Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_07-cv-02247/USCOURTS-caed-2_07-cv-02247-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

GOLDEN GATE BEVERAGE COMPANY,

INC.,

NO. CIV. S-07-2247 FCD/KJM

Plaintiff,

v. MEMORANDUM AND ORDER

DMH INGREDIENTS, INC.,

Defendant.

_______________________________/

DMH INGREDIENTS, INC.

Third Party Plaintiff,

v.

LATITUDE LTD.,

Third Party Defendant.

________________________________/

----oo0oo----

This matter comes before the court on third party defendant

Latitude Ltd.’s (“Latitude”) motion to dismiss for lack of

personal jurisdiction pursuant to Federal Rule of Civil 

Case 2:07-cv-02247-DAD Document 28 Filed 04/10/08 Page 1 of 10
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1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs.

E.D. Cal. Local Rule 78-230(h).

2

Procedure 12(b)(2). Third party plaintiff DMH Ingredients, Inc.

(“DMH”) opposes the motion, asserting that this court has

specific personal jurisdiction over Latitude. For the reasons

set forth below,1

 Latitude’s motion to dismiss for lack of

personal jurisdiction is GRANTED.

BACKGROUND

Golden Gate Beverage Company, Inc. (“Golden Gate”) is a

producer of soft drinks for overseas markets and is located in

California. (Compl., filed Oct. 19, 2007, ¶ 1). DMH is a

provider of ingredients for food and pharmaceutical industries

and is located in Illinois. (Third Party Compl. (“TPC”), filed

Jan. 24, 2008, ¶ 1). Latitude is a Delaware corporation with its

principal place of business in New York. (Decl. of Laurel Mandel

(“Mandel Decl.”), filed Feb. 29, 2008, ¶ 2). 

On or about March 3, 2005, DMH ordered 5,000 kilograms of

ascorbic acid from Latitude. (TPC ¶ 10). On or about March 7,

2005, Latitude shipped the ascorbic acid to DMH. (Id. ¶ 12). On

or about April 13, 2005, DMH shipped to Golden Gate an order

which included 330.69 pounds of ascorbic acid, which DMH alleges

came from the order shipped from Latitude. (Id. ¶ 13). 

Subsequently, it became known to Golden Gate, through its

customer in Japan, that the product shipped was not ascorbic

acid, but erythorbic acid. (Id. ¶ 14; Compl. ¶ 10). As a

result, Golden Gate’s Japanese customer put its entire order of

soft drinks on hold. (Compl. ¶ 10). Eventually, the customer

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deemed the soft drinks unacceptable, and Golden Gate was

obligated to accept them for return and refund the purchase

price, the shipping charges and fees, and taxes for import and

export. (Compl. ¶ 12). Golden Gate also alleges that it lost

sales from this customer for approximately six months. (Id.) On

October 19, 2007, Golden Gate filed a complaint in the Eastern

District of California against DMH arising out of this

transaction.

On January 24, 2008, DMH filed a Third Party Complaint

against Latitude in the Eastern District of California. Latitude

does not have, and has never had, any offices, employees, sales

agents, representatives, agents for service of process, business

licenses, advertising or other similar business or professional

contacts in California. (Mandel Decl. ¶ 3). Latitude does not

have, and has never had, any subsidiaries, affiliates, divisions

or other similar business related entity in California. (Id. ¶

4). Latitude asserts that it does not place products in the

stream of commerce with the expectation that any be sold and/or

utilized by residents of the State of California. (Id. ¶ 6). A

review of Latitude’s customers since it was incorporated reveals

only one customer that is or was a California business. (Id. ¶

7). Sales to this business never amounted to more than five to

seven percent of Latitude’s annual sales, and the end users of

the product sold to that single California company were in

Western states other than California. (Id.) Latitude contends

that it is not aware that any of its products have ever been

ultimately provided or distributed to California consumers. 

(Id.) 

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ANALYSIS

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure,

a defendant may seek dismissal of an action for lack of personal

jurisdiction. “Where, as here, there is no applicable federal

statute governing personal jurisdiction, the law of the state in

which the district court sits applies.” Core-Vent Corp. v. Nobel

Indus. AB, 11 F.3d 1482, 1484 (9th Cir. 1993) (citation omitted). 

“California’s long-arm statute allows courts to exercise personal

jurisdiction over defendants to the extent permitted by the Due

Process Clause of the United States Constitution.” Id. at 1484

(citation omitted). Thus, only constitutional principles

constrain the jurisdiction of a federal court in California. 

Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). “Due

process requires that in order to subject a defendant to a

judgment in personam, if he be not present within the territory

of the forum, he have certain minimum contacts with it such that

the maintenance of suit does not offend traditional notions of

fair play and substantial justice.” Harris Rutsky & Co. Ins.

Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th

Cir. 2003) (internal quotations omitted); see Burger King v.

Rudzewciz, 471 U.S. 462, 476 (1985).

Once a defendant challenges jurisdiction, the burden of

proof to show that jurisdiction is appropriate lies with the

plaintiff. Sher, 911 F.2d at 1361. When a defendant’s motion to

dismiss is to be decided on the pleadings, affidavits, and

discovery materials, the plaintiff need only make a prima facie

showing that personal jurisdiction exists in order for the action

to proceed. Id. 

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A court may exercise either general or specific jurisdiction

over a non-resident defendant. “General jurisdiction exists when

a defendant is domiciled in the forum state or his activities

there are ‘substantial’ or ‘continuous and systematic.’”

Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir.

1998) (quoting Helicopteros Nacionales de Columbia, S.A. v. Hall,

466 U.S. 408, 414-416 (1984)). When a defendant does not reside

in the forum state, the contacts must be such that the

“approximate physical presence in the forum state.” 

Schwarzenegger v. Fred Martin Co., 374 F.3d 797, 801 (9th Cir.

2004) (quoting Bancroft v. Masters, 223 F.3d 1082, 1086 (9th Cir.

2000)). “This is an exacting standard, as it should be, because

a finding of general jurisdiction permits a defendant to be haled

into court in the forum state to answer for any of its activities

anywhere in the world.” Id. (citing Brand v. Menlove Dodge, 796

F.2d 1070, 1073 (9th Cir. 1986) (collecting cases where general

jurisdiction was denied despite the defendants’ significant

contacts with forum)). DMH concedes that Latitude does not have

sufficient contact with California to establish general

jurisdiction. (Third Party Pl.’s Opp’n (“Opp’n”), filed Mar. 25,

2008, at 1:18-2:10; 4:20-21). 

Where general jurisdiction does not exist, the court may

still determine whether the defendant has had sufficient minimum

contacts with the state, as it relates to the pending litigation

against it, in order to justify the exercise of specific

jurisdiction. See Omeluk v. Langsten Slip & Batbyggeri A/S, 52

F.3d 267, 270 (9th Cir. 1995). In determining whether a district

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court can exercise specific jurisdiction over a defendant, the

Ninth Circuit has articulated the following three-part test: 

(1) the nonresident defendant must purposefully direct

[its] activities or consummate some transaction

with the forum or resident thereof; or perform

some act by which [it] purposefully avails

[itself] of the privilege of conducting activities

in the forum, thereby invoking the benefits and

protections of its laws;

(2) the claim must be one which arises out of or

relates to the defendant’s forum-related

activities; and

(3) the exercise of jurisdiction must comport with

fair play and substantial justice, i.e. it must be

reasonable.

Core-Vent, 11 F.3d at 1485 (citation omitted). “Jurisdiction may

be established with a lesser showing of minimum contacts ‘if

considerations of reasonableness dictate.’” Ochoa v. J.B. Martin

and Sons Farms, Inc., 287 F.3d 1182, 1189 n.2 (9th Cir. 2002)

(quoting Haisten v. Grass Valley Med. Reimbursement Fund, Ltd.,

784 F.2d 1392, 1397 (9th Cir. 1986)). “Under this analysis,

there will be cases in which the defendant has not purposely

directed its activities at the forum state, but has created

sufficient contacts to allow the state to exercise personal

jurisdiction if such exercise is sufficiently reasonable.” Brand

v. Menlove Dodge, 796 F.2d 1070, 1074 (9th Cir. 1986). 

The purposeful availment prong requires a “qualitative

evaluation of the defendant’s contact with the forum state in

order to determine whether the defendant’s conduct and connection

with the forum state are such that he should reasonably

anticipate being haled into court there.” Harris, 328 F.3d at

1130 (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

286, 297 (1980); Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir.

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2 Neither of the parties raise any argument with regard

to sovereignty of the defendant‘s state. 

7

1987)) (internal quotations omitted). “The purposeful availment

requirement is met if the defendant ‘performed some type of

affirmative conduct which allows or promotes the transaction of

business within the forum state.’” Id. (quoting Sher, 911 F.2d

at 1362). However, a defendant may not be haled into a

jurisdiction based upon the unilateral acts of third parties. 

Lake, 817 F.2d at 1421 (citing Burger King, 471 U.S. at 475). 

