Edu-Science (USA) Inc. v. Intubrite, LLC
Filing
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ORDER Denying EDU-HK's 34 Motion to Dismiss. Signed by Judge Barry Ted Moskowitz on 7/15/2013. (rlu)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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EDU-SCIENCE (USA), INC.,
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v.
Case No. 12cv01078 BTM (WMC)
Plaintiff,
ORDER DENYING EDU-HK’S
MOTION TO DISMISS
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INTUBRITE, LLC,
Defendant.
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INTUBRITE, LLC,
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v.
Counterclaimant,
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EDU-SCIENCE (USA), INC.; and
EDU-SCIENCE (HK) LTD.,
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Counterdefendants.
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In its answer to the Complaint, Defendant IntuBrite, LLC (“IntuBrite”) brought
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counterclaims against Plaintiff Edu-Science (USA), Inc. (“EDU-USA”) and third party
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Edu-Science (HK) Ltd. (“EDU-HK”). On November 23, 2012, EDU-HK filed a
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motion to dismiss IntuBrite’s counterclaims against it on the grounds of lack of
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personal jurisdiction and forum non conveniens (ECF No. 34). For the reasons below,
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EDU-HK’s motion to dismiss is DENIED.
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12cv01078 BTM (WMC)
I. BACKGROUND
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On February 16, 2012, EDU-USA filed suit against IntuBrite for breach of
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contract. In its answer, IntuBrite brought counterclaims against EDU-USA and
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EDU-HK for: 1) breach of contract; 2) breach of the implied warranty of
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merchantability; 3) negligence; 4) intentional interference with prospective advantage;
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5) intentional misrepresentation of fact; and 6) negligent misrepresentation of fact.
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This case arises out of a contract dispute for the supply of medical equipment,
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specifically stylettes and laryngoscopes with pouches. Plaintiff EDU-USA claims that
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IntuBrite breached its contracts by, inter alia, failing to pay for the goods it had
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ordered. IntuBrite, in turn, claims that the goods were defective and/or otherwise failed
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to conform to what had been ordered.
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IntuBrite, a California limited liability company with its principal place of
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business in California, brings its counterclaims both against the plaintiff, EDU-USA,
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and a third party, EDU-HK. The reason for this appears to be that both price quotations
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– the one for the stylettes and the one for the laryngoscopes with pouches – state
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toward the bottom, “For and on behalf of Edu-Science (H.K.) Ltd.” See Compl., Ex.
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A & D.
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involvement. According to EDU-USA, it is not affiliated with EDU-HK, but rather
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“Edu-Science (HK) LTD. is simply a supplier to EDU-USA who is simply a
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purchaser.”
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acknowledges that Patrick Ng, with whom IntuBrite communicated regarding the
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medical equipment, is vice president of both EDU-USA and EDU-HK. According to
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Mr. Ng’s declaration, however, he is a vice president of EDU-HK “in name only.” See
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EDU-HK’s Reply (ECF No. 37), Decl. of Patrick Ng ¶3. EDU-HK otherwise denies
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any affiliation with EDU-USA.
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IntuBrite has not otherwise made any allegations as to EDU-HK’s
See EDU-USA Answer (ECF No. 21), ¶5.
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However, EDU-HK
12cv01078 BTM (WMC)
II. DISCUSSION
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Counterdefendant EDU-HK moves to dismiss IntuBrite’s claims against it on the
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grounds of lack of personal jurisdiction and forum non conveniens. Each will be
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discussed in turn.
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A. Personal Jurisdiction
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First, EDU-HK argues that this court does not have personal jurisdiction over it.
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“When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff
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bears the burden of demonstrating that the court has jurisdiction.” In re W. States
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Wholesale Natural Gas Antitrust Litig., 715 F.3d 716 (9th Cir. 2013) (citing Harris
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Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128-29 (9th
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Cir. 2003)). However, the plaintiff need only make a prima facie showing of
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jurisdiction, with all disputed facts resolved in favor of the plaintiff. Id.
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In general, personal jurisdiction over a defendant is proper if permitted by the
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state’s long-arm statute and if the exercise of that jurisdiction does not violate federal
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due process. Data Disc, Inc. v. Sys. Tech. Associates, Inc., 557 F.2d 1280, 1286 (9th
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Cir. 1977). California’s long-arm statute allows courts to exercise jurisdiction to the
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full extent permitted under the Constitution. Id.
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To exercise personal jurisdiction over a nonresident defendant consistent with
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federal due process, “that defendant must have at least minimum contacts with the
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relevant forum such that the exercise of jurisdiction does not offend traditional notions
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of fair play and substantial justice.” Boschetto v. Hansing, 539 F.3d 1011, 1015-16
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(9th Cir. 2008) (internal quotations omitted).
