Balmuccino v. Starbucks Corp. CA2/5 ( 2022 )

Filed 8/24/22 Balmuccino v. Starbucks Corp. CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
BALMUCCINO, LLC B308344
Plaintiff and Appellant, (Los Angeles County Super.
Ct. No. 19STCV37444)
v.
STARBUCKS CORPORATION,
Defendant and Respondent.
APPEAL from an order of the Superior Court of Los
Angeles County, Rupert Byrdsong, Judge. Affirmed.
Martorell Law, Eduardo Martorell and JoAnn Victor for
Plaintiff and Appellant.
K & L Gates, Paul W. Sweeney, Jr., Kevin S. Asfor and
Kate G. Hummel for Defendant and Respondent.
__________________________
Balmuccino, LLC appeals from an order granting
Starbucks Corp.’s motion to quash service of summons for lack of
personal jurisdiction. Starbucks’s ubiquitous retail presence in
California notwithstanding, it is a Washington corporation and
the controversy between the parties is not related to and does not
arise out of Starbucks’s contacts with the State of California. We
affirm.
FACTUAL AND PROCEDURAL BACKGROUND
In 2016, California residents Samantha Lemole, Meredith
Scott Lynn, Vince Spinnato, and Faith Miller began developing a
line of coffee-flavored lip balms. In June 2017, Lemole’s brother-
in-law approached Starbucks’s then-CEO about the lip balms.
The CEO, who was an acquaintance, advised that Lemole should
meet with Starbucks’s Head of Product Development and Senior
Vice President, Mesh Gelman. On June 19, 2017, Lemole
emailed Gelman to coordinate a meeting. After a series of emails
on logistics, on October 19, 2017, Lemole, Lynn, Spinnato and
Miller flew from California to meet with Gelman and his
assistant in Starbucks’s New York offices.
At the meeting, the four pitched their idea and gave
Gelman prototypes of the product, including 12 lip balms
specifically aligned with Starbucks’s top 12 flavors. Gelman
declined to sign a nondisclosure agreement, kept the presentation
and prototypes, and promised to explore the possibility of a
partnership. Gelman left Starbucks’s employment shortly after
the meeting and nothing came of the meeting. The following
year, on November 15, 2018, Lemole, Lynn, Spinnato and Miller
formed Balmuccino as a California limited liability company.
On October 18, 2019, Balmuccino brought suit against
Starbucks for breach of an oral or implied contract, breach of
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confidence, and trade secret misappropriation.1 The complaint
alleged Starbucks reached out to one of Balmuccino’s suppliers in
2018 to inquire about coffee-flavored lip balms and presented
prototypes that were “identical” to those provided to Gelman
during the pitch meeting. Balmuccino further alleged Starbucks
manufactured and distributed coffee-flavored lip glosses in a
nationwide promotion that benefitted Starbucks’s retail sales in
California.
Starbucks moved to quash service of summons for lack of
personal jurisdiction. It asserted general or all-purpose
jurisdiction was lacking because it is a corporation formed under
the laws of the State of Washington with its headquarters in
Seattle. Starbucks submitted evidence that all its corporate
executive decisions, including product development and
marketing, are made in Washington, where all of its senior
officers reside and work.
Starbucks also denied it was subject to specific or case-
linked jurisdiction because it did not purposely avail itself of the
benefits of doing business in California in connection with the
subject matter of the complaint; Balmuccino’s claims did not arise
out of Starbucks’s contacts with California; and the assertion of
jurisdiction over Starbucks would not comport with traditional
notions of “fair play and substantial justice.” It asserted its only
in-person contact with Balmuccino’s members occurred in New
York. Nothing came of the meeting and there were no further
communications between the parties after the October 19, 2017
meeting.
1 Before filing suit, the four individual members of the LLC
assigned to Balmuccino their individual rights and claims against
Starbucks. The only plaintiff is Balmuccino.
3
Starbucks further explained its lip gloss promotion was not
connected to Balmuccino’s product. The Group Marketing
Manager in charge of the promotion affirmed he knew nothing
about Balmuccino’s products or any pitch made to Starbucks
about coffee-flavored lip balm. He explained Starbucks
conducted a four-day social media contest in the United States
and Canada from April 30 to May 3, 2019, in connection with the
return of Starbucks’s S’mores Frappuccino to its retail stores.
