Aoki v. Gilbert
| Decision Date | 02 April 2013 |
| Docket Number | No. 2:11-cv-02797-MCE-CKD,2:11-cv-02797-MCE-CKD |
| Court | U.S. District Court — Eastern District of California |
| Parties | THOMAS T. AOKI, M.D., et al., Plaintiffs, v. GREGORY FORD GILBERT, et al., Defendants. |
Plaintiffs Thomas Aoki, M.D. ("Aoki") and Aoki Diabetes Research Institute ("ADRI") (collectively "Plaintiffs") allege several causes of action relating to the development, patenting, and licensing of metabolic activation therapy ("MAT® treatment"), a diabetes treatment. Presently before the Court is Defendant Diabetic Innovations, LLC's Motion to Dismiss for Lack of Personal Jurisdiction ("Defendant's Motion") pursuant to Federal Rule of Civil Procedure 12(b)(2).1 (ECF No. 73.) Plaintiffs filed a timely Opposition to Defendant's Motion. (ECF No. 87.) For the reasons set forth below, Defendant's Motion is denied.2
BACKGROUND3
Aoki, a physician licensed to practice in California, founded ADRI in 1986 to further his research in diabetes and metabolism. ADRI also provides some clinical care using an intravenous insulin therapy known as the MAT® treatment. Aoki is the sole inventor and developer of, and has received a patent for, the MAT® treatment. During and after development of the treatment, Aoki and ADRI developed trade secret know-how related to the use and application of the technology. Aoki also developed additional treatment-related methods and systems for which he obtained further patents.
Aoki alleges that he retained Gregory Gilbert ("Gilbert"), a California attorney, to act as his personal counsel. Gilbert then engaged in business transactions with Aoki and set up legal entities to exploit Aoki's technology, and Gilbert acted as counsel for those legal entities as well. Gilbert purportedly provided legal advice to Plaintiffs and drafted nearly every legal document for both the entities and for Aoki until dissolution of the relationship in 2002-2003.
Thereafter, Gilbert allegedly began to falsely assert that he, or entities with which he was affiliated, held all right, title, and interest in the MAT® treatment. Plaintiffs further allege that Gilbert acted in concert with the remaining Defendants to set up clinics that offer the MAT® treatment. Gilbert also allegedly made false and misleading statements to patients or would-be patients regarding the status and efficacy of the MAT® treatment as well as available payment options.
Defendant Diabetic Innovations, LLC ("Defendant"), is one of the clinics that Gilbert allegedly set up to offer the MAT® treatment. Plaintiffs claim Defendant operates a clinic in Sachse, Texas, that offers the MAT® treatment without Plaintiffs' permission.Defendant claims that "both the Manager (Lancaster) and the Defendant have no contacts in California." (ECF No. 7-2 at 3; see also ECF No. 7-1 at 3 ().) Plaintiffs allege that both Defendant's website and filings with the Texas Secretary of State indicate Defendant actually has six managers, one of which is Sacramento County resident Gilbert. (ECF No. 87 at 2, 4, 5.)
STANDARD
A judgment rendered in violation of due process is void, and due process requires that a defendant be subject to the personal jurisdiction of the court. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (citing Pennoyer v. Neff, 95 U.S. 714, 732-33 (1878); Int'l Shoe Co. v. Washington, 326 U.S. 310 (1945)). In opposing a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the court's jurisdiction over the defendant. Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 671 (9th Cir. 2012) (citation omitted). However, when the defendant's motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a "prima facie showing of jurisdictional facts" to withstand the motion to dismiss. Id. at 672 (citing Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006)). The court resolves all disputed facts in favor of the plaintiff. Wash. Shoe, 704 F.3d at 672.
When there is no federal statute authorizing personal jurisdiction, the district court applies the law of the state in which the district court sits. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). California Code of Civil Procedure section 410.10, California's long-arm statute, is "coextensive" with federal due process requirements. Id. Accordingly, the "jurisdictional analyses under state law and federal due process are the same." Id.
