Utterkar v. Ebix, Inc. et al

Filing 109

ORDER by Judge Lucy H. Koh granting 101 Motion to Dismiss (lhklc1, COURT STAFF) (Filed on 2/2/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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CHETAN UTTARKAR,
Plaintiff,

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v.

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SUDHIR BAJAJ, et al.,

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Case No.14-CV-02250-LHK
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS WITH
PREJUDICE
Re: Dkt. No. 101

Defendants.

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Plaintiff Chetan Uttarkar1 (“Plaintiff”) brings this action against Defendant Sudhir Bajaj

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(“Defendant”) and Does 1 through 10. Before the Court is Defendant’s motion to dismiss

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Plaintiff’s Second Amended Complaint (“SAC”), ECF No. 98, for failure to state a claim, failure

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to properly serve Defendant, lack of personal jurisdiction, and lack of subject matter jurisdiction.

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ECF No. 101. The Court finds this motion suitable for decision without oral argument under Civil

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Local Rule 7-1(b) and hereby VACATES the motion hearing and the case management

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conference set for February 11, 2016, at 1:30 p.m. Having considered the parties’ submissions,

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Plaintiff’s First Amended Complaint stated that his last name was “Utterkar.” ECF No. 33.
Plaintiff corrected the spelling of his last name to “Uttarkar” in his Second Amended Complaint.
ECF No. 98.
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Case No. 14-CV-02250-LHK
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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the record in this case, and the relevant law, the Court hereby GRANTS Defendant’s motion to

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dismiss Plaintiff’s SAC with prejudice under Federal Rule of Civil Procedure 12(b)(2) for lack of

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personal jurisdiction.

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I.

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BACKGROUND
A. Factual Background

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On or around April 3, 1999, Plaintiff and Bajaj, then President of PlanetSoft, Inc.

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(“PlanetSoft”), signed a Memorandum of Understanding (“MOU”) summarizing the terms and

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conditions of Plaintiff’s partnership with PlanetSoft. SAC ¶¶ 20-21. The MOU required that

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Plaintiff would work half-time for PlanetSoft for three months and then either Plaintiff or his
spouse, Marceline Uttarkar, would work full-time thereafter on “mutual consent of both parties.”

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United States District Court
Northern District of California

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SAC, Exh. 2. The agreement would also “be finalized upon at [sic] the end of the 3 months.” Id.

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The MOU detailed that Plaintiff would be working half-time “to develop new business in

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PlanetSoft’s area of specialty in the New York and New Jersey areas” at a salary of $40,000.00/yr.

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prorated monthly. Id. That salary would increase to $80,000.00/yr. for full-time work upon

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“mutual agreement” and “satisfactory full time focus.” Id. In addition, the MOU required that

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Plaintiff would “invest $25,000.00 towards the equity of PlanetSoft.” Id.; SAC ¶ 23. The MOU

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provided that Plaintiff would receive 5 percent of the equity in PlanetSoft in exchange for one

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person’s full-time work and the $25,000.00 investment. Id. ¶ 25 & Exh. 2. Plaintiff was further

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given the option to invest $50,000.00 more for an additional 2.5 percent interest in PlanetSoft, but

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Plaintiff did not do so. Id. ¶ 24. Finally, the MOU noted that all equity would be vested as long as

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Plaintiff was “operationally participating in the growth and development of PlanetSoft business on

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a full time basis.” Id. Exh. 1. According to the MOU, if participation by Plaintiff was no longer

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full time, “equity will be bought back prorated on the basis of valuing the company at twice the

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current revenue.” Id. ¶ 27 & Exh. 2.

