Opinion
B323431
01-23-2024
DELTA TECHNOLOGIES, LLC, Plaintiff and Appellant, v. OLD BELT EXTRACTS, LLC DBA OPEN BOOK EXTRACTS, Defendant and Respondent.
The Federici Law Firm and Michael L. Federici for Plaintiff and Appellant. Haight Brown & Bonesteel, William Ireland, Arezoo Jamshidi; Frantz Ward, Thomas G. Haren, Kelly C. Bokoch, and Meghan C. Lewallen for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from an order of the Superior Court of Los Angeles County No. 22STCV15432, Thomas D. Long, Judge. Reversed with directions.
The Federici Law Firm and Michael L. Federici for Plaintiff and Appellant.
Haight Brown & Bonesteel, William Ireland, Arezoo Jamshidi; Frantz Ward, Thomas G. Haren, Kelly C. Bokoch, and Meghan C. Lewallen for Defendant and Respondent.
EDMON, P. J.
INTRODUCTION
Plaintiff Delta Technologies, LLC (Delta) appeals the trial court's order of dismissal after granting defendant Old Belt Extracts LLC's (OBX) motion to quash for lack of jurisdiction and to dismiss for forum non conveniens. Delta argues the court erred in concluding it could not exercise personal jurisdiction over OBX, a North Carolina company, and in finding that California is an inconvenient forum.
We reverse. As a matter of law, OBX had minimum contacts with California through its contractual relationship with Delta, a California company, and thus there is no constitutional impediment to requiring Delta to defend this action in California. Further, the trial court abused its discretion by granting the forum non conveniens motion without considering California's strong interest in providing its resident a forum. We therefore direct the trial court to vacate its order dismissing the action, deny OBX's motion to quash for lack of personal jurisdiction, and reconsider OBX's motion to dismiss based on forum non conveniens.
FACTUAL AND PROCEDURAL BACKGROUND
I. Underlying Agreement
Delta is a California company that manufactures and distributes hemp and hemp-derived products. OBX, a Delaware company with its principal place of business in North Carolina, is a larger scale manufacturer, developer, and researcher of the same types of products and is licensed in North Carolina to produce hemp.
In December 2020, Delta's owner, Alexander Jacobs, contacted OBX. After the initial contact, Jacobs met virtually with Nicole Brown, OBX's Chief Innovation Officer (CIO), and another OBX executive to discuss OBX's ability to develop a new process to extract tetrahydrocannabivarin (THCV) from raw hemp materials.
Delta shipped a sample of its cannabidivarin (CBDV) distillate to OBX in North Carolina to test the efficacy of the extraction process. The parties then entered into an oral agreement in March 2021 to continue to develop the extraction process using Delta's raw materials. In exchange for Delta furnishing raw materials to OBX, OBX was to provide Delta with half of the THCV produced, and then either to purchase the remaining waste materials or return them to Delta.
In the following months, Delta shipped hemp materials to OBX's North Carolina facilities for processing, and OBX shipped THCV to Delta in California. OBX's final shipment of THCV was unusually larger and purer than the first two, leading Delta to believe OBX did not use Delta's materials to create the final batch of THCV. OBX also did not return or account for hemp waste material that Delta believes is worth hundreds of thousands of dollars.
II. Delta's Lawsuit and OBX's Motion to Dismiss
In May 2022, Delta sued OBX alleging (1) breach of an oral contract, (2) fraud, (3) conversion, (4) receipt of stolen property, and (5) unfair business practices. In addition to compensatory damages, Delta also sought treble damages and attorney fees under Penal Code section 496, subdivision (c). Delta alleged OBX failed to send Delta sufficient THCV, used Delta's materials in a Ponzi scheme with other customers' orders, and committed larceny by failing to return Delta's hemp materials.
Penal Code section 496, subdivision (c) provides that a person who has been injured by the purchase or receipt of stolen property may bring an action for three times the amount of actual damages, plus costs of suit and attorney fees. Our Supreme Court recently held that this provision applies to commercial disputes where a defendant's conduct rises to the level of fraud. (Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333, 361-362.)
Motion to Quash or Dismiss. OBX moved to quash service of summons for lack of personal jurisdiction, or alternatively, to dismiss for forum non conveniens. OBX asserted the trial court lacked general jurisdiction over OBX because it was neither registered in nor had its principal place of business in California, and it lacked specific jurisdiction over OBX because the company did not have minimum contacts with California. OBX argued it did not inject itself into California or subject itself to California's jurisdiction because it did not advertise or market to Delta or in California; Delta had sought out OBX, not vice versa; and OBX had only one contract manufacturer in California. Further, OBX urged that litigation in California would be burdensome because all of the evidence and most of its witnesses were in North Carolina. Finally, OBX asserted that North Carolina had a greater interest in hearing the case because the alleged wrongs occurred in North Carolina and were committed by a hemp producer licensed by North Carolina.
