Judge: Joseph Lipner, Case: 24STCV14551, Date: 2024-09-17 Tentative Ruling

Case Number: 24STCV14551    Hearing Date: September 17, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant ASC Brands, LLC (“Defendant”) moves for an order quashing service of the summons in this action filed by Plaintiff Silvia Garcia (“Plaintiff”) for lack of personal jurisdiction.

The Court DENIES Defendant’s motion.

Background

This is a California Invasion of Privacy Act (“CIPA”) case.

Plaintiff is a resident of California. Defendant is a Delaware entity that sells merchandise via an online store that it owns and operates.

California purchases represent less than 5 percent of Defendant’s total sales in the year to date, which Defendant’s CFO declares represents a typical sales pattern for Defendant. (Zialecki Decl. ¶ 9.) The “Frequently Asked Questions” page on Defendant’s website states that orders can be shipped to the contiguous 48 states, but not to Alaska, Hawaii, or Puerto Rico. (Ferrell Decl. ¶ 4, Ex. 2.)

Plaintiff alleges that Defendant allowed a third party to eavesdrop on chat features on its website in violation of CIPA. In January 2023, while in the state of California, Plaintiff accessed Defendant’s website and used its chat feature to ask questions. (Garcia Decl. ¶¶ 2-3.)

Plaintiff filed this action on June 11, 2024, raising one claim for violations of CIPA, Penal Code, section 631.

On August 14, 2024, Defendant moved to quash service. Plaintiff filed an opposition and Defendant filed a reply.

Legal Standard

“A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a notice of motion for one or more of the following purposes: To quash service of summons on the ground of lack of jurisdiction of the court over him or her.” (Code Civ. Proc., § 418.10, subd. (a)(1).) A defendant has 30 days after the service of the summons to file a responsive pleading, or 40 days if service was effectuated by substitute service. (Code Civ. Proc., § 412.20, subd. (a)(3); Code Civ. Proc., § 415.20, subd. (b).) 

“A motion to quash service of summons lies on the ground that the court lacks personal . . . jurisdiction over the moving party.” (Greener v. Workers’ Comp. Appeals Bd.¿(1993) 6 Cal.4th 1028, 1036, citing to Code of Civil Procedure § 418.10.) “A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of the United States.” (Code Civ. Proc., § 410.10.) “The exercise of jurisdiction over a nonresident defendant comports with these Constitutions if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate traditional notions of fair play and substantial justice.” (Elkman v. National States Ins. Co. (2009) 173 Cal.App.4th 1305, 1313.) “An essential criterion in all cases is whether the ‘quality and nature’ of the defendant’s activity is such that it is ‘reasonable’ and ‘fair’ to require him to conduct his defense in that state.” (Kulko v. Superior Court of California in and for City and County of San Francisco (1978) 436 U.S. 84, 92.)

“Personal jurisdiction may be either general or specific. [Citation.] ‘The nature and quality of the defendant’s contacts determine whether jurisdiction, if exercised, is general or specific. General jurisdiction exists when a defendant is domiciled in the forum state or his activities there are substantial continuous, and systematic.’ [Citation.] Where the contacts are sufficiently substantial, continuous, and systematic, it is not necessary that the cause of action alleged be connected with the defendant’s business relationship to the forum. [Citation.] However, ‘contacts that are random, fortuitous, or attenuated do not rise to the minimum level, and general jurisdiction cannot be exercised under these circumstances.’ [Citation.] If a defendant’s contacts with the forum state are not substantial, continuous, and systematic, the defendant may be subject to specific jurisdiction.” (Shisler v. Sanfer Sports Cars, Inc. (2006) 146 Cal.App.4th 1254, 1258-59.)