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The MOU was written on PlanetSoft letterhead. Id. ¶ 21 & Exh. 2. The MOU was signed

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by Bajaj and by Plaintiff. Id. Exh. 2. The signed MOU was faxed to Plaintiff from PlanetSoft’s

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office and lists Bajaj’s PlanetSoft email address. Id. Plaintiff paid the $25,000.00 initial

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Case No. 14-CV-02250-LHK
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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investment to PlanetSoft. Id. ¶ 28. Plaintiff’s spouse, Marceline Uttarkar, worked full time at

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PlanetSoft from June 1999 until about February 2004. Id. ¶ 32. Plaintiff worked full time at

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PlanetSoft from September 2000 until about July 2001, at which point he ceased working at

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PlanetSoft due to 66 percent wage cuts. Id. ¶¶ 30-31.

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Plaintiff alleges that he “requested and offered Defendants numerous opportunities from

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2003 through 2013 to buy back Plaintiff’s vested 5% equity” in PlanetSoft, and that “[s]ettlement

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discussions” took place during that period. Id. ¶ 46. In 2008, Bajaj and the former attorney for

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PlanetSoft, Shivbir Grewal, “discussed formal settlement/mutual release” with Plaintiff that

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“proposed to buy back Plaintiff’s 5% vested equity as well as reimburse Plaintiff for expenses and
unpaid wages incurred during, relating to, and resulting from Plaintiff’s employment” with

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United States District Court
Northern District of California

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PlanetSoft. Id. ¶ 48. While the agreement was drafted, it was never executed because Bajaj

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“ceased all communications” with Plaintiff. Id. Plaintiff alleges that he “pursued and followed-

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up” with Bajaj from 2009-2011 to no avail. Id. ¶ 49.

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Plaintiff alleges that around June of 2012, Ebix, Inc. (“Ebix”) purchased all of PlanetSoft’s

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stock for approximately $40 million dollars. Id. ¶ 56 & Exh. 7. Plaintiff alleges that Ebix

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“reportedly acquired all of the outstanding capital stock of [PlanetSoft] for $35,000,000.00 in cash

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at closing, and $5,000,000.00 payable in the form of 297,265 shares of the common stock of

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[Ebix] issued at closing.” Id. ¶ 57. The deal also “reportedly involve[d] earn-out cash payments

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to [PlanetSoft] shareholders, based on specific revenue numbers achieved” within two years. Id.

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Following the sale, Bajaj allegedly resumed communicating with Plaintiff by telephone and email

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“to discuss settlement and release of Plaintiff’s 5% vested equity” in PlanetSoft, but Bajaj did not

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inform Plaintiff of the sale to Ebix. Id. ¶¶ 50-54. After Plaintiff learned of the sale, Plaintiff

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contacted Ebix and Bajaj multiple times through counsel requesting compensation for Plaintiff’s 5

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percent interest in PlanetSoft. Id. ¶¶ 61–62 & Exh. 3. Plaintiff has not received any compensation

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for his 5 percent interest in PlanetSoft. Id. ¶ 60.

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Plaintiff resides in Santa Clara County, California. Id. ¶ 1. Bajaj allegedly has residences

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in India, Florida, Georgia, and California. Id. ¶ 2, 14. Bajaj is the President of PlanetSoft, Inc., a

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ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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former Delaware corporation whose primary place of business is Sacramento, California. Id. ¶ 2.
B. Procedural History
Plaintiff filed his original complaint against Ebix, Bajaj, and Does 1-10 on May 15, 2014.

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ECF No. 1. Ebix filed motions to dismiss and to transfer on July 21, 2014. ECF Nos. 15, 16.

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Plaintiff filed timely oppositions, ECF Nos. 18, 19, and Ebix filed timely replies, ECF Nos. 20, 21.

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On October 6, 2014, the Court granted Ebix’s motion to dismiss Plaintiff’s breach of contract

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claim without prejudice. (“October 6, 2014 Order”), ECF No. 29. In the October 6, 2014 Order,

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the Court also denied Ebix’s motion to dismiss or transfer venue. Id.