Contract manufacturing is "the production of goods in accordance with the designs and specifications of a customer who then sells the product under its own brand." (Contract Manufacturing, Black's Law Dict. (11th ed. 2019) Westlaw <http://perma.cc/9Y4K-M26K> [as of Jan. 22, 2024].)
In the alternative, OBX urged the court to dismiss for forum non conveniens because North Carolina was a suitable jurisdiction for the action and the private and public interests weighed in favor of litigation in North Carolina over California. OBX asserted the majority of OBX's witnesses resided in North Carolina, outside of California's subpoena power; any physical evidence pertaining to OBX's facility or manufacturing process were in North Carolina; and it would be less costly and more convenient to try the case in North Carolina.
In support of the motion, OBX's president declared that OBX was a Delaware company registered and licensed to do business in North Carolina, with its principal place of business in North Carolina. OBX did not have offices or facilities in California, did not lease property in California, did not own any businesses or have subsidiaries in California, did not manufacture products in California, and had never been a party to a lawsuit in California or submitted to California jurisdiction. Of the OBX employees who were potential witnesses, four resided in North Carolina, and the other three resided in New York, Ohio, and Massachusetts. OBX had only one contract manufacturer, Tri-Labs Ventures, LLC, based in California.
Delta's Opposition. Delta opposed the motion, urging that OBX had minimum contacts with California because it partnered with California companies, including Delta, sourced hemp from California, and communicated with Delta's employees while they were in California. In support, Delta's owner, Jacobs, stated that he communicated weekly with OBX from California via text message, telephone, online video conferencing, and email. Jacobs attested on several occasions he or one of his employees exchanged products with OBX through OBX's California contract manufacturer, TriLabs, in San Bernardino County. Delta also introduced evidence that OBX's website included a California Proposition 65 compliance letter, stated that OBX sourced hemp from California, and featured a press release announcing OBX's partnership with Radicle Science, Inc., a company with a corporate address in California. Finally, Delta introduced third-party press releases announcing OBX's collaboration with Biopharmaceutical Research Company (BRC), a Delaware corporation with a place of business in California, and Hempacco Co., Inc., a Nevada corporation with its principal office in California.
Delta argued that California's exercise of jurisdiction was reasonable because the lawsuit arose out of OBX's contacts with California, the evidence could readily be brought to California, out-of-state depositions could be conducted by video, and California had an interest in holding large "national players" accountable for injuries to California's small hemp businesses. If Delta were forced to litigate in North Carolina, its litigation costs would increase and it would not have the benefit of treble damages and attorney fees under Penal Code section 496, subdivision (c). Thus, Delta contended that dismissing the action under the forum non conveniens doctrine was inappropriate.
III. Additional Briefing on Reasonableness of Jurisdiction
In July 2022, the court heard argument on the motion and concluded that Delta had established the first two prongs of the specific jurisdiction test-that is, OBX had minimum contacts with California and had purposefully availed itself of the California market. The court continued the hearing for supplemental briefing on the third prong of the specific jurisdiction analysis, i.e., whether it would be reasonable for the court to exercise personal jurisdiction over OBX.
OBX's supplemental brief argued that requiring it to litigate the case in California was unreasonable because although communications and laboratory data could be shared electronically, the hemp materials and its laboratory were both in North Carolina. OBX said: "One of [Delta's] main allegations is that the final shipment was unusually pure and [Delta] alleges that OBX is using the materials 'in a sort of Ponzi scheme.' The procedures and equipment employed by the North Carolina lab in processing the materials will be central to OBX's defense in this matter and may require a physical tour of the facility." OBX asserted it would be a substantial burden to send its management team and two of its laboratory staff to California for trial, and their absence would result in halting OBX's operations. In contrast, only one witness, Jacobs, was in California.
Delta's supplemental brief noted an additional California contact between the parties-namely, a meeting between Jacobs and OBX's CIO, Brown, in Santa Monica to discuss the details of the oral agreement. Delta also pointed to two July 2022 press releases on OBX's website indicating OBX was engaging in further business with California companies. Plaintiff stated: "On July 27, 2022, OBX issued a press release stating OBX and a San Francisco-based company Nalu Bio 'plan to begin initial production of THCV in September 2022 with market-ready compounds available before the end of the year.' . . . On July 19, 2022, Purissima issued a press release stating it was partnering with OBX on an 'exclusive, multi-year processing and distribution partnership.'" Delta further contended that OBX had sufficient resources to defend itself in California, citing OBX's press releases about additional startup funding, recent facility expansions, and hiring of 30 new employees. Thus, Delta said: "[T]he burden on OBX to defend itself in California is negligible when weighed against the 'strong presumption' [Delta] enjoys under California law as a California resident choosing its own forum."
