Opinion
H050827
04-12-2024
NORTH CAROLINA STATE UNIVERSITY et al., Petitioners, v. THE SUPERIOR COURT OF SANTA CLARA COUNTY, Respondent; ADVOQUE SAFEGUARD, LLC, et al. Real Parties in Interest.
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. 21CV392455
LIE, J.Real parties in interest Advoque Safeguard, LLC and Ciasom LLC, manufacturers of N95 masks during the COVID-19 pandemic, sued various entities allegedly involved at different levels of their supply chain. Among the defendants are nonresident petitioners Behnam Pourdeyhimi, Leaders in Innovation and Nonwovens Commercialization, LLC (LINC), the Nonwovens Institute (Institute), North Carolina State University (University), and NC State University Partnership Corporation (Partnership). Petitioners unsuccessfully challenged personal jurisdiction in the trial court, arguing that none of them had the minimum contacts with California that would make specific jurisdiction in California comport with due process, in that none of them had purposefully availed themselves of forum state benefits. They now seek a writ of mandate directing the trial court to grant their motion to quash the service of summons. Because the record supports the trial court's exercise of specific jurisdiction only as to Pourdeyhimi and LINC, we will direct the trial court to modify its order.
I. BACKGROUND
A. The Parties
During 2020, plaintiffs undertook to manufacture and sell N95 masks. Plaintiffs shared a principal place of business in California.
Plaintiffs purchased material from defendant Sanctuary Systems, LLC, a North Carolina company, for use in N95 masks. Sanctuary contracted with LINC and shipped fabric from LINC in North Carolina to plaintiffs in California.
LINC is a nonprofit that sells nonwoven products developed by the Institute. The Institute is an academic program offered by the University, not an entity separate from the University. LINC is wholly owned and operated by the Partnership. The Partnership is a nonprofit corporation intended to promote the University's "educational and charitable purposes." Pourdeyhimi was the manager of LINC, a professor at the University, director of the Institute, and a Sanctuary shareholder.
Sanctuary, LINC, the University, and the Partnership are North Carolina entities based in North Carolina. Pourdeyhimi resides in North Carolina. None of the petitioners conducted business directly with plaintiffs, although at times Sanctuary representatives communicated statements made by plaintiffs to Pourdeyhimi and vice versa.
B. The Allegations
In their complaint, plaintiffs alleged that Sanctuary supplied them with deficient materials sourced from LINC and the Institute. Further, plaintiffs alleged that Pourdeyhimi, among others, made misrepresentations on which plaintiffs reasonably relied in selling and marketing N95 masks made using materials Sanctuary provided. Plaintiffs asserted several tort claims against Pourdeyhimi, LINC, and the Institute. As to the University and the Partnership, plaintiffs asserted a single cause of action for conspiracy.
C. The Motion to Quash
Petitioners moved to quash service of summons for lack of personal jurisdiction. The trial court permitted jurisdictional discovery. The parties presented the following evidence to the trial court.
We deny plaintiffs request for judicial notice of twelve documents. Nine of these requests are unnecessary: (1) six documents are excerpts from exhibits petitioners properly filed with the writ petition; (2) two are opinions of the lower federal courts that plaintiffs cite as persuasive authority; and (3) one is an undated biographical page rendered superfluous by the parties' agreement that Pourdeyhimi was director of the Institute. As to the remainder, plaintiffs have identified no exceptional circumstances that would justify deviating from the general rule that an appellate court will consider only matters that were before the trial court when it ruled. (See Haworth v. Superior Court (2010) 50 Cal.4th 372, 379, fn. 2; In re Marriage of Forrest & Eaddy (2006) 144 Cal.App.4th 1202, 1209-1210.)
In February 2020, plaintiffs' representative Jason Azevedo was introduced by e-mail to "members of the NC State Cooperative," including Sanctuary representatives Bryan Sigler and Stephen Sharp. The introduction progressed to negotiations. In March 2020, plaintiffs were in discussions with Sanctuary to procure nonwoven material suitable for use in N95 masks. Around March 20, 2020, at Sanctuary's request, plaintiffs provided "a letter on [plaintiffs'] [letterhead]" stating that plaintiffs were "willing to purchase" a specified quantity of material to "produce N95 respiratory masks" over the next six months, because a "letter of intent would help [Sanctuary] with procurement of [its] materials" and "machine time." A copy of this letter-bearing Azevedo's full name, references to both Ciasom and Advoque, and a California address-made its way to LINC.
