Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-02152/USCOURTS-azd-2_06-cv-02152-0/pdf.json

Nature of Suit Code: 150
Nature of Suit: Overpayments &amp; Enforcement of Judgments
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Hummingbird Defense Systems, Inc., a

Nevada Corporation,

Plaintiff, 

vs.

Simon Ye and Eleanor Shum, husband

and wife,

Defendant. 

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No. CV06-2152-PHX-JAT

ORDER

Plaintiff has sued for breach of contract and misappropriation of trade secrets. (Dkt. # 1).

Defendant has filed a Motion To Dismiss For Lack Of Jurisdiction And Improper Venue.

(Dkt. # 9). Additionally, the court has considered Plaintiff's Response To Motion To Dismiss

For Lack Of Jurisdiction And Improper Venue (Dkt. #10) and Defendant's Reply In Support

Of Motion To Dismiss For Lack Of Jurisdiction And Improper Venue (Dkt. # 13). The Court

now rules on the Motion to Dismiss.

Background

Plaintiff is a Nevada corporation that has its principal place of business in Arizona.

Defendants are residents of California. Plaintiff manufactures and sells facial recognition

security systems. Defendant Ye came to Arizona twice to familiarize himself with the

Case 2:06-cv-02152-JAT Document 18 Filed 06/27/07 Page 1 of 6
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Plaintiff has sued Mr. Ye's wife, Eleanor Shum, to comply with Arizona's community

property rules. Plaintiff has not alleged that she has had any contacts with in Arizona. The

Court therefore will address only Mr. Ye's activities.

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Plaintiff's system.1

 Mr. Ye visited Arizona twice in 2002. Each time he stayed for the

duration of one day. Neither party has alleged that any negotiations took place during Mr.

Ye's visits to Arizona. The parties dispute whether while in China the Defendant received

and signed a contract for the Plaintiff's security equipment. Plaintiff acknowledges that the

entire contract was to be performed in China.

Legal Analysis

Personal Jurisdiction

The plaintiff bears the burden of establishing personal jurisdiction. See Ziegler v. Indian

River County, 64 F.3d 470, 473 (9th Cir. 1995) (citing Farmer Ins. Exch. v. Portage La

Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir. 1990)). A defendant may move prior to

trial to dismiss a complaint for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2); see, e.g.,

Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977) (citing Rule

12(b)(2)). When a defendant moves to dismiss a compliant for lack of personal jurisdiction,

the plaintiff is "obligated to come forward with facts, by affidavit or otherwise, supporting

personal jurisdiction" over the defendant. Cummings v. W. Trial Lawyers Assoc., 133 F.

Supp. 2d 1144, 1151 (D. Ariz. 2001).

Because no applicable federal statute governing personal jurisdiction exists, Arizona's

long-arm statute applies to this case. See Terracom v. Valley Nat'l Bank, 49 F.3d 555, 559

(9th Cir. 1995) (citing Core-Vent Corp. AB v. Nobel Indus., 11 F.3d 1482, 1484 (9th Cir.

1993)). Arizona's long-arm statute provides for personal jurisdiction to the extent permitted

by the Due Process Clause of the United States Constitution. Ariz. R. Civ. P. 4.2(a); see Doe

v. Am. Nat'l Red Cross, 112 F.3d 1048, 1050 (9th Cir. 1997).

Absent traditional bases for personal jurisdiction (i.e. physical presence, domicile, and

consent), the Due Process Clause requires that a nonresident defendant have certain

minimum contacts with the forum state such that the exercise of personal jurisdiction does

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not offend traditional notions of fair play and substantial justice. See Int'l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945). The Due Process Clause protects a defendant's

"liberty interest in not being subject to the binding judgment of a forum with which he has

established no meaningful 'contacts, ties or relations.'" See Omeluk v. Langsten Slip &

Batbyggeri A/S, 52 F.3d 267, 269-70 (9th Cir. 1995) (quoting Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 471-471 (1985)).

In determining whether a defendant has minimum contacts with the forum state such that

the exercise of jurisdiction over the defendant would not offend the Due Process Clause,

courts focus on "the relationship among the defendant, the forum, and the litigation." Brink

v. First Credit Resources, 57 F. Supp. 2d 848, 860 (D. Ariz. 1999) (citing Shaffer v. Heitner,

433 U.S. 186, 204 (1977)). If a court determines that the defendant's contacts with the forum

state are sufficient to satisfy the Due Process Clause, the court must exercise either "general"

or "specific" jurisdiction over the defendant. See Helicopteros Nacionales de Colombia v.

Hall, 466 U.S. 408, 414-15 nn. 8-9 (1984). The nature of the defendant's contacts with the

forum state will determine whether the court exercises general or specific jurisdiction over

the defendant. Id.