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Plaintiff filed his First Amended Complaint on October 23, 2014. FAC, ECF No. 33. Ebix
filed a motion to dismiss on November 18, 2014. ECF No. 44. Plaintiff filed a timely opposition,

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United States District Court
Northern District of California

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ECF No. 49, and Ebix filed a timely reply, ECF No. 50. On March 18, 2015, the Court granted

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Ebix’s motion to dismiss Plaintiff’s breach of contract claim with prejudice. (“March 18, 2015

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Order”), ECF No. 59.

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While Plaintiff served Ebix on May 30, 2014, Plaintiff was unable to effectuate service on

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Bajaj as Plaintiff could not locate Bajaj. See ECF No. 52. On December 15, 2014, Plaintiff filed a

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“Status Report re: Service upon Defendant Sudhir Bajaj.” Id. Plaintiff represented that on

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December 6, 2015, a Mr. Navipeta Mahest personally served a security guard at the gated entrance

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to Bajaj’s residence in Secunderabad, India. Id. Plaintiff also mailed the documents to the

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residence and emailed the documents to Bajaj’s two last known email addresses on December 15,

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2014. Id.

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On December 29, 2014, Bajaj made a special appearance and filed a motion to dismiss for

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defective service, lack of personal jurisdiction, and failure to state a claim. ECF No. 53. Plaintiff

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filed his opposition on January 12, 2015, ECF No. 54, and Bajaj filed a timely reply, ECF No. 55.

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On March 18, 2015, the Court granted Bajaj’s motion to dismiss for defective service without

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prejudice. ECF No. 59. The court further noted that Plaintiff had not sufficiently alleged facts

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showing that the Court’s exercise of personal jurisdiction over Bajaj would be appropriate. Id.

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Plaintiff filed a motion for leave to file a Second Amended Complaint on April 1, 2015.

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Case No. 14-CV-02250-LHK
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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ECF No. 63. Bajaj made a special appearance and filed an opposition on April 15, 2015. ECF

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No. 68. Plaintiff filed a timely reply. ECF No. 69. Ebix filed an opposition on May 29, 2015,

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ECF No. 81, and Plaintiff filed a timely reply to Ebix’s opposition, ECF No. 85. On August 25,

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2015, the Court granted in part and denied in part Plaintiff’s motion for leave to file a Second

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Amended Complaint. ECF No. 95. The Court permitted Plaintiff to file a Second Amended

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Complaint with seven causes of action against Bajaj only. Id.
On July 30, 2015, Plaintiff filed an ex parte motion to serve Bajaj by publication in the

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Atlanta Journal-Constitution. ECF No. 90. Bajaj filed an opposition to Plaintiff’s ex parte motion

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on August 3, 2015. ECF No. 91. Plaintiff filed objections to Bajaj’s opposition on August 13,

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2015. ECF No. 92. Plaintiff filed a motion to find that Bajaj has waived service of process on

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United States District Court
Northern District of California

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August 19, 2015. ECF No. 93. At the Case Management Conference on August 27, 2015, the

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Court granted Plaintiff’s ex parte motion to serve Bajaj by publication and denied as moot

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Plaintiff’s motion to find that Bajaj has waived service of process. ECF No. 108.

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Plaintiff filed his Second Amended Complaint on September 4, 2015. ECF No. 98. On

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September 17, 2015, Plaintiff filed a motion for leave to file a motion for reconsideration of the

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Court’s order granting in part and denying in part Plaintiff’s motion for leave to file a Second

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Amended Complaint. ECF No. 99. The Court denied Plaintiff’s motion for leave to file a motion

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for reconsideration on November 11, 2015. ECF No. 104.
Bajaj filed the instant motion to dismiss on October 22, 2015. Plaintiff filed a response on

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November 5, 2015. Bajaj filed a reply on November 12, 2015. ECF No. 105.

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II.

