“at least one court has 2 found that in a tort action, the locus of the injury was a relevant factor” under 28 U.S.C. § 3 1391(b)(2)
How later courts described this case
- “at least one court has 2 found that in a tort action, the locus of the injury was a relevant factor” under 28 U.S.C. § 3 1391(b)(2)
- assuming in 24 the alternative that “some standard of agency” was relevant
- no jurisdiction despite two 16 trips to California
Written by the judges who cited it.
The opinion
1
2
3
4
5 IN THE UNITED STATES DISTRICT COURT
6 FOR THE NORTHERN DISTRICT OF CALIFORNIA
7
8 SOELECT, INC., Case No. 23-cv-05405-CRB
9 Plaintiff,
ORDER GRANTING MOTION TO
10 v.
DISMISS
11 HYUNDAI MOTOR COMPANY,
12 Defendant.
13 In this case, Soelect, Inc., a battery company, has sued Hyundai Motor Co. (HMC),
14 a car company, alleging that HMC stole Soelect’s trade secrets in violation of the Defend
15 Trade Secrets Act (DTSA). See Compl. (dkt. 1) ¶¶ 1, 4, 11, 15. HMC now brings two
16 motions: a motion to dismiss, and an alternative motion to stay. See MTD (dkt. 24); MTS
17 (dkt. 26). Because the Court grants the motion to dismiss, it does not reach the motion to
18 stay.
19 I. BACKGROUND
20 A. The Relevant Players
21 Soelect is a Delaware corporation with a principal place of business in North
22 Carolina. Compl. ¶ 16. Soelect “develops revolutionary lithium anode battery technology
23 for rechargeable lithium batteries for high energy applications, such as electric vehicles.”
24 Id. ¶ 4. HMC is a South Korean car company with a principal place of business in South
25 Korea. Id. ¶ 17. HMC’s subsidiary, HATCHI—not a party in this case—is a Michigan
26 corporation with a principal place of business in Michigan. See Walch Decl. Ex. A (dkt.
27 24-3) (HATCHI Compl.) ¶ 3. HATCHI has an office in Santa Clara County, known as the
B. The Dispute
1
“Lithium Metal Batteries have been called the ‘Holy Grail’ of battery technology,”
2
because they have the potential to “dramatically extend the range of electric automobiles,
3
and even power electric aircraft.” Compl. ¶ 4. But lithium tends “to grow dendrites—
4
microscopic branch-like growths of metal,” which “[w]hen present in a battery . . . can
5
grow long enough to short circuit the battery’s two electrodes, potentially causing a fire or
6
explosion.” Id. ¶ 5. And so “substantial efforts” have been undertaken to “mitigate or
7
prevent dendrite growth in Lithium Metal Batteries.” Id. ¶ 6. Soelect claims to have
8
developed a “revolutionary” technologies that does “just that.” Id. ¶ 7. Because successful
9
lithium metal batteries could expand the mileage range for electric vehicles and make them
10
safer, electric vehicle companies are interested in Soelect’s products. Id.
11
In February of 2019, a representative from HATCHI approached Soelect regarding
12
Soelect’s “Lithium-X Anode product.” Id. ¶ 25. The parties entered into a non-disclosure
13
agreement that prevented HMC and HATCHI from using information about Soelect’s
14
products. Id. ¶ 26. “HATCI also assured Soelect that HMC was not Soelect’s competitor
15
and that it did not intend to develop or manufacture its own lithium metal battery
16
components.” Id. ¶ 27. Soelect and HATCHI spent several months negotiating HMC’s
17
testing of Soelect’s product. Id. ¶ 28.
18
In September of 2019, Soelect and HATCHI entered into the Materials Transfer and
19
Testing Agreement (MTA), which directed Soelect to send materials to HMC at HMC’s
20
Uiwang Future Energy Research facility in South Korea. Id. ¶ 29. The MTA forbade
21
HMC and HATCHI “from, among other things, ‘attempt[ing] to determine the
22
composition or structure of [Soelect’s] Proprietary Material’ and ‘perform[ing] any
23
characterization testing including . . . scanning electron microscopy [SEM].’” Id. ¶ 30.
24
The MTA anticipated that the project would take place between September and November
25
of 2019, but allowed for the parties to alter the timeline. Id. ¶ 31.
26
Soelect sent samples of its batteries to HMC for testing. Id. ¶ 32. The parties
27
agreed several times to additional rounds of testing. Id. ¶¶ 33, 36. On October 27, 2020—
1 over a year after entering into the MTA—HMC sent to Soelect’s CEO the results of
2 HMC’s September 2020 testing. Id. ¶¶ 9, 11, 37. That testing showed images that Soelect
3 contends HMC could only have generated “by scanning electron microscopy, a type of
4 testing expressly forbidden by the MTA” because “it can be used to determine the
5 composition and structure of Soelect’s products and reverse engineer those products.” Id.
6 ¶¶ 38, 39. Soelect notified HMC and HATCHI that they had breached the MTA. Id. ¶ 40.
7 HMC and its subsidiaries “repeatedly told Soelect that they did not reverse engineer
8 Soelect’s products” and would not do so. Id. ¶ 43. However, on October 4, 2023, “a
9 Korean newspaper reported that HMC was going to begin developing and manufacturing
10 its own lithium metal battery anodes—products similar to those that Soelect
11 manufactures.” Id. ¶ 46. The article mentioned that the batteries were going to be
12 developed at the Uiwang facility, the same facility where Soelect had shipped its samples,
13 and that Soelect was working with HMC. Id. ¶¶ 47, 48.
14 C. Procedural History
15 1. HATCHI Case
16 In March of 2022, Soelect filed a one-count complaint in the Northern District of
17 Illinois against HATCHI. See HATCHI Compl. In that case, Soelect alleged that
18 HATCHI breached the MTA because it “allowed its affiliate [HMC] to conduct testing
19 barred by” the MTA. Id. ¶ 15. Soelect alleged that it was entitled to $10,000,000.00 in
20 liquidated damages. Id. ¶¶ 17, 18. On June 10, 2024, Judge Jeremy C. Daniel granted
21 partial summary judgment in Soelect’s favor, holding among other things that “there is no
22 genuine dispute that HATCHI breached the MTA by allowing [prohibited] testing to be
23 performed on Lithium-X samples.” Opp’n to MTS (dkt. 39) at 1 (quoting Soelect, Inc. v.
