Opinion
H047366
11-15-2021
NEW VENTURES GROWTH CORPORATION, Plaintiff and Appellant, v. NEW FRONTIER DATA, Defendant and Respondent.
NOT TO BE PUBLISHED
(Santa Clara County Super. Ct. No. 2019-1-CV-342425)
Greenwood, P. J.
California-based New Ventures Growth Corporation (Ventures) entered into a contract with Financial Frontier Group, Inc. dba New Frontier Data (Frontier) to create data analysis software regarding the legal cannabis and hemp industry for integration into Frontier's market research and analytical reporting platforms. Alleging Frontier failed to pay monies owed under the terms of their agreement, Ventures brought an action against Frontier for breach of contract. Frontier, a Delaware corporation headquartered in Washington, D.C., moved to quash service of the summons and complaint, arguing the California court lacked personal jurisdiction. The superior court granted the motion.
Appellant appears in the record both as New Ventures Growth Corporation and New Venture Growth Corporation.
Ventures appeals, contending the superior court erred when it granted Frontier's motion to quash service of the summons and complaint for lack of specific personal jurisdiction, and by denying Ventures's request for judicial notice and for a continuance to conduct discovery on the issue of jurisdiction. For the reasons explained below, we 1 conclude Frontier had minimum contacts justifying the exercise of the court's specific jurisdiction. We will reverse the order.
I. Factual and Procedural Background
A. Contract Negotiation and Execution
Frontier is a Delaware corporation that operates from a "principal office" in Washington, D.C. The company develops research analytics platforms, "benefitting investors and operators" in the financial services industry. Ventures is a limited liability California corporation located in San Jose, California. It describes itself as "a global solutions provider delivering AI and Big Data technology-driven business solutions that meet the strategic objectives of its clients."
In support of its opposition to Frontier's motion to quash, Ventures submitted the declaration of its Chief Executive Officer, Scott Slinker. In May 2018, Peter Rosenberg, a partner with venture capital firm Merida Capital Partners and an investor/shareholder in Frontier, called Slinker in California. Slinker had been the Interim Chief Executive Officer of Reddep Labs until he resigned in April 2018. On learning of Slinker's resignation from Reddep Labs, Rosenberg connected Frontier's Chief Executive Officer Giadha Aguirre de Carcer, located in Washington, D.C., into the call to discuss Slinker's background "building transformation businesses leveraging big data and artificial intelligence." At de Carcer's request, Frontier's Chief Operating Officer Gary Allen arranged for Slinker to travel to Washington, D.C. for a face-to-face meeting with Frontier management at which Slinker made initial recommendations to meet Frontier's "product strategy and big data technology goals."
The record does not reflect when Ventures was incorporated or when Slinker became its CEO.
The parties contemplated that Ventures would create specialized data analytics and artificial intelligence software that could be integrated into Frontier's platforms for the 2 purpose of analyzing the legal cannabis and hemp industry. Ventures would work with Frontier to build a data platform that would "1) automate data lake creation, 2) increase report publishing output, at a higher quality with less time to acquire and analyze data, and 3) streamline[ ] the process to publish research product to be marketed through [Frontier's] SaaS [Software as a Service] Portal." Frontier's platform consisted of a" 'Bloomberg Terminal' SaaS benefitting investors and operators."
At de Carcer's request, Slinker drafted a master services agreement (the Master Agreement), specifying Ventures would create "a big data platform" for Frontier, using advanced analytics and artificial intelligence, pursuant to one or more statements of work over a one-year period. He included a Statement of Work that specified Ventures was to develop specialized software to help Frontier "grow [its] business" in connection with the legal cannabis and hemp industry. After several additional discussions by telephone and e-mail, Slinker revised the draft agreements as requested by Frontier. In late June 2018, Slinker and de Carcer finalized the parties' contract, signing the Master Agreement and the Statement of Work electronically from their respective offices in California and Washington, D.C.
Ventures asserts the "target market" for the project was "the legal cannabis and hemp marketplace, of which California is the largest in the United States." While acknowledging that the purpose of the Statement of Work was to develop its analytics strength in the legal cannabis and hemp industry, Frontier denies it embarked on the project "to generate more business . . . in California."
