Judge: H. Jay Ford, III, Case: 22SMCV02963, Date: 2023-04-13 Tentative Ruling
Case Number: 22SMCV02963 Hearing Date: April 13, 2023 Dept: O
Case
Name: Doe v. Bastiat USA, Inc., et
al.
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Case No.: 22SMCV02963
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Complaint Filed: 12-30-22 |
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Hearing Date: 4-13-23 |
Discovery C/O: None |
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Calendar No.: 11 |
Discover Motion C/O: None |
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POS: OK |
Trial Date: None |
SUBJECT: MOTION TO QUASH SERVICE OF
SUMMONS AND COMPLAINT FOR LACK OF PERSONAL JURISDICTION AND FORUM NON
CONVENIENS
MOVING
PARTY: Defendant Bastiat USA, Inc.
RESP.
PARTY: Plaintiff Jane Doe
TENTATIVE
RULING
Defendant
Basitat USA, Inc.’s Motion to Quash based on Lack of Personal Jurisdiction and
Forum Non Conveniens is DENIED.
Plaintiff’s Objection to Evidence filed by Defendant Bastiat
USA—OVERRULE
Defendant Bastiat USA, Inc.’s Objections to Plaintiff’s
Evidence—
To
deposition of Jane Doe—OVERRULE as to Objection Nos. 1 and 4 and SUSTAIN as to
Objection Nos. 2, 3, 5, 6, 7, 8 and 9.
To declaration
of C. Skilbred—SUSTAIN as to all objections.
To declaration
of D. Allen—SUSTAIN as to all objections
To
declaration of G. Whelpley—SUSTAIN as to all objections.
To
declaration of L. Rotondo—SUSTAIN as to objection 29 to entirety of
declaration. Hearsay.
To
declaration of C. Charles—SUSTAIN as to all objections.
Defendant Bastiat USA, Inc.’s Objection to Plaintiffs’ RJN—SUSTAIN
as to I, J and K and OVERRULED as to D, E, F, G and H. No objection to A-C.
I. No basis for
general jurisdiction
While a corporation’s principal place of business and its
state of incorporation are the paradigmatic locales for assertion of general
jurisdiction, a plaintiff is not precluded from asserting that a corporate
defendant is “at home” in some other location.
As explained in Daimler AG v. Bauman, 571 U.S. 117, 137 (2014),
“[w]ith respect to a corporation, the place of incorporation and principal
place of business are paradigm bases for jurisdiction,” but those two locations
were not the only forums in which a corporation is subject to general
jurisdiction. Daimler, supra,
571 U.S. at 137. “Goodyear did
not hold that a corporation may be subject to general jurisdiction only in a forum where it is incorporated
or has its principal place of business; it simply typed those places paradigm
for all purposes forums.” Id. at
138.
The Supreme Court held that general jurisdiction is not
appropriately exercised “in every state in which a corporation engages in a
substantial, continuous, and systematic course of business” because such
“formulation…is unacceptable grasping.”
However, it also expressly stated that its decision did not “foreclose
the possibility that in an exceptional case…a corporation’s operations in a
forum other than its formal place of incorporation or principal place of
business may be so substantial and of such a nature as to render the
corporation at home in that state.” Id.
at 138 and fn. 19. The proper inquiry is
“not whether a foreign corporation’s in-forum contacts can be said to be in
some sense ‘continuous and systematic,’ it is whether that corporation’s
affiliations with the state are so ‘continuous and systematic’ as to render it essentially
at home in the forum state.” Id.
at 139 (absolutely no basis to find general jurisdiction as to German
corporation where neither it nor its subsidiary were incorporated in CA or
maintained their principal place of business there and German corporation’s
contacts with CA “plainly did not approach” level of being at home there).