Two days before plaintiffs' letter of intent, Sanctuary's representative Sharp had e-mailed Pourdeyhimi: "We are trying to get this material order for the California folks. We need some information to finalize. They have thrown a few wrenches into the works." Sharp asked Pourdeyhimi, "[W]hat is possible" in terms of changing the width of the material and locking in the price "by us fronting the cost on all the raw materials." Pourdeyhimi first responded, "You are family, that person is not . . . [H]e does not get it." Later that evening, Sanctuary's Sigler, copying Pourdeyhimi, advised that after "another round with Jason" the California folks were "concrete" on the width. The following morning, Pourdeyhimi advised that "we should be able" to supply the material as requested. Sharp responded, "Thanks boss, that is a big help. We shall persevere. [¶] I am always here if there is something I can help with over[ ]there, troubleshoot, repair or run."
The next month, LINC agreed to supply nonwoven fabric to Sanctuary at cost. Shortly after LINC and Sanctuary executed this contract, an Advoque employee sent two bills of lading to LINC operations manager William Barnes at a University e-mail address. (Several of Barnes's e-mails identify him as the "NWI Operations Leader" for "The Nonwovens Institute, NC State.") The bills listed "ADVOQUE MOSAIC" as the consignee, with a California address, and "THE NONWOVENS INSTITUTE" as the shipper. Barnes replied to the e-mail that same morning, writing: "I have no record of the pickup, nor the company nor the contact." There is no record of any other direct interaction between plaintiffs and Pourdeyhimi, LINC, the Institute, the University, or the Partnership.
That afternoon, Shelia R. Fisher, identifying herself as "Director, Finance &Business Administration [¶] Nonwovens Institute [¶] North Carolina State University," e-mailed Sanctuary the LINC invoices for its records and confirmed receipt of payment. The next day, Barnes e-mailed Sharp thanking Sanctuary for its order, confirming a pickup time, and asking that Sanctuary provide to LINC a bill of lading. A few days later, Sharp sent Barnes the bill of lading, this one listing Sanctuary as the shipper and Advoque, with a California address, as the consignee. Plaintiffs sent no further bills of lading directly to LINC; instead, Sanctuary sent the bills of lading to LINC.
In early May 2020, plaintiffs learned the masks they produced did not consistently meet N95 standards in Massachusetts Institute of Technology (MIT) testing. Sanctuary contacted Pourdeyhimi about the MIT results, and Pourdeyhimi replied to the effect that MIT used the wrong test for facemasks. Sanctuary forwarded Pourdeyhimi's message to Azevedo, describing it as the "response [Sigler] got back from one of [Sigler's] guys." After MIT assured plaintiffs that its N95 testing was appropriate, Azevedo asked Sanctuary's Sigler to review MIT's response; Sigler followed up with Pourdeyhimi, who reiterated that MIT used the wrong test. Sigler forwarded Pourdeyhimi's reply to Azevedo as "the best that [Sigler was] going to get from [Pourdeyhimi] towards answering [Azevedo's] testing question."
Later that month, Sigler sent an e-mail advising several recipients, including Pourdeyhimi, that "[Sigler] just got off the phone with [Azevedo], [¶] their masks have been certified N95. He asked that I pass along his thanks for helping to make that possible." Pourdeyhimi responded, "I am delighted." Another recipient, using a Sanctuary e-mail address, described the development as "a big win for us all!"
Bills of lading indicate that Sanctuary continued to ship fabric from LINC to Advoque at least once a month from April 2020 through August 2020. Sanctuary regularly sent the bills of lading to Barnes at his University e-mail address, listing Advoque as the consignee with a California address.
Besides supplying Sanctuary with fabric for shipment to Advoque in California, LINC shipped fabric directly to two other companies in California in May and June 2020. As to both companies, the purchase orders during the time period list the University as the vendor. With respect to one of those companies, the record includes a LINC invoice prepared by Fisher with an address for LINC that is in the care of the Institute and University. Further, Pourdeyhimi communicated with that client about contract execution, Fisher communicated with that client to secure payment, and Barnes communicated with that client to facilitate pick up.
D. Denial of the Motion to Quash
The trial court denied the motion to quash. The trial court found petitioners "directed activities to California, had knowledge that the fabric sold to Sanctuary would be sold to Plaintiffs in California, and purposefully derived a benefit of selling the fabric to Plaintiffs that they knew were in California." Further, it found petitioners "agreed to sell [their] products, knowing that it was directed to California, giving advice regarding [their] products and responding to questions from the California recipients of [their] products." Concluding that the plaintiffs based their lawsuit on petitioners' shipments of allegedly defective mask material and petitioners' alleged "misrepresentations regarding the quality and utility of" the material, the trial court ruled that petitioners were subject to specific jurisdiction.
Petitioners timely petitioned for writ of mandate. We issued an order to show cause why the petition should not be granted.
