Sunderland et al v. PharmaCare U.S., Inc. et al
Filing
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ORDER Granting Defendant PharmaCare Laboratories PTY LTD.'s Motion to Dismiss (ECF No. 12 ). Signed by District Judge James E. Simmons, Jr on 5/10/2024. (maq)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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LINDA SUNDERLAND and BENJAMIN
BINDER, individually and on behalf of all
those similarly situated,
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Case No.: 23cv1318-JES (AHG)
ORDER GRANTING DEFENDANT
PHARMACARE LABORATORIES
PTY LTD.’S MOTION TO DISMISS
Plaintiffs,
v.
[ECF No. 12]
PHARMACARE U.S., INC.; and
PHARMACARE LABORATORIES PTY
LTD.,
Defendants.
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Before the Court is Defendant PharmaCare Laboratories Pty Ltd.’s (“PharmaCare
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Laboratories”) motion to dismiss for lack of personal jurisdiction. ECF No. 12. Plaintiffs
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filed an opposition, and PharmaCare Laboratories filed a reply. ECF Nos. 15, 16. On
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November 15, 2023, the Court heard oral argument on the matter and took it under
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submission. ECF No. 23. After due consideration and for the reasons discussed below,
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the motion is GRANTED.
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I.
BACKGROUND
On July 18, 2023, Plaintiffs initiated this class action lawsuit against Defendants
PharmaCare U.S., Inc. (“PharmaCare U.S.”) and PharmaCare Laboratories (collectively,
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23cv1318-JES (AHG)
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“Defendants”). ECF No. 1. Plaintiffs represent themselves and classes of individuals that
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have purchased Defendants’ products that contain the ingredient black elderberry.
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Black elderberry is derived from the Sambucus plant and has become a popular
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ingredient for use in supplements in recent years. Id. at ¶¶ 2-3. Plaintiffs allege that
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Defendants’ products include various statements on its labels, including statements that
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their products are developed by a “world renowned virologist” and that their products
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include a “unique black elderberry extract” that is made from a “proprietary method.” Id.
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at ¶¶ 5-6. However, Plaintiffs allege that these representations are false because
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Defendants’ products actually contain “run-of-the-mill Elderberry Juice.” Id. at ¶¶ 7-8.
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Based on these allegations, Plaintiffs bring a class action lawsuit against
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Defendants with a class of similarly situated consumers who have purchased the accused
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products. Id. ¶ 50. Plaintiff Sunderland is a resident and citizen of New York who has
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purchased Defendants’ Sambucol® Black Elderberry Chewable Tablets over the last two
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years. Id. at ¶¶ 10-11. Plaintiff Binder is a resident and citizen of California who has
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purchased Defendants’ Sambucol® Black Elderberry Original Syrup over the last four
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years. Id. at ¶¶ 15-16. Specifically, Plaintiffs seek to bring class claims for a nationwide
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class, a New York subclass, and a California subclass. Id. at ¶ 50. Individually and on
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behalf of the class, Plaintiffs allege violations of: (1) the California Business and
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Professions Code Section 17200 et seq. (“UCL”); (2) the California Business and
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Professions Code Section 17500 et seq. (“FAL”) for false advertising; (3) the Consumer
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Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (“CLRA”); (4) the New York
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Deceptive Acts and Practices Law; and (5) breach of express warranty. Id. at ¶¶ 60-113.
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Pending now before the Court is Defendant PharmaCare Laboratories’ motion to
dismiss for lack of personal jurisdiction.
II.
LEGAL STANDARDS
Defendant PharmaCare Laboratories brings this motion to dismiss under Federal
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Rule of Civil Procedure 12(b)(2). Once the defendant moves to dismiss for lack of
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personal jurisdiction, the plaintiff then bears the burden to establish that the Court has
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personal jurisdiction over the defendant. Mavrix Photo, Inc. v. Brand Techs., Inc., 647
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F.3d 1218, 1223 (9th Cir. 2011).
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Where the defendant’s motion is based on written materials such as affidavits
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rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of
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jurisdictional facts to withstand the motion to dismiss. Marvix Photo, 647 F.3d at 1223.
