Wang v. Byun

1

JACK WANG, Plaintiff and Appellant, v. STEVE BYUN et al., Defendants and Respondents

B322774, B322790, B322795

California Court of Appeals, Second District, Fifth Division

March 6, 2023

NOT TO BE PUBLISHED

APPEAL from orders of the Superior Court of Santa Clara County Super. Ct. No. 20CV367266, Thang Nguyen Barrett, Judge. Affirmed.

California Appellate Law Group and Jessica M. Weisel; Balogh & Co. and Ethan A. Balogh for Plaintiff and Appellant.

Covington & Burling, Mark W. Mosier, Daniel G. Randolph W. Douglas Sprague, and Isaac D. Chaput for Defendants and Respondents.

BAKER J.

Plaintiff Jack Wang (plaintiff), a California resident, sued his foreign employer and others for breach of contract, breach of fiduciary duty, and tortious interference with contract. In our review of the trial court's orders granting the defendants' motions to quash for lack of personal jurisdiction, we consider whether defendants "'purposefully directed' [their] activities at residents of the forum, [citation], and the litigation result[ed] from alleged injuries that 'arise out of or relate to' those activities [citation]." (Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462 472 (Burger King), italics added.)

I. BACKGROUND

A. Plaintiff's Hiring, Termination, and Lawsuit

Plaintiff is an attorney and entrepreneur. He has known defendant Steve Byun (Byun) since 1991. The two "grew up in the same town in California and attended the same junior high and high schools." Plaintiff, Byun, and a third person who is not a party to this litigation founded defendant Widus Partners (HK) Limited (Widus Partners) in 2010. Widus Partners is a "crossborder strategic advisory and investment firm." It is wholly owned by defendant Widus Holdings (HK) Limited (Widus Holdings).^[1]

Plaintiff left Widus Partners and relinquished his interest in the company in 2012. Around the same time, he began working in the cryptocurrency industry and founded a company that "developed various technology products relating to Bitcoin, cryptocurrencies, and blockchain ...." Plaintiff provided Byun "free[ ] . . . advice and guidance" regarding cryptocurrencies and, in early 2018, Byun invited plaintiff to return to Widus Partners "running a new practice dedicated to [initial coin offerings (ICOs)], blockchain technology, and cryptocurrencies." Byun emphasized Widus Partners' "growing traction and visibility in the Korean market."

As alleged in plaintiff's complaint, plaintiff was "hesitant" to re-join Widus Partners in part due to the firm's "lack of resources outside of South Korea." Byun acknowledged plaintiff "did not, at that time, have a business network within Korea," but emphasized it was not "necessary for [plaintiff] to immediately develop a large book of business" and stressed that Widus Partners "operated on . . . a 'one-firm' philosophy," meaning if any one partner's business was slow they "could contribute on projects within other practice groups."

Plaintiff returned to Widus Partners part-time in 2018 "on a good-faith basis, without a contractual agreement." During this period, he was allegedly "involved with introducing potential clients to Widus Partners, signing new clients, and providing services to existing clients ...."

Plaintiff soon decided to join Widus Partners on a full-time basis, and he and Byun (on behalf of Widus Partners) executed an employment agreement in October 2018. Plaintiff's position was "Partner/Head of ICO Advisory and Blockchain Business."^[2] The term of the agreement was for one year, to be automatically renewed unless terminated either by the company with cause at any time or by either party without cause upon 60 days' notice.

As set forth in the employment agreement, plaintiff was entitled to a salary plus an "incentive bonus based on his contribution to each of the projects he had marketed, sourced and executed." Plaintiff was also entitled to an equity profit share based on his contractually-required purchase, for $400,000, of an eight percent stake in Widus Holdings. Plaintiff and Byun (this time on behalf of Widus Holdings) executed a separate promissory note to finance his purchase of these shares. Plaintiff and Byun (again on behalf of Widus Holdings) also executed a shareholder agreement, which included a put option for plaintiff (requiring Widus Holdings to buy out his shares) and a call option for the company (requiring plaintiff to sell his shares to Widus Holdings). All three contracts-the employment agreement, the promissory note, and the shareholder agreement-include a Hong Kong choice of law provision.

