Opinion
Case No. CV 13-05353 DDP (AJWx)
06-24-2016
j2 GLOBAL, INC. and ADVANCED MESSAGING TECHNOLOGIES, INC., Plaintiff, v. FAX87.COM, FARJAD FANI, MATT JOHNSON FINANCE INC., Defendants.
ORDER RE: DEFENDANTS FARJAD FANI, ELNAZ FANI, STEVEN THONG WAY SEN, AND CHARLES MONTGOMERY'S MOTIONS TO DISMISS [Dkt. Nos. 55, 59, 66, 72]
Before the court is Defendant Farjad Fani's Motion to Dismiss for Insufficient Service of Process under Rule 12(b)(5); Defendant Elnaz Fani's Motion to Dismiss for Insufficient Service of Process and Lack of Personal Jurisdiction under Rule 12(b)(2) and (5); Defendant Steven Thong Way Sen's Motion to Dismiss for Insufficient Service of Process and Lack of Personal Jurisdiction under Rule 12(b)(2) and (5); and Defendant Charles Montgomery's Motion to Dismiss for Lack of Personal Jurisdiction Under Rule 12(b)(2). Having considered the submissions of the parties and heard oral argument, the court grants the motion in part, denies the motion in part, and adopts the following Order.
I. BACKGROUND
This court has explained the factual background of this case in connection with a prior order regarding Defendant Farjad Fani's Motion to Dismiss. (Dkt. 32.) In brief, Plaintiff j2 Global, Inc. is the holder of two patents related to the transmission and storage of facsimile and audio messages. (First Amended and Supplemental Complaint ("FASC" or "Amended Complaint") ¶ 25, 29.) In a prior action, j2 Global, Inc. and Advanced Messaging Technologies, Inc. (collectively, "j2") brought suit against Defendants Fax87, Farjad Fani, and Matt Johnson Finance, Inc. ("MJF") for patent infringement. (Id. ¶ 45.) The parties ultimately settled the case and j2 entered into a patent license agreement with MJF (doing business as Fax87.com). (Id. ¶¶ 46-47.)
On July 24, 2013, Plaintiffs filed a new action against Mr. Fani, Fax87, and MJF asserting breach of contract in connection with the licensing agreement for, inter alia, failure to provide royalty reports, remit royalty payments, and selling the business without timely notice. (Complaint ¶ 42.) On February 5, 2014, this Court issued an order finding service of process insufficient and dismissing the Complaint against Mr. Fani. (Dkt. 32.)
On April 15, 2016, j2 filed the Amended Complaint reasserting breach of license agreement claims against Mr. Fani and MJF and raising, for the first time, claims for patent infringement, trademark infringement, and unfair competition against Mr. Fani, his sister, Elnaz Fani, Steven Thong, Charles Montgomery, and other individuals and corporate entities. (Dkt. 43.) j2 included the various entities--OnlineFaxes, FaxVision, eFax4Less, MyPhone Fax, ResellFax, OneVoix--as defendants on the theory that they are either alter egos or affiliates of one another working in concert to disguise the licensing breach and infringement from j2. (FASC ¶¶ 81, 84.) j2 added the individual defendants alleging that they were affiliated with the various entities. (FASC ¶¶ 125, 130, 135.)
Now before the court are Defendants Farjad Fani, Elnaz Fani, Steven Thong, and Charles Montgomery's individual Motions to Dismiss. Mr. Fani moves to dismiss for insufficient process. (Dkt. 55.) Ms. Fani and Mr. Thong move to dismiss for insufficient process and lack of personal jurisdiction. (Dkt. 59, 66.) Mr. Montgomery moves to dismiss for lack of personal jurisdiction. (Dkt. 72.) Rather than recount here the allegations concerning each individual Defendant's association with various entities and the efforts to serve them, the Court will state the facts as needed to address each issue.
II. LEGAL STANDARD
A. Motion to Dismiss Under Rule 12(b)(5)
"[S]ervice of summons is the procedure by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served." Mississippi Publ'g Corp. v. Murphree, 326 U.S. 438, 444-445 (1946). "Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied." Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). Accordingly, Federal Rule of Civil Procedure 12(b)(5) provides that insufficient service may be a basis for dismissal of a complaint. Once service is challenged, the plaintiff bears the burden of establishing that service was valid. Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004).
Requirements for the contents and manner of service are established by Rule 4. Under Rule 4(e)(2)(B), a person may be served by "leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there." Rule 4(e)(1) further provides that process may be served in accordance with "state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." The applicable state law is described below, as necessary.
