United States District Court, N.D. California
ORDER GRANTING MOTION TO DISMISS FOR LACK OF PERSONAL
JURISDICTION AND GRANTING IN PART AND DENYING IN PART MOTION
TO DISMISS COUNTERCLAIM
CHARLES R. BREYER UNITED STATES DISTRICT JUDGE
Systems, Inc. and Cisco Technology, Inc. (collectively,
“Cisco”) have sued Link U.S. (“Link”)
and its President, Basem Toma, for allegedly importing and
selling counterfeit Cisco goods. Link's counterclaim
asserts that Cisco is the party engaged in unfair
competition, because it wrongfully undermines competition in
the secondary market for its goods. Cisco has moved to
dismiss the counterclaim while Toma has moved to dismiss for
lack of personal jurisdiction or improper venue.
motion is granted and Cisco's motion is granted in part
and denied in part. Cisco has not adequately alleged that
Toma committed intentional acts expressly aimed at
California, while Link has not adequately alleged most of the
theories underlying its unfair competition claim. However, it
appears possible that these defects could be remedied if the
parties are allowed a chance to plead additional allegations.
Therefore, dismissal is without prejudice, and Cisco's
request to conduct jurisdictional discovery is granted.
sells “networking and communications hardware,
software, and services that utilize cutting-edge technologies
to transport data, voice, and video within buildings, across
cities and campuses, and around the world.” Compl.
¶ 12 (dkt. 1). Cisco alleges that Link has unlawfully
“imported, sold, offered for sale, distributed,
transported, or assisted in or caused the importation, sale,
offer for sale, distribution, or transportation” of
counterfeit Cisco goods. Id. ¶ 27-29. It
alleges that Toma is the President of Link and therefore
“intimately involved in, [sic] operating LINK, ”
“actively involved in the day-to-day management and
operations of LINK, ” and the alter ego of Link.
Id. ¶¶ 4, 30-31. Toma is a resident of
North Carolina. Id. ¶ 4.
alleges that U.S. Customs and Border Protection has seized
counterfeit Cisco goods “being imported by LINK, and
shipped to addresses associated with LINK, on thirteen (13)
separate occasions.” Id. ¶ 33. It also
alleges that on several occasions a Cisco investigator
ordered Cisco goods from Link which proved to be
counterfeits. Id. ¶¶ 44-60. The
counterfeit items were shipped to the investigator in
Berkeley, California. Id. ¶¶ 45, 52, 56.
The return addresses on two of the packages the investigator
ordered included Toma's name. Hewitt Decl. ¶ 5 (dkt.
counterclaim alleges that Cisco has attempted to stifle
competition in the secondary market for its equipment, in
violation of California's Unfair Competition Law
(“UCL”). Amended Answer ¶¶ 134-64 (dkt.
28). Link identifies four examples of this ostensibly
anticompetitive behavior. First, it claims Cisco misleads
consumers into believing it is unlawful to buy its products
from independent resellers by describing such sales as
“unauthorized” and “peril[ous].”
Id. ¶¶ 146-49. Second, Cisco ostensibly
“target[s] independent resellers such as LINK for
unwittingly importing suspected counterfeit goods, while
turning a blind eye to comparable conduct by participants in
the Cisco ‘Authorized Network.'” Id.
¶ 150. Third, Cisco allegedly claims that users who buy
its equipment from independent resellers are not authorized
to use the software on that equipment, in an effort to
sidestep copyright law's first sale doctrine.
Id. ¶¶ 151-54. Finally, Cisco ostensibly
misleads consumers by designating certain equipment sold on
the secondary market “used” simply because it has
previously been owned or sold. Id. ¶¶ 155-
has moved to dismiss Link's counterclaim for failure to
state a claim. Cisco's MTD (dkt. 32). Toma, in turn, has
moved to dismiss the claims against him for lack of personal
jurisdiction or, in the alternative, improper venue.
Toma's MTD (dkt. 40).
TOMA'S MOTION TO DISMISS
Federal Rule of Civil Procedure 12(b)(2), a defendant may
move to dismiss for lack of personal jurisdiction. The
plaintiff bears the burden of establishing the court's
personal jurisdiction over a defendant. Cubbage v.
Merchent, 744 F.2d 665, 667 (9th Cir. 1984). In
assessing whether personal jurisdiction exists, the court may
consider evidence presented in affidavits or order discovery
on jurisdictional issues. Data Disc, Inc. v. Systems
Tech. Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977).
“When a district court acts on a defendant's motion
to dismiss under Rule 12(b)(2) without holding an evidentiary
hearing, the plaintiff need make only a prima facie showing
of jurisdictional facts to withstand the motion to
dismiss.” Ballard v. Savage, 65 F.3d 1495,
1498 (9th Cir. 1995). A prima facie showing is established if
the plaintiff produces admissible evidence which, if
believed, would be sufficient to establish personal
jurisdiction. See Harris Rutsky & Co. Ins. Servs.,
Inc. v. Bell & Clemens Ltd., 328 F.3d. 1122, 1129
(9th Cir. 2003). “[U]ncontroverted allegations in
[plaintiff's] complaint must be taken as true, and
conflicts between the facts contained in the parties'
affidavits must be resolved in [plaintiff's]
favor.” Brayton Purcell LLP v. Recordon &
Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010).
to Federal Rule of Civil Procedure 12(b)(3), a party may move
to dismiss an action based on improper venue. Once the
defendant challenges venue, the plaintiff bears the burden of
establishing that venue is proper. Piedmont Label Co. v.
Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir.