Although the defendant is the moving party, the burden of proof is on the plaintiff to demonstrate sufficient minimum contacts exist. (Milhon v. Superior Court (1985) 169 Cal.App.3d 703, 710 [“[W]hen jurisdiction is challenged by a nonresident defendant, the burden of proof is upon the plaintiff to demonstrate that ‘minimum contacts’ exists between defendant and the forum state to justify imposition of personal jurisdiction.”]; see also Floveyor International, Ltd. V. Superior Court (1997) 59 Cal.App.4^th 789, 793.) If the plaintiff is able to meet this burden, the burden shifts to the defendant to demonstrate the exercise of jurisdiction would be unreasonable. (Buchanan v. Soto (2015) 241 Cal.App.4th 1353, 1362.)

Discussion

The question presented here is whether Defendant is subject to specific jurisdiction in California.  “‘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.” ’ ” [Citations.]’ ” (Shisler v. Sanfer Sports Cars, Inc. (2006) 146 Cal.App.4th 1254, 1258-59.)

“For claims sounding in contract, courts generally apply a purposeful availment’ ” analysis, where the focus is on the defendant's intentionality. [Citation.] This [inquiry] 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. [Citation.]” (Casey v. Hill (2022) 79 Cal.App.5th 937, 965 [quotation marks omitted].)  “For claims sounding in tort, courts generally apply a purposeful direction test and look to evidence that the defendant has directed his actions at the forum state, even if those actions took place elsewhere.” (Casey v. Hill, supra, 79 Cal.App.5th at p. 965 [quotation marks omitted].)

The current case involves a tort-like statutory privacy claim, making the “purposeful direction” test most pertinent.  However, California courts do not appear to apply these different tests rigidly; many cases involving tort claims discuss the jurisdictional issues using the language of purposeful availment. As one Court of Appeal explained: the “test for purposeful availment does not hinge mechanically on whether the plaintiff’s claim sounds in tort or contract.  Rather, a court must apply a highly realistic approach on a case-by-case basis and select the most appropriate test for purposeful availment based on the particular facts presented.”  (Gilmore Bank v. AsiaTrust New Zealand, Ltd. (2014) 223 Cal.App.4th 1558, 1571.)  For example, Gilmore Bank explained that the California Supreme Court case of  Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434 applied the purposeful availment analysis despite the fact that the case involved tort claims, not contract claims.

How should a court analyze the jurisdictional effects of a website?  The case of Zippo Mfg. Co. v. Zippo Dot Com, Inc. (W.D.Pa.1997) 952 F.Supp. 1119 (Zippo) discussed this question in the context of tort-like claims of trademark infringement and false product designation.  The California Supreme Court has quoted the Zippo analysis approvingly in analyzing California’s jurisdiction over claims for unfair business practices, breach of contract, unjust enrichment, and violations of statutory claims for false or misleading statements. (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1063.) The Zippo framework states as follows: “ ‘At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. [Citation.] At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. [Citation.] The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.’ ” (Ibid, quoting Zippo, 952 F.Supp. at p. 1124.)

Here, the factors discussed in Zippo favor assertion of personal jurisdiction over Defendant.  Defendant’s website contains a high level of interactivity. Defendant’s website functions as an online store and advertises deals for consumers on its homepage. (Ferrell Decl. ¶ 2.) The website contains an interactive chat feature wherein users can interact with Defendant’s representatives by first submitting their name, email address, optional phone number, and message. (Ferrell Decl. ¶ 3.) The homepage has a fillable form whereby users of the website are invited to “Sign Up” by inputting the user’s email address in exchange for receiving free shipping on orders $49+ and “EXCLUSIVE SAVINGS & OFFERS.” (Ferrell Decl. ¶ 3.) The bottom of the homepage of the Website contains fillable forms for either the user’s email address or mobile telephone number in exchange for “Special Offers.” (Ferrell Decl. ¶ 3.) The top of the homepage of the website contains a search bar where users of the website can search for information about products. (Ferrell Decl. ¶ 3.) The website’s Frequently Asked Questions page indicates that products can be shipped to the contiguous 48 states. (Ferrell Decl. ¶ 4.)

