Judge Upinder S. Kalra, Case Number: 24STCV13037, Date: 2024-10-04 Tentative Ruling

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On May 23, 2024, Plaintiff Deepak Gupta (Plaintiff) filed a Verified Complaint against Defendants Rakesh Soni, Ousama Haffar, Manoj Ramachandran, and LoginRadius, Inc., (Defendants) with eight causes of action for: (1) Retaliation and Wrongful Termination in Violation of Cal. Labor Code § 1102.5; (2) Failure to Pay Wages in Violation of California Labor Code §§ 201 and 203; (3) Unpaid Minimum Wages – Labor Code §§ 1194, 1194.2, 1191.1, and Wage Order 2; (4) Waiting Time Penalties for Unpaid Wages – Labor Code §§ 201, 202, 203; (5) Failure to Furnish Timely and Accurate Itemized Wage Statements Pursuant to Labor Code § 226 and Wage Order 5; (6) Unfair Business Practices in Violation of Cal. Bus. & Prof. Code § 17200 et seq.; (7) Intrusion Into Private Affairs; and (8) Declaratory Relief.

According to the Complaint, Plaintiff was CTO for Defendant LoginRadius, Inc. until he was wrongfully terminated by Defendant Rakesh Soni, CEO for raising issues about financial transparency and nepotism. Plaintiff further alleges that Mr. Soni apologized and offered to make Plaintiff Co-CEO to fix these issues. However, Plaintiff alleges that Mr. Soni reneged on this agreement and then retaliated against him for so reporting to the Board. Plaintiff alleges he has not received compensation, that Defendants improperly accessed his email, and that Defendants improperly disseminated his private information to third parties without his consent.

On June 4, 2024, Plaintiff filed proof of personal service on LoginRadius, Inc. indicating service on June 3, 2024 on registered agent, Northwest Registered Agent, Inc., 2108 N. St. Ste N., Sacramento, California 95816.

On July 3, 2024, LoginRadius, Inc. (moving party) filed the instant motion to quash.

On September 23, 2024, Plaintiff filed an opposition. On September 26, 2024, Moving Party filed a reply.

“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., (CCP) § 418.10, subd. (a)(1).)¿

A defendant may move to quash service of summons on the ground the court lacks personal jurisdiction.¿ (Code Civ. Proc., § 418.10, subd. (a)(1).)¿¿ The plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction. (Burdick v. Superior Court (2015) 233 Cal.App.4th 8, 17 (Burdick); Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449 (Vons).) ¿By¿statute, the courts of this state may exercise personal jurisdiction over nonresident defendants to the extent permitted by the United States Constitution.¿ (Code Civ. Proc., § 410.10.)¿ Under the Constitution, due process requires that a nonresident defendant have¿“certain minimum contacts” with a forum such that the court’s exercise of personal jurisdiction does not offend traditional notions of fair play and substantial justice.¿ (Int’l Shoe Co. v. Wash.¿(1945) 326 U.S. 310, 316.)

The court is unaware of any legal authority which requires a court to rule on evidentiary objections on a motion, except as to a motion for summary motion/adjudication [CCP § 437c (q)] or a special motion to strike (CCP § 425.16 (b)(2); see also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949.) As such, this court respectfully declines to rule on any of these objections. This court is well aware of the rules of evidence, and to how much weight, if any, should be given to any of the proposed evidence.

California courts have personal jurisdiction over an out-of-state defendant only if (1) jurisdiction is available under California’s long arm statute and (2) the exercise of jurisdiction over the defendant does not offend principles of due process. (Buchanan v. Soto (2015) 241 Cal.App.4th 1353, 1361-1362; see also Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268.) Where, as here, a state has construed its long-arm statute to provide jurisdiction to the constitutional limits of due process under the Fourteenth Amendment, the focus is solely on whether the exercise of jurisdiction would comport with due process. (See In re Automobile Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 107-108 (2005); Pavlovich, supra, 29 Cal.4th at p. 268.) Due process requires that a nonresident defendant have certain minimum contacts with the forum state “such that the exercise of jurisdiction does not offend ‘traditional notions of fair play and substantial justice.’” (Buchanan, supra, 241 Cal.App.4th at p. 1362 (quoting Int’l Shoe Co. v. Wash. (1945) 326 U.S. 310, 316).)

It is the plaintiff who has the burden of proving personal jurisdiction by showing that the defendant had the requisite “minimum contacts” with California, under either a general jurisdiction or a specific jurisdiction theory. (Floveyor International, Ltd. v. Superior Court (1997) 59 Cal.App.4th 789, 797.) “Although the defendant is the moving party and must present some admissible evidence (declarations or affidavits) to place the issue [of personal jurisdiction] before the court (by showing the absence of¿minimum contacts with the state), the burden of proof is on the plaintiff to establish, by a preponderance of the evidence, a basis for jurisdiction (minimum contacts between the defendant and the forum state) and valid service of process in conformance with our service statutes.”¿(School Dist. Of Okaloosa County v. Superior Court¿(1997) 58 Cal.App.4th 1126,¿1131.)¿

Moving Party contends it is not subject to general jurisdiction because it is a Canadian corporation with no contacts in California. Plaintiff does not actually argue there is general jurisdiction but argues there is personal jurisdiction because LoginRadius USA, Inc., Moving Party’s wholly-owned subsidiary, does have the requisite contacts with California and is Moving Party’s alter ego.

