Harmoni International Spice, Inc. et al v. Wenxuan Bai et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.August 8, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT WENXUAN BAI’S NOTICE OF MOTION AND MOTION TO DISMISS THE PLAINTIFFS’ SECOND AMENDED COMPLAINT CASE NO. 2:16-CV-00614 BRO (ASX) 1 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A L IF O R N IA 9 00 71 DYKEMA GOSSETT LLP Craig N. Hentschel (SBN 66178) chentschel@dykema.com Abirami Gnanadesigan (SBN 263375) agnanadesigan@dykema.com 333 S. Grand Avenue, Suite 2100 Los Angeles, CA 90071 Telephone: (213) 457-1800 Facsimile: (213) 457-1850 Jason M. Ross (Admitted Pro Hac Vice) jross@dykema.com 1717 Main Street Suite 4200 Dallas, TX 75201 Attorneys for Defendant WENXUAN BAI UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA HARMONI INTERNATIONAL SPICE, INC., a California corporation, and ZHENGZHOU HARMONI SPICE CO., LTD., a corporation, Plaintiff, vs. WENXUAN BAI, an individual, et al. Defendants. Case No. 2:16-cv-00614 BRO (ASx) [Assigned to Hon. Beverly Reid O’Connell] DEFENDANT WENXUAN BAI’S NOTICE OF MOTION AND MOTION TO DISMISS THE PLAINTIFFS’ SECOND AMENDED COMPLAINT Date: October 17, 2016 Time: 1:30 p.m. Court: 14 Second Am. Complaint served: July 5, 2016 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on October 17, 2016, at 1:30 p.m., or as soon thereafter as the matter may be heard before the Honorable Beverly Reid O’Connell of the United States District Court for the Central District of California, in Courtroom 14 of the United States Courthouse located at 312 N. Spring Street, Los Angeles, Case 2:16-cv-00614-BRO-AS Document 123 Filed 08/08/16 Page 1 of 3 Page ID #:3135 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT WENXUAN BAI’S NOTICE OF MOTION AND MOTION TO DISMISS THE PLAINTIFFS’ SECOND AMENDED COMPLAINT CASE NO. 2:16-CV-00614 BRO (ASX) 2 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A L IF O R N IA 9 00 71 California 90012, Defendant Wenxuan Bai (“Defendant” or “Bai”) will and hereby does move to dismiss the Second Amended Complaint (the “SAC”) of Plaintiffs, Harmoni International Spice, Inc. and Zhengzhou Harmoni Spice Co., Ltd. (collectively “Plaintiffs”) pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(4) and 12 (b)(6). This Motion is made on the grounds that the Plaintiffs failed to properly serve the SAC on Bai, that Bai is not subject to personal jurisdiction in California, and that the SAC fails to state any claim upon which relief may be granted against Bai, and should be dismissed with prejudice in its entirety. Specifically: 1. The substituted service of the SAC upon an individual who was not Bai at a California address was defective; 2. Bai, a Chinese citizen, is not subject to jurisdiction in California for the actions described in the SAC; and 3. The SAC fails to allege a complaint upon which relief may be granted against Bai for any purported RICO violations because: a. The SAC fails to allege a pattern of racketeering activity with respect to Bai as it alleges no predicate acts attributable to Bai; and b. The SAC fails to establish any proximate cause between Bai and the injuries complained of by Plaintiffs. This Motion is made following a conference of counsel pursuant to Local Rule 7-3, which took place on July 7 and 8, 2016. Case 2:16-cv-00614-BRO-AS Document 123 Filed 08/08/16 Page 2 of 3 Page ID #:3136 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT WENXUAN BAI’S NOTICE OF MOTION AND MOTION TO DISMISS THE PLAINTIFFS’ SECOND AMENDED COMPLAINT CASE NO. 2:16-CV-00614 BRO (ASX) 3 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A L IF O R N IA 9 00 71 For each of these reasons, Defendant Wenxuan Bai respectfully requests that the Court grant this Motion and dismiss the SAC as against Defendant Wenxuan Bai without leave to amend. Dated: August 8, 2016 DYKEMA GOSSETT LLP Craig N. Hentschel Jason M. Ross Abirami Gnanadesigan By: /s/ Jason M. Ross Jason M. Ross Attorneys for Defendant WENXUAN BAI Case 2:16-cv-00614-BRO-AS Document 123 Filed 08/08/16 Page 3 of 3 Page ID #:3137 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.:2-16-CV-00614 BRO (ASX) [PROPOSED] ORDER GRANTING DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS THE SECOND AMENDED COMPLAINT UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA HARMONI INTERNATIONAL SPICE, INC., a California corporation, and ZHENGZHOU HARMONI SPICE CO., LTD., a corporation, Plaintiff, vs. WENXUAN BAI, an individual, et al. Defendants. Case No. 2:16-cv-00614 BRO (ASx) [Assigned to Hon. Beverly Reid O’Connell] [PROPOSED] ORDER GRANTING DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS THE SECOND AMENDED COMPLAINT Date: October 17, 2016 Time: 1:30 P.M. Court: 14 Second Am. Complaint served: July 5, 2016 The Court, having considered the Defendant’s Motion to Dismiss the Second Amended Complaint, and finding good cause therefor, hereby ORDERS as follows: 1. The substituted service of the SAC upon an individual who was not Bai at a California address was defective; 2. Bai, a Chinese citizen, is not subject to jurisdiction in California for the actions described in the SAC; and 3. The SAC fails to allege a complaint upon which relief may be granted Case 2:16-cv-00614-BRO-AS Document 123-1 Filed 08/08/16 Page 1 of 2 Page ID #:3138 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.:2-16-CV-00614 BRO (ASX) [PROPOSED] ORDER GRANTING DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS THE SECOND AMENDED COMPLAINT against Bai for any purported RICO violations because: a. The SAC fails to allege a pattern of racketeering activity with respect to Bai as it alleges no predicate acts attributable to Bai; and b. The SAC fails to establish any proximate cause between Bai and the injuries complained of by Plaintiffs. IT IS SO ORDERED. Dated: October ____, 2016 By: Hon. Beverly Reid O’Connell United States District Judge Case 2:16-cv-00614-BRO-AS Document 123-1 Filed 08/08/16 Page 2 of 2 Page ID #:3139 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 DYKEMA GOSSETT LLP Craig N. Hentschel (SBN 66178) chentschel@dykema.com Abirami Gnanadesigan (SBN 263375) agnanadesigan@dykema.com 333 S. Grand Avenue, Suite 2100 Los Angeles, CA 90071 Telephone: (213) 457-1800 Facsimile: (213) 457-1850 Jason M. Ross (Admitted Pro Hac Vice) jross@dykema.com 1717 Main Street Suite 4200 Dallas, TX 75201 Attorneys for Defendant WENXUAN BAI UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA HARMONI INTERNATIONAL SPICE, INC., a California corporation, and ZHENGZHOU HARMONI SPICE CO., LTD., a corporation, Plaintiff, vs. WENXUAN BAI, an individual, et al. Defendants. Case No. 2:16-cv-00614 BRO (ASx) [Assigned to Hon. Beverly Reid O’Connell] DEFENDANT WENXUAN BAI’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS Date: October 17, 2016 Time: 1:30 P.M. Court: 14 Defendant Wenxuan Bai (“Bai”) respectfully submits the following Memorandum in support of his Motion to Dismiss the Second Amended Complaint filed by Plaintiffs Harmoni International Spice, Inc. and Zhengzhou Harmoni Spice Co., Ltd. (collectively, “Plaintiffs”). Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 1 of 25 Page ID #:3140 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS i D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 TABLE OF CONTENTS Page I. Introduction ......................................................................................................... 1 II. Plaintiffs Failed to Effectively Serve the Second Amended Complaint and Summons upon Bai, Who Resides in China. ................................................ 2 A. Factual Background .................................................................................. 2 B. Plaintiffs’ Method of Service Fails Under Rule 4(f). ............................... 