United Safeguard Distribs. Ass'n, Inc. v. Safeguard Bus. Sys., Inc.

145 F.Supp.3d 932

United Safeguard Distributors Association, Inc., a Georgia Corporation; Greg Schob, an individual; Vicki Schob, an individual; and Schob and Schob, Inc., a California corporation, Plaintiffs,

v.Safeguard Business Systems, Inc., a Delaware corporation; Safeguard Acquisitions, Inc., a Delaware corporation; Deluxe Corporation, a Minnesota corporation; and Does 1-10, Defendants.

CV 15-3998 RSWL (AJWx)

United States District Court, C.D. California.

Signed November 17, 2015

James M. Mulcahy, Kevin A. Adams, Douglas Robert Luther, Mulcahy LLP, Irvine, CA, for Plaintiffs.

Christopher S. Reeder, Wesley W. Lew, Robins Kaplan LLP, Los Angeles, CA, for Defendants.

ORDER re: DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT AS TO THE SCHOB PLAINTIFFS PURSUANT TO Fed. R. Civ. P. 12(b)(2) and 12(b)(6) [26]

RONALD S.W. LEW, Senior U.S. District Judge

Currently before the Court is Defendants Safeguard Business Systems, Inc. (“SBS”), Safeguard Acquisitions, Inc. (“SAI”), and Deluxe Corporation's (“Deluxe”) (collectively, “Defendants”) Motion to Dismiss First Amended Complaint as to the Schob Plaintiffs Pursuant to Fed. R. Civ. P. 12(b)(2) and 12(b)(6) (“Motion”) [26].

I. INTRODUCTION

Defendants' Motion arises out of Plaintiffs United Safeguard Distributors Association, Inc. (“USDA”), Greg and Vicki Schob, and Schob and Schob, Inc.'s (collectively, “the Schobs”) (USDA and the Schobs collectively known as “Plaintiffs”) Action against Defendants for Declaratory Judgment, Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, Tortious Interference with Contractual Relations, Intentional Interference with Prospective Economic Advantage, Intentional Misrepresentation, Negligent Misrepresentation, Conversion, and Accounting. See First Amend. Compl. (“FAC”) [17].

For the reasons set forth below, this Court GRANTS in part and DENIES in part Defendants' Motion to Dismiss First Amended Complaint as to the Schob Plaintiffs Pursuant to Fed. R. Civ. P. 12(b)(2) and 12(b)(6) [26].

II. BACKGROUND

A. Factual Background

1. The Parties

Plaintiff USDA is incorporated in Georgia and has an office in La Mirada, California. FAC ¶ 27. Plaintiff Schob & Schob, Inc. is incorporated in California with its principal office in Fresno, California. Id. at ¶ 29. Plaintiffs Vicki and Greg Schob are individuals residing in or near Fresno, California. Id. at ¶¶ 30-31.

Defendant SBS is a Delaware corporation with its principal place of business in Dallas, Texas. Id. at ¶ 32. Defendant SAI is a Delaware corporation with its principal place of business in Dallas, Texas. Id. at ¶ 33. Defendant Deluxe is a Minnesota corporation with its principal place of business in Shoreview, Minnesota. Id. at ¶ 34. Deluxe, SBS, and SAI are sellers of Safeguard products, including business forms and systems, apparel, and other business services to small businesses. Id. at ¶ 1. Deluxe acquired SBS in 2004. Id. at ¶ 6. SAI is a wholly-owned subsidiary of Deluxe. Id. at ¶ 12.

2. Plaintiffs' Claims in their FAC

a. Plaintiffs' Seek Declaratory Judgment as to all Defendants.

In their First Amended Complaint, Plaintiffs seek a declaratory judgment against all Defendants¹ , while the remaining ten claims are brought specifically by the Schobs against various Defendants. Id. at ¶¶ 253-261.

b. The Schobs' Claims as to Various Defendants.

The Schobs bring the remaining ten claims in the First Amended Complaint, independently of Plaintiff USDA, against various Defendants: Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, Tortious Interference with Contractual Relations, Intentional Interference with Prospective Economic Advantage, Intentional Misrepresentation, Negligent Misrepresentation, Conversion, and Accounting. See generally FAC.

B. Procedural Background

On July 2, 2015, USDA filed its First Amended Complaint including Plaintiffs Vicki Schob, Greg Schob, and Schob and Schob, Inc. [17]. On July 20, 2015 Defendants filed two Motions to Dismiss as to Plaintiffs USDA and the Schobs, respectively [24, 26], concurrently with Defendants' Request for Judicial Notice in Support of Defendants' Motion to Dismiss First Amended Complaint as to Plaintiff [USDA] [25]. On July 28, 2015, Plaintiffs submitted their respective Oppositions to Defendants' Motion to Dismiss [30, 31]. On August 4, 2015, Defendants submitted their Replies [33, 35], concurrently with their Supplemental Request for Judicial Notice [34].