A defendant is subject to a state’s general jurisdiction if its contacts “are so continuance and systematic as to render [it] essentially at home in the forum State.” (Daimler AG v. Bauman (2014) 571 U.S. 117, 127.) A corporation is typically subject to general jurisdiction where it is incorporated and where it has its principal place of business. (Ford Motor Co. v. Montana Eighth Judicial District Court (2021) 592 U.S. 351, 359.)

Here, there is insufficient evidence supporting general jurisdiction. Notably, Moving Party is a Canadian corporation. (Anand Decl. ¶¶ 8-9, 12.) Its principal place of business is in Canada.[1] (Id. at ¶ 10.)

Plaintiff concludes that LoginRadius USA, Inc. is the alter ego of Moving Party.[2]

“[W]hen the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose” courts may pierce the corporate veil to hold the equitable owners responsible for the corporation’s actions. (Sonora Diamond Corp., supra, 83 Cal.App.4th at p. 538.) California has two requirements: first, “there must be such a unity of interest and ownership between the corporation and its equitable owner” that there is not really a separate personality and second “there must be an inequitable result” by treating the acts in question as belonging to the corporation only. (Ibid.) There are a variety of factors involved and the remedy is “extreme” and “sparingly used.” (Id. at 539.)

Here, Plaintiff’s purported argument for alter ego liability is actually a discussion on purposeful availment which is appropriate for specific, not general, jurisdiction. Plaintiff barely discusses the Sonora Diamond Corp. factors or any reasons why the court should pierce the corporate veil of LoginRadius USA, Inc.

Accordingly, the court does not have general jurisdiction over Moving Party.

“When determining whether specific jurisdiction exists, courts consider the ‘relationship among the defendant, the forum, and the litigation.’” (Halyard Health, Inc. v. Kimberly-Clark Corp. (2019) 43 Cal.App.5th 1062, 1070.) There are three requirements for specific jurisdiction: “(1) the defendant has purposefully availed itself of forum benefits with respect to the matter in controversy; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the exercise of jurisdiction would comport with fair play and substantial justice.” (Ibid.) To determine whether the exercise of specific jurisdiction is proper in a given case, courts consider the relationship among the defendant, the forum, and the litigation.¿ (Pavlovich v. Superior Court¿(2002) 29 Cal.4th 262, 269.)¿¿“[I]t is the defendant’s conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him.”¿ (Walden v. Fiore¿(2014) 134¿S.Ct. 1115, 1122 (Walden).)¿ “[A]¿defendant’s contacts with the¿forum¿State may be intertwined with his transactions or interactions with the plaintiff or other parties.¿¿But a defendant’s relationship with a plaintiff or third party, standing alone, is an insufficient basis for¿jurisdiction.”¿ (Id.¿at p. 1123.)¿¿It is the plaintiff’s burden to demonstrate that the defendant’s conduct giving rise to the pleaded causes of action amounts to constitutionally cognizable “minimum contacts.”¿ (Elkman,¿supra,¿173 Cal.App.4th at p. 1313.)¿

A nonresident defendant may be subject to the specific jurisdiction of the forum “if the defendant has purposefully availed himself or herself of forum benefits [citation], and the ‘controversy is related to or “arises out of” a defendant’s contacts with the forum.’ [Citations.]” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 446.) This test does not require a “causal relationship between the defendant’s in-state activity and the litigation.” (Ford Motor Co., supra, 592 U.S. at p. 361.) The “arise out” of standard “asks about causation,” but “relate to” does not. (Ibid.) “[W]hen a corporation has ‘continuously and deliberately exploited [a State’s] market, it must reasonably anticipate being haled into [that State’s] court[s]’ to defendant actions ‘based on’ products causing injury there.” (Id. at p. 1027.)

