Miller v. S&S Hay Co.

• Decision Date: 24 June 2013
• Docket Number: 1:12-CV-01796-LJO-SMS
• Court: U.S. District Court — Eastern District of California
• Parties: WILLIAM JAKE MILLER, Plaintiff, v. S&S HAY COMPANY, SKYE SAUER, and ARI SCHIFF, Defendants.

WILLIAM JAKE MILLER, Plaintiff,

v.S&S HAY COMPANY, SKYE SAUER, and ARI SCHIFF, Defendants.

1:12-CV-01796-LJO-SMS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

Dated: June 24, 2013

ORDER ON MOTION TO DISMISS

FIRST AMENDED COMPLAINT

(Docs. 24, 25)

INTRODUCTION

On November 2, 2012, Plaintiff William Jake Miller ("Miller") brought this action for violation of the California Unfair Competition Law ("UCL"), Cal. Bus. and Prof. Code §§ 17200, et seq., against Defendants S&S Hay Company ("S&S Hay"), Skye Sauer ("Sauer"), and Ari Schiff ("Schiff") (collectively "Defendants"). On March 27, 2012, this Court granted with leave to amend Defendants' motion to dismiss Miller's complaint. Miller filed a first amended complaint on April 14, 2013. Defendants filed the instant motion to dismiss Miller's amended complaint on April 15, 2013. As discussed further below, the Court DENIES Defendants' motion to dismiss Miller's amended complaint.

BACKGROUND

On October 26, 2009, Miller obtained a default judgment in Kings County Superior Court against S&S Hay and Sauer for $112,750 plus interest and costs on claims of breach of oral contract, intentional and negligent misrepresentation, false promise, and conversion.

S&S Hay and Sauer have not paid the judgment, and Miller has been unable to collect on thejudgment. Miller alleges that Sauer and Schiff have taken affirmative steps wrongfully to prevent Miller from collecting on the judgment. Specifically, Miller alleges that, following service of the default judgment, S&S Hay stopped doing business in California and then stopped doing business altogether to prevent the attachment of any of S&S Hay's funds or any funds payable to S&S Hay. In addition, Sauer was removed from S&S Hay some two weeks after Miller domesticated and instituted collection proceedings in Arizona. Miller also alleges that fifteen business entities pertaining to one or more of the Defendants were formed following the default judgment. These include entities in Wyoming and Montana, to which Defendants could divert income and assets outside of the states where Miller had domesticated the judgment.

On November 2, 2012, Miller initiated this action for violation of the UCL against Defendants in this Court on the basis of diversity jurisdiction. Defendants filed a motion to dismiss under Fed. R. Civ. P. 9(b), 12(b)(2), 12(b)(3), and 12(b)(6) on January 7, 2013. This Court granted with leave to amend Defendants' motion to dismiss Miller's complaint on the basis of res judicata on March 27, 2013. Miller filed an amended complaint on April 14, 2013. Defendants filed a motion to dismiss Miller's amended complaint on April 15, 2013, and re-submitted it on April 17, 2013. Miller filed an opposition on April 25, 2013, and Defendants did not file a reply. In compliance with this Court's order to show cause, the parties submitted supplemental briefing on whether this action should be transferred to the District of Arizona pursuant to 28 U.S.C.A. § 1406. This Court stayed the instant motion to dismiss pending its determination on transfer of venue.

DISCUSSION

Transfer of Venue

A. 28 U.S.C.A. § 1406

Under 28 U.S.C.A. § 1406, "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." "[D]istrict courts in the Ninth Circuit may sua sponte transfer venue under 28 U.S.C. § 1404, or under § 1406." Ahead, LLC v. KASC, Inc., 2013 WL 1747765 at *3 (W.D. Wash. Apr. 23, 2013) (citing Engel v. CBS, Inc., 886 F.Supp. 728, 730 (C.D. Cal. 1995) (additional internal citation omitted). "Title 28 U.S.C. § 1406(a)has been held to authorize the transfer of a case so as to cure the lack of personal jurisdiction in the district where the case was first brought." Wood v. Santa Barbara Chamber of Commerce, Inc., 705 F.2d 1515, 1523 (9th Cir. 1983) (citing Goldlawr v. Heiman, 369 U.S. 463, 466 (1961)).