There are two types of personal jurisdiction: general and specific. General jurisdiction exists when a defendant's "continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities." Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853 (2011) (citing Int'l Shoe, 326 U.S. at 318). Specific personal jurisdiction, on the other hand, exists when a defendant's "in-state activity is continuous and systematic and that activity gave rise to the episode-in-suit." Goodyear Dunlop Tires, 131 S. Ct. at 2853 (citing Int'l Shoe, 326 U.S. 317) (internal quotation marks omitted). However, "the commission of certain 'single or occasional acts' in a State may be sufficient to render a corporation answerable in that State with respect to those acts . . . ." Goodyear Dunlop Tires, 131 S. Ct. at 2853 (quoting Int'l Shoe, 326 U.S. 318).
ANALYSIS
Plaintiffs contend that this Court has general personal jurisdiction over Defendant because Gilbert - allegedly one of Defendant's six managers - resides in Sacramento County. Plaintiffs cite to a decision in which the Ninth Circuit held, for purposes of diversity jurisdiction, a limited liability company is a citizen of every state of which its owners/members are citizens. Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). In addition to confusing personal jurisdiction with subject matter jurisdiction, Plaintiffs fail to recognize that the standard for establishing general jurisdiction is "fairly high." Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986). Plaintiffs have failed to make even a prima facie showing that Defendant has substantial "continuous corporate operations" within California. Accordingly, this Court does not have general personal jurisdiction over Defendant.
The Ninth Circuit employs a three-part test to determine whether a non-resident defendant has sufficient minimum contacts to be subject to specific personal jurisdiction:
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.
Wash. Shoe, 704 F.3d at 672. If the plaintiff satisfies the first two elements, the burden shifts to the defendant to present a "compelling case" that the exercise of jurisdiction would not be reasonable. Id.
A plaintiff may satisfy the first part of the minimum contacts test 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. In cases sounding in tort, courts typically apply the purposeful direction or "effects test," which requires that the defendant have: 1) committed an intentional act, 2) expressly aimed at the forum state, 3) causing harm that the defendant knows is likely to be suffered in the forum state. Id. at 673. The effects test allows a court to exercise personal jurisdiction over a defendant who engages in an intentional act that causes harm in the forum state, even if that act takes place outside the forum state. Id.; see also Goodyear Dunlop Tires, 131 S. Ct. at 2857 (citing Calder v. Jones, 465 U.S. 783, 788 (1984)) ("When a defendant's act outside the forum causes injury in the forum . . . a plaintiff's residence in the forum may strengthen the case for the exercise of specific jurisdiction.").
In Washington Shoe, the Ninth Circuit limited application of the effects test to the plaintiff's willful infringement claim "because that [was the plaintiff's] strongest basis for the exercise of jurisdiction" in the forum state. 704 F.3d 673. The Ninth Circuit elaborated: if the forum state had jurisdiction over the willful infringement claim, it could "exercise jurisdiction over the remaining claims, which are related." Id. (citing Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir. 2004)).4 This Court, as Washington Shoe directs, therefore applies the effects test to Plaintiffs' willful infringement claim against Defendant.5
In the context of the effects test, the Ninth Circuit defines an intentional act as "an external manifestation of the actor's intent to perform an actual, physical act in the real world, not including any of its actual or intended results." Wash. Shoe, 704 F.3d at 674. In Washington Shoe, the Ninth Circuit found that the defendant committed an intentional act "by intentionally engaging in the actual, physical acts of purchasing and selling the allegedly infringing boots . . . ." Id. Similarly in this case, Defendant committed an intentional act under the effects test by intentionally engaging in the actual, physical acts of opening the clinic in Sachse, Texas, and offering the MAT® treatment without Plaintiffs' permission. Thus, Plaintiffs...
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