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The plaintiff cannot “simply rest on the bare allegations of its complaint,” but
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uncontroverted allegations in the complaint must be taken as true. Schwarzenegger v.
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Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (quoting Amba Mktg. Sys.,
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Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). Allegations in the complaint
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may be contradicted by affidavit, but factual disputes must be resolved in the plaintiff’s
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favor. Marvix Photo, 647 F.3d at 1223.
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Where, as here, federal court jurisdiction is based on 28 U.S.C. § 1332(d) and only
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state law causes of action are asserted, the district court applies the law of the state in
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which it sits—here, California—to establish personal jurisdiction. Core-Vent Corp. v.
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Nobel Industries AB, 11 F.3d 1482, 1484 (9th Cir. 1993). California’s long-arm statute
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permits a court to exercise personal jurisdiction over a defendant to the extent permitted
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by the Due Process Clause of the Constitution. Cal. Code Civ. P. § 410.10; Gordy v.
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Daily News, L.P., 95 F.3d 829, 831 (9th Cir. 1996). Therefore, to establish personal
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jurisdiction, Plaintiffs must satisfy the due process Constitutional requirements.
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For a court to exercise personal jurisdiction over a nonresident defendant
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consistent with due process, that defendant must have “certain minimum contacts” with
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the relevant forum “such that the maintenance of the suit does not offend ‘traditional
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notions of fair play and substantial justice.’” International Shoe Co. v. Washington, 326
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U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Minimum
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contacts can either be established through general or specific jurisdiction. General
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jurisdiction, which is found where the defendant has continuous and systematic contacts
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with a state to render then essentially “at home” in the state, is not in dispute here—both
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Defendants and Plaintiffs agree that PharmaCare Laboratories is not subject to general
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jurisdiction in California. Minimum contacts may also be established through specific
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jurisdiction. Specific jurisdiction is established where the defendant (1) purposefully
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directs his activities or consummate some transaction with the forum or performs some
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act by which he purposefully avails himself of the privilege of conducting activities in the
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forum, thereby invoking the benefits and protections of its laws and (2) the claim is one
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which arises out of or relates to the defendant’s forum-related activities. Schwarzenegger
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v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004).
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III.
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DISCUSSION
There is no dispute that PharmaCare Laboratories is an Australian company with
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its principal place of business in Austria. ECF No. 1 at ¶ 21. PharmaCare Laboratories
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owns the Sambucol® trademark, and Plaintiffs further allege that it is the entity
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“responsible for the formulation and manufacturing of the Elderberry products (both in
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the U.S. and internationally), and is responsible for the original labels on the Elderberry
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products.” Id. While the complaint includes a statement regarding this Court’s personal
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jurisdiction over PharmaCare U.S. (see id. at ¶ 23),1 there is no similar allegation as to
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personal jurisdiction over PharmaCare Laboratories.
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PharmaCare Laboratories argues that it is not subject to specific jurisdiction in
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California for several reasons. First, it argues that ownership of the trademark does not
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show that it purposefully availed itself to California jurisdiction. ECF No. 12-1 at 11.
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Second, it refutes the allegation in the Complaint that it manufactures, purchases, labels,
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advertises, markets, sells, or distributes any Sambucol® branded products in California or
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any other state. Id. (citing ECF No. 12-2, Declaration of Anthony Robertson (“Robertson
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Decl.”), Chief Financial Officer, at ¶ 10). Rather it is Defendant PharmaCare U.S. that is
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responsible for purchasing, advertising, marking, labeling, sale and distribution of
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This paragraph reads: “This Court has personal jurisdiction over Defendant PharmaCare U.S., Inc.’s in
this matter because Defendant is a resident of California, and Defendants’ acts and omissions giving rise
to this action occurred in the state of California.”
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Sambucol® branded products in the United States, including California. Robertson Decl.
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at ¶ 11. It also states that PharmaCare U.S. is the entity that runs the website
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sambucolusa.com, which takes online orders. Id. at ¶¶ 12-13. Finally, PharmaCare
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Laboratories states that it is just a holding company that owns shared in other companies,
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including PharmaCare U.S., but it does not direct the work of or exercise sufficient
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control over PharmaCare U.S. Id. at ¶¶ 3, 15.