24 Hyundai Am. Tech. Ctr., Inc., No. 22 CV 1342, 2024 WL 2892905, at *13 (N.D. Ill. June
25 10, 2024) (HATCHI MSJ Order)). Judge Daniel held, however, that the parties disputed
26 “whether the $10 million stipulated sum is a reasonable estimate of the amount of loss that
27 would probably be sustained in the event of a breach,” which “preclude[d] granting
1 Order at *15. Trial is set in the HATCHI matter for November 18, 2024. See Reply re
2 MTS (dkt. 44) at 2. The parties here disagree about whether the only issue in that trial is
3 the enforceability of the liquidated damages clause. Compare MTS Opp’n at 3 (“The only
4 issue that remains in that case is the enforceability of the liquidated damages clause in the
5 contract between HATCHI and Soelect.”) with Reply re MTS at 3 (“in the HATCHI
6 Matter, [Soelect] has flatly refused to agree that actual damages are unavailable. . . .
7 Whether Soelect is entitled to actual damages in the HATCHI Matter implicates evidence
8 and issues relating to, at least, (i) the value of Soelect’s allegedly proprietary technology,
9 (ii) the performance of the Soelect samples at the heart of Soelect’s claims in the HATCHI
10 Matter and here, and (iii) the impact (if any) that HMC’s evaluation of such samples had
11 on Soelect.”). In the meantime, HATCHI has moved for reconsideration of the court’s
12 MSJ ruling, which is set for a hearing on September 25, 2024. Reply re MTS at 4–5.
13 2. This Case
14 Soelect brought this case on October 20, 2023. See Compl. The complaint alleges
15 that HMC violated the DTSA by misappropriating Soelect’s trade secrets. Id. ¶¶ 51–60.
16 The parties stipulated to stay this case until 30 days after the HATCHI summary judgment
17 decision. See Stipulation (dkt. 34). Two motions are now pending: HMC’s motion to
18 dismiss, and HMC’s motion to stay the case until after the HATCHI trial. See MTD;
19 Opp’n to MTD (dkt. 31); Supp. Opp’n to MTD (dkt. 40); Reply re MTD (dkt. 43); MTS;
20 Opp’n to MTS; Reply re MTS. The Court held a motion hearing on Friday, September 20,
21 2024, and took the matter under submission. Motion Hearing (dkt. 51). The Court now
22 addresses the motion to dismiss.
23 II. LEGAL STANDARD
24 HMC brings its motion to dismiss pursuant to Rules 12(b)(2), 12(b)(3), and 12(b)(6)
25 of the Federal Rules of Civil Procedure
26 Under Rule 12(b)(2), a party may move to dismiss a complaint for lack of personal
27 jurisdiction. “When a district court acts on a defendant’s motion to dismiss under Rule
1 showing of jurisdictional facts to withstand the motion to dismiss.” Ballard v. Savage, 65
2 F.3d 1495, 1498 (9th Cir. 1995). A prima facie showing is established if the plaintiff
3 produces admissible evidence that, if believed, would be sufficient to establish personal
4 jurisdiction. See Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d.
5 1122, 1129 (9th Cir. 2003). “[U]ncontroverted allegations in [the plaintiff’s] complaint
6 must be taken as true, and conflicts between the facts contained in the parties’ affidavits
7 must be resolved in [the plaintiff’s] favor.” Brayton Purcell LLP v. Recordon &
8 Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010). However, “bare bones assertions of
9 minimum contacts with the forum or legal conclusions unsupported by specific factual
10 allegations will not satisfy a plaintiff’s pleading burden.” Swartz v. KPMG LLP, 476 F.3d
11 756, 766 (9th Cir. 2007). Additionally, conclusory allegations or “formulaic recitation of
12 the elements” are not entitled to the presumption of truth. Ashcroft v. Iqbal, 556 U.S. 662,
13 681 (2009). “Nor is the court required to accept as true allegations that are . . .
14 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig.,
15 536 F.3d 1049, 1055 (9th Cir. 2008).
16 In assessing whether personal jurisdiction exists, the court is not limited to a
17 plaintiff’s complaint and may consider evidence presented in affidavits or order discovery
18 on jurisdictional issues. Data Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1285
19 (9th Cir. 1977). Although all uncontroverted allegations are taken as true, a court may not
20 “assume the truth of allegations in a pleading which are contradicted by affidavit.”1 Id. at
21 1284.
22 Under Rule 12(b)(3), a party may assert the defense of improper venue. “The
23 plaintiff bears the burden of showing that venue is proper.” Johnson v. Ford Motor Co.,
24 No. 23-cv-1375-PCP, 2023 WL 8654930, at *1 (N.D. Cal. Dec. 14, 2023). “In ruling on a
25 motion to dismiss for improper venue, the Court need not accept the allegations in the
26 complaint as true and may consider evidence outside of the pleadings.” Id. (citing eBay
27
1 Inc. v. Digit. Point Sols., Inc., 608 F. Supp. 2d 1156, 1161 (N.D. Cal. 2009)).
2 Under Rule 12(b)(6), a party may move to dismiss a complaint for failure to state a
3 claim upon which relief may be granted. The Court may base dismissal on either “the lack
4 of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable
5 legal theory.” Godecke v. Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th Cir. 2019)
6 (cleaned up). A complaint must plead “sufficient factual matter, accepted as true, to state a
7 claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (cleaned up). A claim
8 is plausible “when the plaintiff pleads factual content that allows the court to draw the
9 reasonable inference that the defendant is liable for the misconduct alleged.” Id.
10 “Threadbare recitals of the elements of a cause of action, supported by mere conclusory
11 statements, do not suffice” to survive a 12(b)(6) motion. Id. (citing Bell Atlantic v.
12 Twombly, 550 U.S. 544, 555 (2007)). When evaluating a motion to dismiss, the Court
13 “must presume all factual allegations of the complaint to be true and draw all reasonable
14 inferences in favor of the nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556,
15 561 (9th Cir. 1987). “[C]ourts must consider the complaint in its entirety, as well as other
16 sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in
17 particular, documents incorporated into the complaint by reference, and matters of which a
18 court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.
19 308, 322 (2007).
20 If a court dismisses a complaint for failure to state a claim, it should “freely give
21 leave” to amend “when justice so requires.” Fed. R. Civ. Proc. 15(a)(2). A court may
22 deny leave to amend due to “undue delay, bad faith or dilatory motive on the part of the
23 movant, repeated failure to cure deficiencies by amendment previously allowed, undue
24 prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of
25 amendment.” Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008).
26 III. DISCUSSION
27 In its motion to dismiss, HMC argues that (A) the Court lacks personal jurisdiction
1 domestic act; and (D) the anti-claim splitting doctrine bars this suit. See MTD.2
2 A. Personal Jurisdiction
3 HMC first argues that the Court lacks personal jurisdiction over it. MTD at 4–9.
4 Personal jurisdiction can be either general or specific, see Bristol-Myers Squibb Co. v.
5 Sup. Ct. Cal., San Francisco Cty., 582 U.S. 255, 262 (2017), but here Soelect only asserts
6 specific jurisdiction, see Opp’n to MTD at 3–9. The Ninth Circuit has “established a
7 three-prong test for analyzing a claim of specific personal jurisdiction.” Schwarzenegger
8 v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). In particular:
9 (1) The non-resident defendant must purposefully direct his
activities or consummate some transaction with the forum or
10 resident thereof; or perform some act by which he purposefully
avails himself of the privilege of conducting activities in the
11 forum, thereby invoking the benefits and protections of its
laws;
12 (2) the claim must be one which arises out of or relates to the
defendant’s forum-related activities; and
13 (3) the exercise of jurisdiction must comport with fair play and
substantial justice, i.e., it must be reasonable.
