West Corp. v. Superior Court

• Decision Date: 17 March 2004
• Docket Number: No. D042633,D042633
• Citation: 116 Cal.App.4th 1167,11 Cal.Rptr.3d 145
• Court: California Court of Appeals Court of Appeals
• Parties: WEST CORPORATION et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent; Patricia Sanford, Real Party in Interest.

11 Cal.Rptr.3d 145

116 Cal.App.4th 1167

WEST CORPORATION et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent;

Patricia Sanford, Real Party in Interest.

No. D042633

Court of Appeal, Fourth District, Division 1

March 17, 2004

Review Denied June 16, 2004

Walsh & Furcolo, Timothy M. Twomey, San Diego, Daniel W. Kelsberg; Bondurant, Mixson & Elmore, M. Jerome Elmore, Joshua F. Thorpe and Corey F. Hirokawa, Atlanta, GA for Petitioners.

No appearance for Respondent.

Milberg Weiss Bershad Hynes & Lerach, Patrick J. Coughlin, Frank J. Janecek, Jr., Kevin K. Green, San Diego; Law Office of Artie Baran and Artie Baran for Real Party in Interest.

McCONNELL, P.J.

Petitioners West Corporation (West) and West Telemarketing Corporation (WTC) seek a writ of mandate directing the superior court to grant their motion to quash service of summons on the grounds of lack of personal jurisdiction. The issue presented is whether California may constitutionally assert jurisdiction over a nonresident telemarketing corporation when a California resident initiates a phone call to buy a product, reaches a telemarketer who handles the order, the telemarketer then initiates a sale of a separate product and allegedly makes misrepresentations during the sales pitch for the separate product. We conclude personal jurisdiction is proper.

FACTUAL AND PROCEDURAL BACKGROUND

WTC is a wholly owned subsidiary of West. Both corporations are organized under the laws of the state of Delaware and have their headquarters in Nebraska. Neither maintains any offices or employees in California, is licensed to do business in California, nor owns property in California.

WTC is an "inbound teleservices bureau." WTC answers telephone calls for 800 numbers and collects orders for various products and services on behalf of its clients. One of WTC's clients advertised and sold Tae-bo fitness tapes. Another one of WTC's clients was Memberworks, Inc. (MWI). MWI is incorporated under the laws of the state of Delaware and has its principal place of business in Connecticut.

In March 1998, WTC and MWI entered into a "Joint Marketing Agreement" to market MWI's membership programs and to share net profits and losses equally. In January 1999, WTC and MWI entered into a separate "Wholesale Agreement" providing that WTC, at its sole expense, would market, accept orders, and charge consumers for enrollment in the membership programs while MWI would mail out the memberships kits for a fee.

In January 1999, West accepted and assumed all of WTC's rights and obligations under the Joint Marketing and Wholesale Agreements. West used WTC to fulfill its contractual obligations. In July 1999, WTC, West, and MWI entered into a "Joint and Wholesale Marketing Agreement" which superseded and essentially consolidated the prior agreements into one contract.

In late February 1999, Patricia Sanford, a California resident, called an 800 number to order some Tae-bo fitness videotapes. A WTC operator located in Virginia answered the phone call. After the WTC operator processed Sanford's order for the Tae-bo tapes including obtaining her credit card information, the operator proceeded to read a sales pitch from a prepared script for a purportedly free trial membership in a "buying club" that was serviced by MWI. This type of sales pitch for additional products or services is commonly called an "upsell." When Sanford "accepted" the MWI offer, WTC forwarded her information, including credit card information, to MWI. According to Sanford, she and other consumers are told to look for materials in the mail confirming the "risk-free" membership. Sanford alleged several weeks later her credit card was charged "an unsolicited and unexpected $72.00" for "MWI Essentials." In January 2000, she "was assessed another unsolicited and unexpected $84.00 charge ... again charged as `MWI Essentials.'" After inquiring about this charge, Sanford learned this was a renewal fee for the membership buying program. She was not informed that she had been enrolled in the program the prior year and she had never used it. Sanford requested and received a refund of the $84.00 renewal charge.

Sanford alleged that customers are not asked their permission to have their credit and/or debit card information given to MWI and are not sent a bill or invoice indicating their credit/debit cards will be charged. She alleged customers are charged between $60 and $150 annually for membership or renewal fees for the MWI buying clubs.