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There are two kinds of personal jurisdiction, general and specific. The Court has
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general jurisdiction over a nonresident defendant where the defendant has “substantial”
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or “continuous and systematic” contacts with the state, such that it may be haled into
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court in that state for any action without violating due process. However, “[t]he
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standard for establishing general jurisdiction is ‘fairly high,’ and requires that the
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12cv01078 BTM (WMC)
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defendant’s contacts be of the sort that approximate physical presence.” Bancroft &
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Masters, Inc. v. Augusta Nat. Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (citation
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omitted).
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Alternatively, specific jurisdiction exists where: (1) the non-resident defendant
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has performed some act or consummated some transaction within the forum or
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otherwise purposefully availed himself of the privileges of conducting activities in the
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forum, (2) the claim arises out of or results from the defendant’s forum-related
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activities, and (3) the exercise of jurisdiction is reasonable. Id. at 1086.
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Neither party has alleged any facts supporting general jurisdiction. Therefore,
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the question is whether the Court’s exercise of jurisdiction over EDU-HK is reasonable
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based on EDU-HK’s contacts with this forum in connection with the contracts at issue.
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EDU-HK relies heavily on Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008),
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in which the Ninth Circuit held that “the lone transaction for the sale of one item,” a
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car, did not suffice to establish personal jurisdiction over the nonresident defendants.
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However, the transaction at issue in Boschetto “did not create any ongoing obligations”
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with the plaintiff in California, nor did the contract “require the Defendants to engage
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in any substantial business in California.” Id. at 1017. In contrast, EDU-HK had a
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continuing obligation to ship the stylettes and laryngoscopes to IntuBrite in California
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under the contracts. Moreover, EDU-HK invited the CEO of IntuBrite, via letters
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mailed to an address in California, to visit its factory in Hong Kong on at least two
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occasions to discuss EDU-HK’s supply of the medical equipment to IntuBrite.
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See IntuBrite’s Opp. (ECF No. 36), Decl. of John R. Hicks ¶¶4 & 14; see also id., Ex.
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2 & 15. It is well-established that “due process permits the exercise of personal
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jurisdiction over a defendant who purposefully directs his activities at residents of a
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forum, even in the absence of physical contacts with the forum.” Schwarzenegger v.
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Fred Martin Motor Co., 374 F.3d 797, 803 (9th Cir. 2004) (internal quotations and
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alteration omitted). While the “degree of interjection” also plays a role in determining
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the reasonableness of exercising jurisdiction, Harris Rutsky, 328 F.2d at 1132, EDU4
12cv01078 BTM (WMC)
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HK’s contacts with California are sufficiently extensive so as to make reasonable the
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exercise of jurisdiction. Compare id. at 1131-32 (exercise of personal jurisdiction was
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reasonable where nonresident defendant purposefully sought out a business
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relationship with a California corporation, had ongoing contacts with the state over a
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five-year period, and drafted the agreement at issue). Therefore, the first two prongs
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are met.
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As to the final prong, whether the exercise of jurisdiction is reasonable depends
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on whether it comports with “fair play and substantial justice.” Bancroft, 223 F.3d at
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1088 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)). There are
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seven factors to be considered: (1) the extent of the defendant’s purposeful interjection
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into the forum state, (2) the burden on the defendant in defending in the forum, (3) the
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extent of the conflict with the sovereignty of the defendant’s state, (4) the forum state’s
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interest in adjudicating the dispute, (5) the most efficient judicial resolution of the
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controversy, (6) the importance of the forum to the plaintiff’s interest in convenient and
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effective relief, and (7) the existence of an alternative forum. Id.
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Most of the factors clearly weigh in favor of exercising jurisdiction over EDU-
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HK. EDU-HK has purposefully interjected itself into the forum state by shipping the
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medical equipment to California and otherwise communicating with IntuBrite, a
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company EDU-HK knew was located in California, regarding the goods. California
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has a strong interest in adjudicating the dispute because IntuBrite alleges that the
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medical equipment EDU-HK sent to IntuBrite in California contained defects,
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including contamination and mislabeling. Moreover, it would be more efficient for
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IntuBrite’s counterclaims to be heard here, since they are closely related to the claims
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in the main action brought by EDU-USA. Finally, because IntuBrite, its witnesses, and
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the allegedly defective goods are located in California, having its claims heard here is
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extremely significant to its interest in obtaining convenient and effective relief.
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That said, the fact that EDU-HK is located in Hong Kong weighs against the
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exercise of jurisdiction. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102,
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12cv01078 BTM (WMC)
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114 (1987) (“The unique burdens placed upon one who must defend oneself in a
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foreign legal system should have significant weight in assessing the reasonableness of
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stretching the long arm of personal jurisdiction over national borders.”). However, this
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factor is not dispositive, especially since modern technology has “significantly reduced
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the burden of litigating in another country.” Dole Food Co., Inc. v. Watts, 303 F.3d
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1104, 1115 (9th Cir. 2002) (internal quotations omitted).
