Axiom Foods, Inc. v. Acerchem International, Inc. , 874 F.3d 1064 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AXIOM FOODS, INC., a California No. 15-56450
corporation; GROWING NATURALS,
LLC, an Arizona limited liability D.C. No.
company, 2:15-cv-00870-
Plaintiffs-Appellants, PA-AJW
v.
OPINION
ACERCHEM INTERNATIONAL, INC., an
entity of unknown origin,
Defendant,
and
ACERCHEM UK LIMITED, a United
Kingdom limited company,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding
Argued and Submitted April 3, 2017
Pasadena, California
Filed November 1, 2017
2 AXIOM FOODS V. ACERCHEM UK
Before: DAVID M. EBEL, * MILAN D. SMITH, JR., and
N. RANDY SMITH, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY **
Personal Jurisdiction
The panel affirmed the dismissal of a copyright
infringement action for lack of personal jurisdiction over a
defendant United Kingdom limited company.
Applying the “effects” test, the panel concluded that the
nonresident defendant committed an intentional act by
adding plaintiffs’ logos to a newsletter and sending it to a list
of recipients. The defendant did not, however, expressly aim
its intentional act at the forum state of California. Following
Walden v. Fiore, 134 S. Ct. 1115 (2014), the panel held that
while a theory of individualized targeting may remain
relevant to the minimum contacts inquiry, it will not, on its
own, support the exercise of specific jurisdiction.
The panel held that Federal Rule of Civil Procedure
4(k)(2) did not permit the district court to exercise personal
jurisdiction over the United Kingdom company. The panel
concluded that such an exercise of jurisdiction would not
*
The Honorable David M. Ebel, United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
AXIOM FOODS V. ACERCHEM UK 3
comport with due process because there were insufficient
contacts between the defendant and the United States.
COUNSEL
Jim D. Bauch (argued) and Daniel C. Lapidus, Lapidus &
Lapidus PLC, Beverly Hills, California, for Plaintiffs-
Appellants.
Henry L. Self III (argued) and Brian G. Wolf, Lavely &
Singer P.C., Los Angeles, California, for Defendant-
Appellee.
OPINION
M. SMITH, Circuit Judge:
Axiom Foods, Inc. and Growing Naturals, LLC
(collectively, Appellants) appeal from the district court’s
dismissal of their copyright infringement action against
Acerchem UK Limited for lack of personal jurisdiction. We
affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Appellant Axiom Foods, Inc. (Axiom) is a California
corporation that supplies organic and chemical-free products
made from whole-grain brown rice, peas, and other
“superfoods,” to the food, beverage, and nutraceutical
industries. Appellant Growing Naturals, LLC (GN) is an
Arizona limited liability company that develops and sells
natural food products, such as plant-based proteins and rice
milk powders. GN partners with Axiom to produce and sell
4 AXIOM FOODS V. ACERCHEM UK
goods containing Axiom’s products. Appellants do business
in California.
Acerchem International, Inc. (Acerchem International),
which is based in Shanghai, China, is a wholesale
manufacturer of health and nutritional products, including
rice protein. Appellee Acerchem UK Limited (Acerchem
UK), a United Kingdom limited company, is a wholly-
owned subsidiary of Acerchem International. Acerchem UK
maintains its principal place of business in the United
Kingdom, and does not conduct business in the United
States.
On November 20, 2014, Elva Li, an employee of
Acerchem UK, sent a newsletter promoting Acerchem UK’s
rice protein products to 343 email addresses. Appellants’
“As Good as Whey” and “Non-GMO” logos were used in
the newsletter. Most of the newsletter’s recipients were
located in Western Europe. No more than ten recipients
were located in California.
Appellants subsequently registered their copyrights for
the “As Good As Whey” and “Non-GMO” logos with the
United States Copyright Office. After the registrations
became effective, Appellants filed a complaint against
Acerchem International and Acerchem UK in the Central
District of California, on February 6, 2015. 1 The complaint
asserted two claims for copyright infringement pursuant to
17 U.S.C. § 501 based on Acerchem UK’s use of
Appellants’ logos in its November 20, 2014 newsletter.
Acerchem UK filed a motion to dismiss the complaint
for lack of personal jurisdiction and failure to state a claim.
