# RocketPower, Inc. v. Strio Consulting, Inc.

> District Court, N.D. California · November 18, 2020

URL: https://www.frixlaw.com/law-library/cases/10065859

## Case

- **Court:** District Court, N.D. California
- **Decided:** November 18, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

1
2
3
4
5 IN THE UNITED STATES DISTRICT COURT
6 FOR THE NORTHERN DISTRICT OF CALIFORNIA
7
8 ROCKETPOWER, INC., Case No. 20-cv-06446-CRB

9 Plaintiff,
ORDER DENYING MOTION TO
10 v. DISMISS OR TRANSFER VENUE

11 STRIO CONSULTING, INC.,
12 Defendant.

13 RocketPower, Inc. is suing Strio Consulting, Inc. for breach of contract.
14 RocketPower alleges that Strio agreed to perform and review background checks for one
15 of RocketPower’s clients and did not do so. Strio has moved the Court to either dismiss
16 the case for lack of personal jurisdiction or transfer the case to the District of Minnesota.
17 The Court denies Strio’s motion.
18 I. BACKGROUND
19 RocketPower—a company incorporated in Delaware with its principle place of
20 business in California—provides outsourced or contract recruiters and staffers to other
21 companies. See Complaint (dkt. 1-A) ¶ 5; Notice of Removal (dkt. 1) ¶ 7. Strio—a
22 company incorporated and with its principle place of business in Minnesota—provides
23 administrative services like payroll, employment benefits, and background checks to
24 companies including RocketPower and, pursuant to a verbal agreement with RocketPower,
25 some of RocketPower’s clients. Complaint ¶ 6; Notice of Removal ¶ 8. RocketPower
26 alleges that when RocketPower identified a qualified candidate for a client, Strio was
27 contractually “responsible for conducting a background check and other relevant
1 Nuro, Inc., is a California robotics company that develops self-driving vehicles. Id.
2 ¶¶ 18–19. Nuro hired RocketPower to recruit “Safety Drivers,” “Autonomous Vehicle
3 Operators,” (AVOs), and “Command Center Operators” (CCOs). Id. ¶ 20. Nuro required
4 that job applicants successfully complete a background check; ones with driving-related
5 offenses would not qualify. Id. ¶¶ 23–24. RocketPower placed over 100 workers with
6 Nuro in California, though RocketPower also placed workers with Nuro in Arizona and
7 Texas. Caldwell Decl. (dkt. 11-1) ¶¶ 20, 22.
8 RocketPower alleges that Strio knew of Nuro’s screening requirements and their
9 importance to RocketPower’s relationship with Nuro. Id. ¶¶ 26–27. Nonetheless, Strio
10 “either (1) failed to conduct the background checks for the workers or (2) failed to
11 adequately review the background checks conducted for disqualifying criteria.” Id. ¶ 36.
12 This came to light because in February 2020, Nuro conducted its own background check,
13 which “flagged workers for whom Strio was responsible for conducting the background
14 check” including at least one who had been convicted of driving under the influence. Id.
15 ¶¶ 34–35, 37. Once that happened, “RocketPower saw a sharp decline in its placement of
16 workers with Nuro.” Id. ¶ 46.
17 On July 24, 2020, RocketPower sued Strio for breach of contract in the Superior
18 Court of California in Alameda County. See id. at 1–2. On September 14, 2020, Strio
19 removed the case to this Court under 28 U.S.C. § 1441(b) based on diversity jurisdiction.
20 See Notice of Removal ¶ 6.1
21 Strio now moves the Court to either dismiss the case for lack of personal
22 jurisdiction or transfer the case to the District of Minnesota. See Mot. to Dismiss (dkt. 10)
23