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In opposition, Plaintiffs argue that, first, they alleged that PharmaCare Laboratories
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is the entity that is responsible for the labeling and marketing of the Products. ECF No.
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15 at 5 (citing ECF No. 1 at ¶ 21). Since labeling is at the heart of this case and
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PharmaCare Laboratories “placed the Products with its misleading labels into the stream
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of commerce directed at California consumers,” Plaintiffs argue that specific jurisdiction
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is satisfied. Id. Second, even if direct involvement is lacking, Plaintiffs argue that specific
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jurisdiction still exists in this situation because PharmaCare Laboratories “assigned” the
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U.S. subsidiary with the task of carrying out operations and distribution in the United
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States, relying on an agency theory. Id. at 6-7.
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Plaintiffs appear to rely on a stream of commerce theory to support their specific
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jurisdiction argument. See ECF No. 15 at 4. This stream of commerce theory was first
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discussed in the seminal Supreme Court case Asahi Metal Industry Co. v. Superior Court
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of California, Solano County, 480 U.S. 102 (1987). The Asahi Court failed to agree on a
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majority rule, with the Justices espousing two points of view. Justice Brennan opined that
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the constitutional limit of due process is satisfied when a defendant places a product into
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the stream of commerce with awareness that the product is marketed to or may reach the
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forum state. Id. at 117. On the other hand, Justice O’Conner endorsed a more stringent
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test, where simply placing a product into the stream of commerce is not enough, and a
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defendant must do “something more” to direct activity at the forum state. Id. at 109-12.
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Several district courts within this Circuit have interpreted the Ninth Circuit to have
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adopted the O’Conner view that requires “something more” than just knowledge that a
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product will enter the state through the stream of commerce. Holland Am. Line Inc. v.
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Wartsila N. Am., Inc., 485 F.3d 450, 459 (9th Cir. 2007) (“The placement of a product
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into the stream of commerce, without more, is not an act purposefully directed toward a
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forum state.”) (citing Asahi); Clarke v. Air & Liquid Sys. Corp., No. 2:20-CV-00591-
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SVW-JC, 2020 WL 12968241, at *4 (C.D. Cal. Apr. 20, 2020) (“[T]he Ninth Circuit has
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adopted Justice O’Connor’s ‘stream-of-commerce plus’ analysis . . . .”); but see CAO
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Lighting, Inc. v. Signify N.V., 628 F. Supp. 3d 996, 1002 (C.D. Cal. 2022) (“[I]t remains
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unresolved whether Justice Brennan’s view (‘stream of commerce’ alone) or Justice
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O’Connor’s view (‘something more’) controls, and the Courts of Appeals have divided
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on this question.”).
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As to PharmaCare Laboratories’ contention that ownership of the Sambucol®
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trademark does not establish personal jurisdiction, the Court agrees. In the context of
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purposeful availment, courts have considered trademarks to be “a most passive form of
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advertising.” See Williams v. Canon, Inc., 432 F. Supp. 376, 380 (C.D. Cal. 1977). Thus,
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akin to nationwide advertising, any such exposure to such trademarks in a jurisdiction
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does not constitute transacting business or purposeful availment in that jurisdiction. Love
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v. The Mail on Sunday, No. CV05-7798ABCPJWX, 2006 WL 4046170, at *7 (C.D. Cal.
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July 14, 2006).
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The rest of Plaintiffs’ basis for specific jurisdiction rests on two theories. First,
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Plaintiffs argue that PharmaCare Laboratories is the entity that is responsible for the
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labeling and marketing of the Products, and “placed the Products with its misleading
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labels into the stream of commerce directed at California consumers.” The issue with this
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theory is that it has been squarely refuted by PharmaCare Laboratories. In a declaration
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from its Chief Financial Officer, Mr. Robertson, PharmaCare Laboratories has stated,
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under the penalty of perjury, that it does not “manufacture, purchase, label, advertise,
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market, sell or distribute any Sambucol® products in or into California or any other state
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in the United States.” Robertson Decl. at ¶ 10. Rather, it is PharmaCare U.S.—the other
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named Defendant—that is responsible for these actions. Id. at ¶¶ 11-12. An analogous
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situation arose in CAO Lighting, Inc. v. Signify N.V., 628 F. Supp. 3d 996, 1002 (C.D.