B. Motion to Dismiss Under Rule 12(b)(2)
Federal Rule of Civil Procedure 12(b)(2) provides that a court may dismiss a suit for lack of personal jurisdiction. The plaintiff has the burden of establishing that jurisdiction exists, but need only make "a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). "Although the plaintiff cannot simply rest on the bare allegations of its complaint, uncontroverted allegations in the complaint must be taken as true." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 797 (9th Cir. 2004) (internal quotations and citation omitted). Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor. Id.
III. INSUFFICIENT PROCESS CLAIMS
A. Farjad Fani
1. Relevant Facts
After this Court issued its prior order granting Mr. Fani's first Motion to Dismiss on February 5, 2014, j2 renewed its effort to serve Mr. Fani. (Declaration of Agostino von Hassell ¶ 6.) In 2013 and 2014, j2 employed investigators who were unable to conclusively determine Mr. Fani's whereabouts. (Id.) Around this time, from January 2014 to August 2015, Mr. Fani reports residing in Bellevue, Washington, where he had returned from overseas in order to care for his terminally ill father. (Declaration of Farjad Fani ("Farjad Decl.") ¶ 4.) In August 2015, Mr. Fani moved back overseas after his father passed away. (Id.) In 2015, j2's investigator reports connecting Mr. Fani with an apartment in Kuala Lampur but states that Mr. Fani had already left for India by the time process servers arrived. (von Hassell Decl. ¶¶ 14-15.)
On February 3, 2016, j2's process server attempted to serve Mr. Fani at 12707 NE 120th St., Unit B11, Kirkland, WA 98033 ("12707 Residence"). (Dkt. 36.) It is undisputed that Mr. Fani's brother Sarfaraz Fani resides at this address. (Declaration of Sarfaraz Fani in Support of Farjad Fani's Motion to Dismiss ("Sarfaraz First Decl.") ¶ 4.) j2 contends that Mr. Fani also resided at this address. (Plaintiffs' Omnibus Opposition to Defendants' Motion to Dismiss ("Opp'n") at 9).
On April 15, 2016, j2 filed its Amended Complaint with the court. (Dkt. 43.) On April 19, 2015, j2's process server purportedly served Mr. Fani in the same manner by leaving a Summons and the Amended Complaint with his brother Sarfaraz at the 12707 Residence. (Dkt. 46.)
2. 12(b)(5) Claim
As noted above, a plaintiff is allowed to utilize the service procedures of the state in which the district court is located (California) or where service is made (Washington). Fed. R. Civ. P. 4(e)(1). Washington law echoes the federal rules and provides that an individual may be served by "leaving a copy of the summons at the house of his or her usual abode with some person of suitable age and discretion then resident therein." Wash. Rev. Code § 4.28.080(16). California law provides that "a summons may be served by leaving a copy of the summons and complaint at the person's dwelling house, usual place of abode, usual place of business, or usual mailing address." Cal. Code Civ. P. § 415.20(b). While California law allows service at an individual's mailing address, in addition to usual place of abode, it also requires that a plaintiff attempt personal service "with reasonable diligence" before utilizing substituted service. Id. "Two or three attempts to personally serve a defendant at a proper place ordinarily qualifies as 'reasonably diligence.'" Am. Express Centurion Bank v. Zara, 199 Cal. App. 4th 383, 389 (2011). A copy of the summons and complaint must also be mailed to the person to be served at the place where the summons and complaint were left. Cal. Code Civ. P. § 415.20(b).
The parties disagree about whether Mr. Fani's service should be evaluated with reference to Washington's rule for serving someone at their "usual abode" or California's rule for serving someone at their "usual place of abode . . . or usual mailing address" with its additional diligence requirements. Regardless of which law we apply, the case must be dismissed if j2 cannot make a prima facie case that 12707 NE 120th St., Unit B11, Kirkland, WA 98033 is either Mr. Fani's "place of abode" or his "usual mailing address."
Under Washington law, the term "'usual abode' . . . is to be liberally construed to effectuate service and uphold jurisdiction of the court." Sheldon v. Fettig, 129 Wash. 2d 601, 609 (1996) (en banc). Washington has elaborated on this definition by explaining that place of abode "must be taken to mean such center of one's domestic activity that service left with a family member is reasonably calculated to come to one's attention within the statutory period for defendant to appear." Id. at 610 (internal quotations and citations omitted). Likewise, in California, "[t]he critical question is whether a place . . . has 'sufficient indicia of permanence' - i.e., it is not a temporary residence." United States v. Wen-Bing Soong, No. C-13-4088, 2014 WL 988632, at *2 (N.D. Cal. Mar. 10, 2014).
