Opinion ID: 613475
Heading Depth: 3
Heading Rank: 3

Heading: Application of the Schwarzenegger Test

Text: Throughout the ensuing discussion, we concentrate on the false affidavit/forfeiture proceeding aspect of this case, because, as we explain below, we ultimately remand with respect to the initial search and seizure claim, for consideration of the application of the doctrine of pendent personal jurisdiction. See Action Embroidery Corp. v. Atlantic Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir.2004); p. 858, infra.
The first part of the Schwarzenegger test is subdivided into purposeful direction, which most often applies in tort cases, and purposeful availment, which most often applies in contract cases. 374 F.3d at 802; see Pebble Beach, 453 F.3d at 1155. Fiore and Gipson have alleged a tort action, [17] which calls for purposeful direction analysis. We analyze purposeful direction under the three-part test derived from Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), commonly referred to as the Calder -effects test. See Brayton Purcell, 606 F.3d at 1128; see also Calder, 465 U.S. at 788-91, 104 S.Ct. 1482; Schwarzenegger, 374 F.3d at 803. Under the Calder -effect test, `the defendant allegedly must have[ (a) ] committed an intentional act, [(b)] expressly aimed at the forum state, [ (c) ] causing harm that the defendant knows is likely to be suffered in the forum state.' Brayton Purcell, 606 F.3d at 1128 (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir.2006) (en banc)). [D]ue process permits the exercise of personal jurisdiction over a defendant who `purposefully directs' his activities at residents of a forum, even in the `absence of physical contacts' with the forum. Schwarzenegger, 374 F.3d at 803 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (alteration omitted)). Intentional torts, in particular, can support personal jurisdiction over a nonresident defendant who has no other forum contacts. Calder, 465 U.S. at 790, 104 S.Ct. 1482; see also McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. ___, 131 S.Ct. 2780, 2785-87, 180 L.Ed.2d 765 (2011) (plurality opinion).
The intentional act prong of the Calder -effects test is satisfied in this case, as the district court recognized. We construe `intent' in the context of the `intentional act' test as referring to an intent to perform an actual, physical act in the real world, rather than an intent to accomplish a result or consequence of that act. Schwarzenegger, 374 F.3d at 806. Submitting a false and misleading probable cause affidavit and referring the case for forfeiture proceedings in the absence of probable cause were intentional acts. See, e.g., Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1088 (9th Cir.2000) (sending a letter was an intentional act).
The express aiming prong of the Calder -effects test presents a more difficult question. The district court reasoned that Walden's intentional actthe search of Plaintiffs' luggage and seizure of their currencywas expressly aimed at Georgia, not Nevada, because Walden's questioning of Fiore and Gipson, his search of their luggage and his seizure of their money all took place in Georgia. We may assume that is so. But, the district court, as noted, did not consider the false probable cause affidavit aspect of the case, as to which the express aiming prong, we conclude, is satisfied. In general, where there was individual targeting of forum residentsactions taken outside the forum state for the purpose of affecting a particular forum resident or a person with strong forum connectionswe have held the express aiming requirement satisfied. See Brayton Purcell, 606 F.3d at 1129-31; Pebble Beach, 453 F.3d at 1157; Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir.2002); Bancroft & Masters, 223 F.3d at 1087. [18] At the same time, the express aiming requirement is not satisfied where it is merely foreseeable that there will be an impact on individuals in the forum. Pebble Beach, 453 F.3d at 1156; Bancroft & Masters, 223 F.3d at 1087; Schwarzenegger, 374 F.3d at 805. In Bancroft & Masters, we explained that [t]he presence of individualized targeting is what separates these cases from others in which we have found the effects test unsatisfied. 