Bernard Picot v. Dean Weston , 780 F.3d 1206 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BERNARD PICOT, No. 12-17098
Plaintiff-Appellant,
DC No.
and 5:12 cv-01939
EJD
PAUL DAVID MANOS,
Plaintiff,
OPINION
v.
DEAN D. WESTON,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Argued and Submitted
December 9, 2014—San Francisco, California
Filed March 19, 2015
Before: A. Wallace Tashima and Richard A. Paez, Circuit
Judges, and Gordon J. Quist, Senior District Judge.*
Opinion by Judge Tashima
*
The Honorable Gordon J. Quist, Senior United States District Judge for
the Western District of Michigan, sitting by designation.
2 PICOT V. WESTON
SUMMARY**
Personal Jurisdiction
The panel affirmed the district court’s dismissal for lack
of personal jurisdiction of a diversity action alleging tort and
contract claims.
The plaintiff, a resident of California, brought the action
against the defendant, a resident of Michigan, seeking a
declaration that no oral agreement was made, and seeking
damages for intentional interference with the parties’ sales
contract.
The panel held that the defendant neither purposefully
availed himself of the privilege of conducting activities in
California nor expressly aimed his conduct at California. The
panel concluded, therefore, that the district court did not err
in dismissing for lack of specific personal jurisdiction.
COUNSEL
Thomas M. Boehm (argued), Law Offices of Thomas M.
Boehm, Los Gatos, California, for Plaintiff-Appellant.
David H. Schwartz (argued), Angeline Elizabeth O’Donnell,
Law Offices of David H. Schwartz, San Francisco, California,
for Defendant-Appellee.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
PICOT V. WESTON 3
OPINION
TASHIMA, Circuit Judge:
Plaintiff Bernard Picot, a resident of California, appeals
the district court’s dismissal of his action against Defendant
Dean Weston, a resident of Michigan, for lack of personal
jurisdiction. From 2010 to 2012, Picot and Weston worked
together with a third man, Paul David Manos, to develop and
market an electrolyte for use in hydrogen fuel cells. After
Picot and Manos sold the electrolyte technology without
telling Weston, Weston claimed that he was entitled to a one-
third share of the proceeds under an oral agreement. In
response, Picot and Manos sued Weston in California seeking
a declaration that no oral agreement was made, and for
damages for intentional interference with their sales contract.
The district court dismissed the suit for lack of personal
jurisdiction. We affirm.
I.
Weston is a resident of Waterford, Michigan.1 He has
made a career of developing technologies for use in
Michigan’s automotive industry through his corporation,
Engineering Interests, Inc., which is incorporated in Michigan
and headquartered in Sterling Heights, Michigan. Outside the
1
Because the district court resolved this case without an evidentiary
hearing, we take all uncontroverted allegations in the complaint as true
and resolve all factual disputes in the Picot’s favor. Schwarzenegger v.
Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). “We may not
assume the truth of allegations in a pleading which are contradicted by
affidavit.” Mavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d 1218, 1223
(9th Cir. 2011) (alteration and internal quotation marks omitted). The
relevant jurisdictional facts are not in dispute.
4 PICOT V. WESTON
events involved in this suit, neither Weston nor Engineering
Interests has ever conducted business in California. Picot is
a resident of Santa Clara County, California.
Weston and Picot met each other through Manos, a
mutual business associate and a resident of Nevada. Weston
and Manos have known each other since 2005. In 2009,
Manos and Picot were looking to get involved with a
hydrogen technology being developed in Texas. Manos
asked Weston if he could help by traveling to Texas to assess
the technology, which Weston did. Eventually, the three men
determined that the technology being developed in Texas was
unworkable, and began efforts to develop and sell their own
electrolyte formula for use in hydrogen fuel cells.
Exactly how the three men decided to work together is
hotly disputed. Weston claims that in 2009, he and Manos
met in Michigan and reached an oral agreement under which
Weston would help develop, test, fund, and market the
technology. In exchange, Weston would receive $20,000 per
month and a one-third share of any profits from the sale of the
technology. Weston states that Manos claimed to have
authority to enter into the agreement on behalf of Picot, as
well as himself. On February 1, 2010, Manos, Picot, and
Weston met at a restaurant in Howell, Michigan. Weston
claims that at this meeting, Picot confirmed his agreement to
the oral profit-sharing deal. Picot and Manos acknowledge
the meeting, but deny the existence of any oral agreement.
