Judge: Robert B. Broadbelt, Case: 23STCV03931, Date: 2023-08-09 Tentative Ruling

Case Number: 23STCV03931    Hearing Date: August 9, 2023    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                 Defendant BERA Brand Management, Inc.  

RESPONDING PARTY:       Plaintiff PureSpectrum, Inc.

(1)   Motion to Quash Service of Summons for Lack of Personal Jurisdiction

(2)   Motion to Stay Action on the Ground of Inconvenient Forum

The court considered the moving, opposition, and reply papers filed in connection with each motion.

BACKGROUND

Plaintiff PureSpectrum, Inc. (“Plaintiff”) filed this action against defendant BERA Brand Management, Inc. (“Defendant”) on February 22, 2023, alleging three causes of action for (1) breach of contract, (2) breach of covenant of good faith and fair dealing, and (3) unjust enrichment.

Now pending before the court are two motions filed by Defendant: (1) the motion to quash summons for lack of personal jurisdiction, filed on April 10, 2023, and (2) the motion to stay action on the ground of inconvenient forum, filed on April 7, 2023.

REQUEST FOR JUDICIAL NOTICE

The court grants Plaintiff’s request for judicial notice, filed on July 27, 2023.  (Evid. Code, § 452, subd. (c).)

The court grants Defendant’s request for judicial notice, filed on August 2, 2023.  (Evid. Code, § 452, subds. (c), (h); Tufeld Corporation v. Beverly Hills Gateway, L.P. (2022) 86 Cal.App.5th 12, 21, n. 2 [“tak[ing] judicial notice of California’s approximate population” pursuant to Evidence Code section 452, subdivisions (c) and (h), which information could be found at the United States Census Bureau’s website].)

MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

Defendant moves the court for an order (1) quashing the service of summons and complaint in this action on the ground that the court lacks personal jurisdiction over Defendant, and (2) dismissing this action.

“A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.”  (Code Civ. Proc., § 410.10.)  “Under those Constitutions, jurisdiction is proper if a defendant has minimum contacts with California such that a suit in the state does not offend traditional notions of fair play and substantial justice.”  (Farina v. SAVWCL III, LLC (2020) 50 Cal.App.5th 286, 294.)  “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 . . . [¶] (1)  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).)  “‘When a defendant moves to quash service of process on jurisdictional grounds, the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction.  [Citation.]  Once facts showing minimum contacts with the forum state are established, however, it becomes the defendant’s burden to demonstrate that the exercise of jurisdiction would be unreasonable.  [Citation.]’”  (Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 17.)  

“‘Personal jurisdiction may be either general or specific.  A nonresident defendant may be subject to the general jurisdiction of the forum if his or her contacts in the forum state are “substantial . . . continuous and systematic.”’”  (Jayone Foods, Inc. v. Aekyung Industrial Co. Ltd. (2019) 31 Cal.App.5th 543, 553.)  Alternatively, to determine whether specific jurisdiction exists, “‘courts consider the “ ‘relationship among the defendant, the forum, and the litigation.’ ”  [Citation.]’”  (Ibid.)

The court finds that Plaintiff has not met its burden to show that (1) the court has general jurisdiction over Defendant, and (2) the court has specific jurisdiction over Defendant.  The court therefore grants Defendant’s motion.  (Code Civ. Proc., § 418.10, subd. (a)(1).)

First, the court finds that Plaintiff has not met its burden to establish that the court has general jurisdiction over Defendant.  (Burdick, supra, 233 Cal.App.4th at p. 17 [“the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction”].)

“A court has all-purpose jurisdiction over defendants who are at home in the court’s forum.”  (Farina, supra, 50 Cal.App.5th at p. 286.)  Thus, “‘general jurisdiction exists when a defendant is domiciled in the forum state or his activities there are substantial, continuous, and systematic.’”  (Sacramento Suncreek Apartments, LLC v. Cambridge Advantaged Properties II, L.P. (2010) 187 Cal.App.4th 1, 9.)  Defendant has presented the declaration of its Founder and CEO, Ryan Barker (“Barker”), in which Barker states that (1) Defendant is incorporated in Delaware; (2) Defendant is headquartered in New York; and (3) New York is the only state where Defendant has ever maintained physical offices.  (Barker Decl., ¶ 3.)  Plaintiff does not appear to argue that the court has general jurisdiction over Defendant.  Specifically, Plaintiff has not argued that Defendant is domiciled in California or that its activities are so substantial, continuous, and systematic as to conclude that it is “at home” in California.  The court therefore finds that the court does not have general jurisdiction over Defendant.