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LEGAL STANDARD
A. Rule 12(b)(2)
When a defendant moves to dismiss for lack of personal jurisdiction, “the plaintiff bears

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the burden of demonstrating that jurisdiction is appropriate.” Schwarzenegger v. Fred Martin

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Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). Because this Court has not conducted an

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evidentiary hearing, Plaintiff “need only make a prima facie showing of jurisdictional facts.” Sher

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v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). While a plaintiff cannot “‘simply rest on the

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ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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bare allegations of its complaint,’ uncontroverted allegations in the complaint must be taken as

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true [and] [c]onflicts between parties over statements contained in affidavits must be resolved in

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the plaintiff's favor.” Schwarzenegger, 374 F.3d at 800 (quoting Amba Mktg. Systems, Inc. v.

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Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977), and citing AT & T v. Compagnie Bruxelles

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Lambert, 94 F.3d 586, 588 (9th Cir. 1996)).

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Where, as here, there is no federal statute that governs personal jurisdiction, the Court must

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apply the law of the state in which it sits. Schwarzenegger, 374 F.3d at 800. In this case,

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“[b]ecause California's long-arm jurisdictional statute is coextensive with federal due process

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requirements, the jurisdictional analyses under state law and federal due process are the same.” Id.
at 800–01. That is, for this Court to exercise personal jurisdiction over Defendant, Defendant

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United States District Court
Northern District of California

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“must have at least ‘minimum contacts' with the relevant forum such that the exercise of

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jurisdiction ‘does not offend traditional notions of fair play and substantial justice.’” Id. at 801

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(quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). A federal court may exercise

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either general or specific jurisdiction over a non-resident defendant. General jurisdiction exists

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where a defendant has “continuous and systematic” contacts with the forum state such that the

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defendant may be “haled into court in the forum state to answer for any of its activities anywhere

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in the world.” Schwarzenegger, 374 F.3d at 801. Specific jurisdiction is more limited in scope

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and can be exercised where the defendant has sufficient minimum contacts with the forum state,

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and the plaintiff's claims arise out of those contacts. Id. at 801–02.

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B. Leave to Amend
If the court concludes that the complaint should be dismissed, it must then decide whether

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to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to

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amend “shall be freely given when justice so requires,” bearing in mind “the underlying purpose

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of Rule 15 . . . [is] to facilitate decision on the merits, rather than on the pleadings or

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technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (citation omitted).

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Nonetheless, a district court may deny leave to amend a complaint due to “undue delay, bad faith

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or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments

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ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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previously allowed, undue prejudice to the opposing party by virtue of allowance of the

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amendment, [and] futility of amendment.” See Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d

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522, 532 (9th Cir. 2008).

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III.

DISCUSSION

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The Court begins by briefly describing its March 18, 2015 Order on Bajaj’s motion to

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dismiss the FAC. In the March 18, 2015 Order, the Court held that Plaintiff had not properly

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effected service upon Bajaj. ECF No. 59. The Court further held that Plaintiff had not alleged

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facts sufficient to show that the Court could exercise personal jurisdiction over Bajaj. Id.

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Specifically, the Court held that Plaintiff’s assertion in his briefing that Bajaj “personally owned
property and lived in California at times relevant to this litigation until approximately 2012,” ECF

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United States District Court
Northern District of California

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No. 54 at 14-15, was insufficient to support the exercise of general jurisdiction over Bajaj because

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this assertion was not alleged in either the FAC or an affidavit. ECF No. 59. The Court further

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held that Plaintiff had not alleged a sufficient basis for the exercise of specific jurisdiction because

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Bajaj’s only California contacts alleged in the FAC were those of PlanetSoft, not Bajaj, and

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Plaintiff did not allege any nexus between PlanetSoft’s contacts with California and Plaintiff’s

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cause of action against Bajaj. Id. The Court cautioned that failure to cure the deficiency in

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alleging personal jurisdiction over Bajaj would result in a dismissal with prejudice. Id.