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Cal. 2022). In that case, the plaintiff alleged in the complaint “in a conclusory manner
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devoid of facts that Defendant itself places products in the stream of commerce” whereas
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the defendant filed a declaration stating that it “does not design, manufacture, import,
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market, offer for sale or sell, export or import any products or services, in California or
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anywhere else throughout the world.” Id. The plaintiff was unable to present any new
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evidence to rebut the statements in the declaration, and the court held that the plaintiff
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failed to establish that the defendant places the products at issue into the stream of
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commerce. Id. The Court is persuaded by this reasoning. On a motion to dismiss for lack
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of personal jurisdiction, allegations in the complaint may be contradicted by affidavit and
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Plaintiffs have put forth no further factual evidence to refute the statements in the sworn
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affidavit. See Marvix Photo, 647 F.3d at 1223.
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The second theory Plaintiffs rely on to establish jurisdiction is that PharmaCare
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Laboratories “assigned” PharmaCare U.S. with the task of carrying out operations and
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distribution in the United States, including California—an agency theory of jurisdiction.
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In Daimler AG v. Bauman, the Supreme Court rejected the Ninth Circuit’s reliance on an
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agency theory between a parent and a subsidiary to establish general jurisdiction by
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attributing the subsidiary’s contacts with the state to the parent. 571 U.S. 117, 134-39
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(2014). After Daimler, the Ninth Circuit has maintained two theories under which a
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parent/subsidiary relationship could establish jurisdiction. First, the Ninth Circuit held
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that Daimler left intact the “alter ego test for imputed general jurisdiction.” Williams v.
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Yamaha Motor Co., 851 F.3d 1015, 1021 (9th Cir. 2017). This test requires more than
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just a parent-subsidiary relationship however: “a plaintiff must make out a prima facie
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case (1) that there is such unity of interest and ownership that the separate personalities of
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the two entities no longer exist and (2) that failure to disregard their separate identities
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would result in fraud or injustice.” Id. Plaintiffs do not appear to rely on this theory here.
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Second, the Ninth Circuit held that Daimler also “left open the question of whether an
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agency relationship might justify the exercise of specific jurisdiction.” Id. at 1023.
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Specifically, in order to establish specific jurisdiction based on a parent-subsidiary
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agency relationship, the plaintiff must show that “the parent company must have the right
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to substantially control its subsidiary’s activities.” Id. at 1025; In re ZF-TRW Airbag
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Control Units Prod. Liab. Litig., 601 F. Supp. 3d 625, 700 (C.D. Cal. 2022) (the agency
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relationship for specific jurisdiction under an agency theory is “substantial control”). This
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requires a showing higher than “normal oversight of a parent over a subsidiary” and more
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akin to “control of day-to-day operations.” In re California Gasoline Spot Mkt. Antitrust
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Litig., No. 20-CV-03131-JSC, 2021 WL 4461199, at *2 (N.D. Cal. Sept. 29, 2021).
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With this standard in mind, Plaintiffs provide the Court with little evidence or even
allegations regarding the relationship between PharmaCare Laboratories and its
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subsidiary PharmaCare U.S. The complaint does not include allegations regarding the
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level of control PharmaCare Laboratories has over PharmaCare U.S., only alleging that
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“Defendant PharmaCare Pty Ltd. (both individually and through its whole own
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subsidiaries) owns the Sambucol trademark, is responsible for the formulation and
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manufacturing of the Elderberry Products (both in the U.S. and internationally), and is
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responsible for the original labels on the Elderberry Products.” ECF No. 1 at ¶ 21. For the
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first time in its opposition to this motion, Plaintiffs state baldly that the parent is
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“assigning” to its subsidiary “tasks of carrying out U.S. operations with knowledge that
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the Subsidiary would target California markets.” ECF No. 15 at 6. In contrast, Mr.