Mr. Fani argues he is entitled to dismissal because there is no credible evidence he ever lived or received mail at his brother's residence, even on a temporary basis. (Defendant Farjad Fani's Motion to Dismiss ("Farjad Mot.") 8-9.) In support, Mr. Fani submitted declarations by himself and his brother attesting that he does not now nor has he ever lived at the residence. (Farjad Decl. ¶ 3; Sarfaraz First Decl. ¶ 3.) Mr. Fani further states that he has only visited the residence "once or twice since they have lived there." (Farjard Decl. ¶ 3.) Finally, Mr. Fani notes that the process server never reported seeing Mr. Fani at the residence and that process server admits that he was informed by Sarfaraz Fani that Mr. Fani does not reside at the address.(See Dkt. 36.)
In their opposition, j2 argues that there is sufficient evidence to establish a prima facie case that the residence is either Mr. Fani's usual abode or mailing address. (Opp'n 9-10.) As evidence, j2 relies on a printout of a Westlaw PeopleMap report for Farjad Fani that lists "12707 NE 120th St." as a reported address. (Declaration of Guy Ruttenberg, Exhibit 14 at 3.) j2 also relies on a report by the process server that he "spoke with the neighbor who confirmed that Farjad Fani lives at this location." (Dkt. 46 at 6.) The process server also took a photograph of a Maserati, which the neighbor stated belongs to Mr. Fani. (Id. at 6, 8-10.) With regards to the Maserati, j2 notes there is a picture on Mr. Fani's Facebook page with an identical car and a "sold" sign. (Ruttenberg Decl., Ex. 16.)
j2 also raises two alternative arguments in favor of denying Mr. Fani's Motion to Dismiss. First, relying on Travelers Cas. & Sur. Co. Of Am. V. Brenneke, 551 F.3d 1132, 1135-26 (9th Cir. 2009), j2 argues that it has "substantially complied" with the rules of service and thus the court should assert jurisdiction. (Opp'n 11-12.) Second, j2 argues that Mr. Fani was served through his corporation, MJF d/b/a Fax87. (Id. at 12 (citing Certified Bldg. Prods., Inc. v. N.L.R.B., 528 F.2d 968, 969 (9th Cir. 1976) (holding that where a corporation is an alter ego of the individual "service upon the corporation is the equivalent of service upon the individual.")).) In support, j2 notes that Mr. Fani is the sole member of MJF and that, at times, he has even operated his businesses without corporate forms because they were suspended for failing to meet minimal corporate formalities. (Opp'n 12.)
In his reply, Mr. Fani questions the credibility of the statement by the unidentified neighbor. (Defendant Farjad Fani's Reply in Support of Motion to Dismiss ("Farjad Reply") 7.) In an earlier filing, Mr. Fani noted that his brother Farough lives at the residence and suggested that the neighbor might have mistaken the two individuals. (Farjad Mot. 9.) Mr. Fani also states that although he contributed funds to the photographed Maserati, he is not the registered owner and the car remains parked at Sarfaraz's residence because it has a covered garage. (Farjad Reply 7; Declaration of Farjad Fani in Support of Reply ¶ 9.)
Based on the evidence presented, the Court concludes that j2 has not made a prima facie case that the 12707 Residence was ever Mr. Fani's usual abode or mailing address. Both j2's PeopleMap evidence and the picture of the Maserati are, at best, inconclusive. The PeopleMap printout lists the source of the address as "People Find." (Ruttenberg Decl., Ex. 16.) It provides no additional information about how this particular address was identified. Furthermore, the printout notes over a dozen addresses for Mr. Fani, some of which are reported at overlapping dates, casting doubt on the reliability of information gleaned from the report. Likewise, Mr. Fani has provided a plausible explanation for the presence of the Maserati at the residence and j2 has not provided any specific evidence of ownership. j2's strongest evidence is the statement by a neighbor that Mr. Fani lives there. This same neighbor stated, however, that Mr. Fani owns a car, which the evidence suggests he may not own. Given the numerous declarations filed stating that Mr. Fani does not live at the residence, the absence of any other evidence indicating Mr. Fani lives at the residence, and the lack of any other information about how the neighbor knows that Mr. Fani lives there, the court cannot conclude that Plaintiffs' have met their burden of establishing that service is valid.
