Opinion
No. 2:16-cv-02065-KJM-GGH
03-24-2017
WORLD SKATEBOARDING FEDERATION, INC., Plaintiff, v. INTERNATIONAL SKATEBOARDING FEDERATION, and GARY REAM, Defendants.
ORDER
This case arises from a contract that the parties allegedly formed in Switzerland concerning the creation of a commission tasked with organizing and planning the skateboarding events for the 2020 Olympic Games in Tokyo. Defendants International Skateboarding Federation ("ISF") and Gary Ream move to dismiss the complaint brought by plaintiff World Skateboarding Federation, Inc. ("WSF") for lack of jurisdiction. ECF No. 4. Plaintiff opposes. ECF No. 22. The court held a motion hearing on November 4, 2016, at which Karra Porter and Phillip Lowry appeared for plaintiff, and John Poulos and Richard Wickersham appeared for defendants. ECF No. 27. For the following reasons, the court GRANTS defendants' motion. ///// /////
I. FACTUAL ALLEGATIONS
In and prior to 2006, the International Olympic Committee ("IOC") began exploring the possibility of bringing skateboarding to the Olympics. Compl. ¶ 13. Years later, as the IOC actually considered including skateboarding in the 2020 Olympic Games, it invited "key stakeholders" into discussions, including plaintiff WSF and defendant ISF. Id. ¶ 17. WSF's principal and founder, Tim McFerran, is a luminary in the skateboarding industry, and has led efforts to expand competitive skateboarding across the world. Id. ¶¶ 25-47. By May 2015, of the key stakeholders WSF was the largest and most active federation for skateboarding. Id. ¶ 36. ISF, on the other hand, was formed by Ream in 2003, and the organization was largely inactive through the end of 2014. Id. ¶ 49. In 2009, Ream called McFerran and introduced himself as the President of ISF, id. ¶ 50; he told McFerran that his personal friend, Christophe Dubi was now the IOC Olympic Games Executive Director and was going to help Ream get skateboarding recognized in the 2012 Olympic Games, id. ¶¶ 50, 87. In the same conversation, Ream requested that McFerran pay Ream $200,000 for ISF to sanction an international skateboarding event organized by McFerran. Id. ¶ 50. When McFerran refused to pay, Ream told McFerran he would ensure McFerran was not a part of the Olympic Games unless he agreed to pay the $200,000 fee. Id.
In 2014 and 2015, McFerran and Ream engaged in discussions separately with the IOC to bring skateboarding to the 2020 Olympic Games. See id. ¶¶ 74-75. During this time, Ream and ISF held multiple meetings in California. In January 2015, in southern California, ISF held an invitation-only meeting with members of the skateboarding industry. Id. ¶ 53. At that meeting Ream bragged about his special relationship with IOC Executive Director Dubi, and suggested that Dubi was helping him make ISF the official organizer for skateboarding at the 2020 Olympic Games. Id. ¶ 93. In February 2015, in Los Angeles, the IOC attended a meeting with ISF board members that ISF described as an "emergency" meeting to discuss bringing skateboarding to the 2020 Olympic Games. Id. ¶ 75. In March 2015, again in Los Angeles, ISF held an additional invitation-only meeting, this time with associates of Ream. Id. ¶ 55.
On March 11, 2015, in Switzerland, the IOC's Sports Director told ISF and WSF they would have to work together for skateboarding to be included on the 2020 Olympic Games program. Id. ¶¶ 17, 24, 76. The same month, in Turkey, an IOC representative reported that "were it not for McFerran, skateboarding would not be considered for the 2020 Olympic Games." Id. ¶ 80. Around that time, Ream began falsely claiming to third parties that the IOC had selected ISF as the International Federation, meaning the sole organizer, for skateboarding in order to gain favor within the skateboarding industry. Id. ¶¶ 84, 89.
