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Geoffrey L. Mccabe v. Floyd Rose Guitars

April 23, 2012

GEOFFREY L. MCCABE,
PLAINTIFF,
v.
FLOYD ROSE GUITARS;
FLOYD ROSE PERSONAL MARKETING INC.;
FLOYD D. ROSE;
DAVITT & HANSER MUSIC CO.;
PING WELL INDUSTRIAL CO.;
AP GLOBAL ENTERPRISES INC.;
SCHALLER ELECTRONIC GMBH;
LERNER, DAVID, LITTENBERG, KRUMHOLZ AND MENTLIK, LLP; AND
DOES 1--10, INCLUSIVE, DEFENDANT.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER (1) GRANTING MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AND (2) DENYING MOTION TO DISMISS FOR LACK OF JURISDICTION (ECF No. 98)

Presently before the Court is Defendants' motion to dismiss. (Mot. to Dismiss, ECF No. 98) Also before the Court are Plaintiff Geoffrey L. McCabe's ("McCabe") opposition, (Resp. in Opp'n, ECF No. 109), and Defendants' reply, (Reply in Supp., ECF No. 114). The hearing set for the motion on February 23, 2012, was vacated, and the matter taken under submission on the papers. Having considered the parties' arguments and the law, the Court GRANTS Defendants' motion to dismiss for failure to state a claim and DENIES Defendants' motion to dismiss for lack of personal jurisdiction.

BACKGROUND

This Order incorporates by reference the factual and procedural background as set forth in this Court's October, 17, 2011, Order dismissing without prejudice the sixth through eighth claims of McCabe's First Amended Complaint. (Order, Oct. 17, 2011, ECF No. 87) McCabe filed his Second Amended Complaint ("SAC") on October 31, 2011, (SAC, ECF No. 91), adding to the already-long list of defendants Lerner, David, Littenberg, Krumholz & Mentlik LLP ("Lerner David"), intellectual property counsel for the Floyd Rose Defendants, (see id. ¶¶ 16--22). In the instant motion to dismiss, Defendants again move to dismiss the sixth through eighth claims pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, and also move to dismiss Defendant Lerner David pursuant to Rule 12(b)(2) for lack of personal jurisdiction.

LACK OF PERSONAL JURISDICTION

1. Legal Standard

Federal Rule of Civil Procedure 12(b)(2) allows a district court to dismiss an action for lack of personal jurisdiction. "Where defendants move to dismiss a complaint for lack of personal jurisdiction, plaintiffs bear the burden of demonstrating that jurisdiction is appropriate." Dole Food Co. Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). "The court may consider evidence presented in affidavits to assist in its determination and may order discovery on the jurisdictional issues." Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (citing Data Disc, Inc. v. Sys. Tech. Ass'n, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977)). "When a district court acts on the defendant's motion to dismiss without holding an evidentiary hearing, the plaintiff need make only a prima facie showing of jurisdictional facts to withstand a motion to dismiss." Id. (citing Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)); see also Data Disc, 557 F.2d at 1285 ("[I]t is necessary only for [the plaintiff] to demonstrate facts which support a finding of jurisdiction in order to avoid a motion to dismiss.").

"Unless directly contravened, [Plaintiff's] version of the facts is taken as true, and 'conflicts between the facts contained in the parties' affidavits must be resolved in [Plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.'" Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003) (citing Unocal Corp., 248 F.3d at 922); see also Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1087 (9th Cir. 2000) ("Because the prima facie jurisdictional analysis requires us to accept the plaintiff's allegations as true, we must adopt [Plaintiff]'s version of events."), overruled in part on other grounds by Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199 (9th Cir. 2006) (en banc). However, a court "may not assume the truth of allegations in a pleading which are contradicted by affidavit." Alexander v. Circus Enters., Inc., 972 F.2d 261, 262 (9th Cir. 1992) (internal quotations omitted).

California's long-arm jurisdictional statute permits the exercise of personal jurisdiction so long as it comports with federal due process. See Cal. Civ. Proc. Code § 410.10; Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800--01 (9th Cir. 2004). "For a court to exercise personal jurisdiction over a nonresident 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.'" Fred Martin Motor, 374 F.3d at 801 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks omitted)).

