17-CIV-02888 FRED H. GEISLER, MD, et al. vs. TERRY J. JOHNSTON, et al.

GENA ZISCHKE Jeffrey F. Ryan

TERRY J. JOHNSTON

MOTION TO QUASH BY TEDAN SURGICAL INNOVATIONS

TENTATIVE RULING:

The motion to quash is denied.

A. The Motion Fails to Establish General Jurisdiction

Plaintiffs argue that TeDan is subject to general jurisdiction because a limited liability company is a citizen of every state in which its members are citizens. At least one member of TeDan is a California citizen, which means that TeDan is a California citizen. Defendants’ Supplemental Brief does not address this argument. Plaintiffs offer a correct statement of law, but it does not result in personal jurisdiction over TeDan.

The cases cited in Plaintiffs’ Supplemental Opposition are in the context of federal diversity jurisdiction. (See Johnston v. Columbia Props. Anchorage, LP (9th Cir. 2006) 437 F.3d 894, 899; Delay v. Rosenthal Collins Group (6th Cir. 2009) 585 F.3d 1003, 1005.) The issue in those cases was whether an LLC was considered a citizen of a particular state in order to establish diversity. The issue was not whether the LLC was subject to personal jurisdiction in the state where it was deemed a citizen.

Further, citizenship is a basis for personal jurisdiction only as to natural persons and individuals. (See, e.g., Watts v. Crawford (1995) 10 Cal. 4th 743, 762; Judd v. Superior Court (1976) 60 Cal. App. 3d 38, 43.) The Legislative Comment to Code of Civil Procedure section 410.10 identifies citizenship as a basis for jurisdiction over an individual, omits citizenship from the list of bases for jurisdiction over corporations and unincorporated entities. Even if TeDan is a citizen of California, that fact does not, by itself, subject TeDan to general jurisdiction.

B. Plaintiffs Demonstrate that TeDan is Subject to Specific Jurisdiction

The Court may find specific jurisdiction upon a showing that (1) the out-of-state defendant purposefully established contacts with the forum state, (2) Plaintiff’s cause of action “arises out of” or is “related to” defendant’s contacts with the forum state; and (3) the forum’s exercise of personal jurisdiction in the particular case comports with “fair play and substantial justice.” (Burger King Corp. v. Rudzewicz (1985) 471 US 462, 477-478.)

1. Purposeful Availment.

The purposeful availment is shown by TeDan’s operating an office in California for several years (even if it is not the home office). The alleged wrongful acts are against Rhausler in California.

2. Plaintiff’s Claims “Arise Out of” or are “Related to”

Defendant’s Contacts.

Plaintiffs’ claim is that Defendants looted Rhausler, in part on behalf of Defendant TeDan, based on acts occurring in California. The Court may find specific jurisdiction against TeDan based on the acts of California resident Defendant Johnston, who was allegedly acting on TeDan’s behalf when he committed various acts. (Rice Growers Ass ‘n v. First Nat’l Bank of Minneapolis (1985) 167 Cal.App.3d 559, 569; Sher v. Johnston (9th Cir. 1990) 911 F.2d 1357, 1362.)

A motion to quash must be evaluated on affidavits. Defendants acknowledge that a properly verified complaint may serve the purpose of an affidavit. (Supp. Brief at 6:7; see Hearn Pac. Corp. v. Second Generation Roofing Inc. (2016) 247 Cal.App.4th 117, 131-32; Evangelize China Fellowship, Inc. v. Evangelize China Fellowship (1983) 146 Cal. App. 3d 440, 444.) The Court did not consider the allegations of the complaint on the previous hearing; Plaintiff’s Opposition did not rely on it.

The verified First Amended Complaint alleges that Defendant Johnston (California resident at the time) was acting on behalf of TeDan when he committed various acts on which Plaintiffs base their claims. (FAC para. 52, 58(e), 58(f), 58(g), 58(h), 70, 71, 72, 135, 140(g), 140(l).) The allegations are sufficient to allege to support that Plaintiffs’ claims are based, at least in part, on TeDan’s actions in California, performed by Defendant Johnston on TeDan’s behalf as member and agent. (The Court did not consider these allegations at the time of the October 2018 hearing, because Plaintiff did not cite to them in their Opposing papers.)

3. Fair Play and Substantial Justice

“[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 477.) Defendants offer no argument against this element. The Court locates no evidence supporting a finding that imposing specific jurisdiction over Defendant TeDan in this action violates notions of fair play and substantial justice.

C. Conclusion.

The motion to quash is denied. Defendant TeDan shall file and serve a responsive pleading no later than April 23, 2018, or one week after service of written notice of this ruling, whichever date is later.