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j2 Global Inc v. FAX87

United States District Court, C.D. California

April 27, 2017

j2 CLOUD SERVICES, INC., et al., Plaintiff,
v.
FAX87, et al., Defendants.

          ORDER DENYING DEFENDANT STEVEN THONG WAY SEN'S RENEWED MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION [DKTS. 66, 201]

          DEAN D. PREGERSON UNITED STATES DISTRICT JUDGE.

         Presently before the court is Defendant Steven Thong Way Sen (“Thong”)'s renewed Motion to Dismiss for lack of person al jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. (Dkts. 66, 201.) Having considered the parties' submissions and heard oral argument, the cou rt adopts the following Order.

         I. BACKGROUND

         The court assumes the parties' familiarity with the facts giving rise to this action, which have been set forth more fully in several prior Orders. (See Dkts. 32, 106, 167, 197.) Accordingly, the court will limit its discussion to the background necessary for resolving the pending Motion.

         A. Procedural Background

         j2 is the owner of two patents concerning the transmission and storage of facsimile and audio messages. (First Amended and Supplemental Complaint (“FASC”) ¶¶ 25, 29.) In a prior action, j2 sued Defendants Farjad Fani, Fax 87, and Matt Johnson Finance, Inc. (“MJF”) for patent infringement. (Id. ¶ 45.) The parties settled the case, and j2 entered into a patent licensing agreement. (Id. ¶¶ 46-47.)

         On July 24, 2013, Plaintiffs filed a new action asserting, inter alia, that Fani, Fax87, and MJF breached the settlement agreement, violated the licensing agreement, and infringed j2's patents. (See Dkt. 1.) This Court dismissed the action for improper service. (Dkt. 32.) On April 15, 2016, Plaintiffs filed an Amended Complaint with leave from the court. (Dkt. 43.) This Complaint reasserted the claims against Fani, Fax87, and MJF, but also added claims for conspiracy, fraud, patent infringement, and unfair competition against Thong and other individual defendants. (See e.g., FASC ¶¶ 16, 125, 126, 129, 252, and 257 (detailing allegations against Thong specifically).)

         On May 11, 2016, Thong moved to dismiss the suit against him on the basis of improper service and lack of personal jurisdiction. (Dkt. 66). The court ruled that service was proper but deferred ruling on the personal jurisdiction issue pending a period of jurisdictional discovery. (Dkt. 103 at 20-24.) While conducting jurisdictional discovery, Plaintiffs issued a notice of deposition to Thong. (Decl. Guy Ruttenberg, Ex. 1 (Thong Depo.) 25:4-11.) Although the deposition was initially noticed to take place in Denver, Colorado, it ultimately took place in San Francisco, California at Thong's request. (Id. at 26:20-27:8.) At the conclusion of the deposition, which took place on October 21, 2016, counsel for Plaintiffs attempted to “re-serve” Thong with a summons and Amended Complaint. (Dkt. 117 at ¶ 4.)

         Pursuant to the purported “re-service, ” Plaintiffs attempted to file an Application for Entry of Default against Thong, arguing that he had failed to timely respond to both the initial service in June and the re-service in October. (Dkt. 170.) The Clerk of the Court issued a deficiency notice. (Dkt. 171.) After that dispute, the court set a briefing schedule for the renewed motion to dismiss. (Dkt. 186.) Pursuant to that briefing schedule, Thong has timely renewed the motion to dismiss. (Dkt. 202.)

         B. Factual Background

         Defendant Thong is a resident of Colorado who has never resided in California nor maintained an office or place of business in California. (Dkt. 68 ¶ 2.) For the past seven years, Thong has been a full-time employee for a software company called FaxCore. (Id. ¶ 5; Thong Depo. 22:6-13.) FaxCore is located in Parker, Colorado and its primary business is selling software that can be installed on a server to allow a business to send or receive faxes. (Thong Depo. 34:14-35:19.) FaxCore is affiliated with a Malaysian company called FaxCore Asia, which develops the software that FaxCore sells. (Id. at 35:20-25.) Thong is a partial owner of FaxCore Asia. (Id. 36:12-16.)

         In late 2011 or early 2012, Farjad Fani reached out to FaxCore about using its software on the fax87.com website. (Id. 31:4-33:10; 60:2-19.) Thong was brought into the conversation to explain technical aspects of the FaxCore software. (Id.) Thong was then tasked by his supervisor to install and configure the FaxCore software on a server provided by Fani. (Id. 31:4-15.) Subsequent to this work, Fani reached out to Thong in January 2012 to customize the software solution that Thong had installed. (Id. at 31:4-22.) After receiving approval from his supervisor, Thong performed this work an independent basis for Fani. (Id.) Thong also installed the FaxCore software in the myphonefax.com companies. (Id. at 177:6-14.)

         Initially, Thong performed work for Fani on an ad-hoc basis but later received a regular monthly payment. (Id. 186:19-23; 274:25-275:5.) The work performed by Thong involved servicing and updating the interface he developed, providing integration of the website processing vendors, and managing data files on the server that hosts the websites. (Mauch Decl. ¶ 3, Ex. A; Ruttenberg Decl., Ex. 19.) As part of his work, Thong was authorized to hire a support team to assist him. (Thong Depo. 111:19-25.) These workers were hired in Malaysia. According to Thong, he had trouble getting people to work for him without a title so he held himself out as the “CTO” or “Chief Technology Officer” in order to establish “credibility.” (Id. 161:23-162:8.) Defendants note that, in addition holding himself out as CTO, internal communications between Thong and Fani reveal that Fani called Thong a “manager” as early as 2013 (Ruttenberg Decl., Ex. 5) and referred to him as a CTO by 2015 (Ruttenberg Decl., Ex. 2.) Thong notes, however, that he does not have any ownership interest in the websites at issue or the entities that have owned them. (Thong Decl. ¶ 4.)

         Although the parties dispute Thong's title, there is substantial agreement about his activities for the various Defendant companies. Thong performed services for Fax87, OnlineFaxes, and other domain names that OneVoix directed him to work on, including solidfax, faxvision, resellfax, and myphonefax. (Thong Depo. 40:20-44:24; Ruttenberg Decl., Ex. 19.) Communications from 2014 between Thong and Fani show that Thong was responsible for issuing “weekly engineering updates.” (Thong Depo. 249:1-15; Ruttenberg Decl., Ex. 9.) Thong also worked with Fani to create “milestone plans” for the “Fax Enterprise.” (Ruttenberg Decl., Ex. 7.). In March 2015, Thong was directed by Fani to “take the lead on the mobile site” for OnlineFaxes. (Id., Ex. 10.)

         The parties dispute the extent to which Thong directed his specific activities towards California. (Compare Mot. 8-9 with Opp'n 4-5.) Although Thong denies having any specific knowledge of customers in California, he acknowledges understanding that the websites in question were accessible across the United States and had customers across the nation, which “most likely” included California. (Thong Depo. 162:22-163:6.) Mr. Thong also concedes that one feature of the websites he set up was enabling customers to select direct ...


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