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In the instant motion, Defendant moves to dismiss the SAC for failure to state a claim,

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failure to properly serve Defendant, lack of personal jurisdiction, and lack of subject matter

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jurisdiction. ECF No. 101. The Court begins by discussing Defendant’s argument that the SAC

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should be dismissed for lack of personal jurisdiction. Because the Court concludes that the SAC

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does not allege facts sufficient for this Court to exercise personal jurisdiction over Defendant, the

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Court does not reach Defendant’s remaining arguments for dismissal.

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A. The Exercise of Personal Jurisdiction Over Bajaj
A federal court may exercise either general or specific jurisdiction over a non-resident

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defendant. Schwarzenegger, 374 F.3d at 801-02. Defendant argues that Plaintiff has not alleged

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facts supporting this Court’s exercise of either general or specific jurisdiction over Defendant.

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ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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ECF No. 101. The Court addresses Plaintiff’s arguments for general and specific jurisdiction in

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turn.

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1. General Jurisdiction

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The Court may exercise general jurisdiction over a defendant who is domiciled in the

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forum state. Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998).

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Additionally, general jurisdiction over a non-resident exists where a defendant has “continuous

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and systematic” contacts with the forum state such that the defendant may be “haled into court in

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the forum state to answer for any of its activities anywhere in the world.” Schwarzenegger, 374

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F.3d at 801.

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Although the SAC alleges that Defendant resides in California, SAC ¶¶ 2, 13, Plaintiff

United States District Court
Northern District of California

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concedes in his response to Defendant’s motion to dismiss that Defendant does not in fact reside

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in California. See ECF No. 103 at 11 (“DEFENDANT has admitted, multiple times in his filings,

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he does not reside in California. Plaintiff’s investigation has also shown, and DEFENDANT has

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not and will not dispute, that DEFENDANT is not a residence [sic] of California”). Because

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Defendant is not a resident of California, general jurisdiction over Defendant exists only if

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Defendant has sufficient “continuous and systematic” contacts with California. Schwarzenegger,

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374 F.3d at 801. However, Plaintiff does not argue that Defendant has sufficient “continuous and

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systematic” contacts with California to establish the Court’s general personal jurisdiction over

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Defendant. See generally ECF No. 103.

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Instead, Plaintiff argues that general jurisdiction is appropriate in the instant case because

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Defendant has submitted to the Court’s jurisdiction by “making general appearances” to both

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contest jurisdiction and assert additional defenses. ECF No. 103 at 9-10. “Defendants can waive

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the defect of lack of personal jurisdiction by appearing generally without first challenging the

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defect in a preliminary motion, or in a responsive pleading.” Jackson v. Hayakawa, 682 F.2d

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1344, 1347 (9th Cir. 1982). However, Federal Rule of Civil Procedure 12(b) explicitly allows a

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defendant to combine a 12(b)(2) defense with any other 12(b) defense. Fed. R. Civ. P. 12(b) (“No

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defense or objection is waived by joining it with one or more other defenses or objections in a

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ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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responsive pleading or motion.”). In the instant case, Defendant has challenged the Court’s

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exercise of personal jurisdiction over Defendant in each of Defendant’s filings before this Court.

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See ECF Nos. 53, 55, 68, 91, 101, 105 (Defendant’s filings in the instant case, each of which

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challenges the Court’s exercise of personal jurisdiction over Defendant). Therefore, Defendant

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has not submitted to the Court’s exercise of personal jurisdiction through his participation in this

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lawsuit.

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Because Plaintiff has not met his burden of showing that the Court may exercise general

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personal jurisdiction over Defendant, see Schwarzenegger, 374 F.3d at 800 (“[T]he plaintiff bears

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the burden of demonstrating that jurisdiction is appropriate”), the Court turns to whether Plaintiff

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has shown that the Court may exercise specific personal jurisdiction over Defendant.

