Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-04020/USCOURTS-cand-5_05-cv-04020-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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ORDER DENYING PUTNAM'S MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL AND A PARTIAL STAY

OF PROCEEDINGS—No. C-05-04020 RMW

JAH

E-FILED on 2-16-6

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

McKESSON CORPORATION, and HBO &

COMPANY, INC.,

Plaintiffs,

v.

ARTHUR ANDERSEN LLP, ROBERT A.

PUTNAM, and DOES ONE THROUGH

TWENTY,

Defendants.

No. C-05-04020 RMW

ORDER DENYING PUTNAM'S MOTION

FOR CERTIFICATION OF AN

INTERLOCUTORY APPEAL AND A

PARTIAL STAY OF PROCEEDINGS

[Re Docket Nos. 31, 33, 35]

Defendant Robert A. Putnam moves for this court to certify for interlocutory appeal its order

denying his motion to dismiss for lack of personal jurisdiction. For the reasons given below, the

court denies the motion.

I. BACKGROUND

Plaintiff McKesson Corporation acquired plaintiff HBO & Company, Inc. in January 1999. 

Accounting irregularities led to numerous lawsuits against the plaintiffs. In the present action,

Plaintiffs seek damages from defendants Arthur Andersen LLP and Robert Putnam for their alleged

Case 5:05-cv-04020-RMW Document 37 Filed 02/16/06 Page 1 of 6
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1 "The time-honored ritual of a 'special appearance' has no place under the [Federal

R]ules [of Civil Procedure]. . . . Rule 12(b) provides that no defense or objection is waived by being

joined with one or more other defenses or objections in a responsive pleading or motion." Charles

Alan Wright & Mary Kay Kane, Law of Federal Courts § 66 (6th ed. 2002).

ORDER DENYING PUTNAM'S MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL AND A PARTIAL STAY

OF PROCEEDINGS—No. C-05-04020 RMW

JAH 2

misconduct related to the acquisition. Putnam, styling himself a "specially appearing defendant,"1

moved to dismiss all causes of action against him for lack of personal jurisdiction. In an order dated

November 30, 2005, this court denied Putnam's motion. McKesson Corp. v. Arthur Andersen LLP,

2005 WL 3260288.

II. ANALYSIS

"The historic policy of the federal courts has been that appeal will lie only from a final

decision." Charles Alan Wright & Mary Kay Kane, Law of Federal Courts § 101 (6th ed. 2002). 

There are a few limited exceptions, one of which is 28 U.S.C. § 1292(b). Under § 1292(b), a district

court may certify an order "not otherwise appealable" if the district court is "of the opinion that such

order [1] involves a controlling question of law [2] as to which there is substantial ground for

difference of opinion and [3] that an immediate appeal from the order may materially advance the

ultimate termination of the litigation." Congress intended "that section 1292(b) is to be applied

sparingly and only in exceptional cases." In re Cement Antitrust Litig., 673 F.2d 1020, 1027 (9th

Cir. 1982). 

A. Controlling question of law

Plaintiffs concede that whether this court has jurisdiction over Putnam is "a controlling

question of law." Opp'n at 5 n.2. Indeed, the Ninth Circuit has stated that "all that must be shown in

order for a question to be 'controlling' is that resolution of the issue on appeal could materially affect

the outcome of litigation in the district court." In re Cement, 673 F.2d 1020 at 1026. Whether

Putnam is subject to suit in this court will materially affect the outcome.

B. Substantial ground for difference of opinion

1. Effects test

Putnam asserts that there is substantial difference of opinion as to whether the effects test of

personal jurisdiction applies to non-tortious conduct. While in the abstract, there is room for

difference of opinion on this point, whether the Ninth Circuit applies the effects test exclusively to

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ORDER DENYING PUTNAM'S MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL AND A PARTIAL STAY

OF PROCEEDINGS—No. C-05-04020 RMW

JAH 3

tortious behavior is not reasonably in dispute. The Ninth Circuit in Bancroft & Masters, Inc. v.

Augusta National Inc. applied the effects test to conduct that was not itself tortious: mailing a ceaseand-desist letter to a plaintiff in the forum state. 223 F.3d 1082, 1087 (2000). Bancroft & Masters

is not contradicted by any other Ninth Circuit case. This court's ruling that it had personal

jurisdiction over Putnam was based in part on Bancroft & Masters. Putnam also points to district

court cases from within the Ninth Circuit that state that the Ninth Circuit applies the effects test only

in intentional tort cases, e.g., Cognigen Networks, Inc. v. Cognigen Corp., 174 F. Supp. 2d 1134,

1139 (W.D. Wash. 2001) (Lasnik, J.); Rosenberg v. Seattle Art Museum, 42 F. Supp. 2d 1029, 1037

n.8 (W.D. Wash. 1999) (Lasnik, J.); Progressive N. Ins. Co. v. Fleetwood Enters., Inc., 2005 WL

2671353 (W.D. Wash. 2005) (Theiler, Mag. J.). These cases predate and are inconsistent with

Yahoo! Inc. v. La Ligue Contre le Racisme et L'Antisemitisme, 433 F.3d 1199 (9th Cir. Jan. 12,

2006) (en banc). 