In response to OBX's contention that the court would be unable to subpoena former OBX employees, Delta argued: "If those witnesses were to quit or otherwise be discharged from OBX at some point, there is no evidence the witnesses will remain in North Carolina and be subject to a North Carolina court's subpoena power for trial - in other words, regardless of venue, the parties run similar risks of unavailable witnesses at trial." Delta also asserted that OBX destroyed the hemp materials, and therefore the majority of the evidence was digital. Finally, Delta urged that North Carolina had little interest in this case because it has not legalized cannabis use, California had a greater interest because it had a large hemp market, and OBX failed to show California was a "seriously inconvenient" forum.
IV. The Trial Court Granted OBX's Motion
At the hearing, the court reiterated that OBX had minimum contacts with California, but concluded that "on balance, it's inappropriate for jurisdiction to be exercised." The court's minute order explained as follows.
OBX had minimum contacts with California through its interactions with Delta. Specifically, OBX's California contract manufacturer, TriLabs, exchanged products with Delta in California on OBX's behalf, and OBX's CIO, Brown, communicated regularly with Delta representatives in California through text message, telephone, online video conferencing, and emails. Nonetheless, exercising jurisdiction over OBX would offend traditional notions of fair play and substantial justice because OBX's alleged wrongful conduct "including the processing of THCV and retention of the waste materials, occurred in North Carolina. [Jacobs] is the only California witness who has been identified. [Delta's] likely witnesses are only Nicole Brown, a New York resident, and [OBX]'s PMK, presumably a North Carolina resident. [OBX]'s necessary witnesses reside in North Carolina, Ohio, New York, and Massachusetts. The physical evidence and waste products are also located in North Carolina. Although also a mixed bag of interests, the interests in this case do weigh strongly against California jurisdiction."
The court found OBX's remaining contacts with California irrelevant because OBX purchased hemp in California only once, and OBX's relationships with other California-based companies did not show purposeful availment.
Alternatively, with regard to forum non conveniens, North Carolina was a suitable forum and the location of witnesses and evidence made California inconvenient. Further, North Carolina had a greater interest in hearing the case because "the alleged wrongful acts involving hemp manufacturing and conversion of materials occurred in North Carolina by a company registered to produce hemp in North Carolina." The court concluded the action should be heard in North Carolina in the interest of substantial justice.
The trial court granted OBX's motion and dismissed the case. Delta timely appealed.
DISCUSSION
Delta argues the trial court erred in finding it lacked personal jurisdiction over OBX and that California was an inconvenient forum. We agree.
I. The Court Erred in Concluding that it Lacked Specific Jurisdiction Over OBX
a. Personal Jurisdiction Principles and Standard of Review
Under California's long-arm statute, California courts may exercise personal jurisdiction on any basis consistent with the California or United States Constitutions. (Code Civ. Proc., § 410.10; Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268 (Pavlovich).) The exercise of personal jurisdiction over a nonresident defendant is constitutionally permissible" 'if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate" 'traditional notions of fair play and substantial justice.'"' (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444 (Vons), quoting Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 316 (Internat. Shoe).)" (Pavlovich, at p. 268.)
"Under the minimum contacts test, 'an essential criterion in all cases is whether the "quality and nature" of the defendant's activity is such that it is "reasonable" and "fair" to require him to conduct his defense in that State.' (Kulko v. California Superior Court (1978) 436 U.S. 84, 92, quoting Internat. Shoe, supra, 326 U.S. at pp. 316-317, 319.) '[T]he "minimum contacts" test . . . is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite "affiliating circumstances" are present.' (Kulko, at p. 92, quoting Hanson v. Denckla (1958) 357 U.S. 235, 246 (Hanson).)" (Pavlovich, supra, 29 Cal.4th at p. 268.)
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.' [Citations.] In such a case, 'it is not necessary that the specific cause of action alleged be connected with the defendant's business relationship to the forum.' [Citations.] Such a defendant's contacts with the forum are so wide-ranging that they take the place of physical presence in the forum as a basis for jurisdiction." (Vons, supra, 14 Cal.4th at pp. 445-446.) Alternatively, "[i]f the nonresident defendant does not have substantial and systematic contacts in the forum sufficient to establish general jurisdiction, he or she still 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.' [Citation.]" (Id. at p. 446.)
