Judge Christopher K. Lui, Case 22STCV01293 2022-09-20 Tentative Ruling

Judge: Christopher K. Lui, Case: 22STCV01293, Date: 2022-09-20 Tentative Ruling

Case Number: 22STCV01293 Hearing Date: September 20, 2022 Dept: 76

Plaintiff alleges that Defendants have marketed unauthorized health insurance plans and insurance, as purported health care sharing ministry (“HCSM”) plans, to Californians, but refused to pay for any member’s medical costs.

Specially Appearing Defendants Shelley Steele, Timothy Candace Moses, Chase Moses (the “Moses Defendants”) and First Call Telemedicine, LLC (“First Call”) move to quash service of summons for lack of personal jurisdiction.

TENTATIVE RULING

Plaintiff The People of the State of California’s request to conduct jurisdictional discovery as to all Specially-Appearing Defendants is GRANTED. Accordingly, the hearing on the motion to quash is CONTINUED to November 18, 2022 at 8:30 AM. Supplemental briefs are to be filed pursuant to code relative to the November 18, 2022 hearing date.

ANALYSIS

Motion To Quash

Documents Lodged Conditionally Under Seal

The documents lodged conditionally under seal by Plaintiff in support of the Opposition shall immediately be placed in the public record, as the Court has not ordered any documents sealed, nor is there any motion to seal pending.

Discussion

On a motion to quash for lack of personal jurisdiction, the plaintiff has the initial burden of proof:

“When a defendant moves to quash service of process” for lack of specific jurisdiction, “the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction.” ( Vons, supra, 14 Cal.4th at p. 449.) “If the plaintiff meets this initial burden, then the defendant has the burden of demonstrating ‘that the exercise of jurisdiction would be unreasonable.’ ” ( Pavlovich, supra, 29 Cal.4th at p. 273, quoting Vons, at p. 449.)

(Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062 [bold emphasis added].)

General Jurisdiction

Engaging in a substantial, continuous or systematic course of business in forum states is insufficient to confer the exercise of general jurisdiction. The defendant’s presence in the forum state must render it the equivalent of the defendant’s “home state.” The U.S. Supreme Court case of Daimler AG v. Bauman (2014) 571 U.S. 117 prohibits the exercise of general jurisdiction over Defendant because California is not the equivalent of its “home state,” i.e., its principal place of business. (Id. at 122, 127.)

Here, Plaintiff does not argue that a basis for general jurisdiction exists as to any of the moving Defendants.

As such, there is no basis for a finding of general jurisdiction.

Specific Jurisdiction

“Specific jurisdiction may be asserted where the defendant has purposefully availed himself of forum benefits and the controversy is related to or arises out of the defendant's contacts with the forum. (Citation omitted.) Sufficient minimum contacts for specific jurisdiction exist where a nonresident 'deliberately' has engaged in significant activities within a [s]tate [citation] or has created 'continuing obligations' between himself and residents of the forum. [Citation.]" (Citation omitted.)” (Hall v. Laronde (1997) 56 Cal.App.4th 1342, 1346.) Moreover, the exercise of specific jurisdiction must be fair and reasonable. (Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4^th 969, 980.)

“When determining whether specific jurisdiction exists, courts consider the ‘ “relationship among the defendant, the forum, and the litigation.” ’ ( Helicopteros Nacionales de Colombia v. Hall (1984) 466 U.S. 408, 414 [80 L. Ed. 2d 404, 104 S. Ct. 1868], quoting Shaffer v. Heitner (1977) 433 U.S. 186, 204 [53 L. Ed. 2d 683, 97 S. Ct. 2569].) A court may exercise specific jurisdiction over a nonresident defendant only if: (1) ‘the defendant has purposefully availed himself or herself of forum benefits’ ( Vons, supra, 14 Cal.4th at p. 446); (2) ‘the “controversy is related to or ‘arises out of’ [the] defendant's contacts with the forum” ’ (ibid., quoting Helicopteros, supra, 466 U.S. at p. 414); and (3) ‘ “the assertion of personal jurisdiction would comport with ‘fair play and substantial justice’ ” ’ ( Vons, supra, 14 Cal.4th at p. 447, quoting Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 472–473 [85 L. Ed. 2d 528, 105 S. Ct. 2174] [(Burger King)].)” ( Pavlovich, supra, 29 Cal.4th at p. 269.)

(Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4^th 1054, 1062.)

“In judging minimum contacts, a court properly focuses on ‘the relationship among the defendant, the forum, and the litigation.’ [Citations.]” (Calder v. Jones (1984) 465 U.S. 783, 788 [79 L.Ed.2d 804, 104 S. Ct. 1482].) “Each defendant's contacts with the forum State must be assessed individually.” (Id. at p. 790.)

(HealthMarkets, Inc. v. Superior Court (2009) 171 Cal.App.4th 1160, 1167.)

Contrary to petitioner's argument, the trial court's reliance on Anglo Irish Bank Corp., PLC v. Superior Court (2008) 165 Cal.App.4th 969 [81 Cal. Rptr. 3d 535] (Anglo Irish) was sound. In that case, the court held that plaintiffs could satisfy the personal availment prong of the specific personal jurisdiction test based on activities undertaken on behalf of the nonresident defendants, if the plaintiffs established that the defendant purposefully directed those activities at the forum state. (Id. at p. 984.) In so holding, the court carefully distinguished the requirements for specific personal jurisdiction from the requirements to establish liability or personal jurisdiction based on agency principles. The court explained, “In our view, reliance on state substantive law of agency and alter ego to determine the constitutional limits of specific personal jurisdiction is unnecessary and is an imprecise substitute for the appropriate jurisdictional question. The proper jurisdictional question is not whether the defendant can be liable for the acts of another person or entity under state substantive law, but whether the defendant has purposefully directed its activities at the forum state by causing a separate person or entity to engage in forum contacts. That constitutional question does not turn on the specific state law requirements of alter ego or agency, although the inquiry [*389] may be similar in some circumstances.” (Id. at p. 983; see also Empire Steel Corp. v. Superior Court (1961) 56 Cal.2d 823, 835 [17 Cal. Rptr. 150, 366 P.2d 502] [trial court need not decide whether the parent was the alter ego of its subsidiary where “jurisdiction over [parent] has been established on the basis of acts of [the] parent itself”].) As the trial court correctly reasoned, under Anglo Irish, it is sufficient, for purposes of the purposeful availment inquiry, that SK Trading directed SK Energy “towards California ‘for the purpose of engaging in economic activity with California residents.’”

As set forth above, specific jurisdiction “requires a showing not only that the defendant has ‘“purposefully directed”’ its activities at the forum but also that ‘the litigation results from alleged injuries that “arise out of or relate to” those activities.’ [Citation.] There must be ‘a connection between the forum and the specific claims at issue.’ [Citation.] ‘If the operative facts of the allegations of the complaint do not relate to the [nonresident's] contacts in this state, then the cause of action does not arise from that contact such that California courts may exercise specific jurisdiction.’” (Rivelli v. Hemm, supra, 67 Cal.App.5th at p. 399.) “[T]he relatedness requirement is satisfied if ‘there is a substantial nexus or connection between the defendant's forum activities and the plaintiff's claim.’” (Citations omitted.)

(SK Trading Internat. Co., Ltd. v. Superior Court (2022) 77 Cal.App.5th 378, 388-89 [bold emphasis and underlining added].)

¿ Shelley Steele: Plaintiff offers the following evidence:

Shelley was directly responsible for the sale of Aliera plans to thousands of Californians, as she managed Aliera’s marketing, sales departments, and call center operations, and personally approved all advertising. (Butler Decl. ¶ 5; Paul Decl. ¶ 5; Dybnis Decl. Ex. 37 at 34:18-35:7.) She also oversaw the training of Aliera’s in-house sales agents. (Butler Decl. ¶ 5.) Shelley also communicated and signed contracts with several California-based companies integral to the operation of Aliera’s business. For example, California-based Enrollment123, Inc. aka Admin123, collected and held all member contact, plan, claim, and payment information, and facilitated salespersons commissions. (Dybnis Decl. Ex. 15.) In 2015, she signed a contract with the company on behalf of Aliera’s predecessor. (Dybnis Decl. Ex. 41.) The Moses defendants even invited and hosted the owners at their office in June 2019. (Dybnis Decl. Ex. 42.) In addition to the Enrollment123 contract, Shelley also signed contracts on behalf of Aliera with a California based marketing company and California based telecommunication company. (Dybnis Decl. Exs. 17, 27, 40.) Shelley also initiated a relationship with a California bank with no branches outside of California. (Dybnis Decl. Ex. 36 at 63:4-9.) She contacted Fresno First Bank on behalf Aliera, its subsidiaries, and First Call, to move those companies’ accounts to California. (Dybnis Decl. Ex. 2) She was a signatory on the new accounts, became the sole authorized representative for Aliera subsidiaries, personally guaranteed and managed the accounts. (Dybnis Decl. Exs. 3-5, and 36 at 62:21-25, 63:18-24, 81:3-82:6.)