On March 15, 2016, the IOC invited McFerran and Ream to a meeting in Switzerland, where WSF and ISF entered into an agreement to create a Tokyo 2020 Olympic Skateboarding Commission ("Commission") for the purpose of organizing and planning the skateboarding events for the 2020 Olympic Games. Id. ¶ 106. The IOC appointed Ream as Chairman of the Commission, id. ¶ 107, told McFerran he was to be an active participant in the leadership, id. ¶ 116, and told Ream he would have to put the interests of the Commission above those of ISF, id. ¶ 107. One of McFerran's duties as a member of the Commission, a duty he was assigned by the IOC, was to develop a list of contests and qualifying events. Id. ¶ 116. The IOC also told McFerran it was a "good idea" for WSF to be the point organization for the Pan American Games and Commonwealth Games. Id. Relying on the agreement to create the Commission as well as the IOC's promises, McFerran continued to incur expenses, id. ¶ 113, and began negotiating and signing contracts with foreign governments regarding events that would be qualifiers for the 2020 Olympic Games, id. ¶ 117.
On May 9, 2016, Ream and the IOC circulated a draft memorandum of understanding meant to memorialize the agreement WSF and ISF entered into on March 15, 2016. Id. ¶ 120. The draft did not identify WSF as a member of the Commission. Id.
On May 12, 2016, the IOC told McFerran to meet the next day with Ream in Anaheim, California, where Ream was attending a skateboarding conference. Id. ¶ 121. It is unclear from the complaint whether McFerran attended this conference or met with Ream. What is clear from the complaint, however, is WSF's contention that Ream leveraged his personal relationship with IOC Executive Director Dubi to position ISF as the sole organizer of skateboarding events for the Olympic Games, to the detriment of WSF and McFerran. See ¶¶ 88-95. As a result, on May 30, 2016, the IOC held a meeting with ISF without inviting WSF, where the IOC and ISF agreed to a memorandum of understanding that excluded WSF from the Commission. Id. ¶¶ 126-28.
II. PROCEDURAL BACKGROUND
On July 28, 2016, WSF filed a complaint against ISF and Gary Ream in the Superior Court of California, Placer County, in which it pleads the following: (1) Breach of Contract (defendant ISF), id. ¶¶ 140-46; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing (defendant ISF), id. ¶¶ 147-55; (3) Unfair Competition and Unfair Business Practices (all defendants), id. ¶¶ 156-64; (4) for declaratory relief, id. ¶¶ 165-68; (5) for an injunction, id. ¶¶ 169-75; and (6) breach of fiduciary duty (all defendants), id. ¶¶ 176-83.
On August 29, 2016, WSF removed the case to this court. ECF No. 1. The next day, on August 30, defendants filed a motion to dismiss, alleging the court lacks jurisdiction. Defs.' Mot. to Dismiss ("Defs.' MTD") at 5-8, ECF No. 4-1. WSF opposes, Pl.'s Opp'n, ECF No. 22, and defendants replied, ECF No. 24. For the following reasons, the court grants defendants' motion to dismiss for lack of jurisdiction.
III. DISCUSSION
Defendants argue they are not subject to the jurisdiction of this court because defendants and the alleged contract formed in Switzerland do not have the requisite contacts with California. Defs.' MTD at 5-8. Alternatively, defendants seek to join necessary parties, id. at 8-11; request that plaintiff file an amended complaint with a more definite statement, id. at 11-13; and/or provide an amended complaint that strikes immaterial, impertinent, and scandalous allegations, id. at 13-14. The court reaches only the threshold jurisdictional question at this juncture.
Defendants argue WSF's claims must be dismissed because this court lacks general and specific personal jurisdiction. Defs.' MTD at 5-8. Plaintiff responds that the complaint, supplemented by McFerran's supporting declaration in opposition, sets forth sufficient contacts to establish general and specific jurisdiction. Pl.'s Opp'n at 2-3.
Rule 12(b)(2) of the Federal Rules of Civil Procedure provides that a party may move to dismiss a complaint for lack of personal jurisdiction. Although the defendant brings the motion, it is the plaintiff's burden to establish the court's personal jurisdiction. See Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). If the motion is based on written materials rather than an evidentiary hearing, as in this case, the plaintiff need only make "a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010) (quotation omitted). In particular, the plaintiff must convince the court the defendants' "conduct and connection with the forum State [is] such that the defendants should reasonably anticipate being haled into court there." Sher, 911 F.2d at 1361 (quotation marks omitted) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). After plaintiff makes a prima facie showing, the court resolves all contested facts in plaintiff's favor. In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 741 (9th Cir. 2013), aff'd sub nom. Oneok, Inc. v. Learjet, Inc., 135 S. Ct. 1591 (2015). At the same time, the plaintiff cannot establish jurisdiction by alleging bare facts without providing some evidence of their existence, "by affidavit or otherwise." Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977); accord Ochoa v. J.B. Martin & Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002).
