when performing work on its behalf. Id. Based on these facts, there is no merit to PNS' assertion that it does not maintain an office in California. Taves also incorrectly concluded that "PNS has not and does not derive substantial revenue from goods used or consumed in California or services rendered in California." Taves Decl. ¶ 8. Taves reached this conclusion in "seconds" from memory by determining (without actually calculating) that PNS' California-generated revenue amounted to no more than two percent. Cooper Decl. Ex. 21 at 237:18-238:13. In fact, PNS has generated more than 7.5% of its total gross revenue of all time (or 33% of its average annual revenue) from its contacts with California. Id. Ex. 21 at 306:24-307:1; Ex. 22 at No. 3. PNS continues to seek additional work from California. Id. Exs. 19 at 1845-56; Ex. 21 at 257:12-14. Taves also declared that "PNS has signed perhaps one or fewer contracts regarding a California entity." Taves Decl. ¶ 9. The fact that PNS included the word "signed" to limit its contracts with California is an indication that this statement is less than candid. In fact, PNS generally enters into contracts with all of its clients, but these contracts tend to be handshake agreements rather than "signed" documents. See Section II.B.2, supra. In truth, PNS has at least 11 California-based customers, perhaps many more than that, and PNS admitted that it may enter
8

PNS claims that one of the benefits of hiring is that it does not maintain offices anywhere -- PNS operates "virtual" offices. Cooper Decl., Ex. 27. These virtual offices amount to a virtual presence in California, if not an actual one. PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND - 20 WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL
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into more than one agreement with a customer (e.g., AST). Id. PNS also relies on California-based companies, such as Google and CraigsList, to advertise its services and employment needs. See Section II.B.3. and 4., supra. In order to advertise on these sites, PNS must enter into contracts with these companies -- contracts that are governed by California law. Id. Such ongoing relationships with California companies, advertisers and search engines indisputably generate revenue for PNS. PNS is also a 10 percent owner of San Francisco's The Records Portal Company. See Section II.B.2(a), supra. PNS is The Records Portal Co mpany's "engineering team" (i.e., Records Portal's exclusive software development company), PNS partner Hayner is a member of Records Portal's management team, and PNS is the administrative contact for Records Portal's domain registration. Id. PNS also relies on Records Portal to help PNS generate additional business. Cooper Decl. Ex. 19 at 1215. The evidence thus overwhelmingly supports the "economic reality" that PNS does substantial business with California businesses, and has a substantial presence in California. The exercise of personal jurisdiction thus is proper. D. The Exercise of General and Specific Jurisdiction Is Reasonable9

Determining reasonableness of jurisdiction is based upon seven factors: (1) the extent of purposeful interjection; (2) the burden on the defendant to defend the suit in the chosen forum; (3) the extent of conflict with the sovereignty of the defendant's state; (4) the forum state's interest in the dispute; (5) the most efficient forum for judicial resolution of the dispute; (6) the importance of the chosen forum to the plaintiff's interest in convenient and effective relief; (7) and the existence of an alternative forum. Amoco Egypt Oil Co. v. Leonis Navigation Co., 1 F.3d 848, 851-52 (9th Cir. 1993). Taking these factors together, the exercise of jurisdiction is reasonable. The torts were inflicted against an entity operating in California involving California users and was effectuated, in part, from California. "The site where the injury occurred and where evidence is located
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As set forth above, since the first two prongs of specific jurisdiction are met, reasonableness is presumed for specific jurisdiction. PLAINTIFFS' PUBLIC-REDACTED OPP. TO PNS AND - 21 WILLIAMS' MOT. TO DISMISS FOR LACK OF PERSONAL
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usually will be the most efficient forum." Amoco, 1 F.3d at 852, citing Pacific Atl. Trading Co. v. M/V Main Express, 758 F.2d 1325, 1331 (9th Cir. 1985). PNS and Williams purposefully interjected themselves into California repeatedly by attempting to acquire the 2.8 to 3 million email accounts available from Facebook's California-based website, and then spamming the registered users. California has a strong interest in preve