InProcessOut, LLC v. World Tech Toys, Inc.

Western District of Texas, txwd-5:2018-cv-00869

REPLY to Response to Motion, filed by World Tech Toys, Inc., re [19] MOTION to Dismiss filed by Defendant World Tech Toys, Inc.

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3 1 Roland J. Tong (Cal. Bar No. 216836) f', rjt@jnanningllp.com 2 LUE9J!. Elizabeth A. Handelin (Cal. Bar No. 275710) eah®manningllp.com 3 MANNING & KASS ELLROD, RAMIREZ, TRESTER LLP 4 801 S. Figueroa s, 15 Floor Los Angeles, California 90017-3012 5 TelephOne: (213) 624-6900 Facsimile: (213) 624-6999 6 PRO HAC VICE 7 Attorneys for Defendant, WORLD TECH TOYS, INC. 8 UNITED STATES DISTRICT COURT 9 WESTERN DISTRICT OF TEXAS, SAN ANTONIO 10 Case No. 05:18-cv-00869 11 DEFENDANT WORLD TECH TOYS, INC.'S 12 INPROCESSOUT, LLC dba FLYNOCEROS, a Texas Limited Liability Company NOTICE OF SPECIAL APPEARANCE 13 -AND- 14 Plaintiff, REPLY TO PLAiNTIFF'S OPPOSITION TO 15 DEFENDANT'S MOTION TO DISMISS V. PURSUANT TO 16 1. F.R.C.P. 12B)(2) (LACK OF WORLD TECH TOYS, INC., a California PERSONAL JURISDICTION), Corporation, '2. F.R.C.P. 12(B)(3) (IMPROPER VENUE), 19 Defendant. 3. F.R.C.P.. 12(B)(4) (iNSUFFICIENT 20 PROCESS), AND 21 4. F.R.C.P. 12B)5) (INSUFFICIENT SERVICE OF PROCESS) 22 23 NOTICE OF SPECIAL APPEARANCE 24 Defendant World Tech Toys, Inc. continues to make its special appearance pursuant to Texas Rule of 25 Civil Procedure, rule 1 20a, as well as any necessary subsequent appearance to defend its motion to 26 dismiss. This special appearance continues to be for the purpose of bringing before this court and 27 defending Defendant's Motion to Dismiss pursuant to Rule 12(b), subsections (2) through (5), for lack 28 of personal jurisdiction, improper venue, insufficient process and insufficient service of process. DEFENDANT"S SPECIAL APPEARANCE AND REPLY TO OPPOSITION TO ITS 12B MOTION TO DISMISS. 3 SUMMARY OF ISSUES This reply addresses the foiowingisue raised in Plaintiff's Opposition: This court lacks jurisdiction where service of process is fatally defective. Plaintiff contends Defendant must show prejudice where the court diSfavors dismissal for failure to properly issue and serve initial pleadings. While prejudice is established, plaintiffs assertion is wrong. Where Defendant has timely asserted its defenses, this court lacks authority to act due to insufficient process and service of process. Plaintiff relies on cases which actually reach the same conclusion, but are distinguished where those defendants failed to make (and waived) a timely defense. Plaintiff cannot correct defective process and service of process based on Plaintiff's 10 allegations. Plaintiff originally declared Defendant did business within Texas and had a Texas registered 11 agent. But plaintiff identified Defendant's California Registered Agent, and Defendant clearly does not 12 have a Texas Registered Agent since that agent would be listed on Texas's secretary of state website. 13 Plaintiff cannot now claim it misstated a very obvious fact, that it clearly chose to assert to make it appear c14 service was proper when unsupported in law. Moreover, the correction alone still falls short of alleging all i15 facts necessary to establish proper service of process. Service within California requires inImam contacts sufficient to warrant extraterritorial 17 reach, allowing substituted service upon the Texas Secretary of State as Defendant's registered 18 agent. Plaintiffs reliance on decade old lower court decisions is not instructive since most employ 19 outdated foresecability and stream of commerce inquiries. Since J.Mclntyre, jurisdiction is no longer 20 premised on those terms. Jurisdiction requires purposeful availment over foreseeability, and substantial 21 directed activities instead of simply placing a product into the stream of commerce. 22 Contacts are insufficient to warrant personal jurisdiction. Even specific jurisdiction requires 23 I systematic and continuous activity. Plaintiff' has only alleged that the one offending product it purchased 24 I online was sent to Texas. But Plaintiff's unilateral act is insufficient to confer jurisdiction. Plaintiff's 25 allegations are otherwise limited to speculative purchases. Plaintiff also references other non-infringing 26 products sold on other websites and the fact these stores have unrelated physical store locations within 27 Texas, which Plaintiff hasn't even alleged carry any of Defendant's products. This does not establish the 28 contacts necessary for personal jurisdiction, especially in light of clarifications and limitations imposed by the Supreme Court in recent years. 