Weston spent twenty to seventy hours per week working
to develop and market the technology at his office in Sterling
Heights, Michigan. Picot and Manos occasionally worked
out of his office as well. Weston’s marketing efforts focused
largely on soliciting investors or purchasers in the Michigan
PICOT V. WESTON 5
automotive industry including General Motors, Chrysler,
Hummer, and Penske Automotive. He also procured a
$450,000 investment from a Michigan resident, and
contracted with the University of Michigan for technological
help.
On two occasions, Weston left his Michigan office to
travel to California. First, in January 2010, Weston traveled
to southern California for approximately two weeks to help
Manos set up a demonstration for a potential client Picot had
contacted. Second, in June 2010, Weston went to Sacramento
at Manos’ and Picot’s request to help with another
demonstration. On both occasions, Manos and Picot
compensated Weston for his work and related expenses.
On three occasions, Weston met with Tracy Coats, a
resident of Cleveland, Ohio, at the University of Michigan.
Coats is the majority owner of HMR Hydrogen Master
Rights, Ltd. (“HMR”), a Delaware corporation with offices
in Ohio. At one of these meetings, Coats and Weston
videotaped a demonstration of the technology. At another,
Weston and Coats conducted a Skype presentation for a
potential customer in China.
In 2011, Manos and Picot began negotiating with Coats
and another part-owner of HMR, Carl Le Souef, a resident of
Australia, for HMR to purchase the technology. The
negotiations were successful, and Manos and Picot agreed to
sell the technology to HMR for $35 million. They agreed that
the money would be paid into two pass-through trusts, one in
Wyoming and one in Australia. The contract was executed in
Los Angeles, California, and became effective December 12,
2011. This agreement was followed by a series of emails and
phone calls between Weston and Manos. On February 8,
6 PICOT V. WESTON
2012, Weston sent Manos an email referencing earlier
conversations and asking about his share of the proceeds from
the sale to HMR. Immediately after that email Weston called
Manos and demanded $250,000 or he would “do everything
in his power to destroy” Manos and Picot.
In March 2012, Coats told Weston about the $35 million
sale price, and informed him that Manos and Picot had each
already received $1.1 million. On March 20, 2012, Weston’s
lawyer sent Manos and Picot an email threatening to sue if
they did not pay Weston his share of the proceeds pursuant to
their oral agreement. As a result of the threatened litigation
and other unspecified statements by Weston, HMR stopped
making payments to Manos and Picot.
Three days after the threatening email, Picot and Manos
filed suit against Weston in California Superior Court for the
County of Santa Clara seeking: (1) a declaration that no oral
agreement existed between them and Weston; and
(2) damages for intentional interference with the HMR sales
contract. Weston removed the action to the United States
District Court for the Northern District of California on the
basis of diversity jurisdiction. Weston then moved to dismiss
the complaint for lack of personal jurisdiction and improper
venue and, in the alternative, to transfer venue to the Eastern
District of Michigan. The district court concluded that it
lacked personal jurisdiction over Weston on either of the two
claims, granted the motion to dismiss, and denied the motion
to transfer as moot. Picot, but not Manos, timely appealed.
II.
We review de novo a district court’s dismissal for lack of
personal jurisdiction. Wash. Shoe Co. v. A-Z Sporting Goods
PICOT V. WESTON 7
Inc., 704 F.3d 668, 671 (9th Cir. 2012). “[T]he plaintiff bears
the burden of demonstrating that jurisdiction is appropriate.”
Schwarzenegger, 374 F.3d at 800. Where, as here, a
defendant’s motion to dismiss is based on a written record
and no evidentiary hearing is held, “the plaintiff need only
make a prima facie showing of jurisdictional facts.” Id.(quoting Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir.
1990)).
III.
“Federal courts ordinarily follow state law in determining
the bounds of their jurisdiction over persons.” Daimler AG
v. Bauman, 134 S. Ct. 746, 753 (2014). Because “California’s
long-arm statute allows the exercise of personal jurisdiction
to the full extent permissible under the U.S. Constitution,”
our inquiry centers on whether exercising jurisdiction
comports with due process. Id.; see Cal. Code Civ. Proc.
§ 410.10 (“A court of this state may exercise jurisdiction on
any basis not inconsistent with the Constitution of this state
or of the United States.”). Due process requires that the
defendant “have certain minimum contacts” with the forum
state “such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice.’” Int’l
Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (quoting
Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
Depending on the strength of those contacts, there are two
forms that personal jurisdiction may take: general and
specific. Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir.