14
Id. (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)) (emphasis added). “The
15
plaintiff bears the burden on the first two prongs,” and once those are established, the
16
defendant must show a “‘compelling case’ that the exercise of jurisdiction would not be
17
reasonable.” Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th 972, 983 (9th Cir. 2021) (quoting
18
Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008) (quoting Schwarzenegger, 374
19
F.3d at 802)). “If any of the three requirements is not satisfied, jurisdiction in the forum
20
would deprive the defendant of due process of law.” Omeluk v. Langsten Slip &
21
Batbyggeri A/S, 52 F.3d 267, 270–71 (9th Cir. 1995) (adding that court did not analyze
22
reasonableness requirement where first two requirements were not met).
23
This order will address (1) the “purposeful direction” prong; (2) the “arises out of”
24
prong; (3) the “reasonableness” prong; as well as (4) Soelect’s request for jurisdictional
25
discovery.
26
27
1. Purposeful Direction
1
For “suits sounding in tort,” the Ninth Circuit generally applies the “purposeful
2
direction analysis.” AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1208 (9th Cir.
3
2020) (quotation omitted); see also Davis v. Cranfield Aerospace Sols., Ltd., 71 F.4th
4
1154, 1162 (9th Cir. 2023) (recognizing that there is not a “rigid dividing line” between
5
purposeful availment and purposeful direction) (internal quotation marks omitted), cert.
6
denied, 144 S. Ct. 826 (2024).
7
Purposeful direction, or the “effects test,” requires that a defendant have “[a]
8
committed an intentional act, [b] expressly aimed at the forum state, [c] causing harm that
9
the defendant knows is likely to be suffered in the forum state.” Schwarzenegger, 374
10
F.3d at 803 (citing Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)).
11
a. Intentional Act by the Defendant
12
The first part of the purposeful direction test is whether HMC has committed an
13
intentional act. See id. To satisfy the intentional act prong, “the defendant must act with
14
the ‘intent to perform an actual, physical act in the real world.’” Picot v. Weston, 780 F.3d
15
1206, 1214 (9th Cir. 2015) (quoting Schwarzenegger, 374 F.3d at 806). “The threshold of
16
what constitutes an intentional act is relatively low.” AirWair Int’l Ltd. v. Schultz, 73 F.
17
Supp. 3d 1125, 1233 (N.D. Cal. 2014). HMC does not challenge the intentional act
18
element, for good reason—HMC’s testing of Soelect’s product samples is an intentional
19
act.
20
b. Express Aiming
21
The second part of the purposeful direction test turns on whether HMC “expressly
22
aimed” its intentional acts at the forum. See Schwarzenegger, 374 F.3d at 802.
23
i. The Law on Express Aiming
24
The express aiming inquiry centers on whether the defendant specifically targeted
25
the forum state. See Morrill v. Scott Fin. Corp., 873 F.3d 1136, 1143 (9th Cir. 2017)
26
(citing Walden, 571 U.S. at 284). The Supreme Court has explained that the contacts
27
supporting purposeful direction “must be the defendant’s own choice and not [be]
1 ‘random, isolated, or fortuitous.’” Ford Motor Co., 592 U.S. at 359 (quoting Keeton, 465
2 U.S. at 774). The defendant must have “reached out beyond its home—by, for example,
3 exploiting a market in the forum state.” Id. (quotations and alterations omitted).
4 Therefore, a defendant does not purposefully direct its activities at the forum state when
5 the unilateral activity of the plaintiff or a third party is all that connects the defendant to
6 the forum state. See Walden, 571 U.S. at 284–85 (citing World-Wide Volkswagen Corp.
7 v. Woodson, 444 U.S. 286, 291–92, (1980)). Rather, the focus is on the defendant’s “own
8 contacts,” i.e., “contacts that the ‘defendant’ himself creates with the forum state.” See id.
9 at 284 (emphasis in original) (internal quotations omitted) (quoting Burger King Corp. v.
10 Rudzewicz, 471 U.S. 462, 475 (1985)); see also Axiom Foods, Inc. v. Acerchem Int’l, Inc.,
11 874 F.3d 1064, 1070 (9th Cir. 2017) (“The Court made clear that we must look to the
12 defendant’s ‘own contacts’ with the forum, not to the defendant’s knowledge of a
13 plaintiff’s connections to a forum.”) (quoting Walden, 571 U.S. at 289).
14 Nor does a defendant purposefully direct its activities at the forum state merely by
15 directing those activities at a person who happens to reside in the forum state, even if the
16 defendant knows that the person resides there. See Walden, 571 U.S. at 285. Instead, “it
17 is the defendant’s conduct that must form the necessary connection with the forum State.”
18 Id. In Calder v. Jones, 465 U.S. 783, 790 (1984), the Supreme Court “made clear that
19 mere injury to a forum resident is not a sufficient connection to the forum.” Walden, 571
20 U.S. at 290. “Regardless of where a plaintiff lives or works, an injury is jurisdictionally
21 relevant only insofar as it shows that the defendant has formed a contact with the forum
22 State.” Id. Thus, “[t]he proper question is not where the plaintiff experienced a particular
23 injury or effect but whether the defendant’s conduct connects him to the forum in a
24 meaningful way.” Id.
25 Courts are to focus on the defendant’s actual contacts with the forum, and the
26 “quality and nature” of those activities. See Hanson v. Denckla, 357 U.S. 235, 253 (1958).
27 ii. Express Aiming Analysis
1 arguably posit connections between HMC and California”: (1) an October 27, 2020 Zoom
2 meeting attended by “Hyundai personnel from the United States and Korea,” and (2) the
3 negotiations between HATCHI and Soelect over the MTA. MTD at 5. HMC argues that
4 neither set of allegations shows express aiming at California. Id.
5 As to (1) the October 27, 2020 Zoom meeting in which “Hyundai presented slides
6 showing scanning electron microscope images of the Soelect samples, in contravention of
7 the MTA,” Compl. ¶ 2, that meeting does not represent express aiming at California.
