Opinion
Case No. 2:18-CV-2333 JCM (BNW)
06-04-2019
ANGEL PRODUCTIONS WORLDWIDE, INC., Plaintiff(s), v. AIRSTAGE BY EFFECKT-TECHNIK, GMBH, Defendant(s).
Christopher Tayback, Pro Hac Vice, Marshall Searcy, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, Los Angeles, CA, Mark E. Ferrario, Christopher R. Miltenberger, Greenberg Traurig, LLP, Las Vegas, NV, for Plaintiff(s). H. Stan Johnson, Cohen-Johnson, LLC, Kevin M. Johnson, Cohen Johnson Parker Edwards, Las Vegas, NV, for Defendant(s).
Christopher Tayback, Pro Hac Vice, Marshall Searcy, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, Los Angeles, CA, Mark E. Ferrario, Christopher R. Miltenberger, Greenberg Traurig, LLP, Las Vegas, NV, for Plaintiff(s).
H. Stan Johnson, Cohen-Johnson, LLC, Kevin M. Johnson, Cohen Johnson Parker Edwards, Las Vegas, NV, for Defendant(s).
ORDER
James C. Mahan, UNITED STATES DISTRICT JUDGE
Presently before the court is defendant Airstage by Effeckt-Technik's ("Airstage") motion to dismiss for lack of personal jurisdiction. (ECF No. 9). Plaintiff Angel Productions Worldwide, Inc. ("APWI") filed a response (ECF No. 15), to which Airstage replied. (ECF No. 16).
I. Facts
APWI initiated this breach of contract action on December 7, 2018. (ECF No. 1). APWI alleges the following relevant facts:
APWI and its principal, Criss Angel ("Angel"), are magicians in Las Vegas, Nevada. Id. at 2. Airstage is a German company with no offices or employees stationed in Nevada. (ECF No. 9 at 3). On February 26, 2018, APWI and Airstage entered into a contract for APWI to receive a specialized airship for use in a performance. (ECF No. 1 at 3). Unbeknownst to APWI, Airstage had previously entered into an exclusive agreement with another magician in Las Vegas for a similar product. Id. The other magician brought suit in federal district court and obtained an injunction against Airstage for breach of contract, which enjoined Airstage from performance on its contract with APWI. Id.
The contractual relationship between Airstage and APWI began when Airstage received an inquiry from APWI about its products on January 23, 2018. (ECF No. 16-1). Negotiations of the contract between the parties were initially conducted over the phone between Angel and Airstage's project manager, Denis Mugrauer. (ECF No. 15-1 at 1). In-person negotiations regarding the performance of the contract between Angel and Mugrauer, including concurrent telephone communications with Airstage's chief operations officer, took place over the course of two days in two different hotels in Las Vegas, Nevada. Id.
During negotiations, Airstage agreed to send company representatives to Nevada to install the airship. Id. Following negotiations, Mugrauer remained in Las Vegas for a number of days to conduct other business with Las Vegas entities on behalf of Airstage. Id. Other interactions and negotiations between the parties took place electronically through e-mail beginning on January 23, 2018, and continuing over the course of a few days. (ECF No. 16-1). Although the contract was finalized on February 26, 2018, further performance negotiations and alterations took place electronically in August 2018. (ECF Nos. 1 at 2, 16-3). The contract included an exclusivity clause and a non-disclosure clause, preventing Airstage from selling a similar airship to an APWI competitor or disclosing information about the ship without APWI's permission. (ECF No. 16-2 at 3).
This suit was filed by APWI after Airstage failed to deliver the airship due to the injunction obtained by the other magician. (ECF No. 1 at 3). Airstage now moves to dismiss for lack of personal jurisdiction under FRCP 12(b)(2). (ECF No. 9).
II. Legal Standard
To avoid dismissal for lack of personal jurisdiction on the pleadings, a plaintiff bears the burden of demonstrating that his or her allegations would establish a prima facie case for personal jurisdiction. See Boschetto v. Hansing , 539 F.3d 1011, 1015 (9th Cir. 2008). However, allegations in the plaintiff's complaint must be taken as true and considered in plaintiff's favor. Rio Props., Inc. v. Rio Intern. Interlink , 284 F.3d 1007, 1019 (9th Cir. 2002).
When no federal statute governs personal jurisdiction, the district court applies the law of the forum state. See Panavision Int'l L.P. v. Toeppen , 141 F.3d 1316, 1320 (9th Cir. 1998). Nevada has authorized its courts to exercise jurisdiction over persons "on any basis not inconsistent with ... the Constitution of the United States." NRS 14.065. Thus, the Due Process Clause of the Fourteenth Amendment is the relevant constraint on Nevada's authority to bind a nonresident defendant to a judgment of its own courts. World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Two categories of personal jurisdiction exist: (1) general jurisdiction; and (2) specific jurisdiction. See Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 413-15, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984). See also LSI Indus., Inc. v. Hubbell Lighting, Inc. , 232 F.3d 1369, 1375 (Fed. Cir. 2000).
