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Pellegrini v. Huyssen, Inc.

United States District Court, S.D. California

July 7, 2017

WILLIAM PELLEGRINI, individually and on behalf of others similarly situated, Plaintiff,
HUYSSEN, INCORPORATED, a California corporation, bda SEDONA STAFFING; TEMPRO, INC., a Delaware corporation; L.A. LEASING, INC., an Illinois corporation; and DOES 3 through 100, inclusive, Defendants.

          ORDER ON MOTIONS TO DISMISS [Doc. Nos. 9, 10, 11]

          Hon. Cathy Ann Bencivengo United States District Judge

         Order This matter comes before the Court on Defendant Huyssen Incorporated's (“Huyssen') motion to dismiss [Doc. No. 9], Defendant L.A. Leasing, Inc.'s (“L.A. Leasing”) motion to dismiss [Doc. No. 10], and Defendant TemPro Services, Inc.'s (“TemPro”) motion to dismiss [Doc No. 11]. The motions have been fully briefed, and the Court finds them suitable for determination on the papers submitted and without oral arguments in accordance with Civil Local Rule 7.1(d)(1). For the following reasons, Defendants' motions are granted in part and denied in part.

         I. Background

         On July 1, 2016, Plaintiff brought suit in the Superior Court of the State of California (“the State Court Action”) against Defendant Huyssen asserting for wage and hour claims in violation of the California Labor Code, the Code of Regulations, Industrial Wage Commission (“IWC”) and California's Unfair Competition Law (“UCL”). Cal Bus. & Prof Code § 17200, et seq.; Civil Code § 3428. [Doc No. 1-2[1] (“the complaint”).]

         On August 10, 2016, Plaintiff filed a First Amended Complaint (“FAC”) in the State Court Action alleging similar wage and hour claims in violation of California law. [Doc. No. 1-3.] On September 14, 2016, Huyssen filed its Answer to the FAC. [Doc. NO. 1-4.]

         On November 11, 2016, Plaintiff filed amended the FAC to name TemPro Services, Inc. (“TemPro”) and L.A. Leasing as Defendants. [Doc. No. 1-5.] On December 20, 2016, Plaintiff filed a Motion for Leave to Amend the FAC [Doc. No. 1-7] that was opposed by Huyssen [Doc. No. 1-9] and ultimately granted by the Superior Court [Doc. No. 1-11].

         The Second Amended Complaint (“SAC”) was filed on January 13, 2017. [Doc. No. 1-12.] The SAC asserts that Defendants failed to compensate their employees as required by federal and California law and includes a Fair Labor Standards Act (“FLSA”) claim. Specifically, the SAC alleges Defendants Huyssen, L.A. Leasing and TemPro jointly operate a staffing company that operates under the name Sedona Staffing and/or Sedona Group. [Doc. No. 1-12 ¶ 1.] It alleged Defendants retained Plaintiff as an employee and required him, and others similarly situated, to comply with Defendants' uniform policies to attend and participate in meetings and telephonic communications relating to prospective assignments to Defendants clients, consult with Defendants regarding the status of assignments, provide availability to work information to Defendants, attend client and internal company interviews and orientations, and undertake training and travel without receiving any compensation for these activities. [Doc. No. 1-12 ¶¶ 3-4, 23, 25-30.]

         On January 25, 2017, Defendants Huyssen and L.A. Leasing removed the action to this Court pursuant to 28 U.S.C. §§ 1441(a) and 1446(a). [Doc. No. 1.] On February 13, 2017, Defendants filed three separate motions to dismiss [Doc. Nos. 9, 10, 11.] All Defendants seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), with Defendant TemPro also seeking to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2). On February 16, 2017, Plaintiff filed a combined opposition to Huyssen and L.A. Leasing's motions to dismiss [Doc. No. 16] and a separate response in opposition to TemPro's motion [Doc. No. 17.]. Defendants filed their replies. [Doc. Nos. 20, 21, 22.] In light of the commonality of arguments in the motions to dismiss, the Court will consider them together.