In resolving a Rule 12(b)(2) motion, the court may consider evidence outside the pleadings, including affidavits and other materials submitted with the motion. See Daimler AG v. Bauman, 134 S. Ct. 746, 752 (2014) (noting plaintiff in a Rule 12(b)(2) motion submitted declarations and exhibits purporting to demonstrate defendant's contacts to the forum state). The court may consider "relevant materials outside the pleadings without taking judicial notice of those materials." Lindora, LLC v. Isagenix Int'l, LLC, 198 F. Supp. 3d 1127, 1136 n.3 (S.D. Cal. 2016) (citing Stewart v. Screen Gems-EMI Music, Inc., 81 F. Supp. 3d 938, 951-52 (N.D. Cal. 2015)). Here, the court considers whether it has general or specific jurisdiction over defendants in turn. ///// /////
A. General Jurisdiction
"A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). The standard for general jurisdiction is exacting and is satisfied only by a showing of substantial operations in the state, marked by "longevity, continuity, volume, economic impact, physical presence, and integration into the state's markets." Mavrix, 647 F.3d at 1224. At the November 4, 2016 hearing, plaintiff conceded the court does not have general jurisdiction over defendants in this case.
B. Specific Jurisdiction
In determining whether this court has personal jurisdiction, the court looks to the personal jurisdiction rules of the forum state, provided the exercise of jurisdiction comports with due process. Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986). California imposes no greater restrictions than the United States Constitution, and as such, "federal courts in California may exercise jurisdiction to the fullest extent permitted by due process." Id.
A court may exercise specific personal jurisdiction over a non-resident defendant whose "minimum contacts" with the forum state are "sufficient" in that they relate to the claims made in a case. Sher, 911 F.2d at 1361. The minimum contacts inquiry focuses "on the relationship among the defendant, the forum, and the litigation." Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (quotation omitted). The Ninth Circuit has established a three-pronged conjunctive test for determining whether the plaintiff has alleged sufficient "minimum contacts":
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's
forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)). These prongs are identified in shorthand fashion as: (1) purposeful availment and direction, (2) forum-related conduct, and (3) reasonableness. See Menken v. Emm, 503 F.3d 1050, 1057 (9th Cir. 2007).
When a plaintiff seeks to invoke specific personal jurisdiction, the plaintiff must establish jurisdiction for "each claim asserted against a defendant." Picot, 780 F.3d at 1211 (citation omitted). If personal jurisdiction attaches as to one claim, but not others, the district court may exercise pendent personal jurisdiction over any remaining claims that arise out of the same "common nucleus of operative facts" as the claim for which jurisdiction exists. Id.
1. Purposeful availment and direction
Under the first prong, the plaintiff must establish defendants either purposefully availed themselves of the privilege of conducting activities in California, thus invoking the benefits and protections of its laws, or purposefully directed their activities toward California. Schwarzenegger, 374 F.3d at 802; Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). In the Ninth Circuit, the "purposeful availment" requirement is satisfied if a defendant has taken deliberate action within the forum state or if it has created continuing or ongoing obligations to forum residents. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995) (citing Hirsch v. Blue Cross, Blue Shield of Kan. City, 800 F.2d 1474, 1478 (9th Cir. 1986)). Under the rubric of personal availment, the Ninth Circuit has held that "[i]t is not required that a defendant be physically present within, or have physical contacts with, the forum, provided that his efforts are purposefully directed toward forum residents." Id. (quotations and citations omitted).
