United States District Court, C.D. California
j2 GLOBAL, INC. and ADVANCED MESSAGING TECHNOLOGIES, INC., Plaintiffs,
FAX87.COM, FARJAD FANI, MATT JOHNSON FINANCE INC., Defendants.
ORDER GRANTING MOTION TO DISMISS UNDER RULE 12(b)(5)
[DKT No. 21]
S. JAMES OTERO, District Judge.
Before the Court is Defendant Farjad Fani's Motion to Dismiss for Insufficient Service of Process under Rule 12(b)(5) and Lack of Personal Jurisdiction under Rule 12(b)(2). The matter is fully briefed and suitable for adjudication without oral argument. See Fed.R.Civ.P. 78. Having considered the parties' submissions, the Court now issues the following order.
Plaintiffs j2 Global, Inc. and Advanced Messaging Technologies, Inc. (collectively, "j2") assert claims for breach of contract and patent infringement arising from Defendants' alleged unlicensed use of two patents owned by Plaintiffs.
j2 is the owner of U.S. Patents No. 6, 208, 638 ("'638 patent") and 6, 350, 066 ("'066 patent"). (Complaint ¶ 11-17 & Exs. A, B.) In a previous action filed on March 29, 2011, j2 sued Matt Johnson Finance, Inc. ("MJF"), Fax87.com ("Fax 87"), and Farjad Fani for infringement of the '638 and '066 patents ("First Action"). (Id. ¶ 18.) On April 12, 2012, the parties settled the First Action and it was dismissed by stipulation. (Id. ¶ 19.) As part of the settlement, j2 and MJF (doing business as Fax87.com) entered into a Patent License Agreement ("Agreement"). (Id. ¶ 20 & Ex. E.)
Under the Agreement, MJF received a non-exclusive license to the '638 and '066 patents in exchange for its payment to j2 of a lump sum of $25, 000 and running royalties based on customer use. (Id. ¶ 21 & Ex. E, ¶ 3.1.) The Agreement also requires that MJF mark user materials and manuals associated with the licensed product with the numbers of the licensed patents in the manner required by 35 U.S.C. § 87. (Id. ¶ 22 & Ex. E. § 7.4.) Additionally, the Agreement requires MJF to notify j2 within a specified period if it undergoes one of several specified "change events, " which j2 interprets to include any change in control of the Fax87.com website. (Id. ¶ 23. & Ex. E. § 8.)
The Agreement also includes a choice of law provision, providing that the Agreement is to be governed by California law, and a forum selection clause, providing that any claims arising from the Agreement must be brought in the Central District of California. (Id. Ex. E. § 10.1-10.2.)
j2 named Fani, along with MFJ and Fax87.com, in its claim for breach of contract, alleging that these defendants breached the Agreement by failing to provide a royalty report, failing to remit royalty payments, selling the business without providing timely notice to j2, and failing to provide the required markings on the Fax.87.com website. (Id. ¶ 42.) Though not relevant to this motion, j2 additionally asserts patent infringement claims against the current owners and operators of Fax87.com, who are named as Does 1 & 2. (Id. ¶ 37-56.)
Importantly, although Fani was a party to the First Action and to an agreement settling that litigation, he is not included in the Agreement as a party or signatory in his individual capacity. (Id. Ex. E.) Instead, Fani signed the Agreement as a signatory for Matt Johnson Finance, Inc. d/b/a Fax87.com, as the company's CEO. (Id.) Fani asserts, and j2 does not contest, that Fani was included in his individual capacity in the first draft of the Agreement provided by j2, but that he was removed as a party at his request during the negotiations that led to the final Agreement. (Id.) (Declaration of Farjad Fani in Support of Motion ¶ 4.)
Fani asserts that, apart from being named in and negotiating the resolution to the earlier patent infringement litigation, he has no other personal contacts with California. He asserts that he formerly resided in Washington, but left the United States in or about February 2013. (Fani Decl. ¶ 2.) He asserts that he has never resided in California; does not maintain an office or place of business in California; has no mailing address, telephone number or telephone listing in California; does not own or lease property in California; does not maintain a bank account in California; and has not borrowed money in California or applied for a loan in California. (Id.) He further asserts that he has only visited California on vacation in the past. (Id. ¶ 3.)
As discussed further below, Fani also contends that he was not served with the Summons and Complaint. Plaintiffs' proof of service on Fani indicates that the Summons and Complaint were executed upon Tom Walker ("Walker"), purportedly as an Agent for Service of Process for Fani, at the Eastham Foster CPAs ("Eastham") firm in Washington State on or about October 15, 2013. (DKT No. 13.) Service on MJF was also simultaneously executed upon Walker, who was MFJ's registered agent for service of process. (DKT No. 14.)
However, Fani has submitted a declaration stating that he has not authorized any person or entity to accept service of process on his behalf, and particularly, has never authorized Eastham or Walker to accept service of process for him. (DKT No. 24 ¶ 7.) Fani states that when he learned on November 4, 2013 that Walker had mistakenly purported to accept service of process on his behalf, he contacted Eastham, which then advised j2's counsel that Eastham and Walker were only authorized to accept service of process for MJF. (Id. ¶ 8.)
Fani moves to dismiss the claim against him for failure to provide sufficient service of process under Rule 12(b)(5) and for lack of ...