Crossfit, Inc. v. Matrix Solutions, LLC

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8 UNITED STATES DISTRICT COURT

9 SOUTHERN DISTRICT OF CALIFORNIA

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11 CROSSFIT, INC., Case No.: 19-CV-887-CAB-BLM

12 Plaintiff,

ORDER GRANTING DEFENDANT

13 v. DAGOBAH, LLC’S MOTION TO

DISMISS

14 MATRIX SOLUTIONS, LLC et al.,

15 Defendants.

[Doc. No. 35]

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18 This matter comes before the Court on Defendant Dagobah, LLC’s (“Dagobah”)

19 motion to dismiss for lack of jurisdiction. [Doc. No. 35.] The motion has been fully

20 briefed, and the Court finds it suitable for determination on the papers submitted and

21 without oral argument. See S.D. Cal. CivLR 7.1(d)(1). For the reasons set forth below,

22 Dagobah’s motion is granted.

23 I. BACKGROUND

24 On May 10, 2019, Plaintiff CrossFit, Inc. filed its complaint for breach of contract

25 and trademark infringement against Defendants Matrix Solutions, LLC, Progenex

26 Holdings, LLC, Fitness Trade sp. z o.o, Fitness Trade sp. z o.o sp. k., and ABC Corp. [Doc.

27 No. 1.] On December 2, 2019, Plaintiff filed a First Amended Complaint (“FAC”) joining

28 as Defendants The Conclave, LLC and Dagobah, LLC. [Doc. No. 28.]

1 The FAC alleges that Matrix Solutions, LLC, Progenex Holdings, LLC, The

2 Conclave, LLC, and Dagobah, LLC, all Wyoming limited liability companies with a

3 principal place of business in Utah, are collectively doing business as “Progenex.” [Id. at

4 ¶ 10.1] Plaintiff alleges breach of contract and unauthorized use of Plaintiff’s intellectual

5 property and brand in a manner confusing to the public. [Id. at ¶ 1.]

6 The FAC alleges the Court has personal jurisdiction over Dagobah because it has

7 purposefully directed branding and other activities toward Plaintiff in California and is

8 jointly responsible for Progenex’s activities which are purposefully directed to California.

9 [Id. at ¶ 21.] The FAC also alleges that Dagobah is closely affiliated with or an alter ego

10 of Matrix Solutions and the several Progenex entities are all alter egos of one another. [Id.

11 at ¶¶ 9, 14.] The FAC mentions Ryan Page only once, as CEO of Defendant Matrix

12 Solutions, in relation to his response to Plaintiff’s demand letter from July 2017. [Id. at ¶

13 118.]

14 On January 17, 2020, Dagobah moved to dismiss under Federal Rule of Civil

15 Procedure 12(b)(2) for lack of personal jurisdiction. [Doc. No. 35.]

16 II. LEGAL STANDARD

17 Federal Rule of Civil Procedure 12(b)(2) allows a district court to dismiss an action

18 for lack of personal jurisdiction. “Where defendants move to dismiss a complaint for lack

19 of personal jurisdiction, plaintiffs bear the burden of demonstrating that jurisdiction is

20 appropriate.” Dole Foods Co. Inc. v. Watts, 303 F. 3d 1104, 1108 (9th Cir. 2002). “The

21 court may consider evidence presented in affidavits to assist in its determination and may

22 order discovery on the jurisdictional issues.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th

23 Cir. 2011) (citing Data Disc, Inc. v. Sys. Tech. Ass’n, Inc., 557 F.2d 1280 (9th Cir. 1977)).

24 A court’s power to exercise personal jurisdiction over a non-resident defendant is

25 limited by two independent constraints, namely the applicable state personal jurisdiction

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1 statute and the constitutional principles of due process. Sher v. Johnson, 911 F.2d 1357,

2 1361 (9th Cir. 1990); see also In re W. States Wholesale Natural Gas Antitrust Litig., 715

3 F.3d 716, 741 (9th Cir. 2013) (“[p]ersonal jurisdiction over a nonresident defendant is

4 proper if permitted by a state’s long-arm statute and if the exercise of that jurisdiction does

5 not violate federal due process.”). “Under California’s long-arm statute, California state

6 courts may exercise personal jurisdiction ‘on any basis not inconsistent with the

7 Constitution of this state or of the United States.’” Daimler AG v. Bauman, 571 U.S. 117,

8 125 (2014) (quoting Cal. Civ. Proc. Code Ann. § 410.10 (West 2004)). Thus, “the

9 jurisdictional analyses under state law and federal due process are the same.”

10 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-801 (9th Cir. 2004)).