After the ruling of this court that Putnam challenges, the Ninth Circuit decided Yahoo!

Putnam points to the multiple opinions in that case as evidence that reasonable jurists could differ on

whether the effects test can be applied to non-tortious conduct. While there is certainly room for

disagreement among reasonable jurists in the abstract about the proper application of the effects test,

a reasonable district court judge within the Ninth Circuit cannot escape the conclusion that the

effects test can be applied to conduct other than an intentional tort. In Yahoo!, Judge William

Fletcher wrote for an eight-member majority (in an eleven-member panel) that

Many cases in which the Calder effects test is used will indeed involve wrongful

conduct by the defendant. But we do not read Calder necessarily to require in

purposeful direction cases that all (or even any) jurisdictionally relevant effects have

been caused by wrongful acts. We do not see how we could do so, for if an allegedly

wrongful act were the basis for jurisdiction, a holding on the merits that the act was

not wrongful would deprive the court of jurisdiction.

Id. at 1207-08 (citations omitted). The court went on to hold that the non-tortious conduct that the

defendants in Yahoo! directed into California gave California courts jurisdiction over them. Id. at

1211.

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ORDER DENYING PUTNAM'S MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL AND A PARTIAL STAY

OF PROCEEDINGS—No. C-05-04020 RMW

JAH 4

There is, from the perspective of this court, no room for disagreement on how to apply the

effect test to the instant case. The en banc decision in Yahoo! would make any interlocutory appeal

on this issue by Putnam futile.

2. Arising out of

Putnam also claims that McKesson's claims for contribution and indemnity do not strictly

arise out of Putnam's contacts with California. Putnam appears to be arguing that since Putnam's

California contacts are not necessary elements of either of McKesson's claims against him, these

contacts are insufficient to give this court specific jurisdiction over him. This is too narrow a

reading of the "arising out of" requirement. Putnam's contacts, such as sending comfort letters to

McKesson in California, are intertwined with McKesson's claims against him. Furthermore,

Putnam's objection on this point is foreclosed by Yahoo!, since the Ninth Circuit stated "In a specific

jurisdiction inquiry, we consider the extent of the defendant's contacts with the forum and the degree

to which the plaintiff's suit is related to those contacts. A strong showing on one axis will permit a

lesser showing on the other." Id. at 1210. Putnam's contacts with California are sufficiently related

to McKesson's claims against him for this court to have specific jurisdiction over him.

C. Appeal will materially advance termination of the litigation

An appeal at this point would not materially advance the ultimate termination of this

litigation in any meaningful way. As revealed by the parties' arguments for and against a stay

pending an interlocutory appeal, it does not appear that the Ninth Circuit's reversal of the court's

order denying Putnam's motion to dismiss for lack of personal jurisdiction would end this litigation. 

Plaintiffs could either move to transfer proceedings to Georgia or file a separate action against

Putnam there. Plaintiffs also assert that Putnam would remain a third-party witness in any action

against Anderson alone. 

Certification of an interlocutory appeal would not advance termination but would instead

materially retard the progress of this litigation, since the trial must in any event proceed as to

McKesson. See Chas. Pfizer & Co. v. Laboratori Pro-Ter Prodotti Therapeutici S.p.A., 278 F.

Supp. 148, 154 (S.D.N.Y. 1967). While Putnam seeks to halt only discovery against himself, by

implication, this would delay trial involving both defendants once discovery involving McKesson

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ORDER DENYING PUTNAM'S MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL AND A PARTIAL STAY

OF PROCEEDINGS—No. C-05-04020 RMW

JAH 5

was concluded. This is therefore not a case that warrants departing from the federal court system's

standard policy against piecemeal review.

As the court will deny Putnam's motion for certification under § 1292(b), it will also deny

Putnam's motion for a stay pending appeal.

III. ORDER

For the reasons above, Putnam's motion to certify for interlocutory appeal this court's order

denying his motion to dismiss for lack of person jurisdiction is denied. Putnam's motion for a partial

stay of proceedings pending appeal is also denied.

DATED: 2/15/06 /s/ Ronald M. Whyte

RONALD M. WHYTE

United States District Judge

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ORDER DENYING PUTNAM'S MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL AND A PARTIAL STAY

OF PROCEEDINGS—No. C-05-04020 RMW

JAH 6

Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

James E. Lyons apark@skadden.com 

Timothy A. Miller tmiller@skadden.com 

Counsel for Defendants:

Steven J. Rosenberg sjrlaw@aol.com

Gwyn Quillen

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 2-16-6 /s/ JH

Chambers of Judge Whyte

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