In Cubbage v. Merchent, for example, the Ninth Circuit held an Arizona hospital personally availed itself of California's jurisdiction for purposes of litigation of a malpractice action. 744 F.2d 665, 669 (9th Cir. 1984). The hospital argued its doctors were not California residents, it was not licensed in California, and it did not treat the plaintiff in California, but the Circuit found California had jurisdiction because the hospital applied for and received reimbursement from California's Medi-Cal program, and solicited California residents through a telephone listing distributed to forum residents. Id. at 668-69. The hospital's conduct amounted to "continuing efforts to provide services [to residents] in California," id. at 670, and was sufficient to establish specific personal jurisdiction over the Arizona hospital, id. at 672.
Similarly, in Ballard, 65 F.3d at 1498, the Ninth Circuit held an Austrian bank had personally availed itself of jurisdiction in California, even though its physical contacts were "quite limited." The bank's physical contacts to the United States and California consisted of twenty-four business trips taken by bank officials, for business reasons unrelated to the case in Ballard. Id. The Ninth Circuit still found the bank had personally availed itself of California's jurisdiction, however, because "more than 60 percent of [the bank's] customers live[d] in the United States [and American residents were] the beneficiaries of millions of dollars of [bank] loans[; the bank] regularly mail[ed] account statements to its U.S. customers, and it at least occasionally solicits new business from them[; and the bank] maintain[ed] 'correspondent accounts' at several major U.S. financial institutions" for the purpose of giving bank access to American customers. Id.
In this case, ISF and Ream held at least five corporate meetings and a focused meeting for ISF officials in California, Compl. ¶ 7(a) and (c), and many of ISF's general members and members of its leadership reside in California, id. ¶ 7(d). ISF specifically held meetings with the IOC in California to discuss questions about the 2020 Tokyo Olympics. Id. ¶ 7(b). ISF advertises its California events on its website, it does business with California corporations, and it is endorsed by California organizations. Id. ¶ 7(e)-(g). These contacts are sufficient to demonstrate that ISF has purposefully directed its efforts towards California. See Carroll Shelby Licensing, Inc. v. Tango Classic Autos, Inc., No. 15-06264, 2015 WL 12765632, at *4 (C.D. Cal. Dec. 10, 2015) (finding purposeful availment where defendant maintained passive website, traveled to California several times on business, and purchased and sold five cars to California residents); Hernandez v. City of Beaumont, No. 13-00967, 2014 WL 6943881, at *5 (C.D. Cal. Dec. 8, 2014) (finding purposeful availment where defendant maintained a passive website and trained an individual at a tradeshow located in California).
2. Forum-related conduct
Once a plaintiff establishes personal availment, the plaintiff must show the claim arises out of the defendants' forum-related activities. To satisfy this requirement, the plaintiff must show the claim would not have arisen "but for" the defendants' contacts with the forum state. Ballard, 65 F.3d at 1500. The question in this case can be formulated as follows: But for defendants' contacts with California, would WSF's claims against defendants have arisen? See Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 864 (9th Cir. 2003). The answer here shows the court does not have jurisdiction over defendants.
The contract at issue in this case was formed between plaintiff and defendants in Switzerland. Compl. ¶ 106. WSF has made no showing that any component of the contract was negotiated or entered into in California, that any breach occurred in California, or that any of its tortious claims arose in California. California may, as plaintiff alleges, be the center of the skateboard universe, see Pl.'s Opp'n at 3, but this court fails to see how the Ninth Circuit's but-for test is satisfied when the contract was formed out of the country (Switzerland); concerns events scheduled to take place in another country (Japan); the defendants and concerned third parties, including the IOC, based in Switzerland, all reside out-of-forum; and no activities related to the breach of this contract occurred in California.
3. Reasonableness
The court need not reach the question of reasonableness.
IV. CONCLUSION
Because this court lacks jurisdiction over defendants, defendants' motion to dismiss under Federal Rule of Civil Procedure 12(b)(2) is GRANTED. Federal Rule of Civil Procedure 15(a)(2) provides that "[t]he court should freely give [a party leave to amend its pleading] when justice so requires," and the Ninth Circuit has "stressed Rule 15's policy of favoring amendments." Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989). Because amendment has not been shown to be futile, plaintiff is granted leave to amend its complaint within fourteen (14) days of the filing of this order.
IT IS SO ORDERED. DATED: March 24, 2017.
/s/_________
UNITED STATES DISTRICT JUDGE