'rr'1-'t,rr £ CTT'?'V A T A A £?r. TIfl? r -r, I I '1' T%U'1. tTA'C' 3 I LAW AND ANALYSIS 2 I. Insufficient Process and Service of Process (Fed. R. Clv. P. 12(b(4H5)). 3 "[S]crvice of process is the means by which a court asserts its jurisdiction over the person. See 4 Benny v. Pipes, 799 F.2d 489,492(9th Cir. 1986) ('A federal court is without personal jurisdiction over a 5 defendantunless the defendant has been served in accordance with FED. R. CIV. P. 4.'); FED. R. CIV. P. 6 4(k) (stating that '[s}ervice of a summons or filing a waiver of service is effective to establish jurisdiction 7 over the person of a defendant'). Service of process has its own due process component, and must be 8 'notice reasonably calculated to apprise interested parties of the pendency of the action and afford 9 them an opportunity to present their objections.' Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 10 306, 314, 70 S. Ct. 652, 94 L. Ed. 865 (1950)." 11 A. This court lacks jurisdiction where extraterritorial service not authorized pursuant to Rule 4 of the Federal Rules of Civil Procedure unless waiver is sought, which Plaints:ff did not pursue and 12 Plaintiff did notfollow the only applicable state law procedure forservice upon a non-resident without a registered agent in Texas. 13 Plaintiff claims dismissal for defective or insufficient service is disfavored among the court's and requires a showing of actual prejudice. However, the majority of case law does not support that position, P15 including Plaintiffs own citations. Plaintiff cites to Sanderford for example, but while that court 16 addressed a circumstance justifying a showing of actual prejudice there, the court clearly acknowledged 17 that generally the court's lacked authority to act without proper service of process. In Sanderford though, 18 Defendant failed to timely assert insufficient process, and because the defense was raised so late, the court 19 held it,had waived the defense. The court explained: "[W]hen a defective summons is served, the 20 defendant has the right, and indeed the duty, to assert the defense of insufficient process in a motion or 21 responsive pleading A defendant who waits until collateral attack to challenge the process does so at his 22 or her own peril (where summons later found to be in substantial compliance)."2 The court otherwise 23 found it had personal jurisdiction, considering two factors important that typically aren't: (1) the 24 trivialness of the defect which the court described as minor, and (2) actual notice prior to entry of default, 25 with significant time and opportunity to raise the defense prior to the entry of default.3 Generally, if 26 service is inadequate, actual notice is irrelevant where the court lacks the authority to proceed, and it will 27 28 'SECv, Ross, 504 F.3d 1130, 1138 (9thCir. 2007). 2Sanderford v. Prudential ins, Co., 902 F.2d 897,898 (1 1' Cu. 1990). Sanderford v. Prudential ins. Co., 902 F.2d 897, 899(1 1th Cu. 1990). 2 T1.TY' A,.vr.'c C'flTt AT A flTT A fl A '.Tf'T a rF flr,T.T Sr 1'r .flflf'O rTf\).T rf'. T'l'C' 1 'T1 Zt'tT'T T .T'I' T'TC'1. ZTC'C' 3 i where Defendant timely raises this defemse. PlaintiWs other case, Adam, addresses this where that court 2 explained: "[a]nd if AlliedSignal, Inc. was improperly served the district court lacked jurisdiction over 3 that defendant whether or not it had actual notice of the lawsuit."4 Without a proper basis for jurisdiction, 4 or in the absence of proper service of process, the district court has no power to render any judgment 5 against the defendant's person or property unless the defendant has consented to jurisdiction or waived the 6 lack of process.5 "A judgment entered without jurisdiction over the defendant is void."6 7 Defendant raised the defense in a timely manner. In this case Federal Rule of Civil Procedure, rule 8 4, governs summons and service. Rule 4's prescribed methods of service are limited by its own 9 subdivision (k) which addresses the territorial limits of effective service. The first part of subdivision (k) 10 limits the reach to those domiciled within (or those