Asante Technologies, Inc. v. Pmc-Sierra, Inc.

• Decision Date: 30 July 2001
• Docket Number: No. C 01-20230 JW.,C 01-20230 JW.
• Citation: 164 F.Supp.2d 1142
• Court: U.S. District Court — Northern District of California
• Parties: ASANTE TECHNOLOGIES, INC., Plaintiff, v. PMC-SIERRA, INC., Defendant.

164 F.Supp.2d 1142

ASANTE TECHNOLOGIES, INC., Plaintiff, v. PMC-SIERRA, INC., Defendant.

No. C 01-20230 JW.

United States District Court, N.D. California, San Jose Division.

July 30, 2001.

COPYRIGHT MATERIAL OMITTED

Jeffrey J. Lederman, Gray Cary Ware & Freidenrich, Palo Alto, CA, for plaintiff.

Michael A. Jacobs, Morrison & FOerster, San Francisco, CA, for defendant.

ORDER DENYING MOTION TO REMAND AND REQUEST FOR ATTORNEYS' FEES

WARE, District Judge.

I. INTRODUCTION

This lawsuit arises out of a dispute involving the sale of electronic components. Plaintiff, Asante Technologies Inc., filed the action in the Superior Court for the State of California, Santa Clara County, on February 13, 2001. Defendant, PMC-Sierra, Inc., removed the action to this Court, asserting federal question jurisdiction pursuant to 28 U.S.C. section 1331. Specifically, Defendant asserts that Plaintiff's claims for breach of contract and breach of express warranty are governed by the United Nations Convention on Contracts for the International Sale of Goods ("CISG"). Plaintiff disputes jurisdiction and filed this Motion To Remand And For Attorneys' Fees. The Court conducted a hearing on June 18, 2001. Based upon the submitted papers and oral arguments of the parties, the Court DENIES the motion to remand and the associated request for attorneys' fees.

II. BACKGROUND

The Complaint in this action alleges claims based in tort and contract. Plaintiff contends that Defendant failed to provide it with electronic components meeting certain designated technical specifications. Defendant timely removed the action to this Court on March 16, 2001.

Plaintiff is a Delaware corporation having its primary place of business in Santa Clara County, California. Plaintiff produces network switchers, a type of electronic component used to connect multiple computers to one another and to the Internet. Plaintiff purchases component parts from a number of manufacturers. In particular, Plaintiff purchases application-specific integrated circuits ("ASICs"), which are considered the control center of its network switchers, from Defendant.

Defendant is also a Delaware corporation. Defendant asserts that, at all relevant times, its corporate headquarters, inside sales and marketing office, public relations department, principal warehouse, and most design and engineering functions were located in Burnaby, British Columbia, Canada. Defendant also maintains an office in Portland, Oregon, where many of its engineers are based. Defendant's products are sold in California through Unique Technologies, which is an authorized distributor of Defendant's products in North America. It is undisputed that Defendant directed Plaintiff to purchase Defendant's products through Unique, and that Defendant honored purchase orders solicited by Unique. Unique is located in California. Determining Defendant's "place of business" with respect to its contract with Plaintiff is critical to the question of whether the Court has jurisdiction in this case.

Plaintiff's Complaint focuses on five purchase orders.¹ Four of the five purchase orders were submitted to Defendant through Unique as directed by Defendant. However, Plaintiff does not dispute that one of the purchase orders, dated January 28, 2000, was sent by fax directly to Defendant in British Columbia, and that Defendant processed the order in British Columbia. Defendant shipped all orders to Plaintiff's headquarters in California.² Upon delivery of the goods, Unique sent invoices to Plaintiff, at which time Plaintiff tendered payment to Unique either in California or in Nevada.

The Parties do not identify any single contract embodying the agreement pertaining to the sale. Instead, Plaintiff asserts that acceptance of each of its purchase orders was expressly conditioned upon acceptance by Defendant of Plaintiff's "Terms and Conditions," which were included with each Purchase Order. Paragraph 20 of Plaintiff's Terms and Conditions provides "APPLICABLE LAW. The validity [and] performance of this [purchase] order shall be governed by the laws of the state shown on Buyer's address on this order." (Contos Decl., Exh. H, ¶ 16.) The buyer's address as shown on each of the Purchase Orders is in San Jose, California. Alternatively, Defendant suggests that the terms of shipment are governed by a document entitled "PMC-Sierra TERMS AND CONDITIONS OF SALE." Paragraph 19 of Defendant's Terms and conditions provides "APPLICABLE LAW: The contract between the parties is made, governed by, and shall be construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein, which shall be deemed to be the proper law hereof ...." (Wechsler Decl., Exh. D, ¶ 6.)

