Abundant Living Family Church v. Live Design

Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Pagelof12 Page ID #:205 1 "0!

8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA | ABUNDANT LIVING FAMILY 9+22-cv—~00140-RSWL-MRWx CHURCH, ORDER re: Plaintiff, DEFENDANTS’ MOTION TO 14 DISMISS FOR LACK OF 15 PERSONAL JURISDICTION AND | LIVE DESIGN, INC., et al., | IMPROPER VENUE [18] 17 Defendants.

88. $A 19 Plaintiff Abundant Living Family Church (“ALFC”) brings this Action [1] against Defendants Live Design, Inc. (“Live Design”), Sayam Sotelo, and J. Frank Sotelo 29 (collectively, “Defendants”) asserting trademark 53 infringement and other related claims.

DA Currently before the Court is a Motion to Dismiss 55 Sayam Sotelo and J. Frank Sotelo (“the Sotelos”) from 26 this Action for lack of personal jurisdiction and 57 improper venue (“Motion”) [18] filed by Defendants.

28 Having reviewed all papers submitted pertaining to the Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 2 of 12 Page ID #:206

1 Motion, the Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS the Motion.

3 I. BACKGROUND A. Factual Background 5 ALFC alleges the following in its Complaint: 6 ALFC is a non-denominational Christian church with locations in Rancho Cucamonga, California, and Pomona, California. Compl. ¶ 1, ECF No. 1. ALFC’s principal place of business is in San Bernardino, California. Id. ¶¶ 1, 4. Live Design is a Florida corporation with its principal place of business in Coral Springs, Florida.

12 Id. ¶ 5. The Sotelos are officers of Live Design and reside in Parkland, Florida. Id. ¶¶ 6-7.

14 In 2016, ALFC created the domain name, www.alfcrancho.church, referencing only the Rancho Cucamonga location. Id. ¶¶ 12-13. In 2018, because ALFC planned to open its Pomona, California location, ALFC sought to streamline its online presence via a new domain name, www.alfc.church (“Domain Name”). Id. ¶¶ 13-14. When ALFC went to change its website to the Domain Name, however, ALFC found that the Domain Name was already in use by Live Design. Id. ¶¶ 14-15.

23 In January 2019, ALFC contacted Live Design to inquire about purchasing the Domain Name. Id. ¶ 16.

25 Live Design did not agree. See id. ¶ 17. In May 2020, following a cyberattack to www.alfcrancho.church, ALFC contacted Live Design for assistance in restoring the website. Id. ¶¶ 18-19. The parties then entered into Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 3 of 12 Page ID #:207

1 two contracts whereby ALFC would pay a monthly fee to Live Design in exchange for the Domain Name and other website design services. See id. ¶¶ 19-21. J. Frank Sotelo signed both contracts on behalf of Live Design.

5 Id. 6 Live Design did not perform under the contracts as it had represented. Id. ¶ 24. ALFC then requested that Live Design deliver the Domain Name to ALFC in its then- current form so that ALFC could move forward without incurring monthly service charges. Id. Live Design refused. Id. ¶¶ 24-25.

12 B. Procedural Background 13 ALFC filed its Complaint [1] on January 24, 2022.

14 On May 5, 2022, Defendants filed the instant Motion [18]. ALFC filed its Opposition [19] on May 17, 2022.

16 On June 2, 2022, Defendants replied [20].

17 II. DISCUSSION A. Legal Standard 19 Federal Rule of Civil Procedure 12(b)(2) authorizes dismissal of an action for lack of personal jurisdiction. Once a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). 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 survive dismissal.

Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 4 of 12 Page ID #:208

1 Id. (internal quotation marks omitted). The court may consider evidence presented in affidavits to assist in its determination of jurisdictional issues. Data Disc, Inc. v. Sys. Tech. Ass’n, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). Although the plaintiff cannot rely on the bare allegations of the complaint, uncontroverted allegations in the complaint must be taken as true and conflicts between statements contained in the parties’ affidavits must be resolved in the plaintiff’s favor.