The Statement of Work set forth "the objectives, deliverables, timing, staffing, fees and other relevant terms and conditions pursuant to which [Ventures] will perform the Services defined in the Agreement to help [Frontier] commercialize the Product and grow [Frontier's] Data business. The purpose of the project is a transformation to a new data-driven and ai-driven marketing and product model based around a holistic view of your prospect and customer journeys." 3
Under the terms of the Statement of Work, Ventures agreed to develop the cannabis industry-related data software in four phases over a 14-week period. As the work progressed the parties were to "mutually collaborate and agree" on the project deliverables on a bi-weekly basis, as well as collaborate on the research and reporting functionality of the software. For these services, Frontier contracted to pay Ventures $483,000, broken into installments payable as each phase of work was completed, as well as reimburse Ventures for development-related costs of creating the software. The Master Agreement contemplated the parties would "interact on a weekly basis to track the progress" of Ventures's work. It also included a non-exclusivity provision that allowed the parties to contract with others for similar services and products except relating to "the cannabis and/or hemp marketplace . . . for a period of 36 months." While neither the Master Agreement nor the Statement of Work specified that Ventures was to perform its work in California, the Master Agreement provided that California law would govern the agreement and its construction.
According to Slinker, Ventures's design work on the data analytics software took place entirely in California. Slinker had frequent contact with Frontier staff by telephone, e-mail and "Slack, a collaborative communication platform," to discuss the work product objectives of each of the four phases. Every two weeks Ventures staff in California would collaborate with Frontier staff in Washington, D.C. through conference calls, video conferences and power-point presentations. From June 2018 through December 14, 2018, Slinker and his staff reviewed in detail the deliverables for each phase of the project with Frontier's Chief Operating Officer Allen. This constant interaction was necessary "as the Project was not simply to build for [Frontier] in a vacuum" but to design software to Frontier's specifications. According to Slinker, throughout this period, de Carcer and Allen "were adamant about being intimately involved in the Project and all communications about it." 4
Slinker met with Frontier managers on multiple occasions in California. In October 2018, Slinker met with de Carcer, Allen and others at a conference they all attended in Oakland, California. At that time, Slinker participated in a conference call with prospective Frontier investors in which Allen referred to him as "the head of our Silicon Valley office working on our big data platform."
In September and November 2018, Slinker arranged meetings in San Francisco with Frontier's Data Science Manager Robert Kuvinka about the project. Kuvinka lived in San Francisco and worked remotely for Frontier. As a result of the meetings, Slinker implemented changes to "the development roadmap as it pertained to the overall Project objectives" for the work. Kuvinka submitted a declaration in support of the motion to quash stating he had no discretionary authority over the project, and acted solely as an information conduit between Frontier and Ventures. In December 2018, Slinker and two Ventures employees joined Kuvinka in San Francisco to participate in a virtual meeting with Allen and other Frontier employees in Washington, D.C. Slinker also met with Frontier investor Peter Rosenberg in San Francisco; at that meeting they discussed the project.
Slinker declared that Ventures submitted invoices to Frontier for its work, but Frontier only paid for the first phase of the project, placing it in breach of the Master Agreement. In December 2018, Ventures suspended further work on the project and terminated the contract because Frontier did not pay the arrears owed. Ventures thereafter filed a complaint alleging a single cause of action for breach of contract.
B. Motion to Quash Service of Summons and Complaint
Frontier appeared specially in the trial court, seeking to quash service of the summons and complaint for lack of personal jurisdiction. In support of its motion, Frontier submitted uncontroverted evidence that it was incorporated in Delaware and had its headquarters in Washington, D.C., where its senior executives maintained their offices and its product development took place. It did not maintain an office, manage its 5 business, have any physical presence, own any real or personal property, maintain a mailing address, a phone listing or a bank account, or host any business meetings or conferences in California. It was neither registered nor qualified to do business in California and had never been required to file an income tax return in the state. Frontier admitted it had two employees who lived in California by their own election and worked for the company remotely, but indicated these employees were required to report to its executives in Washington, D.C. and to maintain Eastern Time Zone work hours. Further, although one of those employees (presumably Kuvinka) had communicated with Ventures about the scope of the cannabis analytics project, he was supervised by Frontier's employees in Washington, D.C. in doing so.