Ten winners received a $500 Starbucks gift card, a “Sip Kit,”
consisting of four S’mores-flavored lip glosses, and other
promotional items.2 None of the winners was located in
California nor were the Sip Kits sold anywhere.
Balmuccino opposed the motion to quash, asserting
Starbucks knew it was meeting with California residents, knew
Balmuccino’s products were manufactured in California, and had
misappropriated trade secrets from a California company.3 The
trial court granted the motion and dismissed the action for lack of
personal jurisdiction. Balmuccino timely appealed.
2 The lip glosses consisted of three nude-brown-caramel
shades, and one iridescent white shade. They were called
Chocolicious Bliss, Marshmallow Glow, Campfire Spark, and
Graham Glam.
3 On appeal, Starbucks renews its objections to the
declarations of two Balmuccino members — Spinnato and Lynn.
The record does not reflect that the trial court ruled on the
objections. We will assume (without deciding) that the
declarations were properly admitted. Even so, as we shall
discuss, the trial court’s ruling on the motion to quash was
correct.
4
DISCUSSION
It is undisputed Starbucks is a Washington corporation and
Balmuccino does not contend that Starbucks is subject to general
jurisdiction in California. Rather, it asserts California courts
have specific jurisdiction over Starbucks, relying on Balmuccino’s
development of the product in California, its members’ residence
in California, its communications with Gelman and others at
Starbucks while its members were in California, and the damage
Starbucks caused to Balmuccino’s business located in California.
We conclude that this argument turns specific jurisdiction on its
head: it is not the plaintiff’s connections with the forum state
that drive the inquiry. Our attention is directed to the
defendant’s contacts with California. “The primary focus of our
personal jurisdiction inquiry is the defendant’s relationship to the
forum State.” (Bristol-Myers Squibb Co. v. Superior Court of
California, San Francisco County (2017) –––– U.S. ––––, 137
S.Ct. 1773, 1779, 198 L.Ed.2d 395 (Bristol-Myers).)
1. Legal Principles and Standard of Review
“A court of this state may exercise jurisdiction on any basis
not inconsistent with the Constitution of this state or of the
United States.” (Code Civ. Proc., § 410.10.) The constitutional
limit is found in the due process clause, which requires a
defendant to have sufficient “minimum contacts” with the forum
state to satisfy “ ‘traditional notions of fair play and substantial
justice.’ ” (International Shoe Co. v. Washington (1945) 326 U.S.
310, 316.) Two kinds of personal jurisdiction exist: “general
(sometimes called all-purpose) jurisdiction and specific
(sometimes called case-linked) jurisdiction.” (Ford Motor Co. v.
Montana Eighth Jud. Dist. Ct. (2021) –––– U.S. ––––, 141 S.Ct.
1017, 1024, 209 L.Ed.2d 225 (Ford).)
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“A court may exercise specific jurisdiction over a
nonresident defendant only 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” ’ [citations]; 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; accord Ford, supra, 141 S.Ct. at
p. 1024 [citing cases].)
“When a defendant moves to quash service for lack of
personal jurisdiction, the plaintiff bears the burden of proving
facts supporting the exercise of jurisdiction by a preponderance of
the evidence. [Citation] When there is conflicting evidence, the
trial court’s factual determinations are not disturbed on appeal if
supported by substantial evidence. [Citation.] When there is no
conflict in the evidence, however, the question of jurisdiction is
one of law and the reviewing court engages in an independent
review of the record. [Citation.]” (Bader v. Avon Products, Inc.
(2020) 55 Cal.App.5th 186, 192–193 (Bader); accord Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434,
449.)
2. The Controversy Does Not Arise from Starbucks’s
Contacts with California
For purposes of this opinion, we will assume that,
notwithstanding Starbucks’s argument to the contrary,
Starbucks has purposefully availed itself of the benefits of
California through its extensive business in the state.4
4 Starbucks’s argument on appeal tends to conflate the first
and second elements of specific jurisdiction. “Purposeful
6
The Supreme Court most recently addressed specific
jurisdiction in Bristol-Myers, supra, 137 S.Ct. at page 1773 and
Ford, supra, 141 S.Ct. at page 1017.