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Robertson states in his declaration that “[o]ther than the exercise of the broad oversight
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typically indicated by common ownership or common directorship, PharmaCare
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Laboratories does not direct the work of PharmaCare U.S., Inc. or its employees. The
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day-to-day operation of PharmaCare U.S., Inc. are controlled and managed locally by the
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employees of PharmaCare U.S., Inc. Indeed, PharmaCare U.S., Inc. establishes,
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implements, and enforces its own policies, procedures and practices.” Robertson Decl. at
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¶ 15. Based on this record, Plaintiffs have failed to establish that PharmaCare
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Laboratories substantially controls its subsidiary PharmaCare U.S. See CAO Lighting,
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628 F. Supp. 3d at 1003 (finding insufficient “control” where parent stated in a
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declaration that it did not have “any direction or control over the day-to-day operations”
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of the subsidiary).
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Thus, the Court finds that Plaintiffs have failed to make a prima facie showing that
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the Court has personal jurisdiction over Defendant PharmaCare Laboratories and
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GRANTS the motion to dismiss for lack of personal jurisdiction.
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IV.
JURISDICTIONAL DISCOVERY
Plaintiffs request that the Court permit jurisdictional discovery if it finds the
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pleadings insufficient to establish personal jurisdiction over PharmaCare Laboratories.
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“[D]iscovery should ordinarily be granted where pertinent facts bearing on the question
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of jurisdiction are controverted or where a more satisfactory showing of the facts is
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necessary.” Laub v. U.S. Dep’t of Interior, 342 F.3d 1080, 1093 (9th Cir. 2003) (citation
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and quotation marks omitted). However, “the Court need not permit such discovery” if “a
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plaintiff’s claim of personal jurisdiction appears to be both attenuated and based on bare
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allegations in the face of specific denials made by the defendants.” Pebble Beach Co. v.
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Caddy, 453 F.3d 1151, 1160 (9th Cir. 2006) (quoting Terracom v. Valley Nat’l Bank, 49
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F.3d 555, 562 (9th Cir. 1995)). Nor is discovery required if the plaintiff “fail[s] to
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demonstrate how further discovery would allow it to contradict” the defendant’s
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affidavits. Terracom, 49 F.3d at 562; see also Boschetto v. Hansing, 539 F.3d 1011, 1020
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(9th Cir. 2008) (court may to deny jurisdictional discovery if request is “based on little
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more than a hunch that it might yield jurisdictionally relevant facts”); Butcher’s Union
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Local No. 498 v. SDC Inv., Inc., 788 F.2d 535, 540 (9th Cir.1986) (court may deny
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jurisdictional discovery where the plaintiffs “state only that they ‘believe’ discovery will
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enable them to demonstrate sufficient California business contacts to establish the court’s
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personal jurisdiction”).
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Here, Plaintiffs appear to request discovery so that they can rebut Mr. Robertson’s
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declaration the PharmaCare Laboratories does not manufacture, purchase, label,
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advertise, market, sell or distribute any Sambucol® products in California or any other
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state in the United States. ECF No. 15 at 8. However, Plaintiffs have not stated any
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reasons that support their belief that any additional discovery will rebut this statement.
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Without more, the Court does not find that Plaintiffs have made the requisite showing
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that jurisdictional discovery is warranted. See Johnson v. Mitchell, No. CIV S-10-1968
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GEB, 2012 WL 1657643, at *7 (E.D. Cal. May 10, 2012) (denying jurisdictional
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discovery where no colorable showing has been made to personal jurisdiction and
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discovery request is vague and no more than a “fishing expedition”); CAO Lighting, 628
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F. Supp. 3d at 1005-06 (denying jurisdictional discovery where Defendant made specific
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denials of allegations in an affidavit and Plaintiff gave no additional reasons to disbelieve
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those statements).
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Accordingly, the Court DENIES the request for jurisdictional discovery.
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V.
CONCLUSION
After due consideration and for the reasons discussed above, the Court GRANTS
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the motion to dismiss Defendant PharmaCare Laboratories for lack of personal
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jurisdiction and DENIES the request for jurisdictional discovery. Defendant PharmaCare
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Laboratories is DISMISSED WITHOUT PREJUDICE.
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IT IS SO ORDERED.
Dated: May 10, 2024
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