that otherwise consider it a home) the state in which ii the district court is located, or in cases ofjoinder or where authorized by federal statute (both inapplicable 12 here). The second part provides a limited exception where a party may reach outside the court's own state 13 to serve another if that person or entity is not subject to the general jurisdiction of any other state court Th4 within the country. However, in this case, Defendant is clearly subject to general jurisdiction within California. Rule 4 provides one alternative means of service via an applicable state statute.7 Where no 16 federal statute provides for manner of service, service is governed bylaw of state in which district court 17 sits.8 Laws of state where district court sits determines issue of whether service of process is proper in 18 absence of rules specifying territorial limits for effecting service of process.9 Service of process that is 19 valid under state law is valid service of process under Rule 4b0 "For state courts, generally a state long- 20 arm statute supplies all the authority that state courts require. By contrast, there is no general federal long- 21 arm statute, so federal courts must look either to the long-arm statutes of the state in which the court 22 sits"1' "Jurisdiction in personam is "acquired" either by voluntary appearance or by service on the person 23 within the territorial jurisdiction of the court. [Citing many cases.] It follows that the extraterritorial 24 4Adams v. Allied Signal (Jen. Aviation AvionIcs, 74 F.3d 882, 885 (8th Cir. 1996). See Mason v. Genisco reck. Corp., 960 F.2d 849,851(9th Cir. 1992); see also Omni Capital Int'l v. Rudolf Wolff & Co., 484 25 U.s. 97, 104, 108 S. Ct. 404,98 L. Ed. 2d 415 (1981) (B]efoe a court may exercise personal jurisdiction over a defendant, there must.be more than notice. t the defendant aadac* .1utic nally sufficient relationship between the defendant and the forum. There also must be a basis for the defendants amenability to service of summons. Absent consent, this means there must 26 be authorization for service of summons on the deindant'). v. Ross, 504 F.3d 1130, 1138-1139 (9th Cu. 2007). 27 7See e.g. Fed. R. Civ. P.4, subd. (e)(1) and subd. (h)(l). Vena v. Western General Agency, Inc., 543 F Supp 779 (N.D. 111. 1982). 9iCCHandels, A. G. v SS. "Seabird" 544 F Supp 5$ (SD NY 1982). 10Leshko v. Dorr-Oliver, Inc., 86 FED 343 (M.D. Pa 1979). SEC v. Ross, 504 F.3d 1130, 1138 (95 Cir. 2007) quoting Ins. Corp. of Ireland, Ltd v. Compagnie des Bauxites de Guinee, 45 U.S. 694, 702, 102 S. Ct, 2099, 72 L. Ed. 2d 492 (1982). 3 r,trs A .1'1''C' 'ThT'#'T 41 A T)T1' A T 4 TP'T £TT TT?flT s I'r, nrc'T'T'TrT 'TI T'T'C' I r) 'r,'i TTC' tTC'C 3 service is invalid and violates due process. Pennoyer v. Neff 95 U.S. 714. The subpoena being invalid, the 21 court was without jurisdiction and the order *inishing for contempt was void.'2 "Texas courts have consistently required strict compliance with the terms of the Texas long arm statute."3 Moreover, "actual 4' notice to a defendant, without proper service, is not sufficient toconvey upon the court jurisdiction to render default judgment against [the defiidant]. Rather, jurisdiction is dependent upon citation issued and 6 service in a manner provided for by law"4 "Section 17.044(b) of the Texas Civil Practice & Remedies 7 Code provides for substituted service on the Secretary for nonresident defendants doing business in Texas 8 that do not maintain a regular place of business in Texas, provided that the relevant proceeding arises out 9 of business done in Texas. [Citation omitted.] Specifically, plaintiffs must comply with notice 10 requirements of section 17.045(a): If the Secretary of State is served with duplicate copies of process for a 11 nonresident, he shall require a statement of the name and address of the nonresident's home or home office 12 and shall immediately mail a copy of the proecss to the nonresident."5 Texas state law is also limited with respect to service outside its own borders, providing j13 th4 substituted service in limited situations through the Secretary of State. This would have been the only 15 reasonable method Plaintiff could have used lbr proper service upon Defendant. Moreover, since Plaintiff 16 was limited to state service procedures for service outside of Texas, Plaintiff was expected to comply with:l7 all applicable state laws. When Plaintiff serves in a manner prescribed by state law, federal court must 18 look to state law to determine if attempted service has been effective.'6 However, Plaintiff not only failed 19 to serve Defendant pursuant to the only procedure available for out Of state service where no registered 20 agent in Texas exists, but also failed to provide information required in the form of summons and citation 21 pursuant to the applicable state law as well.'7 Thus, both process and service thereof were inadequate. 