Judge: David Sotelo, Case: 21STCV03363, Date: 2022-12-23 Tentative Ruling

Case Number: 21STCV03363    Hearing Date: December 23, 2022    Dept: 30

Ikspan,
Inc. vs. Ruben, et. al., Case No. 21STCV03363 

Tentative
Ruling re:  Defendant’s Motion to Quash
Service of Summons

Specially Appearing Defendant GrandVision Supply Chain B.V.
(GrandVision) moves to quash Plaintiff Ikspan, Inc.’s (Ikspan) service of the summons and complaint on it. The motion is
granted.

California courts may
exercise jurisdiction over nonresidents “on any basis not inconsistent with the
Constitution of this state or of the United States.” (Code Civ. Proc., §
410.10.) Code of Civil Procedure section 410.10 “manifests an intent to
exercise the broadest possible jurisdiction, limited only by constitutional
considerations.” (Sibley v. Superior Court (1976) 16 Cal.3d 442, 445.)
The United States Constitution permits a state to exercise jurisdiction over a
nonresident defendant if the defendant has sufficient “minimum contacts” with
the forum such that “maintenance of the suit does not offend ‘traditional
notions of fair play and substantial justice.’ [Citations.]” (Internat. Shoe
Co. v. Washington (1945) 326 U.S. 310, 316.) “The ‘substantial connection’
[citations], between the defendant and the forum State necessary for a finding
of minimum contacts must come about by an action of the defendant
purposefully directed toward the forum state. [Citations.]” (Asahi Metal
Industry Co. v. Superior Court (1987) 480 U.S. 102, 112.)

“Personal jurisdiction
may be either general or specific. [Citation.] ‘When determining whether
specific jurisdiction exists, courts consider the “relationship among the
defendant, the forum, and the litigation.” ’ [Citations.] A court may exercise
specific jurisdiction over a nonresident defendant only if: (1) “the defendant
has purposefully availed himself or herself of forum benefits” [Citation]; (2)
the “controversy is related to or ‘arises out of’ [the] defendant's contacts
with the forum” [Citations]; and (3) the assertion of personal jurisdiction
would comport with “fair play and substantial justice.” ’ ”  (Szynalski v. Superior Court (2009) 172
Cal.App.4th 1, 7.)

“On a motion to quash
service of summons, the plaintiff bears the burden of proving by a
preponderance of the evidence that all jurisdictional criteria are met. [Citations.]
The burden must be met by competent evidence in affidavits and authenticated
documents.” (Brown v. Garcia (2017) 17 Cal.App.5th 1198, 1203.)

Ikspan commenced this action
on January 27, 2022, for claims arising out of an alleged March 2019 agreement (the
Licensing Agreement) with Privé Goods, LLC (PG), an
eyewear company, to market, promote, advertise, distribute, and sell PG products in fifteen European Union countries. (SAC ¶
2.)
Plaintiff, acting under the Licensing Agreement as a “middle-man” for the
covered countries, entered into a contract with GrandVision (the GV Contract), an
optical retailer, for the exclusive rights to distribute PG products to GrandVision. (SAC ¶ 3.) GrandVision
is a Netherlands company, described by the SAC as “a behemoth optical retailer
operating more than 7,4000 locations in 40 countries worldwide." (SAC ¶
3.)

Ikspan alleges that PG’s
approved manufacturers failed to meet product standards, deliver goods in a
timely manner, and comply with European standards of quality, jeopardizing the
GV Contract. (SAC ¶ 4.) PG, rather than address Ikspan’s concerns about the
manufacturers, proceeded to collude with Defendant Laurent Ruben (Ruben),
Ikspan’s CFO, “to eradicate Ikspan’s coveted rights under the Licensing
Agreement,” forming a plan to “oust Ikspan, steal its CFO and take over the
lucrative GV Contract that Ikspan had secured.” (SAC ¶¶ 5-6.) Ikspan, on the
advice of Ruben, executed a confidential settlement agreement and accompanying
release under which “Ikspan relinquished its exclusive right to market,
promote, advertise distribute and sell Prive eyewear in the Territory and
promptly shut down.” (SAC ¶ 8.)

GrandVision now seeks to quash service of summons on the grounds
that (1) Ikspan has failed to serve it, and (2) the Court lacks personal
jurisdiction over it.