III. DISCUSSION

A. Legal Standard

1. Judicial Notice

A court may take judicial notice of “a fact that is not subject to reasonable dispute because it: (1) is generally known within the court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b).

2. Motion to Dismiss Pursuant to Rule 12(b)(2)

A party may move for dismissal of an action for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Fed. R. Civ. P. 12(b)(2).

a. Personal Jurisdiction over Non-Resident

“It is the plaintiff's burden to establish the court's personal jurisdiction over a defendant.” Doe v. Unocal Corp. , 248 F.3d 915, 921–922 (9th Cir.2001). To make a prima facie showing, the plaintiff need only allege facts that, if true, would support a finding of jurisdiction. Ballard v. Savage , 65 F.3d 1495, 1498 (9th Cir.1995). Where there is no applicable federal statute governing jurisdiction, the exercise of personal jurisdiction over a nonresident defendant requires two findings: 1) the forum state's laws provide a basis for exercising personal jurisdiction, and 2) the assertion of personal jurisdiction comports with due process. Adv. Skin & Hair, Inc. v. Bancroft , 858 F.Supp.2d 1084, 1087 (C.D.Cal. March 14, 2012). “California's long-arm statute extends jurisdiction to the limits of due process.” Unocal Corp. , 248 F.3d at 923 (citing Cal. Code Civ. P. § 410.10 ). “Due process requires that a defendant have ‘certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.’ ” Id. (internal alterations omitted). The defendant's contacts “must be ‘such that the defendant should reasonably anticipate being haled into court’ ” in the forum. Id. at 1088 (internal alterations omitted).

b. Specific Personal Jurisdiction

The Ninth Circuit applies a three-prong test to determine whether the exercise of specific jurisdiction comports with due process: “1) the defendant must purposefully avail herself of ... the forum by some affirmative act or conduct; 2) the plaintiff's claim must arise out of, or result from, the defendant's forum-related contacts; and 3) the extension of jurisdiction must be ‘reasonable.’ ” Adv. Skin & Hair, Inc. v. Bancroft , 858 F.Supp.2d 1084, 1089 (C.D.Cal. March 14, 2012) (citing Roth v. Garcia Marquez , 942 F.2d 617, 620–21 (9th Cir.1991) ). The plaintiff bears the burden of satisfying the first two prongs, and if the plaintiff succeeds, “the burden then shifts to the defendant to present a compelling case that the exercise of jurisdiction would not be reasonable.” Id. (internal quotation marks omitted).

Under the first prong of specific jurisdiction, where purposeful availment is “most often used in suits sounding in contract,” and purposeful direction is “most often used in suits sounding in tort.” Brayton Purcell LLP v. Recordon & Recordon , 606 F.3d 1124, 1128 (9th Cir.2010). The Ninth Circuit evaluates “purposeful direction” for an intentional tort using the three-part “Calder-effects” test. Holland Am. Line Inc. v. Wartsila North America, Inc. , 485 F.3d 450, 459 (9th Cir.2007). Under the “effects test,” “ ‘the defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.’ ” Brayton , 606 F.3d at 1128. The defendant need not have any physical contact with the forum. Id.

3. Motion to Dismiss Pursuant to Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of one or more claims if the pleading fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Dismissal can be based on “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir.1990). A complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted).

4. Federal Courts' Liberal Policy Regarding Leave to Amend

Federal Rule of Civil Procedure 15(a) provides that a party may amend their complaint once “as a matter of course” before a responsive pleading is served. Fed. R. Civ. P. 15(a). After that, the “party may amend the party's pleading only by leave of court or by written consent of the adverse party and leave shall be freely given when justice so requires.” Id. Leave to amend lies “within the sound discretion of the trial court.” United States v. Webb , 655 F.2d 977, 979 (9th Cir.1981).

B. Analysis & Recommendation

1. Judicial Notice

a. Defendants' Supplemental Request for Judicial Notice [34]

In their Supplemental Request for Judicial Notice [34], Defendants request that this Court judicially notice the following items: (1) Claimant's Request for Production of Documents to SBS, SAI, and related parties, served in the related Arbitration; (2) Defendant SAI's Responses to Plaintiff T3 Enterprises, Inc.'s First Request for Production of Documents served in the Idaho action; (3) Defendants SBS and SAI's Responses to Plaintiff Thurnston Enterprises, Inc.'s Amended First Request for Production of Documents served in the Idaho action; (4) The Amended Stipulation Regarding Designation of Certain Confidential Documents filed in the Idaho action. Defs.' Supp. Req. for...