22 B. Plaintiff cannotcorrect defective process and service ofprocess because plaintiff has not the necessaryfacts in the complaint i.e establish the basisfor substituted service upon a 23 24 '2Blackmer v. United States, 284 U.s. 421, (1932) citing Exparte Fiske, 113 U.S. 713. See also United States v. Shipp, 203 U.S. 563 Exparte Rowland, 104 U.S. 604; In re Saiiyer 124 U.S. 200. 25 '3ffarper Macleod Solicitors v. Keasy & Keaty, 260 F.3d 389,398-399 (5th Cii. 2001) citing Mahon, 783 S.W.2d at 771. According to the Texas Supreme Court, "[a] typop)ca1 enorin the forwarding address. . . is grounds to set aside a default judgment based on substituted service." Royal .SthpuLlnes ns. Co. v. .Samaria Baptist Church, 840 S.W.2d 382, 383 (Tex. 26 1992); see also Commission of Contracts of General &ecWive Committee of Petroleum Workers Union of Republic ofMexico v. Arriba, Ltd., 882 S.W.2d 576, 585 (Tex. App. 1994, no writ) ("If the Secretary of State sends the citation and a copy of the 27 etition to the nonresident defendant using an iix.orrect address for the defendant, then a default judgment should be set aside.') 4Harper Macleod Solicitors v. Keaty & Keaty, 260 F.3d 389,398-399 (5th Cir. 2001) citing Wilson v. Dunn, 800 S,W.2d 833, 836 (Tex. 1990). 28 ' Id. at § 17.045(a). 16 Wilson v. Holiday Inn Curacao N. V., 322 F Snpp 1052 (D. Mass. 1971). '7Tex. Civ. Prac. & Rem. Code § 17.041 et seq. and Ten. R. Civ. P.99-108. 4 T%11T1'1T I. 1'1' C'flT'f'T A t A flflT A fl A .Tf' 4 ?T% nr,y,r P 'r r.flflr,C'T'DTrT Df T'r(U I 'T tVl'r,T rf. r%TC,t ITC'C' 3 I nonresident entity outside of the state, nor has plaintiff corrected this in its amended complaint "(T]he Texas long arm statute and the cases interpreting it, determine whether service of process 2 was effective on the Defendants. See FED. R. CW. PROC. 4 (e)(1) (West 1999). To support a default 3 I judgment against a jurisdictional cha11enge Texas law requires plaintiffs to prove that (1) the pleadinE's 4 established that the Defendants were ameaable te service, and (2) evidence in the record demonstrates 5 the Defendants were in fact served in the manner required by the Texas long arm statute. Bludworth, 841 6 F.2d at 649; Whitney v. L & L Realty Corp., 500 S.W.2d 94, 95-96 (Tex. 1973).18 Plaintiff must assert 7 facts establishing that substituted service would be appropriate, which is something he may or may not be 8 able to do, but he clearly cannot effect service on a nonresident without complying with this statute or 9 some other statute which allows service upon a nonresident outside of Texas, and Plaintiff has complied 10 with no such statute. Specifically, to use substituted service, Plaintiff would have had to allege the 11 category to which it was asserting Defendant fell into as described in Texas Civil Practice and Remedies 12 Code section 17.044, subdivision (a). Plaintiff would have also had to allege facts which establish the l3 Secretary of State of Texas would be the appropriate designated agent for Defendant pursuant to in Texas 14 Civil Practice and Remedies Code section 17.044, subdivision (b). This would at least require that he I:cFl5 allege facts establishing how the Defendant engaged in business within Texas but didn't maintain a Texas g16 agent, which it also must allege. Since theac things are not adequately alleged in the complaint, Plaintiff 17 cannot initiate the substituted service pursuant to this statute. 