8 Because the meeting occurred after the SEM imaging at the center of this case, there is no
9 possibility that “any confidential information was misappropriated” at that meeting. See
10 E*Healthline.com, Inc. v. Pharmaniaga Berhad, No. 2:18-cv-01069-MCE-EFB, 2018 WL
11 5296291, at *5 (E.D. Cal. Oct. 23, 2018). Indeed, it was at that meeting that “Hyundai
12 personnel” disclosed to Soelect that it had done the imaging that Soelect alleges “can be
13 used to . . . reverse engineer [Soelect’s] products.” Compl. ¶¶ 2, 39. Nor does
14 participation in a Zoom meeting confer jurisdiction in any case. First, the HMC employees
15 apparently joined the Zoom from South Korea. See Seo Decl. (dkt. 24-10) ¶ 2 (“I attended
16 this virtual meeting from South Korea, as did all other attendees from HMC.”). And
17 second, “ordinary use of the mails, telephone, or other international communications
18 simply do not qualify as purposeful activity invoking the benefits and protections of the
19 [forum] state.” Serenium, Inc. v. Zhou, No. 20-cv-02132-BLF, 2021 WL 3111758, at *4
20 (N.D. Cal. July 22, 2021) (quoting Medimpact Healthcare Sys., Inc. v. Iqvia Holdings,
21 Inc., No. 19-cv-1865-GLC (LL), 2020 WL 1433327, at *8 (S.D. Cal. March 24, 2020)
22 (quoting Roth v. Garcia Marquez, 942 F.2d 617, 622 (9th Cir. 1991))). In its opposition
23 brief, Soelect does not even rely on the October 27, 2020 Zoom meeting for express
24 aiming. See Opp’n to MTD at 6–7.
25 As to (2) the negotiations between HATCHI and Soelect over the MTA, there are
26 two reasons that it does not evidence express aiming.
27 First, it was HATCHI, a Michigan company with an office in California, who
1 parent-subsidiary relationship is insufficient, on its own, to justify imputing one entity’s
2 contacts with a forum state to another for the purpose of establishing personal
3 jurisdiction.” Ranza v. Nike, Inc., 793 F.3d 1059, 1070 (9th Cir. 2015). “As a general
4 principle, corporate separateness insulates a parent corporation from liability created by its
5 subsidiary, notwithstanding the parent’s ownership of the subsidiary.” Id.; see also Opp’n
6 to MTD at 5 (agreeing). That veil can be pierced under limited circumstances.
7 Historically, “this circuit permitted a plaintiff to pierce the corporate veil for jurisdictional
8 purposes and attribute a local entity’s contacts to its out-of-state affiliate under one of two
9 separate tests”—the agency test and the alter ego test. Ranza, 793 F.3d at 1071.
10 Soelect does not assert that the alter ego test applies and instead relies entirely on
11 the agency test. See Opp’n to MTD at 5. But the agency test might no longer be valid.
12 See Ranza, 793 F.3d at 1071 (explaining that because the agency test “stacks the deck” in
13 favor of jurisdiction, “[t]he Supreme Court invalidated this test” in Daimler AG v.
14 Bauman, 571 U.S. 117 (2014)3); Williams v. Yamaha Motor Co. Ltd., 851 F.3d 1015,
15 1024 (9th Cir. 2017) (“Notwithstanding Daimler’s express reservation on the question of
16 agency theory’s application to specific jurisdiction, more than one district court within our
17 circuit has expressed some uncertainty on that point post-Daimler, as ‘the rationale set
18 forth in Daimler . . . would seem to undermine application of [our agency test] even in
19 specific jurisdiction cases.’”; “Daimler’s reasoning is clearly irreconcilable with the
20 agency test set forth in Unocal.”); MSP Recovery Claims v. Actelion Pharm. US, Inc., No.
21 3:22-cv-07604-JSC, 2024 WL 3408221, at *4 (N.D. Cal. 2024) (“the Ninth Circuit has . . .
22 rejected the agency test in the context of specific personal jurisdiction.”).
23 Even if the agency test is still valid, see Williams, 851 F.3d at 1024 (assuming in
24 the alternative that “some standard of agency” was relevant), Soelect has not sufficiently
25 demonstrated an agency relationship here. Soelect assigns significant weight to
26
27
3 To be clear, the Supreme Court added that “Agency relationships . . . may be relevant to
1 HATCHI’s general counsel’s statement that “[HMC], not HATCHI, directs Hyundai
2 CRADLE’s projects and business activities.” Opp’n to MTD at 5 (citing Opp’n to MTD
3 Ex. A (dkt. 31-2) ¶ 4).4 But that statement does not demonstrate that HMC exercises
4 “higher than normal oversight” over HATCHI, akin to control over “day-to-day
5 operations.” See Sunderland v. Pharmacare U.S., Inc., No. 23-cv-1318-JES (AHG), 2024
6 WL 2116069, at *4 (S.D. Cal. May 10, 2024) (holding that if agency theory persists after
7 Daimler, it requires “substantial control,” which is “a showing higher than ‘normal
8 oversight of a parent over a subsidiary’ and more akin to ‘control of day-to-day
9 operations.’”) (quoting In re Cal. Gasoline Spot Mkt. Antitrust Litig., No. 20-cv-03131-
10 JSC, 2021 WL 4461199, at *2 (N.D. Cal. Sept. 29, 2021)).
11 Moreover, a declaration from HMC’s Chaeyeol Lee specifically states that HMC
12 does not exercise that kind of control over HATCHI. See Lee Decl. (dkt. 24-11) ¶¶ 6
13 (“HMC and HATCHI are separate and distinct corporate entities, and observe corporate
14 formalities”), 7 (“HMC and HATCHI are led by distinct and non-overlapping
15 individuals”), 8 (“HATCHI maintains its own bank accounts, financial records, and
16 corporate records, separate from HMC”), 9 (“HMC does not control HATCHI’s day-to-
17 day operations.”). Soelect argues (and insinuated at the motion hearing) that the Lee
18 declaration and the general counsel statement are in conflict, in which case “[c]onflicts
19 between parties over statements contained in affidavits must be resolved in the plaintiff’s
20 favor.” MTD Opp’n at 6 (quoting Schwarzenegger, 374 F.3d at 800). But the statements
21 are not in conflict—the Court understands them to say that HMC directs the projects that
22 HATCHI works on, but HATCHI is its own independent entity. See HDT Bio Corp. v.
23 Emcure Pharm., Ltd., No. C22-0334JLR, 2023 WL 9094355, at *11 (W.D. Wash. Dec. 4,
24 2023) (“shap[ing] [] broader business objectives” and “broader strategic planning”
25 “insufficient to establish an agency relationship for purposes of specific jurisdiction.”).5
26
27
4 At the motion hearing, Soelect’s counsel provided additional context for this declaration,
explaining that the magistrate judge in the Northern District of Illinois had directed
