Salesforce.com, Inc. v. GEA, Inc.

• Decision Date: 13 August 2019
• Docket Number: Case No. 19-cv-01710-JST
• Court: U.S. District Court — Northern District of California
• Parties: SALESFORCE.COM, INC., Plaintiff, v. GEA, INC., Defendant.

SALESFORCE.COM, INC., Plaintiff, v. GEA, INC., Defendant.

Case No. 19-cv-01710-JST

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

August 13, 2019

ORDER HOLDING IN ABEYANCE MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND IMPROPER VENUE

Re: ECF No. 18

Before the Court is Defendant GEA, Inc.'s motion to dismiss for lack of personal jurisdiction and improper venue. ECF No. 18. For the reasons that follow, the Court will hold the motion in abeyance and authorize jurisdictional discovery.

I. BACKGROUND

Plaintiff Salesforce.com, Inc. ("Salesforce") operates a customer relationship management platform that allows entities to manage their sales, service, marketing, and commerce functions, among others. Complaint ("Compl."), ECF No. 1 ¶ 9. Salesforce licenses the platform to its customers, who each designate one or more administrators for their account. Id. ¶¶ 9, 11.

GEA is a Nevada corporation that operates as a "holding company that licenses the intellectual property associated with Grand Estates Auction Company, a luxury residential auction company." ECF No. 18-1 ¶ 3. In 2014, GEA created a Salesforce account by submitting an Order Form and assenting to the Master Subscription Agreement ("MSA"). Compl. ¶ 12.¹ GEArenewed its account via a new Order Form on July 6, 2016. ECF No. 1-1 at 3-7.

The MSA provides that "[b]y accepting this Agreement, either by clicking a box indicating your acceptance or by executing an order form that references this Agreement, you agree to the terms of this Agreement." Id. at 8. The MSA further states that "[i]t is effective between [Salesforce] and [the customer] as of the date of [the customer] accepting this Agreement." Id.

Section 13 of the MSA concerns the governing law and jurisdiction for "any lawsuit arising out of or in connection with this Agreement." Id. at 14. For U.S. customers, section 13.1 provides that "[t]he governing law is . . . California and controlling United States federal law." Id. In addition, "[t]he courts having exclusive jurisdiction are . . . San Francisco, California, U.S.A." Id. Section 13.3 reiterates that "[e]ach party agrees to the applicable governing law above without regard to choice or conflicts of law rules, and to the exclusive jurisdiction of the applicable courts above." Id. at 15.

In 2016, GEA became embroiled in a dispute with one of its sales representatives, Jeremey LeClair. ECF No. 18-1 ¶¶ 8-14. As part of that dispute, GEA alleges, LeClair used his administrator access to gain sole control over GEA's account with Salesforce and transferred GEA's database into a new account. Id. ¶¶ 11-14. GEA sued LeClair in North Carolina state court. Compl. ¶ 13.

Salesforce alleges that, in September 2018, GEA's counsel informed Salesforce that GEA would attempt to hold Salesforce liable for damages suffered due to LeClair's manipulation of the account. Id. ¶ 17. GEA contended that Salesforce employees had improperly performed various actions with regard to GEA's account, at LeClair's request. Id. GEA stated that it would seek at least $800,000,000.00 in damages, fees, and costs for the harm to its business. Id.

On April 2, 2019, Salesforce filed this declaratory judgment action, seeking a declaration that it (1) was not liable for the account modifications and (2) did not breach the parties' agreement. ECF No. 1. On May 30, 2019, GEA filed this motion to dismiss for lack of personal jurisdiction and improper venue. ECF No. 18.²

II. LEGAL STANDARD

A. Rule 12(b)(2)

In contesting a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating personal jurisdiction. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). But where the "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." Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). Further, "[c]onflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor." In re Boon Glob. Ltd., 923 F.3d 643, 650 (9th Cir. 2019).

B. Rule 12(b)(3)

Similarly, "[o]nce the defendant has challenged the propriety of venue in a given court, the plaintiff bears the burden of showing that venue is proper." Autodesk, Inc. v. Kobayashi + Zedda Architects Ltd., 191 F. Supp. 3d 1007, 1020 (N.D. Cal. 2016) (citing Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979)). In evaluating a Rule 12(b)(3) motion to dismiss for improper venue, the "pleadings need not be accepted as true, and facts outside the pleadings may be considered." Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009) (per curiam).

III. DISCUSSION

A. Personal Jurisdiction

Salesforce responds to GEA's motion by asserting two bases for personal jurisdiction: (1) specific jurisdiction and (2) consent via the MSA's forum selection clause.

1. Legal Standard

"Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons." Daimler AG v. Bauman, 571 U.S. 117, 125 (2014). In particular, where "no federal statute authorizes personal jurisdiction, the district court applies the law of the state in which the court sits." Mavrix Photo, 647 F.3d at 1223 (citing Fed. R. Civ. P. 4(k)(1)(A)). As relevant here, "California's long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution." Daimler AG, 571 U.S. at 125; see also Cal. CodeCiv. Proc. § 410.10 ("A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States."). And because that "statute is coextensive with federal due process requirements, the jurisdictional analyses under state law and federal due process are the same." In re Boon, 923 F.3d at 650 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004)).

The due process inquiry generally "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.'" Id. (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "The strength of contacts required depends on which of the two categories of personal jurisdiction a litigant invokes: specific jurisdiction or general jurisdiction." Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015). "A court with general jurisdiction may hear any claim against that defendant, even if all the incidents underlying the claim occurred in a different State." Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1780 (2017) (emphasis in original). General jurisdiction over a corporation is appropriate only when the corporation's contacts with the forum state "are so 'continuous and systematic' as to render [it] essentially at home in the forum State." Daimler AG, 571 U.S. at 127 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Salesforce does not argue that the Court has general jurisdiction over GEA.

"Specific jurisdiction is very different." Bristol-Myers, 137 S. Ct. at 1780. In order for the court to exercise specific jurisdiction, the suit must arise out of or relate to the defendant's contacts with the forum. Id. "In other words, there must be 'an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation.'" Id. (quoting Goodyear, 564 U.S. at 919). Accordingly, "specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction." Goodyear, 564 U.S. at 919.

Alternatively, "[c]onsent is considered as one of four traditional bases for the exercise of personal jurisdiction over a nonresident defendant and . . . is separate from the 'minimum contacts' analysis." Nobel Floral, Inc. v. Pasero, 106 Cal. App. 4th 654, 658 (2003); see also J.McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 880 (2011).

2. Specific Jurisdiction

a. Purposeful Availment

The Ninth Circuit has established a three-part test for analyzing a claim of 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.

Schwarzenegger, 374 F.3d at 802 (quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)). Courts apply a two-step burden-shifting analysis: "The plaintiff bears the burden on the first two prongs. If the plaintiff establishes both prongs one and two, the defendant must come forward with a 'compelling case' that the exercise of jurisdiction would not be reasonable." Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008) (citation omitted).

"For claims sounding in contract, a purposeful availment test is used [for the first prong]; for claims sounding in tort a purposeful direction test is used." In re Boon, 923 F.3d at 651. Here, the parties appear to agree that a purposeful availment test is appropriate for Salesforce's declaratory judgment claims, which are rooted in the parties' contract. ECF No. 20 at 14; ECF No. 21 at 5; see also Netgear, Inc. v. Redzone Wireless, LLC, No. 16-cv-06974-BLF, 2017 WL 2351359, at *2 (N.D. Cal. May 31, 2017) ("A claim for declaratory judgment as to the terms of a contract is an action sounding in contract."); Dynamic Software Servs. v. Cyberbest...