In Bristol-Myers, over 600 plaintiffs brought claims in a
consolidated action against the defendant pharmaceutical
company in California, all alleging injuries caused by the
defendant’s drug. (Bristol-Myers, supra, 137 S.Ct. at p. 1779.)
While some of the plaintiffs were California residents, most had
no connection to California and did not allege that they obtained
the drug in California, were injured there, or were treated there.
Using a “sliding scale” approach, the California Supreme Court
had reasoned that the defendant had extensive contacts with
California and thus personal jurisdiction over the defendant as to
the nonresident’s claims could be based “ ‘on a less direct
availment” deals with the sufficiency of a defendant’s overall
conduct directed toward the forum state. The second element is
concerned with the connection between the forum-directed
activities and the claims asserted against the defendant in the
plaintiff’s complaint. The distinction was colorfully made by the
United States Supreme Court in Ford. The issue there was
whether two automobile accidents were sufficiently related to
Ford’s activities in the respective forum states. Ford conceded
purposeful availment, which the Supreme Court noted was a
“small wonder”: “By every means imaginable—among them,
billboards, TV and radio spots, print ads, and direct mail—Ford
urges Montanans and Minnesotans to buy its vehicles, including
(at all relevant times) Explorers and Crown Victorias.” (Ford,
supra,141 S. Ct. at p. 1028.) The same can be said about
Starbucks.
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connection . . . than might otherwise be required.’ ” (Id. at
p. 1779.)
The Bristol-Myers court rejected this sliding scale
approach, stating that for “specific jurisdiction, a defendant’s
general connections with the forum are not enough.” (Id. at
p. 1781.) “In order for a state court to exercise specific
jurisdiction, ‘the suit’ must ‘aris[e] out of or relat[e] to the
defendant’s contacts with the forum.’ ” (Id. at p. 1780, quoting
Daimler AG v. Bauman (2014) 571 U.S. 117, 118.) Nor could
personal jurisdiction over the nonresident plaintiffs’ claims be
based on California having personal jurisdiction over the resident
plaintiffs’ claims: “The mere fact that other plaintiffs were
prescribed, obtained, and ingested [the drug] in California—and
allegedly sustained the same injuries as did the nonresidents—
does not allow the State to assert specific jurisdiction over the
nonresidents’ claims.” (Bristol-Myers, supra, 137 S.Ct. at
p. 1781.) The Bristol-Myers court found specific jurisdiction over
the defendant as to the nonresident claims was improper because
“[w]hat is needed—and what is missing here—is a connection
between the forum and the specific claims at issue.” (Ibid.) The
plaintiffs were not residents of California, did not claim to have
suffered harm in California, and “all the conduct giving rise to
the nonresidents’ claims occurred elsewhere.” (Id. at p. 1782.)
In Ford, the high court added a new layer to specific
jurisdiction caselaw, figuratively putting in bold font the “or” in
“must arise out of or relate to the defendant’s contacts.” (Ford,
supra, 141 S.Ct. at p. 1025.) Ford arose from two products-
liability suits where the plaintiffs were injured in car accidents
involving Ford vehicles in Montana and Minnesota. (Id. at pp.
1025–1026.) Ford contended it was not subject to specific
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jurisdiction in either state, focusing on the “arise out of or relate
to” second element. It asserted the two Ford vehicles at issue
were not designed, manufactured, or originally sold in Montana
or Minnesota. (Id. at pp. 1020–1021.) The Supreme Court
rejected Ford’s position that “only a strict causal relationship”
would be sufficient to establish the requisite connection between
the lawsuits and Ford’s forum-directed activities. (Id. at p. 1026.)
The high court explained, the “arise out of” requirement
speaks to causation while the “relate to” requirement
“contemplates that some relationships will support jurisdiction
without a causal showing.” (Ford, supra, 141 S. Ct. at p. 1026.)
Under this formulation, “[a] different State’s courts may yet have
jurisdiction, because of another ‘activity [or] occurrence’ involving
the defendant that takes place in the State.” (Ibid.) The court
reasoned “that when a corporation has ‘continuously and
deliberately exploited [a State’s] market, it must reasonably
anticipate being haled into [that State’s] court[s]’ to defend
actions ‘based on’ products causing injury there.” (Id. at p. 1027.)
Because “Ford had advertised, sold, and serviced those two car
models in both States for many years,” there was a strong
“ ‘relationship among the defendant, the forum, and the
litigation’—the ‘essential foundation’ of specific jurisdiction.” (Id.
at p. 1028.)