Here, Delta asserts only specific jurisdiction. When considering specific jurisdiction, courts look to "the' "relationship among the defendant, the forum, and the litigation."' [Citation.] 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.'" '" (Pavlovich, supra, 29 Cal.4th at p. 269.)
"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." (Vons, supra, 14 Cal.4th at p. 449.)
"When there is conflicting evidence, the trial court's factual determinations are not disturbed on appeal if supported by substantial evidence. [Citation.] When no conflict in the evidence exists, however, the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record." (Vons, supra, 14 Cal.4th at p. 449.) On this undisputed record, personal jurisdiction is purely a question of law. (Ibid.)
OBX asserts the appropriate standard of review for personal jurisdiction is substantial evidence because some evidence was in dispute in the trial court. OBX identifies three points of dispute: the number of OBX's witnesses, the characterization of OBX's communications as fraudulent, and the source of OBX's hemp. However, on these points, Delta did not present evidence that would create a conflict requiring substantial evidence review. Delta did not submit evidence showing OBX had fewer than seven witnesses; Delta instead argued that all seven were not necessary. Although Delta asserted OBX committed fraud, the facts appear undisputed regarding the parties' agreement for Delta to furnish hemp and OBX to extract THCV. Lastly, we do not consider where OBX sources its hemp in our analysis below, so any evidence in this regard is inconsequential to the appeal. The evidence we rely on below to analyze personal jurisdiction was undisputed in the trial court.
b. Purposeful Availment
" '" 'The purposeful availment inquiry . . . focuses on the defendant's intentionality. [Citation.] This prong is only satisfied when the defendant purposefully and voluntarily directs [its] activities toward the forum so that [it] should expect, by virtue of the benefit [it] receives, to be subject to the court's jurisdiction based on' [its] contacts with the forum." [Citation.] Thus, purposeful availment occurs where a nonresident defendant" 'purposefully direct[s]' [its] activities at residents of the forum" [citation]," 'purposefully derive[s] benefit' from" its activities in the forum [citation], "create[s] 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" [citation]. By limiting the scope of a forum's jurisdiction in this manner, the" 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts ...." [Citation.] Instead, the defendant will only be subject to personal jurisdiction if" 'it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the state.'" [Citation.]' (Snowney [v. Harrah's Entertainment, Inc. (2005)] 35 Cal.4th [1054], 10621063.)" (Jayone Foods, Inc. v. Aekyung Industrial Co. Ltd. (2019) 31 Cal.App.5th 543, 554 (Jayone).)
"[M]ost courts agree that merely asserting that a defendant knew or should have known that his intentional acts would cause harm in the forum state is not enough to establish jurisdiction under the effects test. [Citations.] Instead, the plaintiff must also 'point to contacts which demonstrate that the defendant expressly aimed its tortious conduct at the forum.'" (Pavlovich, supra, 29 Cal.4th at pp. 270-271.)
In Secrest Machine Corp. v. Superior Court (1983) 33 Cal.3d 664 (Secrest), an injured employee brought a products liability action in California against the Virginia manufacturer of a machine that was used at his employer's California factory. The manufacturer did not maintain offices, or have agents, representatives, employees, or property in California. (Id. at p. 667.) The employer had heard about the manufacturer through word of mouth, sent a representative to view similar machines in operation at another company's plant in California, and then sent the same individual to Virginia to negotiate the purchase of the machine. (Ibid.) After the Virginia visit, the employer continued negotiations from California by both phone and mail, and upon reaching an agreement, mailed a purchase order for the machine at a price of $115,116. (Id. at pp. 667-668.) The employer took delivery of the machine in Virginia, although the parties' contract conditioned acceptance on satisfactory performance in California. (Id. at p. 668.) The manufacturer provided help with maintenance on request. (Ibid.)
The California Supreme Court in Secrest concluded that the manufacturer purposefully had availed itself of the California forum by engaging in a direct sale of a product to a California business for use in California. (Secrest, supra, 33 Cal.3d at pp. 670-672.) The Supreme Court explained that the manufacturer's actions, including those that occurred outside of California, "were designed to consummate a business arrangement in which [the manufacturer] would profit financially by selling its product for use in California. Although [the employer] initially approached [the manufacturer], the sale was a deliberate act by [the manufacturer] which generated substantial gross income and constituted economic activity within California 'as a matter of commercial actuality.'" (Id. at p. 671.) The Supreme Court also noted that the manufacturer's contacts with California did not cease with the installation: the manufacturer continued to provide service assistance and send advertisements to the employer. (Ibid.) Therefore, "the sale of the machine to [the employer] was not 'simply an isolated occurrence' but involved 'efforts of the manufacturer . . . to serve, . . . the market for its product' in California and should have caused [the manufacturer] to anticipate being haled into a California court to defend an action arising from an alleged defect in its product. [Citation.]" (Ibid., fn. omitted.)