3 III. This Court Does Not Have Personal Jurisdiction Over Bai. ............................... 4 A. Standard. .................................................................................................... 4 B. General Jurisdiction is Unavailable: Bai’s Domicile is in China. ............ 5 C. Plaintiffs Fail to Allege Facts Showing Specific Jurisdiction. ................. 5 1. Bai’s Position at Nature Garden is Irrelevant. ................................ 6 2. Bai’s Other Alleged Business Activities and Relationships Fail to Demonstrate Individual Personal Jurisdiction. ................... 7 3. Asserting Personal Jurisdiction Over Bai is Unreasonable. ......... 13 D. Exercising Jurisdiction Would Offend Traditional Notions of Fair Play and Substantial Justice. ................................................................... 14 IV. Plaintiffs Have Not Alleged Facts Against Bai That, If True, Entitle Plaintiffs to Relief. ............................................................................................. 15 A. Motion to Dismiss Standard. ................................................................... 15 B. Plaintiffs Do Not Allege That Bai Undertook a Single Predicate Act and, Thus, Fail to Allege A Pattern of Racketeering Activity. ........ 15 C. Even the Predicate Acts of the Companies Plaintiffs Vaguely Conflate With Bai Do Not Allege Bai’s Participation. ........................... 16 D. Plaintiffs Fail to Allege Proximate Cause With Any Predicate Act Possibly Related to Bai. .......................................................................... 17 V. The Plaintiffs Improperly Added a New Claim. ............................................... 18 VI. This Court Should Dismiss the Claims Against Bai With Prejudice. ............... 18 VII. Conclusion ......................................................................................................... 20 Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 2 of 25 Page ID #:3141 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS ii D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 TABLE OF AUTHORITIES Page(s) CASES Anza v. Ideal Steel Supply Co., 547 U.S. 451, 460 (2006) .............................................................................................................17 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ......................................................................................................................15 Balistreri v. Pacifica Police Dept., 901 F.2d 696 (9th Cir. 1988) ........................................................................................................15 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ......................................................................................................................15 Brockmeyer v. May, 383 F.3d 798 (9th Cir. 2004) ..........................................................................................................2 Burger King v. Rudzewicz, 471 U.S. 462 (1985) ........................................................................................................................6 Calder v. Jones, 465 U.S. 783 (1984) ....................................................................................................6, 8, 9, 10, 11 Chang v. Chen, 80 F.3d 1293 (9th Cir. Cal. 1996) ...........................................................................................18, 19 Chirila v. Conforte, 47 F. App'x 838 (9th Cir. 2002) ......................................................................................................9 CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066 (9th Cir. 2011) ........................................................................................................5 Daimler AG v. Bauman, 571 U.S. ___,134 S. Ct. 746 (2014) ................................................................................................4 Davis v. Metro Productions, Inc., 885 F.2d 515 (9th Cir. 1989) ........................................................................................................10 Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, Inc., 840 F.2d 685 (9th Cir. 1988) ..........................................................................................................2 Doe v. Unocal, 248 F.3d 915 (9th Cir. 2001) ........................................................................................................14 Doe v. Unocal Corp., 27 F. Supp. 2d 1174 (C.D. Cal. 1998) ............................................................................................4 Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 3 of 25 Page ID #:3142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS iii D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 Durning v. Citibank Int’l, 990 F.2d 1133 (9th Cir. 1993) ......................................................................................................16 Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d 902, 907 (1st Cir. 1980) ...............................................................................................10 Fasugbe v. Willms, 2011 U.S. Dist. LEXIS 93483 (E.D. Cal. 2011) ...........................................................................10 Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114 (9th Cir. 2002) ......................................................................................................14 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) ........................................................................................................................5 Gutierrez v. Givens, 1 F. Supp. 2d 1077 (S.D. Cal. 1998) .........................................................................................9, 12 H.J. Inc. v. N.W. Bell Tel. Co., 492 U.S. 229 (1989) ......................................................................................................................16 Hanevold v. Hsu, No. 2:11-cv-01869-JAM-EFB, 2011 U.S. Dist. LEXIS 138987 (E.D. Cal. 2011) ......................13 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) ........................................................................................................................5 In re WellPoint, Inc., 865 F. Supp. 2d 1002 (C.D. Cal. 2011) ..................................................................................16, 17 Int'l Shoe Co. v. Wash., 326 U.S. 310 (1945) ......................................................................................................................14 Kexuan Yao v. Crisnic Fund, S.A., No. SACV 8:10-cv-1299 ................................................................................................................3 Logtale, Ltd. v. Ikor, Inc., No. C -11-05452(EDL), 2014 U.S. Dist. LEXIS 52054 (N.D. Cal. 2014) ...................................10 Neibel v. Trans World Assurance Co., 108 F.3d 1123, 1127 (9th Cir. 1977) .................................................................................................18 Pebble Beach Co. v. Caddy, 453 F.3d 1151 (9th Cir. 2006) ........................................................................................................4 Polich v. Burlington N., Inc., 942 F.2d 1467 (9th Cir. 1991) ......................................................................................................18 Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 4 of 25 Page ID #:3143 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS iv D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364 (9th Cir.1992) .........................................................................................................16 Rupert v. Bond, 68 F. Supp. 3d 1142, 1163 (N.D. Cal. 2014) .........................................................6, 7, 8, 10, 12 13 