j2 Global Inc. v. Fax87.Com

          ORDER RE: DEFENDANTS FARJAD FANI, ELNAZ FANI, STEVEN THONG WAY SEN, AND CHARLES MONTGOMERY'S MOTIONS TO DISMISS [DKT. NO. 55, 59, 66, 72]

          DEAN D. PREGERSON United States District Judge.

         Before the court is Defendant Farjad Fani's Motion to Dismiss for Insufficient Service of Process under Rule 12(b)(5); Defendant Elnaz Fani's Motion to Dismiss for Insufficient Service of Process and Lack of Personal Jurisdiction under Rule 12(b)(2) and (5); Defendant Steven Thong Way Sen's Motion to Dismiss for Insufficient Service of Process and Lack of Personal Jurisdiction under Rule 12(b)(2) and (5); and Defendant Charles Montgomery's Motion to Dismiss for Lack of Personal Jurisdiction Under Rule 12(b)(2). Having considered the submissions of the parties and heard oral argument, the court grants the motion in part, denies the motion in part, and adopts the following Order.

         I. BACKGROUND

         This court has explained the factual background of this case in connection with a prior order regarding Defendant Farjad Fani's Motion to Dismiss. (Dkt. 32.) In brief, Plaintiff j2 Global, Inc. is the holder of two patents related to the transmission and storage of facsimile and audio messages. (First Amended and Supplemental Complaint ("FASC" or "Amended Complaint") ¶ 25, 29.) In a prior action, j2 Global, Inc. and Advanced Messaging Technologies, Inc. (collectively, "j2") brought suit against Defendants Fax87, Farjad Fani, and Matt Johnson Finance, Inc. ("MJF") for patent infringement. (Id. ¶ 45.) The parties ultimately settled the case and j2 entered into a patent license agreement with MJF (doing business as Fax87.com). (Id. ¶¶ 46-47.)

         On July 24, 2013, Plaintiffs filed a new action against Mr. Fani, Fax87, and MJF asserting breach of contract in connection with the licensing agreement for, inter alia, failure to provide royalty reports, remit royalty payments, and selling the business without timely notice. (Complaint ¶ 42.) On February 5, 2014, this Court issued an order finding service of process insufficient and dismissing the Complaint against Mr. Fani. (Dkt. 32.)

         On April 15, 2016, j2 filed the Amended Complaint reasserting breach of license agreement claims against Mr. Fani and MJF and raising, for the first time, claims for patent infringement, trademark infringement, and unfair competition against Mr. Fani, his sister, Elnaz Fani, Steven Thong, Charles Montgomery, and other individuals and corporate entities. (Dkt. 43.) j2 included the various entities--OnlineFaxes, FaxVision, eFax4Less, MyPhone Fax, ResellFax, OneVoix--as defendants on the theory that they are either alter egos or affiliates of one another working in concert to disguise the licensing breach and infringement from j2. (FASC ¶¶ 81, 84.) j2 added the individual defendants alleging that they were affiliated with the various entities. (FASC ¶¶ 125, 130, 135.)

         Now before the court are Defendants Farjad Fani, Elnaz Fani, Steven Thong, and Charles Montgomery's individual Motions to Dismiss. Mr. Fani moves to dismiss for insufficient process. (Dkt. 55.) Ms. Fani and Mr. Thong move to dismiss for insufficient process and lack of personal jurisdiction. (Dkt. 59, 66.) Mr. Montgomery moves to dismiss for lack of personal jurisdiction. (Dkt. 72.) Rather than recount here the allegations concerning each individual Defendant's association with various entities and the efforts to serve them, the Court will state the facts as needed to address each issue.

         II. LEGAL STANDARD

         A. Motion to Dismiss Under Rule 12(b)(5)

         "[S]ervice of summons is the procedure by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served." Mississippi Publ'g Corp. v. Murphree, 326 U.S. 438, 444-445 (1946). "Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of service of summons must be satisfied." Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). Accordingly, Federal Rule of Civil Procedure 12(b)(5) provides that insufficient service may be a basis for dismissal of a complaint. Once service is challenged, the plaintiff bears the burden of establishing that service was valid. Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004).

         Requirements for the contents and manner of service are established by Rule 4. Under Rule 4(e)(2)(B), a person may be served by "leaving a copy of each at the individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there." Rule 4(e)(1) further provides that process may be served in accordance with "state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made." The applicable state law is described below, as necessary.

         B. Motion to Dismiss Under Rule 12(b)(2)

         Federal Rule of Civil Procedure 12(b)(2) provides that a court may dismiss a suit for lack of personal jurisdiction. The plaintiff has the burden of establishing that jurisdiction exists, but need only make "a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). "Although the plaintiff cannot simply rest on the bare allegations of its complaint, uncontroverted allegations in the complaint must be taken as true." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 797 (9th Cir. 2004) (internal quotations and citation omitted). Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor. Id.

