Zarif v. Hwareh.com,inc.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 SHAHNAZ ZARIF, Case No. 23-cv-0565-BAS-DEB 12 Plaintiff, ORDER GRANTING MOTION TO 13 v. DISMISS WITH LEAVE TO AMEND 14 HWAREH.COM, INC., (ECF No. 14) 15 Defendant. [17] 18 Pending before the Court is Defendant’s Motion to transfer or dismiss (ECF No. 14). 19 Defendant moves under Federal Rule of Civil Procedure (“Rule”) 12(b)(2), Rule 12(b)(3), 20 Rule 12(b)(6), Rule 12(f), and 28 U.S.C. § 1404 (a) and argues, inter alia, that the Court 21 lacks personal jurisdiction over Defendant. The Court agrees and GRANTS Defendant’s 22 Motion. (ECF No. 14.) The Court further GRANTS Plaintiff leave to amend his First 23 Amended Complaint. Because the Court grants the motion on personal jurisdiction 24 grounds, it does not reach Defendant’s other arguments. 25 I. BACKGROUND 26 Plaintiff alleges that Defendant violated various state and federal wiretapping and 27 privacy statutes. (FAC, ECF No. 9.) On or about March 7, 2023, Plaintiff accessed 28 Defendant’s website with his personal computer. (Id. ¶ 25.) Unbeknownst to Plaintiff, 1 Defendant had installed Facebook Pixel software in its website source code, which 2 surreptitiously siphons information from website users and redirects that information to 3 Facebook, Inc. (Id. ¶¶ 56–60, 80.) Defendant “utilized Facebook Pixel and other spyware 4 to intercept Plaintiff’s and the Class Members’ electronic computer-to-computer data 5 communications, including how Plaintiff and Class Members interacted with the website, 6 mouse movements and clicks, keystrokes, search items, information inputted into the 7 website, and pages and content viewed while visiting the website.” (Id. ¶ 8.) The 8 information gathered included “plaintiff’s searches for prescription medication for herself, 9 her infant, and her elderly father.” (Id. ¶ 81.) Moreover, “Defendant has engineered and 10 coded its website such that no human being could possibly find, observe, and select--let 11 alone read--the website’s terms of use or privacy policy and either be made aware of or 12 consent to such interception designed by Defendant.” (Id. ¶ 60.) 13 Plaintiff, a resident of San Diego, California, is a Facebook user and a customer of 14 Defendant’s website. (Id. ¶ 25.) Defendant, a Delaware corporation with its principal place 15 of business in Kentucky, does business throughout the United States and is licensed in 16 California as a non-resident pharmacy. (Id. ¶ 26.) Pursuant to California law, Defendant 17 has an agent for service of process in California. (Id.) Defendant also “operates and markets 18 [its] services throughout the country and in this District.” (Id. ¶ 17.) 19 II. LEGAL STANDARD 20 When raised as a defense by motion, Rule 12(b)(2) authorizes the dismissal of an 21 action for lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). When a dispute 22 between the parties arises concerning whether personal jurisdiction over a defendant is 23 proper, “the plaintiff bears the burden of demonstrating that jurisdiction is appropriate.” 24 Will Co. v. Lee, 47 F.4th 917, 921 (9th Cir. 2022). When the defendant’s motion is based 25 on written materials, and no evidentiary hearing is held, the court will evaluate only 26 whether the plaintiff demonstrates a prima facie showing of personal jurisdiction based on 27 the plaintiff’s pleadings and affidavits. Id. The court must take unchallenged allegations in [28] 1 the complaint as true, and conflicts between the parties over statements within any 2 affidavits must be resolved in favor of the plaintiff. Id. 3 The general rule provides that personal jurisdiction over a defendant is proper if it is 4 permitted by a long-arm statute and if the exercise of that jurisdiction does not violate 5 federal due process. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). For 6 due process to be satisfied, a defendant must have “minimum contacts” within the forum 7 state such that asserting jurisdiction over the defendant would not “offend traditional 8 notions of fair play and substantial justice.” Id. at 1155 (citing Int’l Shoe Co. v. Washington, [9] 326 U.S. 310, 315 (1945)). Both California and federal long-arm statutes require 10 compliance with due process requirements. Daimler AG v. Bauman, 571 U.S. 117 , 125 11 (2014). 12 There are two types of personal jurisdiction: general and specific. Id. at 118 . General 13 jurisdiction allows a court to hear cases unrelated to the defendant’s forum activities and 14 exists if the defendant has “substantial” or “continuous and systematic” contacts with the 15 forum state. Fields v. Sedgewick Assoc. Risk, Ltd., 769 F.2d 299, 301 (9th Cir. 1986). 16 Specific jurisdiction permits the court to exercise jurisdiction over a defendant who has 17 availed itself through forum-related activities that gave rise to the action before the court. 18 Bancroft & Masters, Inc. v. August Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000), 19 overruled on other grounds in part by Yahoo! Inc. v. La Ligue Contre Le Racisme Et 20 L’Antisemitisme, 433 F.3d 1199 (9th Cir. 2006). 