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004) ................................................................................................5, 6, 13 Sever v. Alaska Pulp Co., 978 F.2d 1529 (9th Cir. 1992) ......................................................................................................16 Sher v. Johnson, 911 F.2d 1357 (9th Cir. 1990) ................................................................................................11, 12 Turner v. Cook, 362 F.3d 1219 (9th Cir. 2004) ......................................................................................................16 Williams v. Cnty. of L.A. Dep’t of Pub. Soc. Servs., No. CV 14-7625 JVS (JC), 2016 U.S. Dist. LEXIS 67579 (C.D. Cal. 2016) ................................2 Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199 (9th Cir. 2006) ......................................................................................................11 RULES Rule 4 of the Federal Rules of Civil Procedure .........................................................................1, 2, 3 4 Rule 8 of the Federal Rules of Civil Procedure ..................................................................................15 Rule 12(b)(2) of the Federal Rules of Civil Procedure .....................................................................1, 4 Rule 12(b)(5) of the Federal Rules of Civil Procedure .....................................................................1, 2 Rule 12(b)(6) of the Federal Rules of Civil Procedure ...................................................................1, 15 Rule 15 of the Federal Rules of Civil Procedure ................................................................................18 STATUTES 18 U.S.C. § 1961(5) ............................................................................................................................15 18 U.S.C. § 1962(c) ......................................................................................................................16, 18 18 U.S.C. § 1962(d) ..................................................................................................................2, 16, 18 CAL. CIV. PROC. CODE § 410.10 ...........................................................................................................4 Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 5 of 25 Page ID #:3144 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 1 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 I. Introduction Wenxuan Bai is a resident of China. The Court should dismiss him from this lawsuit under Rule 12(b)(5) because Plaintiffs failed to serve him properly with the Second Amended Complaint (Dkt. 98, the “SAC”) or the Summons. Plaintiffs purported to enact substituted service on Bai; however, on the face of Rule 4, that method of service applies only to defendants located in the United States. This alone is fatal to Plaintiffs’ effort to prosecute its claims against Bai. Alternatively, the Court should dismiss Bai under Rule 12(b)(2) because it has no personal jurisdiction over him. Plaintiffs allege only two jurisdictional facts about Bai: that he is President of a California company that has no alleged relation to this lawsuit; and that he has some vaguely-described affiliation with other Defendant entities. Plaintiffs fail to allege that Bai himself purposefully directed claim-related activities to California, or that he knew any act Plaintiffs allege he undertook would cause them harm in California. And despite numerous vague and conclusory assertions placing Bai in the thick of the alleged plot, his actual conduct -- as alleged by Plaintiffs -- boils down to two telephone calls of unspecified geographic origins and destinations. As a whole, the SAC fails to show that he purposefully directed any claim-related activity to California, or that he knew harm in California would result. While each reason above is independently sufficient to dismiss the claims against Bai, in the further alternative, the Court should dismiss Bai under Rule 12(b)(6) because Plaintiffs fail to allege facts that, if true, entitle them to relief against him. Plaintiffs have not met their burden to plead a pattern of racketeering activity. Indeed, the SAC fails to allege that Bai participated in any alleged predicate act. Even if Plaintiffs silently attribute other Defendant companies’ predicate acts to Bai, they allege no facts showing that he knew of or participated in the predicate acts. Moreover, the SAC fails to sufficiently allege proximate cause between Plaintiffs’ injury and any predicate act that could conceivably relate to Bai. Further, Plaintiffs’ Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 6 of 25 Page ID #:3145 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 2 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 additional claim under 18 U.S.C. § 1962(d) should fail because Plaintiffs did not properly seek leave to bring additional claims, and because bringing a new claim against Bai would be futile. Bai therefore requests that Court dismiss the claims against him with prejudice. II. Plaintiffs Failed to Effectively Serve the Second Amended Complaint and Summons upon Bai, Who Resides in China. Once a defendant challenges service under Rule 12(b)(5), “plaintiffs bear the burden of establishing that service was valid under Rule 4.” Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). “A federal court does not have jurisdiction over a defendant unless the defendant has been served properly under Fed. R. Civ. P. 4.” Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, Inc., 840 F.2d 685, 688 (9th Cir. 1988); see also Williams v. Cnty. of L.A. Dep’t of Pub. Soc. Servs., No. CV 14-7625 JVS (JC), 2016 U.S. Dist. LEXIS 67579, at *21 (C.D. Cal. 2016) (“A federal court can assert personal jurisdiction over a defendant only if the defendant has been served in the manner provided by Rule 4 of the Federal Rules of Civil Procedure.”). A. Factual Background As Plaintiffs allege, “Defendant Bai is an individual residing in China.” (SAC ¶ 33.) The Declaration of Wenxuan Bai (“Bai Dec.”), filed concurrently herewith, confirms that he is a Chinese resident and citizen, and has never resided in or been a citizen of the United States or California. (Bai Dec., at p.1.) The Proof of Service on Defendant Bai, filed on July 8, 2016, avers that service was purportedly accomplished “By Substituted Service.” (Proof of Service, Dkt. 103, at ¶ 4(b).) The Process Server reported that she attempted service at a business located at 17702 Copus Rd., Bakersfield, CA (the “Copus Road Address”). (Proof of Service, Dkt. 103, at p.3.) However, Plaintiffs fail to allege -- either in the SAC or in the Proof of Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 7 of 25 Page ID #:3146 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 3 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 Service -- that the Copus Road Address is affiliated with Bai. In fact, the Process Server plainly states that the Copus Road Address was devoid of identifying information. It is a “a large metal building fully fenced and padlocked,” and “there was no sign stating business name or hours.” (Proof of Service, Dkt. 103, at p.3.) The Process Server alleged substituted service or, in her words, “sub-served” a male office manager of the unidentified business, who had the last name Tao but refused to give his first name. (Proof of Service, Dkt. 103, at p. 3.) The Process Server further stated that on July 6, 2016, she mailed the Complaint and Summons to Bai not at an address in China, but to the Copus Road Address in Bakersfield. (Proof of Service, Dkt. 103, at p. 4.) B. Plaintiffs’ Method of Service Fails Under Rule 4(f). Because Bai resides in China (SAC, at ¶ 33), Rule 4(f) exclusively controls service of process upon him. FED. R. CIV. P. 