The Court has closely examined the evidence cited by Plaintiff and does not find sufficient evidence that Shelley Steele purposefully engaged in activities in California or directed toward California, which have a direct nexus to the advertising and insurance activity which forms the basis of the Complaint.

However, Plaintiff’s request to conduct jurisdictional discovery is GRANTED as to Specially Appearing Defendant Shelley Steele.

A plaintiff is generally entitled to conduct discovery with regard to a jurisdictional issue before a court rules on a motion to quash. (Citation omitted.) The granting of a discovery request "lies in the discretion of the trial court, whose ruling will not be disturbed in the absence of manifest abuse." (Citation omitted.) Under the circumstances, the trial court should be provided the opportunity to exercise its discretion to determine whether jurisdictional discovery pertaining to petitioners would be appropriate in this case.

(Goehring v. Superior Court (1998) 62 Cal.App.4th 894, 911.)

¿ Timothy Candace Moses:

Tim was a top executive of Aliera. (Paul Decl. ¶ 6.) As its “Executive Director,” he entered into multiple contracts on behalf of Aliera. (Dybnis Decl. Exs. 29-34.) He was involved in the creation of its plans, including membership guides. (Butler Decl. ¶ 6.) At one point, he oversaw the managers of its call center and individual sales. (Dybnis Decl. Ex. 25.) He also developed its sales channels with call centers and oversaw the training of those centers. (Butler Decl. ¶ 6.) He served as Aliera’s contact for Enrollment123, Inc. and regularly corresponded with the California vendor, even beyond March 2019.7 (Dybnis Decl. Ex. 26; Dybnis Decl. Exs. 43, 44.) Both he and Chase negotiated terms of Aliera’s contracts. (Dybnis Decl. Exs. 45-47.) He also corresponded with at least one of Aliera’s California sales agencies and a California-based payment processor. (Giudici 2nd Decl. Exs. A- F; Giudici Decl. ¶ 6; Dybnis Decl. Ex. 48.)

The Court has closely examined the evidence cited by Plaintiff and it is questionable whether there is sufficient evidence that Tim Moses purposefully engaged in activities in California or directed toward California, which have a direct nexus to the advertising and insurance activity which forms the basis of the Complaint.

However, Plaintiff’s request to conduct jurisdictional discovery is GRANTED as to Specially Appearing Defendant Timothy Candace Moses.

¿ Chase Moses:

Chase Moses was Aliera’s Executive Vice President. (Dybnis Decl. Ex. 20 p. 20 ¶ 2.) He was responsible for creating and managing its health plans, among other duties. (Id.; Dybnis Decl. Ex. 37 at 35:8-19.) Later as President, he oversaw the marketing and sales departments. (Guarino Decl. ¶ 9; Paul Decl. ¶ 7.) He was also “Acting President” of Aliera’s marketing subsidiary, Advevo, LLC. (Guarino Decl. ¶ 9.) In these roles, he approved Aliera’s marketing. (Butler Decl. ¶ 7; Dybnis Decl. Ex. 37 at 34:23-36:2.) He oversaw Aliera’s sales team and was involved in the creation of all of Aliera’s marketing, including member guides, cards, and notifications to California members, and website. (Dybnis Decl. Ex. 28, 20, p. 183 ¶ 19: Paul Decl. ¶ 7.) He also sent membership materials, such as cards, member guides, and instructions for renewal, to all members, including those in California. (Dybnis Decl. Ex. 20, p. 185 ¶ 28.) Chase also trained California-based agents who sold Aliera’s plans to California residents. (Dybnis Decl. Ex. 37 at 34:23-36:2.) For example, he had calls discussing how to sell the plans with I Health and Life Insurance Services (“I Health”), a California insurance sales agency that sold Aliera plans in California. (Giudici Decl. ¶¶ 1-4; Giudici 2nd Decl. Ex. 6.) Tim, Shelley and Chase, also hosted the I Health CEO in their office. (Giudici Decl. ¶ 5.) After Aliera’s relationship ended with I Health, Chase flew to California and met with the CEO to request that I Health’s agents sell Aliera plans again. (Giudici Decl. ¶ 9.) Chase also trained California agents through webinars he hosted. (Dybnis Decl. Exs. 8-11, 13, 22.) He emailed California agents to convince them to sell Aliera’s Trinity plans when Aliera switched from Unity to Trinity plans, touting the benefits of the new plans. (Dybnis Decl. Exs. 8, 12.) He also signed contracts with California insurance sales call centers and plan design consultants. (Dybnis Decl. Exs. 24, 39.) Chase and Tim both created Aliera’s system for reviewing claims, systems that determined whether Aliera approved California members’ claims. (Paul Decl. ¶¶ 8-9.)