11 Under the Due Process Clause of the Fourteenth Amendment, to exercise personal

12 jurisdiction over an out-of-state defendant, the defendant must have “certain minimum

13 contacts with [the State] such that the maintenance of the suit does not offend traditional

14 notions of fair play and substantial justice.” Goodyear Dunlop Tires Operations, S.A. v.

15 Brown, 564 U.S. 915, 923 (2011) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316

16 (1945) (internal quotations omitted)). This minimum contacts jurisdiction may be either

17 “general or all-purpose jurisdiction,” or “specific or case-linked jurisdiction.” Id. at 919

18 (citing Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414 (1984)). “The

19 strength of contacts required depends on which of the two categories of personal

20 jurisdiction a litigant invokes: specific jurisdiction or general jurisdiction.” Ranza v. Nike,

21 Inc., 793 F.3d 1059, 1068 (9th Cir. 2015).

22 III. DISCUSSION

23 Dagobah contends it is a Wyoming limited liability company that does not conduct

24 business in California to be subject to general jurisdiction in this Court. Dagobah also

25 denies that it has availed itself of the benefits of the laws of California and states it has no

26 contacts with California to support a finding of specific jurisdiction. Dagobah avers it is

27 only a holding company and has never sold any products or provided any services

28 anywhere.

1 Plaintiff argues Dagobah has sufficient minimum contacts with California to support

2 specific jurisdiction and suggests there may be general jurisdiction because Dagobah is an

3 unincorporated association and California may be its home. Primarily, Plaintiff contends

4 that Dagobah is closely affiliated with or an alter ego of Defendant Matrix Solutions and

5 the “Progenex” enterprise, such that Dagobah should also be responsible for the past and

6 ongoing trademark infringement by Progenex in California.

7 A. General Jurisdiction

8 “A court with general jurisdiction may hear any claim against that defendant, even

9 if all the incidents underlying the claim occurred in a different State.” Bristol-Myers

10 Squibb Co. v. Superior Court of California, 137 S. Ct. 1773, 1780 (2017) (emphasis in

11 original) (citing Goodyear, 564 U.S. at 919). “But ‘only a limited set of affiliations with a

12 forum will render a defendant amenable to’ general jurisdiction in that State.” Id. (quoting

13 Daimler, 571 U.S. at 137). “Because the assertion of judicial authority over a defendant is

14 much broader in the case of general jurisdiction than specific jurisdiction, a plaintiff

15 invoking general jurisdiction must meet an ‘exacting standard’ for the minimum contacts

16 required.” Ranza, 793 F.3d at 1069 (citing CollegeSource, Inc. v. AcademyOne, Inc., 653

17 F.3d 1066, 1074 (9th Cir. 2011)). “‘[G]eneral jurisdiction requires affiliations so

18 continuous and systematic as to render the foreign corporation essentially at home in the

19 forum State, i.e., comparable to a domestic enterprise in that State.’” Id. (quoting Daimler,

20 571 U.S. at 133 n.11). “Such contacts must be ‘constant and pervasive.’” Id. (citing

21 Daimler, 571 U.S. at 122). “The paradigmatic locations where general jurisdiction is

22 appropriate over a corporation are its place of incorporation and its principal place of

23 business.” Id. (citing Daimler, 571 U.S. at 137). “Only in an ‘exceptional case’ will

24 general jurisdiction be available anywhere else.” Id. (some internal quotation marks

25 omitted) (quoting Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014)).

26 Limited liability companies are considered citizens of each state where its owners or

27 members are residents. See Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894,

28 899 (9th Cir. 2006).

1 Plaintiff’s argument for general jurisdiction involves Dagobah’s possible citizenship

2 in California because it is a limited liability company. [Doc. No. 41 at 25.] Plaintiff points

3 out that Dagobah only states that its sole member is a private trust established under, and

4 governed by, the laws of Utah, but Dagobah failed to identify the citizenship of any trustee.

5 The citizenship of a traditional trust is the citizenship of its trustee or trustees. See

6 Demarest v. HSBC Bank USA, N.A., 920 F.3d 1223, 1229 (9th Cir. 2019). In response to

7 the Court’s order for a supplemental declaration on this issue, Dagobah declared the private

8 trust has two trustees, Ryan and Lindsay Page, both citizens of Utah. [Doc. No. 45.]