223 F.3d at 1088. In other words, the difference between those cases in which harm is merely foreseeable in the forum and those in which conduct is expressly aimed at the forum is often the difference between an intended impact that is either local or undifferentiated, and an intended impact that is targeted at a known individual who has a substantial, ongoing connection to the forum. For example, the maintenance of a passive website did not satisfy the express aiming requirement, even though the website was viewed by forum residents, because there was no individualized targeting involved in merely registering and operating a passive informational website. Brayton Purcell, 606 F.3d at 1130. Similarly, there was no express aiming in Schwarzenegger, which involved an Ohio car dealership's unauthorized use of Arnold Schwarzenegger's photograph in local advertisements, none of which were circulated in California, the forum in which Schwarzenegger brought suit. 374 F.3d at 799-800. The express aim was local, as the defendant intended the advertisement at issue to have only local effects. Id. at 807. The fact that the advertisement may have had forum effects, such as diminished compensation due to the over-saturation of [Schwarzenegger's] image, id. at 800, was not sufficient to satisfy the express aiming prong. Id. at 807. With respect to the allegedly false affidavit and referral for forfeiture proceedings, the indications that Walden was expressly targeting Fiore and Gipson in Nevada are strong. From the outset, Walden must have known and intended that his actions would have impacts outside Atlanta. Walden confronted Fiore and Gipson at their boarding gate for a plane to Las Vegas, after learning from agents in San Juan that they had just flown from there. So he knew that they were merely changing planes in Atlanta, not staying there. When Walden spoke to them, Fiore and Gipson evidenced no connections whatever to Georgia; they said they were going to Las Vegas, and showed California drivers' licenses. Thus, Walden expressly aimed his actions at people and property he knew from the outset were not local. [19] See id. Moreover, on the complaint's allegations, Walden definitely knew, at some point after the seizure but before providing the alleged false probable cause affidavit, that Fiore and Gipson had a significant connection to Nevada. First, Fiore and Gipson's complaint states that the funds were readily identifiable [as] originating and returning to Las Vegas as the ordinary static place where they were situated as plaintiffs' bank for gambling. The complaint then goes on to state that Walden ... told plaintiffs in no uncertain terms that if they later produced legal receipts demonstrating the legitimacy of the funds, the funds would be returned. Attempting to so demonstrate, [u]pon returning to their homes in Las Vegas, plaintiffs marshaled records within Las Vegas to comply with defendant's request and representation ... On August 30, 2006, plaintiffs forwarded the following to Walden from Las Vegas: i. Copies of federal tax returns showing that each plaintiff made their living through gaming; ii. Receipts for their trip; iii. Travel itinerary for the trip; and iv. Hotel records showing that they gambled at such a high level that the casinos would provide them rooms on a complimentary (free) basis. (emphasis added). At this point, the complaint alleges, Walden necessarily recognized that in addition to a `bank' held by Gipson for his seed money in gaming and necessarily originating in Nevada, the seized funds included at least $30,000.00 in cash received from legal gaming win[nings] in Puerto Rico. The complaint also alleges that [a]ll defendants recognized at all times that the destination of the funds at the time of the seizure was Las Vegas, Nevada, and that a substantial amount of the currency had also originated at Las Vegas, Nevada. Finally, the complaint alleges that after Fiore and Gipson arrived in Las Vegas, either Walden or Defendant C, with Walden's acquiessance [sic] and encouragement, searched data bases for background on plaintiffs including data bases compiled and maintained in Nevada, and that [t]hese searches indicated that the plaintiffs were `squeaky clean.' Moreover, [a]t the time that the probable cause affidavit was drafted, Walden and defendant C recognized that the funds were not subject to forfeiture and that they had authority and duty to return or cause the return of the seized ... funds to plaintiffs in Las Vegas ... [And] any reasonable officer acting in like or similar circumstances would have returned the seized funds to the plaintiffs in Las Vegas. Nevertheless, despite demand, despite knowledge of innocence, and despite the duty to return the funds, the funds were not returned to Las Vegas as required. Finally, according to the complaint, the funds ultimately were returned to Fiore and Gipson in Las Vegas, by the prosecutor to whom the case had been referred after Walden submitted the false affidavit. Taken together, these allegations indicate that at the time the