1
Appellants never served Acerchem International.
AXIOM FOODS V. ACERCHEM UK 5
The district court ordered jurisdictional discovery and
granted the parties leave to file supplemental briefing.
On September 11, 2015, the district court granted
Acerchem UK’s motion to dismiss for lack of personal
jurisdiction. 2 The district court declined to rule on
Acerchem UK’s motion to dismiss for failure to state a
claim. Appellants timely appealed.
STANDARD OF REVIEW
We review de novo “[a] district court’s determination of
whether personal jurisdiction may be properly exercised.”
Washington Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d
668, 671 (9th Cir. 2012).
ANALYSIS
I. Specific Jurisdiction
A. General Principles
“Federal courts apply state law to determine the bounds
of their jurisdiction over a party.” Williams v. Yamaha
Motor Co., 851 F.3d 1015, 1020 (9th Cir. 2017) (citing Fed.
R. Civ. P. 4(k)(1)(A)). California authorizes its courts to
exercise jurisdiction “to the full extent that such exercise
comports with due process.” Id. (citing Cal. Civ. Proc. Code
§ 410.10). Accordingly, “the jurisdictional analyses under
[California] state law and federal due process are the same.”
Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218,
1223 (9th Cir. 2011).
2
Axiom and GN conceded that the district court lacked general
jurisdiction over Acerchem UK. They do not argue otherwise on appeal.
6 AXIOM FOODS V. ACERCHEM UK
Due process “constrains a State’s authority to bind a
nonresident defendant to a judgment of its courts.” Walden
v. Fiore, 134 S. Ct. 1115, 1121 (2014). A nonresident
defendant must have “certain minimum contacts with [the
forum] such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice.’”
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
(quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
“The inquiry whether a forum State may assert specific
jurisdiction over a nonresident defendant ‘focuses on the
relationship among the defendant, the forum, and the
litigation.’” Walden, 134 S. Ct. at 1121 (quoting Keeton v.
Hustler Magazine, Inc., 465 U.S. 770, 775 (1984)) (internal
quotation marks omitted). Specifically, “the defendant’s
suit-related conduct must create a substantial connection
with the forum State.” Id. Our “primary concern” is “the
burden on the defendant.” Bristol-Myers Squibb Co. v.
Superior Court, 137 S. Ct. 1773, 1780 (2017) (quoting
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
292 (1980)).
Two principles animate the “defendant-focused”
inquiry. Walden, 134 S. Ct. at 1122. First, the relationship
between the nonresident defendant, the forum, and the
litigation “must arise out of contacts that the ‘defendant
himself’ creates with the forum State.” Id. (quoting Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).
Second, the minimum contacts analysis examines “the
defendant’s contacts with the forum State itself, not the
defendant’s contacts with persons who reside there.” Id. It
follows that “a defendant’s relationship with a plaintiff or
third party, standing alone, is an insufficient basis for
jurisdiction.” Id. at 1123.
AXIOM FOODS V. ACERCHEM UK 7
These principles apply to cases involving intentional
torts. Id. “A forum State’s exercise of jurisdiction over an
out-of-state intentional tortfeasor must be based on
intentional conduct by the defendant that creates the
necessary contacts with the forum.” Id. While “a single act
can support jurisdiction,” the act must first “create[] a
‘substantial connection’ with the forum.” Burger King,
471 U.S. at 475 n.18 (citation omitted). Put differently,
“‘some single or occasional acts’ related to the forum may
not be sufficient to establish jurisdiction if ‘their nature and
quality and the circumstances of their commission’ create
only an ‘attenuated’ affiliation with the forum.” Id. (quoting
Int’l Shoe, 326 U.S. at 318). A defendant’s “‘random,
fortuitous, or attenuated’ contacts” will not suffice. Walden,
134 S. Ct. at 1123 (quoting Burger King, 471 U.S. at 475).
There are three requirements for a court to exercise
specific jurisdiction over a nonresident defendant: (1) the
defendant must either “purposefully direct his activities”
toward the forum or “purposefully avail[] himself of the
privileges of conducting activities in the forum”; (2) “the
claim must be one which arises out of or relates to the
defendant’s forum-related activities”; and (3) “the exercise
of jurisdiction must comport with fair play and substantial
justice, i.e. it must be reasonable.” Dole Food Co., Inc. v.
Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). “The plaintiff
bears the burden of satisfying the first two prongs of the
test.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d
797, 802 (9th Cir. 2004). If the plaintiff meets that burden,
“the burden then shifts to the defendant to ‘present a
compelling case’ that the exercise of jurisdiction would not
be reasonable.” Id. (quoting Burger King, 471 U.S. at 476–
78)).
8 AXIOM FOODS V. ACERCHEM UK
Where, as here, a case sounds in tort, we employ the
purposeful direction test. See id. The test, often referred to
as the “effects” test, derives from Calder v. Jones, 465 U.S.
783 (1984). Washington Shoe, 704 F.3d at 673. The
defendant must have “(1) committed an intentional act,
(2) expressly aimed at the forum state, (3) causing harm that
the defendant knows is likely to be suffered in the forum
state.” Id. (quoting Mavrix Photo, 647 F.3d at 1228).
Under the first prong of this test, Appellants must show
that Acerchem UK committed an intentional act.
Schwarzenegger, 374 F.3d at 806. Li added Appellants’
logos to the newsletter and sent it to a list of recipients. This
was unquestionably an intentional act, so the first prong of
the test is satisfied.
Appellants must next demonstrate that Acerchem UK
“expressly aimed” its intentional act at the forum. Id. Before
we address the second prong of the test, we must consider
the impact of Walden on the test to be employed.
B. The Impact of Walden
We have held that “individualized targeting” satisfies the
express aiming requirement. See Washington Shoe,
704 F.3d at 678–79; see also Brayton Purcell LLP v.
Recordon & Recordon, 606 F.3d 1124, 1130 (9th Cir. 2010).
A theory of individualized targeting alleges that a defendant
“engaged in wrongful conduct targeted at a plaintiff whom
the defendant knows to be a resident of the forum state.”
Washington Shoe, 704 F.3d at 675 (quoting Dole Food Co.,
303 F.3d at 1111). In the context of copyright infringement,
we have held that a defendant’s “alleged willful
infringement of [a plaintiff’s] copyright, and its knowledge
of both the existence of the copyright and the forum of the
AXIOM FOODS V. ACERCHEM UK 9
copyright holder,” established “individualized targeting.”
Id. at 678–79.
Appellants claim that they have satisfied the express
aiming requirement. They rely on the strength of their own
forum connections, coupled with evidence suggesting
Acerchem UK knew of those connections and Appellants’
ownership of the logos’ copyrights. 3 Walden requires more.
In Walden, the Supreme Court rejected our conclusion that
the defendants’ “knowledge of [the plaintiffs’] ‘strong forum
connections,’” plus the “foreseeable harm” the plaintiffs
suffered in the forum, comprised sufficient minimum
contacts. 134 S. Ct. at 1124–25 (citation omitted). The
3
The parties dispute whether Acerchem UK knew that Appellants
own the copyrights to the two logos. In her declaration, Li acknowledged
authorship of the allegedly infringing newsletter. Li explained that she
found the logos by entering terms such as “rice protein” into a search
engine, but could not recall from which websites the logos originated.
Li denied intent to infringe, maintaining that she believed the copyrights
were in the public domain.
On the other hand, Kay Abadee, the Vice President of Axiom and
GN, attested that Appellants are well-known in the industry, and that
their websites are among the first online search results for terms like “rice
protein.”
The district court reviewed the parties’ affidavits and concluded that
it was “plausible” that Li did not know Appellants owned the logos. The
district court, which did not hold an evidentiary hearing, should have
resolved the factual conflict in Appellants’ favor. See Rio Properties,
Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002).
Nonetheless, the district court’s error was not dispositive. As we
explain above, Acerchem UK lacked sufficient minimum contacts with
California to comply with the requirements of due process, which
renders this aspect of the case moot.
10 AXIOM FOODS V. ACERCHEM UK
Court found that our approach “impermissibly allow[ed] a
plaintiff’s contacts with the defendant and forum to drive the
jurisdictional analysis.” Id. at 1125. The Court made clear
that we must look to the defendant’s “own contacts” with the
forum, not to the defendant’s knowledge of a plaintiff’s
connections to a forum. Id. at 1124–25.