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The Court is mindful that, according to the declaration of Max Choi,
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“[e]mployees who work in the People’s Republic of China are not permitted to travel
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to the United States without the written permission of the government of the People’s
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Republic of China, which would be difficult to obtain in a civil case in the United
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States.” (ECF No. 39, ¶5.) Nonetheless, the Court must balance that against the
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difficulty that IntuBrite would face it in obtaining relief for its claims were it forced to
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bring suit in Hong Kong.
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As to the remaining factor, conflict with the sovereignty of Hong Kong, this
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factor “entails an examination of the competing sovereign interests in regulating [the
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defendant’s] behavior.” Dole, 303 F.3d at 1115. California has a strong interest in
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protecting its businesses, and certainly in protecting its citizens from faulty medical
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equipment. Moreover, while Hong Kong may have an interest in regulating its
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businesses, the goods in this case were intended solely for use in the United States.
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Regardless of whether EDU-HK is affiliated with EDU-USA or not, EDU-HK appears
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to do a significant amount of business with EDU-USA, which is an American company
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supplying medical equipment to other American companies. Thus, this factor weighs
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in favor of retaining jurisdiction.
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In sum, while the Court appreciates that it may be difficult for EDU-HK to
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litigate in this district, the factors overall favor IntuBrite. Therefore, the Court holds
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that it has personal jurisdiction over EDU-HK.
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12cv01078 BTM (WMC)
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B. Forum Non Conveniens
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EDU-HK’s second argument is that the claims against it should be dismissed on
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the grounds of forum non conveniens. A district court may decline to exercise
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jurisdiction where a foreign forum would be more convenient. Lueck v. Sundstrand
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Corp., 236 F.3d 1137, 1142 (9th Cir. 2001). “In dismissing an action on forum non
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conveniens grounds the court must examine: (1) whether an adequate alternative forum
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exists, and (2) whether the balance of private and public interest factors favors
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dismissal.” Id.
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1. Adequate Alternative Forum
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“The defendant bears the burden of proving the existence of an adequate
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alternative forum.” Cheng v. Boeing Co., 708 F.2d 1406, 1411 (9th Cir.1983). An
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alternative forum generally exists when “the defendant is amenable to service of
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process in the foreign forum.” Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th
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Cir. 2001). Here, EDU-HK has indicated that it would be amenable to service of
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process in Hong Kong, where it is located. Therefore, this prong is met.
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2. Private and Public Interest Factors
The private interest factors to be considered are:
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(1) the residence of the parties and the witnesses;
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(2) the forum’s convenience to the litigants;
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(3) access to physical evidence and other sources of proof;
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(4) whether unwilling witnesses can be compelled to testify;
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(5) the cost of bringing witnesses to trial;
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(6) the enforceability of the judgment; and
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(7) “all other practical problems that make trial of a case easy,
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expeditious and inexpensive.”
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Lueck, 236 F.3d at 1145. These factors cut both ways, for whatever would be easier
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12cv01078 BTM (WMC)
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for EDU-HK would be harder for IntuBrite, and vice versa. For instance, IntuBrite is
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likely to have witnesses and physical evidence in California, while EDU-HK is likely
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to have witnesses and physical evidence in Hong Kong. But as IntuBrite points out,
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“unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum
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should rarely be disturbed.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
The public interest factors to be considered are:
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(1) local interest of lawsuit;
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(2) the court’s familiarity with governing law;
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(3) burden on local courts and juries;
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(4) congestion in the court; and
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(5) the costs of resolving a dispute unrelated to this forum.
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Lueck, 236 F.3d at 1147. As noted above, California has a strong interest in this case,
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and the dispute is certainly not unrelated to this forum. Moreover, it is more
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expeditious to hear IntuBrite’s claims here, since the related case brought by EDU-
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USA will move forward in this district. Therefore, these factors weigh in favor of
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keeping the case in this district.
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Overall, the public and private interest factors weigh against dismissing the case
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on forum non conveniens grounds, and the mere fact that an alternative forum exists
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does not outweigh the presumption in favor of the plaintiff’s choice of forum. The
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Court therefore DENIES EDU-HK’s motion to dismiss on forum non conveniens
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grounds.
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12cv01078 BTM (WMC)
III. CONCLUSION
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For the reasons above, EDU-HK’s motion to dismiss (ECF No. 34) is hereby
DENIED.
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IT IS SO ORDERED.
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DATED: July 15, 2013
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BARRY TED MOSKOWITZ, Chief Judge
United States District Court
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12cv01078 BTM (WMC)
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