F8 Viet. Co. v. U.S. Dist. Court for the N. Dist. of Cal. (In re Boon Global Ltd.)

• Decision Date: 03 May 2019
• Docket Number: No. 18-71347,18-71347
• Parties: IN RE BOON GLOBAL LIMITED ; F8 Vietnam Company Limited; California Fitness & Yoga Centers Company Limited ; Randy Dobson, Boon Global Limited ; F8 Vietnam Company Limited; California Fitness & Yoga Centers Company Limited ; Randy Dobson, Petitioners, v. United States District Court for the Northern District of California, Oakland, Respondent, Indyzen, Inc., a California corporation, Real Party in Interest.
• Court: U.S. Court of Appeals — Ninth Circuit

923 F.3d 643

IN RE BOON GLOBAL LIMITED ; F8 Vietnam Company Limited; California Fitness & Yoga Centers Company Limited ; Randy Dobson,Boon Global Limited ; F8 Vietnam Company Limited; California Fitness & Yoga Centers Company Limited ; Randy Dobson, Petitioners,

v. United States District Court for the Northern District of California, Oakland, Respondent,Indyzen, Inc., a California corporation, Real Party in Interest.

No. 18-71347

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 4, 2019 San Francisco, California

Filed May 3, 2019

Adam Wolek (argued) and Zackary R. Clark, Taft Stettinius & Hollister LLP, Chicago, Illinois; David A. Makman, Law Offices of David A. Makman, San Mateo, California; for Petitioners.

Mark R. Figueiredo (argued), Ethan G. Solove (argued), and Austin T. Jackson, Structure Law Group, LLP, San Jose, California, for Respondent-Real Party in Interest.

Petition for Writ of Mandamus to the United States District Court for the Northern District of California, D.C. No. 4:16-cv-07387-JSW

Before: Richard A. Paez, Marsha S. Berzon, and Ryan D. Nelson, Circuit Judges.

R. NELSON, Circuit Judge:

Petitioners Boon Global Limited, F8 Vietnam Company Limited, California Fitness & Yoga Centers Company Limited ("CFYC"), and Randy Dobson (collectively "the Third Parties") seek a writ of mandamus directing the district court to vacate its order compelling the Third Parties to arbitration, and grant the Third Parties’ motions to dismiss. Despite the district court’s flawed jurisdictional analysis, we deny the petition.

I

As alleged in the complaint, around 2013, Randy Dobson began developing an online personal training platform, which later became the "Morfit App." Praveen Narra, CEO of Indyzen (a software development company), pitched his software development expertise to Dobson. Shortly thereafter, Parkridge Limited was formed with Dobson as CEO and Chairman, and Narra as the Chief Technology Officer ("CTO"). As CTO, Narra oversaw the hiring of another software company, TIBCO, to develop the Morfit App. TIBCO ultimately did not deliver a mobile platform app.

In 2015, Parkridge’s shareholders agreement was executed, with Narra’s father and Mabel Mak (Dobson’s wife) designated as shareholders. Parkridge then entered into a software development and licensing agreement (the "Agreement") with Indyzen. Dobson signed the Agreement on behalf of Parkridge as CEO and Narra signed on behalf of Indyzen. The Agreement defined the parties subject to arbitration: "Except for any dispute arising out of payments due to Company, any dispute or disagreement arising between the Company and the Customer ... shall be referred to arbitration ...." The "Company" was defined as Indyzen and the "Customer" as Parkridge.

On December 29, 2016, Parkridge and Mak sued Indyzen and Narra for improperly developing the Morfit App for Parkridge, alleging breach of fiduciary duties, breach of contract, unjust enrichment, fraudulent misrepresentation, and fraudulent concealment. Indyzen successfully moved to compel arbitration under the Agreement. In arbitration, Indyzen counterclaimed and added, as defendants to the counterclaim, the Third Parties, all of which have or had an affiliation with Dobson and are located in Hong Kong or Vietnam.¹ The arbitrator found he lacked authority to determine jurisdiction over entities not parties to the Agreement and dismissed the Third Parties, subject to a further order from the district court or agreement by the parties.

Indyzen petitioned the district court to compel the Third Parties to arbitrate. The Third Parties filed separate motions to dismiss. The district court compelled the Third Parties to arbitration "in order that the arbitrator may decide whether to allow counterclaims against them to proceed." The district court found that the "Dobson Companies and their business dealings are sufficiently interrelated and interdependent on conduct governed by the Morfit Agreement that the doctrine of equitable estoppel enables the Court to find that the nonsignatories may be bound by the agreement despite not having signed it." After the arbitration analysis, the district court then found it "may properly exercise jurisdiction over the Dobson Companies. These companies are closely associated with Randy Dobson and, by signing the Agreement to perform the subject work in California, he is properly subjected to the jurisdiction of this Court."