         II. Legal Standard

         Federal Rule of Civil Procedure 12(b)(2) allows a district court to dismiss an action for lack of personal jurisdiction. “Where defendants move to dismiss a complaint for lack of personal jurisdiction, plaintiffs bear the burden of demonstrating that jurisdiction is appropriate.” Dole Foods Co. Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). “The court may consider evidence presented in affidavits to assist in its determination and may order discovery on the jurisdictional issues.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2011) (citing Data Disc, Inc. v. Sys. Tech. Ass'n, Inc., 557 F.2d 1280 (9th Cir. 1977)).

         When both parties support their respective positions with affidavits and the “district court acts on the defendant's motion to dismiss without holding an evidentiary hearing, the plaintiff need make only a prima facie showing of jurisdictional facts to withstand a motion to dismiss.” Id. (citing Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). See also Data Disc, 557 F.2d at 1285 (“if Plaintiff's proof is limited to written materials, it is necessary only for these materials to demonstrate facts which support a finding of jurisdiction in order to avoid a motion to dismiss.”).[2] In other words

[plaintiff] need only demonstrate facts that if true would support jurisdiction over the defendant. Unless directly contravened, [plaintiff's] version of the facts is taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in [plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.

Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003) (citations omitted).

         A court's power to exercise personal jurisdiction over a non-resident defendant is limited by two independent constraints: the applicable state personal jurisdiction statute and constitutional principles of due process. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990); see also In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 741 (9th Cir. 2013) (“[p]ersonal jurisdiction over a nonresident defendant is proper if permitted by a state's long-arm statute and if the exercise of that jurisdiction does not violate federal due process.”) “Under California's long-arm statute, California state courts may exercise personal jurisdiction ‘on any basis not inconsistent with the Constitution of this state or of the United States.'” Daimler AG v. Bauman, 134 S.Ct. 746, 753 (2014) (quoting Cal. Civ. Proc. Code Ann. § 410.10 (West 2004)).

         Under the Due Process Clause of the Fourteenth Amendment, to exercise personal jurisdiction over an out-of-state defendant, the defendant must have “certain minimum contacts with [the State] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted)). This minimum contacts jurisdiction may be either “general or all-purpose jurisdiction, ” or “specific or case-linked jurisdiction.” Id. at 919 (citing Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414 (1984)). “In order for a court to exercise specific jurisdiction over a claim, there must be an ‘affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.'” Bristol-Myers Squibb Co. v. Superior Court of Cal., S.F. Cnty., 137 S.Ct. 1773, 1781 (2017) (quoting Goodyear, 564 U.S. at 919).

         Under Rule 12(b)(6), a party may bring a motion to dismiss based on the failure to state a claim upon which relief may be granted. A Rule 12(b)(6) motion challenges the sufficiency of a complaint as failing to allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). For purposes of ruling on a Rule 12(b)(6) motion, the court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the non-moving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But, a “pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).

         III. Discussion

         A. TemPro's Motion to Dismiss Pursuant to Rule 12(b)(2).

         Defendant TemPro moves to dismiss for lack of either specific or general personal jurisdiction because it does not conduct or solicit any business in the State of California. [Doc. No. 11 at 12-13.] Plaintiff does not dispute that TemPro lacks sufficient contacts with California to support general jurisdiction, but asserts that TemPro operates in California as Sedona Staffing and the Sedona Group and is therefore subject to specific personal jurisdiction. [Doc. No. 17 at 10-13.] In the alternative, Plaintiff argues that L.A. Leasing and Huyssen's contacts related to the San Diego branch should be imputed to TemPro. [Doc. No. 17 at 13-18.] Since Plaintiff has effectively conceded that general jurisdiction does not exist, the Court will limit its inquiry to whether it has specific jurisdiction over TemPro.