18 C. Any registered mail of the clerk summons or citation had to be handled by the clerk of the court, 19 and service was improper where c.ried out by counsellor Plaintiff "Unless the citation or an order of the court otherwise directs, the citation shall be served by any 20 person authorized by Rule 103 by (1) delivering to the defendant, in person, a true copy of the citation 21 with the date of delivery endorsed thereon with a copy of the petition attached thereto, or (2)mailing to the 22 defendant by registered or certified mail, return receipt requested, a true copy of the citation with a copy 23 of the petition attached thereto."9 "Service by registered or certified mail and citation by publication 24 must, if requested, be made by the clerk of the court in which the case is pending. But no person who is a 25 party to. or interested in the outcome of a suit may serve any process in that suit, and, unless otherwise 26 authorized by a written court order."2° The registered mail or certified mail sent to Defendant was not sent 27 28 18Harper Macleod Solicitors Keaty & Keaty, 260 F.3d 389,398 (5th 19 v. Cir. 2001) (emphasis added). Tex. R. Civ. P. 106. 20 Tex. R.. Civ. P. 103. 5 1'TTfT').Tt'% A V1'Cl C'TbTf'T A t A flflT AT A I,1. A ifl% flrrnT %r 1'f P,nnfc'TrTc,,.T 'T I'(DT'C' 1 SrEVfr').T Pr,', TTC' £TC'C 3 by the clerk of the court, and Plaintiff admits he carried out this function. Thus, the notice and service wa improper and made process and service of prdcess inadequate to establish jurisdiction over Defendant. II. Lack of Personal Jurisdiction (Fed. R. Clv. P. 12(b)(2)). A. case law is outdaVed w,d Invalidatedfollowing J'Mclntyre and subsequent Plaintiff's Supreme Court opinions which ckarly overrule Brennan's approach in the Asahi concurrence, and where evdtP the .F'Mdntyre concurrence acknowledges the same standard but believes the concurrence was merely misinterpreted and overextended by lower courts. 6 PlaintifFs cases can be distinguishI where those cases involved substantial contact beyond what 7 is present here. Regardless, insofar as any one of thos e cases expressed any viewpoint that would subject 8 this case to personal jurisdiction of this court, that approach was expressly overturned in J'Mclntyre and 9 can no longer be applied to confer jurisdiction. J'Mclntyre explained there be manifest intent of 10l Defendant to submit to the power of a sovereign, requiring Defendant to purposefully avail itself of the 11 privilege of conducting activities within a state, where Defendant must act or conduct itself in a manner 12 directly targeting the forum state.2' To constitute purposefi.il avaihnent, the defendant's contacts must be l3 "purposefully directed" to the state,22 and must result from the defendant's own "efforts to avail itself of l4 the forum."23 "[Al defendant will not be haled into a jurisdiction solely based on contacts that are i15 'random, isolated, or fortuitous,"4 or on the "unilateral activity of another party or a third person."25 l6 Through its purposeful forum contacts, the defendant must have sought "some benefit, advantage, or profi 17 by 'availing' itself of the jurisdiction."26 In conducting this analysis, we assess "the quality and nature of 18 the contacts, not the quantity."27 19 The court rejected Brennan's "stream-of-commerce" and "foreseeability" approach when applied 20 contrary to the Due Process Clause.28 The court explained that it was Defendant's actions, not Defendant' 21 intentions that conferred jurisdiction.29 The court reiterated the original holding from Asahi, which stated 22 "[t}he 'substantial connection' between defndant and the forum State necessary for a finding of minimum 23 contacts must come about by an action of the defendant purposefully directed toward tle forum State. The 24 21.1. Mdntyre Mach, Ltd v. Nicastro, 564 U.S. 873,882 (2011); see also 25 22Guardian Royal .Exch. Assurance, Ltd. v. EnglLi'h China Clays. P.L. C., 815 S.W.2d 223,228 (Tex. 1991). 23Mo/ci Mac River Expeditions v. Drugg, 221 S.W.34 569,576 (Tex. 2007). 26 24Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 tTex. 2005) quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984). 25 27 Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991) quoting Burger J(Corp. v. Rudzewicz, 471 U.S 462,475 (1985). 26Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005). 28 27MoncriefOil Int'l Inc. v. OAO Gazprom, 414 S.W.3d 142, 151 (Tex. 2013). 28j Mcintyre Mach. Ltdv. Nicastro, 564 U.S. 873, 882-883, 886 (2011). 291 McIntyre Mach. Ltd v. Mcastro, 564 U.S. 873, 883 (2011). 6,r,rr.tT' A APrC' ('flY","T A r A flfl' Afl A .Te'Y A 7T r)TflT P 'D/". /' T'DThT 'rr'. VI'C' I tfYrT,Y,.T 'rr'. 