Second, the court finds that Plaintiff has not shown that Defendant has purposefully availed itself of the benefits of California and therefore finds that the court may not exercise specific jurisdiction over Defendant.  (Burdick, supra, 233 Cal.App.4th at p. 17 [“the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction”].)

“‘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’ ” [citation]; and (3) “ ‘the assertion of personal jurisdiction would comport with “fair play and substantial justice” ’ ” [citation].’”  (Jayone Foods, Inc., supra, 31 Cal.App.5th at p. 553.)  As to the first prong, “[a] defendant purposefully avails itself of a forum’s benefits if it intentionally directs its activities at a forum such that, by virtue of the benefits the defendant has received, it should reasonably expect to be haled into the forum’s courts.”  (Farina, supra, 50 Cal.App.5th at p. 294 [emphasis in original].) 

Defendant contends that it did not purposefully avail itself of the benefits of California because (1) Plaintiff is the entity that initiated the business relationship with Defendant; (2) the parties’ contract negotiations did not have a connection to California, as Defendant’s employees conducted negotiations from other states, including Connecticut and Arizona; (3) Plaintiff’s own employees were based in states other than California, including Washington and New Jersey; (4) the contemplated future consequences of the parties’ contract did not have a connection to California since, inter alia, Plaintiff provided sample for each state in the United States and some foreign countries; and (5) remote, out-of-state employees on both sides performed the obligations under the contract and the amendments, from, (i) on Plaintiff’s end, England, India, Spain, and New York, and (ii) on Defendant’s end, New Jersey, Virginia, Canada, and New York.  (Barker Decl., ¶¶ 6, 11, subd. (d); Archambault Decl., ¶¶ 4-5, 7-8.)  Defendant also asserts that Plaintiff had “regularly come to [Defendant]; [Plaintiff’s employee, Michael McCrary] himself has flown to meet with [Barker] in person in New York and Arizona.”  (Barker Decl., ¶ 11, subd. (c).)  However, Defendant’s employees did not travel to California to do business with Plaintiff.  (Ibid.)

Plaintiff contends that Defendant has purposefully availed itself of the benefits of California based on the following evidence.  Defendant is registered to transact business in the State of California, and, independent of its relationship with Plaintiff, Defendant has 12 other clients to which it has provided services and sent bills to a California address since June 1, 2019. (Tenenbaum Decl., Ex. C [California Secretary of State Statement]; Tenenbaum Decl., Ex. B, p. 8:13-15 [Def. Response to Special Interrogatory No. 6].)  Further, Defendant has stated that the number of individuals who have taken its surveys that are located in California from June 1, 2019 to the present amounts to approximately “731,339 responses, or approximately 9% of all of the survey responses . . . .”  (Tenenbaum Decl., Ex. B, p. 11:22-25 [Def. Response to Special Interrogatory No. 10].)  Plaintiff also submits a screenshot of Defendant’s landing page, which (1) states that Defendant can measure a “brand’s financial impact on the business” and (2) includes a map that shows portions of California, including the Los Angeles area.  (Tenenbaum Decl., ¶ 8.)

Next, Plaintiff disputes Defendant’s position that Plaintiff initiated the business relationship with Defendant.  Plaintiff’s Founder and CEO, Michael McCrary (“McCrary”) states in his declaration that Barker initiated contact with him on the social media platform LinkedIn on January 17, 2017, by requesting that they “catch up” and inquiring about the status of his new company (i.e., Plaintiff).  (McCrary Decl., ¶ 9.)  After agreeing to speak on the phone that day, Barker “wanted to see if [McCrary] could save [Defendant] money if [Barker] switched from his then-sample provider” to Plaintiff.  (McCrary Decl., ¶ 10.)  Thus, Plaintiff asserts that Defendant, through Barker, approached Plaintiff about a potential business relationship.  (Ibid.)  Plaintiff further contends that at least seven of its employees that were based in California provided services to Defendant, consisting of two executive level employees (McCrary and Connor Weiss, Senior Vice President of Finance) and five client service consultants (Michael Olague, Chloe Quintana, Willian Van Heusen, Michol McCloud, and Cole Johnson).  (McCrary Decl., ¶¶ 13-14; Olague Decl., ¶¶ 3-5.)  Finally, Plaintiff asserts that, (1) between January 1, 2020 and January 1, 2023, Defendant obtained survey responses from 401,565 respondents located in California, and (2) the parties’ agreement provides that it shall be governed by the laws of the State of California.  (Olague Decl., ¶ 6; McCrary Decl., Ex. A, Agreement, p. 4.)