In light of the Court’s instructions in Walden, mere
satisfaction of the test outlined in Washington Shoe, without
more, is insufficient to comply with due process. 4 Following
Walden, we now hold that while a theory of individualized
targeting may remain relevant to the minimum contacts
inquiry, it will not, on its own, support the exercise of
specific jurisdiction, absent compliance with what Walden
requires. Cf. Picot v. Weston, 780 F.3d 1206, 1214–15 (9th
Cir. 2015) (applying Walden to express aiming prong of
purposeful direction test).
C. Application of the Principles of Walden
We now turn to Appellants’ evidence of Acerchem UK’s
contacts with California, and conclude that Acerchem UK’s
“suit-related conduct” did not “create a substantial
connection with [California].” Walden, 134 S. Ct. at 1121.
Appellants’ counsel reviewed the list of 343 email
addresses that received Acerchem UK’s newsletter.
Counsel’s affidavit stated that the list included “[a]t least
55 recipients with companies in California, including
4
The Supreme Court rejected a similar rule proposed by the
respondents in Walden: “[A] defendant creates sufficient minimum
contacts with a forum when he (1) intentionally targets (2) a known
resident of the forum (3) for imposition of an injury (4) to be suffered by
the plaintiff while she is residing in the forum state.” 134 S. Ct. at 1124
n.8.
AXIOM FOODS V. ACERCHEM UK 11
14 recipients with locations within Los Angeles County.”
As required, we focus on “the defendant’s contacts with the
forum State itself, not the defendant’s contacts with persons
who reside there.” Id. at 1122. By that standard, Appellants’
evidence sheds no light on whether Acerchem UK created
minimum contacts with California. We lack information
concerning the residence of the 55 recipients and the legal
and operational relationships among the 55 recipients and
their respective companies. Moreover, any California
contacts Acerchem UK created by sending a single
newsletter to 55 recipients of unknown residence are too
“attenuated,” id. at 1123 (citation omitted), and “isolated,”
Keeton, 465 U.S. at 774, to support the exercise of
jurisdiction.
Nor does the fact that 144 email addresses belong to
Appellants’ “actual or potential partners, customers, or
suppliers” compel a different result. The foreseeability of
injury in a forum “is not a ‘sufficient benchmark’ for
exercising personal jurisdiction.” Burger King, 471 U.S. at
474 (quoting World-Wide Volkswagen, 444 U.S. at 295); see
also Washington Shoe, 704 F.3d at 675 (“Calder ‘cannot
stand for the broad proposition that a foreign act with
foreseeable effects in the forum state always gives rise to
specific jurisdiction.’” (quoting Bancroft & Masters, Inc. v.
Augusta Nat’l Inc., 223 F.3d 1082, 1087 (9th Cir. 2000))).
Acerchem UK’s evidence confirms the insufficiency of
its contacts with California. No more than ten of the
newsletter’s recipients were physically located in California.
Indeed, most of the recipients were located in Western
Europe. Acerchem UK itself conducts no business in
California. It can hardly be said that “California [wa]s the
focal point both of the [newsletter] and of the harm
suffered.” Walden, 134 S. Ct. at 1123 (first alteration in
12 AXIOM FOODS V. ACERCHEM UK
original) (quoting Calder, 465 U.S. at 789); see also Keeton,
465 U.S. at 773–74 (holding that “regular circulation of
magazines in the forum State is sufficient to support an
assertion of jurisdiction in a libel action,” as “regular
monthly sales of thousands of magazines cannot by any
stretch of the imagination be characterized as random,
isolated, or fortuitous”); Mavrix Photo, 647 F.3d at 1229–31
(finding sufficient minimum contacts where defendant used
plaintiff’s copyrighted photos on its celebrity gossip website
“as part of its exploitation of the California market for its
own commercial gain”).
Calder is instructive to show how different the facts are
in this case. In Calder, a California actress brought a libel
action against two nonresident defendants in California state
court, based on an article defendants wrote for the National
Enquirer. See 465 U.S. at 784–86. The Supreme Court
found the defendants’ “forum contacts to be ample.”
