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BENQ AMERICA CORPORATION v. FORWARD ELECTRONICS CO.

December 15, 2005.

BENQ AMERICA CORPORATION, Plaintiff,
v.
FORWARD ELECTRONICS CO., LTD., et al., Defendants.



The opinion of the court was delivered by: PHYLLIS HAMILTON, District Judge

ORDER GRANTING MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
The motion of defendant Forward Electronics Co., Ltd., to dismiss for lack of personal jurisdiction or for improper venue came on for hearing before this court on November 30, 2005. Plaintiff appeared by its counsel Brian C. Rocca, and defendant appeared by its counsel Joseph S. Wu and Craig Pinedo. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS the motion as follows and for the reasons stated at the hearing.

BACKGROUND

  This is an action alleging breach of warranty and seeking indemnity and declaratory relief. Plaintiff BenQ America Corporation ("BenQ" America) is a California corporation. Defendant Forward Electronics Co., Ltd. ("Forward") is a Taiwanese corporation, with its principal place of business in Taiwan. BenQ America's parent corporation, BenQ Corporation ("BenQ Corp." — not a party to this action), is also a Taiwanese corporation. BenQ Corp. purchased electronic components (the "tuners") from Forward in Taiwan. Those components, which contain integrated circuit chips, were incorporated into products such as televisions and color monitors that were then imported into the United States for sale by BenQ America. On February 24, 2005, Thomson Licensing S.A. ("Thomson") filed a complaint with the U.S. International Trade Commission ("ITC") against BenQ,*fn1 alleging that BenQ had infringed five of Thompson's patents. One of those patents involves the integrated circuit chips that Forward incorporated into its tuners.

  On March 9, 2005, Thomson filed a patent infringement suit in this district against BenQ Corp., BenQ America, BenQ Optronics (Suzhou) Co. Ltd, and Au Optronics Corporation (case No. C-05-1005 (JSW)). The patent infringement suit was reportedly based on the same allegations and patents as the ITC investigation action. The parties requested a stay of the infringement action pursuant to 28 U.S.C. § 1659(a) (civil action involving parties that are also parties to proceeding before ITC may be stayed), and the request was granted on May 4, 2005. The parties apparently reached an agreement to settle the dispute before the ITC, and on December 8, 2005, they filed a stipulated notice of dismissal of the patent infringement suit.

  Meanwhile, on June 4, 2005, BenQ America filed the present action. In the complaint, BenQ America alleges that in a June 10, 2003, contract, BenQ Corp. and Forward agreed that Forward would defend BenQ Corp. against any claims of infringement connected with products furnished by Forward, and would indemnify BenQ Corp. for any damages and costs awarded in any litigation resulting from any such claim, provided that BenQ Corp. notified Forward in writing within 30 days of the pendency of any such claim. BenQ America alleges (on information and belief) that Forward was aware that BenQ America is a wholly owned subsidiary to BenQ Corp.; that BenQ Corp. sells its products through BenQ America in California; that the June 10, 2003, contract indemnifies BenQ, which includes BenQ corporation and its subsidiaries, including BenQ America; and that BenQ America was an intended beneficiary of the indemnification contract.

  BenQ America asserts that BenQ Corp. notified Forward of the pendency of the Thomson action on March 8, 2005, and that Forward notified BenQ Corp. on March 23, 2005, that it would not defend or indemnify BenQ Corp. or BenQ America in connection with the civil action or the ITC proceedings brought by Thomson. On May 30, 2005, BenQ America advised Forward that Forward was in breach of the indemnification agreement.

  BenQ America then filed the present action, alleging causes of action for express contractual indemnity, equitable or implied indemnity, breach of warranty against infringement (UCC § 2-312), and declaratory relief. Forward now seeks an order dismissing the complaint for lack of personal jurisdiction. In the alternative, Forward contends that the parties agreed in a November 12, 2003, contract that any disputes arising from the sale of Forward's tuners would be resolved by the Taipei District Court, in Taipei, Taiwan, and that the complaint should be dismissed for improper venue.

  DISCUSSION

  A. Legal Standards

  The court should generally decide issues relating to personal jurisdiction before examining venue. "The question of personal jurisdiction, which goes to the court's power to exercise control over the parties, is typically decided in advance of venue, which is primarily a matter of choosing a convenient forum." Leroy v. Great Western United Corp., 443 U.S. 173, 180 (1979).

  1. Dismissal for lack of personal jurisdiction.

  Federal courts sitting in California may exercise personal jurisdiction over any nonresident to the extent permitted by due process. Harris Rutsky & Co. Ins. Serv., Inc. v. Bell & Clements, Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003) (citing Cal. Civ. P. Code § 410.10). Absent one of the traditional bases for personal jurisdiction (presence, domicile, or consent), due process requires that the defendant have sufficient minimum contacts with the forum state, and that maintenance of the suit not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

  The extent to which a federal court can exercise personal jurisdiction will depend on the nature and quality of presence, or the nature and quality of the defendant's contacts with the forum state. Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 444-45 & n. 5 (1952). If a defendant is domiciled in the forum state, or if its activities there are "substantial, continuous, and systematic," a federal court can (if permitted by the state's "long-arm" statute) exercise jurisdiction as to any cause of action, even if unrelated to the defendant's activities within the state. Id. at 445. This is termed "general jurisdiction."

  If, however, a non-resident's contacts with the forum state are not sufficiently "continuous and systematic" for general jurisdiction, that defendant may still be subject to "specific jurisdiction" on claims related to its activities or contacts in the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473-76 (1985). This "limited" or "specific" personal jurisdiction analysis involves an evaluation of the defendant's contact with the forum state, "to determine whether the `defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.'" Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1485 (9th Cir. 1993) (quoting Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)); see also Hanson v. Denckla, 357 U.S. 235, 253-54 (1958); Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995).

  When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is proper. Rio Properties, Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002). Where the motion is based on written materials rather than on an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). In such cases, the court need only inquire into whether the plaintiff's pleadings and affidavits make the required prima facie showing. Id. Although the plaintiff cannot rest on the bare allegations of the complaint, uncontroverted allegations in the complaint must be taken as true. Id. Conflicts between the parties over statements contained in affidavits must be resolved in the plaintiff's favor. Id. 2. Dismissals for improper venue

  Parties may by contract designate a forum in which any litigation is to take place. Litigation commenced elsewhere may be subject to dismissal for improper venue. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991); see also Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996) (forum-selection clause provides basis for Rule 12(b)(3) motion to dismiss for improper venue)

  Under Rule 12(b)(3), a court can consider facts outside the pleadings and need not take the pleadings as true. Thus, the court can consider reasons for denying enforcement of a forum-selection clause — e.g., fraud, undue influence, imbalance in bargaining power, or serious inconvenience in litigating in selected forum. See Argueta, 87 F.3d at 324. The court must draw all reasonable inferences and resolve all factual conflicts in favor of the party seeking to avoid enforcement of the ...


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