Opinion
23-cv-06116-NC
03-21-2024
PRAVIN CHANDER THALASILA, Plaintiff, v. WAYNE LO, Defendant.
ORDER REQUESTING REASSIGNMENT TO A DISTRICT COURT JUDGE; REPORT AND RECOMMENDATION TO DENY MOTION FOR DEFAULT JUDGMENT
RE: ECF 10
NATHANAEL M. COUSINS, UNITED STATES MAGISTRATE JUDGE
Plaintiff Pravin Chander Thalasila seeks a default judgment against defendant Wayne Lo on Thalasila's claim for recognition in California of a Canadian judgment against Lo. Thalasila and Lo agreed Lo would conduct futures trading on behalf of Thalasila. See ECF 1, Ex. A. According to Thalasila, Lo violates the terms of their agreement, resulting in almost complete losses to Thalasila's account. See id. Thalasila originally pursued Lo in Canadian court, resulting in a default judgment there. Id., Ex. B. He now seeks recognition of that Canadian judgment here. ECF 1. Lo, again, did not appear and Thalasila moved for default judgment. ECF 10. This Court concludes it does not have personal jurisdiction over Lo and thus recommends denying Thalasila's motion. I. BACKGROUND
A. Factual History
This Court accepts Thalasila's allegations as true for the purposes of this motion. Thalasila is California resident and Lo is a Canadian resident. ECF 1 ¶¶ 3-4. According to Thalasila, Lo operates an online subscription service called ESRealTime that offers stock tips and alerts. ECF 1, Ex. A ¶ 4. The service is offered through a private channel on Discord, an instant messaging social platform. Id. Thalasila first subscribed to Lo's service in January 2021. Id. ¶ 7. He unsubscribed in February 2021. Id. ¶ 8.
In November 2021, Thalasila approached Lo about actively managing Thalasila's trading account on Ninjatrader, a futures trading account. Id. ¶¶ 7, 9.
They entered into an agreement about what investment rules Lo would follow. Id. ¶ 10. On or around November 23, 2021, Lo violated those rules, resulting in losses to Thalasila's account. Id. ¶ 11. Thalasila and Lo conferred, transferred the remaining balance to a different trading account, and agreed on new investment parameters. Id. ¶¶ 12-14. In December 2021, subsequent trades by Lo outside those parameters resulted in more loses for Thalasila. Id. ¶¶ 15-18.
B. Procedural History
1. The Canadian Judgment
Thalasila filed a civil claim against Lo in Canadian court in March 2023. ECF 1. ¶ 5. According to Thalasila, he served Lo in accordance with Canadian law. Id. ¶ 7. Lo did not respond, and the Canadian court entered a default judgment against him on July 5, 2023, for CAD $107,034.96. Id. ¶ 7; see also id. Ex. B.
2. The Instant Action
Thalasila filed his complaint in this action on November 27, 2023, seeking recognition of the Canadian judgment against Lo under California's Uniform Foreign Country Money Judgments Recognition Act (“Recognition Act”), Cal. Code Civ. Proc. § 1713, et seq. ECF 1. On Thalasila's motion, the Clerk entered default on February 7, 2024. ECF 8, 9. Thalasila then filed the instant motion. ECF 10. This Court requested supplement briefing on personal jurisdiction, which Thalasila provided. ECF 12, 14. Lo did not appear at the March 20, 2024, hearing on this motion. ECF 16.
II. LEGAL STANDARD
Default may be entered against a party who fails to plead or otherwise defend an action and against whom a judgment for affirmative relief is sought. Fed.R.Civ.P. 55(a). Upon default, the factual allegations of the complaint, except those concerning damages, are deemed admitted by the non-responding parties. HICA Educ. Loan Corp. v. Warne, No. 11-cv-04287-LHK, 2012 WL 1156402, at *1 (N.D. Cal. Apr. 6, 2012) (citing Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002)).
Following a defendant's default, courts have discretion to enter default judgment. Fed.R.Civ.P. 55(b); Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Before doing so, courts must ensure they have subject matter and personal jurisdiction. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). These jurisdictional thresholds apply for default judgments on Recognition Act claims. See Severs v. Hyp3r Inc., No. 22-CV-04413-DMR, 2023 WL 5652488, at *2-5 (N.D. Cal. Aug. 11, 2023) (analyzing whether court had personal jurisdiction for purposes of recognizing Canadian judgment); Wuxi Powerbit Data Tech. Ltd. v. BiTMICRO Networks, Inc., No. 22-CV-08959-JCS, 2023 WL 4995720, at *4 (N.D. Cal. June 9, 2023) (finding personal jurisdiction proper over California corporation for purposes of default judgment on Recognition Act claim); see also Restatement (Third) of Foreign Relations Law § 481 cmt. g (1987) (“[E]nforcement of a debt arising out of a foreign judgment must be initiated by civil action, and the judgment creditor must establish a basis for the exercise of jurisdiction by the enforcing court over the judgment debtor or his property.”). But see Lenchyshyn v. Pelko Elec., Inc., 723 N.Y.S.2d 285, 292 (2001) (“[W]e conclude that it is immaterial to recognition and enforcement of a foreign country money judgment whether there is any basis for the exercise of personal jurisdiction over the judgment debtor in [recognizing jurisdiction].”).
