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Vance's Foods, Inc v. Special Diets Europe Limited

April 15, 2012

VANCE'S FOODS, INC.,
PLAINTIFF,
v.
SPECIAL DIETS EUROPE LIMITED, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Plaintiff Vance's Foods, Inc. ("Plaintiff"), seeks injunctive and monetary relief from Defendant Special Diets Europe Limited ("SDE") and individual Defendants Eamon Cotter and Mariel Cotter (collectively, "Defendants") for claims of misappropriation of trade secrets and breach of contract.

Presently before the Court is Defendants' Motion to Dismiss for Lack of Personal Jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). For the reasons set forth below, Defendants' Motion is GRANTED in part and DENIED in part.*fn1

BACKGROUND*fn2

Plaintiff is a corporation organized under the laws of Alaska with its principal place of business in Sacramento, California. Plaintiff engages in the business of producing and distributing worldwide a non-dairy milk substitute DariFreeTM.

SDE is an Irish corporation with its offices located in Ireland. Eamon Cotter and Mariel Cotter (collectively, "the Cotters") are citizens and residents of Ireland. The Cotters are the sole owners and directors of SDE.

On or about October 7, 2007, Plaintiff entered into two written agreements with SDE. Pursuant to the first agreement ("Distribution Agreement"), Plaintiff appointed SDE as its exclusive distributor of DariFreeTM products in a defined European territory. Pursuant to the second agreement ("Product Development Agreement"), SDE undertook to develop and distribute a liquid stable version of DariFreeTM in Europe.

Under the Product Development Agreement, Plaintiff provided SDE with the formula for DariFreeTM, disclosed to SDE its manufacturing process and provided SDE with a list of ingredient suppliers. SDE was to keep the information received from Plaintiff confidential, to use it only for purposes of performing its obligations under the agreement, and to return that information to Plaintiff upon request or upon termination or expiration of the agreement. Also pursuant to the Product Development Agreement, SDE would have the ten-year exclusive right to manufacture, market and sell the liquid stable DariFreeTM product within a specified European territory if SDE:

1) developed the liquid product within eighteen months from the start date of the agreement; 2) obtained Plaintiff's written acknowledgment that the product had been adequately developed and was ready for commercial sale; and 3) continually complied with all terms and conditions of the agreement.

According to Plaintiff, this business relationship was pretextual and was orchestrated by Defendants for the purpose of accessing, misappropriating and using Plaintiff's confidential information. Plaintiff alleges that Defendants misappropriated Plaintiff's trade secrets, which Defendants had received for the purpose of developing the liquid version of DariFreeTM.

Plaintiff also claims that Defendants breached the Product Development Agreement by failing to develop the liquid product, violating the confidentiality obligation provided by the contract and further violating numerous other contractual provisions. Plaintiff seeks injunctive relief and both compensatory and punitive damages.

Plaintiff originally filed this action in the Superior Court of the State of California, County of Sacramento. Defendants removed the action to this Court on the basis of diversity jurisdiction and now move to dismiss the Complaint for lack of personal jurisdiction. For the following reasons, Defendants' Motion is GRANTED in part and DENIED in part.

STANDARD

District courts have the authority to dismiss an action for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). The burden of establishing personal jurisdiction rests with the plaintiff. Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Where, as here, the motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of the facts in support of personal jurisdiction. Id. In deciding whether a prima facie showing has been made, a court need only consider the pleadings and any submitted affidavits. Id. "Although the plaintiff cannot 'simply rest on the bare allegations in its complaint,'... uncontroverted allegations in the complaint must be taken as true." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (internal citations omitted). "Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor." Id.

A court granting a motion to dismiss a complaint must decide whether to grant leave to amend. Leave to amend should be "freely given" where there is no "undue delay, bad faith or dilatory motive on the part of the movant, ... undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of the amendment...." Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. Aspen, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to be considered when deciding whether to grant leave to amend). Not all of these factors merit equal weight. Rather, "the consideration of prejudice to the opposing party ... carries the greatest weight." Eminence Capital, 316 F.3d at 1052. Dismissal without leave to amend is proper only if it is clear that "the complaint could not be saved by any amendment." Intri--Plex Techs. v. Crest Group, Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (internal citations and quotations omitted).

ANALYSIS

According to Defendants, this action must be dismissed because this Court lacks jurisdiction over their persons. Defendants are correct with respect to this Court's jurisdiction over Mariel Cotter, but their arguments are rejected as to the remaining Defendants.

A. Applicable Law.

Where, as here, there is no federal statute governing personal jurisdiction, courts apply the long-arm statute of the state in which the court sits. Fed. R. Civ. P. 4(k); Boschetto, 539 F.3d at 1015. California's long-arm statute allows the exercise of jurisdiction to the full extent permitted by federal constitutional due process. Cal. Civ. Proc. Code § 410.10. Accordingly, "the jurisdictional analyses under state law and federal due process are the same." Schwarzenegger, 374 F.3d at 800-01. For a court to exercise personal jurisdiction over a non-resident defendant, that defendant must have at least "minimum contacts" with the relevant forum such that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The defendant's "conduct and connections with the forum State" must be such that the defendant "should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). "Personal jurisdiction over each defendant must be analyzed separately." Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1130 (9th Cir. 2003).

There are two categories of personal jurisdiction from a due process perspective: general and specific. Boschetto, 539 F.3d at 1016. General personal jurisdiction allows a forum state to exercise personal jurisdiction over a defendant for any claim related or unrelated to the defendant's contacts with the forum.

Rocke v. Canadian Auto. Sport Club, 660 F.2d 395, 398 (9th Cir. 1981). A court can exercise general jurisdiction over a non-resident defendant when the defendant's contacts with the forum are "substantial" or "continuous and systematic." Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).

A court can exercise specific personal jurisdiction over a defendant where the claim "arises out of or has a substantial connection to the defendant's contacts with the forum." Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002). The Ninth Circuit employs a three prong test to determine whether a court can exercise specific jurisdiction over a defendant. Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010). Under this 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, ...


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