Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-02357/USCOURTS-caed-2_05-cv-02357-6/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

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28 These motions were determined to be suitable for decision *

without oral argument. L.R. 78-230(h).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

ID MARKETING, INC., )

) 2:05-cv-2357-GEB-KJM

Plaintiff, )

) ORDER*

v. )

)

MARC BOAZ; AMERICAN MARKETING & )

MAILING SERVICES, INC.; and )

CHARLES G. CHATELAIN, )

)

Defendants. )

)

Defendants Charles G. Chatelain (“Chatelain”) and American

Marketing & Mailing Services, Inc., (“AMMS”) each move to dismiss this

action under Federal Rule of Civil Procedure 12(b)(2) for lack of

personal jurisdiction. Plaintiff opposes the motions. 

BACKGROUND

Plaintiff is a California corporation with its principal

place of business in Rocklin, California. (Compl. ¶¶ 5-6; Hogan Decl.

¶ 5.) Plaintiff performs direct mailing services, primarily for

automobile dealers, throughout the United States. (Hogan Decl. ¶ 3.) 

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For large orders that entail “extremely voluminous” mailings,

Plaintiff hires a “mail house” to perform the actual printing and

mailing. (Compl. ¶ 16.) 

AMMS is a “mail house” Plaintiff frequently hired. (Hogan

Decl. ¶ 4; Fest Supp. Decl. ¶ 3.) AMMS is a Florida corporation. 

(Compl. ¶ 16.) On more than one hundred and twenty-five occasions

AMMS printed and mailed advertisements for Plaintiff. (Hogan Decl. ¶

5.) On at least thirty-five occasions, AMMS printed advertisements

for California automobile dealerships and subsequently mailed the

advertisements to California residents. (Id. ¶¶ 6-7.) Over a threeyear period, AMMS charged Plaintiff approximately one million dollars

for its services. (Id. ¶ 5.) 

Plaintiff’s business is specialized and highly competitive. 

(Compl. ¶ 11.) In order to promote its business, Plaintiff employs

salespersons who contact automobile dealers and offer to mail

advertisements on behalf of the dealer to potential customers who

reside in the vicinity of the dealership. (Hogan Decl. ¶¶ 3, 6-7.) 

If a dealer expresses interest in the offer, the salesperson sends a

proposal to the dealer for review. (Compl. ¶ 15.) If the dealer does

not approve the proposal within a specified time frame, the proposal

expires and Plaintiff performs no further work. (Id. ¶ 15.) However,

if the dealer approves the proposal, the salesperson generates a final

contract, which the dealer signs and returns. (Id. ¶ 16.) After

receiving the signed contract, Plaintiff drafts an advertisement,

selects the potential customers to receive the advertisement, and

verifies the printing and mailing of the advertisement. (Hogan Decl.

¶¶ 3-4.)

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3

In mid-August 2005, an employee of Plaintiff, Defendant Marc

Boaz (“Boaz”), created a proposal for a potential customer located in

Hobbs, New Mexico. (Compl. ¶ 17.) Plaintiff alleges that Boaz

deceived the potential customer to believe it was contracting with

Plaintiff for its services, when in fact Boaz had created his own

purchase agreement using Plaintiff’s marks. (Id. ¶¶ 9, 17.) 

Plaintiff further alleges Boaz agreed with Chatelain, an officer and

director of AMMS, to have AMMS do the printing and mailing required to

fill the customer’s order without Plaintiff’s knowledge. (Id. ¶¶ 9,

17-18.) The customer sent a check for $15,679.00 to AMMS for the

mailing. (Id. ¶ 19.) Plaintiff alleges that Defendants split the

proceeds from this transaction. (Id. ¶ 20.) 

DISCUSSION

Plaintiff has the burden of establishing personal

jurisdiction over each Defendant; however, Plaintiff “need only make a

prima facie showing of jurisdiction where, as here, the district court

did not hear testimony or make findings of fact.” Ziegler v. Indian

River County, 64 F.3d 470, 473 (9th Cir. 1995). “In determining

whether [Plaintiff] has met [its] burden [of making a prima facie

showing], uncontroverted allegations in [Plaintiff’s] complaint must

be taken as true, and ‘conflicts between the facts contained in the

parties’ affidavits must be resolved in [Plaintiff’s] favor . . . .’” 

Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588

(9th Cir. 1996) (quoting WNS Inc. v. Farrow, 884 F.2d 200, 203 (5th

Cir. 1989)). 

Whether a nonresident defendant may be subjected to suit in

a particular forum depends “upon two inquiries: (1) whether a state

statute of the forum confers personal jurisdiction over the

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nonresident defendant and (2) whether the exercise of jurisdiction

accords with federal constitutional principles of due process.” Flynt

Distrib. Co., Inc. v. Harvey, 734 F.2d 1389, 1392 (9th Cir. 1984). 

“California’s long-arm permits the exercise of jurisdiction to the

limits of due process. Thus . . . analysis of personal jurisdiction

under California’s long-arm and the Constitution collapse into one,

and [the Court need only] consider . . . whether the exercise of

jurisdiction over [a Defendant] comports with due process.” Glencore

Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114,

1123 (9th Cir. 2002) (citing Cal. Civ. Proc. Code § 410.10). 

