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Overhill Farms Inc. v. West Liberty Foods LLC

United States District Court, C.D. California

August 21, 2014

Overhill Farms Inc., Plaintiff,
v.
West Liberty Foods LLC, Defendant.

ORDER re: DEFENDANT'S MOTION TO DISMISS OR IN THE ALTERNATIVE TO TRANSFER TO THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA [13]

RONALD S.W. LEW, Senior District Judge.

Currently before the Court is Defendant West Liberty Foods LLC's ("Defendant") Motion to Dismiss or in the Alternative to Transfer to the United States District Court for the Southern District of Iowa [13]. The Court, having reviewed all papers submitted pertaining to this Motion, NOW FINDS AND RULES AS FOLLOWS:

The Court hereby GRANTS Defendant's Motion to Dismiss pursuant to 12(b)(2), DENIES as moot Defendant's Motion to Dismiss pursuant to 12(b)(3), and DENIES as moot Defendant's Motion to Transfer.

I. BACKGROUND

Plaintiff Overhill Farms Inc. ("Plaintiff") is a corporation incorporated under the laws of the State of Nevada and has its principal place of business in Vernon, California. Compl. ¶ 3. Plaintiff is a manufacturer of food products, including frozen prepared meals, for companies that sell prepared meals and other food products. Id. at ¶ 7. Plaintiff manufactures prepared meals that include ground turkey for "one of Plaintiff's most important... customers, " which then resells the prepared meals to the ultimate consumers of the meals. Id. at ¶ 8.

Defendant is a limited liability company organized under the state of Iowa. Id. at ¶ 4. Plaintiff alleges that since early 2004, it sourced ground turkey from Defendant pursuant to quality specifications, purchase orders, invoices, emails, and related communications. Id. at ¶ 9. Plaintiff also alleges that starting in January 2004, the Parties entered into numerous contracts for Defendant to manufacture, sell, and deliver ground turkey to Plaintiff at its facility in Vernon, California. Id. at ¶ 10. Plaintiff provided its ingredient specifications to Defendant, which require (a) the product to meet all standards for human consumption and to conform to laws and regulations, (b) the product to be manually deboned to eliminate bones and cartilage, and (c) for a bone collector to be used. Id. at ¶ 11. Since 2004, Plaintiff has purchased over 5 million pounds of ground turkey from Defendant. Id. at ¶ 6.

On November 3, 2011, Defendant provided Plaintiff a Continuing Guaranty, Warranty, and Indemnity Agreement ("Guaranty"). Id. at ¶ 13. On or about October 12, 2012, Plaintiff submitted Purchase Order 193375 to Defendant for 27, 500 pounds of ground turkey. Id. at ¶ 14. Upon receipt of the ground turkey, Plaintiff used it to create turkey patties for turkey burger sandwiches for one of its customers. Id. at ¶ 18. Plaintiff shipped the turkey burger to its customer, which distributed the burger to its end-user customers. Id. at ¶ 20. On or about February 5, 2013, Plaintiff received notice from its customer that consumers of the turkey burger sandwiches using Defendant's ground turkey reported finding pieces of bone and bone chips in the turkey patties. Id. at ¶ 21.

As a result of Defendant's actions, Plaintiff asserts claims for (1) breach of sales contract, (2) breach of guaranty, warranty, and indemnity agreement, (3) breach of the implied covenant of good faith and fair dealing, (4) breach of express warranty, (5) breach of the implied warranty of merchantability, (6) breach of the implied warranty of fitness for a particular purpose, and (7) negligence. To date, Plaintiff has incurred no less than $340, 041.27 in damages, and also seeks to recover lost profits and other damages caused by interference with or loss of customer relationship. Id. at ¶ 40.

Plaintiff filed its Complaint on May 7, 2014 [1]. Defendant filed the instant Motion on July 10, 2014 [13]. Plaintiff filed an Opposition on July 30, 2014 [16] and Defendant filed its Reply on August 6, 2014 [19]. This matter was set for hearing on August 20, 2014 and was taken under submission on August 15, 2014.

II. LEGAL STANDARD

A. Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2)

Pursuant to Federal Rule of Civil Procedure 12(b)(2), a district court cannot proceed against a defendant over which it lacks personal jurisdiction unless that defendant has waived the requirement. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 702-03 (1982). Because no applicable federal statute governs jurisdiction in this case, California personal jurisdiction law applies. See Panavision Int'l, L.P. v. Toeppen , 141 F.3d 1316, 1320 (9th Cir. 1998). The exercise of personal jurisdiction over a nonresident defendant requires the presence of two factors: (1) California's laws must provide a basis for exercising personal jurisdiction, and (2) the assertion of personal jurisdiction must comport with due process. Hirsch v. Blue Cross, Blue Shield of Kansas City , 800 F.2d 1474, 1477 (9th Cir. 1986). California's long arm statute permits the exercise of personal jurisdiction to the fullest extent permitted by due process. See Cal. Civ. Proc. Code § 410.10; Panavision , 141 F.3d at 1320. "Because California's long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800-01 (9th Cir. 2004). Thus, only a due process analysis is required here.

Due process requires that a defendant have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316 (1945) (internal quotation marks omitted). The plaintiff bears the burden of proving that each defendant has sufficient minimum contacts with the forum state that warrant the court's exercise of personal jurisdiction. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd. , 328 F.3d 1122, 1130 (9th Cir. 2003) ("Personal jurisdiction over each defendant must be analyzed separately."); Rio Props., Inc. v. Rio Int'l Interlink , 284 F.3d 1007, 1019 (9th Cir. 2002). Depending on the nature and scope of the defendant's contacts with the forum, jurisdiction may be general or specific to a cause of action. Roth v. Garcia Marquez , 942 F.2d 617, 620 (9th Cir. 1991).

When a defendant's contacts with the forum state are "substantial" or "continuous and systematic, " general jurisdiction may be exercised over that defendant for any cause of action, even if it is unrelated to the defendant's activities within the forum state. Schwarzenegger , 374 F.3d at 801-02; Data Disc, Inc. v. Sys. Tech. Assocs. , 557 F.2d 1280, 1287 (9th Cir. 1977). In cases where a defendant's contacts are insufficient to support an exercise of general jurisdiction, more limited specific jurisdiction may be found where a cause of action arises out of or is related to the defendant's activities in the forum state. Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472-73 (1985); Ballard v. Savage , 65 F.3d 1495, 1498 (9th Cir. 1995). "Specific jurisdiction may be exercised with a lesser showing of minimum contacts than is required for the exercise of general jurisdiction." ACORN v. Household Int'l, Inc. , 211 F.Supp.2d 1160, 1164 (C.D. Cal. 2002). The Ninth Circuit uses a three-part test to determine whether there is specific jurisdiction over a defendant: (1) the defendant either purposefully directed its activities at the forum or purposefully availed itself of ...


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