II. DISCUSSION
A nonresident defendant is subject to specific personal jurisdiction in California if: "(1) 'the defendant has purposefully availed himself or herself of forum benefits' [citation]; (2) 'the "controversy is related to or 'arises out of' [the] defendant's contacts with the forum"' [citation]; and (3)' "the assertion of personal jurisdiction would comport with 'fair play and substantial justice'"' [Citations]." (Pavlovich v. Superior Court (2002) 29 Cal.4th 262, 269 (Pavlovich).)
As plaintiffs concede, none of the petitioners are subject to general jurisdiction. (See Daimler AG v. Bauman (2014) 571 U.S. 117, 137 (Daimler) [" 'For an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile' "].) We address only whether petitioners may be sued in California based on specific jurisdiction. (See Jacqueline B. v. Rawls Law Group, P.C. (2021) 68 Cal.App.5th 243, 253.)
On a defendant's motion to quash service of process on jurisdictional grounds, "the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction. [Citation.] Once facts showing minimum contacts with the forum state are established, however, it becomes the defendant's burden to demonstrate that the exercise of jurisdiction would be unreasonable. [Citation.] When there is conflicting evidence, the trial court's factual determinations are not disturbed on appeal if supported by substantial evidence. [Citation.] When no conflict in the evidence exists, however, the question of jurisdiction is purely one of law and the reviewing court engages in an independent review of the record. [Citation.]" (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449 (Vons).)
Our adjudication of the petition turns on two central issues: (1) whether Pourdeyhimi and LINC had sufficient contacts with California to support the trial court's exercise of specific jurisdiction over them; and (2) whether their contacts may be imputed to the Institute, the University, and the Partnership. We conclude the trial court properly exercised jurisdiction over only Pourdeyhimi and LINC.
A. Pourdeyhimi and LINC
The trial court found that Pourdeyhimi and LINC supplied fabric and related information to plaintiffs in California. The trial court found that they did this to benefit from selling fabric to plaintiffs they knew were in California. As to Pourdeyhimi and LINC, substantial evidence supports these findings, and we accordingly defer to these findings over petitioners' contrary assertions. The trial court's findings justify the exercise of specific jurisdiction on the ground that Pourdeyhimi and LINC purposefully availed themselves of forum benefits by targeting the forum, the controversy arises out of their forum contacts, and petitioners have not demonstrated that the exercise of jurisdiction here would be unreasonable. (See Vons, supra, 14 Cal.4th at p. 449; Pavlovich, supra, 29 Cal.4th at pp. 269, 273.)
1. The Trial Court's Factual Findings are Supported by Substantial Evidence
It is undisputed that Pourdeyhimi managed LINC, a nonprofit, and was a Sanctuary shareholder. In March 2020, Pourdeyhimi took part in e-mail communications with Sanctuary staff about his ability to supply fabric that Sanctuary could sell to a California company. Pourdeyhimi assured Sanctuary's Sharp that LINC could produce fabric to the company's specifications, which Sharp explained came from "Jason"-the given name of plaintiffs' representative Azevedo. Pourdeyhimi's apparent understanding of the first-name reference to the California company's representative invited an inference that Pourdeyhimi intended that Sharp-whom he described as "family" and who in turn called Pourdeyhimi "boss"-convey Pourdeyhimi's assurances to plaintiffs.
Moreover, in jurisdictional discovery, LINC produced a March 2020 letter from plaintiffs that identified Azevedo using his full name, listed plaintiffs' California address, and indicated that they were looking to secure 4.2 million square meters of material over six months. Correspondence between Sanctuary and plaintiffs conveyed that Sanctuary's anticipated price was in the range of $2.47 per square meter, which would put the gross value of 4.2 million square meters over $10 million. It is reasonable to infer from this evidence that by March 2020, Pourdeyhimi understood that if Pourdeyhimi caused LINC to supply fabric to Sanctuary at cost, Sanctuary (and Pourdeyhimi, as a shareholder) could generate a profit by shipping the fabric to plaintiffs in California and charging a premium. And it is reasonable to infer that, given Pourdeyhimi's personal financial incentive, he caused LINC to tailor its fabric to plaintiffs' specifications, targeting plaintiffs' business.
The chain of closely timed communications about the MIT testing-between plaintiffs and Sanctuary, Sanctuary and Pourdeyhimi, and Sanctuary and plaintiffs- allowed the trial court to infer that Pourdeyhimi intended Sanctuary to communicate his assurances to plaintiffs that LINC's fabric was appropriate to use for N95 masks. This inference is reinforced by Pourdeyhimi's expression of "delight[]" later that month when Sanctuary informed him that plaintiffs' masks had been certified for use as N95's. Substantial evidence supports the trial court's finding-implicit in its reference to Pourdeyhimi's use of Sanctuary "as a middleperson" to make "representations . . . with regards to the California company"-that Pourdeyhimi, in his capacity as LINC's manager, purposefully communicated with plaintiffs through Sanctuary to allay the concerns expressed by plaintiffs in California.