assertedly false affidavit was composed and filed, Walden recognized that the plaintiffs had significant connections to Nevada, particularly with respect to the funds for which forfeiture was being sought. For the purposes of personal jurisdiction, it does not matter whether Fiore and Gipson were legal residents of Nevada or whether they simply had a significant connection to the forum, such that Walden's actions were `performed with the purpose of having' its `consequences felt' by someone in [Las Vegas]. Ibrahim v. Dep't Homeland Sec., 538 F.3d 1250, 1259 (9th Cir.2008); see also Brainerd, 873 F.2d at 1259. Ibrahim, for example, concerned a woman from Malaysia who had studied at Stanford but was leaving, permanently, on the day of the incident that gave rise to the lawsuit. 538 F.3d at 1253. The defendant, a resident of Virginia who had no ties to California, had from the Transportation Security Intelligence Service's office in Washington, D.C., instructed San Francisco police to detain Ibrahim after her name appeared on the federal government's No-Fly List. Id. at 1253, 1258. We held the purposeful impact on Ibrahim in San Francisco sufficient to establish personal jurisdiction over the out-of-state defendant, because it was apparent to the defendant that his order's consequences would be felt in San Francisco. Id. at 1258-59. This was so even though the defendant did not initiate the phone call that resulted in him instructing the police in San Francisco to detain Ibrahim. Id. at 1258. Whether Ibrahim was a California resident at the time of her detention was not discussed in the case, indicating that her residence did not matter. Similarly, in Brainerd, a defamation case, Brainerd, the plaintiff had accepted a tenured position with the University of Arizona, after which the defendant made defamatory statements about him to his new employer. 873 F.2d at 1258. Whether Brainerd was an Arizona resident at the time the defamatory statements were made was not a factor in the opinion's analysis. Instead, Brainerd's known connection to Arizona was sufficient to establish personal jurisdiction in Arizona over the defendant, a resident of Canada whose only contacts with Arizona consisted of communications with the University of Arizona regarding the plaintiff. Id. at 1258-59. The defendant knew the injury and harm stemming from his communications would occur in Arizona, where Brainerd planned to live and work. Id. at 1259 (emphasis added). In this case, the allegations in the complaint, taken as true for these purposes, establish that Walden necessarily recognized, at least by the time he wrote the probable cause affidavit, that the plaintiffs had a connection to Nevada that was at least as strong as in Ibrahim, in which the plaintiff left the forum state the day after the incident giving rise to the suit, never to return, 538 F.3d at 1253, or in Brainerd, where the plaintiff only planned to live and work in the forum where the injury occurred. 873 F.2d at 1259. Thus, whether Fiore and Gipson were residents of Nevada at the time of the filing of the false probable cause affidavit is not determinative of the question of personal jurisdiction over Walden. Moreover, as in Ibrahim and Brainerd, it is not relevant who initiated the contacts with Nevada. See Ibrahim, 538 F.3d at 1258-59; Brainerd, 873 F.2d at 1259. Instead, the critical factor is whether Walden, knowing of Fiore and Gipson's significant connections to Nevada, should be taken to have intended that the consequences of his actions would be felt by them in that state. As to that issue, our precedents regarding personal jurisdiction in cases concerning fraud or similar causes of action are informative. That case law firmly establishes that if a defendant is alleged to have defrauded or similarly schemed against someone with substantial ties to a forum, the expressly aimed factor is met, even if all the defrauding activities occur outside the forum. In Bancroft & Masters, for example, the defendant, a company based in Georgia, sent a letter to the company in Virginia that is the sole registrar of domain names in the United States, allegedly for the purpose of misappropriating a California company's domain name for its own use. 223 F.3d at 1087. This court held that the letter, sent from Georgia to Virginia, was expressly aimed at California because it individually targeted [plaintiff], a California corporation doing business almost exclusively in California and the effects of the letter were primarily felt, as [defendant] knew they would be, in California. Id. at 1088. Similarly, Metropolitan Life, decided before this court explicitly adopted the