2008). Picot does not contend that Weston is subject to
general jurisdiction in California; instead, he argues that
specific jurisdiction exists. When a plaintiff relies on specific
jurisdiction, he must establish that jurisdiction is proper for
8 PICOT V. WESTON
“each claim asserted against a defendant.” Action
Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174,
1180 (9th Cir. 2004). If personal jurisdiction exists over one
claim, but not others, the district court may exercise pendent
personal jurisdiction over any remaining claims that arise out
of the same “common nucleus of operative facts” as the claim
for which jurisdiction exists. Id. at 1181.
We employ a three-part test to assess whether a defendant
has sufficient contacts with the forum state to be subject to
specific personal jurisdiction:
(1) The non-resident defendant must
purposefully direct his activities or
consummate some transaction with the forum
or resident thereof; or perform 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 must be one which arises out of
or relates to the defendant’s forum-related
activities; and
(3) the exercise of jurisdiction must comport
with fair play and substantial justice, i.e. it
must be reasonable.
Schwarzenegger, 374 F.3d at 802. The plaintiff has the
burden of proving the first two prongs. CollegeSource, Inc.
v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011).
If he does so, the burden shifts to the defendant to “set forth
a ‘compelling case’ that the exercise of jurisdiction would not
PICOT V. WESTON 9
be reasonable.” Id. (quoting Burger King Corp. v. Rudzewicz,
471 U.S. 462, 477 (1985)).
The exact form of our jurisdictional inquiry depends on
the nature of the claim at issue. For claims sounding in
contract, we generally apply a “purposeful availment”
analysis and ask whether a defendant has “purposefully
avail[ed] [himself] of the privilege of conducting activities
within the forum State, thus invoking the benefits and
protections of its laws.” Schwarzenegger, 374 F.3d at 802(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). For
claims sounding in tort, we instead apply a “purposeful
direction” test and look to evidence that the defendant has
directed his actions at the forum state, even if those actions
took place elsewhere. Id. at 802–03. Because Picot asserts
both a contract and a tort claim, both tests are at issue here.
A.
A claim for declaratory judgment as to the existence of a
contract is an action sounding in contract. See Stanford
Ranch, Inc. v. Md. Cas. Co., 89 F.3d 618, 625 (9th Cir. 1996)
(“[A] claim dependent on the existence of an underlying
contract sounds in contract, as opposed to tort.”). Therefore,
our minimum contacts inquiry for Picot’s declaratory
judgment claim focuses on whether Weston purposefully
availed himself of the privilege of conducting business within
California through the purported oral contract.
“[A] contract alone does not automatically establish
minimum contacts in the plaintiff’s home forum.” Boschetto,
539 F.3d at 1017. Rather, there must be “actions by the
defendant himself that create a ‘substantial connection’ with
the forum State.” Burger King, 471 U.S. at 475 (1985)
10 PICOT V. WESTON
(quoting McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223
(1957)). Merely “random, fortuitous, or attenuated” contacts
are not sufficient. Id. (internal quotation marks omitted). A
defendant must have “performed some type of affirmative
conduct which allows or promotes the transaction of business
within the forum state.” Sher, 911 F.2d at 1362 (quoting
Sinatra v. Nat’l Enquirer, Inc., 854 F.2d 1191, 1195 (9th
Cir.1988)). In determining whether such contacts exist, we
consider “prior negotiations and contemplated future
consequences, along with the terms of the contract and the
parties’ actual course of dealing.” Burger King, 471 U.S. at
479.
Applying this standard, we conclude that Picot has not
demonstrated that Weston had sufficient minimum contacts
with California to subject him to specific personal jurisdiction
there. Under the disputed oral agreement, Weston was
obligated to develop the technology, arrange for its testing,
and assist in fund-raising and marketing. In exchange,
Weston would receive a one-third interest in any profits from
the sale of the technology, $20,000 per month, and
reimbursement of his expenses to develop and adapt the
technology. The agreement was formed in Michigan, where
Weston lived, where it was understood Weston would
perform the majority of his work, and where Weston did
indeed discharge most of his contractual duties.
Despite Weston’s lack of ties to California, Picot makes
two arguments in favor of the exercise of jurisdiction. We
find neither persuasive. First, he contends that the oral
agreement created a substantial connection between Weston
and California because Picot, a co-party to the agreement,
fulfilled his obligations under the agreement by seeking out
investors and buyers in California. This argument would
PICOT V. WESTON 11
mistakenly “allow[] a plaintiff’s contacts with the defendant
and forum to drive the jurisdictional analysis.” Walden v.