“Constitutional due process is satisfied when a non-resident

defendant has certain minimum contacts with the forum such that the

maintenance of the suit does not offend traditional notions of fair

play and substantial justice. Depending on the nature of a foreign

defendant’s contacts with the forum, a federal court may obtain either

specific or general jurisdiction over him.” Id. (citations and

punctuation omitted). Plaintiff contends the Court may exercise

specific jurisdiction over Defendants because “[Plaintiff’s] cause[s]

of action arise[] out of or ha[ve] a substantial connection to

[Defendants’] contacts with [California].” Glencore, 284 F.3d at 1123

(citation omitted). 

Whether specific jurisdiction exists is determined by a

three-part test: “(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.” 

Id. “If any of the three requirements is not satisfied, jurisdiction

in the forum would deprive the defendant of due process of law.” 

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Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir.

1995).

I. Purposeful Availment

“When an intentional tort claim is asserted, purposeful

availment of the privilege of conducting activities in the forum state

can be met by the purposeful direction of a foreign act having effect

in the forum state.” CE Distrib., LLC v. New Sensor Corp., 380 F.3d

1107, 1111 (9th Cir. 2004). “Th[is] effects test is satisfied if the

defendant (1) commits an intentional act; (2) expressly aimed at the

foreign state; (3) causing harm in the foreign state that the

defendant knew was likely to be suffered in that state.” Id. 

Plaintiff had a three-year business relationship with AMMS

and Chatelain. (Hogan Decl. ¶ 5.) Plaintiff alleges that in 2005

AMMS and Chatelain “agreed to do the printing and mailing with full

knowledge that [] Boaz was defrauding the customer into believing the

mailing was being done through [Plaintiff] when it was not.” (Compl.

¶ 18.) Plaintiff alleges that after completing the mailing, AMMS and

Chatelain received payment directly from the customer and then split

the proceeds with Boaz. (Id. ¶ 20.) AMMS’s and Chatelain’s acts were

allegedly committed with an intent to deceive Plaintiff’s customers

for their own benefit, while knowing it would adversely affect

Plaintiff’s business. (Compl. ¶¶ 18-20.)

Based on the nature of the parties’ relationship and the

allegations in the Complaint, AMMS and Chatelain “had every reason to

know that the effect of the transactions [with Boaz and the

misinformed customer] would resonate in [California].” CE Distrib.,

LLC, 380 F.3d at 1111. Because AMMS and Chatelain intentionally

engaged in conduct that was directed at Plaintiff in California, the

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primary effect of which they knew would be felt in California, they

“purposefully availed” themselves to California. Id.

II. “Arises out of”

The “arises out of” portion of the test is “met if ‘but for’

the contacts between the defendant and the forum state, the cause of

action would not have arisen.” Terracom, 49 F.3d at 561. But for

AMMS and Chatelain “agreeing to do the printing and mailing with full

knowledge that [] Boaz was defrauding the customer into believing the

mailing was being done through [Plaintiff] when it was not,” and

splitting the proceeds therefrom with Boaz, Plaintiff’s claims for

conversion and intentional interference with prospective economic

advantage would not have arisen. Therefore, the second prong of the

specific jurisdiction test is satisfied.

III. Reasonableness 

The reasonableness portion of the test is presumed satisfied

upon a showing that a defendant purposefully directed his activities

at forum residents unless the defendant overcomes this presumption by

presenting a compelling case that jurisdiction would be unreasonable. 

Haisten v. Grass Valley Med. Reimb. Fund, Ltd., 784 F.2d 1392, 1397

(9th Cir. 1986). Neither AMMS or Chatelain has presented a compelling

case that the exercise of would be unreasonable. 

Since the present record reveals that specific jurisdiction

may be exercised over Plaintiff’s conversion and intentional

interference claims, it must be determined whether it is “appropriate

to assume jurisdiction over [Plaintiff’s] other claim[s] under

principles analogous to the doctrine of pendent jurisdiction.” Data

Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1289 n.8 (9th

Cir. 1977). The issue is whether all Plaintiff’s claims “arise[] out

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of a common nucleus of operative facts with [the] claim[s over which

specific jurisdiction exists.]” Action Embroidery v. Atlantic

Embroidery 368 F.3d 1174, 1180 (9th Cir. 2004) (citations omitted).

Plaintiff’s other claims are for RICO violations, trademark

infringement, false designation of origin, breach of contract,

negligent interference with prospective economic advantage, unfair

competition, and breach of the duty of loyalty. These claims are all

based on Defendants’ alleged scheme and agreement to deceive one of

Plaintiff’s potential customers into believing it was conducting

business with Plaintiff when in fact it was not. Since all of

Plaintiff’s claims arise from a common nucleus of fact, the claims

over which specific jurisdiction exists serve as the basis for the

exercise of pendent personal jurisdiction over Plaintiff’s other

claims. Therefore, personal jurisdiction will be exercised over all

Plaintiff’s claims, and the motions to dismiss for lack of personal

jurisdiction are denied.

IT IS SO ORDERED.

Dated: June 6, 2006

/s/ Garland E. Burrell, Jr.

GARLAND E. BURRELL, JR.

United States District Judge

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