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Tradin Organics USA, LLC v. Advantage Health Matters, Inc.

United States District Court, N.D. California, San Jose Division

March 23, 2015

TRADIN ORGANICS USA, LLC, Plaintiff,
v.
ADVANTAGE HEALTH MATTERS, INC., Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS Re: Dkt. No. 11

EDWARD J. DAVILA, District Judge.

Presently before the Court is Defendant Advantage Health Matters, Inc.'s ("Defendant") Motion to Dismiss Plaintiff Tradin Organics USA, LLC's ("Plaintiff") complaint. The Court found these matters suitable for decision without oral argument pursuant to Civil Local Rule 7-1(b) and previously vacated the hearing. Having fully reviewed the parties' briefing, the Court DENIES the motion.

I. BACKGROUND

Plaintiff is a wholesale supplier of raw food ingredients, including organic chia. Dkt. No. 2 ("Compl.") at ¶ 7. It is a limited liability company with its place of incorporation in Delaware and its principal place of business in California. Id. at ¶ 1. Defendant is an independent retail marketer of whole food and natural health products. Id. at ¶ 2. It is a corporation with its place of incorporation and principal place of business in Ontario, Canada. Id.

Plaintiff alleges that on February 19, 2013, it entered into a written contract with Defendant whereby Plaintiff would sell organic chia to Defendant (the "Sales Contract"). Id. at ¶ 8; Dkt. No. 2-1, Exh. 1. According to the Sales Contract, Defendant would purchase 9, 600 bags weighing 25 kilograms each for a total purchase of 529, 104 pounds. Compl. at ¶ 9. The price agreed upon was $4.10 per pound, amounting to a total value of $2, 169, 326.40. Id . The Sales Contract also provided that the organic chia would be tendered monthly, from September 2013 to August 2014, to a warehouse in New Jersey. Id. at ¶¶ 9-10.

Plaintiff alleges that in August 2013, the parties communicated to discuss the first shipment that would be made in September 2013. Id. at ¶ 11. In September 2013, the first shipment was made to the warehouse in New Jersey, but Defendant allegedly did not pick it up. Id. at ¶¶ 12-14. In January 2014, [1] Defendant allegedly made arrangements to pick up the organic chia that had been tendered in September. Id. at ¶ 15. Plaintiff alleges that this is the only installment of organic chia that Defendant has accepted. Id.

On February 21, 2014, Plaintiff alleges that it provided Defendant with a written demand that Defendant accept delivery of the five installments Plaintiff had tendered, and Plaintiff provided Defendant with a schedule for the remaining six installments due under the Sales Contract. Id. at ¶ 20. One week later, Defendant allegedly notified Plaintiff that it considered the Sales Contract null and void because Plaintiff had failed to timely tender the organic chia. Id. at ¶ 21.

Plaintiff alleges that as of the date of the complaint, it has tendered all eight installments due under the Sales Contract, but Defendant has only accepted the September 2013 shipment and refused to accept the remaining seven of those installments. Id. at ¶¶ 15, 19. The agreed-upon amount of organic chia has allegedly been tendered at the warehouse in New Jersey, and each shipment has allegedly conformed to the specifications listed on the product specification sheet. Id. at ¶¶ 16-18; Dkt. No. 2-1, Exh. 2.

Plaintiff commenced the instant action on May 5, 2014. See Dkt. No. 2. It alleges two claims: (1) breach of contract for Defendant's alleged failure to receive delivery of the chia and refusal to pay for the chia; and (2) breach of covenant of good faith and fair dealing for Defendant's alleged failure to pay for the chia and repudiation of the Sales Contract, frustrating Plaintiff's expectation of payment. See id. at 4-5. In August 2014, Defendant filed the instant motion to dismiss based on lack of personal jurisdiction, improper venue, and invoking the doctrine of forum non conveniens. See Dkt. No. 11 ("Mot."). In September 2014, Plaintiff filed an opposition brief, and Defendant filed a reply brief. See Dkt. Nos. 20 ("Opp."), 24 ("Reply").

II. LEGAL STANDARD

A. Federal Rule of Civil Procedure 12(b)(2)

Under Rule 12(b)(2), a defendant may move for dismissal based on lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). Two independent limitations may restrict a court's power to exercise personal jurisdiction over a nonresident defendant: the applicable state personal jurisdiction rule and constitutional principles of due process. Sher v. Johnson, 911 F.2d 1357, 1360 (9th Cir. 1990). California's statutory limitation is co-extensive with the outer limits of due process. See id. at 1361; Cal. Civ. Proc. Code § 410.10. Accordingly, the federal and state jurisdictional inquiries merge into a single analysis. See Rano v. Sipa Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993).