As an example of an exceptional case where general
jurisdiction was asserted over a corporation outside of its state of
incorporation or principal place of business, the Supreme Court cited to Perkins
v. Benguet Col. Mining Co., 342 U.S. 437, 447-448 (1952). See Daimler AG, supra, 57 1
U.S. at 139, fn 19. Perkins
involved a corporation whose principal place of business and place of
incorporation was the Phillipines. Perkins,
supra, 342 U.S. at 439. However,
due to WWII and the Japanese occupation of the Phillipines, the corporation’s
president, who was located in Ohio, was doing all of the corporation’s business
there and to the extent the company was doing any business at all during and
immediately after the occupation, it was doing so in Ohio. Id. at 447-448.
Thus, in Perkins, the corporation was essentially
using Ohio as its “headquarters,” conducting all of its activities from Ohio
and making the corporation essentially “at home” in Ohio. See Bristol-Myers Squibb Co. v. Superior
Court (2016), 1 Cal. 5th 783,
787 (rev’d on other grounds
by Bristol-Myers Squibb v. Superior Court (2017) 137 S. Ct.
1773). “A defendant corporation's substantial sales
in a state are insufficient to establish general jurisdiction, as the general
jurisdiction analysis turns on the nature of the defendant's
continuous corporate operations within a state.” Strasner v. Touchstone Wireless Repair
& Logistics, LP (2016) 5 Cal.App.5th 215, 222–223 (contacts of parent
corporation could be imputed to subsidiary to establish general jurisdiction
per alter ego or agency only if “the parent exercised pervasive and continuous
control over the subsidiary’s day-to-day operations that went beyond the normal
parent-subsidiary relationship”).
Plaintiff fails to submit any admissible evidence
establishing that Defendant Bastiat USA, Inc. is subject to general
jurisdiction in California. It is
undisputed that Defendant Bastiat USA, Inc. is incorporated in Nevada and
headquartered in New Jersey. See
Plaintiff’s Compendium of Evidence Declarations, Ex. 5, Dec. of S. Rianna, ¶¶3
and 4; Dec. of S. Rianna ISO of Motion to Quash, ¶2. It is also undisputed that Bastiat USA, Inc.
is not registered to do business with the California Secretary of State and has
no designated agent for service of process in California. See Dec. of S. Rianna ISO of MTQ,
¶3. Plaintiff fails to establish that
this is the “exceptional” case where general jurisdiction should be asserted
over a corporate defendant outside its state of incorporation.
Plaintiff also fails to submit evidence establishing that
Bastiat Santa Monica is the alter ego or agent of Bastiat USA, Inc. Plaintiff submits evidence that Bastiat Santa
Monica and Bastiat USA both share the same CEO and office address. See Plaintiff’s RJN, Ex. A, p. 2; Ex.
B. It is also undisputed that Basitat
USA and Bastiat Santa Monica use Biz Advisory Group for human resources and
payroll services. See Dec. of A.
Palacios, ¶2.
However, sharing of common officers and directors,
addresses and employees are only a few of the many factors that must be
considered to determine whether there is “such a unity of interest and
ownership between the corporation and its equitable owner that the separate
personalities of the corporation and shareholder do not in reality exist.” Sonora Diamond Corp. v. Sup. Ct.
(2000) 83 Cal.App.4th 523, 538.
Among the factors the Court should consider are whether there has been a
commingling of funds or other assets between the two entities, whether one
entity has held itself out as liable for the debts of the other entity,
identical equitable ownership in the two entities, use of the same offices and
employees, inadequate capitalization, disregard of corporate formalities, lack
of segregation of corporate records and identical directors and officers. Id.
Plaintiff makes no showing except that Bastiat USA and
Bastiat Santa Monica share the same office address, the same CEO and a
third-party payroll/HR company. There is
no evidence of any commingling of assets, any failure to adhere to corporate
formalities or inadequate capitalization.
Plaintiff has not demonstrate that on balance, these two entities are
merely alter egos of one another.
In addition, there is no showing or argument on the
second element of alter ego—inequitable result.