1'.T(' IT'C' 3 i placement of a product into the stream of commerce, without more, is not an act of the defendant 2 purposefully directed toward the forum State?3° J'Mclntyre directed the lower court to apply the 3 O'Connor standard which required finding purposeful availment on the part of a Defendant before 4 subjecting it to a court's authority, reiterating that this was a factual determination where defendant's 5 conduct and the economic realities of the market a defendant has sought to serve will differ across cases.3' 6 The court also provided an example of a situation in which a domestic entity who has a product to 7 sell would be improperly subject to jurisdiction in any one of the 50 states under Brennan's (now 8 overruled) approach if he were to sell to a distributor who would then sell the products outside the state 9. because clearly it would be foreseeable that a product could be sold in any one of the fifty states; this 10 approach applied this way was held to violate the Due Process clause.32 This example is also the closest ii factually. Taking all of plaintiff's allegations as true except those established as clearly false, the allegedly 12 infringing product is apparently offered for sale on one or two online distributor! marketplaces, neither of 13 which expressly targets Texas for the purpose of selling the allegedly infringing product(s). 14 B. The Supreme Court has clearly established the facts here are insufficient since there are no continuous or systematic contacts, and the only product known to have crossed into Texas 45 was unilaterally brought there by FlaIntff who cannot use his own act to confer jurisdiction over Defendant outside ofDefendant's own domicile, CalifornuL 16 "Adjudicatory authority of this oider, in which the suit 'arises out of or relates to the defendant's contacts with the forum' is today called 'specific junsdiction.' "{S}peciflc junsdiction over a 18 nonresident corporatiOn is appropriate when the corporation has purposefully directed its activities at the 19 forum state and the litigation results from alleged injuries that arise out of or relate to those activities."35 20 "(TJhe words 'continuous and systematic' were used in International Shoe to describe instances in 21 which the exercise of specWc jurisdiction would be appropriate."36 In order to find that a corporation 22 is subject to general jurisdiction in a fonnn, the plaintiff must demonstrate not only that the corporation 23 "engages in a substantial, continuous, and systematic course of business," but that the "corporation's 24 affiliations with the state are so continuous and systematic as to render it essentially at home in the forum 25 30J.MciniyreMach. Ltdv. Nicastro, 564 U.S. 873,883 (2011) citing Asahi Metal md. Co. v, Sup,C:, of Cal., 480 U.S. 102, 10 26 J.McIntyre Mach. Ltd v. Mcastro, 564 U.S. 873, 885 (2011). 27 J.Mcintyre Mach. Ltd v. Nicastro, 564 U.S. 873, 885 (2011). HelicopterosNacionales de Colombia, S.A. v. Hall, 466 U.S. 408,414 n. 8 (1984). 35DaimlerAGv. Bauman, 571 U.S. 117, 138-127(2014). 28 Quick Tee/is v. Sage Group Plc, 313 F.3d 338 (Cir. 2002) citing Alpine View Co. v. Atlas Copco AB, 05 F.3d 208, 215 (5th Cir. 2000). Daimler AG v. Bauman, 571 U.S. 117, 138 (2014) citing International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945). 7 1rT,y,rr A TI'C' C.fl1,rT A T 4 flhT A fl A ATY flTflT ..F !'I f flPC'V1'1tT r, ri'c' I 'T gfv1'TrVkT mf ThVC' £T'C' 3 State."37 Thus, continuous and systematic are required to confer any type of jurisdiction. Even in J'Mclntyre 's concurrence it was pointed out that no prior Supreme Court opinion had ever found a single isolated sale, even If accompanied with a sales effort purposefully directed toward sales in the United States generally, wotdd be sufficient to confer jurisdiction in that state38 The concurrence also explained there must always be "something more," a purposeful targeted act of Defendant, such as a special state-related design, or directed advertising, advice or marketing, if there is no discernible "regular flow" or "regular course" of sales into the state as established by Plaintiff.9 The 8 Supreme Court has also stated "unilateral activity of another party or a third person is not a n appropriate 9 consideration when determining whether a defendant has sufficient contacts with a forum state to justify 10 an assertion of jurisdiction."40 "The unilateral activity of those who claim