LINC knew Sanctuary continuously shipped LINC's fabric to "Advoque" in California in 2020 because Sanctuary continuously provided LINC bills of lading reflecting the destination. Moreover, LINC's indirect dealings with plaintiffs were not its only contact with California during the relevant time period. LINC made direct sales for delivery in California to two other companies during the same period, and Pourdeyhimi was personally involved in the execution of at least one of the contracts.
Petitioners contend that Pourdeyhimi and LINC did not intend for Sanctuary to convey their products or advice to plaintiffs in California and at most knew only that Sanctuary might do so. This argument, however, asks us to resolve factual disputes in petitioners' favor. In a reply declaration, Pourdeyhimi denied knowing who "Jason" and the "California folks" were or what Sanctuary was doing in its business. Pourdeyhimi explained that he was receiving more than 100 e-mails a day in the time period- "constant inquiries from both the private and public sector" due to the COVID-19 pandemic. The trial court found that "Pourdeyhimi's statements . . . simply lack credibility." Further, the trial court found that Pourdeyhimi "use[d] Sanctuary as a middleperson" but "his actions and representations were with regards to the California company." In context, we understand the trial court's finding to be that Pourdeyhimi understood he was dealing with plaintiffs, if only through an intermediary: (1) Sanctuary would relay his representations to plaintiffs and (2) Sanctuary would sell LINC's fabric to plaintiffs. LINC's nonprofit status and Pourdeyhimi's stake in Sanctuary bolstered the trial court's determination that Pourdeyhimi used Sanctuary as a "middleperson" by supplying a motive for him to do so. Although the evidence did not necessarily compel this determination and the petitioners adduced contrary evidence, we must defer to the trial court's resolution of the factual dispute.
2. The Trial Court's Exercise of Jurisdiction was Appropriate
The trial court's findings persuade us that (1) Pourdeyhimi and LINC purposefully availed themselves of the benefits of the California forum by targeting California plaintiffs; (2) this suit arises out of their contacts with the California forum; and (3) the assertion of personal jurisdiction over them satisfies traditional notions of fair play and substantial justice. (See Pavlovich, supra, 29 Cal.4th at p. 269 [three requirements for exercise of specific jurisdiction].) The trial court's exercise of jurisdiction over Pourdeyhimi and LINC was therefore proper.
Pourdeyhimi and LINC purposefully availed themselves of the benefits of the California forum by targeting plaintiffs, through Sanctuary, and by making other direct sales into the forum during the same period. Consistent with the trial court's factual findings, Pourdeyhimi and LINC did more than merely sell fabric to Sanctuary knowing that it would eventually be sent to a customer in California. In particular, acting as LINC's manager and as an interested Sanctuary shareholder, Pourdeyhimi directed allegedly false representations to plaintiffs regarding testing procedures and the suitability of LINC's fabric for its intended use to induce plaintiffs to continue using LINC's fabric. This and other targeted conduct provides the" 'something more'" required by J. McIntyre Machinery Ltd. v. Nicastro (2011) 564 U.S. 873 (McIntyre), such that the first prong of the jurisdictional analysis is "easily met." (McIntyre, at p. 889 (conc. opn. of Breyer, J.); Casey v. Hill (2022) 79 Cal.App.5th 937, 972 (Casey) ["first prong of the specific jurisdiction test is easily met" where defendants directed "numerous communications that contained the alleged misrepresentations" to plaintiffs in the forum state]; see also McIntyre, at p. 882 (plur. opn. of Kennedy, J.).)
In McIntyre, the United States Supreme Court sought to "clarify" what constitutes purposeful availment. The New Jersey Supreme Court had held "a foreign manufacturer of a product" was subject to personal jurisdiction in New Jersey's courts "so long as the manufacturer 'knows or reasonably should know that its products are distributed through a nationwide distribution system that might lead to those products being sold in any of the fifty states.'" (McIntyre, supra, 564 U.S. at p. 877 (plur. opn. of Kennedy, J.).) A divided United States Supreme Court reversed. (See id. at p. 879.)