         “[S]pecific jurisdiction is confined to adjudication of ‘issues deriving from, or connected with, the very controversy that establishes jurisdiction.'” Goodyear Dunlop, 564 U.S. at 919. See also Daimler AG, 134 S.Ct. at 758 (the focus is on the “relationship among the defendant, the forum, and the litigation.”). “When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State.” Bristol-Myers Squibb, 137 S.Ct. at 1781. The Ninth Circuit uses a three-prong test to determine whether a non-resident defendant is subject to specific personal jurisdiction: (1) [t]he 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, i.e. it must be reasonable. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). The plaintiff bears the burden of satisfying the first two requirements and if successfully met, the “burden then shifts to the defendant to ‘present a compelling case' that the exercise of jurisdiction would not be reasonable.” Id. at 801-802.

         Here, TemPro is a Delaware corporation with its principal place of business in Moline, Illinois. [Doc. No. 11-2 at ¶ 2.] TemPro is wholly owned by John Enterprises Limited an Illinois corporation. [Doc. No. 13.] TemPro asserts that with one exception, TemPro has not had any California employees since December 31, 2000. [Doc. No. 11-2 at ¶ 2.] TemPro declares that it does not have any offices in California, does not have any bank account in California, is not licensed to do business in California, has no agent for service of process in California, does not lease or own any real estate in California, and does not have any contracts with any businesses based in California. [Id. at ¶¶ 6-11.] Further, TemPro attests that Plaintiff is not and never has been employed by TemPro and that it does not have any ownership interest in L.A. Leasing or Huyssen and L.A. Leasing and Huyssen do not have an ownership interest in TemPro. [Id. at ¶¶ 5, 12.]

         In opposition, Plaintiff alleges that jurisdiction exists in California because TemPro operates in California as Sedona Staffing and the Sedona Group. Plaintiff asserts that specific jurisdiction is warranted because (1) through these entities TemPro purposefully avails itself in California by openly recruiting agents online and maintaining a staffing office in San Diego; (2) the action arises out of TemPro's activities in California because Plaintiff's claims are derived from his employment relationship with the Sedona Group that was formed in the San Diego branch office; and (3) exercise of jurisdiction over TemPro would be reasonable. [Doc. No. 17 at 10-13.] Defendant TemPro summarily dismisses Plaintiff's argument that The Sedona Group and TemPro are one and the same, asserting that the absence of any Secretary of State Corporate Documents is evidence that The Sedona Group is not a corporate entity.

         In support of his argument, Plaintiff offers a declaration by Lacy Wells, an associate with the law firm of Nicholas & Tomasevic, LLP, counsel of record for Plaintiff, and a number of accompanying exhibits[3]. [Doc. No. 17-5 at ¶ 1.] Plaintiff posits that the exhibits demonstrate that: (1) TemPro's principal place of business is at 612 Valley View Drive, Moline, IL; (2) the Sedona Compass website[4] is registered at the same mailing address as TemPro; (3) a billboard identifying the Sedona Group is located at the 612 Valley View Drive address; (4) Rick John is the President of the Sedona Group and TemPro; (5) Ms. Kahley's Linked In profile indicates that she is the “Director of Operations at The Sedona Group”; (5) In 1986 TemPro was formed by the Willard Brothers, which eventually becomes The Sedona Group, encompassing three divisions - Sedona Staffing Services, Sedona Technologies and Sedona Medical; (6) In 1998, TemPro rebrands as Sedona Staffing Services.

         1. Purposeful availment

         “Purposeful availment analysis examines whether the defendant's contacts with the forum are attributable to his own actions or are solely the actions of the plaintiff.” Sinatra v. National Enquirer, 854 F.2d 1191, 1195 (9th Cir. 1988). To successfully demonstrate this, Plaintiff must show that TemPro “engage[d] in some form of affirmative conduct allowing or promoting the transaction of business within the forum state.” Gray & Co. v. Firstenberg Machinery Co., 913 F.2d 758, 760 (9th Cir. 1990) (citation omitted). In contract cases the inquiry typically focuses on “whether a defendant ‘purposefully avails itself of the privilege of conducting activities' or ‘consummates a transaction' in the forum, focusing on activities such as delivering goods or executing a contract.” Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, at 1206 (9th Cir. 2006) (citing Schwarzenegger, 374 F.3d at 802).

