Wixen Music UK Ltd. v. Transparence Entm't Grp.
| Docket Number | 2:21-cv-02663-ODW (MRWx) |
| Decision Date | 22 December 2021 |
| Parties | WIXEN MUSIC UK LTD., Plaintiffs, v. TRANSPARENCE ENTERTAINMENT GROUP INC., et al., Defendants. |
| Court | U.S. District Court — Central District of California |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS [16]
On March 26, 2021, Plaintiff Wixen Music UK brought this action against Defendants Transparence Entertainment Group, Inc. (“TEG”), TEG officers Dennis Dreith and Shari Hoffman, and former Wixen employee Tania Oliveira, primarily alleging Defendants misappropriated its trade secrets. (Compl. 1, ECF No. 1.) Defendants now move to dismiss this action for lack of personal jurisdiction, forum non conveniens, and failure to state a claim. (Mot. Dismiss (“Mot.” or “Motion”), ECF No. 16.) The Court GRANTS IN PART and DENIES IN PART Defendants' Motion.[1]
For purposes of Defendants' Rule 12(b)(6) Motion, the Court takes all of Wixen's well-pleaded allegations as true. See Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). The Court also refers to these allegations in determining whether it has personal jurisdiction over Oliveira, though in that context, the allegations may be controverted by a presentation of evidence. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004).
Wixen is a U.K. corporation that administers music copyrights and collects royalties earned by its clients' recordings, which are known as “neighboring rights” royalties. (Compl. ¶ 13.) Wixen's clients include musicians, vocalists, producers, and others involved in creating recordings. (Id.)
TEG is a California corporation. (Id. ¶ 14.) Like Wixen, TEG also administers and collects neighboring rights royalties. (Id. ¶ 2.) Dreith and Hoffman are TEG officers who reside in California. (Id. ¶ 3, 4.) Oliveira is a London, U.K. resident and former Wixen employee who now works for TEG. (Decl. Tania Oliveira (“Oliveira Decl.”) ¶¶ 2, 8, ECF No. 16-1.)
Oliveira began working for Wixen at the end of 2019. (Compl. ¶ 17.) As a condition of her employment, Oliveira agreed to retain Wixen's “confidential and proprietary information and trade secrets” in strict confidence. (Id.) These trade secrets include the names, contact information, and incomes of Wixen's clients, contract amounts and expiration dates, Wixen's methodology for collecting neighboring rights, Wixen employee salaries, and more. (Id. ¶ 18.) Wixen took measures to ensure the information remained confidential, such as requiring employees to sign confidentiality agreements and securing the information in password-protected repositories. (Id. ¶ 20.)
On October 29, 2020, while still employed by Wixen, Olivera entered into a non-disclosure agreement with California-based TEG, Dreith, and Hoffman (collectively, “TEG Defendants”) in which Oliveira agreed to share certain information including Wixen's trade secrets. (Id. ¶ 22.) On November 1, 2020, TEG entered into an additional consulting agreement with Oliveira. (Id. ¶ 23.) During the five months Oliveira worked for both Wixen (in the U.K.) and TEG (in California), she emailed herself and TEG Defendants Wixen-related information, including Wixen trade secrets, from her work computer. (Id. ¶ 25.) Moreover, during and after Oliveira's employment with Wixen, Oliveira contacted one or more of Wixen's clients using their non-public contact information found in Wixen's client list, for the purpose of soliciting business from those clients on behalf of TEG. (Id. ¶ 26.) As a result, TEG did in fact gain the business of certain Wixen clients. (Id.)
On February 1, 2021, Oliveira informed Wixen that she would resign effective March 12, 2021. (Id. ¶ 31.) Prior to resigning, Oliveira deleted several TEG-related emails from her work laptop, which Wixen later found in the computer's “Recycle Bin.” (Id. ¶ 33.) The deleted emails show Oliveira shared confidential Wixen information with TEG. (Id.)