The four-justice plurality wrote that a "defendant's transmission of goods permits the exercise of jurisdiction only where the defendant can be said to have targeted the forum; as a general rule, it is not enough that the defendant might have predicted that its goods will reach the forum State." (McIntyre, supra, 564 U.S.at p. 882 (plur. opn. of Kennedy, J.).) In McIntyre, the "claim of jurisdiction center[ed] on three facts: The distributor agreed to sell [the manufacturer's] machines in the United States; [the manufacturer's] officials attended trade shows in several States but not in New Jersey; and up to four machines ended up in New Jersey." (Id. at p. 886 (plur. opn. of Kennedy, J.).) Because the facts revealed at most "an intent to serve the U.S. market, but . . . not . . . that [the manufacturer] purposefully availed itself of the New Jersey market," the plurality concluded that the exercise of jurisdiction was improper. (Ibid.)
The concurring justices reasoned, instead, that the relevant facts failed to establish personal jurisdiction because, even if the manufacturer knew that a sale would occur in New Jersey, there was no" 'regular . . . flow' or 'regular course' of sales in New Jersey" and there was "no 'something more,' such as special state-related design, advertising, advice, marketing, or anything else." (McIntyre, supra, 564 U.S. at p. 889 (conc. opn. of Breyer, J.).)
After McIntyre, "merely placing a product into the stream of commerce, even with knowledge that the product might enter the forum state, is not a sufficient basis for personal jurisdiction over a nonresident defendant." (Jayone Foods, Inc. v. Aekyung Industrial Co. Ltd. (2019) 31 Cal.App.5th 543, 559 (Jayone); see also Bombardier Recreational Products, Inc. v. Dow Chemical Canada ULC (2013) 216 Cal.App.4th 591, 602; Dow Chemical Canada ULC v. Superior Court (2011) 202 Cal.App.4th 170, 179.) But the McIntyre court did not "agree[] on exactly what more besides foreseeability must be shown; for example, whether the defendant's products knowingly and regularly flowed into the forum state or were part of a regular course of sale in the forum state . . .; or whether there must be something more than that, such as special state-related design, advertising, advice, or marketing." (Bombardier, at p. 602.)
The trial court properly found that Pourdeyhimi and LINC sold fabric to an intrastate distributor with" 'something more'" than mere knowledge that the distributor could send the fabric into one or more other states. (See McIntyre, supra, 564 U.S. at p. 889 (conc. opn. of Breyer, J.).) It determined that Pourdeyhimi, acting as LINC's manager, caused LINC to work with a distributor to specifically secure business from plaintiffs in California by assuring plaintiffs that the fabric would meet their specifications and responding to concerns about the suitability of the fabric for use in N95 masks-"special state-related design . . . [and] advice." (See ibid.) Moreover, between the indirect shipments to plaintiffs and the direct shipments to other companies in the state in the same period, the trial court could justifiably find a" 'regular . . . flow'" of LINC's fabric into California for at least several months. (See ibid.) Through this conduct, Pourdeyhimi and LINC "can be said to have targeted the forum." (Id. at p. 882 (plur. opn. of Kennedy, J.).)
Pourdeyhimi's personal conduct as LINC's manager, as found by the trial court, satisfies us that LINC's production of material for Sanctuary's known California buyers and Pourdeyhimi's communications in furtherance of that relationship establish Pourdeyhimi's and LINC's purposeful availment of the benefits of the California forum. Plaintiffs' claims against Pourdeyhimi and LINC include tort theories predicated on Pourdeyhimi's representations that MIT used the wrong test, inducing plaintiffs to continue selling and marketing inadequate masks in breach of their own contractual obligations. The personal efforts to target plaintiffs undertaken by Pourdeyhimi, which allegedly include fraudulent misrepresentations, suffice to demonstrate purposeful availment. (See generally Casey, supra, 79 Cal.App.5th at pp. 965-966, 972.)
Petitioners do not meaningfully dispute that this suit arises out of Pourdeyhimi and LINC's forum contacts. (See generally Bristol-Myers Squibb Co. v. Superior Court (2017) 582 U.S. 255, 262 [for a state court to exercise specific jurisdiction, suit must arise out of or relate to defendant's forum contacts].) The forum contacts include the sales and communications Pourdeyhimi and LINC directed to plaintiffs in California through Sanctuary. In this suit, plaintiffs allege that the fabrics were unsuited for their intended use and that Pourdeyhimi's comments about the MIT study were fraudulent. All of their claims arise out of LINC's contacts with the forum.
We agree with petitioners that LINC's direct sales to other California companies "are insufficient," standing alone, "to establish personal jurisdiction" because they are unrelated to this suit. But, as set forth above, they are relevant to the broader assessment of forum contacts.