Plaintiff fails to establish that it would be inequitable under these
facts to recognize the separate corporate existence of Bastiat USA from Bastiat
Santa Monica. Without this second
element, alter ego cannot be applied. Id.
at 539 (“extreme remedy” of alter ego could not be applied where plaintiff
failed to make any showing of any wrongdoing by alter ego or principal or any
injustice flowing from recognition of their separate corporate identities
beyond difficulty satisfying judgment).
As the party asserting general jurisdiction, Plaintiff
has the burden of establishing that such jurisdiction exists over Defendant
Bastiat USA in response to this motion to quash. See
Ziller Electronics Lab GmbH v. Sup. Ct. (1988) 206 Cal.App.3d 1222, 1232.
Plaintiff fails to do so.
II. Plaintiff establishes this Court’s personal
jurisdiction over Bastiat USA based on specific jurisdiction
As the party asserting jurisdiction
over Bastiat USA, Plaintiff is responsible for establishing all elements of
specific jurisdiction. See Ziller Electronics Lab GmbH v. Sup.
A. Purposeful availment
“The purposeful availment inquiry focuses on the
defendant's intentionality. This prong
is only satisfied when the defendant purposefully and voluntarily directs his
activities toward the forum so that he should expect, by virtue of the benefit
he receives, to be subject to the court's jurisdiction based on his contacts
with the forum.” Pavlovich, supra,
29 Cal.4th at 269. “When a defendant
purposefully avails itself of the privilege of conducting activities within the
forum State, it has clear notice that it is subject to suit there, and can act
to alleviate the risk of burdensome litigation by procuring insurance, passing
the expected costs on to customers, or, if the risks are too great, severing
its connection with the State.” Id.
Purposeful action directed at a forum
resident has been described by the Supreme Court as sufficient contacts for
specific jurisdiction over a particular defendant. See Burger King Corp. v. Rudzewicz
(1985) 471 U.S. 462, 472. The purposeful
availment requirement is intended to prevent jurisdiction to be exercised over
a non-resident based upon random, fortuitous or attenuated contacts or of the
unilateral activity of another party or a third person. See Pavlovich v. Superior Court (2002)
29 Cal.4th 262, 268. “Parties who reach
out beyond one state and create continuing relationships and obligations with
citizens of another are subject to regulation and sanctions in the other State
for the consequences of their activities.”
See Burger King Corp. v. Rudzewicz, supra, 471 U.S. at
473; Hall v. LaRonde (1997) 56 Cal.App.4th 1342, 1344 (the use of
electronic mail and the telephone by a party in another state may establish
sufficient minimum contacts with California to support personal jurisdiction); Stone
v. State of Tex. (1999)
76 Cal.App.4th 1043,
1048-1049.
According to Plaintiff, Bastiat USA purposefully availed itself of
California’s benefits, because (1) Rotondo was its employee; (2) he was
assigned to work in California by Bastiat USA, specifically the store in Santa Monica
where Plaintiff worked; (3) Rotondo’s work included meetings in California with
Basitat USA’s CEO and director; (4) Bastiat USA exercises control over the
California Brandy Melville stores.
Defendant’s objection to the declaration of Rotondo is sustained. Rotondo’s declaration was filed in an
employment lawsuit brought by him against Bastiat USA and is hearsay. Plaintiff therefore fails to present
admissible evidence that Bastiat USA assigned Rotondo to work in the Santa
Monica store and that his work included attending meetings with Stephan Marsan
and Salvatore Rianna.
Defendant’s Treasurer and Director, Salvatore Rianna, submitted a
declaration on Bastiat USA’s behalf in Rotondo’s employment litigation against
it. Rianna admitted that Bastiat USA
hired Rotondo in December 2018 and it temporarily assigned him to concentrate
on the West Coast territory, including California. See Plaintiff’s RJN, Ex. F, ¶6; Dec.
of Rianna ISO of MTQ, ¶9. During that time, Rianna admits that Rotondo stayed
for periods of time in the Santa Monica warehouse. Id. at ¶6. Rotondo was therefore
undisputedly in California acting on Bastiat USA’s behalf and his contact with
California in overseeing Bastiat USA’s business operations are attributable to
Bastiat USA. See Anglo Irish Bank
Corp., PLC v. Supr. Ct. (2008) 165 Cal.App.4th 969, 984
(“we conclude that the Irish bank, the Isle of Man bank, and the trust company
purposefully directed their activities at California residents by and through
the individuals who visited California on their behalf”).