10 Schwarzenegger, 374 F.3d at 800.

11 B. Discussion 12 1. Personal Jurisdiction 13 District courts in California may exercise personal jurisdiction over a nonresident defendant to the extent permitted by the Due Process Clause of the United States Constitution. Cal. Civ. Prov. Code § 410.10. The Due Process Clause permits courts to exercise personal jurisdiction over any defendant who has sufficient “minimum contacts” with the forum such that the “maintenance of the suit [would] not offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

23 Personal jurisdiction may be founded on either general jurisdiction or specific jurisdiction. Mulato v. Wells Fargo Bank, N.A., 76 F. Supp. 3d 929, 944 (N.D. 26 Cal. 2014). Here, ALFC does not dispute that the Court lacks general jurisdiction over the Sotelos. See generally Opp’n, ECF No. 19. Accordingly, the Court Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 5 of 12 Page ID #:209

1 focuses only on whether it may exercise specific jurisdiction over the Sotelos.

3 In the Ninth Circuit, a court may exercise specific jurisdiction over a nonresident defendant if: (1) the defendant purposefully availed himself of the privileges of conducting activities in the forum; (2) the claim arises out of or results from the defendant’s forum- related activities; and (3) the exercise of jurisdiction is reasonable. Apple Inc. v. Allan & Assocs. Ltd., 445 10 F. Supp. 3d 42, 51 (N.D. Cal. 2020) (citation omitted).

11 The plaintiff bears the burden of satisfying the first two elements. Mulato, 76 F. Supp. 3d at 944. Only after the first two elements are met does the burden shift to the defendant to satisfy the third element.

15 Id. Here, ALFC has not met its burden to satisfy the first element regarding purposeful availment.

17 Accordingly, the Court GRANTS Defendants’ Motion to Dismiss the Sotelos from this Action for lack of personal jurisdiction.

20 a. Purposeful Availment and the Fiduciary 21 Shield Doctrine 22 “Purposeful availment analysis examines whether the defendant’s contacts with the forum are attributable to his own actions or are solely the actions of the plaintiff.” Sinatra v. National Enquirer, 854 F.2d 26 1191, 1195 (9th Cir. 1988). “Purposeful availment requires that the defendant engage in some form of affirmative conduct allowing or promoting the Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 6 of 12 Page ID #:210 transaction of business within the forum state.” Wolf Designs, Inc. v. DHR Co., 322 F. Supp. 2d 1065, 1070 (C.D. Cal. 2004) (citing Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 840 (9th Cir. 1986)). The focus on the affirmative conduct of the defendant is designed to ensure that the defendant is not “haled into court as the result of random, fortuitous or attenuated contacts, or on account of the unilateral activities of third parties.” Id. (citing Shute v. Carnival Cruise Lines, 897 F.2d 377, 381 (9th Cir. 1990), rev’d on other grounds, 499 U.S. 585 (1991)).

12 ALFC argues that this Court has specific jurisdiction over the Sotelos because the Sotelos purposefully directed business activities at California.

15 Mot. 7:20-28. The Sotelos oppose, arguing that they acted on behalf of Live Design and are therefore protected by the fiduciary shield doctrine. Mot. 20:3- 9. In response, ALFC asserts that the “guiding spirit” exception to the fiduciary shield doctrine applies and that the Sotelos should not be insulated from jurisdiction simply because they acted on behalf of Live Design. Opp’n 11:14-12:4.

23 “The fiduciary shield doctrine protects individuals from being subject to jurisdiction solely on the basis of their employers’ minimum contacts within a given jurisdiction.” Winery v. Graham, No. C 06-3618 MHP, 2007 WL 963252, *5 (N.D. Cal. Mar. 2007) (citation omitted). Thus, “[u]nder the fiduciary shield doctrine, Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 7 of 12 Page ID #:211

1 a person’s mere association with a corporation that causes injury in the forum state is not sufficient in itself to permit that forum to assert jurisdiction over the person.” Davis v. Metro Prods., Inc., 885 F.2d 515, 520 (9th Cir. 1989) (citations omitted). However, the fiduciary shield doctrine does not inherently shield employees from suit for acts they commit in their individual capacities. Arcona, Inc. v. Farmacy Beauty, LLC, No. 217CV07058ODWJPR, 2018 WL 1441155, at *3 (C.D.