         The complaint alleges that TemPro dba Sedona Staffing and/or Sedona Group along with the other Defendants, jointly operates a staffing company that failed to compensate their employees, including Plaintiff, as required by federal and California law. [Doc. No. 1-12 ¶ 1.] Further, Plaintiff alleges that TemPro, operating as The Sedona Group, openly recruits agents like Huyssen to open up new staffing office locations on its website. [See Doc. No. 17-5 at ¶ 8 and Ex. J.] Additionally, Plaintiff argues that TemPro's purposeful availment is demonstrated though the websites of The Sedona Group and Sedona Staffing Corporate. Plaintiff contends that links on The Sedona Group website transfer users to the website of Sedona Staffing Corporate and users can select office locations from the Sedona Staffing Corporate Site. [See Id. at ¶ 9, Exs. K, L, M.] According to Plaintiff, the Clairemont Mesa Blvd Location listed as an office location on the Sedona Staffing Corporate website is where Plaintiff visited and was hired. [See Id. at ¶ 9, Exs. K, L, M; Doc. No. 17-1 at ¶ 2, Ex. A.] Plaintiff also asserts that San Diego and Carlsbad, two separate California locations, are listed on the Sedona Staffing Corporate's website. [See Wells Decl. ¶ 9.] In response, Defendant TemPro states “Plaintiff's mantra throughout his Response that ‘TemPro operates as the Sedona Group' is conclusory unsupported by the facts, and does not make it so.” [Doc. No. 22 at 7:3-4.] The Court disagrees. Plaintiff has submitted an affidavit and accompanying exhibits that allege that TemPro operates as The Sedona Group and Sedona Staffing, that The Sedona Group and Sedona Staffing have offices in California though which Plaintiff, a California resident, sought temporary employment, and The Sedona Group recruits partners within California. Moreover, in deciding whether Plaintiff has established his prima facie case for personal jurisdiction, the Court resolves conflicts between facts contained in the parties' affidavits in Plaintiff's favor. Harris Rutsky, 328 F.3d at 1129. Accordingly, the Court finds that TemPro, operating as Sedona Staffing and The Sedona Group, purposefully avails itself of the privilege of conducting business in California.

         2. Relatedness of the Claim and Contacts

         The second prong of the Schwarzenegger analysis requires the court to determine whether the claim arises from the defendant's forum-related activities. See Schwarzenegger, 374 F.3d at 801-802. Courts make this determination by “apply[ing] a but for test.” See Menken v. Emm, 503 F.3d 1050, 1058 (9th Cir. 2007) (plaintiff would not have suffered an injury “but for” defendant's forum-related conduct).

         The Court concludes that but for TemPro's, operating as The Sedona Group and/or Sedona Staffing, contacts with California Plaintiff's claims against it would not have arisen. Plaintiff's claims arise out of an employment relationship that was allegedly formed in The Sedona Group's San Diego branch office. [Doc. No. 17-1 at ¶ 9; Doc. No. 17-5 at¶ 9, Ex. M.] Furthermore, it is alleged that The Sedona Group owns the Sedona Compass website that catalogs temporary workers' information, including Plaintiff's, in California. [Wells Decl. ¶¶ 2, 4, Exs. F, M.] Given that Defendant TemPro does not dispute this, the Court concludes that Plaintiff has carried his burden on the issue. See Harris Rutsky, 328 F.3d at 1129.

         3. Reasonableness

         The third part of the Schwarzenegger test requires a broad inquiry into the overall reasonableness and fairness of exercising personal jurisdiction. Schwarzenegger, 374 F.3d at 801-802. The burden is on defendants to “present a compelling case” that exercising personal jurisdiction over it would be unreasonable. Burger King, 471 U.S. at 476-78. In making this inquiry the court considers: (1) the extent of purposeful interjection into the forum state; (2) the burden on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of defendant's state; (4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the ...

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