Plaintiff testified at deposition that Rotondo assaulted her in 2019 and
the incident occurred when they were “checking on the Orange County
stores.” See Plaintiff’s
Compendium of Exhibits, Ex. 1, 120:5-25 to 121:1-15. Plaintiff testified the assault occurred in
the home of Franco Sorgi. Id. at 120:14-18. This event occurred while Rotondo was
employed by Bastiat USA during his temporary assignment to the Western
Territories and, according to Plaintiff, while Rotondo was in California to
“check on the Orange County stores.” See
Plaintiff’s Compendium of Exhibits, Ex. 1, 120:5-25 to 121:1-15.
Plaintiff’s evidence establishes that Defendant Bastiat USA had business
dealings and operations in California, including Santa Monica, to such an
extent that it had a warehouse in Santa Monica and Rotondo was assigned to
oversee Bastiat USA’s business operations in the Western Territories in late
2019, including California. As part of
Rotondo’s oversight, he resided in California for a short period while
“checking” on Bastiat USA’s Southern California stores. Plaintiff sufficiently establishes Basitat
USA’s purposeful availment of California’s forum benefits.
B. “Controversy is related to or arises out of the defendant’s contacts
with the forum”
A lawsuit arises out of a defendant’s forum-related contacts if “there is
a substantial nexus or connection between the defendant’s forum activities and the
plaintiff’s claim.” Snowney v.
Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1068. The ‘arising out of or relating to’
standard is in the disjunctive, and is intended as a relaxed, flexible standard.” Gilmore Bank v. AsiaTrust New Zealand
Limited (2014) 223 Cal.App.4th 1558, 1573.
“A claim need not arise directly from the defendant's forum contacts in
order to be sufficiently related to the contact to warrant the exercise of
specific jurisdiction. Moreover,
the forum contacts need not be directed at the plaintiff in order to warrant
the exercise of specific jurisdiction.
Indeed, only when the operative facts of the controversy are not related
to the defendant's contact with the state can it be said that the cause of
action does not arise from that contact.”
Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054,
1068.
In Jayone
Foods, Inc., supra, the Court of Appeals reversed the trial court’s
finding that the plaintiff’s injuries did not arise from or relate to the
defendant’s contacts, finding the trial court interpreted the relatedness prong
too narrowly.” Jayone Foods, Inc.,
supra, 31 Cal.App.4th at 559.
The trial court’s finding was based on the failure to demonstrate that
the decedent “purchased or used the bottles of the Humidifier Mate that Aekyung
shipped to Jayone” during the relevant period.
Requiring the x-complainant to establish that the specific bottles of
cleaner that injured decedent came from one of x-defendant’s shipments “applied
the relatedness prong too narrowly.” Id.
The Court
of Appeals found a substantial nexus between the Aekyung’s forum contacts and
the underlying wrongful death claim. The
evidence supported a finding that Jayone purchased the product in question from
Aekyung during the relevant period and that the x-complainant sold that product
to the retailer from whom decedent purchased the product during that
period. Id. at 560.
Plaintiff was assaulted by Defendant Rotondo while he was assigned by
Defendant Bastiat USA’s California business dealings and operations. Based on the undisputed evidence, Rotondo was
only in California at Bastiat USA’s behest and for the purpose of overseeing
its operations. Plaintiff also testified
that the assault happened when Rotondo was in California “checking on the
Orange County stores.” Plaintiff
sufficiently establishes that the litigation arises out of Defendant Bastiat
USA’s contacts with California.