United States District Court
Northern District of California

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2. Specific Jurisdiction

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The Ninth Circuit has developed a three-prong test for analyzing whether a non-resident

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defendant is subject to specific personal jurisdiction:

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(1) The non-resident defendant must purposefully direct his activities or consummate some

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transaction with the forum or resident thereof; or perform some act by which he

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purposefully avails himself of the privilege of conducting activities in the forum, thereby

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invoking the benefits and protections of its laws;

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(2) the claim must be one which arises out of or relates to the defendant's forum-related
activities; and

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(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must
be reasonable.

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Schwarzenegger, 374 F.3d at 802. The plaintiff bears the burden of establishing the first two

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prongs of the test. Id. “If the plaintiff succeeds in satisfying both of the first two prongs, the

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burden then shifts to the defendant to ‘present a compelling case’ that the exercise of jurisdiction

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would not be reasonable.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–78,

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(1985)).

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The entirety of Plaintiff’s argument in support of the exercise of specific jurisdiction over
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ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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Defendant is as follows:

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Plaintiff alleges that DEFENDANT, as the President of
PLANETSOFT, “purposefully directed PLANETSOFT activities at
businesses and consumers that resided in California and benefited
from doing said business in California.” SAC, ¶ 14. Plaintiff also
alleged that DEFENDANT, with the help of a California-based
attorney, Mr. Shivbir Grewal, negotiated, on behalf of
PLANETSOFT, a buyback settlement of Plaintiff’s equity interest in
PLANETSOFT.
SAC, ¶ 16.
These settlement negotiations
contributed to Plaintiff’s belief DEFENDANT would buyback his
equity interest in PLANETSOFT.

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ECF No. 103 at 11. In this argument, Plaintiff identifies two California-based activities that
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Plaintiff contends support the exercise of specific jurisdiction in California: (1) Defendant directed
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PlanetSoft’s business activities in California; and (2) Defendant negotiated a settlement agreement

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with Plaintiff through the help of a California-based attorney. The Court addresses each of these
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United States District Court
Northern District of California

activities in turn.
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a. PlanetSoft’s California Business Activities

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In the SAC, Plaintiff alleges that Defendant is the President of PlanetSoft, and that
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PlanetSoft conducts business in California. SAC ¶¶ 14-15. Plaintiff argues that by directing
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PlanetSoft’s business activities in California, Defendant is subject to specific jurisdiction in

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California. ECF No. 103. Defendant does not dispute that Defendant is the President of
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PlanetSoft and that PlanetSoft conducts business in California. ECF Nos. 101, 105. Instead,
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Defendant argues that Plaintiff has not established that PlanetSoft’s activities in California can be
attributed to Defendant for purposes of this Court’s exercise of specific jurisdiction over

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Defendant. Id.
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“The mere fact that a corporation is subject to local jurisdiction does not necessarily mean
its nonresident officers, directors, agents, and employees are suable locally as well.” Winery v.

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Graham, No. C 06-3618 MHP, 2007 WL 963252, at *5 (N.D. Cal. Mar. 29, 2007). To the
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contrary, the fiduciary shield doctrine protects an individual from being subjected to personal
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jurisdiction based on acts undertaken in the individual’s corporate capacity. See Davis v. Metro
Productions, Inc., 885 F.2d 515, 520 (9th Cir.1989) (“[A] person's mere association with a

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corporation that causes injury in the forum state is not sufficient in itself to permit that forum to

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assert jurisdiction over the person.”). There are two circumstances under which the fiduciary

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shield doctrine does not apply: “(1) where the corporation is the agent or alter ego of the

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individual defendant; or (2) by virtue of the individual's control of, and direct participation in the

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alleged activities.” Mulato v. Wells Fargo Bank, N.A., 76 F. Supp. 3d 929, 945 (N.D. Cal. 2014)

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(quoting j2 Global Commc'ns, Inc. v. Blue Jay, Inc., No. 08–cv–4254 PJH, 2009 WL 29905, at *5

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(N.D. Cal. Jan. 5, 2009)).