Nor do petitioners demonstrate that it would offend traditional notions of fair play and substantial justice for Pourdeyhimi and LINC to be sued in a downstream client's home forum when they allegedly made fraudulent representations-albeit via an intermediary-to induce that client to maintain the supply-chain relationship. (See generally Ford Motor Co. v. Mont. Eighth Judicial Dist. Court (2021) 592 U.S. 351, 358; Pavlovich, supra, 29 Cal.4th at p. 273; Jayone, supra, 31 Cal.App.5th at pp. 563-565 [applying defendant's burden to show assertion of jurisdiction would be unfair or unreasonable].)
Relying on the contention that they lacked minimum contacts, petitioners in their briefing made no attempt to suggest that the exercise of jurisdiction over Pourdeyhimi and LINC would be otherwise unreasonable. (See Casey, supra, 79 Cal.App.5th at p. 973 [burden on party seeking to defeat jurisdiction to present other considerations that render jurisdiction unreasonable when a defendant has purposefully directed activities at forum residents].)
At oral argument, however, petitioners argued that because LINC only sold its fabric to California entities at cost in response to a pandemic, and not to secure a commercial benefit, it does not comport with fair play and substantial justice for the buyers to sue LINC in their home forum. But as we have explained, even lacking a profit motive of its own, LINC acted through its manager Pourdeyhimi, who as a Sanctuary shareholder did stand to profit at least indirectly from LINC's dealing with plaintiffs. Moreover, LINC's asserted altruism does not account for the alleged deficiency of those materials for their intended purpose and the alleged fraudulent misrepresentations relating to the same subject. Despite LINC's nonprofit status and at-cost sales, the trial court's factual findings support its exercise of personal jurisdiction over LINC (and Pourdeyhimi) as comporting with fair play and substantial justice. (See generally Martinez v. Perlite Institute, Inc. (1975) 46 Cal.App.3d 393, 399-404 [exercising jurisdiction over nonprofit entity]; Archdiocese of Milwaukee v. Superior Court (2003) 112 Cal.App.4th 423, 442-443 [same].)
B. The Institute, Partnership, and University
With multiple defendants, "[e]ach defendant's contacts with the forum State must be assessed individually." (Calder v. Jones (1984) 465 U.S. 783, 790.) Generally, the actions of a third party are irrelevant. (Farina v. SAVWCL III, LLC (2020) 50 Cal.App.5th 286, 296 (Farina); but see Magnecomp Corp. v. Athene Co. (1989) 209 Cal.App.3d 526, 535 [corporations' activities through their appointed agents are considered].) For example, employees' contacts "are not to be judged according to their employer's activities," but neither does "their status as employees . . . insulate them from jurisdiction" in a certain forum for their own conduct. (Calder, at p. 790.) Similarly, a parent company does not purposefully avail itself of a forum's benefits by the mere fact of a subsidiary's contacts unless the subsidiary's contacts can otherwise be attributed to the parent. (See HealthMarkets, Inc. v. Superior Court (2009) 171 Cal.App.4th 1160, 1169 (HealthMarkets).)
The trial court neither explained its rationale for treating the petitioners collectively nor made factual findings specific to the Institute, Partnership, or University and their relationships with LINC. Implicit in the trial court's assertion of specific jurisdiction as to these three defendants is the determination that they either purposefully availed themselves of forum benefits or else directed Pourdeyhimi's and LINC's forum contacts. The parties seem to agree that the trial court imputed Pourdeyhimi's and LINC's alleged forum contacts to the Institute, the University, and the Partnership. They disagree about the propriety of doing so. We conclude that there is insufficient evidence in the record to support a determination that the Institute, the University, or the Partnership purposefully directed any case-related conduct, including case-related conduct of Pourdeyhimi and LINC, at the California forum.
The evidence of the operational relationship between LINC, the Institute, the University, and the Partnership is limited. As it relates to the Institute and the University, plaintiffs adduced evidence that LINC's purpose and function is to "commercializ[e] niche high-value technical nonwoven products developed at the [Institute] at [the University]." To that end, LINC uses its "manufacturing assets . . . located at the . . . Institute's pilot facilities . . . to manufacture the goods needed for its clients." LINC acts as a "manufacturing incubator," providing short runs of novel nonwoven products developed at the Institute to facilitate introduction and testing for companies interested in licensing the technologies. To carry out these operations, LINC's work is, at least in part, conducted by University employees assigned to the Institute using University e-mail addresses. Moreover, Pourdeyhimi acts as both LINC's manager and director of the Institute. As it relates to the Partnership, the record reveals no connection beyond LINC's existence as a wholly owned subsidiary.