10 Cal. Mar. 22, 2018) (citations omitted). Employees may be individually liable where: (1) the corporation is the agent or alter ego of the individual defendant; or (2) the individual controlled or directly participated in the alleged activities. Wolf Designs, 322 F. Supp. 2d 15 at 1072 (citations omitted). “[M]ere knowledge of tortious conduct by the corporation is not enough to hold a director or officer liable for the torts of the corporation absent other unreasonable participation in the unlawful conduct by the individual.” Id. (citation and internal quotation marks omitted). Rather, in determining whether to exercise specific jurisdiction over a nonresident defendant acting on behalf of a corporation, the central determination is whether the nonresident defendant was a primary participant or “guiding spirit” in the alleged wrongdoing. Id. 26 (citation omitted).

27 Contrary to ALFC’s allegations, the Court finds that the Sotelos are protected under the fiduciary Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 8 of 12 Page ID #:212

1 shield doctrine. In analogous cases where courts have declined to extend the fiduciary shield doctrine, plaintiffs have put forth evidence showing the individual defendants’ direct involvement in the alleged wrongdoing. See Wolf Designs, 322 F. Supp. 2d at 1073 (exercising personal jurisdiction where a nonresident officer-defendant was the sole proprietor of his corporation and had the “final say” as to the corporation’s policies); Arcona, 2018 WL 1441155, at *4 (exercising personal jurisdiction over nonresident officer-defendants who played a “central role” in the wrongdoing, directed the corporation’s business in the forum, and educated employees in the forum regarding the infringing product); LTC Now, LLC v. Relyfy Corp., No. 820CV00351JLSADS, 2020 WL 5167757, at *4 (C.D. Cal. June 26, 2020) (exercising personal jurisdiction over nonresident officer-defendant where he was the “sole owner and CEO” of the corporation and evidence confirmed no other employees of the corporation were involved in the negotiations giving rise to the lawsuit). But such is not the case here. ALFC has not met its burden to show that Live Design is the alter ego of the Sotelos or that the Sotelos primarily participated in the alleged wrongdoing. The Complaint contains no allegations addressing the Sotelo’s specific involvement in the alleged trademark infringement whatsoever. ALFC only notes that J. Frank Sotelo signed the contracts assigning the trademark rights to ALFC on behalf of Live Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 9 of 12 Page ID #:213

1 Design, and makes a single conclusory statement that the Sotelos “are and were instrumentalities and alter egos of each other and Live Design . . . and were direct participants” in the alleged wrongdoing. Compl. ¶¶ 8, 19, 20. This is insufficient to show that the Sotelos were the moving force behind the infringing activity.

7 See Apple, 445 F. Supp. 3d at 57 (holding that a nonresident officer-defendant did not avail himself of the benefits of a particular forum where he had only signed and performed a contract on behalf of a corporation).

12 ALFC’s Opposition is similarly deficient in evidence of the Sotelos’ involvement in the infringing activity. ALFC merely recites the standard for the “guiding spirit” analysis while contending that the Sotelos are subject to jurisdiction in California simply because they are executives at Live Design and were involved in the business relationship between ALFC and Live Design. See Opp’n 14:18-15:13. Again, more is required to establish personal jurisdiction over the Sotelos, and ALFC has not met its burden. See Fasugbe v. Willms, No. CIV. 2:10-2320 WBS, 2011 WL 3667440, at *4 (E.D. Cal. Aug. 22, 2011) (dismissing individual defendant for lack of personal jurisdiction where plaintiff had alleged, without more, that the defendant was the “guiding spirit,” “central figure,” and “made all final decisions”); Shenzhen Riitek Tech. Co. v. AERB, Inc., No. 818CV00645JLSJDE, 2018 WL 5264077, at *7 Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 10 of 12 Page ID #:214 (C.D. Cal. July 18, 2018) (dismissing individual defendant for lack of personal jurisdiction where plaintiffs only alleged that the individual defendant was employed by the corporation and owned the alleged infringing trademark).