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Plaintiff has not shown that either exception to the fiduciary shield doctrine applies in the
instant case. As to the first exception, Plaintiff has not alleged that PlanetSoft has no separate
existence such that it might be treated as the alter ego of Defendant. See Flynt Distributing Co.,

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United States District Court
Northern District of California

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Inc. v. Harvey, 734 F.2d 1389, 1393–94 (9th Cir.1984) (stating that where a corporation is the

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alter ego of its owners, jurisdiction over the corporation supports jurisdiction over the owners).

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Similarly, with respect to the second exception, Plaintiff has not alleged that Defendant

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was in control of and a direct participant in PlanetSoft’s business activities in California. See

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Mulato, 76 F. Supp. at 945 (stating that the fiduciary shield doctrine may not apply “by virtue of

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the individual’s control of, and direct participation in the alleged activities”). Absent allegations

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that an exception to the fiduciary shield doctrine applies in the instant case, Defendant cannot be

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subject to personal jurisdiction in California solely because he is president of a company that did

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business in California. See Winery v. Graham, No. 06-3618, 2007 U.S. Dist. LEXIS 22858, at 15

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(N.D. Cal. Mar. 28, 2007) (“The mere fact that a corporation is subject to local jurisdiction does

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not necessarily mean its nonresident officers, directors, agents, and employees are suable locally

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as well.”); see also March 18, 2015 Order (rejecting Plaintiff’s argument that PlanetSoft’s

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California-based activities could be the basis of specific jurisdiction over Defendant).

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Furthermore, even if PlanetSoft’s contacts with California could be attributed to Bajaj,

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Plaintiff has failed to satisfy the second prong of the specific jurisdiction analysis, that is, whether

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Plaintiff’s claims arise out of or relate to Defendant’s forum-related activities. Specifically,

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Plaintiff has failed to allege any nexus between PlanetSoft’s business activities in California and

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Plaintiff’s causes of action. Plaintiff’s causes of action arise out of the alleged breach of an MOU

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that described Plaintiff’s responsibilities in New York and New Jersey, while Bajaj resided in

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Massachusetts. See SAC. Thus, the causes of action do not relate to PlanetSoft’s business

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activities in California.

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The Court therefore concludes that PlanetSoft’s business activities in California are not
sufficient for the Court to exercise specific jurisdiction over Bajaj.
b. Settlement Negotiations
Plaintiff additionally argues that the Court may exercise specific jurisdiction over
Defendant based on the fact that in 2008, Defendant, with the assistance of a California-based
attorney, negotiated a buyback settlement agreement with Plaintiff while Plaintiff and Defendant

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United States District Court
Northern District of California

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both resided in California. ECF No. 103 at 11. Plaintiff states that Defendant participated in these

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negotiations on behalf of PlanetSoft. Id. Plaintiff further alleges that these settlement negotiations

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resulted in a draft settlement agreement that was never signed or executed. SAC ¶ 48.

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As with PlanetSoft’s business activities in California, Plaintiff has not argued that

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Defendant’s settlement negotiations on behalf of PlanetSoft may be attributed to Defendant

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individually. Without showing that an exception to the fiduciary shield doctrine applies, Plaintiff

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has not shown that Defendant is subject to personal jurisdiction based on acts undertaken in

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Defendant’s corporate capacity as the representative for PlanetSoft. See Davis, 885 F.2d at 520

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(holding that, absent an exception, the fiduciary shield doctrine protects an individual from being

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subjected to personal jurisdiction based on acts undertaken in the individual’s corporate capacity).