Fiore, 134 S. Ct. 1115, 1125 (2014). But our inquiry is
limited to examining contacts that “proximately result from
actions by the defendant himself.” Burger King, 471 U.S. at
475. Therefore, the fact that a contract envisions one party
discharging his obligations in the forum state cannot, standing
alone, justify the exercise of jurisdiction over another party to
the contract.
Second, Picot argues that the requisite contacts were
created by “the parties’ actual course of dealing.” Burger
King, 471 U.S. at 479. Specifically, he contends that
Weston’s two trips to California are sufficient to subject him
to the state’s jurisdiction. While “physical entry into the
State . . . is certainly a relevant contact,” Walden, 134 S. Ct.
at 1122, a defendant’s transitory presence will support
jurisdiction only if it was meaningful enough to “create a
‘substantial connection’ with the forum State,” Burger King,
471 U.S. at 475 (quoting McGee, 355 U.S. at 223).
Here, given “the limited nature of the transaction at
issue,” Boschetto, 539 F.3d at 1017, that substantial
connection is lacking. Neither trip was envisioned in the
initial oral agreement; rather, both grew incidentally out of
broader efforts to develop and market the technology. In both
cases, Weston traveled to California at Manos’ and Picot’s
request and expense to assist in presentations Manos and
Picot had planned for clients that Manos and Picot had
identified. Weston’s role in the presentations was relatively
small: he primarily prepared prototypes and demonstrations.
His first visit lasted only two weeks. The exact length of his
second visit is unclear, but appears to have been about the
same.
12 PICOT V. WESTON
Moreover, Weston’s two trips to California hold no
special place in his performance under the agreement as a
whole. In addition to the two trips to California, he also
traveled to Mexico for a presentation and spoke over the
Internet with potential customers in China. The bulk of his
efforts in developing and marketing the technology were
centered in Michigan. He worked out of his office in Sterling
Heights, Michigan, contracted with the University of
Michigan, and met with possible purchasers in Michigan and
Ohio. Manos, Picot, and Coats all traveled to Michigan to
meet with Weston. At most, Weston’s contacts with
California were merely “random, fortuitous, or attenuated.”
Burger King, 471 U.S. at 475 (internal quotation marks
omitted). Accordingly, we hold that the oral agreement and
Weston’s two trips to California did not create sufficient
minimum contacts to subject him to personal jurisdiction
there.2
B.
Picot’s second cause of action alleges that Weston
tortiously interfered with Picot’s contract to sell the
technology to HMR. In analyzing whether a court has
specific personal jurisdiction over a tort claim, we apply our
three-part “effects” test derived from Calder v. Jones,
465 U.S. 783 (1984). See Schwarzenegger, 374 F.3d at 803.
Under this test, a defendant purposefully directed his
activities at the forum if he: “(1) committed an intentional
act, (2) expressly aimed at the forum state, (3) causing harm
2
Because Picot has failed to establish that Weston purposefully availed
himself of the privilege of conducting activities in California, we need not
address whether the suit arises out of Weston’s forum-related activities,
or whether the exercise of jurisdiction would be reasonable.
PICOT V. WESTON 13
that the defendant knows is likely to be suffered in the forum
state.” Id. (quoting Dole Food Co. v. Watts, 303 F.3d 1104,
1111 (9th Cir. 2002)). In applying this test, we must “look[]
to the defendant’s contacts with the forum State itself, not the
defendant’s contacts with persons who reside there.” Walden,
134 S. Ct. at 1122. Thus, a “mere injury to a forum resident
is not a sufficient connection to the forum.” Id. at 1125.
Rather, “an injury is jurisdictionally relevant only insofar as
it shows that the defendant has formed a contact with the
forum State.” Id.
1.
The meaning of the term “intentional act” in our
jurisdictional analysis is essentially the same as in the context
of intentional torts; namely, the defendant must act with the
“intent to perform an actual, physical act in the real world.”
Schwarzenegger, 374 F.3d at 806. Here, Weston committed
an intentional act when he spoke with Coats about the
technology. Thus, the first prong is easily satisfied.
2.
The second prong of our test, “express aiming,” asks
whether the defendant’s allegedly tortious action was
“expressly aimed at the forum.” Brayton Purcell LLP v.