24
1 Because RocketPower is incorporated in Delaware and has its principal place of business in
California, and Strio is incorporated and has its principal place of business in Minnesota, the
25
parties are diverse. See Notice of Removal ¶¶ 7–9. And although the Complaint states that Strio’s
liability “exceeds $25,000,” Strio has submitted a declaration suggesting that the amount at stake
26
is $28,915.41 per month for at least five months. See id. ¶ 15; Fulhart Decl. (dkt. 10-2) ¶ 4. The
Court thus finds “by a preponderance of the evidence” that the amount in controversy exceeds
27
$75,000. See Chavez v. JPMorgan Chase & Co., 888 F.3d 413, 416 (9th Cir. 2018) (citation
1 at 5, 12.
2 II. LEGAL STANDARD
3 A. Personal Jurisdiction
4 When a motion to dismiss for lack of personal jurisdiction is based on written
5 materials rather than an evidentiary hearing, the plaintiff need only make a prime facie
6 showing of jurisdiction. See Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218,
7 1223 (9th Cir. 2011). “[U]ncontroverted allegations in the complaint must be taken as
8 true” and “[c]onflicts between parties over statements contained in affidavits must be
9 resolved” in the plaintiff’s favor, Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797,
10 800 (9th Cir. 2004), but disputed allegations in the complaint that are not supported by any
11 evidence cannot establish jurisdiction, see In re Boon Glob. Ltd., 923 F.3d 643, 650 (9th
12 Cir. 2019).
13 A court may exercise personal jurisdiction over an out-of-state defendant when
14 doing so is permitted by the forum state’s long-arm statute and where the exercise of
15 jurisdiction does not violate federal due process. Pebble Beach Co. v. Caddy, 453 F.3d
16 1151, 1154 (9th Cir. 2006). Because California’s long-arm statute allows courts to
17 exercise personal jurisdiction to the extent permitted by the Due Process Clause, see Cal.
18 Code Civ. Pro. § 410.10, that leaves only the due process inquiry.
19 Due process requires that a defendant not present in the forum state have “certain
20 minimum contacts” with the state “such that the maintenance of the suit does not offend
21 traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326
22 U.S. 310, 316 (1954).2 There are “three requirements”—
23 (1) The defendant must either purposefully direct his activities or
purposefully avail himself to the privileges of conducting activities in the
24
forum;
25 (2) The claim must be one which arises out of or relates to the defendant’s
forum related activities; and
26

