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Lever Your Business Inc. v. Sacred Hoops & Hardwood. Inc.

United States District Court, C.D. California

December 23, 2019




         Proceedings: (IN CHAMBERS) - DEFENDANT'S MOTION TO DISMISS (Dkt. [ 13 ], filed October 8, 2019)


         Plaintiff Lever Your Business, Inc. ("LYB") filed this action against defendant Sacred Hoops & Hardwood, Inc. ("Sacred Hoops") on August 15, 2019. Dkt. 1 ("Compl."). LYB asserts claims for breach of contract, unfair competition, and conversion. See id. According to LYB, Sacred Hoops breached an agreement between the parties restricting the resale price of goods that Sacred Hoops buys from LYB, refused to pay for or return goods that it purchased from LYB, and engaged in unfair competition by holding LYB responsible for its nonpayment. Id.

         On October 8, 2019, Sacred Hoops filed a motion to dismiss. Dkt. 13 ("Motion"). On October 28, 2019, LYB filed an opposition. Dkt. 18 ("Opp."). Sacred Hoops filed a reply on November 4, 2019. Dkt. 19 ("Reply").

         Having carefully considered the parties' arguments, the Court finds and concludes as follows.


         Plaintiff LYB is a California corporation with its principal place of business in California. Compl. ¶ 1 LYB "distributes] Italian based clothing, accessory, and life style brand to companies (sellers) throughout the United States." Id, ¶ 6. LYB manages distribution for Hey Dude, an Italian-based shoe company. Id.

         Defendant Sacred Hoops is a South Dakota corporation with its principal place of business in South Dakota. Compl. ¶ 1; Motion at 4. Sacred Hoops does business as Top 10 Sports and sells shoes, socks, and related accessories on its website and on to consumers. Compl. ¶¶ 2-3; Motion at 3.

         In February 2017, plaintiff and defendant entered into the Minimum Advertising Pricing Policy ("MAP Agreement"). Compl. at 7. The MAP Agreement provides, in relevant part, that defendant, as a dealer, was required to advertise Hey Dude products at or above a minimum advertised price set by the MSRP in Hey Dude's catalog and order form. Id. ¶ 8. The MAP Agreement also required that defendant receive written authorization from Hey Dude before selling Hey Dude products to a non-consumer third party. Id.

         Plaintiff alleges that, beginning in May 2018, defendant ordered and received more than $ 116, 000 in Hey Dude inventory. Compl. ¶ 10. Plaintiff further alleges that defendant did not object to or return any of the inventory, give notice that any of the inventory was defective or not in compliance with the order, and refused to pay for the inventory. Id. Plaintiff contends that it has attempted to collect the outstanding balance and that defendant continues to refuse to pay the outstanding invoices. Id. ¶ 11. Defendant contends, allegedly, that its obligations to pay the outstanding Hey Dude invoices are relieved or offset because plaintiff caused defendant to lose profits and sales. Id ¶ 12.

         Finally, plaintiff contends that, in 2018, defendant violated the MAP Agreement by advertising Hey Dude products below the minimum required price and by selling Hey Dude products on unauthorized websites, including Compl. ¶¶ 13-14.[1]


         A. Rule 12(b)(2)

         When a defendant moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the “ plaintiff bears the burden of establishing that jurisdiction is proper." Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008) (citation omitted). Where, as here, the defendant's motion is based on written materials rather than an evidentiary hearing, "the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010) (quoting Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). The plaintiff cannot simply rely on the "bare allegations" of its complaint; however, uncontroverted allegations in the complaint must be taken as true, and "[c]onflicts between parties over statements contained in affidavits must be resolved in the plaintiffs favor." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004).

         Generally, personal jurisdiction exists if (1) it is permitted by the forum state's long-arm statute and (2) the "exercise of that jurisdiction does not violate federal due process." Pebble Beach. 453 F.3d at 1154-55. "California's long-arm statute is co-extensive with federal standards, so a federal court may exercise personal jurisdiction if doing so comports with federal constitutional due process." Boschetto, 539 F.3d at 1015. "For a court to exercise personal jurisdiction over a nonresident defendant, that defendant must have at least 'minimum contacts' with the relevant forum such that the exercise of jurisdiction 'does not offend traditional notions of fair play and substantial justice.'" Schwarzenegger. 374 F.3d at 801 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Depending on the nature of the contacts between the defendant and the forum state, personal jurisdiction is characterized as either general or specific.

         1. General Jurisdiction

         "A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (quoting International Shoe, 326 U.S. at 317). A corporation's place of incorporation and principal place of business are the paradigmatic bases for general jurisdiction. Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). Otherwise, "[t]he standard is met only by 'continuous corporate operations within a state [that are] thought so substantial and of such a nature as to justify suit against [the defendant] on causes of action arising from dealings entirely distinct from those activities.'" King v. Am. Family Mut. Ins. Co., 632 F.3d 570, 579 (9th Cir. 2011) (quoting International Shoe, 326 U.S. at 318). The standard for general jurisdiction "is an exacting standard, as it should be, because a finding of general jurisdiction permits a defendant to be haled into court in the forum state to answer for any of its activities anywhere in the world." Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1224 (9th Cir. 2011).

         2. Specific Jurisdiction

         A court may assert specific jurisdiction over a claim for relief that arises out of a defendant's forum-related activities. Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir. 1993). The test for specific personal jurisdiction has three parts:

(1) The defendant must perform an act or consummate a transaction within the forum, purposefully availing himself of the privilege of conducting activities in the forum and ...

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