Recordon & Recordon, 606 F.3d 1124, 1129 (9th Cir. 2010).
The exact form of our analysis varies from case to case and
“depends, to a significant degree, on the specific type of tort
or other wrongful conduct at issue.” Schwarzenegger,
374 F.3d at 807. In this case, Picot alleges intentional
interference with a contract, so we must ask whether Weston
expressly aimed such interference at California. Picot argues
14 PICOT V. WESTON
that this requirement is met because Weston targeted Picot, a
California resident. See Wash. Shoe Co., 704 F.3d at 675.
In assessing Picot’s arguments, we are guided by the
Supreme Court’s recent decision in Walden. There, the Court
reinforced the traditional understanding that our personal
jurisdiction analysis must focus on the defendant’s contacts
with the forum state, not the defendant’s contacts with a
resident of the forum. In Walden, a Georgia police officer,
working with DEA agents, seized money belonging to two
professional gamblers in a Georgia airport and later helped
draft a false affidavit to show probable cause for the seizure.
134 S. Ct. at 1119–20. The gamblers, residents of California
and Nevada, filed suit against the police officer in Nevada,
alleging violations of their Fourth Amendment rights. Id. at
1120. The Supreme Court held that the officer lacked
sufficient contacts with Nevada to subject him to jurisdiction
there. Id. at 1126. The proper analysis in tort cases as well
as contract cases, the Court reiterated, “looks to the
defendant’s contacts with the forum State itself, not the
defendant’s contacts with persons who reside there.” Id. at
1122. “[T]he plaintiff cannot be the only link between the
defendant and the forum.” Id. Turning to the specific injury
alleged, the Court noted that the gamblers’ lack of access to
their seized funds had no meaningful connection to Nevada
because they “would have experienced this same lack of
access in California, Mississippi, or wherever else they might
have traveled and found themselves wanting more money
than they had.” Id. at 1125. Because the plaintiffs’ injury
was not “tethered to Nevada in any meaningful way,” the
Court concluded that it did not create a jurisdictionally
sufficient contact. Id.
PICOT V. WESTON 15
Applying the principles of Walden, we conclude that
Weston’s actions did not connect him with California in a
way sufficient to support the assertion of personal jurisdiction
over him. Weston’s allegedly tortious conduct consists of
making statements to Coats (an Ohio resident) that caused
HMR (a Delaware corporation with offices in Ohio) to cease
making payments into two trusts (in Wyoming and Australia).
Weston did all this from his residence in Michigan, without
entering California, contacting any person in California, or
otherwise reaching out to California. In short, “none of
[Weston’s] challenged conduct had anything to do with
[California] itself.”3 Id. Moreover, as in Walden, Picot’s
injury, an inability to access out-of-state funds, is not tethered
to California in any meaningful way. Rather, his injury is
entirely personal to him and would follow him wherever he
might choose to live or travel. The effects of Weston’s
actions are therefore “not connected to the forum State in a
way that makes those effects a proper basis for jurisdiction.”
3
Picot also contends that the “express aiming” requirement is met
because, shortly before the alleged tortious interference, Weston called
Manos and threatened to “destroy” Manos and Picot unless they paid him
immediately. These threats, Picot argues, amount to extortion expressly
targeted at California. However, Picot did not assert an extortion claim in
his complaint. We therefore do not address the alleged extortion other
than to say that it has no bearing on the jurisdictional issues before us.
Our specific jurisdiction inquiry is limited to “the defendant’s suit-related
conduct.” Walden, 134 S. Ct. at 1121. A plaintiff may not create personal
jurisdiction over one claim by arguing that jurisdiction might be proper
over a different, hypothetical claim not before the court. Cf. Action
Embroidery, 368 F.3d at 1180 (“Personal jurisdiction must exist for each
claim asserted against a defendant.”).
16 PICOT V. WESTON
Id.4 Accordingly, Picot has failed to make a prima facie
showing of specific personal jurisdiction over Weston on his
intentional interference claim.
IV.
Weston neither purposefully availed himself of the
privilege of conducting activities in California nor expressly
aimed his conduct at California. The district court, therefore,
did not err in dismissing this action for lack of personal
jurisdiction. The judgment of the district court is
AFFIRMED.
4
Because Picot has not established the second prong of our purposeful
direction test, we need not address the third prong. See Schwarzenegger,
374 F.3d at 807 n.1.