The Court has closely examined the evidence cited by Plaintiff and it is questionable whether there is sufficient evidence that Chase Moses purposefully engaged in activities in California or directed toward California, which have a direct nexus to the advertising and insurance activity which forms the basis of the Complaint.

However, Plaintiff’s request to conduct jurisdictional discovery is GRANTED as to Specially Appearing Defendant Chase Moses.

¿ First Call Telemedicine, LLC:

First Call provided telemedicine services for all Trinity plan members, including those in California. (Guarino Dec l. ¶ 11.) Members directly registered with First Call to receive telemedicine services. (Paul Decl. ¶ 11; Dybnis Decl. Ex. 36 at 80:1-20.) Starting in 2020, consumers who were members of both an Aliera and First Call plan paid for the services separately. (Paul Decl. ¶ 12.) First Call still markets and sells its plans to Californians through its website and a phone line. (Dybnis Decl. Ex. 18-19, 36 at 59:6-8, 15-19, 72:23-73:6, 91:23-92:13) The website is accessible to and includes notices specific to California consumers. (Dybnis Decl. ¶ 11, Ex. 18-19.) First Call currently maintains 690 California members and receives monthly payments from them. (Dybnis Decl. Ex. 36 at 27:3-13, 81:12-17, 94:6-11.) First Call also used to contract with Enrollment123, Inc. for use of its customer resource management database and uses Fresno First Bank for its banking. (Id. at 29:1-18, 61:23-62:1, 62:5-7, 108:1-7.) Shelley Steele has always been the sole operations decision maker for First Call. (Id. at 65:15-24, 92:20-24.)

The Court has closely examined the evidence cited by Plaintiff and it is questionable whether there is sufficient evidence that First Call Telemedicine, LLC purposefully engaged in activities in California or directed toward California, which have a direct nexus to the advertising and insurance activity which forms the basis of the Complaint. Operating a website accessible by California residents itself is not sufficient to demonstrate purposeful availment.

First, this conclusion is dictated by the definition of purposeful availment.

Defendants did not purposefully direct any activities toward California residents. At most, the law firm operated a website that could be accessed by California residents, but the website did not target California residents specifically and it was plaintiff who first contacted defendants. In assessing whether an out-of-state defendant's operation of a website constitutes purposeful availment, we examine (1) whether the website targets California residents (Citations omitted), and, if it does not, (2) where the website falls on a “sliding scale” of “interactivity” with Internet users, with websites allowing the out-of-state defendant to conduct business with California residents at one end of the scale and websites that passively make information available at the other end (citations *255 omitted). Here, the evidence showed that the law firm did not target California residents (and hence that any effect on those residents was not intended): Although the website boasted that the firm had a “nationwide” practice and set forth examples of prior settlements from persons who had received substandard treatment in California VA facilities, the website included examples from all around the country and the website itself was accessible from anywhere. On the sliding scale, the firm's 2017 website occupied a “middle ground” because it ostensibly allowed plaintiff to exchange information with the firm's website (citation omitted), although the fact that plaintiff herself had to reach out to the firm directly confirms the minimal interactivity of the website.

(Jacqueline B. v. Rawls L. Grp., P.C. (2021) 68 Cal.App.5th 243, 254-55.)

However, Plaintiff’s request to conduct jurisdictional discovery is GRANTED as to Specially Appearing Defendant First Call Telemedicine, LLC.

Accordingly, the hearing on the motion to quash is CONTINUED to November 18, 2022 at 8:30 AM. Supplemental briefs are to be filed pursuant to code relative to the November 18, 2022 hearing date.