The Ford court cautioned, however, “In the sphere of
specific jurisdiction, the phrase ‘relate to’ incorporates real limits,
as it must to adequately protect defendants foreign to a forum.”
(Id. at p. 1026.)
We encounter one of the “real limits” in this case.
Balmuccino contends six points of contact connect the controversy
and Starbucks to California: (1) it is home to the entirety of the
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Balmuccino team; (2) the ideas that led to the business venture
arose in California; (3) the chemistry, ingredient lists and
formulations were developed in California; (4) the product design
and prototypes were developed in California; (5) the pitch points
and pitch deck that were used in the New York meeting were
created in California; and, (6) all of the communications with the
Balmuccino team, other than when the parties met in New York,
occurred while the team was in California.5
None of the six points of contact confer specific jurisdiction
over Starbucks because they only relate either to Balmuccino’s
contacts with California or Starbucks’s contacts with Balmuccino,
not with Starbucks’s contacts with California involving the
subject of this lawsuit. The Supreme Court has consistently
rejected attempts to satisfy the defendant-focused “ ‘minimum
contacts’ inquiry” solely through evidence of the contacts between
the plaintiff and the forum state or the defendant’s contacts with
residents of that state. (Walden v. Fiore (2014) 571 U.S. 277,
284–285.)
5 We do not know which facts the trial court found or
considered important to its ruling because plaintiffs have not
supplied us with a reporter’s transcript, and there is no written
ruling. In their absence, we presume the trial court findings are
supported by the evidence and imply all findings necessary to
support the judgment. (See Cal. Rules of Court, rule 8.120(b)
[“[i]f an appellant intends to raise any issue that requires
consideration of the oral proceedings in the superior court, the
record on appeal must include a record of these oral proceedings
in the form of” a reporter’s transcript, an agreed statement, or a
settled statement]; In re Marriage of Cohn (1998) 65 Cal.App.4th
923, 928; Estate of Fain (1999) 75 Cal.App.4th 973, 992.)
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Specifically, the six points of contact identified by
Balmuccino do not demonstrate that the alleged trade secret
misappropriation “arises out of or relates to” Starbucks’s contacts
with California as required by Ford, Bristol-Myers, and a long
line of Supreme Court precedent. Balmuccino cites to Starbucks’s
3,034 stores in California but fails to identify how that retail
activity is connected to the alleged trade secret misappropriation.
Balmuccino has failed to show, even under the new formulation
discussed in Ford, that its claims “relate to” Starbucks’s
California stores. That is because there is no forum-related
activity or occurrence by Starbucks that took place in California.
Like in Bristol-Myers, all the conduct giving rise to Balmuccino’s
claims occurred elsewhere: the disclosure of the trade secrets
occurred in New York, Starbucks’s development of the lip glosses
occurred in Washington, and the lip glosses were awarded to
residents of other states. The same analysis applies to
Balmuccino’s other causes of action as well.
Balmuccino attempts to link the controversy to Starbucks’s
retail presence in California through the “Sip Kit” lip glosses.
According to Balmuccino, Starbucks “purposefully and
successfully extract[ed] information from a California cohort and
integrat[ed] trade secrets into a national promotion that was
clearly meant, in part, to drive sales in Starbucks’s huge market
in California. . . .”
The uncontroverted evidence before us is that the Sip Kit
lip glosses, as well as the entire promotional campaign, were
created, developed, and launched in Washington, not California.
No Sip Kit lip glosses were awarded to anyone in California, and
none was sold in California. To the extent Balmuccino alleges
the four lip glosses, which were part of a much larger award that
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included a $500 Starbucks gift card and other promotional items,
drove Starbucks’s retail sales in California, Balmuccino has
presented no evidence to support that claim. Neither we nor the
trial court may speculate on the truth of these allegations. The
undisputed evidence is the promotion was conducted over four
days throughout the United States and Canada, not only
California. From these facts, Balmuccino has not demonstrated
its controversy is related to or arises out of Starbucks’s contacts
with the State of California.
DISPOSITION
The trial court’s order is affirmed. Starbucks to recover its
costs on appeal.
RUBIN, P. J.
WE CONCUR:
BAKER, J. KIM, J.
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