1979). When considering a Rule 12(b)(3) motion to dismiss,
the pleadings need not be accepted as true, and the court
“may consider facts outside of the pleadings.”
Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324
(9th Cir. 1996).
reaching the merits of Toma's objection to personal
jurisdiction, it is necessary to consider Cisco's
contention that he has waived this defense. Opp'n to
Toma's MTD at 8-9 (dkt. 46-1). Cisco claims that Toma
waived his objection to personal jurisdiction by
“act[ing] in a way that is inconsistent with raising or
maintaining it.” Id. at 8. It is true that the
Ninth Circuit has recognized that a personal jurisdiction
defense can be waived by “deliberate, strategic
behavior.” Peterson v. Highland Music, Inc.,
140 F.3d 1313, 1318 (9th Cir. 1998). For example, the defense
would be waived if a defendant engaged in
“‘sandbagging' by raising the issue of
personal jurisdiction on a motion to dismiss, deliberately
refraining from pursuing it any further when his motion is
denied in the hopes of receiving a favorable disposition on
the merits, and then raising the issue again on
acts Cisco points to as demonstrating Toma's waiver of
his personal jurisdiction defense fall far short of
“deliberate, strategic behavior.” Cisco complains
that Toma “has waited nearly eight months after filing
of his Amended Answer to bring the instant motion and . . .
has participated in case management conferences, discovery,
and multiple stipulations seeking extensions of deadlines to
allow all parties to pursue settlement discussions.”
Opp'n to Toma's MTD at 8. As Toma points out, much of
the eight-month delay is attributable to continuances that
Cisco either agreed to or actively sought. See, e.g.
Joint Stipulation (dkt. 30). In any event, the Ninth Circuit
has rejected the argument that requesting a continuance
waives objections to personal jurisdiction. Benny v.
Pipes, 799 F.2d 489, 493 (9th Cir. 1986)
(“Generally, a motion to extend time to respond gives
no hint that the answer will waive personal jurisdiction
defects.”). Similarly, courts have concluded that
participating in discovery does not waive challenges to
personal jurisdiction. Zuckerman v. Green Earth Techs.,
Inc., CV 10-1240 PA (FFMx), 2010 WL 11549406, at *5 n.3
(C.D. Cal. Apr. 30, 2010). Finally, as Toma points out, Cisco
can hardly claim to be prejudiced by any delay in bringing
this motion when the hearing is set for the same day as its
own motion to dismiss and no trial date has been set. In
short, Toma's participation up to this point and the
moderate delay in briefing the instant motions hardly amounts
to deliberate, bad-faith delay in raising personal
jurisdiction as a defense.
the facts here fall short of even Cisco's single,
non-binding authority, Plunkett v. Valhalla Investments
Servs., Inc., 409 F.Supp.2d 39 (D. Mass. 2006). In that
case, over a year passed between the filing of the answer and
the defendants' motion to dismiss for lack of personal
jurisdiction. Id. at 42. In that time, they
“1) participated in a scheduling conference and engaged
in a colloquy with the Court with respect to the nature of
the case, 2) conducted discovery, 3) consented to Alternative
Dispute Resolution, 4) entered into a stipulation and
protective order with the plaintiff and 5) moved the Court to
allow [their] Ohio counsel to appear pro hac
vice.” Id. Even by Cisco's account
the delay in this case is shorter and Toma's
participation in the litigation less extensive. Toma has not
waived his objection to personal jurisdiction.
appears to suggest that jurisdiction over Toma is appropriate
because he is an officer and employee of Link and Link is
properly subject to personal jurisdiction in this Court.
See Opp'n to Toma's MTD at 9-10. Although
“a person's mere association with a corporation
that causes injury in the forum state is not sufficient in
itself to permit that forum to assert jurisdiction over the
person. . . . [T]he corporate form may be ignored in cases in
which the corporation is the agent or the alter ego of the
individual defendant.” Davis v. Metro Prods.,
Inc., 885 F.2d 515, 520 (9th Cir. 1989). “To apply
the alter ego doctrine, the court must determine (1) that
there is such unity of interest and ownership that the
separate personalities of the corporation and the individuals
no longer exist and (2) that failure to disregard the
corporation would result in fraud or injustice.”
Flynt Distrib. Co. v. Harvey, 734 F.2d 1389, 1393
(9th Cir. 1984). The Ninth Circuit has found this standard
met when, for example, the individual defendants were
“the sole shareholders of the corporations and the sole
partners of the partnerships, ” “converted the
assets of the various corporations and partnerships for their
own use and dealt with them as if they were one, ” and
left a number of the corporations undercapitalized.
Id. at 1393-94.
pleads no comparable facts regarding Toma's relationship
with Link. See generally Compl. In fact, its only
allegations of an alter ego relationship are conclusory
statements that Toma controls Link's day-to-day
operations and is the alter ego of Link. See, e.g.
id. ¶ 31 (“On information and belief, TOMA
controls LINK, [and] LINK is the alter ego of TOMA.”).
Conclusory allegations with no factual support are
insufficient to demonstrate the applicability of the alter
Cisco does not appear to argue otherwise, contending instead
that “proving alter ego liability . . . is not
necessary if Cisco sufficiently alleges . . . that Toma
himself has committed tortious acts.” Opp'n to
Toma's MTD at 10. It is true that “[a] corporate
officers is, in general, personally liable for all torts
which he authorizes or directs or in which he
participates.” See Transgo, Inc. v. Ajac
Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir.
1985). However, as explained below in the analysis of
specific jurisdiction, Cisco has not plausibly alleged
Toma's participation in any tortious act.