21 III. ANALYSIS 22 Defendant challenges Plaintiff’s assertion of personal jurisdiction. In response, 23 Plaintiff argues he has adequately pled specific jurisdiction.1 Thus, the Court analyzes the 24 Ninth Circuit’s three-pronged test for specific jurisdiction: [27] 1 Plaintiff does not argue he has pled general jurisdiction, and so, the Court does not consider the [28] 1 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform [2] some act by which he purposefully avails himself of the privilege of 3 conducting activities in the forum, thereby invoking the benefits and protections of its laws; [4] (2) the claim must be one which arises out of or relates to the defendant’s 5 forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial [6] justice, i.e. it must be reasonable. [7] 8 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). The plaintiff 9 bears the burden of proving the first two prongs and, if successful, the burden shifts to the 10 defendant on the third prong to prove that jurisdiction is unreasonable. Id. If any prong is 11 not satisfied, then jurisdiction in the forum would deprive the defendant of due process of 12 law. AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1208 (9th Cir. 2020). As discussed 13 below, Plaintiff has failed to establish the first prong. 14 The first prong requires Plaintiff to show that Defendant either purposefully availed 15 itself of the forum or purposefully directed its conduct at the forum. Courts typically apply 16 “purposeful availment” analysis to suits sounding in contract, while courts apply 17 “purposeful direction” analysis to suits, like this one, that sound in tort. See S.D. v. Hytto 18 Ltd., No. 18-cv-00688-JSW, 2019 WL 8333519 , at *3 (N.D. Cal. May 15, 2019); see also 19 In re: Vizio, Inc., Consumer Priv. Litig., 238 F. Supp. 3d 1204, 1215 (C.D. Cal. 2017) 20 (“Plaintiffs’ federal claims under the Wiretap Act bear a ‘close relationship’ to the tort of 21 invasion of privacy.”). 22 A defendant purposefully directs its activities toward the forum when the defendant 23 has “(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing 24 harm that the defendant knows is likely to be suffered in the forum state.” Ayla, LLC v. 25 Alya Skin Pty. Ltd., 11 F.4th 972 , 980 (9th Cir. 2021); see also Axiom Foods, Inc. v. 26 Acerchem Int’l, Inc., 874 F.3d 1064, 1069 (9th Cir. 2017). Courts refer to this as the 27 “Calder effects test.” See Hytto, 2019 WL 8333519 , at *3. A plaintiff must fulfill all three [28] 1 requirements to progress forward to the second prong of the specific jurisdiction test. 2 Pakootas v. Teck Cominco Metals, Ltd., 905 F.3d 565, 577 (9th Cir. 2018). 3 The first part of the Calder effects test requires that the defendant have committed 4 an intentional act. Ayla, 11 F.4th at 980. A defendant acts intentionally when he or she acts 5 with “intent to perform an actual, physical act in the real world, rather than an intent to 6 accomplish a result or consequence of that act.” AMA, 970 F.3d at 1209 (quoting 7 Schwarzenegger, 374 F.3d at 806 ). In AMA, the Ninth Circuit stated intent was established 8 through the defendant’s partnership with a media company that owned and operated a 9 pornography website. Id. The operation of a website is an intentional act; therefore, the 10 defendant met the first requirement of the Calder effects test. See id.; see also Hytto, 2019 11 WL 8333519 , at *4 (“The ‘intentional act’ standard is easily satisfied here because [the 12 plaintiff] alleges that [the defendant] purposefully intercepted electronic transmissions 13 from and/or to users in the U.S.”). Likewise, in this case, the “intentional act” prong is 14 easily satisfied. Plaintiff alleges, “Defendant intentionally tapped and made unauthorized 15 interceptions and connections to Plaintiff and Class Members’ electronic communications 16 to read and understand movement on the website . . . .” (FAC ¶ 8.) 17 Next, the Court must determine whether Plaintiff adequately pleads that Defendant 18 “expressly aimed” its intentional act—collecting personal data from its website—at this 19 forum. See Ayla, 11 F.4th at 980. He does not. The Ninth Circuit first addressed this issue 20 in Cybersell Inc. v. Cybersell Inc., 130 F.3d 414 (9th Cir. 1997). Cybersell relied partly on 21 Zippo Manufacturing. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 22 1997), which stated personal jurisdiction may be constitutionally exercised over an entity 23 that conducts business over the Internet if the nature and quality of that business is so 24 significant that failing to exercise jurisdiction over it in that forum would be unreasonable. 25 However, Cybersell added an additional requirement to this standard: there must be 26 “something more to indicate that the defendant purposefully (albeit electronically) directed 27 his activity in a substantial way to the forum state.” Cybersell, 130 F.3d at 418 . Without [28] 1 this “something more,” an intentional act is not an act “expressly aimed” at the forum state. [2] Id. 3 This inquiry requires courts to “focus on the defendant’s contacts with the forum 4 state, not the defendant’s contacts with the resident of the forum.” Picot v. Weston, 780 5 F.3d 1206, 1214 (9th Cir. 2015); see also Walden v. Fiore, 571 U.S. 277, 290 (2014) 6 (“Mere injury to a forum resident is not a sufficient connection to the forum.”). “Not all 7 material placed on the Internet is, solely by virtue of its universal accessibility, expressly 8 aimed at every state in which it is accessed.