SEOP, Inc. v. Michael Wetmore

Defendant MICHAEL WETMORE moves to quash service of the summons and complaint. First, he argues that this court lacks personal jurisdiction over him because he is an Illinois resident who lacks minimum contacts with California. Second, he argues that California is an inconvenient forum and that Illinois is a suitable alternate forum.

The court DENIES the motion.

As an initial matter, Plaintiff SEOP argues that Wetmore’s motion is procedurally improper because the notice of motion designated a hearing date 41 days after filing of the notice, in violation of CCP 418.10, which requires the notice designate a hearing date not more than 30 days after the filing of the notice. But this requirement is not jurisdictional, and is subject to the court’s calendar availability. (See Olinick v. v. BMG Entertainment (2006) 138 Cal.4th 1285, 1296.)

Personal Jurisdiction

On a motion to quash service of the summons and complaint for lack of personal jurisdiction, the burden is on the plaintiff to show, by a preponderance of the evidence, that sufficient minimum contacts exist between defendant and the forum state to justify imposition of personal jurisdiction. (Mihlon v. Superior Court (1985) 169 Cal.App.3d 703, 710.) If plaintiff meets its burden of proof with competent evidence supported by specific evidentiary facts, then the burden shifts to defendant to prove that the exercise of jurisdiction would be unreasonable. (Jewish Defense Organization v. Superior Court (1999) 72 Cal.App.4th 1045, 1055.)

Even if a nonresident lacks continuous and systematic contacts sufficient to confer general jurisdiction for all of his business activities, he may still be subject to specific jurisdiction for purposefully availing himself with the forum state and for claims arising out of his contacts with the forum state.

During the job interview process, Wetmore established contacts with California by purposefully engaging in telephone and email communications with directors and officers of SEOP, which is located in Santa Ana, CA. He visited California, and engaged in a face-to-face interview with SEOP officials for the purpose of being hired. After being hired, Wetmore received paychecks issued by SEOP, drawn upon a bank accounted located in Irvine, California. According to the evidence presented by plaintiffs, Wetmore committed acts of fraud directed at SEOP, its officers, and its directors.

Where a nonresident defendant commits an intentional act outside California that causes injuries within the state, he must present a compelling case to render jurisdiction unreasonable. (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 475-476.)

II. Forum Non Conveniens

The doctrine of forum non conveniens is an equitable doctrine invoking the discretionary power of the court to decline to exercise jurisdiction and to stay or dismiss the action if the court believes the action may be more appropriately and justly tried elsewhere. (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751.) The inquiry is not whether some other state provides a better forum, but whether California is so seriously inconvenient that it should be adjudicated elsewhere in the interest of substantial justice. (Ford Motor Co. v. Ins. Co. of North America (1995) 35 Cal.App.4th 604, 611.)

The burden of proof is on the defendant to show that the action should be tried elsewhere. Plaintiff’s choice of forum will not be disturbed unless Defendant can prove that a suitable alternative forum exists and that the balance of private and public interest factors makes it just that the litigation proceed in the alternative forum. (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751.)

If Defendant demonstrates that it is amenable to process in the alternative forum and there is no procedural bar to the foreign court’s deciding the case on the merits, the burden falls on Plaintiff to show that the alternative forum is nevertheless unsuitable. (Hahn v. Diaz-Barba (2011) 194 Cal.App.4th 1177, 1191.)

A. Suitable Alternate Forum

First, the court must determine with a suitable alternate forum exists, whether there is jurisdiction in the alternate forum, and whether the statute of limitations bars hearing the case on the merits in the alternate forum.

Here, Illinois is clearly a proper forum and Illinois clearly has general jurisdiction and specific jurisdiction over Wetmore. But it is unclear if Illinois has jurisdiction over SEOP. And Wetmore fails to make any showing in that regard.

Defendant Wetmore states that he is not aware of any statute of limitations in Illinois. But that showing is insufficient. He must review the claims here and show that they are not time-barred in Illinois under Illinois law, but he fails to carry this burden. So Wetmore fails to carry his burden of proof on this point.

B. Private and Public Interests

Second, the court must determine whether the private interests of the parties and the public interests of California favor adjudication in California or Illinois.

