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Randhawa v. Skylux Inc.

December 18, 2009

MOHIT RANDHAWA AKA HARPAL SINGH, PLAINTIFF,
v.
SKYLUX INC., INTERACTIVE INTELLIGENCE, INC., MUJEEB PUZHAKKARAILLATH, AND DOES 1 THROUGH 20, INCLUSIVE, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTIONS TO DISMISS

Plaintiff Mohit Randhawa aka Harpal Singh filed this action in state court against defendants Skylux Inc. ("Skylux"), Interactive Intelligence, Inc. ("Interactive"), and Mujeeb Puzhakkaraillath alleging various state claims relating to a contract for calling center software. All defendants removed the action to federal court. Skylux and Puzhakkaraillath now move to dismiss plaintiff's First Amended Complaint ("FAC") pursuant to Federal Rules of Civil Procedure 12(b)(2) for lack of personal jurisdiction, 12(b)(3) for improper venue, and 12(b)(6)*fn1 for failure to state a claim upon which relief can be granted.

I. Factual and Procedural Background

Skylux is a New York corporation of which Puzhakkaraillath, a New York resident, is President and CEO. (First Amended Complaint ("FAC") ¶¶ 4, 15; Decl. Puzhakkaraillath ¶ 7.) In April 2005, Skylux and Puzhakkaraillath allegedly contacted plaintiff, a resident of California, advertising software for an integrated calling center. (FAC. ¶¶ 1, 8.) The software was manufactured by Interactive, an Indiana corporation, and Skylux acted as authorized reseller and service provider. (Id. ¶¶ 3, 8, 17.) On May 27, 2005, representatives for plaintiff entered into a written Memorandum of Understanding ("MOU") with Skylux Telelink Pvt. Ltd. ("STPL"), an Indian company also owned by Puzhakkaraillath, to set up the Interactive software for an inbound and outbound Indian calling center for plaintiff's future company. (FAC Ex. A; FAC ¶ 9; Decl. Puzhakkaraillath ¶ 4.) Skylux and Puzhakkaraillath allegedly represented to plaintiff that Skylux would be responsible for implementing the Interactive software and calling system. (Id. ¶ 27.) Plaintiff also tendered approximately $207,000.00 to Skylux to purchase the software and licenses to use the software, and hired employees for the calling center. (FAC ¶¶ 10, 11.) Plaintiff alleges that Skylux has not overseen the finalization of the call center project as required by the MOU. (Id. ¶ 20.)

Beginning around September 2005 and ending in May 2009, plaintiff had technical difficulties using the Interactive software. (Id. ¶ 13.) Plaintiff alleges he purchased software for inbound and outbound calls, but the licenses he received were only for outbound calls. (Id.) Plaintiff alleges that Skylux refused to provide him with the correct inbound/outbound licenses or respond to his complaints for four years, and represented that they had no record that plaintiff had purchased Interactive licenses though them. (Id. ¶¶ 17, 24, 27.) Skylux allegedly refused to acknowledge that plaintiff has purchased the licenses. (Id. ¶ 20.)

One of plaintiff's employees, Amit Aurora, allegedly worked as an agent for Skylux and intentionally damaged plaintiff's Interactive software and property so that plaintiff would have to pay Skylux repair and consultation fees. (Id. ¶¶ 12, 48.) Skylux allegedly hired Aurora after his employment with plaintiff ended. (Id.)

II. Discussion

On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff needs to plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556-57).

In general, the court may not consider materials other than the facts alleged in the complaint when ruling on a motion to dismiss. Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996). The court may, however, consider additional materials if the plaintiff has alleged their existence in the complaint and if their authenticity is not disputed. See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002). Here, plaintiff and defendants Skylux and Puzhakkaraillath have provided the court with a copy of the MOU (Removal Ex. A; FAC Ex. A) and no party has questioned its authenticity. Accordingly, the court will consider this document in deciding defendants' motion to dismiss.

Upon granting a motion to dismiss, Federal Rule of Civil Procedure 15(a) "advises the court that 'leave shall be freely given when justice so requires,'" and the court should grant leave under Rule 15(a) "'with extreme liberality.'" Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). "Absent prejudice, or a strong showing of any [other relevant] factor[], there exists a presumption under Rule 15(a) in favor of granting leave to amend." Id. "Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . that the complaint could not be saved by amendment." Id. Defendants have failed to show that they will suffer prejudice if plaintiff is allowed to file a second amended complaint. Accordingly, upon dismissing any claims, the court must grant plaintiff leave to amend his FAC unless the futility of amendment warrants dismissing a claim with prejudice.