1 Second, even if HATCHI’s act of entering into the MTA with Soelect could be
2 imputed to HMC, that act alone does not demonstrate express aiming by HMC into
3 California. HATCHI and Soelect negotiated the MTA “in part” in California. See Compl.
4 ¶ 19. But HMC is a South Korean company, HATCHI is a Michigan company, Soelect is
5 a North Carolina company, and the relevant testing occurred when Soelect shipped
6 samples (presumably from North Carolina) to HMC in South Korea. That the MTA itself
7 was negotiated “in part” in California seems rather incidental.6 See Ford Motor Co., 592
8 U.S. at 359 (contacts cannot be “random, isolated, or fortuitous.”). A party entering into
9 “a contractual relationship that ‘envisioned continuing and wide-reaching contacts’ in the
10 forum State” can certainly be sufficient for a forum state court to exercise jurisdiction over
11 the party. See Walden, 571 U.S. at 285. But here, there was “no contemplation that
12 California would play a role in any of” the resulting conduct between the parties. See
13 E*Healthline.com, 2018 WL 5296291, at *5; see also Picot v. Weston, 780 F.3d 1206,
14 1213 (9th Cir. 2015) (no jurisdiction over Michigan-based defendant who took two trips to
15 California “to develop and market the technology” but undertook tasks agreed to in the
16 contract in Michigan); Serenium, 2021 WL 3111758, at *1, 4 (even where plaintiff was
17 based in California, and parties had frequent communication, where contract was for
18 defendant to develop products in Japan, South Korea, China, and Taiwan, there was no
19 jurisdiction over defendant in California).
20 Moreover, as HMC points out, “express aiming ‘depends, to a significant degree, on
21 the specific type of tort or other wrongful conduct at issue,” and a defendant must have
22 “‘expressly aimed its tortious conduct at the forum.’” MTD at 7–8 (quoting
23
24
relationship, see MTD Supp. Opp’n at 2 (“the court notes that the MTA ‘contemplates an
25 express delegation of HATCHI’s obligations to the HMC scientists who actually received
and tested the materials’”) (quoting HATCHI MSJ Order at *12), it does not. Judge
26 Daniel was addressing HATCHI’s argument that it was not liable for testing done by HMC
because the contract did not list HMC as a recipient of the product samples. See HATCHI
27 MSJ Order at *10–12. That the MTA anticipated that HMC would be testing the samples
does not mean that HATCHI was HMC’s agent for the purposes of specific jurisdiction.
1 E*Healthline.com, 2020 WL 5495284, at *4; Alexandria Real Estate Equities, Inc. v.
2 RUNLABS (UK) Ltd., No. 18-cv-07517-LHK, 2019 WL 4221590, at *13 (N.D. Cal. Sept.
3 5, 2019)). Indeed, in E*Healthline.com, 2020 WL 5495284, at *5, the court held that an
4 allegation that a defendant misappropriated confidential information through an employee
5 located in the forum was insufficient because the allegation “fail[ed] to demonstrate that
6 [that employee] performed any specific act on behalf of [the defendant], let alone an act
7 related to the misappropriation of plaintiff’s confidential information.” Here, while
8 Soelect alleges that HMC negotiated the MTA through HATCHI in this forum, it does not
9 allege either that HMC/HATCHI engaged in any wrongdoing in the course of the
10 contracting process, or that any misappropriation took place in California. Aiming non-
11 tortious conduct at the forum is insufficient. See Picot, 780 F.3d at 1214.7
12 Soelect adds a third potential basis for express aiming: that HMC at one point
13 “invited Soelect into the forum to discuss business opportunities.” Opp’n to MTD at 7
14 (citing Ex. B (dkt. 31-3) (Email Chain)). But a single invitation to California is not enough
15 to demonstrate express aiming. See Picot, 780 F.3d at 1213 (no jurisdiction despite two
16 trips to California). Moreover, the invitation came after the parties had entered into the
17 MTA. Compare Email Chain (with dates ranging between October 21, 2019 and
18 November 5, 2019) with MTA at 3 (signed September 1, 2019 and September 24, 2019).
19 And the invitation had nothing to do with the MTA or even with the parties’ specific
20 relationship. See Email Chain at 4 (invitation was to a “Mobility Innovators Forum”).
21 Soelect does not allege that the invitation is evidence of misappropriation of Soelect’s
22 trade secrets. See E*Healthline.com, 2020 WL 5495284, at *4; see also Pray, Inc. v.
23 Christian Care Ministry, Inc., No. 2:23-cv-10660, 2024 WL 1680053, at *5 (C.D. Cal.
24
25
7 The opposition responds that “The hook that HMC used to reel in Soelect’s proprietary
26 materials—the MTA contract—was negotiated in California.” MTD Opp’n at 6; see also
id. at 5 (“The genesis of HMC’s theft was a contract negotiated by the CRADLE office of
27 HMC’s subsidiary CRADLE in California—an intentional act aimed at California.”). But
this is an entirely new spin—the complaint does not allege that HATCHI negotiated the
1 Apr. 5, 2024) (allegation of “three meetings in California” that “provides little detail about
2 the content of these meetings,” absent “other allegations linking [defendant’s executives]
3 to California” was insufficient for personal jurisdiction); Hempel v. Cydan Dev., Inc., No.
4 3:13-cv-00008-MMD-CBC, 2018 WL 5777491 (D. Nev. Nov. 2, 2018) (visit to Nevada
5 did not support personal jurisdiction where it was “not challenged conduct nor [was] it
6 integral to any of” the claims). Nor does Soelect even allege that it accepted the
7 invitation.8
8 Because Soelect fails to identify sufficient contacts that HMC itself created with
9 California, Soelect has failed to show express aiming. See Walden, 571 U.S. at 284.
10 c. Harm
11 The third part of the purposeful direction test is whether HMC knew that its
12 intentional act would cause harm in the forum. See Schwarzenegger, 374 F.3d at 803. The
13 focus of the inquiry “is not the magnitude of the harm, but rather its foreseeability.”
14 Lindora, LLC v. Isagenix Int’l, LLC, 198 F.Supp.3d 1127, 1141 (S.D. Cal. 2016). For
15 jurisdictional purposes, a corporation incurs economic loss in the forum of its principal
16 place of business. See CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1079
17 (9th Cir. 2011). “If a jurisdictionally sufficient amount of harm is suffered in the forum
18 state, it does not matter that even more harm might have been suffered in another state.”
19 Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1207 (9th
20 Cir. 2006).
21 HMC argues that Soelect “‘does not allege that [HMC] injured [it] in California.’”
22 See MTD at 8 (quoting Kovalenko v. Kirkland & Ellis LLP, No. 22-cv-05990-HSG, 2023
23 WL 5444728, at *14 (N.D. Cal. Aug. 23, 2023)). That is correct. Soelect, a Delaware
24 corporation with its principal place of business in North Carolina, see Compl. ¶ 16, alleges
25
26
8 Also, the HATCHI MSJ Order’s language about the MTA “contemplat[ing] an express
27 delegation of HATCHI’s obligations to the HMC scientists who actually received and
tested the materials,” which Soelect characterizes as a delegation of “performance from
1 only that “Soelect has suffered harm as a direct and proximate result of HMC’s use and
2 disclosure of Soelect’s trade secrets, and . . . HMC has gained, both financially and
3 reputationally, as a market leader in the lithium metal anode area, from this use or
4 disclosure,” id. ¶ 59. In Kovalenko, 2023 WL 5444728, at *14, where the plaintiff did not
5 live in California, worked in several other states, and only intended to relocate to
6 California, Judge Gilliam held that the plaintiff failed to allege that the defendant injured
7 the plaintiff in California, and so had failed to allege forum-state harm. Soelect similarly
8 fails to allege any forum-state harm here.