In response to discovery, Frontier confirmed it was engaged in providing services to the legal cannabis and/or hemp marketplace in the United States and California, but denied marketing its services to the California cannabis industry. Frontier admitted to sponsoring cannabis related conferences in California, and that its management and staff attended business conferences in California on numerous occasions.
Ventures opposed the motion to quash. Ventures also requested a continuance to conduct further discovery related to the question of jurisdiction, and a motion for judicial notice of certain materials gathered from the internet reflecting Frontier's contacts with California.
After holding a hearing, the trial court issued a written decision and order granting the motion to quash, finding Frontier did not have substantial operations in California necessary for the court to exercise general personal jurisdiction. It also concluded Ventures did not establish Frontiers had sufficient minimum contacts with the forum to justify the court's exercise of specific personal jurisdiction. The court denied 6 the request for judicial notice and motion to continue the case for further discovery. Ventures timely appealed.
Neither party submitted a reporter's transcript of the hearing.
II. Discussion
A. General Principles Governing the Exercise of Personal Jurisdiction
California's long-arm statute authorizes the courts of the state to exercise jurisdiction over a person "on any basis not inconsistent with the Constitution of the United States or the Constitution of California." (Code Civ. Proc., § 410.10; Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268 (Pavlovich); Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444 (Vons).) The statute manifests a legislative intent that California courts have "the broadest possible jurisdiction," limited only by constitutional due process considerations. (Integral Development Corp. v. Weissenbach (2002) 99 Cal.App.4th 576, 583, quoting Sibley v. Superior Court (1976) 16 Cal.3d 442, 445.) Because "[a] state court's assertion of jurisdiction exposes defendants to the State's coercive power" it is "subject to review for compatibility with the Fourteenth Amendment's Due Process Clause." (Goodyear Dunlop Tires Operations, S.A. v. Brown (2011) 564 U.S. 915, 918 (Goodyear).) A state court's assertion of personal jurisdiction over a nonresident defendant "comports with the requirements of the due process clause of the federal Constitution 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, supra, 14 Cal.4th at p. 444, quoting International Shoe Co. v. Washington (1945) 326 U.S. 310, 316.) Central to the question of personal jurisdiction is "the defendant's relationship to the forum State. [Citations.]" (Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (2017) 582 U.S. ___ [137 S.Ct. 1773, 1779] (Bristol-Myers).)
Courts have "recognized two types of personal jurisdiction: 'general' (sometimes called 'all-purpose') jurisdiction and 'specific' (sometimes called 'case-linked') 7 jurisdiction." (Bristol-Myers, supra, 582 U.S. at p. ____ [137 S.Ct. at pp. 1779-1780].) A defendant with such substantial, "continuous, and systematic contacts" such that it can be "fairly regarded as at home" in the forum state is subject to the exercise of that state's general jurisdiction and thus can be sued there regardless of the nature of the claims being asserted against it. (Daimler AG v. Bauman (2014) 571 U.S. 117, 137-139, quoting Goodyear, supra, 564 U.S. at p. 919.)
If a defendant's contacts with the forum state are not substantial, continuous and systematic, the defendant may be subject to specific jurisdiction. For a court to assert specific jurisdiction, "the constitutional touchstone remains whether the defendant purposefully established 'minimum contacts' in the forum State." (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 474 (Burger King).) Specific jurisdiction is contingent on the" 'relationship among the defendant, the forum and the litigation.'" (Helicopteros Nacionales de Columbia v. Hall (1984) 466 U.S. 408, 414, quoting Shaffer v. Heitner (1977) 433 U.S. 186, 204 (Shaffer).) A defendant must have "fair warning that a particular activity may subject [him] to the jurisdiction of a foreign sovereign." (Shaffer, at p. 218 [conc. opn. of Powell, J.].)