B. Federal Rule of Civil Procedure 12(b)(3)

Under Rule 12(b)(3), a defendant may move for dismissal based on improper venue. Fed.R.Civ.P. 12(b)(3). Venue is governed by 28 U.S.C. § 1391. When considering a motion to dismiss pursuant to Rule 12(b)(3), a court need not accept the pleadings as true and may consider facts outside of the pleadings. Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). Once the defendant has challenged the propriety of venue in a given court, the plaintiff bears the burden of showing that venue is proper. Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979). Pursuant to 28 U.S.C. § 1406(a), if the court determines that venue is improper, the court must either dismiss the action or, if it is in the interests of justice, transfer the case to a district or division in which it could have been brought. Whether to dismiss for improper venue, or alternatively to transfer venue to a proper court, is a matter within the sound discretion of the district court. See King v. Russell, 963 F.2d 1301, 1304 (9th Cir. 1992).

C. Motion to Dismiss Based on Forum Non Conveniens

Under the doctrine of forum non conveniens, "[a] district court has discretion to decline to exercise jurisdiction in a case where litigation in a foreign forum would be more convenient for the parties." Lueck v. Sundstrand Corp., 236 F.3d 1137, 1142 (9th Cir. 2001). In a motion to dismiss based on the ground of forum non conveniens, the defendant must make a "clear showing of facts which establish such oppression and vexation of a defendant as to be out of proportion to plaintiff's convenience, which may be shown to be slight or nonexistent." Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1118 (9th Cir. 2002). The determination to dismiss under this doctrine is at the discretion of the district court. Lueck, 236 F.3d at 1143.

III. DISCUSSION

In its Motion to Dismiss, Defendant sets forth three arguments: (1) this Court lacks personal jurisdiction over Defendant; (2) this venue is improper; and (3) under the doctrine of forum non conveniens, an adequate alternative forum exists in Toronto, Canada. Mot. at 2. Each basis for the motion will be addressed in turn.

A. Personal Jurisdiction

Personal jurisdiction over an out-of-state defendant is proper if the exercise of the jurisdiction does not violate federal due process. In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 741 (9th Cir. 2013). To satisfy due process, the defendant must have "minimum contacts" with the forum state such that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. Id . There are two kinds of jurisdiction that a court may exercise over an out-of-state defendant: general jurisdiction and specific jurisdiction. Martinez v. Aero Caribbean, 764 F.3d 1062, 1066 (9th Cir. 2014). For a corporation, general jurisdiction exists in the states where it is "essentially at home, " such as its place of incorporation and principal place of business. Lightfoot v. Cendant Mortg. Corp., 769 F.3d 681, 689 (9th Cir. 2014). Specific jurisdiction exists when the corporation's activities in the forum state has given rise to the suit. Id.

"[T]he plaintiff bears the burden of demonstrating that the court has jurisdiction." In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d at 741. The plaintiff must make a prima facie showing of jurisdictional facts, and the court must resolve all disputed facts in the plaintiff's favor. Id.

i. General Jurisdiction

"To establish general jurisdiction, the plaintiff must demonstrate that the defendant has sufficient contacts to constitute the kind of continuous and systematic general business contacts that approximate physical presence." Id . "General jurisdiction over a corporation is appropriate only when the corporation's contacts with the forum state are so constant and pervasive as to render it essentially at home in the state." Martinez, 764 F.3d at 1066.

In its motion, Defendant contends that Plaintiff has not met its burden to establish general jurisdiction in California. Mot. at 9. It further argues that even if the Sales Contract's governing law clause were applied, that only specifies the applicable law in the event of a dispute, but does not confer jurisdiction. Id . Plaintiff, however, does not offer an argument concerning general jurisdiction. Given the absence of an argument from Plaintiff, this Court presumes that Plaintiff concedes this point. Thus, there is no basis to invoke general jurisdiction.

ii. Specific Jurisdiction

To exercise specific personal jurisdiction over a defendant, the Ninth Circuit applies a three-prong test to determine whether a defendant has sufficient contacts to be susceptible to specific jurisdiction:

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, ...

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