With regard to j2's alternative arguments, the claim that it has "substantially complied" is inapposite. Brenneke was a case where an individual was properly visually identified at home but refused to open the door to accept service. 551 F.3d at 1134. In such a circumstance, the court declined to require in-hand service but expressly distinguished a case where service was left with a defendant's mother at a house that was not the defendant's house as an example of insufficient service. Id. at 1137 (discussing Levens v. Koser, 126 Or. App. 399 (1994).)
Turning to the alter ego argument, a plaintiff must assert (1) that there is such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist; and (2) that there would be an inequitable result if the acts in question are treated as those of the corporation alone. Neilson v. Union Bank of California, N.A., 290 F. Supp. 2d 1101, 1115 (C.D. Cal. 2003). "Conclusory allegations of 'alter ego' status are insufficient to state a claim. Rather, a plaintiff must allege specifically both of the elements of alter ego liability, as well as facts supporting each." Id. (citing In re Currency Conversion Fee Antitrust Litigation, 265 F.Supp.2d 385, 426 (S.D.N.Y. 2003)). "Factors that courts have found militated towards finding alter ego liability include commingling of assets, treatment of the assets of the corporation as the individual's own, failure to maintain corporate records, employment of the same employees and attorneys, undercapitalization, and use of the corporation as a shell for the individual." Ontiveros v. Zamora, 2009 WL 425962, at *7 (E.D. Cal. Feb 20, 2009).
Here, j2's allegations cannot support the application of the alter ego doctrine. See Calista Enterprises Ltd. v. Tenza Trading Ltd., No. 3:13-cv-01045-SI, 2014 WL 3670856, at *3 (D. Or. July 23, 2014) (finding that mere allegations of alter ego liability are insufficient to demonstrate effective service on the individual). Aside from asserting that Mr. Fani is the sole member of MJF, j2's only other evidence is that Mr. Fani registered two corporate entities that were later dissolved for failure to comply with certain regulatory requirements. (Shuettinger Decl., Exs. 1-2.) Notably, one of these entities is MJF, which was dissolved on February 1, 2010 for failure "to file an annual list of officers/license renewal within the time set forth by law." (Id., Ex. 2.) Mr. Fani did, however, file to have the corporation reinstated the following month. (Id.) MJF was dissolved for the same reason in 2014 but Mr. Fani actually relies on this fact to argue that service on a defunct corporation is inadequate to serve its alleged alter ego. These allegations alone do not satisfy the test for alter ego liability, nor has j2 demonstrated that there would be an inequitable result if MJF is not treated as Fani's alter ego.
3. E-mail Service
Given that this Court has concluded Mr. Fani was not properly served, it turns to j2's alternative request, raised in its opposition papers, seeking leave to re-serve Mr. Fani via e-mail.
California Code of Civil Procedure section 413.30 provides that "the court in which the action is pending may direct that summons be served in a manner which is reasonably calculated to give actual notice to the party to be served." Cal. Civ. Pro. Code § 413.30; see also Fed. R. Civ. P. 4(f)(3) (permitting service on an individual in a foreign country by "other means not prohibited by international agreement"). The only textual requirements for service under Rule 4(f)(3) is that it "must be (1) directed by the court; and (2) not prohibited by international agreement." Rio Props. v. Rio Int'l Interlink, 284 F.3d 1007, 1014 (9th Cir. 2002). Courts are also, as always, limited by the requirement that service must be "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objection." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 214 (1950). Precedent on the subject is limited and the Ninth Circuit has left "it to the discretion of the district court to balance the limitations of e-mail service against its benefits in any particular case." Rio Props., 284 F.3d at 1018.
j2 argues that e-mail service is justified because Mr. Fani has been evading service for three years, several private investigators have been unsuccessful at tracking Mr. Fani, and j2 has communicated with Mr. Fani through a valid e-mail address. (Opp'n at 15.) Mr. Fani responds that, far from evading service, he spent seventeen months in the United States taking care of his father and that he regularly updates his social media accounts to reveal his whereabouts (Fani Decl. ¶¶ 4, 6.) Mr. Fani also contends that the email address j2 wants to serve process on is not his "active, preferred email address." (Farjad Reply 10.)
On the present record, the court declines to authorize alternative service by e-mail. j2 may, however, file a separate motion seeking leave from this Court to serve Mr. Fani by e-mail.