To satisfy the due process requirement of "fair warning," the California Supreme Court has articulated three requirements for the proper exercise of specific jurisdiction. First, the defendant must purposefully avail himself of forum benefits. Second, the controversy must relate to or arise out of the defendant's forum-related contacts. Third, the court's assertion of jurisdiction must comport with fair play and substantial justice. (Pavlovich, supra, 29 Cal.4th at p. 269.)
"This 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts [citations] or of the 'unilateral activity of another party of a third person,' [citation]. [Fn. omitted.] Jurisdiction is proper, however, where the contacts proximately result from actions by the defendant himself that create that create a 'substantial 8 connection' with the forum State. [Citations.]." (Burger King, supra, 471 U.S. at p. 475.) Where the defendant deliberately engages in significant activities in the forum state, or creates "continuing obligations" between himself and the forum's residents, "he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by 'the benefits and protections' of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well." (Id. at pp. 475-476.)
The analysis of specific jurisdiction is fact driven. The principles that govern the determination of whether specific personal jurisdiction can properly be exercised in a particular case do not "turn on 'mechanical' tests," but instead focus on the quality and nature of the defendant's contacts with the forum in relation to the particular cause of action asserted against it. (Burger King, supra, 471 U.S. at pp. 478-479, 486, fn. 29.)
B. The Applicable Standard of Review
When a defendant challenges the exercise of personal jurisdiction over it in the superior court, the plaintiff has the initial burden to prove the factual basis for such jurisdiction by a preponderance of the evidence. (Pavlovich, supra, 29 Cal.4th at p. 273; Vons, supra, 14 Cal.4th at p. 449.) The proof must consist of more than mere allegations in the complaint. The plaintiff must provide support with "competent evidence of jurisdictional facts. Allegations in an unverified complaint are insufficient to satisfy this burden of proof." (Automobile Antitrust Cases I & II (2005) 135 Cal.App.4th 100, 110.) On a proper showing that the defendant has purposefully availed itself of the forum and the plaintiff's claims relate to or arise out of the defendant's forum-related contacts, the burden shifts to the defendant to demonstrate the court's exercise of personal jurisdiction over it would be unfair or unreasonable. (Burger King, supra, 471 U.S. at p. 472; Vons, supra, 14 Cal.4th at pp. 447-448.)
On appeal, the issue of whether the defendant's contacts with California are sufficient to justify the exercise of personal jurisdiction over it is generally a question of 9 law subject to de novo review. (Snowney v. Harrah's Entertainment (2005) 35 Cal.4th 1054, 1062 (Snowney).) If, however, the evidence submitted on the motion is conflicting, the appellate court must first review the trial court's express or implied factual findings to determine if those findings are supported by substantial evidence. (Vons, supra, 14 Cal.4th at p. 449.) Here the trial court made certain findings which we review for substantial evidence. We consider de novo whether the assertion of specific jurisdiction comports with due process of law.
C. The Exercise of Specific Jurisdiction is Justified
Applying the principles set forth above, we conclude Frontier had sufficient minimum contacts with California to justify the exercise of specific personal jurisdiction over Frontier.
Although Ventures argued in the trial court that Frontier had substantial and continuous contact in California that would justify the court's exercise of general jurisdiction, it does not now contend there is sufficient evidence to support that finding. Ventures argues it lacks such evidence because the trial court did not grant a continuance to conduct discovery on the issue.