Plaintiff's Complaint alleges that Defendant promised in writing that the chips would meet certain technical specifications. (Compl. ¶¶ 13, 14, 15, 17, 18, 22, 23, & 25.) Defendant asserts that the following documents upon which Plaintiff relies emanated from Defendant's office in British Columbia: (1) Defendant's August 24, 1998 press release that it would be making chips available for general sampling (Doucette Decl. ¶ 13); (2) Defendant's periodic updates of technical specifications (Doucette Decl., Exh. H); and (3) correspondence from Defendant to Plaintiff, including a letter dated October 25, 1999. It is furthermore undisputed that the Prototype Product Limited Warranty Agreements relating to some or all of Plaintiff's purchases were executed with Defendant's British Columbia facility. (Doucette Decl., Exhs. B & C.)

Defendant does not deny that Plaintiff maintained extensive contacts with Defendant's facilities in Portland Oregon during the "development and engineering" of the ASICs. (Amended Supplemental Decl. of Anthony Contos, ¶ 3.) These contacts included daily email and telephone correspondence and frequent in-person collaborations between Plaintiff's engineers and Defendant's engineers in Portland. (Id.) Plaintiff contends that this litigation concerns the inability of Defendant's engineers in Portland to develop an ASIC meeting the agreed-upon specifications. (Id.)

Plaintiff now requests this Court to remand this action back to the Superior Court of the County of Santa Clara pursuant to 28 U.S.C. section 1447(c), asserting lack of subject matter jurisdiction. In addition, Plaintiff requests award of attorneys fees and costs for the expense of bringing this motion.

III. STANDARDS

A defendant may remove to federal court any civil action brought in a state court that originally could have been filed in federal court. 28 U.S.C. § 1441(a); Caterpillar, Inc. v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). When a case originally filed in state court contains separate and independent federal and state law claims, the entire case may be removed to federal court. 28 U.S.C. 1441 (c).

The determination of whether an action arises under federal law is guided by the "well-pleaded complaint" rule. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). The rule provides that removal is proper when a federal question is presented on the face of the Complaint. Id. at 9, 103 S.Ct. 2841. However, in areas where federal law completely preempts state law, even if the claims are purportedly based on state law, the claims are considered to have arisen under federal law. Ramirez v. Fox Television Station, Inc., 998 F.2d 743 (9th Cir. 1993). Defendant has the burden of establishing that removal is proper. Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir.1992). If, at any time before judgment, the district court determines that the case was removed from state court improvidently and without jurisdiction, the district court must remand the case. 28 U.S.C. § 1447(c).

The Convention on Contracts for the International Sale of Goods ("CISG") is an international treaty which has been signed and ratified by the United States and Canada, among other countries. The CISG was adopted for the purpose of establishing "substantive provisions of law to govern the formation of international sales contracts and the rights and obligations of the buyer and the seller." U.S. Ratification of 1980 United Nations Convention on Contracts for the International Sale of Goods: Official English Text, 15 U.S.C.App. at 52 (1997). The CISG applies "to contracts of sale of goods between parties whose places of business are in different States ... when the States are Contracting States." 15 U.S.C.App., Art 1(1)(a). Article 10 of the CISG provides that "if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance." 15 U.S.C.App. Art. 10.

IV. DISCUSSION

Defendant asserts that this Court has jurisdiction to hear this case pursuant to 28 U.S.C. section 1331, which dictates that the "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Specifically, Defendant contends that the contract claims at issue necessarily implicate the CISG, because the contract is between parties having their places of business in two nations which have adopted the CISG treaty. The Court concludes that Defendant's place of business for the purposes of the contract at issue and its performance is Burnaby, British Columbia, Canada. Accordingly, the CISG applies. Moreover, the parties did not effectuate an "opt out" of application of the CISG. Finally, because the Court concludes that the CISG preempts state laws that address the formation of a contract of sale and the rights and obligations of the seller and buyer arising from such a contract, the well-pleaded complaint rule does not preclude removal in this case.

A. Federal Jurisdiction Attaches to Claims Governed By the CISG

Although the general federal question statute, 28 U.S.C. § 1331(a), gives district...