9 In response, Soelect argues that “where intellectual property is stolen, a projected
10 negative effect on the marketplace in a state is sufficient to demonstrate harm is likely to
11 occur in the forum.” Opp’n to MTD at 7. Soelect cites in support of that point DFSB
12 Kollective Co. v. Bourne, 897 F. Supp. 2d 871, 885 (N.D. Cal. 2012), a copyright case in
13 which Judge Hamilton held that the plaintiff, who was not a California resident, had
14 adequately alleged harm in California because it had alleged that “by offering unauthorized
15 copies of Plaintiffs’ works, Defendant has affected Plaintiffs’ large California market by
16 ‘decreasing the volume of sales and corresponding revenue there appreciably.’” See
17 Opp’n to MTD at 7 (emphasis added). Soelect argues that “California is one of the largest
18 electric vehicle marketplaces in the United States” and that because HMC stole its battery
19 technology, Soelect has a decreased ability to participate in the electric vehicle
20 marketplace. Id. (citing https://cleantechnica.com/2024/02/22/california-rises-to-21-4-bev-
21 market-share-33-8-of-us-bev-market/, which does not mention Hyundai or Soelect).
22 This is unpersuasive. As an initial matter, this theory of harm is attenuated: Soelect
23 makes batteries, batteries are important for electric vehicles, there is a big market for
24 electric vehicles in California, therefore Soelect was harmed by not being able to
25 participate in the California car market.9 It is also nowhere in the complaint, which
26
27
9 It is also unclear why the issue is Soelect’s ability to participate in California’s electric
car market and not its ability to participate in California’s HMC electric car market.
1 touches only on how important effective lithium metal batteries are to the “multi-billion-
2 dollar electric vehicle marketplace.” See Compl. ¶¶ 4–7. If the Court’s focus is
3 foreseeability, then the complaint does not plead foreseeable harm in California. See
4 Lindora, 198 F.Supp.3d at 1141. Soelect insists that its inability to participate in
5 California’s electric vehicle market because of HMC’s misappropriation “is a forum-
6 specific harm unique to California.” Opp’n to MTD at 7. But it does not feel “unique to
7 California”—by that reasoning, Soelect could argue that it suffered harm everywhere
8 electric vehicles are sold. As to California specifically, unlike in DFSB, where the
9 plaintiff already had a “large California market,” which the defendant impacted by offering
10 unauthorized copies of the plaintiffs’ works, see DFSB Kollective, 897 F. Supp. 2d at 885,
11 Soelect apparently has no California market, see Statement of Undisputed Material Facts
12 in HATCHI Matter (No. 22-cv-01342 in N.D. Ill.) (dkt. 138) (“Soelect admits that it is not
13 selling its products commercially yet, but that is immaterial to this dispute.”).
14 Accordingly, the standard rule applies: a corporation incurs economic loss in the forum of
15 its principal place of business—here, North Carolina. See CollegeSource, 653 F.3d at
16 1079.
17 Soelect has therefore failed to allege forum-specific harm.
18 Because Soelect failed to show express aiming at California, and failed to allege
19 harm suffered in California, Soelect has failed the “purposeful direction” prong. Soelect
20 has therefore failed to satisfy the three-prong test for specific personal jurisdiction. See
21 Schwarzenegger, 374 F.3d at 802.
22 2. Arises Out Of
23 Claims “arise out of” the defendant’s contacts with the forum state when there is a
24 causal connection between the contacts and the claims. See Bristol-Myers, 582 U.S. at
25 255. Claims that do not “arise out of” the defendant’s contacts may nonetheless “relate to”
26 those contacts. Ford Motor Co., 592 U.S. at 362. “The ‘arises out of or relates to’
27 standard requires a connection, relationship, or nexus between the plaintiff’s claims and
1 JST, 2024 WL 54701, at *7 (N.D. Cal. Jan 4, 2024). Because Soelect has not met its
2 burden on the “purposeful direction” prong, the Court need not reach the “arises out of”
3 prong. See Omeluk, 52 F.3d at 270–71.
4 3. Reasonableness
5 “The plaintiff bears the burden on the first two prongs,” and once those are
6 established, the defendant must make a “‘compelling case’ that the exercise of jurisdiction
7 would not be reasonable.” Ayla, 11 F.4th at 983–84. Because Soelect has not met its
8 burden on the “purposeful direction” prong, the Court need not reach the reasonableness
9 prong. See Omeluk, 52 F.3d at 270–71.
10 The Court therefore GRANTS the motion to dismiss based on lack of personal
11 jurisdiction.
12 4. Jurisdictional Discovery
13 Soelect argues that if the Court does not deny the motion to dismiss outright, it
14 should give Soelect the opportunity to take jurisdictional discovery. MTD Opp’n at 9.
15 A district court has “broad discretion to permit or deny [jurisdictional] discovery, . .
16 . and its decision will not be reversed except ‘upon the clearest showing that denial of
17 discovery results in actual and substantial prejudice to the complaining litigant.’”
18 Butcher’s Union Loc. No. 498, United Food & Com. Workers v. SDC Inv., Inc., 788 F.2d
19 535, 540 (9th Cir. 1986) (quoting Data Disc, 557 F.2d at 1285 n.1). “Prejudice is
20 established if there is a reasonable probability that the outcome would have been different
21 had discovery been allowed.” Laub v. U.S. Dep’t of Interior, 342 F.3d 1080, 1093 (9th
22 Cir. 2003). “[A] refusal to grant discovery to establish jurisdiction is not an abuse of
23 discretion when ‘it is clear that further discovery would not demonstrate facts sufficient to
24 constitute a basis for jurisdiction.’” Id. (quoting Wells Fargo & Co. v. Wells Fargo Exp.
25 Co., 556 F.2d 406, 430 (9th Cir. 1977)).
26 A plaintiff must establish a “colorable” basis for personal jurisdiction before
27 jurisdictional discovery will be allowed, offering “‘some evidence’ tending to establish
1 2022 WL 174236, at *15 (N.D. Cal. Jan. 19, 2022) (citation omitted). “This ‘colorable’
2 showing should be understood as something less than a prima facie showing.” Id. (citation
3 omitted). But where a plaintiff’s request for discovery is based on “little more than a
4 hunch that it might yield jurisdictionally relevant facts,” its denial is within the district
5 court’s discretion. See Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008).
