Netgear, Inc. v. Redzone Wireless, LLC
| Decision Date | 31 May 2017 |
| Docket Number | Case No. 16-cv-06974-BLF |
| Parties | NETGEAR, INC., Plaintiff, v. REDZONE WIRELESS, LLC, Defendant. |
| Court | U.S. District Court — Northern District of California |
[Re: ECF 9, 30]
In this declaratory relief action, Defendant Redzone Wireless, LLC ("Redzone") moves to dismiss for lack of personal jurisdiction and lack of a case or controversy, or alternatively to transfer the case to the U.S. District Court for the District of Maine. Mot., 9. For the reasons set forth below, the Court GRANTS the motion to dismiss for lack of personal jurisdiction, and thus declines to address the remaining issues raised in Redzone's motion.
In March 2015, Redzone, which is incorporated and has its principal place of business in Maine, reached out to declaratory judgment Plaintiff Netgear, Inc. ("Netgear"), which is incorporated in Delaware and has its principal place of business in California, to inquire whether an inventory of Netgear routers were available for purchase. Ex. 1 to Notice of Removal ("Compl.") ¶ 10, ECF 1; Mot. 7, 9. Netgear had manufactured the routers pursuant to specifications of a different wireless carrier, which Netgear told Redzone. Compl. ¶¶ 9, 11. To assist Redzone in determining whether the routers were compatible with its network, Netgear sent samples to Redzone for testing. Id. ¶ 11. Netgear informed Redzone that were it to purchase the routers, they would be sold "as is" with no further modifications or support. Id.
After Redzone determined that the routers were compatible with its network, the parties negotiated an agreement whereby Redzone agreed to purchase routers from Netgear. Id. ¶¶ 12-13. On April 6, 2015, the parties executed Netgear's Standard Terms and Conditions Agreement ("T&C Agreement"). Id. ¶ 13; Ex. A to Compl. ("T&C Agreement"), ECF 1. Approximately three weeks later, on April 28, 2015, the parties entered into a Redzone Wireless Custom LG6100 SKU Side Letter ("Side Letter Agreement"), which obligated the parties to terms in addition to the T&C Agreement. Compl. ¶ 14; Ex. B to Compl. ("Side Letter Agreement"), ECF 1. Redzone took delivery of the routers in June 2015, and subsequently began installing them in customers' homes. Compl. ¶ 16.
Between the time Redzone tested the routers for compatibility with its network and began installing them in its customers' homes, Redzone made significant alterations to its wireless system. Id. Once Redzone installed the routers, it began receiving complaints of connectivity drops from its customers. Id. Redzone alerted Netgear of the issue on July 16, 2015, and requested a solution. Id.
Netgear was unable to discover the root cause of the connectivity issues, but nonetheless provided patches for the router firmware in November and December 2015, even though it contends it was not contractually required to do so. Id. ¶ 17. Netgear alleges that Redzone continued to demand that it provide additional support for the routers, and thus Netgear brought this declaratory judgment suit seeking a declaration that it is not obligated to devote further time and resources to the connectivity issues being experienced by Redzone's customers. Id. ¶¶ 18-19.
Redzone now moves to dismiss this action for lack of personal jurisdiction and lack of a case or controversy. Mot. 2. Alternatively, Redzone asks the Court to transfer the action to the District Court for the District of Maine. Netgear opposes the motion. Opp'n, ECF 20.
Redzone first argues that the Court does not have personal jurisdiction over it, and therefore, the action cannot be maintained in this Court. Mot. 4. Netgear contends, however, that this Court may exercise specific jurisdiction over Redzone. Opp'n 4.
Federal Rule of Civil Procedure 12(b)(2) authorizes a defendant to seek dismissal of anaction for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). "Where, as here, 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." Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015) (internal quotation marks and citation omitted). "[T]he plaintiff cannot simply rest on the bare allegations of its complaint." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (internal quotation marks and citation omitted). However, uncontroverted allegations in the complaint are accepted as true, and factual disputes created by conflicting affidavits are resolved in the plaintiff's favor. Id.
Where no applicable federal statute governs personal jurisdiction, "the law of the state in which the district court sits applies." Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003). "California's long-arm statute allows courts to exercise personal jurisdiction over defendants to the extent permitted by the Due Process Clause of the United States Constitution." Id. "[D]ue process requires that the defendant '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.'" Ranza, 793 F.3d at 1068 (quoting Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)) (internal quotation marks and citation omitted).
"The strength of contacts required [for exercising personal jurisdiction] depends on which of the two categories of personal jurisdiction a litigant invokes: specific jurisdiction or general jurisdiction." Ranza, 793 F.3d at 1068. Netgear contends that Redzone is subject to specific jurisdiction in this district, and therefore the Court addresses only whether it may exercise specific jurisdiction over Redzone. See Opp'n 4.
The Ninth Circuit has established a three-prong test for determining whether a non-resident defendant is subject to specific personal jurisdiction in a forum:
Schwarzenegger, 374 F.3d at 802 (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)).
The exact form of the Court's jurisdictional inquiry depends on the nature of the claim at issue. For claims sounding in contract, the Ninth Circuit applies a "purposeful availment" analysis and asks whether a defendant has "purposefully avail[ed] [himself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id. (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). A claim for declaratory judgment as to the terms of a contract is an action sounding in contract. See Stanford Ranch, Inc. v. Md. Cas. Co., 89 F.3d 618, 625 (9th Cir. 1996) (). Therefore, the minimum contacts inquiry for Netgear's declaratory judgment claim focuses on whether Redzone purposefully availed itself of the privilege of conducting business within California.
i. Purposeful Availment
Redzone argues that this Court lacks specific jurisdiction over it because it conducts no activities or business in California; it has no offices, employees, or banking in California; closes no sales and performs no services in California; installed none of Netgear's routers in California; and negotiated the terms of the contract with a Netgear employee in New Jersey via email. Mot. 6. Moreover, Redzone asserts that all persons familiar with the facts underlying this controversy are located in either Maine or North Carolina. Id.
Netgear responds that this Court may exercise specific jurisdiction over Redzone because Redzone purposefully availed itself of the privileges and protections of the laws of California. Opp'n 5. Netgear identifies the following facts to support its contention: (1) Redzone reached out to a California based company, (2) Redzone negotiated the sale of products shipped from California, (3) Redzone paid for the products via wire transfer to a bank in California,1 (4) Redzone sought resolution to technical connectivity issues from Netgear's California basedemployees; and (5) Redzone threatened legal action against a Netgear, a California based company. Id. Redzone disputes that any of these facts is sufficient, as nearly all of the contacts occurred via email, it negotiated the contract with a Netgear employee located in New Jersey, and because a single sale transaction by an out-of-state buyer like the one at issue here is insufficient to establish personal jurisdiction. Reply 1-2, ECF 23.
The purposeful availment test requires "'in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (quoting Hanson, 357 U.S. at 253). "A defendant has purposely availed himself of the benefits of a forum if he "'deliberately' has engaged in significant activities within a State, . . . or has created 'continuing obligations' between himself and residents of the forum." Id. at 475-76 (internal citation omitted). Further, "[p]urposeful availment requires that the defendant engage in some form of affirmative conduct allowing or promoting the transaction of business within the forum state." Gray & Co. v. ...
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