The court finds that, upon evaluating the parties’ contract and surrounding circumstances, Plaintiff has not met its burden to show that Defendant purposefully established minimum contacts with California.

“[A] contract with a forum resident, alone, is insufficient to establish jurisdiction.  [Citation.]  Courts must scrutinize the underlying business transaction—past negotiations, contemplated future consequences, contract terms, and the parties’ actual course of dealing—to determine whether the defendant purposefully established minimum contacts with the forum.”  (Farina, supra, 50 Cal.App.5th at p. 299.)  A choice of law provision is “relevant to this inquiry.”  (Ibid.)

As to the past negotiations, the parties dispute which entity initiated their business relationship.  As set forth above, Plaintiff’s Founder and CEO asserts that Defendant approached Plaintiff “about doing business together” after reaching out on LinkedIn.  (McCrary Decl., ¶ 10.)  The court notes that, while Plaintiff has submitted copies of the LinkedIn conversation between Barker and McCrary, the messages do not conclusively show that Defendant contacted Plaintiff to form the subject business relationship, and instead show only that Barker requested that he and McCrary “catch up[.]”  (McCrary Decl., ¶ 9.)  Conversely, Defendant asserts that Plaintiff proposed the business arrangement.  Specifically, Barker states that (1) McCrary reached out to provide the same sample that Defendant was receiving from third party Lucid at a lower cost; (2) Barker requested that Plaintiff perform tests to confirm that its sample was comparable to Lucid’s and, upon Plaintiff doing so, Defendant agreed to switch to Plaintiff’s services; and (3) in 2019, McCrary asked Barker to have Defendant enter into a written contract with Plaintiff in lieu of their informal agreement.  (Barker Decl., ¶¶ 5, 6-8.)  

Although the court recognizes that Barker, who is associated with Defendant, appears to have initiated contact with McCrary, who is associated with Plaintiff, the court finds that Plaintiff has not presented sufficient evidence rebutting Barker’s recounting of events and, in particular, his assertions that (1) Plaintiff performed tests, at its own cost, in order to satisfy Defendant that Plaintiff’s sample was comparable to Lucid’s sample in order to obtain Defendant’s business, and (2) Plaintiff requested that the parties enter into a formal, written contract with Plaintiff to memorialize their informal business arrangement.  (Barker Decl., ¶¶ 6, 8.)  Further, as discussed in more detail below, the evidence shows that most of the parties involved in the negotiations were not based in California.  (Barker Decl., ¶¶ 8-10; Archambault Decl., ¶¶ 4-6.)  Thus, the court finds that this evidence weighs slightly in favor of finding that Defendant did not purposefully establish minimum contacts with California.

As to contract terms, the court acknowledges that, as Plaintiff points out, the parties’ agreement includes a choice of law provision.  (Farina, supra, 50 Cal.App.5th at p. 299 [“Choice of law provisions are relevant to this inquiry”].)  Specifically, the SaaS Services Order Form states that it “shall be governed by the laws of the State of California without regard to its conflict of laws provisions.”  (McCrary Decl., Ex. A, Agreement, p. 4.)  This fact weighs in favor of finding that Defendant purposefully established minimum contacts with California.

As to contemplated future consequences, the court agrees with Defendant that they did not concern California.  Defendant has produced evidence showing that the parties’ agreement was not specifically targeted to California because (1) Plaintiff was supposed to develop software for Defendant’s automation platform, which would have been primarily used by employees in New York, and (2) Plaintiff provided services based on surveys collected from residents in all 50 states of the United States and some foreign countries, and thus was not limited to providing services based on surveys from California residents only.  (Barker Decl., ¶ 11, subd. (d).)  Although Plaintiff has argued that “hundreds of thousands of California residents” were surveyed using Plaintiff’s platform, Plaintiff has not disputed that it also provided sample from respondents in other states and foreign countries.  (Opp., p. 15:14-16 [emphasis omitted]; Olague Decl., ¶ 6.)  Thus, the court finds that Plaintiff’s evidence does not establish that the contemplated future consequences specifically concerned California and therefore finds that this evidence weighs in favor of finding that Defendant did not purposefully establish minimum contacts with California. 

As to the parties’ actual course of dealing, both Plaintiff and Defendant have presented evidence of the locations of the relevant employees that negotiated and performed under the parties’ contract and the subsequent amendments.