Moreover, the Ninth Circuit has recently opined as follows.  “[I]f a defendant, in its regular course of business, sells a physical product via an interactive website and causes that product to be delivered to the forum, the defendant has purposefully directed its conduct at the forum such that the exercise of personal jurisdiction may be appropriate.” (Herbal Brands, Inc. v. Photoplaza, Inc. (9th Cir. 2023) 72 F.4th 1085, 1088, cert. denied (2024) 144 S.Ct. 693.)  Under the analysis in Herbal Brands, personal jurisdiction would be appropriate here, where Defendant admittedly sells products through its website to California.  Notably, Defendant has not cited any precedential authority under which a defendant that regularly makes sales to a forum state was not found to be subject to the jurisdiction of that state.

Both parties argue about whether the current case meets the standards set forth in Thurston v. Fairfield Collectibles of Georgia, LLC (2020) 53 Cal.App.5th 1231 (Thurston), which involved a claim of violation of the Unruh Civil Rights Act.  “[U]nder California case law, making a substantial number of sales of goods or services to California residents via one’s own website constitutes purposeful availment. The vast majority of federal cases are in accord.” (Thurston, 53 Cal.App.5th 1231, 1240.) “Admittedly, the sales must be substantial; they are not enough if they are only ‘random, isolated, or fortuitous ....’ ” (Ibid.) Where the defendant made eight percent of its sales to residents of California, totaling between $320,000 and $375,000 a year, the Thurston court found that “[t]hat is the equivalent of having a brick-and-mortar store in California — a ‘virtual store’ ” giving rise to personal jurisdiction in California. (Ibid.)

            Defendant’s sales to California residents are sufficient even though they are less than those at issue in Thurston. Here, less than five percent of Defendant’s total sales are to California purchasers, whereas the Defendant in Thurston made eight percent of its sales to California purchasers. Defendant argues that this is notable because California makes up roughly 11.9 percent of the total population of the United States, suggesting that California purchases buy products from Defendant at a lower rate than purchasers in other states. However, the same was true of the eight percent sale rate in Thurston, albeit to a lesser degree – population weight is not dispositive. This is not a case where the defendant’s sales to the forum state are less than one percent or otherwise random and fortuitous. Although it is less than the percentage of sales in Thurston, sales approaching five percent are adequate to give rise to an inference that Defendant knew that it was selling products to buyers in California and intentionally continued to do so. Businesses do not simply misplace five percent of their revenue.

            Defendant argues that Plaintiff did not interact with Defendant’s chat feature as a result of Defendant’s sales to California.

However, “[the Supreme Court has] never framed the specific jurisdiction inquiry as always requiring proof of causation—i.e., proof that the plaintiff ’s claim came about because of the defendant's in-state conduct.” (Ford Motor Company v. Montana Eighth Judicial District Court (2021) 592 U.S. 351, 362.) “[F]orum contacts need not be directed at the plaintiff in order to warrant the exercise of specific jurisdiction, and that the “arising out of or relating to” standard is in the disjunctive, and is intended as a relaxed, flexible standard, rather than one requiring that the plaintiff's claim arise out of the forum contact in any narrow sense.” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 455.) “The United States Supreme Court has stated more than once that the nexus required to establish specific jurisdiction is between the defendant, the forum, and the litigation [citations]—not between the plaintiff and the defendant.” (Id at p. 458, citing Helicopteros Nacionales de Colombia, S.A. v. Hall (1984) 466 U.S. 408, 411 and Shaffer v. Heitner (1977) 433 U.S. 186, 204.)

Plaintiff’s use of the chat feature arises out of and relates to Defendant’s efforts to make sales to California. The website chat feature’s purpose is to facilitate sales and customer support with buyers, which necessarily includes the California buyers to whom Defendant knew it was selling products. It is certainly foreseeable to Defendant that the chat feature that it created for customer interaction will be used, often hand-in-hand, in connection with sales to customers.

            The Court concludes that Defendant purposefully directed its sales at California, and therefore had sufficient minimum contacts with the state supporting the exercise of personal jurisdiction over Defendant in California.  For these reasons, the Court denies Defendant’s motion.