1. General Jurisdiction

A court may assert general jurisdiction over a nonresident defendant "[i]f the defendant's

activities in the state are 'substantial' or 'continuous and systematic,' ...even if the cause of

action is unrelated to those activities." Doe, 112 F.3d at 1050-51 (quoting Haisten v. Grass

Valley Med. Reimbursement Fund, Ltd., 784 F.2d 1392, 1396 (9th Cir. 1986)).

Plaintiff did not assert an argument in support of general jurisdiction, Mr. Ye argues that

he does not have "substantial" or "continuous and systematic" contacts with Arizona. Mr. Ye

does not own property or maintain an office in Arizona. Because Mr. Ye's activities in the

forum state are not sufficiently substantial, this Court cannot assert general jurisdiction over

him.

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2. Specific Jurisdiction 

The Ninth Circuit applies a three-part test to determine whether a defendant's contacts

with the forum state are sufficient to subject him to the state's specific jurisdiction. Under

this three-part test, specific jurisdiction exists only if: (1) the defendant purposefully availed

himself of the privilege of conducting activities in the forum, thereby invoking the benefits

and protections of its laws, or purposefully directed conduct at the forum that had effects in

the forum; (2) the claim arises out of defendant's forum-related activities; and (3) the exercise

of jurisdiction comports with fair play and substantial justice, i.e., it is reasonable. Bancroft

& Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (citing Cybersell,

Inc. v. Cybersell, Inc., 130 F.3d 414, 417 (9th Cir. 1997)). 

 a. Purposeful Availment and Effects Test

In discussing the specific jurisdiction test, the United States Supreme Court has long

emphasized that "it is essential in each case that there be some act by which the defendant

purposefully avails itself of the privilege of conducting activities within the forum State, thus

invoking the benefits and protection of its laws." Hanson v. Denckla, 357 U.S. 235, 253

(1958). The Supreme Court has held that a court may also have specific jurisdiction over a

defendant where the intended effects of the defendant's non-forum conduct were purposefully

directed at and caused harm in the forum state. Calder v. Jones, 465 U.S. 783, 788-90

(1984).

Plaintiff alleges that a contract was shipped to China for Mr. Ye's review and was to be

performed entirely in China. Plaintiff does not allege that the contract was signed in Arizona

or that any contract negotiations took place in Arizona. No allegations of breach of contract

while in Arizona have been made. Plaintiff fails to show that their claims are materially

related to activities that were conducted in or directed at Arizona. Plaintiff does not identify

any conduct by Mr. Ye that took place in Arizona that adequately supports the availment

concept. Mr. Ye's contacts with the forum state are not sufficient to satisfy the Due Process

clause. Visiting Arizona, for a total of two days, to familiarize himself with the Plaintiff's

product, is not in itself enough to constitute purposeful availment of the Plaintiff's 

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Because Plaintiff has not satisfied the requirements of personal jurisdiction with

regard to Mr. Ye, it cannot satisfy the requirements as to Ms. Shum.

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forum. For the Court to find specific jurisdiction over the Defendant, Mr. Ye's conduct must

satisfy each prong of the Ninth Circuit's three-prong test. Plaintiff has not demonstrated that

Mr. Ye's conduct satisfies the first prong. The nonetheless will analyze the second prong as

an additional and alternative basis for dismissal. 

 b. Claim Arises Out of Activities

 The Ninth Circuit has adopted a "but for" test to determine whether a plaintiff's cause of

action arises out of the defendant's forum-related activities. Doe, 112 F.3d at 1051; see

Omeluk, 52 F.3d at 271. The "arising out of" requirement is met, if but for the contacts

between the defendant and the forum state, the cause of action would not have arisen. See

Tarracom, 49 F.3d at 561. 

The "but for" test is not satisfied here as the cause of action does not arise out of the Mr.

Ye's forum related activities. Plaintiff has not shown that absent Mr. Ye visiting Arizona to

familiarize himself with the Plaintiff's product the breach of contract or misappropriation of

trade secrets would not have arisen. The claims do not arise out of the simple act of coming

to Arizona to look at products. Plaintiff bears the burden of establishing personal jurisdiction

and has failed to allege adequate facts to meet that burden.

Conclusion

Plaintiff did not satisfy the first and second prongs of the Ninth Circuit's three-part test for

specific jurisdiction. It is unnecessary to analyze the third prong of the test because each

prong must be satisfied in order for the Court to exert personal jurisdiction over Defendants.2

Additionally, because the Court cannot exercise personal jurisdiction over the Defendants,

Defendants' improper venue argument is moot and need not be analyzed.

///

Accordingly, 

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IT IS ORDERED granting Defendants' Motion To Dismiss For Lack Of Jurisdiction And

Improper Venue (Doc. #9).

DATED this 26th day of June, 2007.

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