General jurisdiction over a company arises where the company is either been incorporated or where it has its principal place of business. See Daimler v. Bauman , 571 U.S. 117, 134 S. Ct. 746, 750, 187 L. Ed.2d 624 (2014). General jurisdiction may also arise when a defendant's affiliation and contacts with the forum state are so "continuous and systematic" as to render it essentially "at home" in that forum. See id. at 760-61.
To establish specific jurisdiction, a plaintiff must demonstrate that each nonresident defendant has at least "minimum contacts" with the relevant forum. Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 801 (9th Cir. 2004). The Ninth Circuit has established a three-prong test for analyzing an assertion of specific personal jurisdiction:
(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; (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.
Id. at 802.
The plaintiff bears the burden of satisfying both of the first two prongs of the test. Id. The defendant has the burden of disproving reasonableness under the third prong. Id.
III. Discussion
Airstage moves to dismiss APWI's complaint pursuant to Federal Rule of Civil Procedure 12(b)(2), asserting that there is no basis for general or specific personal jurisdiction over Airstage. (ECF No. 9 at 5–9).
a. General Jurisdiction
For general jurisdiction to exist, a defendant must engage in continuous and systematic general business contacts that approximate physical presence in the forum. See Helicopteros , 466 U.S. 408 at 416, 104 S.Ct. 1868 ; CollegeSource, Inc. v. AcademyOne, Inc. , 653 F.3d 1066, 1074 (9th Cir. 2011). General jurisdiction over a company arises where the company has either been incorporated or where it has its principal place of business. See Daimler , 134 S. Ct. at 750.
Airstage is not incorporated in Nevada, nor does it operate its principal place of business in Nevada. Airstage has no offices or permanent staff in Nevada, is not registered to do business in Nevada, does not pay business taxes in Nevada, and has not otherwise continuously and systematically operated in Nevada. Therefore, the court finds that general jurisdiction over Airstage does not exist in Nevada. See Daimler , 134 S. Ct. at 750, 761 ; Pfister v. Selling Source, LLC , 931 F. Supp. 2d 1109, 1115–16 (D. Nev. 2013).
b. Specific Jurisdiction
The Ninth Circuit has adopted the three-prong Schwarzenegger test for specific jurisdiction, imposing jurisdiction only if (1) the defendant has purposefully availed itself of the forum jurisdiction; (2) the claim at issue arises from the defendant's contacts with the forum jurisdiction; and (3) the exercise of jurisdiction is reasonable. See Schwarzenegger , 374 F.3d at 802.
i. Purposeful availment
The Supreme Court has observed that the commission of even "single or occasional acts" in a state may be sufficient to render a corporation answerable in that state with respect to those acts. Int'l Shoe Co. v. Washington , 326 U.S. 310, 318, 66 S. Ct. 154, 90 L.Ed. 95 (1945). Regardless, the court should look to the terms of a contract and the prior negotiations and contemplated future consequences of an agreement, as well as the parties' actual course of dealing in determining purposeful availment, as a contract alone is not enough. Burger King Corp. v. Rudzewicz , 471 U.S. 462, 105 S. Ct. 2174, 2177, 85 L.Ed. 2d 528 (1985). Any contacts, even if physical, must not be incidental. See generally Picot v. Weston , 780 F.3d 1206 (9th Cir. 2015).
Here, Airstage sent a corporate officer to Nevada, resulting in further negotiations of performance of the contract. (ECF Nos. 1, 15-1). Moreover, the contract itself contains provisions that demonstrate Airstage's intent to make purposeful contact with the state of Nevada in furtherance of its performance under the contract. First, the contract contemplates doing business with a Nevada company. (ECF No. 16-2 at 2). Second, the contract reflects negotiations indicating Airstage's obligation and intent to place its product in Nevada. Id. at 3. Third, Airstage's intent to bind its future conduct relating to airships in Las Vegas is shown by the contract's exclusivity and non-disclosure clauses. Id. Finally, the contract expressly requires Airstage to again physically reach into Nevada by sending technicians to install the airship. Id.
This type of conduct directly targets the forum, allowing and promoting the transaction of business within Nevada. See Mavrix Photo, Inc. v. Brand Tech., Inc. , 647 F.3d 1218, 1229 (9th Cir. 2011) ; Sher v. Johnson , 911 F. 2d 1357, 1362 (9th Cir. 1990). Therefore, the court finds that Airstage's purposeful contacts with Nevada with respect to its contract with APWI demonstrate its purposeful availment of the forum state. See International Shoe , 326 U.S. at 318, 66 S.Ct. 154 ; Boschetto , 539 F.3d at 1015.
ii. Arising out of or relating to contacts
To exercise specific jurisdiction over Airstage, the claim must be one which arises out of or relates to Airstage's forum-related activities. Schwarzenegger , 374 F.3d at 802.