For reasons that are not pertinent to this appeal, Byun notified plaintiff in October 2019 that his employment agreement was being terminated and Widus Holdings was exercising its option to buy plaintiff's shares in the company. At that time, plaintiff had paid $200,000 of the $400,000 due under the promissory note.

This litigation arises out of defendants' alleged: failure to pay any incentive bonus for 2019; refusal to provide audited financial statements to verify the calculation of plaintiff's equity profit share; and refusal to pay the equity profit share, unreimbursed business expenses, or $200,000 for plaintiff's shares in Widus Holdings without a release and indemnification. Plaintiff alleged both entity defendants are alter egos of Byun. Plaintiff asserted causes of action for breach of contract against Widus Partners and Widus Holdings, breach of fiduciary duty against Widus Partners and Byun, and tortious interference with contract against Byun.^[3]

B. Motions to Quash

Widus Partners and Widus Holdings filed a joint motion to quash plaintiff's summons for lack of personal jurisdiction in August 2020. As we shall discuss, the trial court granted the entity defendants' motion by the time Byun, who was served later than the entity defendants, filed a similar motion to quash in December 2020. The entity defendants and Byun argued they are not subject to general or specific personal jurisdiction in California and, in the alternative, that California is an inconvenient forum.

Both Widus Partners and Widus Holdings are headquartered and incorporated in Hong Kong. Neither company has ever been incorporated, qualified, or registered to do business in California; had a registered agent in California; paid taxes in California; held a bank account in California; or owned or leased real or personal property in California. According to Widus Partners' chief operating officer, Jonathan Lee, plaintiff was the company's only employee residing in California during the term of his employment. His recruitment and hiring was managed entirely through email and phone calls.

Byun resides in South Korea. He has not lived in California since 2003 and, since 2010, he has visited California no more than once each year for no more than two weeks at a time. According to Byun, plaintiff suggested that he work remotely from California when he rejoined Widus Partners in 2018. Byun was "apprehensive" about this arrangement "because the remainder of Widus Partners personnel worked from and resided in Asia (specifically, Hong Kong, Seoul, and Singapore)." Plaintiff was "never require[ed]" to work from California and travelled frequently to Asia for work, "remaining for approximately two to three weeks at a time." Indeed, Widus Partners and plaintiff eventually agreed "that he should reside in Seoul on a semi-permanent basis, at least six months, returning to the United States intermittently, as he needed," but Widus Partners terminated plaintiff "[b]efore that plan came to fruition."^[4]

In opposition, plaintiff argued Byun and the entity defendants are subject to both general and specific jurisdiction in California and, in any event, the trial court should permit further jurisdictional discovery. He contended Widus Partners is subject to personal jurisdiction in California in its own right; Widus Holdings in its own right and as an alter ego of Widus Partners; and Byun in his own right and as an alter ego of the entity defendants.

Plaintiff submitted a declaration stating that "Byun recruited [him] to rejoin Widus Partners precisely because [he] was a resident of California, so that Widus Partners could tap into San Francisco's and Silicon Valley's tech communities. It was to Widus Partners' advantage to have a resident of California-and specifically, a person who lives near the technology companies in Northern California-be a partner in Widus Partners." Plaintiff claimed that Byun provided "express oral assurances . . . that [he] could and should remain in California while working for Widus Partners."^[5]

Plaintiff submitted various marketing materials purporting to show, as plaintiff put it, that Widus Partners "touted the fact that it had a 'presence' and an 'office' in California" based solely on his affiliation with the firm. These included "pitch decks" listing locations in (and including images of) various Asian cities and San Francisco. The pitch decks name plaintiff as a contact point for Widus Partners in San Francisco. Plaintiff also submitted a sample email from Byun that includes a signature block listing locations in Asian cities and San Francisco. Archived versions of Widus Partners' website mention the firm's "presence" in various Asian cities and Silicon Valley and include plaintiff's contact information in San Francisco. These references to California were removed from Widus Partners' website when plaintiff was terminated.

Plaintiff declared he personally forwarded at least one of the pitch decks mentioning San Francisco "to two individuals at a San Francisco company ...." In 2018 and 2019, Widus Partners' business in California included "contracts with several California companies, for...