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 9 F.3d 1218, 1231 (9th Cir. 2011). But where “a website with national viewership and scope 10 appeals to, and profits from, an audience in a particular state, the site’s operators can be 11 said to have ‘expressly aimed’ at the state.” Id. 12 Plaintiff relies on two cases; both are distinguishable. In Oakley, Inc. v. Donofrio, 13 the plaintiff, Oakley, Inc., alleged that the defendants “engaged in a scheme to sell Oakley 14 products via eBay without authorization and in violation of a Retail Sales Agreement.” No. 15 SACV 12-02191-CJC(RNBx), 2013 WL 12126017 , at *1 (C.D. Cal. June 14, 2013). The 16 district court found specific jurisdiction based on two key allegations: (1) Defendants 17 “exploited the benefits of the California market” by “accepting orders from [California] 18 consumers through eBay and shipping products to consumers in California” and 19 (2) Defendants “knew they were infringing intellectual property of a corporation 20 headquartered and principally doing business in California.” Id. at *6–7. In Loomis v. 21 Slendertone Distribution, Inc., the court found that the defendant had “expressly aimed its 22 conduct toward California because, among other things, the defendant maintained an 23 interactive website available to California residents, exploited the California advertising 24 market, sold products through the website to California residents, and exchanged 25 information with users in California.” 420 F. Supp. 3d 1046 , 1069–70 (S.D. Cal. 2019). 26 Specifically, the court pointed out that the defendant not only had a designated agent 27 registered in California, but also “directly targeted California with television commercials 28 directed to Plaintiff’s California home and advertisements on Defendant’s own website: 1 ‘We put The Flex Belt in the hands of the best Trainers in Los Angeles,’ and ‘Ellen K from 2 the Ryan Seacrest Show uses The Flex Belt-#1 Female DJ in Los Angeles.’” Id. at 1070 . 3 In this case, Plaintiff alleges Defendant has a registered agent in California and 4 “markets [its] services throughout the country and in this District.” (FAC ¶¶ 17, 24.) But 5 these allegations are insufficient. First, registering an agent with the California Secretary 6 of State does not alone “amount to substantial contacts for jurisdictional purposes.” 7 Nutrishare, Inc. v. BioRX, L.L.C., No. CVS-008-1252 WBS EFB, 2008 WL 3842946 , at 8 *3 (E.D. Cal. Aug. 14, 2008). In Nutrishare, the plaintiff argued that defendant 9 purposefully availed itself of the forum by registering with the California State Board of 10 Pharmacy and appointed an agent for service of process. Id. at *5–6. The court rejected 11 this argument, reasoning that compliance with state registration laws does not justify 12 hauling a defendant across state lines. Id. Second, although specific allegations of forum 13 state marketing may support specific jurisdiction, Plaintiff’s bare allegation of “marketing” 14 is insufficient. Unlike the complaint in Loomis, which included descriptions of particular 15 advertisements, Plaintiff includes no specifics. Without more, the Court cannot infer that 16 Defendant’s marketing targets California. Moreover, neither of the bases for jurisdiction in 17 Oakley are present here. Plaintiff does not allege that any products were shipped to 18 California2 or that Defendant was targeting a known California resident. See Oakley, 2013 19 WL 12126017 , at *6–7. 20 Plaintiff does not allege sufficient facts to support the “something more” required 21 for express aiming, and therefore, flunks the Calder effects test.3 Thus, Plaintiff fails to 22 establish purposeful direction and, accordingly, fails to establish specific jurisdiction. [25] 26 2 Even if the FAC did allege products shipped to California, Plaintiff would still need to demonstrate that his harm arose out of those forum contacts. See Oakley, 2013 WL 12126017 , at *7–8. 27 3 Plaintiff does not raise jurisdictional discovery. And a mere “hunch” that discovery might yield jurisdictionally relevant facts is insufficient. See LNS Enters. LLC v. Cont’l Motors, Inc., 22 F.4th 852 , [28] 1 |}IV. CONCLUSION 2 For the foregoing reasons, Defendant’s Motion to Dismiss is GRANTED. (ECF No. 3 || 14.) The Court also GRANTS Plaintiff leave to amend his FAC. If Plaintiff chooses to file 4 ||a second amended complaint, he must do so on or before September 5, 2023. 5 The Court also directs the Clerk of Court to TERMINATE AS MOOT Defendant’s 6 || duplicative Motion to transfer or dismiss. (ECF No. 8.) 7 IT IS SO ORDERED. , 8 (pil Q_| Lioht i 9 || DATED: August 15, 2023 United States District Judge