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Markey v. Kudelski S.A.

April 3, 2007

JOHN MARKEY, PLAINTIFF,
v.
KUDELSKI S.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hon. Thomas J. Whelan United States District Judge

ORDER GRANTING MOTION TO DISMISS

On July 11, 2006, Plaintiff John Markey filed a complaint alleging employment discrimination, breach of contract, and breach of the implied covenant of good faith and fair dealing against Defendants Kudelski S.A. (a Swiss corporation), Nagravision S.A. (also a Swiss corporation), and Nagra USA, Inc. (a New York corporation). Kudelski moves to dismiss for lack of personal jurisdiction under Federal Rule 12(b)(2). Because Markey has not met his burden to show either general or specific jurisdiction through admissible evidence, the court will GRANT the motion.

I. Facts & Legal Standards

Markey's lawsuit arises out of his employment with Kudelski. In November 1998, he signed an employment contract with Kudelski entitling him to a base salary, a bonus, and terminable annually for cause upon three months' notice. (Compl. ¶ 8.) He alleges that Kudelski and other companies wanted him to participate in a fraudulent scheme, but he believed it would subject him to criminal liability. (Id. ¶¶ 10--11.) His refusal, along with his rheumatoid arthritis, national origin, and age, all contributed to his unlawful termination. (Id. ¶¶ 11--14.)

Kudelski representatives met with Markey in October and November 1998, apparently at a trade show in the Los Angeles area. (Markey Decl. ¶ 6; Def.'s Reply in Supp. at 3.) According to Markey, Kudelski's principal, Andre Kudelski, had dinner with him and discussed an offer of employment in some detail. (Markey Decl. ¶ 7.) Markey then flew to Switzerland to complete the negotiations and sign the contract with Kudelski, S.A. (Id. ¶¶ 7--8.) Thereafter, a Kudelski subsidiary, Nagra USA, Inc., paid his salary and benefits. (Id. ¶ 21.)

From November 1998 to the present, Markey lived in San Diego, visited Kudelski subsidiaries, and assumed responsibilities in sales and marketing for Kudelski products. (Markey Decl. ¶ 19--22.) He provided his own office equipment, but received reimbursements for long-distance telephone calls. (Id. ¶ 20.) He asserts that no Kudelski entity ever told him that Kudelski, S.A. technically no longer employed him (id. ¶ 25), and further, that some correspondence suggested otherwise (id. ¶ 26--27).

Rule 12(b)(2) provides that a court may dismiss a claim for "lack of jurisdiction over the person." Fed. R. Civ. P. 12(b)(2). Although the defendant is the moving party in a motion to dismiss, the plaintiff invoked the court's jurisdiction, and therefore bears the burden of proof on the necessary jurisdictional facts. Ballard v. Savage, 65 F.3d 1495, 1497 (9th Cir. 1995); Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986); Spacey v. Burgar, 207 F. Supp. 2d 1037, 1042 (C.D. Cal. 2001).

When a defendant responds to a complaint with a motion to dismiss, the plaintiff need only make a prima facie showing of personal jurisdiction. Myers v. Bennett Law Offices, 238 F.3d 1068, 1071 (9th Cir. 2001); Data Disc., Inc. v. Sys. Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). In this context, a "prima facie" showing means that plaintiff has produced admissible evidence that, if believed, would be sufficient to establish the existence of personal jurisdiction. See WNS, Inc. v. Farrow, 884 F.2d 200, 203--04 (5th Cir. 1989).

The allegations contained in the affidavits and pleadings must assert particular facts which establish the necessary ties between the defendant and the forum state. Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 185 (2nd Cir. 1998); H.M. Greenspun v. Del E. Webb Corp., 634 F.2d 1204, 1208 n.5 (9th Cir. 1980). The court must weigh the substantiated pleadings and declarations in the light most favorable to the plaintiff and resolve all factual disputes in the plaintiff's favor. Data Disc, Inc. v. Sys. Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). If the plaintiff establishes sufficient minimum contacts with the forum state, the burden shifts to the defendant to show that the exercise of jurisdiction would be unreasonable. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).

II. Discussion

Markey argues that the court may exercise both general and specific jurisdiction over Kudelski. Both forms of jurisdiction over a corporate entity depend on the California long-arm statute, Cal. Code Civ. Proc. § 410.10, and ultimately the Due Process Clause, see Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Because Kudelski ceased operations in California before Markey filed suit, the court cannot exercise general jurisdiction. Further, Markey has failed to establish a prima facie case of specific jurisdiction because the contract negotiations and course of dealing do not manifest that Kudelski purposefully availed itself of California law. Therefore, the court will GRANT the motion to dismiss.

A. Kudelski No Longer Has a Continuous and Systematic Presence in California

Because general jurisdiction posits a corporation's presence in a forum state-as opposed to a nexus between isolated acts and a resident's claim-Markey must show that Kudelski's contacts with California amount to a "physical presence." See Burnham v. Superior Ct., 495 U.S. 604, 619 (1990). Kudelski objects to substantially all of Markey's proof, arguing that Kudelski's contacts "years before it ceased doing business in the forum do not subject the company to general jurisdiction." (Def.'s Obj. ¶¶ 4--6, 10--15, 17--19.) Kudelski relies on Serafini v. Superior Ct., 68 Cal. App. 4th 70, 80 (1998), for that proposition. As the court will explain, Kudelski misunderstands Serafini, but nevertheless prevails because, on balance, Markey's evidence falls short of establishing the continuous, substantial, and systematic contacts necessary to sustain general jurisdiction. See Helicopteros Nacionales de Columbia v. Hall, 466 U.S. 408, 414--15 (1984).

Markey avers generally that Kudelski conducted business in California in numerous forms, from 1951 through at least 1998. (Markey Decl. ¶¶ 9, 10, 12--15, 17--18.) But Markey's causes of action arose years later-at the absolute earliest, November 1, 2002, the first date he alleges a breach of contract. (Compl. ¶ 11.) Under California law, a court cannot fairly exercise general jurisdiction over an individual who "unequivocally cease[s]" doing business before service of process. See Serafini, 68 Cal. App. 4th at 80. An analogous rule governs general jurisdiction over corporations. Compare Restatement (2d) Conflict of Laws § 35 (1971) (cited in Serafini) with Restatement § 48 ("A state has power to exercise judicial jurisdiction over a foreign corporation which has ...


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