B. Elnaz Fani
1. Relevant Facts
j2's efforts to serve Elnaz Fani, Farjad Fani's sister, began after j2 filed its Amended Complaint on April 15, 2016. The Amended Complaint included Ms. Fani in this action for the first time on the grounds that she provided marketing and operational support to Fax87 and the other corporate defendants. (FASC ¶¶ 13, 135.) The basis of this allegation is Ms. Fani's LinkedIn profile where she states that she was employed by Fax87, though she now denies having done any actual work for her brother's company. (FASC ¶ 136; Declaration of Elnaz Fani ("Elnaz Decl." ¶ 7.)
As with Mr. Fani, j2 purportedly served Ms. Fani at the residence at 12707 NE 120th St., Unit B11, Kirkland, WA 98033 (Dkt. 47.) Likewise, Ms. Fani denies residing at the address except for approximately a ten-day stay in July 2015 when Ms. Fani and her mother stayed with Sarfaraz Fani while they were in the process of moving between homes after her father passed away. (Elnaz Decl. ¶3; Declaration of Sarfaraz Fani in Support of Elnaz Fani's Motion to Dismiss ("Sarfarz Second Decl.") ¶3).
2. 12(b)(5) Claim
Because j2 attempted to serve Ms. Fani in Washington in the same manner as Mr. Fani, the court relies on the same legal standards to guide its analysis. See supra Part III.A.2. Here, again, the sufficiency of process turns on whether Ms. Fani was served at a location that constitutes her "place of abode" or "usual mailing address."
Ms. Fani argues that the Amended Complaint should be dismissed because the 12707 Residence is not her place of abode. Although Ms. Fani admits that she stayed at the residence for ten days in July 2015, she contends that stay did not have any "indicia of permanence." United States v. Wen-Bing Soong, No. C-13-4088, 2014 WL 988632, at *2 (N.D. Cal. Mar. 10, 2014). Ms. Fani also admits that she temporarily listed the 12707 Residence as her mailing address while her family moved to a new apartment complex called Piedmont but argues that does not make the place her "usual mailing address." (Elnaz Fani's Motion to Dismiss ("Elnaz Mot." 9 (citing Zirbes v. Stratton, 187 Cal. App. 3d 1407, 1416-17 (1986) (holding a defendant's use of a particular address to renew her driver's license is insufficient to find it was a usual mailing address)).)
In its response, j2 notes that Ms. Fani has admitted to listing the 12707 Residence as a mailing address and submits another PeopleMap printout showing the 12707 Residence is associated with her name. (Elnaz Decl. ¶4; Ruttenberg Decl., Ex. 22.) j2 also challenges Ms. Fani's claim to have moved to the Piedmont after staying with her brother, noting that its investigator was unable to verify the claim with an employee at the Piedmont leasing office. (Ruttenberg Decl., Ex. 22.) The employee was only able to confirm that someone with the last name "Fani" came as a prospective renter in 2014. (Id.) Finally, j2 states that the same unidentified neighbor who reported that Mr. Fani resided at the 12707 Residence also reported that Ms. Fani lived there. (Dkt. 46 at 6.)
In her reply, Ms. Fani contests the claims of the unidentified Piedmont employee and reiterates that she lived at the Piedmont from July 10, 2015 until approximately May 2016. In support, her brother Farzam Fani provided lease documents showing that he began a lease at the Piedmont on July 10, 2015 and correspondence from the Piedmont on May 23, 2016 confirming his move-out. (Declaration of Farzam Fani, Exs. A, B.) He also stated that Ms. Fani, along with their mother, lived with him at the Piedmont and that they now all live together in Redmond, Washington. (Farzam Decl. ¶ 2,3.)
On the present record, the court concludes that j2 has not established that the 12707 Residence was either Ms. Fani's place of abode or usual mailing address. In addition to the PeopleMap printout and the single statement of a neighbor, which the court concluded was insufficient in Mr. Fani's case, j2 has only offered Ms. Fani's own admission that she temporarily listed Mr. Fani's residence as a mailing address. This instance, in light of other evidence that Ms. Fani resided elsewhere with her parents and her brother Farzam Fani, does not substantiate j2's contention that the 12707 Residence was her "usual mailing address."
Because the court finds j2 has not carried its burden to show that service of process upon Ms. Fani was sufficient, the court does not reach Ms. Fani's motion to dismiss under Rule 12(b)(2). See Omni Capital, 484 U.S. at 104.