2. Analysis

McCabe argues that Lerner David-a limited liability partnership of the state of New Jersey, and having its principal place of business in New Jersey, (SAC ¶ 16, ECF No. 92)-is subject to general or specific jurisdiction in this Court. (Resp. in Opp'n 18--25, ECF No. 109) The Court considers each in turn.

A. General Jurisdiction

"For general jurisdiction to exist over a nonresident defendant . . . the defendant must engage in continuous and systematic general business contacts . . . that approximate physical presence in the forum state." Fred Martin Motor, 374 F.3d at 801 (internal quotation marks omitted) (citations omitted). "Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Bancroft & Masters, 223 F.3d at 1086.

"Even when the cause of action does not arise out of or relate to the foreign corporation's activities in the forum State, due process is not offended by a State's subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the State and the foreign corporation." Helicopteros Nacionales De Colom. v. Hall, 466 U.S. 408, 414 (1984) (footnote omitted) (citing Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952)). The assertion of general jurisdiction must nevertheless be reasonable. Amoco Egypt Oil Co. v. Leonis Navigation Co., 1 F.3d 848, 852--53 (9th Cir. 1993).

McCabe alleges that Lerner David has "systematic and continuous" contacts with the state of California by virtue of the fact that the firm serves as intellectual property counsel for the California-based Floyd Rose Defendants and other California entities, (SAC ¶ 25--26, ECF No. 92); (Mot. to Dismiss 16, ECF No. 98); that attorneys from the firm have traveled to California to negotiate licenses on behalf of then-California-resident Mr. Rose, (SAC ¶ 83, ECF No. 92); that the firm regularly solicits and conducts business in California with California entities, (id. ¶ 17); that attorneys from the firm regularly attend the annual National Association of Music Merchants ("NAMM") show in Anaheim, California, (Id. ¶ 17); that attorneys from the firm are licensed to practice law in California and have represented Mr. Rose in other offensive litigation matters in California federal courts, (id. ¶¶ 19--20); and that the firm received shares of stock in a California-based corporation for work done to obtain and sell Mr. Rose's patents, (id. ¶ 21).

The Court finds these alleged contacts insufficient to confer general personal jurisdiction over Lerner David.*fn1 The strongest alleged connection between Lerner David and California is that the firm "regularly solicits and conducts business in California with California entities." (Id. ¶ 17) But this allegation is directly contravened by John Nelson's ("Nelson") declaration, which states that "Lerner David . . . does not regularly solicit business in California with California entities." (Mot. to Dismiss Ex. 1 ¶ 4, ECF No. 98-1) McCabe does not offer a competing declaration to bolster this otherwise unsupported allegation of the complaint. Further, though Lerner David admits that its attorneys have attended the NAMM show in California, the firm denies and McCabe does not allege that their presence there was for the purpose of soliciting business. See (id. ¶ 7); (SAC ¶ 17, ECF No. 92)

Moreover, the fact that Lerner David attorneys are licensed in California or have appeared in California courts pro hac vice does not convince the Court that Lerner David's contacts are so systematic and continuous that general jurisdiction is appropriate. See, e.g., Crea v. Busby, 55 Cal. Rptr. 2d 513, 516 (Cal. Ct. App. 1996). And although Lerner David has received compensation in the form of stock in a California entity, the work relating to that compensation "was performed outside of and unrelated to California." (Mot. to Dismiss Ex. 1 ¶ 8, ECF No. 98-1)

The final two asserted contacts-that Lerner David serves as patent counsel and negotiates licenses on behalf of California entities-are also insufficient to justify the existence of general jurisdiction. These contacts are nevertheless relevant to the specific jurisdiction analysis.

B. Specific Jurisdiction

"Specific jurisdiction exists where the cause of action arises out of or has substantial connection to the defendant's contact with the forum." ChemRisk, LLC v. Chappel, 2011 U.S. Dist. LEXIS 50997, at *8 (N.D. Cal. May 12, 2011) (internal quotations omitted) (citations omitted). In analyzing ...


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