4(f) (“Serving an Individual in a Foreign Country”). Compare Fed. R. Civ. P. 4 advisory committee’s note on 1993 amendments to Subdivision (f) (“This subdivision provides for service on individuals who are in a foreign country ….”) with advisory committee’s note on 1993 amendments to Subdivision (e) (“[Subdivision (e)] provides a means for service of summons on individuals within a judicial district of the United States.”). On its face, the Proof of Service describes an attempt to serve Bai by means of substituted service, which does not apply to individuals outside the United States. As this District Court has held, “The section of Rule 4 that governs service of individuals within the United States has a specific provision for service to an agent authorized to receive service of process. Because Rule 4(f) does not include such a provision for service of an agent, a plain reading of the Federal Rules compels the conclusion that the limitation to personal service was intentional for individuals in a foreign country.” Kexuan Yao v. Crisnic Fund, S.A., No. SACV 8:10-cv-1299 AG (JCGx), 2011 U.S. Dist. LEXIS 97358, at *13-14 (C.D. Cal. 2011) (emphasis added) (internal citation Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 8 of 25 Page ID #:3147 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 4 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 omitted). Thus, Plaintiffs’ attempt to serve Bai fails under Rule 4. The Proof of Service should be quashed and the SAC should be dismissed as to Bai. III. This Court Does Not Have Personal Jurisdiction Over Bai. A. Standard. Rule 12(b)(2) governs a motion to dismiss for lack of personal jurisdiction. The plaintiff bears the burden of establishing that the court has jurisdiction over the defendant. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Courts properly exercise personal jurisdiction over a defendant “if it is permitted by a long- arm statute and if the exercise of that jurisdiction does not violate federal due process.” Id., 453 F.3d at 1154. “Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.” Daimler AG v. Bauman, 571 U.S. ___,134 S. Ct. 746, 753 (2014). Because Bai was not served within the United States (or, indeed, at all), RICO’s provision for nationwide service of process -- and a national minimum contacts analysis -- does not apply. Rather, for purposes of establishing personal jurisdiction over Bai, California’s long-arm statute governs. Doe v. Unocal Corp., 27 F. Supp. 2d 1174, 1184 (C.D. Cal. 1998) (when service of process on international defendant was not obtained in the United States under RICO’s nationwide service of process provisions, “plaintiffs must rely on the traditional minimum contacts analysis associated with service of process under California’s long-arm statute”). Because “California’s long-arm statute extends jurisdiction to the limits of due process,” the inquiry centers on whether exercising jurisdiction comports with due process. Id.; see CAL. CIV. PROC. CODE § 410.10 (allowing jurisdiction “on any basis not inconsistent with the Constitution of this state or of the United States”). A court may exercise either general or specific jurisdiction over a nonresident defendant. General jurisdiction exists where a defendant has substantial or Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 9 of 25 Page ID #:3148 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 5 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 “continuous and systematic” contacts with the forum. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984). If a complaint does not allege that a defendant’s minimum contacts with the forum establish general jurisdiction, the alleged facts may still demonstrate specific jurisdiction. The Court may assert specific jurisdiction over a nonresident defendant when: (1) the non-resident defendant purposefully directs his activities or consummates some transaction with the forum or resident thereof; or performs 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 arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction comports with fair play and substantial justice, i.e. it is reasonable. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). The plaintiff bears the burden of demonstrating the first two prongs. CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011). If the plaintiff satisfies the first two parts of the test, the burden shifts to the defendant to “to set forth a ‘compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. (citing Burger King v. Rudzewicz, 471 U.S. 462, 476-78 (1985)). B. General Jurisdiction is Unavailable: Bai’s Domicile is in China. The SAC does not allege general jurisdiction over Bai. General jurisdiction only exists if a defendant has “substantial” or “continuous and systematic” contacts with the forum. Helicopteros, 466 U.S. at 415. “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile ….” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011). Bai’s domicile is in China and, thus, Plaintiffs have not alleged general jurisdiction. C. Plaintiffs Fail to Allege Facts Showing Specific Jurisdiction. The first two prongs of specific jurisdiction analysis require that: (1) the non- resident defendant purposefully direct his activities or consummate some transaction Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 10 of 25 Page ID #:3149 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 6 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 with the forum or a resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, and that (2) the claim arises out of or relates to the defendant’s forum-related activities. Schwarzenegger, 374 F.3d at 802. In RICO cases, the Ninth Circuit looks to the “purposeful direction” test within the first prong. Rupert v. Bond, 68 F. Supp. 3d 1142, 1163 (N.D. Cal. 2014). Courts assess purposeful direction under the three-part “effects” test articulated by the Supreme Court in Calder v. Jones, 465 U.S. 783, 788- 89 (1984): a defendant is deemed to have purposefully directed his activities toward the forum if he: “(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.” Rupert, 68 F. Supp. 3d at 1163 (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1206 (9th Cir. 2006)). Bai’s alleged acts fall well short of the “purposeful” requirement for contacts to give rise to specific jurisdiction. See Burger King, 471 U.S. at 475 (Court’s inquiry is limited to examining contacts that “proximately result from actions by the defendant himself”). Plaintiffs identify only two jurisdictional allegations about Bai: (1) he allegedly owns or “is otherwise associated with,” Defendant QTF, Non-Defendant QXF, Defendant Lianghe, and Defendant Golden Bird, all of which exported or continue to export garlic to California; and (2) he allegedly is President of Nature Garden Farm Corporation, a California company with its primary place of business in Bakersfield, California. (SAC ¶ 64.) Neither of these facts show “actions by the defendant himself” to purposefully direct his alleged activities, related to Plaintiffs’ claims, to California. Burger King, 471 U.S. at 475. 1. Bai’s Position at Nature Garden is Irrelevant. Plaintiffs fail to connect Mr. Bai’s status as President of Nature Garden to any of Plaintiffs’ claims in this case. The SAC is devoid of any allegations describing what Nature Garden is or does, in California or elsewhere. As confirmed in Bai’s Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 11 of 25 Page ID #:3150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 7 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 Declaration, Nature Garden is not even involved in the garlic trade. (Bai Dec., at p. 2.) The SAC fails to describe how Bai’s role at Nature Garden relates to any alleged RICO claims, or even garlic more generally. This claimed jurisdictional fact fails, because it does not show that Bai “purposefully directed” any act relating to Plaintiff’s claims to California. Rupert, 68 F. Supp. 3d at 1163. 