Relying on Secrest, the Court of Appeal in Luberski, Inc. v. Oleificio F.LLI Amato S.R.L. (2009) 171 Cal.App.4th 409 (Luberski) concluded that an Italian olive oil producer that entered into a direct sales contract with a California business had purposefully availed itself of the California forum. The plaintiff California company sued the defendant for breach of contract after the defendant failed to ship 12,000 cases of olive oil purchased by the plaintiff for $406,000. (Id. at p. 412.) The defendant had no employees, assets, bank accounts, or offices in California. (Id. at p. 413.) Although the defendant had sold olive oil to a small number of California customers, it provided no services in California; rather, its sales activity solely consisted of accepting purchase orders, preparing invoices, and then shipping the products to the closest harbor in California. (Ibid.) The plaintiff's unsolicited purchase order was the parties' first and only business dealing. (Ibid.)
In concluding the defendant was subject to specific personal jurisdiction in California, the Luberski court noted that the parties' "contract negotiations were conducted via long-distance communications with the implicit understanding that the goods were only useful to [the plaintiff] if they were delivered to California." (Luberski, supra, 171 Cal.App.4th at p. 419.) The defendant also "maintained responsibility for the goods until they arrived in California," and thus, "had the expectation that the goods it was placing in interstate commerce would be utilized in California." (Ibid.; see also Jayone, supra, 31 Cal.App.5th at pp. 554-556 [discussing Secrest and Luberski].)
In the present case, as in Secrest and Luberski, although Delta initiated contact with OBX, OBX's subsequent contacts with California were unquestionably deliberate and voluntary, not "fortuitous" or "random." OBX chose to enter into a contractual relationship with Delta, a business based entirely in California, to receive raw hemp materials shipped from California, and to send its finished product back to California, presumably for distribution within California. Further, OBX's CIO, Brown, had extensive telephone, videoconference, text, and email contacts with Delta's owner, Jacobs, while Jacobs was in California, and Brown traveled to California to negotiate a contract with Jacobs. And, OBX used a California contract manufacturer, TriLabs, to physically exchange products with Delta in California. We agree with the trial court that these contacts with California satisfy the purposeful availment requirement.
We further conclude, contrary to the trial court, that OBX's collaborations with other California companies demonstrate OBX's purposeful availment of the California market. On its own website, OBX stated that it used Radicle Sciences, a Californiabased company, to conduct nationwide efficacy studies; announced a collaboration with BRC, another California-based company; and reported that it partnered with California-based Nalu Bio to commercialize Nalu Bio's "THCV production method." OBX also disclosed in its briefing that it licensed a patent to Hempacco, another California company. In short, OBX's press releases and admissions indicate it has a pattern of engaging in business relationships with California companies related to its hemp processing business and, more specifically, THCV production, and that it publicizes these relationships via self-promotional content on its website.
On appeal, OBX asserts there is a factual dispute as to whether it had done work with BRC. In the trial court, Delta presented evidence that on June 14, 2022, OBX's website announced a collaboration with BRC, stating: "Under the terms of the collaboration, OBX will leverage BRC's research platforms, in order to develop research-backed formulations and products including Delta-9 THC." OBX did not object to Delta's use of the press release as evidence of purposeful availment. Rather, in response, OBX's president submitted a declaration dated July 20, 2022, attesting that OBX had not yet done any work with BRC. We conclude this evidence does not create a factual dispute because it appears both things were true: OBX and BRC agreed to a collaboration, and one month after announcing the collaboration, the parties had not yet worked together. We rely on the press release here not for the notion that OBX was actively working with BRC in July 2022, but rather that it was actively creating relationships with California companies and marketing itself to California by publicizing such relationships on its website.
OBX asserts these business relationships are not relevant because the applicable period for minimum contacts is when the cause of action arose, citing Cadle Co. II, Inc. v. Fiscus (2008) 163 Cal.App.4th 1232, 1239 (Cadle); Boaz v. Boyle &Co. (1995) 40 Cal.App.4th 700, 717 (Boaz). Here, Delta's claims arose at least in part when it analyzed its last shipment of THCV, which it received in February 2022. Within a few months of the last shipment, OBX posted announcements for the collaborations with California companies on its website. We do not know exactly when OBX began and finalized negotiations for these business transactions. Nonetheless, they appear close enough in time to fairly impute them to OBX for purposes of considering OBX's contacts with California. For all of these reasons, we conclude that OBX purposefully availed itself of the California market.
