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Environmental Research Center v. Technical Laboratories

October 24, 2011

ENVIRONMENTAL RESEARCH CENTER,
PLAINTIFF,
v.
TECHNICAL LABORATORIES, INC., DEFENDANT.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER GRANTING MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Defendant Technical Laboratories, Inc. ("Technical") moves to dismiss the complaint for lack of personal jurisdiction or, alternatively, to dismiss for failure to state a claim and to strike the prayer for punitive damages. Plaintiff Environmental Research Center ("ERC") opposes all motions. Pursuant to Local Rule 7.1(d)(1), this matter is appropriate for decision without oral argument. For the reasons set forth below, the court grants the motion to dismiss for lack of personal jurisdiction and denies as moot all other pending motions. The Clerk of Court is instructed to close the file.

BACKGROUND

On September 12, 2011Technical, incorporated under the laws of the State of Tennessee, with its principal place of business in Tennessee, removed this action, based upon diversity jurisdiction, from the Superior Court of the State of California, County of San Diego. (Notice of Removal ¶¶6-9). ERC is a non-profit corporation incorporated in the State of California with its principal place of business in California. Technical moves, pursuant to Fed.R.Civ.P. 12(b)(2), to dismiss the complaint for lack of personal jurisdiction or, alternatively, to dismiss the second and third causes of action for fraud and negligent misrepresentation, respectively, and to strike the prayer for punitive damages.

Th First Amended Complaint ("FAC"), filed on August 10, 2011, alleges six claims for (1) breach of contract; (2) fraud; (3) negligent misrepresentation; (4) breach of the covenant of good faith and fair dealing; (5) general negligence; and (6) professional negligence. (FAC at p.1). In broad brush, ERC's claims arise out of the contractual relationship between the parties. On March 17, 2010, the parties entered into an oral contract whereby Technical would provide laboratory testing services of ingestible products ("Products") provided by ERC in exchange for certain fees. The majority of laboratory tests were conducted for the purpose of determining the amount of lead or arsenic in the Products. ERC is in the business of using the results provided by Technical "to determine if any amounts of the Chemicals found in the Products were at levels above those allowed under California's Proposition 65." (FAC ¶9). In the event the Products were determined to be not in compliance with Proposition 65, ERC would then facilitate the bringing of a legal action pursuant to Proposition 65. In reliance upon the laboratory testing, ERC hired staff, leased or purchased office space, retained legal counsel, and served Notices of Violation against companies determined to be in violation of Proposition 65. (FAC ¶12).

The parties allegedly continued their contractual arrangement from March 17, 2010 through about June 23, 2010. (FAC ¶11). On July 9, 2010 ERC first learned that there could be a problem with Technical's test results. ERC made inquiry and received further assurances of confidence in the laboratory results from Technical. ERC conducted further testing of the Products by other laboratories and discovered that Technical "breached the contract because [the] test results on a large number of the Products were inaccurate, faulty, and unreliable." (FAC ¶13).

ERC alleges that it has been damaged in the amount of $1,250,000 and seeks punitive and exemplary damages related to the fraud cause of action.

DISCUSSION

Personal Jurisdiction

Pursuant to Rule 12(b)(2), a court may dismiss a suit for "lack of jurisdiction over the person." Fed.R.Civ.P. 12(b)(2). The court may "exercise personal jurisdiction over a non-resident if jurisdiction is proper under California's long-arm statute and if that exercise accords with federal constitutional due process principles." Fireman's Fund Ins. Co. v. National Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996). As the Ninth Circuit has explained:

California's long-arm statute authorizes the court to exercise personal jurisdiction over a non-resident defendant on any basis not inconsistent with the California or federal Constitution. Cal.Code Civ. Proc. § 410.10. The statutory and constitutional requirements therefore merge into a single due process test.

Id. at 893. "Due process requires only that . . . [the defendant] have certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Where the court does not conduct an evidentiary hearing, a plaintiff need only establish a prima facie case of personal jurisdiction. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990).

On a motion to dismiss for lack of personal jurisdiction, the party seeking to invoke the court's jurisdiction bears the burden of establishing contacts by the non-resident defendant sufficient to establish personal jurisdiction. WNS, Inc. v. Farrow, 884 F.2d 200, 203 (9th Cir. 1989).

[O]n a motion to dismiss for lack of jurisdiction, uncontroverted allegations in the plaintiff's complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in the plaintiff's favor for purposes of ...


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