2. Bai’s Other Alleged Business Activities and Relationships Fail to Demonstrate Individual Personal Jurisdiction. a. Bai Disputes the Allegations That He is “Associated With” Certain Entities. In addition to Nature Garden allegation, in order to establish personal jurisdiction Plaintiffs allege that Bai owns or “is otherwise associated with” Defendant QTF, Non-Defendant QXF, Defendant Lianghe, and Defendant Golden Bird. (SAC ¶ 64.) Plaintiffs fail to specify what “otherwise associated with” means, or why such a vague description is helpful for determining personal jurisdiction. Furthermore, Plaintiffs’ allegations of ownership, control, or “otherwise association” are contradicted by Bai’s Declaration. Bai states under penalty of perjury that he is not an owner and has no position with Defendant QTF; that he is the CEO, but not owner, of Non-Defendant QXF; and that he is not an owner and has no position with either Defendant Lianghe or Defendant Golden Bird. (Bai Dec., at p. 2.) Thus, contrary to the allegations in the SAC, Bai’s role in the identified companies is limited to his status as CEO of QXF, an entity that is not a defendant in this lawsuit. But even if Plaintiffs’ allegations stood unchallenged, Bai’s alleged affiliations with these companies are unavailing. Plaintiffs fail to show in their “RICO Jurisdiction” section (SAC ¶ 64) that Bai “committed an intentional act … expressly aimed at [California]” merely by an alleged ownership stake or vague “otherwise affiliation” with the identified companies. Rupert, 68 F. Supp. 3d at 1163. Any California contacts Plaintiffs may allege as to the identified companies are not dispositive to Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 12 of 25 Page ID #:3151 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 8 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 establish personal jurisdiction over Bai, individually. “Petitioners are correct that their contacts with California are not to be judged according to their employer’s activities there. … Each defendant’s contacts with the forum State must be assessed individually.” Calder, 465 U.S. at 790 (emphasis added). b. Plaintiffs’ Vague Allegations Conflating Mr. Bai With Other Defendants and Businesses Do Not Create Individual Personal Jurisdiction. i. Mere Association With Other Defendants Fails to Create Personal Jurisdiction. Throughout the entire SAC -- and well beyond Plaintiffs’ two bare jurisdictional allegations -- Plaintiffs fail to allege any requisite “intentional act … expressly aimed at [California], … causing harm that [Bai] knows is likely to be suffered in [California].” Rupert, 68 F. Supp. 3d at 1163. The SAC contains no shortage of vague, conclusory allegations that Bai owned or controlled or was vaguely “otherwise associated with” a corporate defendant. (See generally SAC ¶¶ 12, 15, 18, 22, 24, 25, 33, 60, 64, 69, 138, 140, 147, 184, 188, 190, 213, 224 and 227.) What all these allegations lack, however, is any specific fact showing some “intentional act” Bai took to direct a claim-related activity to California, or that he knew injury to Plaintiffs -- in California -- would result. Rupert, 68 F. Supp. 3d at 1163. Plaintiffs likewise allege that Bai has relationships with other defendants, but again fail to allege that Bai purposefully directed some claim-related activity to California, and that he knew injury in California would proximately result. (See generally SAC ¶¶ 17, 26, 27,49, 60, 72, 139, 152, 208, and 290.) Elsewhere, Plaintiffs vaguely mention Bai along with other Defendants. For example, the SAC alleges that a number of Defendants funded Defendant Hume’s efforts to initiate antidumping review requests. (SAC ¶¶ 153 & 224.) Further, the SAC alleges that Bai “and Wang, with the assistance of C Agriculture and others,” Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 13 of 25 Page ID #:3152 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 9 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 somehow sold Defendant Golden Bird’s dumping duty rate to unspecified Defendant entities. (SAC ¶¶ 181-182.) Again, Bai refutes the allegation that he has any ownership stake in or control over Golden Bird (Bai Dec., at p. 2) that would allow Bai to sell anything Golden Bird owned or controlled. The SAC further alleges that Bai is possibly one of the individuals or entities responsible for obtaining a forgery. As the SAC alleges, the alleged forgeries were “obtained by Hume from Huamei and/or from Bai, Ye, and Wang.” (SAC ¶ 252). This allegation is too vague and ambiguous to support personal jurisdiction over Bai. Courts in the Ninth Circuit have rejected attempts by Plaintiffs to establish personal jurisdiction through the acts of conspirators. See Gutierrez v. Givens, 1 F. Supp. 2d 1077, 1083 n.1 (S.D. Cal. 1998) (personal jurisdiction cannot be established by reference to acts of alleged RICO conspirators); Chirila v. Conforte, 47 F. App'x 838, 842 (9th Cir. 2002) (“There is a great deal of doubt surrounding the legitimacy of this conspiracy theory of personal jurisdiction.”). Any assertion that Bai conspired with individuals and entities that may have ties to California is unavailing to prove personal jurisdiction over him. Likewise, Plaintiffs fail to allege how any contacts QTF, Non-Defendant QXF, Defendant Lianghe, and Defendant Golden Bird may have with California should be attributed individually to Bai for purposes of establishing personal jurisdiction, even if Bai’s vaguely-alleged affiliation with these companies were not refuted by Bai’s Declaration. While Calder cautions that an individual defendant cannot avoid a determination of personal jurisdiction by virtue of his status as a corporate employee, Calder equally holds that each individual defendant’s contacts must be weighed individually. Calder, 465 U.S. at 790. The Ninth Circuit maintains that acts a person takes in his capacity as agent of a company may be considered as a factor for the agent’s individual personal jurisdiction only after the plaintiff demonstrates that the individual defendant was the “guiding spirit” behind the company’s conduct. See Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 14 of 25 Page ID #:3153 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 10 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 Davis v. Metro Productions, Inc., 885 F.2d 515, 523 n.10 (9th Cir. 1989) (quoting Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d 902, 907 (1st Cir. 1980)). In Davis, the Ninth Circuit recognized that the “fiduciary shield” doctrine was not an absolute bar to asserting personal jurisdiction over a corporate officer, individually. However, the Davis Court held that the proper inquiry was the contacts that each defendant individually had with the forum state: not that each and every contact the employer had would be personally attributed to the officer. Davis, 885 F.2d at 522. Likewise, District Courts in the Ninth Circuit hold that mere conclusory allegations that an officer was a “guiding spirit” are insufficient to prove individual personal jurisdiction. Fasugbe v. Willms, 2011 U.S. Dist. LEXIS 93483, at *9 (E.D. Cal. 2011) (“conclusory statements that [corporate agent] was a ‘guiding spirit’ and “central figure” and made all final decisions” did not establish individual personal jurisdiction). Thus, the vague and refuted allegations that Bai had an ownership stake or “other” affiliation with a defendant company does not transfer the company’s minimum contacts with California onto Mr. Bai. Logtale, Ltd. v. Ikor, Inc., No. C - 11-05452(EDL), 2014 U.S. Dist. LEXIS 52054, at *18 (N.D. Cal. 2014) (defendant’s service as an officer of a corporation does not equate to the defendant personally directing his individual conduct toward California). Further, these allegations fail to establish that Bai expressly aimed any conduct at California, or that his conduct caused harm that Bai knew was likely to be suffered in California. As such, Plaintiffs cannot establish the second and third prongs of the Calder test. See Rupert, 68 F. Supp. 3d at 1163 (holding that Calder requires plaintiff to demonstrate that the defendant “(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”). Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 15 of 25 Page ID #:3154 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 11 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 ii. Bai’s Alleged Receipt of Commissions Fails to Create Personal Jurisdiction. The SAC further alleges that Bai received unspecified commissions from his alleged interest in certain companies. (See generally SAC ¶¶ 176-179.) Plaintiffs’ allegations regarding the ownership interests that would distribute any profits to Bai are controverted by Bai’s Declaration. (Bai Dec., at p. 2.) And Plaintiffs again fail to allege that the vague receipt of unspecified profits or commissions, at unspecified times, shows that Bai - individually -- purposefully directed, to California, some specific act he undertook related to the claims in this lawsuit, or knew that some harm to Plaintiffs in California would proximately result. Yahoo!, 433 F.3d at 1206. Further, Plaintiffs fail to demonstrate that profits or commissions by businesses they allege are associated with Bai should be treated as jurisdictional facts for Bai, individually. See Calder, 465 U.S. at 790. iii. Vague Allegations Conflating Bai With Others Initiating an Administrative Review Request Do Not Create Personal Jurisdiction. Plaintiffs further make unclear and contradictory allegations concerning a 2014 U.S. Department of Commerce (“DOC”) administrative review request filed by Defendant Crawford against Plaintiff Zhengzhou Harmoni, which Defendant Crawford withdrew in 2015. The SAC makes one allegation that Bai was involved, vaguely, in filing the 2014 administrative review request. In Paragraph 242, Plaintiffs allege that both the filing and the withdrawal were done “at the behest of the Enterprise, including Bai.” However, the SAC offers no facts regarding what activities the Enterprise undertook to actuate its “behest,” or how the Enterprise’s unspecified activities establish that Bai - individually -- purposefully directed any activities to this forum. Sher v. Johnson, 911 F.2d 1357, 1365 (9th Cir. 1990) (“Regardless of their joint liability, jurisdiction over each defendant must be Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 16 of 25 Page ID #:3155 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 12 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 established individually.”) (citation omitted); Gutierrez v. Givens, 1 F. Supp. 2d 1077, 1083 n.1 (S.D. Cal. 1998) (personal jurisdiction cannot be established by looking to the alleged acts of conspirators). Moreover, the SAC fails to allege how Bai knew that harm in California would result from administrative action involving to Zhengzhou Harmoni: a Chinese company. iv. Vague, Contradictory Allegations Conflating Bai With Others in Withdrawing the Administrative Review Request Do Not Create Personal Jurisdiction. Further, the SAC vaguely alleges that Bai was involved in a decision to withdraw Defendant Crawford’s 2014 administrative review request of Plaintiff Zhengzhou Harmoni. Paragraphs 154, 244, and 247 state that Bai directed Crawford to withdraw the request. However, the SAC contradicts itself, asserting that Defendant Crawford’s withdrew the administrative review request “in response to a request made by Hume at Wang’s instruction.” (SAC ¶ 243.) The SAC does not articulate what act Bai personally took, purposefully directed at California, that communicated his alleged instruction to Defendant Wang, a Chinese resident, who then instructed Defendant Hume, who then made a request to Defendant Crawford, who then withdrew the 2014 administrative review request against a Chinese company. Such an attenuated chain of events fails to establish personal jurisdiction over Bai. Sher, 911 F.2d at 1365. (“[J]urisdiction over each defendant must be established individually.”). Further, this chain of events is inconsistent with Bai, individually, purposefully directing activities to California that are related to Plaintiffs’ claims, or that he knew that harm in California would result. Rupert, 68 F. Supp. 3d at 1163. Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 17 of 25 Page ID #:3156 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 13 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 v. Two Telephone Calls of Unspecified Locations Do Not Create Personal Jurisdiction. The only specific facts alleged in the SAC about any acts Bai himself undertook relate to two telephone calls between Bai and Plaintiff Harmoni’s CEO, Frank Zhou. Plaintiffs allege that in the first telephone call, Bai offered to direct Defendant Hume to withdraw the administrative review request Defendant Crawford filed against Plaintiff Zhengzhou Harmoni, but only in exchange for Zhengzhou Harmoni withdrawing its complaint against Defendant QTF that was pending before Chinese import and export enforcement authorities. (SAC ¶ 240.) The SAC further alleges that Zhou declined to commit to withdrawing the complaint against Defendant QTF. (SAC ¶ 240.) The SAC then alleges that three days later, Bai and Zhou participated in a second telephone call in which Bai assured Zhou that he would direct Hume to withdraw Defendant Crawford’s review request, apparently with no request that Zhengzhou Harmoni promise anything in return. (SAC ¶ 241.) Plaintiff fails to allege any facts demonstrating that these two telephone calls -- each of an unspecified geographic origin or destination -- demonstrate that Bai, individually, purposefully directed his activities to California, knowing that harm in California would result. See Rupert, 68 F. Supp. 3d at 1163; Hanevold v. Hsu, No. 2:11-cv-01869-JAM-EFB, 2011 U.S. Dist. LEXIS 138987, at *12 (E.D. Cal. 2011) (no personal jurisdiction established by a telephone call, where plaintiff failed to establish that non-resident defendant knew the phone call took place in California or plaintiff resided in California). 3. Asserting Personal Jurisdiction Over Bai is Unreasonable. The third prong of finding jurisdiction over a non-resident defendant requires a determination that the exercise of jurisdiction is reasonable. Schwarzenegger, 374 F.3d at 802. In assessing reasonableness, the Ninth Circuit considers: “(1) the extent of a defendant’s purposeful interjection into the forum state’s affairs; (2) the burden Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 18 of 25 Page ID #:3157 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 14 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of the defendant’s home state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff’s interests in convenient and effective relief; and (7) the existence of an alternative forum.” Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1125 (9th Cir. 2002). Here, numerous factors argue against a finding of personal jurisdiction. As noted above, Bai has not interjected himself into California at all. Further, a finding of personal jurisdiction would require Bai to expend considerable resources on American attorneys and travel. (Bai Dec., at p. 2.) Moreover, Bai understands very little English and would require the assistance of translators to defend himself in this action. (Bai Dec., at p. 2.) Hailing Bai to America to defend against this action would likewise offend China’s sovereignty over its citizens. And because Plaintiffs may pursue relief in the pending DOC action, this forum state’s interest in adjudicating the dispute is limited; the controversy could be resolved more efficiently in the DOC proceedings. As one of the two Plaintiffs is not a resident of California, there is no particular importance that this Court adjudicate these claims. Finally, an alternative forum for this dispute exists: the DOC. D. Exercising Jurisdiction Would Offend Traditional Notions of Fair Play and Substantial Justice. The exercise of jurisdiction over Bai would offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945); see Doe v. Unocal, 248 F.3d 915, 925 (9th Cir. 2001) (following a finding of minimum contacts sufficiently related to the alleged claims, “the court must determine whether the assertion of personal jurisdiction would comport with traditional notions of ‘fair play and substantial justice’”). Exercising jurisdiction over a Chinese citizen with such miniscule contact with the United States offends traditional notions of fair play Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 19 of 25 Page ID #:3158 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 15 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 and substantial justice. IV. Plaintiffs Have Not Alleged Facts Against Bai That, If True, Entitle Plaintiffs to Relief. A. Motion to Dismiss Standard. Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure is proper where there is either “a lack of cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). In Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court cautioned that Rule 8 “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotations omitted). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to “draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. However, a complaint “that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do.” Id. (internal quotations omitted). Nor does a complaint suffice if it “tenders ‘naked assertions’ devoid of ‘further factual enhancement.’” Id. (quoting Twombly, 550 U.S. at 557). Legal conclusions “are not entitled to the assumption of truth” and must be disregarded. Iqbal, 556 U.S. at 679. B. Plaintiffs Do Not Allege That Bai Undertook a Single Predicate Act and, Thus, Fail to Allege A Pattern of Racketeering Activity. A “pattern of racketeering activity” requires the existence of two or more predicate acts. 18 U.S.C. § 1961(5). That requirement, however, is a minimum, and Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 20 of 25 Page ID #:3159 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 16 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 is not itself sufficient to establish a pattern. H.J. Inc. v. N.W. Bell Tel. Co., 492 U.S. 229, 237-38 (1989); Turner v. Cook, 362 F.3d 1219, 1229 (9th Cir. 2004). Rather, the alleged predicate acts must be sufficiently related and create a threat of continuing criminal activity. H.J. Inc., 492 U.S. at 240; Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 366 (9th Cir.1992). Isolated or sporadic incidents do not amount to a pattern. Durning v. Citibank Int’l, 990 F.2d 1133, 1138 (9th Cir. 1993); Sever v. Alaska Pulp Co., 978 F.2d 1529, 1535 (9th Cir. 1992). In its May 24, 2016 Order, this Court held: “[W]here a plaintiff alleges RICO claims against multiple defendants, the ‘plaintiff must allege at least two predicate acts by each defendant.’” (Dkt. 90, at p. 46) (quoting In re WellPoint, Inc., 865 F. Supp. 2d 1002, 1035 (C.D. Cal. 2011). In its August 5, 2016 Order dismissing the C. Agriculture Defendants, this Court again addressed the requirement that Plaintiffs plead multiple predicate acts that have a relationship to each other. (Order Granting Mot. To Dismiss, Dkt. 121, at 16 (noting that the alleged demand letter constitutes only one predicate act, and “without a relationship to any other alleged predicate act, it cannot, standing alone, constitute a pattern of racketeering activity”).) In Wellpoint, this District Court dismissed both a RICO enterprise claim (18 U.S.C. § 1962(c)) and a RICO conspiracy claim (18 U.S.C. § 1962(d)) against certain defendants because the plaintiffs failed to allege two predicate acts committed by those defendants and, thus, failed to establish the “pattern” requirement. Wellpoint, 865 F. Supp. 2d at 1035-36 (discussing the failure of pleading a “pattern”). Plaintiffs fail to allege that Bai, specifically, undertook any alleged predicate acts. (SAC ¶ 306.) C. Even the Predicate Acts of the Companies Plaintiffs Vaguely Conflate With Bai Do Not Allege Bai’s Participation. This failure is not a mere oversight. Even the predicate acts attributed to QTF and Golden Bird (the only predicate actors Plaintiffs could somehow seek to silently Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 21 of 25 Page ID #:3160 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 17 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 conflate with Bai) fail to allege Bai’s participation, action, or even knowledge. As a primary matter, the vague assertion that Bai owns or is “otherwise associated with” QTF and Golden Bird (SAC ¶ 64) are wholly insufficient to automatically impute all of these defendants’ alleged predicate acts to Bai. A review of the allegations related to the predicate acts alleged against QTF and Golden Bird reveal that the substance of these allegations fail to touch Bai in any way. Paragraphs 166-169 of the SAC relate to Predicate Acts 9-12 (naming Hume and Golden Bird as actors). Paragraphs 166- 169 only mention acts by Hume, not Bai. Paragraphs 198-200 relate to Predicate Act 13 (naming Hume, Kwo Lee and QTF as actors). Those Paragraphs discuss Kwo Lee, Zhao Zhenqing and Hume, but not Bai. Paragraphs 218-219 of the SAC relate to Predicate Acts 15, 17, 18 and 19 (naming Hume and QTF as actors). Yet Paragraphs 218-219 discuss Hume only, not Bai. And Paragraph 291 of the SAC discusses Predicate Act 25 (naming Hume and QTF). Again, that Paragraph of the SAC mentions Hume, but not Bai. Plaintiffs have not met their burden of alleging ‘at least two predicate acts, by each defendant” and their claims against Bai should therefore be dismissed. Wellpoint, 865 F. Supp. 2d at 1035. D. Plaintiffs Fail to Allege Proximate Cause With Any Predicate Act Possibly Related to Bai. The only predicate acts that Bai even conceivably could be identified with are Predicate Acts 9-13, 15, and 17-19, which name Golden Bird and QTF (but not Bai) among the actors. (SAC ¶ 306.) All of these predicate acts allege fraudulent submissions to Customs and the Court of International Trade. (SAC ¶ 306.) As this Court held, “the connection between Plaintiffs’ alleged harm of lost sales and profits that was purportedly caused by the C. Agriculture Defendants’ Customs submissions is too attenuated to satisfy the proximate causation requirement.” (Dkt. 121 at 23, citing Anza v. Ideal Steel Supply Co., 547 U.S. 451, 460 (2006).) The same conclusion applies to these alleged RICO predicate acts. Thus, the claims against Bai Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 22 of 25 Page ID #:3161 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 18 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 should be dismissed. V. The Plaintiffs Improperly Added a New Claim. As noted in the Court’s August 5, 2016 Order, the Court did not grant Plaintiffs leave to add new claims in its SAC. (Dkt. 121, at 25.) Because Plaintiffs failed to comply with Rule 15, its additional claim under 18 U.S.C. § 1962(d) should be stricken as to Bai. Further, the Court should not grant Plaintiffs leave to add a § 1962(d) claim against Bai, because such a claim would be futile. As shown above, Plaintiffs have failed to allege facts that, if true, would