C. “Fair play and substantial
justice”
Once a plaintiff shows that the
nonresident defendant has “purposefully availed” itself of benefits and
protections of forum law, that defendant bears the burden of proving it would
be unreasonable for local courts to exercise jurisdiction, i.e. violate notions
of fair play and substantial justice. See
Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 475.
In determining whether assertion of
jurisdiction would be unreasonable, the court must consider (1) the burden on
the defendant; (2) the forum State's interest in adjudicating the dispute; (3)
the plaintiff's interest in obtaining convenient and effective relief; (4) the
interstate judicial system's interest in obtaining the most efficient
resolution of controversies; and (5) the shared interest of the several States
in furthering fundamental substantive social policies. See World-Wide Volkswagen Corp. v. Woodson
(1980) 444
Plaintiff is a resident of California. See Plaintiff’s Complaint, ¶1;
Plaintiff Compendium of Evidence, Ex. 1, 52:16-22. Defendant does not submit any evidence
disputing this allegation. This Court
has a strong interest in adjudicating disputes involving its residents,
particularly alleged sexual assaults that occurred within its borders.
Defendant fails to establish that it would be burdensome
on it to litigate the case in California.
Defendant clearly has a business presence in California based on the
evidence that it has sufficient business operations in California to send a
dedicated executive to oversee and inspect its stores.
Defendant argues its operations, witnesses, records and
evidence are located outside of California.
Defendant fails to establish that this would be overly burdensome, given
technological advancements that allow for discovery to inexpensively, e.g.
Zoom, electronic production of documents, etc.
Defendant argues the bulk of sexual assaults occurred
outside California. This is of no
moment. California has a strong interest
in hearing cases involving personal injury to its residents within its
borders. In addition, the other alleged
sexual assaults did not occur in either New Jersey or Nevada, where Defendant’s
headquarters are located and where it was incorporated.
Defendant also cites to the larger volume of cases pending
in California, as opposed to New Jersey.
This factor alone does not justify refusal to assert personal
jurisdiction over the Defendant, particularly given that the alleged sexual
assault occurred here in California and Plaintiff is a California resident. See Cornelison v. Chaney (1976) 16
Cal.3d 143, 151 (“California has an interest in providing a forum since
plaintiff is a California resident.”)
D. Plaintiff
establishes specific jurisdiction
Plaintiff establishes with admissible evidence that
Defendant Bastiat USA purposefully availed itself of California’s benefits and the
litigation arises out of or relates to its contacts with California. Defendant
fails to establish that assertion of jurisdiction would be unreasonable. Defendant’s motion to quash based on lack of
minimum contacts is DENIED.
III. Defendant fails to establish that Forum Non
Conveniens
A. Applicable Law
If the court
finds that "in the interest of substantial justice" an action filed
in California should be adjudicated elsewhere, it may stay or dismiss the
action on such conditions as may be just. See CCP §410.30(a). The statute codifies the common law doctrine
of forum non conveniens. This is not a jurisdictional doctrine. Rather, it is
“an equitable doctrine invoking the discretionary power of a court to decline
the exercise of jurisdiction (to stay or dismiss) it has over a transitory
cause of action when it believes that the action may be more appropriately and
justly tried elsewhere.” Stangvik v.
Shiley, Inc. (1991) 54 Cal.3d 744, 751.
78.
“A trial court
considering a forum non conveniens issue engages in a two-step process, the
first of which is to determine whether a suitable alternative forum
exists. Where there is a suitable
alternative forum, the court proceeds to the next step, consideration of the
private interests of the parties and the public interest in keeping the case in
California.” National Football League
v. Fireman's Fund Ins. Co. (“NFL”) (2013) 216 Cal.App.4th 902, 917 (quoting
Stangvik).
“The defendant, as the
moving party, bears the burden of proof on a motion based on forum non
conveniens. It is the trial court's duty
to weigh and interpret evidence and draw reasonable inferences therefrom.” Id. at 918. “There thus must be evidence—not merely bald
assertions—to support the trial court's determination.” Ford Motor Co. v. Insurance Co. of North
America (1995) 35 Cal.App.4th 604, 610.