9 Dagobah is a Wyoming limited liability company with its principal place of business in

10 Wyoming. Dagobah’s sole member is a private trust established under the laws of Utah

11 with two trustees who are both citizens of Utah. Plaintiff’s suggestion that the Court has

12 general jurisdiction because Dagobah might be a citizen of California is therefore

13 unsupported. Besides its argument under the alter ego theory, which is discussed further

14 below, Plaintiff does not assert any additional reason to adequately invoke general

15 jurisdiction. Accordingly, the Court does not find that Dagobah has any affiliations with

16 California that are so continuous and systematic to invoke general jurisdiction over

17 Dagobah.

18 B. Specific Jurisdiction

19 The Ninth Circuit applies a three-part test to determine whether a district court can

20 exercise specific personal jurisdiction over a nonresident defendant:

21 (1) The non-resident defendant must purposefully direct his activities or

22 consummate some transaction with the forum or resident thereof; or perform some

23 act by which he purposefully avails himself of the privilege of conducting activities

24 in the forum, thereby invoking the benefits and protections of its laws (the

25 “purposeful availment” requirement);

26 (2) the claim must be one which arises out of or relates to the defendant’s forum-

27 related activities; and

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1 (3) the exercise of jurisdiction must comport with fair play and substantial justice,

2 i.e. it must be reasonable.

3 Schwarzenegger, 374 F.3d at 802 (quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir.

4 1987)). “The plaintiff bears the burden of satisfying the first two prongs of the test.” Id.

5 “If the plaintiff succeeds in satisfying both of the first two prongs, the burden then shifts to

6 the defendant to ‘present a compelling case’ that the exercise of jurisdiction would not be

7 reasonable.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).

8 a. Purposeful Availment

9 Plaintiff contends that because liability here sounds in tort, the “purposeful

10 direction” analysis derived from Calder v. Jones, 465 U.S. 783 (1984), is appropriate. A

11 defendant purposefully directed his activities at the forum if he: “1) committed an

12 intentional act; 2) expressly aimed at the forum state; 3) causing harm that the defendant

13 knows is likely to be suffered in the forum state.” Picot v. Weston, 780 F.3d 1206, 1214

14 (9th Cir. 2015) (internal citation omitted). The Supreme Court has cautioned that “the

15 plaintiff cannot be the only link between the defendant and the forum.” Walden v. Fiore,

16 571 U.S. 277, 285 (2014). “Rather, it is the defendant’s conduct that must form the

17 necessary connection with the forum State that is the basis for its jurisdiction over him.”

18 Id. As the Court explained, “[r]egardless of where a plaintiff lives or works, an injury is

19 jurisdictionally relevant only in so far as it shows that the defendant has formed a contact

20 with the forum state. The proper question is not where the plaintiff experienced a particular

21 injury or effect but whether the defendant’s conduct connects him to the forum in a

22 meaningful way.” Id. at 290.

23 Here, Plaintiff has failed to demonstrate that Dagobah committed any intentional act

24 expressly aimed at California. Plaintiff argues that Dagobah provides CEO services to

25 Progenex through Ryan Page which supports personal jurisdiction. The Court is not

26 convinced that even if true, this forms the necessary connection with Dagobah and

27 California. Dagobah providing CEO services to Progenex, without any other intentional

28 act on the part of Dagobah, does not result in a meaningful connection between Dagobah

1 and California. Moreover, Plaintiff’s argument is largely based on allegations without

2 factual support. To support a meaningful connection between Dagobah and California

3 through some type of complex scheme as Plaintiff suggests would require sufficient factual

4 support beyond mere allegations. The Court is also not convinced by Plaintiff’s assertion

5 that Dagobah’s ongoing participation in a California JAMS arbitration is a sufficient

6 contact to establish personal jurisdiction. Plaintiff states that Dagobah was named as a

7 defendant in the arbitration action. The Court does not find that Dagobah choosing to

8 defend itself and assert counterclaims in the arbitration action equates to deliberately

9 engaging in significant activities in California. In the absence of reliable evidence to the

10 contrary, Dagobah has not purposefully directed its activities to California.

11 In light of the above, the Court concludes that Dagobah’s actions do not connect it

12 with California in a way sufficient to support the assertion of personal jurisdiction over it.

13 Accordingly, because Plaintiff has failed to establish that Dagobah purposefully availed

14 itself of the privilege of conducting activities in California, the Court need not address

15 whether the claim arises out of or resulted from Dagobah’s forum related activities or

16 whether the exercise of jurisdiction would be reasonable. See Pebble Beach Co. v. Caddy,

17 453 F.3d 1151, 1155 (9th Cir. 2006) (concluding that because plaintiff’s claim failed the

18 first prong of the minimum contacts test “we need not address whether the claim arose out

19 of or resulted from Caddy’s forum-related activities or whether an exercise of jurisdiction

20 is reasonable per the factors outlined by the Supreme Court in Burger King Corp., 471 U.S.

21 462, 476-77 [] (1985).”); Attilio Giustio Leombruni S.p.A v. Lsil & Co., Inc., Case No. CV

22 15-002128 BRO (Ex), 2015 WL 12743878, at * 10 (C.D. Cal. May 29, 2015) (declining to

23 address the reasonableness of exercising jurisdiction where plaintiff failed to demonstrate

24 purposeful availment).