The parties appear to agree that McCrary, working from California, was involved in negotiating the terms of the initial agreement.  (Barker Decl., ¶¶ 8-9; McCrary Decl., ¶ 13.)  Defendant has submitted the declaration of its Chief Technology Officer, who states that he was involved in the first amendment to the contract with two other employees of Defendant (Doug Guion, who worked from Connecticut, and Ryan Anderson, who was based in Arizona), alongside two of Plaintiff’s employees who were based outside of California (in Washington and New Jersey).  (Archambault Decl., ¶¶ 3-5.)  One of Defendant’s remote employees negotiated the second amendment on behalf of Defendant from Connecticut with, primarily, Plaintiff’s Chief Operating Officer, who was based in New Jersey.  (Archambault Decl., ¶ 6.)  None of Defendant’s employees signed the contract and amendments in California.  (Barker Decl., ¶¶ 9-10.)

In addition to McCrary’s performance of work with Defendant, Plaintiff also asserts that (1) Connor Weiss “oversaw all aspects of billing and invoice collection and liaised directly with [Defendant] on financial matters” from California, and (2) from September 1, 2022 through December 31, 2022 (i.e., the period of unpaid invoices that is the subject of this action), five of Plaintiff’s client services consultants based out of California worked “directly” with Defendant “on all aspects” of their experience with Plaintiff, “including defining with [Defendant] the services they needed, monitoring their experience and the quality of information they were obtaining from the sample, and problem-solving any technical issues.”  (McCrary Decl., ¶¶ 13-15.)  One such consultant explains that he worked with Defendant in its project to migrate its survey data from one platform to another, and to manage the way Plaintiff’s platform integrated with the other platforms.  (Olague Decl., ¶ 4.)  Defendant takes issue with this evidence in reply, arguing that Plaintiff’s failure to specifically identify the details of those relationships is insufficient to meet its burden to show a substantial connection to California.  

The court finds that, considering all of the evidence presented, Plaintiff has not shown that the parties’ actual course of dealing substantially involved California-based employees.  Defendant has submitted evidence showing that none of its employees that worked with Plaintiff were based in or traveled to California.  (Barker Decl., ¶¶ 6, 11, subd. (c); Archambault Decl., ¶¶ 2, 4-7.)  Defendant has also submitted evidence that the employees of Plaintiff with which Defendant “primarily” interacted were based in England, New York, New Orleans, Spain, and India.  (Archambault Decl., ¶ 7 [emphasis added]; Barker Decl., ¶ 11, subd. (b) [“The employees who [Defendant] regularly interacted with were located primarily on the East Coast (in New Jersey and New Orleans) as well as abroad (including England and India)”] [emphasis added].)  Although Plaintiff has identified seven employees based in California that directly worked with Defendant, Plaintiff did not submit sufficient evidence showing the extent of the working relationship between those employees and Defendant, and did not rebut Defendant’s showing that Defendant “primarily” interacted with five of its employees that were not located in California.  (Ibid.; McCrary Decl., ¶ 13-15.) 

Upon consideration of the evidence submitted by the parties, the court finds that Plaintiff has not met its burden to show that Defendant “purposefully availed [itself] of” the benefits of the State of California.  (Jayone Foods, Inc., supra, 31 Cal.App.5th at p. 553 [internal quotations omitted].)  Thus, the court finds that Plaintiff has not met its burden to demonstrate facts justifying the exercise of personal jurisdiction and therefore grants Defendant’s motion.  (Ibid.; Code Civ. Proc., § 418.10, subd. (a)(1).)

MOTION TO STAY ACTION ON GROUND OF INCONVENIENT FORUM

Defendant moves the court for an order staying or dismissing this action on the ground of inconvenient forum pursuant to Code of Civil Procedure sections 410.10, 410.30, and 418.10.

In light of the court’s order granting Defendant’s motion to quash service of summons, the court denies Defendant’s motion for an order staying or dismissing this action on the ground of inconvenient forum as moot.    

ORDER

The court grants defendant BERA Brand Management, Inc.’s motion to quash service of summons for lack of personal jurisdiction.

The court orders that the service of summons on defendant BERA Brand Management, Inc. is quashed.

The court denies defendant BERA Brand Management, Inc.’s motion to stay action on ground of inconvenient forum as moot.

The court orders that this action is dismissed.

The court orders defendant BERA Brand Management, Inc. to give notice of this ruling.

IT IS SO ORDERED.

DATED:  August 9, 2023

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court