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IPS Shared Technical Services, Inc. v. Overwatch Systems, Ltd.

United States District Court, N.D. California

May 20, 2014



EDWARD M. CHEN, District Judge.

Plaintiff IPS Shared Technical Services, Inc. has filed suit against Defendant Overwatch Systems Ltd., asserting, inter alia, that Overwatch breached a contract entered into between the parties. Currently pending before the Court is Overwatch's motion to dismiss for lack of personal jurisdiction. Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS Overwatch's motion.


IPS is a California corporation with its principal place of business in California. See Kramer Decl. ¶ 2; Boice Decl. ¶ 2.[1] Overwatch is a Delaware corporation with its principal place of business in Texas. See Overly Decl. ¶ 2.

IPS filed suit against Overwatch, asserting, inter alia, a breach of a contract between the two parties. The contract relates to a government program known as the United States Army Future Combat System ("FCS") program. Boeing Company was the prime contractor for the systems development and demonstration phase of the program. Boeing hired Overwatch to provide certain software applications and systems. Overwatch, in turn, hired various subcontractors, one of which was IPS. IPS was hired to provide weather information systems. See Overly Decl. ¶ 3.

There is no dispute that, under the IPS/Overwatch contract, the principal place of performance was Colorado. See Overly Decl. ¶ 5; Boice Decl. ¶ 4. Indeed, IPS expressly concedes that "the engineering effort for the contract which is the subject of this dispute was performed in Colorado, " as well as Texas, Boice Decl. ¶ 4, where, under the contract, all deliverables provided by IPS would be sent ( i.e., to Overwatch's facility in Texas). See Overly Decl. ¶ 4. IPS maintains, however, that the contract was negotiated in California (as well as amendments). IPS also asserts that "ongoing, regular administration of the Contract was performed in California" because, e.g., Overwatch sent payments to IPS in California and IPS reviewed and analyzed costs in California. Boice Decl. ¶¶ 6-10. IPS also claims that Overwatch requested an audit, which ultimately was conducted in California. See Boice Decl. ¶ 11. However, the government agency which Overwatch asked for audit assistance was based in Texas. It appears that the government agency in Texas (not Overwatch) made the decision for the audit to take place in California - presumably, because that is where IPS is based. See Lutz Decl. ¶ 5; Boice Decl. ¶ 12 & Ex. B (audit report) (reflecting that audit report was prepared for government agency in Texas, though it was prepared by a branch office in California).


A. Legal Standard

When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the burden lies with the plaintiff to demonstrate that jurisdiction is proper. See Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). In this case, where "the defendant's motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss.'" CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011) (citation omitted). In doing so, "[t]he plaintiff cannot simply rest on the bare allegations of its complaint, ' but uncontroverted allegations in the complaint must be taken as true." Id.

B. Personal Jurisdiction

California's "long-arm" statute allows the exercise of personal jurisdiction to the fullest extent of due process. See Cal. Civ. Code § 410.10. Due process, in turn, requires that "the defendant have minimum contacts with [the forum state] such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice."'" Martin v. D-wave Sys., Inc., No. C-09-03602 RMW, 2009 WL 4572742, at *2 (N.D. Cal. Dec. 1, 2009) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). There is general jurisdiction over a defendant where the defendant's contacts with the forum state "are so substantial, continuous, and systematic that the defendant can be deemed to be present' in that forum for all purposes." Yahoo! Inc. v. La Ligue Contre Le Racisme et L'antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006); see also Daimler AG v. Bauman, 134 S.Ct. 746, 751 (2014) (stating that a court may assert general jurisdiction over a foreign corporation "only when the corporation's affiliations with the State in which suit is brought are so constant and pervasive as to render [it] essentially at home in the forum State'").

In the instant case, IPS conceded at the hearing that it was not asserting general jurisdiction. Absent general jurisdiction, a court may only exercise specific jurisdiction based on the relationship between the defendant's forum contacts and the plaintiff's claim. See id. Therefore, the Court need only evaluate whether there is specific jurisdiction over Overwatch.

Under Ninth Circuit law, a court has specific jurisdiction over a defendant if:

(1) The non-resident defendant purposefully directs his activities or consummates some transaction with the forum or resident thereof; or performs some act by which he purposefully avails himself of the privilege of conducting activities in the ...

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