25 C. Alter Ego Theory

26 Plaintiff primarily argues that jurisdiction is proper under an alter ego theory.

27 Plaintiff contends that Dagobah is an alter ego of the Progenex enterprise which consists

28 of the other defendant entities, Matrix Solutions, Progenex Holdings, and The Conclave.

1 Essentially, Plaintiff alleges that Ryan Page has orchestrated some type of tax-evasion

2 scheme where Dagobah is controlling both the CEO and managing member, himself, of

3 the other Progenex entities and Progenex is using Dagobah to concentrate its assets while

4 leaving the liabilities to the remaining defaulted defendant entities.

5 The Court finds Plaintiff’s alter ego theory is unsupported. Plaintiff has not provided

6 any concrete evidence that Ryan Page is concentrating the assets of Progenex using

7 Dagobah or that Dagobah is directly involved with any of the actions of the other entities.

8 As stated previously, Plaintiff’s argument is based largely on unsubstantiated allegations

9 and speculation, which are insufficient as a matter of law to support a finding of alter ego.

10 See Davis v. Metro Prods. Inc., 885 F.2d 515, 520 (9th Cir. 1989) (“Because the corporate

11 form serves as a shield for the individuals involved for purposes of liability as well as

12 jurisdiction, many courts search for reasons to ‘pierce the corporate veil’ in jurisdictional

13 contexts parallel to those in liability contexts.”). See also Katzir’s Floor & Home Design,

14 Inc. v. M-MILS.com., 394 F.3d 1143, 1149 (9th Cir. 2004) (holding “mere fact of sole

15 ownership and control does not eviscerate the separate corporate identity that is the

16 foundation of corporate law,” noting, “[e]ven if the sole shareholder is entitled to all of the

17 corporation’s profits, and dominated and controlled the corporation, that fact is insufficient

18 by itself to make the shareholder personally liable”); Leek v. Cooper, 194 Cal. App. 4th

19 399, 414 (2011) (finding an “allegation that a person who owns all of the corporate stock

20 and makes all of the management decisions is insufficient to cause the court to disregard

21 the corporate entity.”). As a result, the Court cannot assert jurisdiction over Dagobah

22 simply because of its association with Progenex and Ryan Page. See Davis, 885 F.2d at

23 520 (“mere association with a corporation that causes injury in the forum state is not

24 sufficient in itself to permit that forum to assert jurisdiction.”).

25 D. Jurisdictional Discovery

26 Plaintiff requests that should the Court be inclined to grant Dagobah’s motion, it

27 should stay ruling on the motion to allow Plaintiff to conduct jurisdictional diversity

28 otherwise it would cause substantial prejudice.

1 “[T]he question of whether to allow discovery is generally within the discretion of

2 || the trial judge.” Am. W. Airlines, Inc. v. GPA Grp., Ltd., 877 F.2d 793, 801 (9th Cir. 1989).

3 || A decision “to deny discovery will not be disturbed except upon the clearest showing that

4 denial of discovery results in actual and substantial prejudice to the complaining

5 || litigant.” Laub v. U.S. Dep’t of Interior, 342 F.3d 1080, 1093 (9th Cir. 2003) (internal

6 ||citations omitted). While “purely speculative allegations of attenuated jurisdictional

7 contacts” are insufficient to warrant jurisdictional discovery, Getz v. Boeing Co., 654 F.3d

8 860 (9th Cir. 2011), “discovery should ordinarily be granted where pertinent facts

9 ||bearing on the question of jurisdiction are controverted or where a more satisfactory

10 showing of the facts is necessary.” Laub, 342 F.3d at 1093 (citing Butcher’s Union Local

11 498 v. SDC Inv., Inc., 788 F.2d 535, 540 (9th Cir.1986); Boschetto v. Hansing, 539

12 1011, 1020 (9th Cir. 2008)).

13 The Court finds that Plaintiff has not met its burden of demonstrating that there are

14 || “pertinent facts” that are controverted or needing a more satisfactory showing in order to

15 || determine the issue of jurisdiction over Dagobah nor has Plaintiff clearly shown any “actual

16 || or substantial prejudice” would result by denying discovery as Dagobah will be dismissed

17 || without prejudice in this action. Accordingly, Plaintiff's request for jurisdictional

18 || discovery is DENIED.

19 IV. CONCLUSION

20 For the reasons set forth above, Dagobah’s motion to dismiss for lack of personal

21 |/jurisdiction is GRANTED. Accordingly, Plaintiff's claims against Dagobah, LLC are

22 ||DISMISSED without prejudice to refiling in a court that has personal jurisdiction over

23 || Dagobah, LLC.

24 It is SO ORDERED.

25 Dated: February 28, 2020 €

26

Hon. Cathy Ann Bencivengo

27 United States District Judge

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