1. Private Interests of the Parties

The court must consider 3 factors: (1) the cost of obtaining attendance of witnesses; (2) the availability of compulsory process for attendance of unwilling witnesses; (3) the ease of access to sources of proof. (Stangvik, 54 Cal.3d at 531.)

Defendant argues that the majority of witnesses are employees of VMI in Illinois who cannot be compelled to testify in California. But the problem is that there are equally important witnesses in California who arguably cannot be forced to testify in Illinois. So it’s not clear which way this factor cuts. Both parties would be equally inconvenienced by being forced to appear in the sister state forum. So neither forum is truly “preferable” to the exclusion of the other.

Both forums are proper and the California forum is not so seriously inconvenient that the California action should be stayed.

2. Public Interest Factors

Defendant merely asserts that the public interest factors favor Illinois. But California has a compelling interest in allowing a California corporation to sue its CEO in California for fraud and breach of employment contract.

This suit would not overburden the court court calendar because it does not involve numerous actions and parties. (Cf. Stangvik v. Shiley Inc., 54 Cal.3d at 758 [court congestion posed by 235 separate actions] and Campbell v. Parker-Hannifin Corp. (1999) 69 Cal.App.4th 1534, 1542 [court congestion where 20 separate plaintiffs involved] with Roulier v. Cannondale (2002) 101 Cal.App.4th 1180, 1190 [no court congestion where only 1 plaintiff involved].)

Here, potential jurors will be called upon to decide a case which does concern the local community, because it involves a California corporation and its CEO.

The court must also weigh the competing interests of California and Illinois in the litigation, which may include such matters as:

a. California’s interest in regulating the transaction or activities involved (affecting property located here or products manufactured here);

b. the foreign state’s concerns in making technology and products available to its citizens that might be impeded if American liability laws were applied to actions brought by foreign residents;

c. The competitive disadvantage to California business if resident corporations are required to defend lawsuits here based on injuries incurred elsewhere. (Stangvik v. Shirley Inc., 54 Cal.3d at 751; Morris v. AGFA Corp. (2006) 144 Cal.App.4th 1452, 1464.)

Here, California clearly has a compelling interest in adjudicating breach of an employment contract between a California corporation and its CEO, particularly where that CEO is alleged to have committed fraud directed at actors residing in the forum state.

The parties make much ado about who was the first to file, but this argument appears to be irrelevant. The court’s own research suggests that the parties may properly maintain parallel but related proceedings in both courts. Parallel actions may proceed simultaneously in sister states until a final judgment that is binding on the parties is rendered in one of the actions. (Advanced Bionics Corp. v. Medtronic Inc. (2002) 29 Cal.4th 697, 708.)

Even if the case is filed first in California, a California court will only enjoin a parallel proceeding in a sister state under “an exceptional circumstance that outweighs judicial restraint and comity principles.” (Ibid.)

Similarly, where jurisdiction is concurrent in both a state and federal court, the same action can be filed in either or both federal and state courts. If filed in both, each court acquires jurisdiction, but neither acquires exclusive jurisdiction. Each may proceed at its own pace until one or the other reaches final judgment and becomes res judicata on the claim. Neither will interfere with or try to restrain each other’s proceedings. (Donovan v. City of Dallas (1964) 377 U.S. 408, 412; Fowler v. Ross (1983) 142 Cal.App.3d 472, 476-477.)

Under principles of comity and judicial restraint, a California court has discretion to stay the action. The court must consider:

1. the importance of discouraging litigation designed solely to harass the adverse party;

2. the importance of avoiding unseemly conflicts with other jurisdictions; and

3. whether the parties’ rights can best be determined by the other court because of:

a. the nature of the subject matter

b. the availability of witnesses

c. the state to which the proceedings in the other court have advanced.

(Thompson v. Continental Ins. Co. (1967) 66 Cal.2d 738, 746-747.)

In this case, none of these principles merits staying the action. Both cases were filed at about the same time in Nov. or Dec. 2013. The Illinois summons and complaint were not served on SEOP until Jan. 2014. Both forums are equally convenient. Illinois is where Wetmore resides and where he created the VMI start-up. So it would be more costly for Wetmore to appear in California.

But California is where the officers and directors of SEOP are based, so there are key witnesses and documents here in California as well. And it would also be costly for SEOP to appear in Illinois. But both forums are proper forums for suit. And the parties are free to maintain their competing actions at their election.

Plaintiff shall serve notice of this ruling.

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