27
2 A court may also exercise “general” personal jurisdiction where a defendant’s “affiliations with
1
(3) The exercise of jurisdiction must comport with fair play and substantial
2 justice, i.e. it must be reasonable.
3 Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1068 (9th Cir. 2017).
4 B. Transfer
5 “For the convenience of parties and witnesses, and in the interest of justice, a
6 district court may transfer any civil action to any other district or division where it might
7 have been brought or to any district of division to which all parties have consented.” 28
8 U.S.C. § 1404(a). A court must “weigh multiple factors in its determination whether
9 transfer is appropriate in a particular case.” Jones v. GNC Franchising, Inc., 211 F.3d 495,
10 498 (9th Cir. 2000). A court may consider “(1) the location where the relevant agreements
11 were negotiated and executed, (2) the state that is most familiar with the governing law, (3)
12 the plaintiff’s choice of forum, (4) the respective parties’ contacts with the forum, (5) the
13 contacts relating to the plaintiff’s cause of action in the chosen forum, (6) the differences
14 in the costs of litigation in the two forums, (7) the availability of compulsory process to
15 compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources
16 of proof.” Id. at 498–99.
17 III. DISCUSSION
18 Strio argues that the Court lacks personal jurisdiction over Strio because Strio does
19 not have the required “minimum contacts” with California. Mot. to Dismiss at 1. In the
20 alternative, Strio argues that the Court should transfer this lawsuit to Minnesota for
21 efficiency reasons because there is pending litigation between the parties in the District of
22 Minnesota. Id. 1–2, 12–13. Because the Court has personal jurisdiction over Strio and the
23 relevant factors do not support transferring this case to Minnesota, the Court denies Strio’s
24 motion.
25 A. Personal Jurisdiction
26 The Court concludes that it has jurisdiction over Strio because Strio purposefully
27 contracted to provide services to RocketPower, a California company, and those services
1 work at Nuro, another California company.
2 First, Strio has “purposefully directed” its activities at California. Burger King
3 Corp. v. Rudzewicz, 471 U.S. 462, 473 (1985). When it comes to “interstate contractual
4 obligations,” parties that “reach out beyond one state and create continuing relationships
5 and obligations with citizens of another state are subject to regulation and sanctions in the
6 other State for the consequences of their activities.” Id. (citation omitted). Although a
7 “contract with an out-of-state party alone . . . clearly cannot” establish the required
8 minimum contacts, the “prior negotiations and contemplated future consequences, along
9 with the terms of the contract and the parties’ actual course of dealing” determine “whether
10 the defendant purposefully established minimum contacts within the forum.” Id. at 478–
11 79. Here, Strio reached beyond Minnesota in creating a contractual relationship with
12 RocketPower, a citizen of California. Complaint ¶¶ 10–17. And although negotiations
13 took place partly in Minnesota and partly remotely between Minnesota and California, see
14 Fullhart Decl. (dkt. 10-2) ¶ 16; Caldwell Decl. ¶ 6–8, the parties’ course of dealing shows
15 that Strio purposefully established contacts with California. Pursuant to its agreement with
16 RocketPower, Strio indirectly but purposefully provided certain services to Nuro, a
17 California company. Complaint ¶¶ 28–29. Those services were tailored to Nuro’s specific
18 needs, id. ¶ 26, and the California workers entered into joint employment agreements with
19 RocketPower and Strio, Caldwell Decl. ¶ 11. Strio’s contacts with California are thus far
20 from “random,” “fortuitous,” or “attenuated.” See Burger King, 471 U.S. at 480 (citation
21 omitted).
22 Second, RocketPower’s claim “arises out of” Strio’s California-related activities.
23 Axiom Foods, 874 F.3d at 1068. RocketPower alleges that Strio breached the contract it
24 made with RocketPower, a California company, by failing to screen workers that it jointly
25 employed with RocketPower on behalf of Nuro, a California company.
26 Third, exercising jurisdiction in this case would be reasonable. See id. “[W]here a
27 defendant who purposefully has directed his activities at forum residents seeks to defeat
1 considerations would render jurisdiction unreasonable.” Burger King, 471 U.S. at 477.
2 The Ninth Circuit “has identified seven relevant factors in determining the reasonableness
3 of asserting jurisdiction over a nonresident defendant.” FDIC v. British-Am. Ins. Co.,
4 Ltd., 828 F.2d 1439, 1442 (9th Cir. 1987). .
5 (1) The extent of purposeful interjection into the forum state;
(2) The burden on the defendant of defending in the forum;
6
(3) The extent of conflict with the sovereignty of defendant’s state;
7 (4) The forum state’s interest in adjudicating the dispute;
(5) The most efficient judicial resolution of the controversy;
8
(6) The importance of the forum to [the] plaintiff’s interest in convenient
9 and effective relief;
(7) The existence of an alternative forum.
10
11 Id.
12 Because these factors are neutral, or point both ways, Strio has not presented a
13 compelling case that exercising jurisdiction would be unreasonable. As discussed above,