some relationship with a 11 nonresident defendant cannot satisfy the requirement of contact with the forum state."41 In J'Mclrnyre, the 12 court found no contact at all except for what amounted to at most a few, and up to four, sales to the forum 13 state, and only one sale alleged by Plaintiff, and neither the potential of up to four nor the sole sale 14 established which was purchased by the Plaintiff were enough to confer jurisdiction, nor was this a matter i15 the Supreme Court felt was a difficult or close matter, but in fact described it as an example of a case that g16 the forum state should have never thought it had authority to subject that Defendant to its own jurisdiction. 17 As previously stated, Defendant does not own any property, pay or owe any taxes, or have an 18 office or other business location within the state of Texas.42 Defendant does not have employees working 19 or conducting business within the state, nor does it solicit customers or employees from the state of 20 Texas.43 No contracts have been entered into which must be performed within the state and Defendant has 21 certainly not committed a tort in the state of Texas. Defendant does not conduct andlor transact business 22 in Texas, nor has it ever conducted and/or transacted business in that state.45 Defendant is a California 23 Corporation, registered to conduct business in California only. Plaintiff has only ever established that 24 one sale of an infringing product ever made. it to Texas, and that it was Plaintiff's own doing that brought 25 Dai,nlerAG v. Bauman, 571 U.S. 117, 138-139 20i4). 3J. Mcintyre Mach. Ltd v. Nicastro, 564 U.S. 873,888 (2011) (concurrence). 26 39See J. Mcintyre Mach. Ltd v. Nicastro, 564 U.S. 873, 889 (2011) (concurrence). 4°Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,417 (1984), 27 Hanson v. Denckla, 357 U.S. 235, 253 (1958). 42 (Dec. V.K. ir 13-18.) 4° (Dec. V.K. j21-26.) 28 (Dec. V.K. 27-28.) (Dec. V.K. 10-14.) 4°(Dec.V.K. r 3.) 8 r*"rfi'p.Tr's A T"r',C, C'T'r.y AT P.flTT AT A T?T AtV 1T'YT, 'T'I" r'vr'Trvkr rt't vrc' I 1- I S,rrf'Ø,T,-rs r'c' aTc'c 3 it there, which has long been held to be an Insufficient means for establishing personal jurisdiction over 2 defendant. Plaintiff's other assertions ar purely speculativó and h)pothetical, where Defendant points out 3 that more people could purchase the infringing items on these third party websites like Amazon or 4 Hobbytron and theri have them sent to Texas. While Defendant acknowledges another sale could have 5 potentially occurred, like any other product sold today, it is riot aware of any and would amount to a very 6 small percentage of overall sales, because Defendant does not direct any advertising or marketing to Texas 7 like its os home state of California, which is where Plaintiff should have commenced this suit. 8 Plaintiff also tries to add additional, but irrelevant assertions. While Plaintiffclaims the infringing 9 product was found on two websites, Amazon and Hobbytron, it claimed that at least Amazon had a 10 physical store in the state, but failed to allege any infringing item was actually sold there. Moreover, while 11 clearly unable to allege infringing items were on sale elsewhere, Defendant alleged "Defendant's 12 products" (not infringing products) were available for purchase through other third-party distributor l3 websites. But obviously those non-infringing products are irrelevant, and no sales are alleged to have l4 ended up in Texas. Furthermore, Plaintiff alleges those websites are operated by companies with physical J15 store locations within Texas, but even if true, no allegation that the Texas stores sold any products online, g16 or even in the store locations within the state. Based on the facts alleged by Plaintiff, and considering them 17 in the most favorable light, only one fact can be relied upon as certajn, which is that Plaintiff purchased an 18 item it alleges infringes its Trademark and had that item shipped to Texas. On that baais alone Plaintiff 19 commenced this lawsuit against Defendant. Clearly this court does not have a reasonable basis to subject 20 Defendant to its jurisdiction. Defendant thus requests this court dismiss it for at least a lack of personal 21 jurisdiction. This clearly establishes that personal jurisdiction does not exist here, where no purposeful 22 activity was taken at any time by the Defendant. We are only aware of limited activity taken by the 23 Plaintiff, but such activity cannot subject Defendant to the jurisdiction of the Court in a foreign sovereign. We know that Defendant has not conducted business in Texas, has not adyertised or solicited customers, 25 owned property, or paid taxes, or any of the other activities which would be expected of someone who is 26 availing him or herself to a specific forum. Thus, Texas cannot impose jurisdiction over Defendant in this 27 case and must dismiss, or at least transfer this action to a court in California. 