            As an initial matter, GrandVision has not made a
general appearance in this action. Under Code Civ. Proc. § 418.10, subd. (e), “a defendant may move
to quash and ‘simultaneously answer, demur, or move to strike the complaint or cross-complaint’
and ‘no act’ by a party who first makes a motion to quash, ‘including filing an
answer, demurrer, or motion to strike,’ constitutes an appearance ‘unless the
court denies the motion.’ ” (State Farm General Ins. Co. v. JT's Frames,
Inc. (2010) 181 Cal.App.4th 429, 440.) While
Plaintiff argues that GrandVision has generally appeared because it has filed a
case management statement, participated in meet and confer efforts, and
provided verified responses to discovery, all of those acts took place after
the filing of this motion to quash on November 14, 2022. (Benson Decl. ¶¶ 9-10,
Ex. G, Ex. H.)

            Ikspan’s Proof of Service of Summons for GrandVision,
filed September 19, 2022, shows that Ikspan served GrandVision USA, Inc.
(GrandVision USA) via personal service on September 14, 2022, in Wilmington,
Delaware. Ikspan argues that personal service on GrandVision USA is proper to
effect service on Defendant GrandVision (Supply Chain B.V.), because Grandvision
USA is a domestic subsidiary and so a “general manager” of GrandVision under
California law.

“The Hague Service
Convention does not apply when process is served on a foreign corporation by
serving its domestic subsidiary which, under state law, is the foreign
corporation's involuntary agent for service.” (Volkswagenwerk
Aktiengesellschaft v. Schlunk (1988) 486 U.S. 694, 694.)

            In California, “[d]elivery by hand of a copy of any
process against a foreign corporation (a) to any officer of the corporation or
its general manager in this state . . . shall constitute valid service on the
corporation.” (Corp. Code § 2110; Code Civ. Proc. § 416.10, subd. (b).) ‘The term ‘general manager of a corporation’
indicates one who has general direction and control of the business of the
corporation as distinguished from one who has the management only of a
particular branch of the business; he may do everything which the corporation
could do in transaction of its business.' ” (General Motors Corp. v.
Superior Court (1971) 15 Cal.App.3d 81, 86.)

California law allows service on a foreign corporation by serving
its domestic subsidiary, as the “general manager” of the parent company. (Yamaha Motor Co., Ltd. v. Superior Court
(2009) 174 Cal.App.4th 264, 272 (Yamaha Motor).) In general, when
determining whether one served falls under the statutory definition of “general
manager,” “it has been said that ‘every object of the service is obtained when
the agent served is of sufficient character and rank to make it reasonably
certain that the defendant will be apprised of the service made,’ and by
service on such an agent, ‘the requirement of the statute is answered.’
[Citation.] Whether in any given case, the person served may properly be
regarded as within the concept of the statute depends on the particular facts
involved.” (Cosper v. Smith & Wesson Arms Co. (1959) 53 Cal.2d 77,
83.)

Here, GrandVision USA is
not a direct subsidiary of Grandvision. Rather, GrandVision USA is owned by
GrandVision Retail Holding B.V. (GrandVision RH); GrandVision RH and
GrandVision are owned by the same holding company, GrandVision Group Holding
B.V. (Nijof Decl. ¶ 10.) The rule stated in Yamaha Motor regarding
service on the domestic subsidiary of a foreign corporation does not apply in
this context. (See Yamaha Motor, 174 Cal.App.4th at 268 [“Yamaha–America
is Yamaha–Japan's wholly owned domestic subsidiary in the United States”].)

Furthermore, Ikspan has
not presented facts supporting the contention that GrandVision USA’s relation
to GrandVision is such as “to make it reasonably certain that [GrandVision] will
be apprised of the service made” on GrandVision USA. (Cosper, 53 Cal.2d
at 83.) In Yamaha Motor, the court noted that the the domestic
subsidiary, in addition to being wholly owned by the defendant foreign company,
“ha[s] an exclusive arrangement to sell the manufacturer's products, provides
warranty service, English owner manuals, does testing, marketing, and receives
complaints about the manufacturer's products. Probable contact between the
domestic representative and the foreign corporation leading to actual
notification is far more present here than in Cosper.” (Yamaha Motor,
174 Cal.App.4th at 274.) Here, undisputed evidence shows that GrandVision
USA is not subject to any management or control by GrandVision, does not
receive products from GrandVision, does not test products for GrandVision, does
not issue warranties for GrandVision, and does not receive complaints for
GrandVision. (Nijhof Decl. ¶¶ 4, 12.) GrandVision USA is not GrandVision’s
designated agent for service of process in the United States. (Nijhof Decl. ¶
11.) Accordingly, Plaintiff has not shown that GrandVision was properly served
via GrandVision USA. The motion to quash is therefore granted.