DMH concedes that Latitude did not purposely direct its product

to a California resident. 

Rather, DMH rests its opposition on the assertion that

jurisdiction in California is reasonable, and thus, a lesser

showing of minimum contacts is required. Where a defendant has

not directed its activities at a forum state, there is no

presumption of reasonableness. Brand, 796 F.2d at 1075. In

determining whether the exercise of specific jurisdiction is

reasonable, the court must weigh the following seven factors:

(1) the extent of the defendant[‘s] purposeful

interjection into the forum state’s affairs;

(2) the burden on the defendant of defending in the

forum;

(3) the extent of conflict with the sovereignty of the

defendant[‘s] state;

(4) the forum state’s interest in adjudicating the

dispute;

(5) the most efficient [forum for] judicial resolution

of the controversy;

(6) the importance of the forum to the plaintiff’s

interest in convenient and effective relief; and,

(7) the existence of an alternative forum.

Core-Vent, 11 F.3d at 1487-88 (citation omitted).2

In this case, there is no evidence that Latitude purposely

interjected itself into California’s affairs. DMH’s claims

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against Latitude arise out of their contractual relationship. 

There is no evidence that this contract was negotiated, effected,

or performed in California. See Sher, 911 F.2d at 1362 (finding

that an out of state law firm representing a California client in

a criminal proceeding in Florida did not meet the purposeful

availment prong through payment from a California bank, phone

calls to the client in California, and letters to California). 

Further, there is no evidence that Latitude knew that DMH would

sell its product to a California company, which, in turn, would

use that product to serve a customer in Japan. See World-Wide

Volkswagen, 444 U.S. at 298-99 (holding that despite

foreseeability that purchasers of the product might take it to

another state, personal jurisdiction did not exist where

distributor of cars did not sell cars to customers in the forum

state); cf. Plant Food Co-op v. Wolfkill Feed & Fertilizer, 633

F.2d 155, 159, (9th Cir. 1980) (holding that jurisdiction was

proper where distributer, who shipped product directly to Montana

on the orders of Washington middlemen, knew the product was bound

for the forum state and received financial benefit). Finally,

Latitude presents evidence that since its incorporation, only one

customer was a California corporation and that the end users of

the product were not California residents. Therefore, this

factor weighs against a finding of reasonableness in the exercise

of jurisdiction. See Brand, 796 F.2d at 1075 (holding that

jurisdiction was unreasonable where the defendant merely decided

to sell to someone who indicated he would resell in California

and there were no continuing obligations or operations in the

state).

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DMH makes conclusory assertions that jurisdiction is

reasonable because resolution of the dispute in this forum is an

efficient and reasonable method of litigation, much of the

evidence will be available in California, and the travel required

is not an excess burden. However, despite its burden to

demonstrate that jurisdiction is appropriate, DMH proffers

neither specific arguments nor evidence in support of these

blanket assertions. See Sher, 911 F.2d at 1361.

DMH concedes that alternative fora exist to resolve this

litigation. (Opp’n at 4:10-11). As such, DMH is not prevented

from litigating this dispute in a forum to which Latitude is

subject to jurisdiction. However, DMH argues that this forum is

more convenient because all claims can be resolved and disposed

of in one action. DMH also argues that California has an

interest in this litigation because a California corporation has

suffered a financial loss. While it may be more convenient for

DMH to litigate all claims in this forum, such convenience does

not outweigh the interests of due process. Rather, Latitude has

presented evidence that it has had very limited contacts with

California, both generally and in this specific case. Moreover,

the consumers of the product were not citizens of California and

no California citizen was injured as a result of the product’s

subsequent shipment to Golden Gate. See Brand, 796 F.2d at 1076

(holding that jurisdiction was not reasonable where a forum

state’s citizen was not injured by the defective product). 

For the foregoing reasons, the court finds that the exercise

of jurisdiction over Latitude in this forum would violate due

process. Latitude has not purposely directed its activities at

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California or purposely availed itself of the benefits of doing

business in California. Moreover, given the minimal contacts

between Latitude and California, Latitude’s lack of knowledge

that DMH would be selling Latitude’s product to a California

company, and DMH’s failure to substantiate any of its conclusory

statements with specific arguments or evidence, the court’s

exercise of jurisdiction over Latitude would not be reasonable. 

Therefore, Latitude’s motion to dismiss DMH’s Third Party

Complaint for lack of personal jurisdiction is GRANTED. 

IT IS SO ORDERED.

DATED: April 10, 2008.

 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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