A contract with an out-of-state party alone does not "automatically establish sufficient minimum contacts in the other party's home forum." (Burger King, supra, 471 U.S. at p. 478.) "Instead, we have emphasized the need for a 'highly realistic' approach that recognizes that a 'contract' is 'ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction.'" (Id. at p. 479, quoting Hoopeston Canning Co. v. Cullen (1943) 318 U.S. 313, 316.) In the context of assessing whether a party to a contract purposefully established minimum contacts within the forum, the court must consider "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing - that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum." (Burger King, at p. 479.) 10
Ventures argues the negotiation, contemplated business outcome, and the course of dealing between the parties here most closely resemble the facts of Hall v. LaRonde (1997) 56 Cal.App.4th 1342 (Hall). We agree. California resident Hall reached out by email to New York resident LaRonde about a software module Hall had written. LaRonde suggested integrating the module into his existing software package. The parties entered into a contract authorizing LaRonde to sell licenses for the use of the integrated software application to the public, with Hall to receive ongoing royalties. Hall adapted his software module to LaRonde's package. After he provided LaRonde with the module, Hall continued to assist with upgrades necessitated by new and existing software. He performed all work in California, and all negotiations were conducted by electronic mail and telephone. When LaRonde continued to market the integrated software but failed to pay the royalties under the contract, Hall filed a suit in California for breach of contract. (Id. at pp. 1344-1345.)
The Second District Court of Appeal concluded minimum contacts were demonstrated to justify the assertion of specific jurisdiction. "LaRonde's contacts with California consisted of more than simply purchasing a software module from Hall," as evidenced by Hall's initial work to integrate the module into LaRonde's software package. (Hall, supra, 56 Cal.App.4th at p. 1347.) Hall's continued modifications of the software program to comport with new products demonstrated an ongoing relationship between the parties. The contract provided that LaRonde would make royalty payments to Hall for each package sold, thus creating a" 'continuing obligation[]'" between LaRoche and the resident of California, as described in Burger King, supra, 471 U.S. at page 475. LaRonde "purposefully derived a benefit from interstate activities. It is fair to require that he account in California for the consequences that arise from such activities." (Hall, at p. 1347.)
We agree that when Frontier negotiated the terms of the Master Agreement and Statement of Work for product deliverables that were designed to integrate with its 11 existing marketing analytics platform, its contacts with California were more than a simple purchase of an off-the-shelf software program. Ventures's data analytics software, which was designed entirely in California, was tailored to Frontier's specifications through the terms of the Master Agreement and Statement of Work. After the execution of the contract, in the course of their dealings with one another, Frontier and Ventures worked closely to make certain those terms were executed. Frontier exercised oversight and control over the project, making certain its specific data analytics needs were addressed in the software development through constant collaboration with the Ventures team.
While Hall's facts parallel those before us, there are important differences between the circumstances of the two. First, unlike Hall's continued efforts to modify his software module to fit with new and existing software programs, there is no evidence from the terms of the contract or the conduct of the parties, that either Ventures or Frontier contemplated maintaining an ongoing business relationship with respect to the integrated software past the one-year contract termination date. Second, the contract did not create an ongoing obligation by Frontier to Ventures beyond the design and integration of the software program described in the Statement of Work, such as the continuing royalty payments due on future sales to Hall. Third, unlike LaRoche, who marketed Hall's integrated software and obtained an ongoing financial benefit from it, Frontier did not ultimately receive the integrated software product from Ventures; the California company terminated the contract based on Frontier's nonpayment. But we conclude these factual distinctions are outweighed by the collaborative engagement of Frontier in the product development.
Other factors also cause us to determine that Frontier established minimum contacts in the forum. We note Frontier deliberately reached out to Ventures, who did not have products in the national stream of commerce, and invited negotiations to develop the integrated software. Ventures argues Frontier's deliberate initiation of their 12 negotiations and business relationship demonstrates its purposeful availment of the forum, relying on Neadeau v. Foster (1983) 129 Cal.App.3d 234. There the appellate court found sufficient minimum contacts when a nonresident manufacturer solicited the services of a California financial consultant and thereafter failed to pay as required by their contract. (Id. at pp. 238-240.) Additionally, Frontier's Chief Operating Officer introduced Ventures's Chief Executive Officer as "the head of our Silicon Valley office working on our big data platform," to prospective Frontier investors, thereby claiming both a business relationship with a Silicon Valley "start-up," a new endeavor, and the status of the California technology innovation geography.