Miller argues that venue is not improper in this Court because this Court does not lack specific personal jurisdiction under the "effects" test laid out by the United States Supreme Court in Calder v. Jones, 465 U.S. 783 (1984).

The Ninth Circuit employs a three-part test to determine whether a defendant has sufficient minimum contacts to be subject to specific personal jurisdiction:¹

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Washington Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012) (quoting Brayton PurcellLLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010)).

a. Calder Test

The first prong of the test for personal jurisdiction may be satisfied by "demonstrating that the defendant either purposefully availed itself of the privilege of conducting activities in the forum, or purposefully directed its activities at the forum." Id. Miller's claim for violation of the UCL sounds more in tort than in contract, so the appropriate inquiry is "whether a defendant purposefully direct[s] his activities at the forum state[.]" Id. at 672-73 (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (en banc)). This "purposeful direction" or "effects" test is based on Calder. Id. It "requires that the defendant have '(1) committed an intentional act, (2) expresslyaimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.'" Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 805 (9th Cir. 2004) (quoting Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)).

i. Intentional Act

Miller alleges that Sauer was removed from S&S Hay, that S&S Hay ceased doing business, and that Defendants formed fifteen other business entities following the default judgment. Miller sufficiently alleges intentional acts by Defendants. Schwarzenegger, 374 F.3d at 806 ("We construe 'intent' in the context of the 'intentional act' test as referring to an intent to perform an actual, physical act in the real world, rather than an intent to accomplish a result or consequence of that act.").

ii. Express Aiming

Defendants also must have "expressly aimed" their intentional acts - removal of Sauer, cessation of business, and formation of fifteen other business entities - at California. Id. Interpretation of this prong of the Calder analysis has been problematic in the Ninth Circuit. A recent Ninth Circuit decision on this specific issue drew multiple dissents from the order denying rehearing en banc, a strongly worded reproach from the panel majority in the opinion, as well as an equally emphatic dissent from the opinion. Fiore v. Walden, 688 F.3d 558 (9th Cir. 2012). This disagreement within the Ninth Circuit, perhaps along with disagreement with other circuits, apparently prompted the United States Supreme Court to grant certiorari in that case. Walden v. Fiore, 133 S. Ct. 1493 (2013), Fiore, 688 F.3d at 565 ("The majority of circuits have held that, under Calder, a defendant must expressly aim the conduct forming the basis of the claim at the forum state—not just at a known forum resident—before the courts of that state may exercise jurisdiction over the defendant.") (O'Scannlain, J. dissenting) (emphasis in the original). Judge O'Scannlain's dissent from the denial of rehearing en banc, with which four other circuit judges concurred, recognizes that there is "a conflict in our own circuit over how to interpret and to apply Calder's express-aiming requirement." 688 F.3d at 566 (O'Scannlain, J. dissenting).

The dissent states that "[t]his tension in our circuit law was cemented into a square conflict in Brayton Purcell LLP v. Recordon & Recordon, which upheld the exercise of personal jurisdiction because the defendant's allegedly tortious conduct individually targeted the plaintiff (a resident of theforum), even though the defendant did not expressly aim his conduct at the forum." Id. (citing 606 F.3d 1124 (9th Cir. 2010)). Here, Miller argues that this prong of the Calder test is satisfied because "the defendants committed intentional wrongful acts directed at a plaintiff they knew to be a California resident." The Court acknowledges the variety of interpretations given to the "expressly aimed" requirement. However, the Ninth Circuit has held that this requirement is satisfied where defendants target a known forum resident. Myers v. Bennett Law Offices, 238 F.3d 1068, 1073 (9th Cir. 2001) (finding that personal jurisdiction in Nevada is proper because defendant's conduct "individually targeted" plaintiffs, who defendant "knew were Nevada residents"); Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1087 (9th Cir. 2000) (finding the express-aiming requirement met when "the defendant is alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the forum state"). In fact, despite the inconsistency of standards applied, the Ninth Circuit has not held a defendant's conduct that targeted a known forum resident to be insufficient to satisfy the express-aiming requirement. See, Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1157 (9th Cir. 2006) (distinguishing cases where "individualized targeting was present" and finding lack of personal jurisdiction because "Caddy has hatched no such plan directed at Pebble Beach."), Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 807 (9th Cir. 2004) (distinguishing cases where defendants'...