The court has already determined that the contacts related to the contract are sufficient to establish purposeful availment. The court also agrees with Airstage that the claims stem from either its contract with APWI or its previous contract with the other magician who obtained the injunction preventing Airstage from performing its contract with APWI. (ECF No. 9 at 8). Because this dispute stems directly from Airstage's failure to perform under its contract with APWI, the court finds that this action directly arises out of Airstage's forum-related activities. Accordingly, Airstage's conduct satisfies the second prong of the Schwarzenegger test. See Boschetto , 539 F.3d at 1015 ; Schwarzenegger , 374 F.3d at 801.
iii. Reasonable exercise of jurisdiction
The court's exercise of jurisdiction must comport with fair play and substantial justice; i.e. , it must be reasonable. Schwarzenegger , 374 F.3d at 802. The burden is on Airstage to prove that the court's exercise of jurisdiction is unreasonable. Id. The court considers seven factors of reasonability under the Schwarzenegger test:
(1) the extent of the defendant's purposeful injection into the forum state's affairs; (2) the burden on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of the defendant's state; (4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum.
Dole Food Co. v. Watts , 303 F.3d 1104, 1114 (9th Cir. 2002).
"No one factor is dispositive; a court must balance all seven." Panavision , 141 F.3d at 1323. However, "when minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant." Asahi Metal Indus. Co., Ltd. v. Super. Ct. of Cal., Solano Cnty. , 480 U.S. 102, 107 S. Ct. 1026, 1033, 94 L.Ed.2d 92 (1987).
The Ninth Circuit has held that the first factor parallels the question of minimum contacts in determining the reasonableness of exercising specific jurisdiction. Amoco Egypt Oil Co. v. Leonis Nav. Co., Inc. , 1 F.3d 848, 852 (9th Cir. 1993) ; Roth v. Garcia Marquez , 942 F.2d 617, 623 (9th Cir. 1991) ("in light of the first prong of purposeful availment, analysis of this first factor in the third prong would be redundant"). Therefore, because the court finds that Airstage purposefully availed itself on Nevada, the court also finds that Airstage purposefully "injected" itself in Nevada, supporting a finding of reasonableness.
The second factor, the burden on Airstage in litigating the forum, favors Airstage. Undoubtedly, travelling to a foreign jurisdiction with a different language and legal system is more burdensome than litigating in a familiar jurisdiction. Nonetheless, this is to be expected when conducting international commercial business. The third factor was not meaningfully discussed by either party. As the court sees no potential conflict, the court holds this factor to be neutral.
The fourth factor considers Nevada's interest in adjudicating the controversy. Because Nevada has a manifest interest in providing effective means of redress for its residents, this factor weights in favor of APWI. See McGee v. Int'l Life Ins. Co. , 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957).
The fifth factor considers the most efficient judicial resolution of the controversy upon the location of the evidence and the witnesses. Core-Vent Corp. v. Nobel Indus. AB , 11 F.3d 1482, 1489 (9th Cir. 1993). This factor is neutral. Most of the evidence is either online or comes from actions that occurred in Las Vegas. There may be a substantial number of potential witnesses in Germany, but there are also a substantial number of potential witnesses in Nevada; therefore, considering that electronic evidence would be equally accessible in Germany, the factor is neutral. However, it should be noted that the court affords this factor less weight given modern advances in communication and transportation. See Panavision , 141 F.3d at 1323.
The sixth factor, the importance of the forum to a plaintiff's interest in convenient and effective relief, weighs in favor of APWI. Airstage does not suggest that there would be a more convenient and effective forum for APWI's interest than Nevada, and it is unlikely that such a forum exists.
The final factor, the availability of an alternative forum, weighs in favor of Airstage. APWI has not suggested that the German legal system would not be able to provide adequate and appropriate relief.
While some individual factors favor Airstage, its minimum contacts and the overall weight of the Schwarzenegger test favor APWI. Accordingly, the court finds that Airstage has not overcome its burden to prove the unreasonableness of Nevada as a forum for this litigation.
Because Airstage has created sufficient minimum contacts within Nevada, the current action arises out of those contacts, and exercise of jurisdiction is not unreasonable, subjecting Airstage to specific jurisdiction in Nevada is appropriate. See Schwarzenegger , 374 F.3d at 801.
IV. Conclusion
Accordingly,
IT IS HEREBY ORDERED, ADJUDGED, and DECREED that Airstage's motion to dismiss (ECF No. 9) be, and the same hereby is, DENIED.
IT IS SO ORDERED.