express aiming analysis, held that personal jurisdiction existed in California over Geneva Gambrell, an Alabama resident who purposefully defrauded James Neaves, a California resident, by sending a letter to an insurance company representing that Gambrell was entitled to a payment that she knew actually belonged to Neaves. Id. at 1064-65. Gambrell sent the letter to the insurance company in California, rather than mailing it to the company's headquarters in New York, but the court explained that the location to which the letter was mailed did not matter. Id. at 1065. What mattered, instead, was that in address[ing] the envelope to Metropolitan, she was purposefully defrauding Neaves in California. Id. The situation here is similar to those in Bancroft & Masters and Metropolitan Life. The complaint alleges that Walden fraudulently executed a false and misleading probable cause affidavit, used it to encourage the U.S. Attorney in Georgia to prosecute a forfeiture action, and thereby sought to obtain the funds for the Atlanta DEA. [20] These allegations are analogous to an allegation that Walden attempted to defraud Fiore and Gipson of the seized funds. See Rivera v. Philip Morris, Inc., 395 F.3d 1142, 1155 (9th Cir.2005) (listing the elements of fraud under Nevada law). According to the complaint, Walden falsely and with misleading omissions represented in the probable cause affidavit that the Atlanta DEA was entitled to the funds he knew rightfully belonged to Fiore and Gipson, whom he knew had a significant connection to Nevada. And the fraudulent execution of the probable cause affidavit was intended to assist in the retention and eventual forfeiture of Fiore and Gipson's funds, actions which, Walden knew, would have their consequences felt in Las Vegas, see Ibrahim, 538 F.3d at 1259, the location to which he knew the funds should rightfully have been returned. Moreover, after Fiore and Gipson forwarded all of their documentation, Walden likely knew, if he did not know before, that Fiore and Gipson were professional gamblers with significant ties to Nevada and that seizing and attempting to keep their bank and their earnings would disrupt their business activities in Nevada. See Bancroft & Masters, 223 F.3d at 1087 (holding that the express aiming requirement was satisfied when defendant sent a letter to a company in Virginia with the alleged intent and result of disrupting the plaintiff's California business). In sum, with regard to the filing of the false probable cause affidavit, Walden individually targeted Fiore and Gipson, as he was aware of their significant connection to Nevada and of the likely impact of his defrauding actions on their property and business in Nevada. Under our case law, these facts satisfy the express aiming prong of the Calder -effects test.
The final prong of the Calder -effects test is the requirement that the conduct at issue caused foreseeable harm in the forum. We do[ ] not require that the `brunt' of the harm be suffered in the forum. Brayton Purcell, 606 F.3d at 1131 (quoting Yahoo!, 433 F.3d at 1207). Instead, the foreseeable-harm element is satisfied when defendant's intentional act has `foreseeable effects' in the forum. Id. If a jurisdictionally sufficient amount of harm is suffered in the forum state, it does not matter that even more harm might have been suffered in another state. Yahoo!, 433 F.3d at 1207. The foreseeable harm factor, thus understood, is readily satisfied here. During their initial encounter, Walden knew from their plane tickets, and from the San Juan DEA agent, that Fiore and Gipson were heading to Las Vegas, along with their $97,000. Moreover, Fiore and Gipson had explained at the airport that they were professional gamblers, and Fiore provided some documentation regarding her funds. After arriving in Nevada, Fiore and Gipson provided additional documentation of the legitimacy and sources of the funds. Consequently, Walden knew, by the time he wrote the fraudulent probable cause affidavit, that the money seized represented their professional earnings. The documentation also demonstrated that he had seized their $30,000 bank, which they needed to pursue their trade in Nevada. Although the funds were eventually returned to Fiore and Gipson, it is a fair inference from the complaint that the return was delayed while the prosecutor considered whether to go forward with a forfeiture action on the basis of the false probable cause affidavit and sought, unsuccessfully, to forestall a lawsuit such as this one through execution of a release. The delay in returning the funds to Fiore and Gipson in Las Vegas caused them foreseeable harm in Nevada.