6 Soelect’s one-paragraph request for jurisdictional discovery asserts that it has
7 already “proffered documents showing that HMC directed California-based CRADLE’s
8 business activities, including the [MTA]” and that “CRADLE10 brought Soelect into
9 California to discuss business relations.” MTD Opp’n at 9. It then argues that those
10 documents “must be resolved in [Soelect’s] favor,” and, at a minimum, show that Soelect
11 is “entitled to jurisdictional discovery.” Id. (quoting Schwarzenegger, 374 F.3d at 800).
12 Soelect’s conclusory argument is unpersuasive. Schwarzenegger held that
13 “[c]onflicts between parties over statements contained in affidavits must be resolved in the
14 plaintiff’s favor,” see Schwarzenegger, 374 F.3d at 800, but, as already discussed, there is
15 no conflict between the statement that HMC directs HATCHI’s projects and business
16 activities and the statement that HMC does not control HATCHI’s day-to-day operations,
17 see Lee Decl. ¶ 9; MTD Opp’n Ex. A ¶ 4. Further discovery into HMC’s control over
18 HATCHI (not CRADLE, which is just an office) could theoretically support Soelect’s
19 agency theory of jurisdiction,11 but that theory might not even remain viable in this Circuit.
20 See Williams, 851 F.3d at 1024; MSP Recovery Claims, 2024 WL 3408221, at *4. And,
21 as discussed above, even if HATCHI’s act of negotiating the MTA could be imputed to
22 HMC, that act still does not demonstrate express aiming of tortious conduct into
23 California. See Ford Motor Co., 592 U.S. at 359 (contacts cannot be “random, isolated, or
24 fortuitous.”); E*Healthline.com, 2018 WL 5296291, at *5 (“no contemplation that
25
26
10 Notably the complaint alleges that HATCHI, not CRADLE, solicited Soelect’s business.
27 See Compl. ¶ 25. HATCHI is a Michigan corporation with a principal place of business in
Michigan. See HATCHI Compl. ¶ 3.
1 California would play a role in any of” the resulting conduct between the parties); Picot,
2 780 F.3d at 1213 (no jurisdiction over Michigan-based defendant who took two trips to
3 California to develop and market technology where the tasks agreed to in the contract
4 occurred outside California). Soelect’s request for jurisdictional discovery is therefore
5 “based on little more than a hunch,” see Boschetto, 539 F.3d at 1020, and fails to offer
6 “‘some evidence’ tending to establish personal jurisdiction over the defendant,” see Jeong,
7 2022 WL 174236, at *15.
8 A separate reason the Court is disinclined to allow jurisdictional discovery is that
9 Soelect already received discovery from HATCHI about the MTA in the HATCHI Matter.
10 See Stipulated Order Regarding Production of Documents and Electronically Stored
11 Information in HATCHI Matter (No. 22-cv-01342 in N.D. Ill.) (dkt. 31). Soelect also took
12 some discovery from HMC in the HATCHI Matter, although perhaps not as much as
13 Soelect would have liked. See Order on Motion to Compel in HATCHI Matter (No. 22-
14 cv-01342 in N.D. Ill.) (dkt. 78) (noting that Soelect believed that production from HMC
15 was incomplete and that Soelect “may attempt to get additional documents”); Parties’
16 Stipulation to Conduct Certain Depositions Following the Close of Deadlines in HATCHI
17 Matter (No. 22-cv-01342 in N.D. Ill.) (dkt. 97) ¶ 4 (“HATCHI was informed that [HMC]
18 will agree to voluntarily make certain witnesses available for depositions in Korea”).
19 Soelect has not articulated how “there is a reasonable probability that the outcome would
20 [be] different [if further] discovery [was] allowed.” See Laub, 342 F.3d at 1093.
21 B. Venue
22 HMC next argues that this district is an improper venue. MTD at 10.
23 In a civil action, venue is proper: (1) in a judicial district in which any defendant
24 resides, (2) in a judicial district “in which a substantial part of the events or omissions
25 giving rise to the claim occurred, or a substantial part of property that is the subject of the
26 action is situated,” or (3) “in a judicial district in which any defendant is subject to the
27 court’s personal jurisdiction” if there is no district in which an action may otherwise be
1 defendant in this case, so 28 U.S.C. § 1391(b)(1) is unmet. As discussed above, HMC is
2 not subject to the Court’s jurisdiction, and so 28 U.S.C. § 1391(b)(3) is unmet. The only
3 question is whether Soelect satisfies 28 U.S.C. § 1391(b)(2). “[I]t is sufficient that a
4 substantial part of the events occurred in the challenged venue, even if a greater part of the
5 events occurred elsewhere.” Vigg v. Jaddou, No. 21-cv-02678-KAW, 2022 WL 3581930,
6 at *2 (N.D. Cal. Aug. 10, 2022) (internal quotations omitted).
7 The complaint alleges that “[v]enue is appropriate in the Northern District of
8 California pursuant to 28 U.S.C. § 1391 because the contract under which HMC was
9 permitted to perform limited testing of Soelect’s products was negotiated, in part, in
10 California by HMC’s subsidiary company in Santa Clara County.” Compl. ¶ 19. But
11 HATCHI and Soelect partially negotiating the MTA in this district was not “a substantial
12 part of the events . . . giving rise to the claim.” See 28 U.S.C. § 1391(b)(2); Elofson v.
13 Bivens, No. 15-cv-05761-BLF, 2017 WL 566323, at *14 (N.D. Cal. Feb. 13, 2017) (28
14 U.S.C. § 1391(b)(2) not met where the events that occurred in the Northern District of
15 California “[made] up a very small part of the overall circumstances giving rise to this
16 action”). The negotiation of the MTA was not “a substantial part of the events” here.12
17 The complaint does not allege that HATCHI negotiated the MTA in bad faith in order to
18 lure Soelect into sharing its trade secrets so that HMC could steal them a year later. See
19 Compl. ¶¶ 9–11.
20 In addition, Soelect’s injury did not take place in California. Soelect is a Delaware
21 corporation with a principal place of business in North Carolina. See Compl. ¶ 16; Myers
22
23
12 Soelect complains that HMC “cites no meaningful authority” as to venue, but then itself
24 cites only one case: Uffner v. La Reunion Francaise, S.A., 244 F.3d 38, 42 (1st Cir. 2001).
See MTD Opp’n at 9. In that case, the First Circuit held that “venue may be proper in any
25 number of districts” and that courts are to look “not to a single ‘triggering event’
prompting the action, but to the entire sequence of events underlying the claim.” Uffner,
26 244 F.3d at 42. In Uffner, an insured’s boat caught fire and sank, the insured filed a claim
with his insurer, and the insurer denied the claim. Id. The First Circuit concluded that the
27 loss of the boat was “a substantial event giving rise to the claim,” and so venue was proper
in the district where the boat sank. Id. at 42–43. That holding does not move the needle
1 v. Bennett Law Offices, 238 F.3d 1068, 1075–76 (9th Cir. 2001) (“at least one court has
2 found that in a tort action, the locus of the injury was a relevant factor” under 28 U.S.C. §
3 1391(b)(2)). All of HMC’s conduct occurred in South Korea. See Compl. ¶¶ 37–38
4 (testing), 58 (use). Where the misappropriation and injury all occurred elsewhere and only
5 the contract was signed here, venue is not proper here. See Zike, LLC v. Catalfumo, No.