These facts do not support the trial court's determination that the Institute, the University, or the Partnership "were aware that they were supplying mask material and information regarding that material and testing to [p]laintiffs in California," "purposefully derived a benefit of selling the fabric to [p]laintiffs," or "agreed to sell [their] products" and gave "advice regarding [their] products" to California recipients. There is nothing in the record from which to infer that Pourdeyhimi, in particular, was acting on behalf of any entity other than LINC in undertaking his relevant forum contacts.
"Agency relationships . . . may be relevant to the existence of specific jurisdiction" because a corporation is a distinct legal entity that can only act through its agents. (Daimler, supra, 571 U.S. at p. 135, fn. 13, italics omitted.) But "[t]he mere ownership of a subsidiary does not subject a nonresident parent company to specific personal jurisdiction based on the subsidiary's forum contacts. Ownership of a subsidiary alone does not constitute purposeful availment. Rather, purposeful availment requires some manner of deliberately directing the subsidiary's activities in, or having a substantial connection with, the forum state." (HealthMarkets, supra, 171 Cal.App.4th at p. 1169; see also In re Automobile Antitrust Cases I &II (2005) 135 Cal.App.4th 100, 119, fn. omitted (Automobile Antitrust) ["a parent corporation is not subject to our state court jurisdiction simply because its wholly owned subsidiary is properly subject to jurisdiction in California courts"].)
California courts have assessed" 'whether the defendant [over whom specific personal jurisdiction is asserted] has purposefully directed its activities at the forum state by causing a separate person or entity to engage in forum contacts.'" (HealthMarkets, supra, 171 Cal.App.4th at p. 1170; see id. at p. 1169 [disagreeing with the use of substantive law "principles of 'alter ego' and 'agency,' including the 'representative services' doctrine" as the framework for the jurisdictional inquiry]; see also Farina, supra, 50 Cal.App.5th at p. 296 ["Only when a defendant purposefully directs a third party's activities toward the forum state can the actions of the third party be imputed to the defendant"]. Some courts favor reliance on alter ego or agency principles in assessing specific jurisdiction as to a parent company. (See VirtualMagic Asia, Inc. v. Fil-Cartoons, Inc. (2002) 99 Cal.App.4th 228, 244-246 [directing trial court to assess in the first instance whether alter ego or agency principles supported exercise of jurisdiction over parent corporations on remand following appellate court's determination that California has specific jurisdiction over the subsidiary]; see also Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 537-542 (Sonora Diamond) [discussing the use of alter ego and agency doctrines to assess whether to impute jurisdictional contacts for purposes of general jurisdiction]; HealthMarkets, supra, 171 Cal.App.4th at pp. 1169-1170 [collecting cases applying the reasoning in general jurisdiction cases to justify the exercise of specific personal jurisdiction].) But it matters not whether we rely on agency or alter ego principles as a reference point: the result is the same.
As to the Partnership, there is no evidence about its role in the activities giving rise to personal jurisdiction over LINC aside from its status as LINC's corporate parent. The record thus does not support the exercise of personal jurisdiction over the Partnership. (See HealthMarkets, supra, 171 Cal.App.4th at p. 1169; Automobile Antitrust, supra, 135 Cal.App.4th at pp. 119, 121.)
As to the Institute and the University, we discern no evidence of their involvement in the decision by LINC or Pourdeyhimi to target California companies for fabric sales or associated representations. Plaintiffs' arguments do not help us.
First, plaintiffs argue that the University signed and approved the relevant purchase orders for LINC's materials. But plaintiffs do not direct us to supporting evidence in the record, and we have found none. Plaintiffs tell us that they successfully argued at the trial court's motion hearing that the University had to sign all of the LINC purchase orders before LINC could sell and ship materials. But the hearing transcript was not provided and, even if counsel's arguments could be considered evidence, the trial court's written order omits any such fact. Rather, the trial court's discussion of LINC purchase orders is limited to its observation that nonparties identified the University, the Institute, or the Partnership, rather than LINC, as the vendors on purchase orders. But these purchase orders were signed, if at all, only by the nonparties. They have no tendency to prove that LINC had to secure approval from the University before contracting with nonparties or Sanctuary. Although in communications with a nonparty Pourdeyhimi said that a manufacturing agreement was "in [the] process of being signed by all stakeholders" (capitalization omitted), Pourdeyhimi never identified those stakeholders. The record does not bolster speculation that the University, Institute, or Partnership were among them.