In Cadle, supra, 163 Cal.App.4th at pages 1234-1235, the appellate court reversed the trial court's order granting a motion to quash service of summons in the plaintiff's action to revive a 14-year-old money judgment against the defendant. The judgment came from an earlier action where defendant answered the complaint, and plaintiff won on summary judgment. (Id. at p. 1235.) The trial court concluded that even though the defendant had not purposefully availed himself of the benefits of California since the original litigation, there were sufficient minimum contacts to exercise personal jurisdiction in a revival action by virtue of the original judgment. (Id. at p. 1240.) In Boaz, supra, 40 Cal.App.4th at page 704, plaintiffs sued for injuries they incurred from their grandmothers' ingestion of the drug diethylstilbestrol while pregnant with plaintiffs' mothers. One of the defendants moved to quash the return of service for lack of personal jurisdiction. When analyzing minimum contacts, the court stated, "We shall assume that the relevant period is when [the defendant's] predecessors were distributing [the drug], some 25 years ago, rather than just before [the defendant] was served." (Id. at p. 717.)
OBX's argument does not apply to Hempacco, with which it had a business relationship as of May 2021.
c. Relatedness of Delta's Claims to OBX's California Contacts
Next, we evaluate whether Delta's claims are related to OBX's California contacts. Our Supreme Court has "adopted a 'substantial connection' test and held that the relatedness requirement is satisfied if 'there is a substantial nexus or connection between the defendant's forum activities and the plaintiff's claim.'" (Snowney v. Harrah's Entertainment, Inc., supra, 35 Cal.4th at p. 1068.)"' "Only when the operative facts of the controversy are not related to the defendant's contact with the state can it be said that the cause of action does not arise from that [contact]." '" (Vons, supra, 14 Cal.4th 455.)
Here, OBX's contacts are clearly connected to Delta's claims. OBX's ongoing communications with Delta, use of a California contract manufacturer, receipt of raw materials from California, and shipment of product to California all directly relate to Delta's claims of conversion, theft, and fraud. Delta's claims thus arise out of OBX's contacts with California.
d. Exercise of Jurisdiction Is Reasonable
"Once a plaintiff has shown the requisite minimum contacts to support jurisdiction, the burden shifts to defendant to show jurisdiction is not reasonable. An otherwise valid exercise of personal jurisdiction 'is presumed to be reasonable.'" (Integral Development Corp. v. Weissenbach (2002) 99 Cal.App.4th 576, 591 (Integral Development).) The defendant "must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Most such considerations usually may be accommodated through means short of finding jurisdiction unconstitutional." (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 477; Pavlovich, supra, 29 Cal.4th at p. 297.)
"A determination of reasonableness rests upon a balancing of interests: the relative inconvenience to defendant of having to defend an action in a foreign state, the interest of plaintiff in suing locally, and the interrelated interest the state has in assuming jurisdiction." (Integral Development, supra, 99 Cal.App.4th at p. 591.) To balance these interests, we consider several factors, including California's interest in providing a forum for its residents or regulating the business involved, the extent to which plaintiff's claims arose out of defendant's local activities, plaintiff's interest in obtaining convenient and effective relief, the relative availability of the evidence, and the burdens on both sides to litigate in one place rather than another. (Ibid.; World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 292.)
These factors unquestionably support the conclusion that California's exercise of jurisdiction is reasonable. First, California has an interest in exercising jurisdiction because Delta is a California resident. "California has a manifest interest in providing a local forum for its residents to redress injuries inflicted by out-of-state defendants." (Integral Development, supra, 99 Cal.App.4th at p. 591.) This is particularly true where, as here, Delta's causes of action arose directly out of OBX's California activities. California's policy to protect its residents, thus, strongly supports California jurisdiction.
Second, Delta has a strong interest in litigating this case in California. In addition to the convenience to Delta of pursuing this case in California, Delta sought remedies unavailable in North Carolina. Specifically, Delta asserted claims for treble damages and attorney fees under Penal Code section 496, subdivision (c) based on OBX's allegedly fraudulent conduct. North Carolina lacks a comparable statute.
Third, although some of the evidence appears to be in North Carolina, the inconvenience to OBX of litigating in California is not great. The physical evidence consists of the hemp materials, which Delta asserts have been destroyed, records from processing the materials, and machinery in OBX's facility. The hemp materials, if they still exist, are portable, as evidenced by the parties' repeated exchanges of these goods. Likewise, any written records are easily digitally shared. And, although the machinery in OBX's facility is in North Carolina, this is not the kind of evidence that would come to court. Rather, the parties' employees or experts will inspect such machinery and then testify to their findings in court.