The inclusion of a California choice of law provision in the Master Agreement also weighs in favor of a finding of Frontier's minimum contacts with the state. (International Technologies Consultants v. Euroglas (6th Cir. 1997) 107 F.3d 386, 393 [though not determinative, that a contract is to be governed by the law of a particular state is a pertinent consideration in determining whether minimum contacts exist there]; CompuServe, Inc. v. Patterson (6th Cir. 1996) 89 F.3d 1257, 1264; see also Burger King, supra, 471 U.S. at p. 482 [concluding a Florida choice of law provision in the franchise contract between the parties, coupled with the long-term relationship between the nonresident franchisee and the resident franchisor, was sufficient to establish purposeful availment of the benefits and protections of Florida law].)
Though Frontier asserts the nature of the data project described in the Master Agreement and Statement of Work and the absence of any term requiring its performance in California denotes a lack of purposeful connection to the state, it does not dispute Ventures's assertion that the project design work was performed in California, or that this was the reason Ventures sought the protection of the California choice of law provision. Frontier executed the contract and agreed to be bound by its terms, including its governing law provision. 13
Frontier contends the remote and electronic nature of its negotiations and its lack of physical presence in California demonstrate it had insufficient minimum contacts in the state to support the assertion of specific jurisdiction. That the contract was negotiated and executed primarily through electronic means does not in and of itself defeat the assertion of specific jurisdiction. "We hold that the use of electronic mail and the telephone by a party in another state may establish sufficient minimum contacts with California to support personal jurisdiction. [¶]. . .[¶] [W]e do not believe that the physical presence of a representative of the defendant in California should be determinative. Much has happened in the role that electronic communications plays in business transactions . . . . The speed and ease of such communications have increased the number of transactions that are consummated without either party leaving the office. There is no reason why the requisite minimum contacts cannot be electronic." (Hall, supra, 56 Cal.App.4th at pp. 1344, 1347.) "[I]t is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. So long as a commercial actor's efforts are 'purposefully directed' toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there." (Burger King, supra, 471 U.S. at p. 476, quoting Keeton v. Hustler Magazine, Inc. (1984) 465 U.S. 770, 774-775.)
The contemplated consequence - the commercial outcome - of the negotiations was the creation by Ventures of software that would improve the amount, speed and quality of data related to the legal cannabis and hemp industry accessible on Frontier's existing market research application for investors and operators. The parties presented conflicting evidence regarding whether California's legalized cannabis and hemp market was Frontier's primary marketing target, and we defer to the court's implied finding that it found credible Frontier's assertion that it was not developing the new data-analytics 14 product with the capture of California's cannabis market as its goal. (See Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, 49 [appellate courts generally defer to the trial court's credibility determinations]; Vons, supra, 14 Cal.4th at p. 449 [the trial court's factual determinations are not disturbed if support by substantial evidence].) But as the trial court noted, California has a large market share of the national cannabis business; it follows that investor interest in the national market also affects the state. The improved data analytics project created through Frontier and Ventures's contractual collaboration was thus connected to the California forum.
Through the initiative process, in 2016 California legalized adult usage of limited amounts of such products for nonmedical purposes. (See Health & Saf. Code, § 11362.1; Prop. 64, § 4.4, approved Nov. 8, 2016, eff. Nov. 9, 2016.)
Frontier relies on the analysis of Picot v. Weston (9th Cir. 2015) 780 F.3d 1206, 1212-1213 (Picot) to argue its contacts with California were insufficient to support the exercise of specific jurisdiction over it. In Picot, a resident of Nevada introduced a California plaintiff to defendant, a resident of Michigan, to develop and market an electrolyte formula for use in automotive hydrogen fuel cells. The technology was developed by defendant in Michigan, while plaintiff attempted to find a seller in California. According to defendant, the parties entered into an oral agreement in Michigan, pursuant to which he was responsible for developing and testing the technology and assisting the plaintiffs with fundraising and marketing; the defendant was to receive one-third of the proceeds from its sale. (Id. at pp. 1209-1210.) After discovering plaintiff had secretly sold the electrolyte technology for $35 million, defendant asserted his right to a share of the sale proceeds. Plaintiff sought to thwart defendant's efforts by filing an action for declaratory relief in California, seeking a judicial declaration that no oral agreement existed and a claim that defendant had interfered with their contract to sell the technology to a third party. (Id. at p. 1210.) 15
On appeal from the district court's denial of the defendant's motion to quash service, the Ninth Circuit reversed. (Picot, supra, 780 F.3d at pp. 1212-1213.) It held that the assertion of specific personal jurisdiction over the defendant in California was improper because his contacts with the state were too limited. (Ibid.) In reaching this conclusion, the court rejected plaintiff's argument that the alleged oral agreement created a substantial connection between defendant and California simply because performance of that agreement was to occur in California. (Ibid.) It likewise rejected plaintiffs' assertion that the parties' course of dealing (which included two two-week trips by the defendant to California to help market the technology) was sufficient to subject defendant to the personal jurisdiction of California courts. The court reasoned the alleged agreement did not anticipate defendant's travel to California, defendant made the trips to the forum at plaintiff's request and expense, and the trips represented only a small portion of his marketing efforts, which occurred primarily in Michigan and Ohio. (Id. at p. 1213.)