Second, highlighting Pourdeyhimi's various roles and the symbiotic relationship between LINC and the Institute, plaintiffs argue that each of LINC, the Institute, and the University "are intertwined so that the actions of any one of them implicate all of them." In articulating this argument, plaintiffs argue that LINC and the Institute "were specifically founded as subsidiaries of" the University. This assertion is unsupported by any evidence in the record. Rather, the uncontradicted evidence in the record is that the Institute is an academic program offered by the University-not a separate entity-and LINC is a wholly-owned subsidiary of the Partnership-a nonprofit "special purpose associated entity of [the University]." While there is no doubt of a close relationship between LINC on one hand and the Institute and the University on the other, apparently including shared leadership, shared human resources, and shared physical facilities, we find no evidence that the Institute or the University controlled LINC's relevant conduct. Nor are we able to identify any evidence that Pourdeyhimi was acting in his role as a representative of the Institute or the University when he made his forum contacts, including through his management of LINC. We therefore conclude that the Institute and the University did not" 'purposefully direct[] [their] activities at the forum state by causing a separate person or entity to engage in forum contacts.'" (See HealthMarkets, supra, 171 Cal.App.4th at p. 1170.)
Using the representative services doctrine as the lens through which to evaluate the Partnership's contacts, as plaintiffs suggest, does not make a difference.
"The' "representative services"' doctrine, a species of agency," has been applied to" 'exercise . . . jurisdiction when [a] local subsidiary performs a function that is compatible with, and assists the parent in the pursuit of, the parent's own business.'" (Paneno v. Centres for Academic Programmes Abroad Ltd. (2004) 118 Cal.App.4th 1447, 1456.) But "[p]laintiffs must show more than mere ownership or control of a local subsidiary by a foreign parent corporation. [Citations.] The foreign company must exercise a highly pervasive degree of control over the local subsidiary. It must veer into management and day-to-day operations of the local subsidiary in order to apply the representative services doctrine. [Citations.] An exercise of general jurisdiction under the representative services doctrine is only appropriate if the control of the subsidiary is so pervasive and continual that the local subsidiary functions as an agent or instrumentality of the parent corporation, despite the maintenance of separate corporate structures." (Automobile Antitrust, supra, 135 Cal.App.4th at p. 120, fns. omitted; see also Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 578; Daimler, supra, 571 U.S. at pp. 135-136 [predicating parent's susceptibility to general jurisdiction on its hypothetical readiness to undertake tasks performed by subsidiary "stacks the deck"]; but see Dorel Industries, Inc. v. Superior Court (2005) 134 Cal.App.4th 1267, 1280 [applying representative services doctrine to find general jurisdiction over a Canadian holding company that "continued its traditional business of manufacturing and distributing" car seats and relied on subsidiary to "design and manufacture those car seats,"-tasks "it otherwise would have done itself"-while collaborating with the subsidiary to ensure regulatory compliance and involving itself in customer service issues].)
More broadly, a corporate subsidiary may be considered an agent of its parent if the parent "exercises such a degree of control over its subsidiary corporation that the subsidiary can legitimately be described as only a means through which the parent acts, or nothing more than an incorporated department of the parent." (Sonora Diamond, supra, 83 Cal.App.4th at p. 541.) "The parent's general executive control over the subsidiary is not enough; rather there must be a strong showing beyond simply facts evidencing 'the broad oversight typically indicated by [the] common ownership and common directorship' present in a normal parent-subsidiary relationship." (Id. at p. 542.) Similarly, the alter ego doctrine may supply a basis to disregard a corporate entity's separate existence if (1) the "unity of interest and ownership between the corporation and its equitable owner" divest them of truly "separate personalities" and (2) treating the owner's acts as those of the corporation alone would produce "an inequitable result." (Id. at p. 538.)
Whatever lens we use, there must be some significant exercise of control over LINC by the entity over which jurisdiction is asserted, whether it be the Institute, the University, or the Partnership. The record lacks substantial evidence of such control. To the extent plaintiffs assert that Sanctuary's forum contacts should be imputed to the Institute, the University, or the Partnership, there is no evidence of any of these entities exercising control over Sanctuary. At most, the evidence reflects Pourdeyhimi had some ability to influence Sanctuary's decisionmaking (his 4 percent ownership stake and his correspondence with Sanctuary personnel), without evidence that he used that influence on behalf of the Institute, the University, or the Partnership. Accordingly, we conclude the trial court should have granted the motion to quash as to the Institute, the University, and the Partnership.
III. DISPOSITION
Let a peremptory writ of mandate issue directing the trial court to set aside its order of February 7, 2023 and to issue a new order that denies the motion to quash as to Pourdeyhimi and LINC but grants the motion to quash as to the Institute, the University, and the Partnership. In the interests of justice, the parties shall bear their own costs in this writ proceeding. (Cal. Rules of Court, rule 8.493(a)(1)(B).)
WE CONCUR: BAMATTRE-MANOUKIAN, ACTING P. J., BROMBERG, J.