6 6:11-1841-TMC, 2012 WL 12867973, at *3 (D.S.C. Feb. 29, 2012) (venue not proper in
7 South Carolina, even though “[d]efendants made trips to South Carolina during which the
8 NDA was signed,” where trade secret misappropriation all occurred “in Florida or
9 elsewhere”); cf. Power Integrations, Inc. v. Penbrothers Int’l Inc., No. 19-cv-2700-SVK,
10 2019 WL 13202217, at *3 (N.D. Cal. Nov. 1, 2019) (notwithstanding that plaintiff was
11 headquartered in this district and would feel harms in this district, “the location of the
12 threatened misappropriation would appear to be where the Individual Defendants are
13 working, i.e., in the Philippines and/or San Diego” and so “any . . . misappropriation of
14 PI’s trade secrets . . . would have taken place in the Philippines and/or San Diego, not this
15 District.”).
16 Accordingly, Soelect has not met 28 U.S.C. § 1391(b)(2), and the Northern District
17 of California is an improper venue. The Court therefore GRANTS the motion to dismiss
18 based on improper venue.
19 C. Failure to State a DTSA Claim
20 Finally, HMC argues that the complaint should be dismissed pursuant to Rule
21 12(b)(6) because Soelect fails to state a claim under the DTSA. See MTD at 15. In order
22 for the DTSA to apply to conduct outside of the United States, there must be an “act in
23 furtherance” of the misappropriation that was “committed in the United States.” 18 U.S.C.
24 § 1837. HMC argues that while “Soelect alleges that ‘HMC has used [its] trade secrets
25 without Soelect’s consent and thereby misappropriated them in violation of the DTSA,’”
26 “Soelect fails to allege that any such use, or any act in furtherance thereof, occurred
27 domestically.” MTD at 15 (quoting Compl. ¶ 58). The Court agrees.
1 secrecy” of Soelect’s product samples, the MTA, was negotiated and executed within the
2 United States. Opp’n to MTD at 12–13 (quoting 18 U.S.C. § 1839(5)(B)(ii)(II)).13 The
3 problem with this is that it was HATCHI, not HMC, who negotiated and executed the
4 MTA. Also, as stated repeatedly above, the complaint does not allege that HATCHI did
5 anything improper in the contracting process. “[A]n act that occurs before the [allegedly
6 wrongful] operation is underway or after it is fully completed is not an act in furtherance of
7 the misappropriation.” Bepex Int’l, LLC v. Micron BV, No. 19-cv-2997 (KMM/JFD),
8 2023 WL 2975699, at *5, 7 (D. Minn. Apr. 17, 2023) (internal quotation marks omitted).
9 “[A]n act in furtherance of misappropriation must manifest that the offense is at work and
10 is not simply a project in the minds of the offenders.” Id. (internal quotation marks
11 omitted). Soelect also argues that “other acts in furtherance of the misappropriation . . .
12 occurred domestically,” but it points only to “the communications that led up to Soelect’s
13 decision to ship its samples to HMC.” Opp’n to MTD at 13. But again, those
14 communications were with HATCHI, and Soelect does not allege that those
15 communications were part of the misappropriation.
16 Soelect cites to a single case that it says supports is position here: Medcenter
17 Holdings Inc. v. WebMD Health Corp., No. 1:20-cv-0053 (ALC), 2021 WL 1178129, at
18 *6 (S.D.N.Y. Mar. 29, 2021). Id. In Medcenter, though, in connection with acquisition
19 talks, the defendant entered into a nondisclosure agreement through which the plaintiff
20 shared its database structure and allowed the defendant to interview the plaintiff’s senior
21 leadership and see those employees’ confidential employment terms. Id. at *2. One of
22 those employees attended a conference in Miami attended by the defendant’s CEO, got
23 access to the plaintiff’s data key, and then resigned abruptly and joined the defendant’s
24 company. Id. at *3. The plaintiff then learned that the employee had used the data key to
25 access, download, retain, and steal substantial amounts of confidential data from the
26 plaintiff, which the defendant used. Id. The court concluded that the plaintiff had
27
1 sufficiently alleged a domestic act in furtherance of the misappropriation by way of the
2 allegations of “the meeting between [the employee and the defendant’s CEO] in Miami,
3 FL; the negotiation of the NDA in New York, which [the plaintiff] contends was a Trojan
4 Horse for [the defendant] to learn about [the plaintiff’s] employees and proprietary
5 databases; and [the employee’s] consulting work with [the defendant], which her contract
6 indicates would take place partly in the United States.” Id. at *6. Those allegations are far
7 more extensive than what Soelect has alleged here. Here, it was the defendant’s subsidiary
8 who negotiated the contract; here, there is no suggestion that the contracting process was
9 in any way nefarious; here, the alleged misappropriation happened entirely in South Korea;
10 and here, there is no alleged use of the misappropriated data in the United States. If
11 Medcenter is the best case that Soelect can point to, Soelect has failed. See also ProV Int’l
12 Inc. v. Lucca, No. 8:19-cv-978-T-23AAS, 2019 WL 5578880, at *3 (M.D. Fla. Oct. 29,
13 2019) (dismissing DTSA claim for failure to state a claim where there was “no allegation
14 suggesting that the defendants attempted to recruit an employee from the United States,
15 that the defendants acquired in the United States the [plaintiff’s] ‘trade secrets,’ or that the
16 defendants used the trade secrets in the United States.”).
17 Because Soelect has not alleged a domestic act in furtherance of the
18 misappropriation, the Court GRANTS the motion to dismiss for failure to state a claim.
19 Soelect asks that “if the Court has concerns about the sufficiency of Soelect’s allegations
20 in this regard,” it should give Soelect leave to amend. Opp’n to MTD at 13. If failure to
21 state a claim was the only basis for dismissal, the Court would do so. However, because
22 Soelect has also failed as to personal jurisdiction and venue, leave to amend would be
23 futile. See Leadsinger, 512 F.3d at 532.
24 IV. CONCLUSION
25 For the foregoing reasons, the Court GRANTS the motion to dismiss based on lack
26 of personal jurisdiction, improper venue, and failure to state a claim. The Court does not
27 grant either jurisdictional discovery or leave to amend, and it does not reach the alternative
1 || motion to stay.
2 IT IS SO ORDERED.
3 Dated: September 24 , 2024 □□□ /
CHARLES R. BREYER
4 United States District Judge
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