3. E-mail Service
The court declines to grant leave to serve Ms. Fani by e-mail. See supra Part III.A.3. Ms. Fani's brother Farzam Fani has filed a declaration that, as of June 6, 2016, Ms. Fani, Farzam, and their mother live in Redmond, Washington. (Farzam Decl. ¶ 3.) Further, the record contains no evidence that Ms. Fani has not lived continuously in Washington. j2's inability to identify Ms. Fani's precise address does not give rise to the inference that she is attempting to evade service nor does it justify authorizing alternate service in this case.
C. Steven Thong
1. Relevant Facts Defendant Steven Thong has been a full-time employee for Faxcore, where he now works as Vice-President of product development. (Declaration Steven Thong Way Sen ("Thong Decl.") ¶ 5.) j2 first attempted to serve Mr. Thong after filing its Amended Complaint on April 15, 2016. The Amended Complaint included Mr. Thong in this action for the first time on the grounds that he offered operational support for Fax87, OnlineFaxes, and other corporate Defendants. (FASC ¶ 125.)
On April 20, 2016, j2 purportedly served Mr. Thong by leaving a copy of the Amended Complain and Summons at the office of his employer, Faxcore, located at 19590 East Main Street, Suite 207, Parker, Colorado (the "Faxcore Office."). (Dkt. 53.) The proof of service states that the documents were left with the office manager at Faxcore, Janine Ackerson. (Id.)
2. 12(b)(5) Claim
As noted above, the Federal Rules of Civil Procedure allow a plaintiff to serve process according to specified federal procedures as well as by the procedures of the state in which the district court is located (California) or where service is made (Colorado). Fed. R. Civ. P. 4(e) The court previously stated the standards governing service under California law at a "person's dwelling house, usual place of abode, usual place of business, or usual mailing address." Cal. Code Civ. P. § 415.20(b). Under Colorado law, personal service upon an individual can also be accomplished by leaving a copy of the Summons and Complaint "at the person's usual workplace, with the person's supervisor, secretary, administrative assistant, bookkeeper, human resources representative or managing agent." Colo. R. Civ. P. 4(e)(1). Under Colorado, there is no additional diligence or mailing requirement if personal service is accomplished at a person's workplace in the described manner. See id.
As an initial matter, Mr. Thong contends that the sufficiency of his service can only be evaluated under either federal or California law but not Colorado law. First, he argues that "Colorado law does not provide for service to the authorized agent of an individual person or for substituted service on an individual absent a court order." (Steven Thong's Motion to Dismiss ("Thong Mot." 5 n.1) (citing Col. R. Civ. P. 4(e), (f)).) Because there was no court order here, Mr. Thong asserts service under Colorado law is invalid. Second, Mr. Thong argues that because j2's Proof of Service states that he was served by "substituted service," j2 cannot now claim that he was served according to Colorado's rules for personal service. (Steven Thong's Reply in Support of Motion to Dismiss ("Thong Reply") 3-4.) Both arguments are unavailing.
First, Mr. Thong's argument that serving an individual at their "usual workplace" requires a court order relies on a misreading of the Colorado Rules of Civil Procedure. While Colorado Rule of Civil Procedure 4(f) states that a party must obtain a court order before attempting substituted service, the rule expressly begins by stating that the provision only comes into effect "[i]n the event that a party attempting service of process by personal service under section (e) is unable to accomplish service . . . ." Turning to Rule 4(e), the rule clearly states: "Personal service shall be as follows . . . (1) Upon a natural person whose age is eighteen years or older by delivering a copy thereof to the person . . . or by leaving a copy thereof . . . at the person's usual workplace . . . ." Colo R. Civ. P. 4(e). Thus, in Colorado, service at a person's usual workplace is defined as a form of personal service not as a form of substituted service requiring a court order. Likewise, Colorado Supreme Court cases discussing service at one's "usual workplace" make no mention of a the substituted service requirements. See. e.g., Goodman Associates, LLC v. WP Mountain Properties, LLC, 222 P.3d 310, 316 (Colo. 2010).