Originally, Sanford filed her class action suit in federal court (Sanford v. Memberworks, Inc. (U.S. Dist. Ct. case No. 02-CV-601 H(LSP))) alleging causes of action for a violation of federal laws regarding unordered merchandise, declaratory relief, conversion, unjust enrichment, and fraud. West and WTC unsuccessfully moved to dismiss Sanford's federal suit for lack of personal jurisdiction. However, Sanford's federal claim against West and WTC for the mailing of unordered merchandise was eventually dismissed because West and WTC had not been involved in mailing the membership kits to Sanford. The federal court declined to take supplemental jurisdiction over Sanford's state claims.

On February 13, 2003, Sanford filed a class action complaint in San Diego Superior Court against West and WTC alleging causes of action for: (1) violation of the consumers legal remedies act; (2) unlawful, fraudulent and unfair business practices; (3) untrue and/or misleading advertising; (4) conversion; (5) unjust enrichment; (6) fraud and deceit; and (7) negligent misrepresentation.

West and WTC unsuccessfully moved to quash service of summons on the ground the court lacked personal jurisdiction.

DISCUSSION

West and WTC argue that personal jurisdiction was improperly asserted, pointing out they have no employees or offices in California, they are not licensed to do business in California, and they own no California property. They further point out they did not advertise the Tae-Bo fitness videotapes or MWI memberships in California. Nor did they mail anything to or bill Sanford. They stress that Sanford initiated the telephone call that WTC answered in Virginia and assert they did not reach out to Sanford or any other California resident. Sanford focuses on the fact that the defendants initiated the upsell of the MWI membership program while knowing she was a California resident.

"A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States." (Code Civ. Proc., § 410.10.) "A state court's assertion of personal jurisdiction over a nonresident defendant who has not been served with process within the state comports with the requirements of the due process clause of the federal Constitution if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate `"traditional notions of fair play and substantial justice."'" (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, 58 Cal.Rptr.2d 899, 926 P.2d 1085.)

"Under the minimum contacts test, `an essential criterion in all cases is whether the "quality and nature" of the defendant's activity is such that it is "reasonable" and "fair" to require him [or her] to conduct his [or her] defense in that State.' [Citations.] `[T]he "minimum contacts" test ... is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite "affiliating circumstances" are present.' [Citations.] `[T]his determination is one in which few answers will be written "in black and white. The greys are dominant and even among them the shades are innumerable."'" (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 268, 127 Cal.Rptr.2d 329, 58 P.3d 2.)

Jurisdiction may be general when the nonresident's activities in the forum state are "`extensive or wide-ranging' [citation] or `substantial ... continuous and systematic.'" (Alexander v. Heater (1987) 193 Cal.App.3d 1241, 1244, 238 Cal.Rptr. 795.) In such a situation, "there is a constitutionally sufficient relationship to warrant jurisdiction for all causes of action against him [or her], regardless of whether the specific cause of action is connected to the defendant's business activities in the forum." (Ibid.) Alternatively, jurisdiction may be specific, i.e., based "upon the nature and quality of the defendant's activities in the forum in relation to the particular cause of action, and the balance between the convenience of the parties and the interest of the state in asserting jurisdiction." (Ibid.) "When determining whether specific jurisdiction exists, courts consider the "`relationship among the defendant, the forum, and the litigation.'" [Citations.] A court may exercise specific jurisdiction over a nonresident defendant only if: (1) `the defendant has purposefully availed himself or herself of forum benefits' [citation]; (2) `the "controversy is related to or `arises out of' [the] defendant's contacts with the forum"' [citations]; and (3) "`the assertion of personal jurisdiction would comport with `fair play and substantial justice.'"'" (Pavlovich v. Superior Court, supra, 29 Cal.4th 262, 269, 127 Cal.Rptr.2d 329, 58 P.3d 2.)

"When a defendant moves to quash service of process on jurisdictional grounds, the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction. [Citation.] Once facts showing minimum contacts with the forum state are established, however, it becomes the defendant's burden to demonstrate that the exercise of jurisdiction would be unreasonable. [Citation.] When there is conflicting evidence, the trial court's factual determinations are not disturbed on appeal if supported by substantial evidence. [Citation.] When no conflict in the evidence exists, however, the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of...