A. Motion to Dismiss for Lack of Personal Jurisdiction

A plaintiff has the burden of establishing that the court has personal jurisdiction over a defendant. Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (citing Cubbage v. Merchent, 744 F.2d 665, 667 (9th Cir. 1984)). On a motion to dismiss, a plaintiff "need make only a prima facie showing of jurisdictional facts . . . . That is, the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant." Id. (quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). When not directly controverted, a plaintiff's version of the facts must be taken as true and conflicts between the facts contained in the parties' affidavits should be resolved in favor of the plaintiff. Id. at 922. Once a defendant has contradicted the allegations contained in the complaint, however, a plaintiff may not rest on the pleadings, but must present admissible evidence which, if true, would support the exercise of personal jurisdiction. Harris Rutsky & Co. Ins. Svcs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003).

"Personal jurisdiction over a nonresident defendant is tested by a two-part analysis. First, the exercise of jurisdiction must satisfy the requirements of the applicable state long-arm statute. Second, the exercise of jurisdiction must comport with federal due process." Dow Chem. Co. v. Calderon, 422 F.3d 827, 830 (9th Cir. 2005) (quoting Chan v. Soc'y Expeditions, Inc., 39 F.3d 1398, 1404-05 (9th Cir. 1994)). "California [law] permits the exercise of personal jurisdiction to the full extent permitted by due process." Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000); see also Cal. Civ. Pro. Code § 410.10 ("A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States."). Therefore, the governing standard in this case is whether the court's exercise of personal jurisdiction over defendant comports with federal due process. See Calderon, 422 F.3d at 831.

The exercise of personal jurisdiction over a defendant comports with federal due process only if the defendant "has certain minimum contacts with the relevant forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006) (en banc) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)) (internal quotation marks omitted). In turn, sufficient "minimum contacts" can give rise to "general jurisdiction" or "specific jurisdiction." Unocal Corp., 248 F.3d at 923. General jurisdiction applies if the defendant's activities in the forum "are substantial, continuous and systematic," whereas specific jurisdiction applies if a defendant's "less substantial contacts with the forum give rise to the cause of action before the court." Unocal Corp., 248 F.3d at 923. Because plaintiff has not presented any argument in support of general jurisdiction over defendants in this action, the court will limit its analysis to determining whether specific jurisdiction exists.

The Ninth Circuit analyzes specific jurisdiction according to a three-prong test:

(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.

Yahoo! Inc., 433 F.3d at 1205-06 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)). The plaintiff bears the burden of satisfying the first two prongs of the test. Menken v. Emm, 503 F.3d 1050, 1057 (9th Cir. 2007). If the plaintiff succeeds in satisfying both of the first two prongs, "the burden then shifts to the defendant to 'present a compelling case' that the exercise of jurisdiction would not be reasonable." Id. (quoting Schwarzenegger, 374 F.3d at 802).

1. Purposefully Avail/Direct

The purposeful availment prong of the specific jurisdiction test has been further subdivided into two distinct questions: whether Skylux and Puzhakkaraillath either (1) "purposefully availed" themselves of the privilege of conducting activities in the forum, or (2) "purposefully directed" their activities toward the forum. See Schwarzenegger, 374 F.3d at 802 ("We often use the phrase 'purposeful availment,' in shorthand fashion, to include both purposeful availment and purposeful direction, but availment and direction are, in fact, two distinct concepts. A purposeful availment analysis is most often used in suits sounding in contract. A purposeful direction analysis, on the other hand, is most often used in suits sounding in tort.") (internal citations omitted). Because plaintiff in this case alleges tort and contract claims, an analysis of both purposeful availment and purposeful direction is appropriate.

a. Purposeful Availment

A showing that a defendant purposefully availed itself of the privilege of doing business in a forum state typically consists of evidence of the defendant's contacts or actions in the forum. By making such contacts or taking such actions, a defendant "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958). In return for these "benefits and protections," a defendant must "submit to the burdens of litigation in that forum." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476,(1985); see also Cote v. Wadel, 796 F.2d 981, 984 (7th Cir. ...


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