“[P]urposeful¿availment¿occurs where a nonresident defendant purposefully directs¿its activities at residents of the forum [citation],¿purposefully derives¿benefit¿from’ its activities in the forum [citation],¿creates a substantial connection with the forum [citation],¿deliberately has engaged in significant activities within’ the forum [citation],¿or has created continuing obligations between itself¿and residents of the forum.” (Anglo Irish Bank Corp. v. Superior Court¿(2008) 165 Cal.App.4th 969, 978 (Anglo Irish), internal quotation marks and citations omitted.)¿

Here, Plaintiff has not met his burden showing Moving Party purposefully availed itself of California as a forum. Notably, the connection based on Plaintiff’s employment is based on Plaintiff’s independent move to California to be with his wife and not at Moving Party’s direction. (Anand Decl. ¶ 22.) It is therefore “fortuitous” that Moving Party has a relationship with California, if any, because Plaintiff decided to move there.[3] (Ford Motor Co., supra, 592 U.S. at p. 359.) Similarly, Moving Party’s use of Gusto to handle payroll matters (for Plaintiff) also does not demonstrate “significant business activities” in California as Plaintiff suggests because they are still tied to his independent move to California. (Gupta Decl., Exhibit C.) Taken together, these actions show Moving Party accommodating Plaintiff’s request to work remotely from California where his wife lived. The court is hardpressed to find this is purposeful availment by Defendant. If anything, Plaintiff purposefully availed themself.

Plaintiff has also not demonstrated that Moving Party acted through LoginRadius USA, Inc. to satisfy the purposeful availment requirement. “The principle of availment arises where it is shown that a specific activity of the parent corporation, while done in the context of the parent-subsidiary relationship, is itself sufficient to justify the exercise of jurisdiction over the parent by the forum state.” (Sonora Diamond Corp., supra, 83 Cal.App.4th at p. 552.) “[T]he acts furnishing the basis for jurisdiction must be related to the cause of action for which jurisdiction is sought.” (Ibid.) Therefore, “the focus is on the acts of the parent itself.” (Ibid.) A parent corporation’s “obvious volitional choice to enter the California market through a subsidiary” is “not enough” to give California jurisdiction over the parent.[4] (Id. at p. 553 [internal citations omitted.]) It is worthwhile to state the rule as set forth in Northern Natural Gas Co. v. Superior Court (1976) 64 Cal.App.3d 983 that a parent corporation cannot be subject to jurisdiction solely by the fact that the subsidiary is wholly owned by the parent.

Here, the acts are not the basis for jurisdiction. The reasons Plaintiff provides to confer jurisdiction on Moving Party through LoginRadius USA, Inc. are that it is the parent company, that it supposedly paid LoginRadius USA, Inc.’s taxes in 2017, has a California bank account, and participated in Plaintiff’s employment.[5] (Opp. 5:8-6:8.) However, Plaintiff’s claims stem from his employment with Moving Party only.[6] (See, generally, Verified Complaint.) He does not discuss LoginRadius USA, Inc. at all. (Ibid.) He claims Moving Party and its Board of Directors acted wrongfully and seeks enforcement of California labor laws against them. (Ibid.) There is simply not enough evidence for a prima facie showing to meet Plaintiff’s burden.

Accordingly, Moving Party did not purposefully avail itself of California’s forum.

Courts may consider the following: “¿“the burden on the defendant,” “the forum State's interest in adjudicating the dispute,” “the plaintiff's interest in obtaining convenient and effective relief,” “the interstate judicial system's interest in obtaining the most efficient resolution of controversies,” and the “shared interest of the several States in furthering fundamental substantive social policies.”” (Burger King Corp. v. Rudzewicz¿(1985) 471 U.S. 462, 477.)¿¿

Neither party briefed this issue. The court declines to analyze this issue since Moving Party did not purposefully avail itself of California as a forum.[7]

[1] However, it does contract with WeWork to allow employees to work at any WeWork office, including offices in California. (Id. at ¶ 11.) Indeed, Moving Party indicates that it’s only connection to California now is Plaintiff, who immigrated to the United States and settled in California upon marriage. (Id. at ¶¶ 22-23.) Still, these are sporadic connections, rather than the “systematic” and “continuous” connections that comport with “traditional notions of fair play and substantial justice to subject [Moving Party] to the jurisdiction of [California], even when the cause of action is unrelated to the contacts.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 536.)

[2] The court will not analyze agency between the two corporations because Plaintiff did not do so.

[3] Plaintiff’s purported evidence that Moving Party filed taxes on behalf of LoginRadius USA, Inc. in California as well as holding a bank account in California do not help establish purposeful availment because Plaintiff’s claim is not related to either of these.

[4] In Empire Steel Corp. of Texas, Inc. v. Superior Court (1961) 56 Cal.2d 823, the “act which conferred jurisdiction was an independent act of the parent, knowingly creating the misleading perception to the third party, that the subsidiary was financially solvent.” (Sonora Diamond Corp., supra 83 Cal.App.4th at p. 553.)

[5] Plaintiff also contends Moving Party took concrete steps to relocate Plaintiff to California, but, as discussed above, Plaintiff initiated the move to California to be with his wife. The court is not persuaded that Moving Party assisting Plaintiff to do this is enough to confer jurisdiction.

[6] Plaintiff provides an unsigned “offer of employment” with LoginRadius USA, Inc. and Plaintiff. (Gupta Decl., Exhibit E.) However, this is unsigned. The court also notes it includes an arbitration clause.

[7] Although, the court notes that it is likely inequitable to hail Moving Party to this forum because its employee, Plaintiff, moved to California and it accommodated his request.