In determining whether to grant a motion
based on forum non conveniens, a court must (1) determine whether the alternate
forum is a ‘suitable’ place for trial and if so, (2) consider the private
interests of the litigants and the interests of the public in retaining the
action for trial in California. The private interest factors are those that
make trial and the enforceability of the ensuing judgment expeditious and
relatively inexpensive, such as the ease of access to sources of proof, the
cost of obtaining attendance of witnesses, and the availability of compulsory
process for attendance of unwilling witnesses. The public interest factors
include avoidance of overburdening local courts with congested calendars,
protecting the interests of potential jurors so that they are not called upon
to decide cases in which the local community has little concern, and weighing
the competing interests of California and the alternate jurisdiction in the
litigation.” Stangvik, supra, 54 Cal.3d at 751. All of the following factors must be weighed
in each case. See Shiley, Inc. v. Sup.Ct. (1992) 4 Cal.App.4th 126,
133-134.
Where plaintiff is a California resident for purposes of
forum non conveniens, there is a “strong presumption” in favor of plaintiff's
choice of forum. See National
Football League v. Fireman's Fund Ins. Co., supra, 216 Cal.App.4th
at 926-927, 932. If the plaintiff is a California resident, the plaintiff's choice of a
forum should rarely be disturbed unless the balance is strongly in favor of the
defendant. See NFL, supra,
216 Cal.App.4th at 917.
Where the plaintiff is a California
resident, the court may not dismiss an action on grounds of forum non
conveniens. The court may, however, stay
the action when substantial justice requires trial elsewhere. “In short, the trial court retains a flexible
power to consider and weigh all factors relevant to determining which forum is
the more convenient, and to stay actions by true California residents when it
finds that the foreign forum is preferable.”
Archibald v. Cinerama Hotels (1976) 15 Cal.3d 853, 860.
B. No basis to stay based on
forum non conveniens
Plaintiff is a California resident.
There is therefore a strong presumption in favor of California. Defendant can only defeat this presumption
with a showing that the private and public interest factors weigh heavily in
favor of it.
A defendant’s state of incorporation
and its principal place of business is presumptively a convenient forum. See Stangvik, supra, 54 Cal.3d
at 755-756. The presumption is
rebuttable, however. Id. “A forum is suitable if there is
jurisdiction and no statute of limitations bar to hearing the case on the
merits.” Chong v. Sup.Ct. (1997)
58 Cal.App.4th 1032, 1036-1037. A remedy
must be available for the claim sued on.
Stangvik, 54 Cal.3d at 754.
Defendant establishes that New
Jersey is its principal place of business and Nevada its state of
incorporation. Defendant, however, fails
to establish that statute of limitations does not bar Plaintiff’s claims in New
Jersey or Nevada or that she will have a remedy for the claims sued on in
either state. Defendant therefore fails
to establish that New Jersey or Nevada as a suitable alternative forum.
In addition, Defendant also fails to
establish that the public interest factors weigh strongly against California’s
retention of this case. As discussed in
connection with the motion to quash based on lack of personal jurisdiction,
Plaintiff is a California resident who was allegedly assaulted by Defendant’s
employee in California. New Jersey’s
only connection to the case is as the principal headquarters of Defendant. New Jersey and Nevada have less of an
interest in this case than California.
Defendant fails to establish that
the private interest factors weigh against California’s retention of the
case. Defendant fails to identify what
relevant witnesses or evidence would be located in New Jersey and why it would
be inconvenient to litigate the action in California even if key evidence and
witnesses were located there. Defendant
fails to submit any evidence that litigating this action in California would be
inconveniently expensive. On the other
hand, Plaintiff is located in California and she was allegedly assaulted at
least once in California.
Defendant fails to establish that
California is an inconvenient forum.
Defendant’s alternative request for dismissal based on forum non conveniens
is DENIED.