14 Strio purposefully interjected into the forum state by agreeing with RocketPower to
15 provide certain services to RocketPower and its clients, including California clients.
16 Although defending in California may burden Strio to some extent, RocketPower chose to
17 sue in California, and any relevant third parties (e.g., Nuro representatives and job
18 applicants) are likely located in California, not Minnesota. For the same reason, and
19 despite litigation between the parties in the District of Minnesota, this specific controversy
20 would be more efficiently adjudicated in California.
21 Therefore, the Court has personal jurisdiction over Strio.
22 B. Transfer
23 The Court denies Strio’s motion to transfer venue because the Jones factors do not
24 support transferring this case to Minnesota. See 211 F.3d at 498.
25 Some of the factors relevant to a motion to transfer venue under 28 U.S.C.
26 § 1404(a) do not favor either party. For example, “the location where the relevant
27 agreements were negotiated and executed,” id., was both California and Minnesota, see
1 and Minnesota are a wash because RocketPower and Strio have both established contacts
2 with California and Minnesota, and the contacts in both places are relevant to this suit. See
3 Jones, 311 F.3d at 498–99. The “state that is most familiar with the governing law,” id. at
4 498, remains unclear at this stage because the parties dispute whether California or
5 Minnesota law governs RocketPower’s breach of contract claim and have not adequately
6 briefed this issue.3
7 But other factors favor not transferring this case. The “plaintiff’s choice of forum”
8 obviously points in that direction. Id. So do the “availability of compulsory process to
9 compel attendance of unwilling non-party witnesses” and the “ease of access to sources of
10 proof.” Id. Under Rule 45(c)(1) of the Federal Rules of Civil Procedure, a subpoena may
11 command a person to attend a trial, hearing, or deposition only “within 100 miles of where
12 the person resides, is employed, or regularly transacts business in person” or “within the
13 state where the person resides, is employed, or regularly transacts business in person” if
14 certain additional requirements are met. Fed. R. Civ. P. 45(c)(1). Here, the only non-party
15 persons with apparent relevance are Nuro representatives, job applicants, and workers.
16 These persons are likely located in California, not Minnesota. And it is unclear what
17 would prevent the parties from obtaining any pertinent evidence currently located in
18 Minnesota.
19 Strio argues that existing litigation in the District of Minnesota means that
20 transferring this case would be more efficient. See Mot. to Dismiss at 13–15. But a closer
21 look at the Minnesota suits indicates that they involve different issues. See Strio Request
22 for Jud. Notice (dkt. 10-1). For example, the Northern District of California previously
23 transferred a breach of contract suit brought by RocketPower against Strio to Minnesota
24 based on an express forum-selection clause in one of the relevant agreements. See No. 19-
25 cv-2900-WHA (N.D. Cal) Order Granting Transfer (dkt. 10-1 Ex. 1) at 4. No such clause
26
3 Either way, California choice-of-law principles will determine which state law controls. See Van
27
Dusen v. Barrack, 376 U.S. 612, 642 (1964) (“[T]he transferee district court must under § 1404(a)
1 || exists here. And that transferred suit involves the validity of certain non-compete
2 || agreements and other issues related to this suit only insofar as they arise out of the same
3 || general set of agreements. See id. at 2—3. In another Minnesota suit, Strio is suing
4 || RocketPower for not paying its share of costs or giving Strio its share of profits, see id. at
5 || 3, and RocketPower has asserted similar counterclaims against Strio, see No. 19-cv-1048
6 || (D. Minn.) Answer to Second Amended Compl. (dkt. 10-1 Ex. 3) §§ 36-58. Such claims
7 || are not present here. The Minnesota lawsuits do not involve Strio’s employment screening
8 || obligations or whether Strio breached those obligations with respect to RocketPower’s
9 || relationship with Nuro.*
10 In sum, it may be legally and logistically difficult for the District of Minnesota to
11 || resolve this more California-centric case. That the parties are litigating other issues in
«12 || Minnesota is not enough to warrant a transfer.

13 || IV. CONCLUSION

14 For the foregoing reasons, the Court DENIES Strio’s motion to dismiss or transfer

15 |] venue.
a
16 IT IS SO ORDERED. iE

2 17 Dated: November 18, 2020
CHARLES R. BREYER
Z 18 United States District Judge
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25 4 For the same reason, the “first-to-file doctrine” does not apply. When “a complaint involving the
same parties and issues has already been filed in another district,” the first-to-file rule “permits a
26 || district court to decline jurisdiction over an action.” Pacesetter Sys., Inc. v. Medtronic, Inc., 678
F.3d 93, 94-95 (9th Cir. 1982). As this formulation makes clear, the doctrine is discretionary and
27 || “is to be applied with a view to the dictates of sound judicial administration.” Id. at 95. As
28 discussed above, this case involves different issues than the cases currently pending in the District
of Minnesota.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10065859. Public record. Not legal advice.