On March 26, 2021, Wixen filed a Complaint alleging: (1) trade secret misappropriation under federal law; (2) trade secret misappropriation under state law; (3) intentional interference with contractual relations; (4) intentional interference with economic relations; (5) unfair competition; and (6) conspiracy. (Id. ¶¶ 36-83.) Defendants now move to dismiss on three grounds: (1) the Court lacks personal jurisdiction as to Oliveira; (2) alternatively, Oliveira must be dismissed from the case under the doctrine of forum non conveniens; and (3) irrespective of whether Oliveira is dismissed on those grounds, failure to state a claim under Federal Rule of Civil Procedure (“Rule”) 12(b)(6) as to all Defendants. (Mot. 3-15.) The matter is fully briefed. (See Id.; Pls.' Opp'n, ECF No. 18; Defs.' Reply, ECF No. 20.)
For the following reasons, the Court finds it has personal jurisdiction over Oliveira and thus DENIES Defendants' Motion to dismiss Oliveira from this action.
Federal courts have the power to exercise personal jurisdiction to the extent permitted by the laws of the states in which they sit. Fed.R.Civ.P. 4(k)(1)(A). California's long-arm jurisdictional statute is coextensive with federal due-process requirements, namely, that a 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.” Int'l Shoe Co. v. State of Wash., Office of Unemp't Comp. & Placement, 326 U.S. 310, 316 (1945); Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1110 (9th Cir. 2002).
When a party seeks dismissal under Rule 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the exercise of personal jurisdiction is proper. Menken v. Emm, 503 F.3d 1050, 1056 (9th Cir. 2007). When the motion to dismiss is based on written materials rather than an evidentiary hearing, “the plaintiff need only make a prima facie showing of jurisdictional facts.” Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). “Although the plaintiff cannot simply rest on the bare allegations of its complaint, uncontroverted allegations in the complaint must be taken as true.” Schwarzenegger, 374 F.3d at 800 (internal quotations and citations omitted).
Personal jurisdiction may be general or specific. Daimler AG v. Bauman, 571 U.S. 117, 127-28 (2014). General jurisdiction exists when a foreign defendant's “affiliations with the State are so continuous and systematic as to render [it] essentially at home in the forum State.” Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal quotation marks omitted). The parties do not dispute that the Court does not have general jurisdiction over Oliveira. (See Opp'n 5.) Thus, the issue is whether this Court may exercise specific jurisdiction over Oliveira.
The Ninth Circuit uses a three-prong test for establishing specific jurisdiction: (1) the non-resident defendant must purposefully direct activities or transactions with the forum or purposefully avail him or herself of the benefits and protections of the forum's laws; (2) the claim must arise out of or relate to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice such that it is reasonable. Schwarzenegger, 374 F.3d at 802. “The plaintiff bears the burden of satisfying the first two prongs of the test.” Id. The burden then shifts to the defendant to “present a compelling case” that the third prong is not satisfied. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).
The Court's specific jurisdiction analysis begins by considering whether Oliveira “purposefully directed” her conduct toward, or “purposefully availed” herself of the privileges of, California. Schwarzenegger, 374 F.3d at 802. Courts typically analyze contract disputes under the “purposeful availment” standard, and typically apply the “purposeful direction” standard to tort claims. See Id. (). However, the Ninth Circuit “often use[s] the phrase ‘purposeful availment,' in shorthand fashion, to include both purposeful availment and purposeful direction.” Id. And despite observing that the purposeful direction test is more appropriate for tort claims, the Schwarzenegger court nevertheless analyzed the tort claims at issue under both the purposeful direction and purposeful availment standards in determining specific jurisdiction. Id. at 802-803. This Court follows suit and assesses Wixen's claims under both standards.
To establish purposeful direction, a plaintiff must show the defendant “(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.” Axiom Foods, Inc. v. Acerchem Int'l, Inc., 874 F.3d 1064, 1069 (9th Cir. 2017) (citation omitted). The inquiry is “defendant-focused, ” meaning that “the relationship between the nonresident defendant, the forum, and the litigation must arise out of contacts that the defendant himself creates with the forum state.” Id. at 1068 (internal quotations and citation omitted, emphasis in original).
Here Wixen fails to demonstrate the third prong: that Oliveira “[knew] that the harm caused would likely be suffered in California.” See Krypt, Inc. v. Ropaar LLC, No. 19-cv-03226-BLF, 2020 WL 3639651, at *6 (N.D. Cal. July 6, 2020). To satisfy this element, a defendant's intentional act must have foreseeable effects in the forum. Brayton Purcell LLP v....
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