Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-03841/USCOURTS-cand-5_06-cv-03841-3/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1332 Diversity-Personal Property

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 This disposition is not designated for publication and may not be cited. 1

 Unless otherwise indicated, references to Rules hereinafter will refer to the Federal 2

Rules of Civil Procedure.

Case No. C 06-03841 JF (HRL)

ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE

(JFEX2)

**E-Filed 7/18/07**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SiVAULT SYSTEMS, INC., a 

Nevada corporation,

 Plaintiff,

 v.

ALEXANDER GELF,

JONATHAN SCHMIDT, and

HYPERCOM CORPORATION, a 

Delaware corporation,

 Defendants.

Case Number C 06-03841 JF (HRL)

ORDER GRANTING MOTION TO 1

DISMISS WITHOUT PREJUDICE 

[re: docket no. 43 ]

Defendant Hypercom Corporation (“Hypercom”) moves to dismiss the First Amended

Complaint (“FAC”) of Plaintiff SiVault Systems, Inc. (“SiVault”), pursuant to Rule 12(b)(2) and

Rule 12(b)(5) of the Federal Rules of Civil Procedure. SiVault did not file opposition to the 2

Case 5:06-cv-03841-JF Document 54 Filed 07/18/07 Page 1 of 5
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Case No. C 06-03841 JF (HRL)

ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE

(JFEX2)

motion. For the reasons set forth below, the Court will grant the motion without prejudice

pursuant to Rule 12(b)(2). The motion to dismiss pursuant to Rule 12(b)(5) will be terminated as

moot. 

I. BACKGROUND

SiVault is a Nevada corporation with its principal place of business in New York. FAC ¶

1. Defendants Alexander Gelf and Jonathan Schmidt both are former employees of SiVault and

citizens of California. Id. at ¶¶ 2,3. Hypercom is a Delaware Corporation with its principal

place of business in Arizona. Id. at ¶ 4. On June 20, 2006, SiVault filed the instant action

against Gelf and Schmidt, former employees of SiVault, alleging, among other things, that Gelf

and Schmidt were entrusted with property belonging to SiVault and had converted a portion of

the property to their own use and had transported a portion to their new employer, Hypercom. 

Complaint ¶¶ 2, 3, 12, 20, 22, 23, 24. On February 23, 2007 this Court granted SiVault

permission to amend its complaint. Subsequently, SiVault amended its complaint to add

Hypercom as a party. SiVault sued Hypercom for (a) conversion; (b) intentional interference

with contractual relations, prospective advantage intentional interference with contractual

relations; and (c) unjust enrichment. SiVault served the FAC on Hypercom on April 3, 2007. 

 Hypercom filed the instant motion on April 26, 2007. It asserts that dismissal is proper

because this Court does not have personal jurisdiction over it, and that service was untimely. 

SiVault did not oppose the motion. See Notice by Hypercom re Motion to Dismiss. The Court

heard oral argument on June 29, 2007. Before oral argument, SiVault informed the Court that it

had filed for bankruptcy. 

II. LEGAL STANDARD

Under Rule 12(b)(2) , a defendant may move to dismiss for lack of personal jurisdiction. 

“On a motion to dismiss, the court must accept the complaint's allegations as true in their

entirety, and must draw all reasonable inferences in favor of the nonmoving party.” Pelletier v.

Federal Home Loan Bank of San Francisco, 968 F.2d 865, 872 (9th Cir. 1992). 

III. DISCUSSION

When a nonresident defendant raises a challenge to personal jurisdiction, the plaintiff

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Case No. C 06-03841 JF (HRL)

ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE

(JFEX2)

bears the burden of showing that jurisdiction is proper. Decker Coal Co. v. Commonwealth

Edison Co., 805 F.2d 834, 839 (9th Cir. 1986). A district court sitting in California may exercise

personal jurisdiction over a non-resident defendant if the defendant has “minimum contacts” with

California such that maintenance of the suit “does not offend traditional notions of fair play and

substantial justice.” Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1286

(9th Cir. 1977); see also International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). If the

nonresident defendant’s contacts with California are “substantial” or “continuous and

systematic,” the defendant is subject to “general jurisdiction” in California even if the cause of

action is not related to the defendant’s activities within the state. Data Disc, 557 F.2d at 1287. If

the defendant’s activities within the state are not so pervasive as to subject it to general

jurisdiction, it may be subject to “specific jurisdiction” if the cause of action is directly related to

those activities. Data Disc, 557 F.2d at 1287. The Ninth Circuit has articulated a three-part test

to determine when it is appropriate to exercise specific jurisdiction over a particular defendant:

(1) the nonresident defendant has performed some act by which he purposefully avails himself of

the privilege of conducting activities in the forum, thereby invoking the benefits and protections

of its laws; (2) the claim arises out of or results from the defendant’s forum-related activities; and

(3) exercise of jurisdiction is reasonable. Id. 

SiVault does not allege that Hypercom is subject to general jurisdiction in California, i.e.

that Hypercom has substantial or systematic contacts with California. Rather, SiVault appears to

claim that Hypercom’s employment of Gelf and Schmidt gives rise to specific personal

jurisdiction. However, all of the allegations in the FAC concerning Hypercom focuses on

Hypercom’s conduct in Arizona. For example, SiVault alleges in its FAC that Hypercom hired

Gelf and Schmidt, but does not allege that Hypercom did so in California. See FAC ¶ 21. The

FAC further asserts that Hypercom possessed SiVault’s hardware and software in Arizona. Id. at 

¶25, 27, 30. Hypercom’s alleged knowledge that SiVault equipment was improperly brought to

its facility in Arizona, id. at ¶ 30, is insufficient to establish personal jurisdiction in California. 

Moreover, SiVault has not opposed Hypercom’s motion to dismiss. Because SiVault is the

Plaintiff in this action, its bankruptcy filing does not affect the present proceeding. Because the

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Case No. C 06-03841 JF (HRL)

ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE

(JFEX2)

plaintiff bears the burden of establishing personal jurisdiction, the Court concludes that

Hypercom’s motion is well-taken. As this Court does not have personal jurisdiction over

Hypercom, it need not resolve the question of whether service was timely. 

IV. ORDER

Good cause therefor appearing, IT IS HEREBY ORDERED that the above-entitled action

is DISMISSED without prejudice as to Defendant Hypercom. 

DATED: July 18, 2007.

 

JEREMY FOGEL

United States District Judge

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Case No. C 06-03841 JF (HRL)

ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE

(JFEX2)

This Order has been served upon the following persons:

Thomas Caudill: law.caudill@sbcglobal.net 

Mark B. Fredkin: mfredkin@mffmlaw.com, mramos@mffmlaw.com; siamas@mffmlaw.com;

crogers@mffmlaw.com; dolson@mffmlaw.com; gdent@mffmlaw.com; jlira@mffmlaw.com 

Robert J. Gibson: hgibson@swlaw.com, cfrench@swlaw.com 

Edward F. Mitchell: EFMLawSF@juno.com 

Notice will be delivered by other means to:

Thomas G. Amon 

500 Fifth Avenue 

Suite 1650 

New York, NY 10110 

Case 5:06-cv-03841-JF Document 54 Filed 07/18/07 Page 5 of 5