         III. INSUFFICIENT PROCESS CLAIMS

         A. Farjad Fani

         1. Relevant Facts

         After this Court issued its prior order granting Mr. Fani's first Motion to Dismiss on February 5, 2014, j2 renewed its effort to serve Mr. Fani. (Declaration of Agostino von Hassell ¶ 6.) In 2013 and 2014, j2 employed investigators who were unable to conclusively determine Mr. Fani's whereabouts. (Id.) Around this time, from January 2014 to August 2015, Mr. Fani reports residing in Bellevue, Washington, where he had returned from overseas in order to care for his terminally ill father. (Declaration of Farjad Fani ("Farjad Decl.") ¶ 4.) In August 2015, Mr. Fani moved back overseas after his father passed away. (Id.) In 2015, j2's investigator reports connecting Mr. Fani with an apartment in Kuala Lampur but states that Mr. Fani had already left for India by the time process servers arrived. (von Hassell Decl. ¶¶ 14-15.)

         On February 3, 2016, j2's process server attempted to serve Mr. Fani at 12707 NE 120th St., Unit B11, Kirkland, WA 98033 ("12707 Residence"). (Dkt. 36.) It is undisputed that Mr. Fani's brother Sarfaraz Fani resides at this address. (Declaration of Sarfaraz Fani in Support of Farjad Fani's Motion to Dismiss ("Sarfaraz First Decl.") ¶ 4.) j2 contends that Mr. Fani also resided at this address. (Plaintiffs' Omnibus Opposition to Defendants' Motion to Dismiss ("Opp'n") at 9).

         On April 15, 2016, j2 filed its Amended Complaint with the court. (Dkt. 43.) On April 19, 2015, j2's process server purportedly served Mr. Fani in the same manner by leaving a Summons and the Amended Complaint with his brother Sarfaraz at the 12707 Residence. (Dkt. 46.)

         2. 12(b)(5) Claim

         As noted above, a plaintiff is allowed to utilize the service procedures of the state in which the district court is located (California) or where service is made (Washington). Fed.R.Civ.P. 4(e)(1). Washington law echoes the federal rules and provides that an individual may be served by "leaving a copy of the summons at the house of his or her usual abode with some person of suitable age and discretion then resident therein." Wash. Rev. Code § 4.28.080(16). California law provides that "a summons may be served by leaving a copy of the summons and complaint at the person's dwelling house, usual place of abode, usual place of business, or usual mailing address." Cal. Code Civ. P. § 415.20(b). While California law allows service at an individual's mailing address, in addition to usual place of abode, it also requires that a plaintiff attempt personal service "with reasonable diligence" before utilizing substituted service. Id. "Two or three attempts to personally serve a defendant at a proper place ordinarily qualifies as ‘reasonably diligence.'" Am. Express Centurion Bank v. Zara, 199 Cal.App.4th 383, 389 (2011). A copy of the summons and complaint must also be mailed to the person to be served at the place where the summons and complaint were left. Cal. Code Civ. P. § 415.20(b).

         The parties disagree about whether Mr. Fani's service should be evaluated with reference to Washington's rule for serving someone at their "usual abode" or California's rule for serving someone at their "usual place of abode . . . or usual mailing address" with its additional diligence requirements. Regardless of which law we apply, the case must be dismissed if j2 cannot make a prima facie case that 12707 NE 120^th St., Unit B11, Kirkland, WA 98033 is either Mr. Fani's "place of abode" or his "usual mailing address." Under Washington law, the term "‘usual abode' . . . is to be liberally construed to effectuate service and uphold jurisdiction of the court." Sheldon v. Fettig, 129 Wash.2d 601, 609 (1996) (en banc). Washington has elaborated on this definition by explaining that place of abode "must be taken to mean such center of one's domestic activity that service left with a family member is reasonably calculated to come to one's attention within the statutory period for defendant to appear." Id. at 610 (internal quotations and citations omitted). Likewise, in California, "[t]he critical question is whether a place . . . has ‘sufficient indicia of permanence' - i.e., it is not a temporary residence." United States v. Wen-Bing Soong, No. C-13-4088, 2014 WL 988632, at *2 (N.D. Cal. Mar. 10, 2014).

         Mr. Fani argues he is entitled to dismissal because there is no credible evidence he ever lived or received mail at his brother's residence, even on a temporary basis. (Defendant Farjad Fani's Motion to Dismiss ("Farjad Mot.") 8-9.) In support, Mr. Fani submitted declarations by himself and his brother attesting that he does not now nor has he ever lived at the residence. (Farjad Decl. ¶ 3; Sarfaraz First Decl. ¶ 3.) Mr. Fani further states that he has only visited the residence "once or twice since they have lived there." (Farjard Decl. ¶ 3.) Finally, Mr. Fani notes that the process server never reported ...