II

The writ of mandamus is a "drastic and extraordinary" remedy "reserved for really extraordinary causes." Ex parte Fahey , 332 U.S. 258, 259–60, 67 S.Ct. 1558, 91 L.Ed. 2041 (1947). "Only exceptional circumstances amounting to a judicial usurpation of power, or a clear abuse of discretion will justify the invocation of this remedy. The petitioner bears the burden of showing that its right to issuance of the writ is clear and indisputable." In re Van Dusen , 654 F.3d 838, 840–41 (9th Cir. 2011) (alterations).

In deciding whether to grant mandamus relief, we consider five factors: (1) whether the petitioner has other adequate means, such as a direct appeal, to attain the relief he or she desires; (2) whether the petitioner will be damaged or prejudiced in a way not correctable on appeal; (3) whether the district court’s order is clearly erroneous as a matter of law; (4) whether the district court’s order makes an "oft-repeated error," or "manifests a persistent disregard of the federal rules"; and (5) whether the district court’s order raises new and important problems, or legal issues of first impression.

Id. at 841 (quoting Bauman v. U.S. Dist. Court , 557 F.2d 650, 654–55 (9th Cir. 1977) ). Satisfying the third factor is necessary for granting the writ. In re Henson , 869 F.3d 1052, 1058 (9th Cir. 2017) (per curiam). But a petitioner need not satisfy all factors. Id. "Mandamus review is at bottom discretionary—even where the Bauman factors are satisfied, the court may deny the petition." San Jose Mercury News, Inc. v. U.S. Dist. Court , 187 F.3d 1096, 1099 (9th Cir. 1999).

III

We begin with the third Bauman factor, clear error, because "the absence of the third factor is dispositive." Hernandez v. Tanninen , 604 F.3d 1095, 1099 (9th Cir. 2010) (internal quotation marks and ellipsis omitted). A writ of mandamus "will not issue merely because the petitioner has identified legal error." In re Van Dusen , 654 F.3d at 841. "Mandamus, it must be remembered, does not run the gauntlet of reversible errors."

Will v. United States , 389 U.S. 90, 104, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967) (internal quotation marks omitted).

The Third Parties argue that, as foreign corporations with no contacts in the United States, the court lacks jurisdiction over them. We agree that the district court erred in summarily concluding that it had jurisdiction over the Third Parties, but conclude the district court did not commit clear error. Moreover, the remaining Bauman factors weigh against mandamus review. Accordingly, we deny the petition. The district court must have personal jurisdiction over each individual third-party entity before compelling them to arbitrate. See Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp. , 549 U.S. 422, 430–31, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) ("[A] federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over ... the parties (personal jurisdiction)."). Where no federal statute authorizes personal jurisdiction, the law of the state in which the district court sits applies. Mavrix Photo, Inc. v. BrandTechs., Inc. , 647 F.3d 1218, 1223 (9th Cir. 2011). California’s long-arm statute authorizes personal jurisdiction to the extent permitted by the Due Process Clause of the United States Constitution. Cal. Civ. Proc. Code § 410.10. "Because California’s long-arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800–01 (9th Cir. 2004). Due process, in turn, requires that each party "have certain minimum contacts" with the forum state "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int’l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted).

A party seeking to establish jurisdiction over a person or entity can either: (1) show each defendant’s sufficient, direct contacts with the forum state, or (2) use the alter ego theory to "extend personal jurisdiction to a foreign parent or subsidiary when, in actuality, the foreign entity is not really separate from its domestic affiliate." Ranza v. Nike, Inc. , 793 F.3d 1059, 1073 (9th Cir. 2015). The party asserting jurisdiction bears the burden to establish jurisdictional facts. Pebble Beach Co. v. Caddy , 453 F.3d 1151, 1154 (9th Cir. 2006). When the party invoking jurisdiction does not ask for jurisdictional discovery (Indyzen did not), we must evaluate whether the "pleadings and affidavits establish a prima facie showing of jurisdictional facts." Data Disc, Inc. v. Sys. Tech. Assocs. , 557 F.2d 1280, 1286 (9th Cir. 1977). Although the party asserting jurisdiction is "required only to establish a prima facie showing of jurisdictional facts," the standard is not toothless. Id. at 1285 n.2. The party asserting jurisdiction "cannot simply rest on the bare allegations of its complaint"; however, "uncontroverted allegations in the complaint must be taken as true." Schwarzenegger , 374 F.3d at 800 (internal quotation marks and citation omitted). "Conflicts between parties over statements contained in affidavits must be resolved in the plaintiff’s favor." Id.

Here, the district court’s analysis concerning whether Indyzen made a prima facie showing of jurisdictional facts was flawed. The district court exercised jurisdiction over Dobson because he "sign[ed] the Agreement to...