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Even assuming, arguendo, that the settlement negotiations could be ascribed to Defendant

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personally, the Court finds that the contacts associated with negotiating an unsigned,

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unenforceable draft contract are too attenuated to satisfy the purposeful availment prong of the

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specific jurisdiction inquiry. The purposeful availment prong “ensures that a defendant will not be

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haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the

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unilateral activity of another party or a third person.” Burger King Corp., 471 U.S. at 475. The

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Ninth Circuit has held that contract negotiations within the forum state satisfy the purposeful

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Case No. 14-CV-02250-LHK
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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availment prong of the specific jurisdiction analysis only where the defendant’s negotiations

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“allow[] or promote[] the transaction of business within the forum state.” Sinatra v. Nat’l

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Enquirer, Inc., 854 F.2d 1191, 1195 (9th Cir. 1988). Thus, the Ninth Circuit has held that specific

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jurisdiction in California is appropriate for claims of breach of contract arising out of contracts “at

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least partially negotiated in California and actually formed in California.” Data Disc, Inc. v.

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Systems Tech. Assocs., Inc., 557 F.2d 1280, 1287-88 (9th Cir. 1977).

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In the instant case, no contract was actually formed, in California or elsewhere, as a result

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of Defendant’s alleged settlement negotiations in California. SAC ¶ 48. Likewise, Plaintiff points

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to no evidence that the unsuccessful settlement negotiations “allow[ed] or promote[d]
[Defendant’s] transaction of business within the forum state.” See Sinatra, 854 F.2d at 1195.

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United States District Court
Northern District of California

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Absent evidence that the settlement negotiations were part of “ongoing efforts by [Defendant] to

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avail [himself] of the benefits and protections of California,” the ultimately unsuccessful

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settlement negotiations in California do not satisfy the purposeful availment prong of the specific

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jurisdiction analysis. See BJI Energy Sol’ns, LLC v. Artemis Techs. d/b/a Alphpa-Lite, No. CV

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04-1521-RGK(JTLX), 2004 WL 1498164, at *3-4 (C.D. Cal. June 17, 2004) (holding that

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unsuccessful contract negotiations in California that resulted in an unsigned draft contract were

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insufficient to establish personal jurisdiction in California because the plaintiff had not produced

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evidence of “ongoing efforts” by the defendant “to avail itself of the benefits and protections of

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California”).

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Therefore, Plaintiff has not met his burden to show that this Court may exercise specific

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jurisdiction over Defendant. See Schwarzenegger, 374 F.3d at 800 (“[T]he plaintiff bears the

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burden of demonstrating that jurisdiction is appropriate.”).

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Because Plaintiff has not demonstrated that the Court may exercise either general or

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specific jurisdiction over Defendant, the Court GRANTS Defendant’s motion to dismiss the SAC

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under Rule 12(b)(2) for lack of personal jurisdiction.

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B. Leave to Amend
The Court now turns to whether to grant Plaintiff leave to amend his complaint. The Court
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Case No. 14-CV-02250-LHK
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE

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

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of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue

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

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amendment.” See Leadsinger, 512 F.3d at 532.
In the instant case, the Court previously dismissed Plaintiff’s First Amended Complaint for

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failure to properly serve Baja and for lack of personal jurisdiction as to Bajaj. March 18, 2015

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Order. The Court gave Plaintiff an opportunity to amend his complaint to address the Court’s

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concerns as to personal jurisdiction. Id. In the March 18, 2015 Order, the Court warned Plaintiff

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that failure to cure the deficiencies in personal jurisdiction would result in dismissal with
prejudice. Id. Plaintiff’s SAC has failed to cure the personal jurisdiction deficiencies. Giving

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United States District Court
Northern District of California

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Plaintiff an additional opportunity to amend his complaint to address personal jurisdiction would

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be futile, would cause undue delay, and would unduly prejudice Defendant by requiring Defendant

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to file repeated motions to dismiss on personal jurisdiction grounds. Therefore, the Court’s

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dismissal of Plaintiff’s SAC is with prejudice. See Leadsinger, 512 F.3d at 532.

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IV.

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CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant’s Motion to Dismiss with

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prejudice.

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IT IS SO ORDERED.

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Dated: February 2, 2016
______________________________________
LUCY H. KOH
United States District Judge

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Case No. 14-CV-02250-LHK
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE