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Locuspoint Networks, LLC v. D.T. v. LLC

United States District Court, N.D. California

August 1, 2014

LOCUSPOINT NETWORKS, LLC, Plaintiff,
v.
D.T. V. LLC, Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

JACQUELINE SCOTT CORLEY, Magistrate Judge.

This breach of contract action arises out of Plaintiff LocusPoint Networks' agreement to purchase a television station in Philadelphia, Pennsylvania from Defendant D.T.V., LLC ("DTV"). DTV contends that this Court lacks personal jurisdiction of it and has moved to dismiss under Federal Rule of Civil Procedure 12(b)(2). After carefully considering the parties' submissions, and having the benefit of oral argument on June 19, 2014, the Court DENIES the Motion to Dismiss. The Court finds that it has specific jurisdiction of DTV as it purposefully availed itself of the privilege of conducting activities in California in connection with the contract at issue in this case.

FACTUAL BACKGROUND

Defendant owns and operates the television station WPHA in Philadelphia, Pennsylvania. (Complaint ¶ 2.) In January 2012, Ravi Potharlanka, Plaintiff's President and Co-Founder, contacted Defendant's principal, Randolph Weigner to "request a time to discuss DTV's television station holdings, including WPHA." (Dkt. No. 19-1 ¶ 2.) Mr. Weigner told Mr. Potharlanka that Defendant had the stations listed for sale with Patrick Communications, L.L.C., a broker of television and radio stations, and to contact John Cunney who works there. ( Id. ¶ ¶ 2-3.) Mr. Potharlanka did so, and in response Mr. Cunney sent Mr. Potharlanka in California an offering memorandum that identified WPHA and Defendant's other television stations for sale. ( Id. ¶ 3.) Over several months, Mr. Potharlanka negotiated a Letter of Intent between the two parties regarding Plaintiff's purchase of Defendant's Philadelphia television station. ( Id. ¶ 4.) During those negotiations, Mr. Potharlanka sent emails to both Mr. Cunney and Mr. Weigner that contained Plaintiff's California address and California telephone numbers. ( Id. ¶ 4.) Mr. Potharlanka also received several telephone calls from Mr. Cunney and Mr. Wiegner to those California telephone numbers and received emails from them at Plaintiff's email address. ( Id. )

Mr. Potharlanka signed the Letter of Intent on behalf of Plaintiff in California on July 19, 2012. ( Id. ¶ 5.) The Letter of Intent is on Plaintiff's letterhead and lists its California address under the signature of Mr. Potharlanka. ( Id. Ex. A.) The parties eventually signed an Asset Purchase Agreement ("the Agreement"), which was also signed in California by Plaintiff's Chief Executive Officer. ( Id. ¶ 6.) Following the signing of the Agreement, Plaintiff wired two payments to Defendant and Patrick Communications from Plaintiff's California bank account. ( Id. ¶ 7.)

Pursuant to the Agreement, the assets to be sold by Defendant included a Class A license from the Federal Communications Commission ("FCC"). (Complaint ¶ 2.) Class A licenses are transferable to other parties only if the FCC has consented. ( Id. ¶ 3.) The FCC does not consent to such transfers unless the license has been granted a renewal. ( Id. ) Since WPHA's renewal had not been granted, Plaintiff sought certain assurances from Defendant regarding the license through multiple contractual provisions. ( Id. ) These contractual provisions included:

5.1 FCC Application. Within five (5) business days of the date of this Agreement, Seller and Buyer shall file an application with the FCC (the "FCC Application") requesting the FCC Consent. Seller and Buyer shall diligently prosecute the FCC Application and otherwise use their best efforts to obtain the FCC Consent as soon as practicable, provided, however, that neither party shall be required to participate in a trial-type hearing or judicial appeal. Seller shall take all action required under FCC rules to give timely public notice of the filing of the FCC Application.

(Dkt. No. 1-1 at 5.)

5.2 General. Seller and Buyer shall notify each other of all documents filed with or received from any governmental agency (including the FCC) with respect to this Agreement or the transactions contemplated hereby. Seller and Buyer shall cooperate with the FCC in connection with obtaining the FCC Consent, and shall promptly provide all information and documents requested by the FCC in connection therewith. If either Seller or Buyer becomes aware of any fact relating to it that would prevent or delay the FCC Consent, such party shall promptly notify the other party thereof and the parties shall use commercially reasonable efforts to remove any such impediment.

( Id. at 6.)

9.1 Cooperation. Each party shall cooperate fully with the other in taking any commercially reasonable actions (including to obtain the required consent of any governmental instrumentality or any third party) necessary to accomplish the transactions contemplated by this Agreement, including, but not limited to, the prompt satisfaction of any condition to the Closing set forth herein.

( Id. at 10.) The Agreement also included a provision that allowed either party to terminate the agreement after September 1, 2013. ( Id. at 15.)

Following the execution of the Agreement, Plaintiff proceeded to communicate and cooperate with Defendant, as the Agreement required. Following a meeting between Defendant and the FCC on February 7, 2013, Plaintiff encouraged Defendant to submit to the FCC's instructions in order to place WPHA in a position of compliance with FCC rules. (Complaint ¶ 39.) When Defendant "offered a litany of excuses for delaying its response to the FCC, " Plaintiff communicated to Defendant's counsel that "the best way to resolve the FCC's inquiry was to submit the best facts that Defendant could gather to demonstrate WPHA's compliance with FCC rules." ( Id. ¶ ¶ 42-43.) Plaintiff continued to communicate with Defendant, and on March 29, 2013, Plaintiff called Defendant's counsel "to voice [Plaintiff's] frustration with DTV's delay." ( Id. ¶ 44.) On May 21, 2013, due to further delay in Defendant's cooperation with the FCC, Plaintiff "stepped in, consistent with its [Asset Purchase Agreement] obligation to cooperate in obtaining the FCC's consent to the assignment. [Plaintiff] detailed for [Defendant] five cases to cite to support [Defendant's] arguments to the FCC." ( Id. ¶ 47.) On May 23, 2013, Defendant submitted a memorandum to the FCC, although it did not address the FCC's central complaint about WPHA. ( Id. ¶ 49.)

Plaintiff continued to devote time and resources to remove obstacles to the Class A license's approval. ( Id. ¶ 51.) "After [Defendant] stated that it would rather not spend the money, [Plaintiff] voluntarily paid for new equipment that allowed WPHA to shift its transmissions to channel 24, thereby complying with the FCC Settlement Agreement and helping to resolve" an interference complaint by a New Jersey television station, WPSJ. ( Id. ) As the termination-option date approached, Plaintiff asked Defendant to extend the date and submit additional facts to the FCC Enforcement Bureau. ( Id. ¶ 54.) Defendant declined both. ( Id. ) Once Defendant submitted its memorandum to the FCC "concerning the remedy for WPHA's alleged refusal to grant access to the FCC field agent, " Plaintiff prepared for closing. ( Id. ¶ ¶ 58-60.) Plaintiff "(i) finalized and sent the closing documents to DTV, and (ii) waived certain closing conditions. It further agreed not to exercise its termination option if the FCC did not approve the assignment by September 1, and again asked DTV to execute an Agreement amendment extending the option date." ( Id. ¶ 60.)

Defendant purported to terminate the Agreement on March 11, 2014. (Id. ¶¶ 13, 65.) This lawsuit followed.

LEGAL STANDARD

When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction over the defendant. See Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128-29 (9th Cir. 2003). "Where, as here, a court decides a motion to dismiss for lack of personal jurisdiction without an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Longyu Int'l Inc. v. E-Lot Electronics Recycling Inc., 2:13-CV-07086-CAS, 2014 WL 1682811, at *2 (C.D. Cal. Apr. 29, 2014). In such cases, "we only inquire into whether [the plaintiff's] pleadings and affidavits make a prima facie showing of personal jurisdiction." Caruth v. Int'l Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995). Moreover, "for the purpose of this demonstration, the court resolves all disputed facts in favor of the plaintiff." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006).

"Where, as here, no federal statute authorizes personal jurisdiction, the district court applies the law of the state in which the court sits." Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). California's long-arm statute has the same due process requirements as the federal long-arm statute. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004). The Due Process Clause requires that nonresident defendants have "minimum contact" with the forum state such that the exercise of personal jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945).

DISCUSSION

A court may exercise either general or specific jurisdiction over an out-of-state defendant. See Daimler AF v. Bauman, 134 S.Ct. 746, 754 (2014). Plaintiff maintains this Court has specific jurisdiction of Defendant. "A court may exercise specific jurisdiction over a foreign defendant if his or her less substantial contacts with the forum give rise to the cause of action before the court. The question is whether the cause of action arises out of or has a substantial connection with that activity." Doe v. Unocal, 248 F.3d 915, 923 (9th Cir. 2001) (internal citations and quotation marks omitted); see also Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011) ("[S]pecific jurisdiction is confined to adjudication of issues deriving from, or ...


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