We distinguish Picot from the case before us. In Picot, plaintiff filed the action in California to avoid liability for violating the terms of the contract. Ventures filed this action to obtain relief from Frontier's default on its contractual obligations. In Picot, the terms of the oral contract did not anticipate contacts with California. Here, the parties entered into a written contract with a California choice of law provision, expressly providing Frontier would have collaborative and hands-on involvement as Ventures developed the data platform to Frontier's specifications. Frontier's contacts with the forum state were thus anticipated by the parties and incorporated into their agreement.
A defendant's minimum contacts with a forum state will not establish personal jurisdiction over that defendant in the state's courts for all purposes; rather, there must also be "a connection between the forum and the specific claims at issue." (Bristol-Myers, supra, 582 U.S. at p. ___ .) In this case, Ventures's breach of contract claim arises directly from Frontier's contacts with California in contracting 16 for and participating in Ventures's development of a specialized software product. Because of this direct connection, extensive additional contacts by Frontier with the state are not required for the superior court to exercise specific personal jurisdiction over it in this case. (Moncrief v. Clark (2015) 238 Cal.App.4th 1000, 1007-1008.)
Where a defendant has purposefully availed itself of the benefits of the forum state and the claim against it is connected to its contacts with the state, it will be subject to specific personal jurisdiction of the state's courts over that claim unless the exercise of such jurisdiction would be unreasonable or unfair. (Snowney, supra, 35 Cal.4th at p. 1070.) Factors relevant to this fairness determination include "the burden on the defendant of appearing in the forum, the forum state's interest in adjudicating the claim, the plaintiff's interest in the availability of convenient and effective relief within the forum, judicial economy, and 'the "shared interest of the several States in furthering fundamental substantive social policies."' (Burger King, supra, 471 U.S. at p. 477.)" (Vons, supra, 14 Cal.4th at p. 448.) The defendant bears the burden of negating the fairness of proceeding in the forum. (Id. at p. 448.)
Frontier contends that a California court's exercise of specific personal jurisdiction over it on Ventures's claim would be "inherently unfair" because it is headquartered in Washington, D.C., its senior executives have their offices there and it does not have an office or any physical presence in California. However, this argument assumes that a physical presence in the state is required to make the exercise of specific personal jurisdiction fair. The law does not support such an assumption. (See, e.g., Jayone Foods, Inc. v. Aekyung Indus. Co. (2019) 31 Cal.App.5th 543, 564 [asserting jurisdiction over Korean company with no California presence not unfair given that modern advances in communications and transportation reduce the burden of litigation in a foreign forum].) There is no evidence of economic or other disparity between the parties such that requiring Frontier to defend a lawsuit in California would render litigation so inconvenient that it unfairly would be set at an extraordinary disadvantage in comparison 17 to Ventures. (Burger King, supra, 471 U.S. at p. 478.) Frontier has not met its burden to show that the exercise of specific personal jurisdiction over it in this case is unreasonable or unfair.
III. Disposition
The superior court's order quashing service of the summons and complaint on Frontier is reversed and the matter is remanded for further proceedings. 18
WE CONCUR: Grover, J., Danner, J. 19