Finally, while four of the parties' witnesses reside in North Carolina, the other four respectively reside in California, New York, Ohio, and Massachusetts. While a California court cannot not compel the out-of-state witnesses to testify, a North Carolina court likewise cannot not compel out-of-state witnesses to do so. (Minder v. State of Georgia (1902) 183 U.S. 559, 562 ["it is not within the power of [a state] court[] to compel the attendance of witnesses who are beyond the limits of the state"].) In any event, OBX's witnesses are its own employees, and therefore OBX should be readily able to require their appearance at trial or preserve their testimony for use at trial.
OBX responds that if its witnesses are required to testify in California, their resulting absence from North Carolina would have "a meaningful impact on the production of materials and Research and Development opportunities." OBX does not elucidate what "meaningful impact" means in this context. OBX indicated that most of its proposed witnesses are executives. OBX also identified one scientist and one senior lab technician as witnesses. Yet, OBX never explained how a short absence by each of these witnesses would unduly burden OBX or actually halt operations.
We also bear in mind that the "fairness requirement . . ., written over 50 years ago [in Internat. Shoe, supra, 326 U.S. 310], must be assessed in the context of our age of global business and modern technology. '[T]he same technological progress in communication and transportation that has increased the flow of commerce between the states and the need for jurisdiction over nonresidents, has simultaneously decreased the burdens inherent in defending a lawsuit in a foreign tribunal.'" (Integral Development, supra, 99 Cal.App.4th at p. 592; Gilmore Bank v. AsiaTrust New Zealand Ltd. (2014) 223 Cal.App.4th 1558, 1575 [" 'modern advances in communications and transportation have significantly reduced the burden of litigating in another country.' "].) In this case, air travel and video depositions would make witness testimony readily accessible.
For all of these reasons, we conclude that requiring OBX to litigate in California does not violate notions of fair play and substantial justice. Accordingly, the trial court erred in finding that it could not constitutionally exercise personal jurisdiction over OBX. Because we reverse based on personal jurisdiction, we do not reach Delta's argument that it should have been allowed to conduct jurisdictional discovery.
II. The Court Abused Its Discretion in Finding California to be an Inconvenient Forum
"Forum non conveniens is an equitable doctrine invoking the discretionary power of a court to decline to exercise the jurisdiction it has over a transitory cause of action when it believes that the action may be more appropriately and justly tried elsewhere." (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751 (Stangvik).) "In determining whether to grant a motion based on forum non conveniens, a court must first determine whether the alternate forum is a 'suitable' place for trial." (Ibid.) For there to be a suitable alternative, the proposed forum must have jurisdiction over the defendant and the action must not be barred by a statute of limitations. (Shiley Inc. v. Superior Court (1992) 4 Cal.App.4th 126, 132-133.)
If there is a suitable alternative forum, "the next step is to consider the private interests of the litigants and the interests of the public in retaining the action for trial in California. The private interest factors are those that make trial and the enforceability of the ensuing judgment expeditious and relatively inexpensive, such as the ease of access to sources of proof, the cost of obtaining attendance of witnesses, and the availability of compulsory process for attendance of unwilling witnesses. The public interest factors include avoidance of overburdening local courts with congested calendars, protecting the interests of potential jurors so that they are not called upon to decide cases in which the local community has little concern, and weighing the competing interests of California and the alternate jurisdiction in the litigation." (Stangvik, supra, 54 Cal.3d at p. 751.) Courts apply these factors flexibly, without giving undue emphasis to any one element. (Id. at p. 753.)
In general, "the plaintiff's choice of a forum should rarely be disturbed unless the balance is strongly in favor of the defendant.... [I]f the plaintiff is a resident of the jurisdiction in which the suit is filed, the plaintiff's choice of forum is presumed to be convenient . . . and . . . a state has a strong interest in assuring its own residents an adequate forum for the redress of grievances." (Stangvik, supra, 54 Cal.3d at pp. 754-755.) Because a court which has dismissed a suit cannot thereafter protect the litigants' interests, a trial court has no discretion to dismiss an action brought by a California resident on grounds of forum non conveniens except in extraordinary cases. (Archibald v. Cinerama Hotels (1976) 15 Cal.3d 853, 858.) Thus, when dealing with a resident plaintiff, "[t]he ultimate question is whether the balancing of the Stangvik factors shows that California is a seriously inconvenient forum. [Citation.] The defendant, as moving party, bears the burden of proof." (Morris v. AGFA Corp. (2006) 144 Cal.App.4th 1452, 1464 (Morris); Stangvik, at p. 751.)
"The existence of a suitable alternative forum is a legal question that we review independently." (Animal Film, LLC v. D.E.J. Productions, Inc. (2011) 193 Cal.App.4th 466, 472.) We review for abuse of discretion the court's decision to grant the motion based on its weighing of interests. (Stangvik, supra, 54 Cal.3d at p. 751; Roulier v. Cannondale (2002) 101 Cal.App.4th 1180, 1188.)