Walden, 134 S. Ct. at 1123 (citing Calder, 465 U.S. at 788–
89). The defendants contacted “California sources” for
information and wrote about the actress’s activities in
California. Id. Roughly 600,000 copies of the article were
sold in California, where the actress suffered the “brunt” of
the reputational injury. Id. In short, “[t]he crux of Calder
was that the reputation-based ‘effects’ of the alleged libel
connected the defendants to California, not just to the
plaintiff.” Id. at 1123–24. In this case, Acerchem UK sent
one newsletter to a maximum of ten recipients located in
California, in a market where Acerchem UK has no sales or
clients. The alleged infringement barely connected
Acerchem UK to California residents, much less to
California itself.
Finally, we will not impute Acerchem International’s
forum contacts to Acerchem UK. “It is well established that,
AXIOM FOODS V. ACERCHEM UK 13
as a general rule, where a parent and a subsidiary are separate
and distinct corporate entities, the presence of one . . . in a
forum state may not be attributed to the other[.]” Holland
Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 459
(9th Cir. 2007). Appellants have provided no reason to
deviate from this general rule. 5
The district court correctly found that it lacked specific
jurisdiction over Acerchem UK. 6
II. Rule 4(k)(2) Jurisdiction
In the alternative, Appellants contend that the district
court may exercise personal jurisdiction over Acerchem UK
pursuant to Federal Rule of Civil Procedure 4(k)(2).
Rule 4(k)(2) permits a federal court to exercise personal
jurisdiction over a defendant if “the defendant is not subject
to jurisdiction in any state’s courts of general jurisdiction,”
5
Assuming, without deciding, that an agency relationship between
Acerchem International and Acerchem UK would be “relevant to the
existence of specific jurisdiction,” Daimler AG v. Bauman, 134 S. Ct.
746, 759 n.13 (2014), Appellants have not made a prima facie case for
an agency relationship between Acerchem International and Acerchem
UK, see Williams, 851 F.3d at 1024–25 (“[U]nder any standard for
finding an agency relationship, the parent company must have the right
to substantially control its subsidiary’s activities.”). Nor have they
spelled out an alter ego theory of liability allowing us to attribute the
activities of the parent entity to the subsidiary. See id. at 1021 (“[A]
plaintiff must make out a prima facie case (1) that there is such unity of
interest and ownership that the separate personalities of the two entities
no longer exist and (2) that failure to disregard their separate identities
would result in fraud or injustice.” (citation omitted)).
6
Having decided that Appellants do not meet their burden with
respect to the second prong of the purposeful direction test, we need not
address the last prong. See Picot, 780 F.3d at 1215 n.4.
14 AXIOM FOODS V. ACERCHEM UK
and “exercising jurisdiction is consistent with the United
States Constitution and laws.” Rule 4(k)(2) imposes three
requirements:
First, the claim against the defendant must
arise under federal law. Second, the
defendant must not be subject to the personal
jurisdiction of any state court of general
jurisdiction. Third, the federal court’s
exercise of personal jurisdiction must
comport with due process.
Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1159 (9th Cir.
2006) (citations omitted). “The due process analysis under
Rule 4(k)(2) is nearly identical to traditional personal
jurisdiction analysis with one significant difference: rather
than considering contacts between [the defendant] and the
forum state, we consider contacts with the nation as a
whole.” Holland Am. Line, 485 F.3d at 462.
Appellants do not satisfy the third requirement.
According to the evidence produced, the sole contact
between Acerchem UK and the United States is the
newsletter. Although Appellants maintain that Acerchem
UK sent the newsletter to “[a]t least 70 recipients with
companies in the United States, other than California,”
Appellants fail to explain the relationship between the
70 recipients and their respective companies. At best, “[t]he
contacts between [Acerchem UK] and the United States can
only be described as scant, fleeting, and attenuated.” Id.The district court properly declined to exercise
jurisdiction over Acerchem UK pursuant to Rule 4(k)(2).
AXIOM FOODS V. ACERCHEM UK 15
CONCLUSION
For the foregoing reasons, we affirm the district court’s
dismissal of Appellants’ complaint pursuant to Rule
12(b)(2).
Appellants shall bear costs on appeal. Fed. R. App. P.
39(a)(2).
AFFIRMED.