28 11111. Improper Venue (Fed. R. Civ. P. 12(bX3)). "In distinguishing between the principles ofjurisdiction and venue, we note that "jurisdiction is 9 r1'rr. A c'y.T,-,r A I A A A A TT n r,ny r l'r. nr.'yrTrmT 1'' r,'c. 1 terTr.,.T rr. r.T't nc' 3 i the power to adjudicate, while venue, which relates to the place where judicial authority may be exercised, 2 is intended for the convenience of the litiganth." [Citations omitted] In order for the district court to hear a 3 case, the court musthave not only personal jurisdiction over theparties, but also venue."47 Here, while it 4 should be established that no personal jurisdiction can lie, if some minor contact does give rise to any jurisdiction sufficient to litigate it will still be located in the improper venue where this matter should have 6 been brought in a district court in California instead. Clearly a federal court in California has original jurisdiction over the federal questiOn claim. It also is where defendant is domiciled, incorporated and has 8 its headquarters. And generally speaking one sues where defendant is located, which also generally becomes the location of the alleged wrong. 10 "Venue in General.A civil action may be brought (1) a judicial district in which any defendant resides, if all defendants are in 11 residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or 12 omissions giving rise to the claim occurred, or a substantial part of property that is the subjectof the action is situated; or 13 (3) if there is no district in which an action may otherwise be brought as l4 provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action."48 '15 Clearly based on the plain language of (b)(1) this matter shotild have been venued in California. It 16 is the only location of the defendant and there are no other defendants. While service will still not be cured 17 by this move, it would fix not only the venue problem, but the matter of personal jurisdiction as well. As 18 for service, it will be far simple to effect service where we will no longer be an out of state entity for the 19 purposes of service of process. Thus, if not dismissed, Defendant requests this matter be transferred. 20 CONCLUSION 21 Since service and process were not adequate to confer jurisdiction the court should dismiss for that 22 reason alone. However, the court also does not have the authority to act due to lack of personal jurisdiction 23 where the only contaci established is the single purchase by Plaintiff which was shipped to Texas by 24 Plaintiff's own directed conduct and without any intent or directed action on the part of Defendant. 25 26 27 28 Securities Investor Protection Corp. v. Vigman, 764 F.2d 1309, 1313 (9th Cir. 1985) 48 28 U.S. Code § 1391 subd. (b). 10 E1,TrnIT A .1rnc' C'flTf A T A A fl A Tf1T A TV fl1YIT St '1't T1'Tr, 1'f YT'C' I %1 I TV TVCS ZTCC' 3 The above has been submitted in response to Plaintiff's Opposition to Defendant's Reply Brief on 2 the 28th of December, 2018. 3 Is/Roland Tong I DATED: December 28, 2018 4 PRO HAC VICE Roland J. Tong (Cal. Bar. No. 216836) 5 rjt®manningllp. corn 6 Elizabeth A. Handelin (Cal. Bar. No. 275710) eah®manningllp. corn 7 MANNING & KASS ELLROD, RAMIREZ, TRESTER LLP 8 801 S. Figueroa St. 15th Floor Los Angeles, California 90017-3012 9 Telephone: (213) 624-6900 10 Facsimile: (213) 624-6999 Attorneys for Defendant, 11 WORLD TECH TOYS, INC. 12 13 14 15 g16 17 18 19 20 21 22 23 24 25 26 27 28 11 A,.rD'PC' If'T A Y A flfl A A fT A IT flTTIT 1 1'# t T'T'T1T rf T'T'C' I 'IT % $rYrTrvkT 1'c r.Tc'A STC'C' 3 1 2 3 4 5 Roland Tong 1sf Roland Tong 6 7 8 9 1 11 12 13 t414 J!u15 c'16 12 NT WORLD TECH TOYS, INC.'S ECIAL APPEARANCE AND MOTION FOR EXTENSION OF TO FILE REPLY TO PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION TO DISMISS