Suitable Alternative Forum. We agree with the trial court that North Carolina is a suitable alternative forum. OBX is registered to do business in and has its principal place of business in North Carolina. Therefore, OBX is subject to North Carolina's general jurisdiction. (See Daimler AG v. Bauman (2014) 571 U.S. 117, 129 [state court may exercise general jurisdiction over company that has its principal place of business in that state].) Further, the action is not time-barred. Under North Carolina law, Delta has three years from the alleged tortious conduct, which occurred in 2021 and 2022, to file its claims for breach of an oral contract, conversion, and fraud. (N.C. Gen. Stats. § 1-52(1), (4), (5) &(9).)
Private and Public Factors. Nonetheless, we conclude the trial court abused its discretion by failing to consider the strong presumption in favor of a California resident's choice of a home forum when balancing the Stangvik factors. (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733 ["An abuse of discretion is shown when the trial court applies the wrong legal standard."].)
At oral argument, counsel for OBX argued that the trial court had in fact considered California's interest in providing Delta a forum, citing the portion of the court's minute order where it addressed the reasonableness of exercising jurisdiction over OBX. However, in its two-page analysis of forum non conveniens, the trial court did not acknowledge the well-established principle that the resident plaintiff's forum choice should not be disturbed unless the balance of interests strongly favors defendant. (Stangvik, supra, 54 Cal.3d at pp. 754-755.) "When the record clearly demonstrates what the trial court did, we will not presume it did something different." (Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 39 Cal.App.4th 1379, 1384; Steuri v. Junkin (1938) 27 Cal.App.2d 758, 760 ["It is true that where the record is silent as to what was done it will be presumed that what ought to have been done was not only done but rightly done. But back of that rule is the rule that legal presumptions do not come to the aid of the record except as to acts or facts touching which the record is silent. When the record states what was done, it will not be presumed that something different was done."]) Here, the court clearly failed to consider in the context of its forum non conveniens analysis that California has a strong interest in assuring its resident, Delta, an adequate forum for redress of grievances, including that it be able to avail itself of the wider range of damages.
Instead of addressing these paramount interests, the trial court focused on the fact that the hemp was processed in North Carolina, believing that the place of the wrong is the predominant public factor in the forum non conveniens calculus, based on Roman v. Liberty University (2008) 162 Cal.App.4th 670, 684. Roman, however, relied on Hernandez v. Burger (1980) 102 Cal.App.3d 795, 802, which involved a plaintiff who was a Mexican resident and citizen, and an accident that occurred in Mexico. California's only connection to the case was that the defendants were California residents. (Id. at p. 799.) Unlike here, Hernandez did not involve a resident plaintiff and thus did not consider California's interest in protecting its resident plaintiffs.
As to the private factors, the court did not consider whether the location of witnesses and evidence made California a seriously inconvenient forum. (See Morris, supra, 144 Cal.App.4th at p. 1464.) The trial court focused on the hemp materials and four witnesses being in North Carolina. Yet, the trial court did not consider that because the four witnesses work for OBX, the California court's inability to compel their testimony was less of a concern than it would be if those four witnesses were disinterested or hostile parties. The court also did not to consider how modern technology and transportation made the location of physical evidence less burdensome. (See Rice Growers Assn. v. First National Bank (1985) 167 Cal.App.3d 559, 580 ["The same technological progress in communication and transportation that has increased the flow of commerce between the states and the need for jurisdiction over nonresidents, has simultaneously decreased the burdens inherent in defending a lawsuit in a foreign tribunal."].) The evidence's location in North Carolina means the parties' experts may need to tour the North Carolina facility or retrieve the hemp materials and products from North Carolina for testing. However, these facts do not appear to make California a seriously inconvenient forum for litigation.
The court stated: "I'm not aware that the Courts of Appeal have modified the law to take into account technological advances, and I don't think it's in my place necessarily to do that."
We conclude the trial court abused its discretion by failing to give Delta's choice of forum significant weight as required by Stangvik, supra, 54 Cal.3d at pages 754-755. On remand, the trial court shall reconsider the forum non conveniens issue and assess whether California is a seriously inconvenient forum.
DISPOSITION
The order is reversed and the matter remanded. We direct the trial court to vacate its order dismissing the action, deny OBX's motion to quash for lack of personal jurisdiction, and reconsider OBX's motion to dismiss based on forum non conveniens. Delta Technologies, LLC is awarded its appellate costs.
We concur: LAVIN, J., EGERTON, J.