Mr. Thong's second argument also finds no support in either case law or the relevant rules of civil procedure. Mr. Thong is correct to note that the Proof of Service form j2 filed in the record states that he was served "by substituted service." (Dkt. 53.) But the form does not specify which state law was invoked. Moreover, the only case Mr. Thong cites in support of his argument is a case addressing whether a plaintiff who attempted service by federal waiver could later claim to have attempted service under state law. Because the waiver request expressly included language stating "this is not a formal summons or notification from the Court" and because "[w]aiving service under the federal rules is a uniquely federal method of serving process," the court concluded that service was invalid in that case. Gonzales v. Thomas Built Buses, Inc., 268 F.R.D. 521, 525 (M.D. Penn. 2010). Here, j2's only error was to state that it had made service by "substituted service" even though the actual service made constitutes "personal service" under Colorado law. Even the fullest reading of Mr. Thong's argument would not require j2 to newly serve Mr. Thong but instead only to file a new piece of paper with the correct designation. To dismiss on this basis "would further the kind of unnecessary . . . disputes over legal technicalities" that would only frustrate the aims of the Colorado rules of service. Falco v. Nissan N. Am. Inc., 987 F. Supp. 2d 1071, 1080 (C.D. Cal. 2013) (discussing California service process statutes).
Given that it is permissible to serve Mr. Thong under Colorado law, the only remaining question is whether the requirements of Rule 4(e) were met. There is no dispute in the record that the Faxcore Office is Mr. Thong's "usual workplace" or that the documents were actually left with Janine Ackerson, an office manager at Faxcore. (Thong Decl. ¶¶ 3, 5.) Plaintiff's only contention is that Ms. Ackerson was not authorized to receive service on Mr. Thong's behalf. (Thong Mot. 7-8.) Under Colorado Rule 4(e), however, there is no requirement that when service is delivered at a person's usual work place it has to be left with an authorized agent. See Colo. R. Civ. P. 4(e)(1). To the contrary, service can either be delivered "at the person's usual workplace with the person's supervisor, secretary, administrative assistant, bookkeeper, human resources representative or managing agent; or by delivering a copy to a person authorized by appointment . . . ." Id. (emphasis added). The only question is whether an office manager qualifies as an employee that can receive service at someone's usual workplace. The Colorado Supreme Court has explained that the employee does not need a title from the enumerated list but instead the relevant inquiry is whether "service is made upon an employee whose position presumptively includes delivery of papers to the relevant party." Goodman Associates, LLC v. WP Mountain Properties, LLC, 222 P.3d 310, 317 (Colo. 2010). There is no evidence in the record, nor does Mr. Thong argue, that an office manager's duties would not presumptively include delivery of papers to a Vice-President at an office. Thus, the court concludes that Mr. Thong was validly served under Colorado law and denies Mr. Thong's Motion to Dismiss under Rule 12(b)(5).
IV. PERSONAL JURISDICTION CLAIMS
A. Relevant Factual Background
Until filing its Amended Complaint, j2 had focused primarily on the actions of Farjad Fani and MJF. In its Amended Complaint, j2 raises for the first time claims against other individual defendants, including Steven Thong and Charles Montgomery for fraud, patent infringement, trademark infringement, and unfair competition. (Dkt. 43; Opp'n 21.) The accusations against Thong and Montgomery revolve primarily around their alleged involvement with the websites MyPhoneFax and OnlineFaxes.
According to j2, MyPhoneFax and OnlineFaxes are either alter egos and/or affiliates of MJF and Fax87 established to obscure unlawful infringing activities. (FASC ¶¶7, 11; Opp'n 4.) j2 notes that the phone numbers associated with the various entities connect to the same call center in the Philippines, the companies offer the same services, share the same offices, and are owned by an unnamed individual in Washington. (Ruttenberg Decl. ¶ 2.)
Mr. Thong is a resident of Castle Rock, Colorado who works for Faxcore, a company not named in this action. (Thong Decl. ¶ 2, 5.) Mr. Montgomery is a resident of Fairhope, Alabama. (Montgomery Decl. ¶ 2.) According to j2, until July 2015, "Steven Thong" was identified as the Chief Technology Officer (CTO) on the onlinefaxes.com website and "Charles Montgomery" was identified as the Chief Marketing Officer (CMO). (FASC ¶¶ 126, 131.) On or about July 25, 2015, j2 alleges that the websites were updated to delete Steven Thong and Charles Montgomery's names and instead list "Steven Arasu" as the CTO and "Charles Newsom" as the CMO. (Id.) According to a cached version of the website, "Steven Arasu" joined OnlineFaxes in October 2012 and "is directly responsible for innovation while ensuring overall scalability and availability." (FASC ¶127; FASC, Ex. 21.) j2 also submits a LinkedIn page where Mr. Thong lists himself as the CTO of MyPhoneFax from August 2013. (FASC, Ex. 27.) As for "Charles Newsom," the website states that his "current role as a Director of Marketing, allows him the opportunity to work hands on with SEO, PPC, Feed management, and all Digital Marketplaces." (FASC ¶132, FASC, Ex. 21.)