6 Because the Sotelos are protected under the fiduciary shield doctrine and ALFC has not otherwise shown how the Sotelos purposefully directed their actions at California, ALFC has failed to meet its burden. As such, the Court need not discuss the second and third factors required for specific jurisdiction and DISMISSES the Sotelos from this Action for lack of personal jurisdiction.

14 b. Jurisdictional Discovery 15 ALFC argues that limited jurisdictional discovery should be permitted if the Court requires additional jurisdictional facts to rule on the Motion. Opp’n 18:1- 13. “A district court, however, need not allow jurisdictional discovery where ‘it is clear that further discovery would not demonstrate facts sufficient to constitute a basis for jurisdiction,’ unless there are contested jurisdictional facts or more facts are needed.” Apple, 445 F. Supp. 3d at 58 (quoting Laub v. U.S. Dep't of Interior, 342 F.3d 1080, 1093 (9th Cir. 2003)). Further, “where a plaintiff’s claim of personal jurisdiction appears to be both attenuated and based on bare allegations in the face of specific denials made by the defendants, the Court need not permit even limited Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 11 of 12 Page ID #:215

1 discovery . . . .” Terracom v. Valley Nat. Bank, 49 2 F.3d 555, 562 (9th Cir. 1995) (citation omitted).

3 The Court will not allow limited jurisdictional discovery here. Clearly, the Sotelos do not have minimum contacts with California. As stated, any contacts the Sotelos had with California were made in the course and scope of their employment with Live Design, and such activities are protected by the fiduciary shield doctrine. To the extent the Sotelos have any personal contacts with California, their contacts are weak and attenuated at best and cannot support the exercise of personal jurisdiction. See Mot.

13 21:17-20. In the face of the Sotelos’ specific denials of personal jurisdiction, ALFC has not made any additional showing to establish jurisdiction. Further jurisdictional discovery would not reveal facts demonstrating a basis for personal jurisdiction over the Sotelos, and therefore the Court DENIES ALFC’s request to conduct limited jurisdictional discovery.

20 2. Leave to Amend 21 “The court should give leave [to amend] freely when justice so requires.” Fed. R. Civ. P. 15(a)(2). In the Ninth Circuit, “Rule 15’s policy of favoring amendments to pleadings should be applied with ‘extreme liberality.’” United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981). However, the court is not required to grant leave to amend if it determines that permitting a plaintiff to amend would be an exercise in futility.

Case 5:22-cv-00140-RSWL-MRW Document 23 Filed 06/15/22 Page 12 of 12 Page ID #:216 See, e.g., Rutman Wine Co. v. E. & J. Gallo Winery, 829 2 F.2d 729, 738 (9th Cir. 1987) (“Denial of leave to amend is not an abuse of discretion where the pleadings before the court demonstrate that further amendment would be futile.”).

6 Here, further amendment would be futile. As stated, ALFC cannot bring forth more facts to establish jurisdiction over the Sotelos because the Sotelos simply do not have minimum contacts with California. Leave to amend is DENIED.

11 III. CONCLUSION 12 Based on the foregoing, the Court GRANTS the Defendants’ Motion to Dismiss the Sotelos from this Action for lack of personal jurisdiction and DENY ALFC’s request for limited jurisdictional discovery. The Court need not address Defendants’ remaining arguments regarding venue given the discussion on personal jurisdiction. Leave to amend is also DENIED. In the interest of clarity, the Court notes that the Action will still proceed against Live Design in light of the disposition of this Motion.

22 IT IS SO ORDERED.

24 DATED: June 15, 2022 26 _/s_/ _R_on_a_ld_ _S_.W_._ L_e_w________________ 27 HONORABLE RONALD S.W. LEW 28 Senior U.S. District Judge