III. DISCUSSION
A. Jurisdiction
Here, subject matter jurisdiction is proper and personal jurisdiction is not. This Court has diversity jurisdiction because the parties are diverse and the amount in controversy exceed $75,000. See U.S.C. § 1332(a)(2). However, as discussed below, this Court does not have personal jurisdiction.
1. This Court Lacks Personal Jurisdiction Over Defendant Lo
Courts may have general or specific jurisdiction over defendants. Individuals are subject to general personal jurisdiction where they are domiciled. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924, (2011). “Specific jurisdiction, on the other hand, depends on an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.” Id. at 919 (quotation marks and brackets omitted). Here, Thalasila argues this Court has specific jurisdiction over Lo. ECF 14 at 2-4.
To establish specific jurisdiction, Thalasila must first show Lo “purposefully availed [himself] of the privilege of conducting activities in California, or purposefully directed its activities toward California.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). “[T]he plaintiff cannot be the only link between the defendant and the forum” in this analysis. Walden v. Fiore, 571 U.S. 277, 285 (2014). “Rather, [] the defendant's conduct [] must form the necessary connection with the forum State.” Id. “A contract alone does not automatically establish minimum contacts in the plaintiff's home forum.” Picot v. Weston, 780 F.3d 1206, 1212 (9th Cir. 2015) (quotation marks and brackets omitted). Thus, “a defendant's relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction.” Walden, 571 U.S. at 285.
Thalasila, in his supplemental brief, claims Lo “deliberately engaged in conduct directed to plaintiff in California” by “soliciting plaintiff's investment in the ESRealTime subscription, and by taking over management of plaintiff's account.” ECF 14 at 4. These allegations do not suffice to confer personal jurisdiction. Thalasila relies on himself as “the only link” to California. See Walden, 571 U.S. at 285. He cites no other connection between Lo and California. This single connection “is an insufficient basis for jurisdiction.” See id.
Thalasila's original complaint in Canadian court provides an even less compelling basis for personal jurisdiction. There, Thalasila describes how he subscribed to Lo's channel and alerts on Discord, a third-party web application. ECF 1, Ex. A ¶ 7. He does not describe any proactive outreach by Lo directed at Thalasila or California consumers generally. See id. Thalasila then contacted Lo about management of his account. Id. ¶ 9. Though Thalasila alleges he and Lo entered into an agreement, see id. ¶¶ 10, 14, an agreement or contract alone does not impart personal jurisdiction. See Picot, 780 F.3d at 1212. In short, nothing in Thalasila's original complaint suggests Lo purposefully directed his activities towards California. See Schwarzenegger, 374 F.3d at 802.
Thalasila's sole citation in support of his argument for specific jurisdiction supports this conclusion. See MacDermid, Inc. v. Deiter, 702 F.3d 725 (2d Cir. 2012). In MacDermid, the court examined whether it had personal jurisdiction over a Canadian resident who accessed computer servers in Connecticut. Id. at 730-731. Analyzing purposeful availment, the court found the defendant was aware that the email system and computer servers she used were housed in Connecticut. Id. at 730. Because the defendant “knew that the email servers she used and the confidential files she misappropriated were both located in Connecticut,” the court found she met the test for purposeful availment. Id.
Neither Thalasila's complaint, motion for default judgment, nor supporting brief allege any such knowledge or purposefulness by Lo. See id. As compared to MacDermid, where the defendant had specific knowledge that her actions involved computer equipment in the forum state, Thalasila describes a transaction over a third-party app and omits any hint that Lo knew Thalasila was based on California. See id. Thus, Thalasila's own authority on personal jurisdiction supports a finding he has not met the mark.
Because Thalasila does not adequately allege that Lo purposefully availed himself of the privilege of conducting activities in California, he fails the test for specific jurisdiction. Thus, this Court lacks personal jurisdiction over Lo.
IV. CONCLUSION
This Court recommends denying Thalasila's motion for default judgment because based on his allegations there is no personal jurisdiction over Lo in California.
Because not all parties have consented to magistrate judge jurisdiction, the Clerk of Court is asked to reassign this case to a District Judge. Thalasila is ordered to serve this order on Lo. Any party may object to this order within 14 days of being served under Fed.R.Civ.P. 72(b).
IT IS SO ORDERED.