allow them to prevail on their § 1962(c) claim against Bai. As the Court noted in its August 5, 2016 Order, “to the extent Plaintiffs seek and obtain leave to amend to add [the § 1962(d)] claim, the claim cannot apply to the C. Agriculture defendants given that Plaintiffs cannot state a claim against the C. Agriculture Defendants under § 1962(c).” (Dkt. 121, at 26 (citing Neibel v. Trans World Assurance Co., 108 F.3d 1123, 1127 (9th Cir. 1977) (“[I]f the section 1962(c) claim does not state an action upon which relief could ever be granted, regardless of the evidence, then the section 1962(d) claim cannot be entertained.”).) For the same reasons articulated by this Court, Plaintiffs should not be given leave to amend and add a 1962(d) claim against Bai. VI. This Court Should Dismiss the Claims Against Bai With Prejudice. Generally, “dismissal without leave to amend is improper unless it is clear … that the complaint could not be saved by any amendment.” Polich v. Burlington N., Inc., 942 F.2d 1467, 1472 (9th Cir. 1991). While this is the first iteration of Plaintiffs’ Complaint to which Bai has had to respond, this is nevertheless Plaintiffs’ third draft of the Complaint. Twice Plaintiffs have amended their Complaint in response to motions to dismiss and the Court’s Orders. Further amendment cannot salvage them. In Chang v. Chen, 80 F.3d 1293, 1296 (9th Cir. Cal. 1996), the Ninth Circuit affirmed dismissal of RICO Plaintiffs’ Second Amended Complaint where, as Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 23 of 25 Page ID #:3162 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 19 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 here, the Plaintiff was unable to state a cognizable RICO claim after multiple attempts. “[T]he district court gave Appellants a detailed and accurate listing of what had to be included in any revised complaint. Because Appellants have had ample opportunity to plead a cognizable RICO enterprise, as well as instruction from the district court, there is no reason to believe that any amendment would cure the deficiency.” Id. at 1301. In its Order dismissing without prejudice the RICO claims against the C. Agriculture Defendants in the First Amended Complaint, this Court provided the same sort of “detailed and accurate listing” the plaintiffs in Chang received. Chang, 80 F.3d at 1301. Here, the Court clearly instructed Plaintiffs that identifying the Defendants in at least two predicate acts is a basic necessity. (Dkt. 90, at 46 (“[Alleging one predicate act] is insufficient to adequately plead … a pattern of racketeering activity.”).) While Plaintiffs attempted to correct their pleading deficiency as to C. Agriculture, they did no more. Specifically, they failed to identify Bai in a single predicate act. And despite Plaintiffs’ attempts to resolve other defendants’ dismissal for failure to allege personal jurisdiction, the SAC still fails to allege jurisdictional facts as to Bai. The pleading deficiencies as to Bai cannot be cured by more re-drafts: they stem from a failure by Plaintiffs to possess sufficient factual information that they could allege in good faith to make their claims against Bai viable. Plaintiffs cannot overcome their inability to plead with particularity by illusory jabs describing Bai as the “driver” of the scheme (SAC ¶ 15), at the “center of [the] Enterprise” (SAC ¶ 138), “oversee[ing] and direct[ing]” its mechanics. (SAC ¶ 177.) These are descriptions, not facts. For these reasons, the Court should not allow further amendment to Plaintiffs’ Complaint. Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 24 of 25 Page ID #:3163 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: 2:16-CV-00614 BRO (ASX) MEMORANDUM OF POINTS AND AUTHORITIES FOR MOTION TO DISMISS 20 D Y K E M A G O SS ET T LL P 33 3 SO U T H G R A N D A V EN U E , S U IT E 21 00 L O S A N G E L ES , C A 9 00 71 VII. Conclusion For the foregoing reasons, Defendant Bai respectfully requests that the Court grant his Motion to Dismiss. Dated: August 8, 2016 DYKEMA GOSSETT LLP Craig N. Hentschel Jason M. Ross Abirami Gnanadesigan By: /s/ Jason M. Ross Jason M. Ross Attorneys for Defendant WENXUAN BAI Case 2:16-cv-00614-BRO-AS Document 123-2 Filed 08/08/16 Page 25 of 25 Page ID #:3164 Case 2:16-cv-00614-BRO-AS Document 123-3 Filed 08/08/16 Page 1 of 3 Page ID #:3165 Case 2:16-cv-00614-BRO-AS Document 123-3 Filed 08/08/16 Page 2 of 3 Page ID #:3166 Case 2:16-cv-00614-BRO-AS Document 123-3 Filed 08/08/16 Page 3 of 3 Page ID #:3167 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.:2-16-CV-00614 BRO (ASX) DECLARATION OF LINGLING MARTIN D Y K E M A G O SS E T T L L P 33 3 SO U T H G R A N D A V E N U E SU IT E 2 10 0 L O S A N G E L E S, C A 9 00 71 DYKEMA GOSSETT LLP Craig N. Hentschel (SBN 66178) chentschel@dykema.com Abirami Gnanadesigan (SBN 263375) agnanadesigan@dykema.com 333 S. Grand Avenue, Suite 2100 Los Angeles, CA 90071 Telephone: (213) 457-1800 Facsimile: (213) 457-1850 Jason M. Ross (Admitted Pro Hac Vice) jross@dykema.com 1717 Main Street Suite 4200 Dallas, TX 75201 Attorneys for Defendant WENXUAN BAI UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA HARMONI INTERNATIONAL SPICE, INC., a California corporation, and ZHENGZHOU HARMONI SPICE CO., LTD., a corporation, Plaintiff, vs. WENXUAN BAI, an individual, et al. Defendants. Case No. 2:16-cv-00614 BRO (ASx) [Assigned to Hon. Beverly Reid O’Connell] DECLARATION OF LINGLING MARTIN IN SUPPORT OF DEFENDANT WENXUAN BAI’S MOTION TO DISMISS Date: October 17, 2016 Time: 1:30 p.m. Court: 14 I, LINGLING MARTIN, hereby declare as follows: 1. I am over 21 years of age and have never been convicted of a felony. I am a certified court interpreter in the State of California and for the Federal Courts of the State of California in Chinese. My California state license number is #301082. I am registered with the United States District Court for the Central District of California. Case 2:16-cv-00614-BRO-AS Document 123-4 Filed 08/08/16 Page 1 of 2 Page ID #:3168 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.:2-16-CV-00614 BRO (ASX) DECLARATION OF LINGLING MARTIN D Y K E M A G O SS E T T L L P 33 3 SO U T H G R A N D A V E N U E SU IT E 2 10 0 L O S A N G E L E S, C A 9 00 71 2. I translated to Mandarin Chinese the Declaration of Wenxuan “Jack” Bai attached hereto as Exhibit 1, for the purpose of allowing Wenxuan Bai to review that Declaration in his native language and ensure, prior to its execution by him, that the facts stated therein were true and correct. 3. The English-language Document entitled Declaration of Wenxuan “Jack” Bai, filed separately and also attached hereto as Exhibit 2, is a faithful translation to English of the Mandarin-language Declaration of Wenxuan “Jack” Bai attached hereto as Exhibit 1. Exhibit 2 is a faithful translation of Exhibit 1, prepared in accordance with the relevant professional standards I adhere to as a certified translator and interpreter. I declare under penalty of perjury that the foregoing is true and correct. Executed on August __, 2016, in _________________________. LINGLING MARTIN People's Republic of China9 Case 2:16-cv-00614-BRO-AS Document 123-4 Filed 08/08/16 Page 2 of 2 Page ID #:3169 Exhibit 1, page 3 Case 2:16-cv-00614-BRO-AS Document 123-5 Filed 08/08/16 Page 1 of 3 Page ID #:3170 Exhibit 1, page 4 Case 2:16-cv-00614-BRO-AS Document 123-5 Filed 08/08/16 Page 2 of 3 Page ID #:3171 Exhibit 1, page 5 Case 2:16-cv-00614-BRO-AS Document 123-5 Filed 08/08/16 Page 3 of 3 Page ID #:3172 Exhibit 2, page 6 Case 2:16-cv-00614-BRO-AS Document 123-6 Filed 08/08/16 Page 1 of 3 Page ID #:3173 Exhibit 2, page 7 Case 2:16-cv-00614-BRO-AS Document 123-6 Filed 08/08/16 Page 2 of 3 Page ID #:3174 Exhibit 2, page 8 Case 2:16-cv-00614-BRO-AS Document 123-6 Filed 08/08/16 Page 3 of 3 Page ID #:3175