Mr. Thong admits to once listing himself as the CTO of MyPhoneFax and concedes doing work as an independent contractor for onlinefaxes.com but denies that he was ever an employee of onlinefaxes.com or that he ever used the name Steven Arasu. (Thong Decl. ¶ 5.) Mr. Montgomery also admits to working for an onlinefaxes.com as an independent contractor but states that his duties were limited to improving the search engine ranking of the website. (Declaration of Charles Montgomery ¶ 3.) He further states that he was terminated as of August 2015 because he did not do enough work, he was never an employee of onlinefaxes.com, and he has never used the name "Charles Newsom" or requested it be used on the onlinefaxes.com website. (Montgomery Decl. ¶4, 5.)
On the basis of this association, j2 alleges that Thong and Montgomery "provide[] operational support for Fax87, OnlineFaxes, SolidFax, FaxVision, eFax4less, Myphonefax and ResellFax." (FASC ¶125, 130.) j2 also alleges they "make, sell, offer for sale and/or otherwise provide support for the infringing Internet fax services." (Id. ¶ 252.) And finally j2 alleges they also "assist with selling, offering for sale, operation and/or supporting infringing Internet fax products and services." (Id. ¶ 257.)
B. Legal Standard
District courts have the power to exercise personal jurisdiction to the extent authorized by the law of the state in which they sit. Fed. R. Civ. P. 4(k)(1)(A); Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). Because California's long-arm statute authorizes personal jurisdiction coextensive with the Due Process Clause of the United States Constitution, see Cal. Code Civ. Proc. § 410.10, this Court may exercise personal jurisdiction over a nonresident defendant when that defendant has "at least 'minimum contacts' with the relevant forum such that the exercise of jurisdiction 'does not offend traditional notions of fair play and substantial justice.'" Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). The defendant's contacts with the forum must be of such a quality and nature that the defendants could reasonably expect "being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
Personal jurisdiction may be either general or specific. See Schwarzenegger, 374 F.3d at 801. In this case, Plaintiffs only contend that this Court has specific jurisdiction over Defendants. (Opp'n at 17.)
The Ninth Circuit analyzes specific jurisdiction according to a three-prong test:
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;Id. at 802. "If the plaintiff succeeds in satisfying both of the first two prongs, the burden then shifts to the defendant to 'present a compelling case' that the exercise of jurisdiction would not be reasonable." Id. at 802 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 452, 476-78 (1985)).
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.
C. Analysis
Both parties have made strong arguments in support of their positions on the question of whether this court may exercise personal jurisdiction over Defendants Thong and Montgomery. The court concludes, however, that the record is not sufficiently developed to enable the court to reach a finding on the issue. In circumstances where "pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary," a district court may grant jurisdictional discovery. Borschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir.2008). That is, if more facts are needed to determine jurisdiction, a granting of jurisdictional discovery is proper. Laub v. U.S. Dep't of the Interior, 343 F.3d 1080, 1093 (9th Cir. 2003). Accordingly, the court will grant Plaintiffs' request to conduct jurisdictional discovery. (Opposition at 24.)
Discovery shall be limited to information relevant to the extent of Defendants Thong and Montgomery's contacts with California and the nature of their relationship with other named individual and corporate Defendants. Such discovery may also include the whereabouts and contact information of other Defendants. The discovery shall conclude 90 days from the date of this Order.
V. CONCLUSION
For the reasons set forth above, Defendant Farjad Fani's and Defendant Elnaz Fani's Motions to Dismiss under Rule 12(b)(5) are GRANTED. Defendants Farjad Fani and Elnaz Fani are dismissed as defendants in this action, without prejudice. Defendant Steven Thong's Motion to Dismiss under Rule 12(b)(5) is DENIED. The Court DEFERS ruling on Defendant Steven Thong's and Defendant Charles Montgomery's Motion to Dismiss for lack of personal jurisdiction pending jurisdictional discovery. Defendants can renew their motion after jurisdictional discovery is completed if they believe there remains a basis for doing so. IT IS SO ORDERED. Dated: June 24, 2016
/s/
DEAN D. PREGERSON
United States District Judge