67 Cal.App.5th 380
Cal. Ct. App.2021Background
- Plaintiffs Rivelli (Massachusetts) and Pinecroft (Nevada) are Series A preferred shareholders in Rodo Medical, a California corporation; they sue Rodo’s investors and directors over a 2017 stock purchase (the "Straumann Transaction").
- Institut Straumann AG (Swiss corporation) increased its Rodo stake from 12% to 30%, obtained an additional board seat, exclusive international distributorship rights (excl. U.S., Canada, Hong Kong, South Korea), a revolving credit arrangement, and an option to acquire 51% later; several transaction documents specify California choice of law.
- Frank Hemm (Swiss citizen; Straumann EVP) served on Rodo’s board and, according to undisputed evidence, negotiated and signed the transaction documents on Straumann’s behalf; he participated in board meetings (mostly by phone), recused from the vote, and did not draft the shareholder information statement.
- Plaintiffs assert derivative and direct claims (fraud, breach of fiduciary duty, aiding and abetting, and Corporations Code violations) alleging misrepresentations to shareholders and director misconduct that disadvantaged Series A holders.
- Straumann and Hemm were served via the Hague Convention, each moved to quash for lack of personal jurisdiction; the trial court granted the motions, finding insufficient forum-relatedness and no evidence of fraudulent/tortious conduct by Hemm. Plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether California has specific (case-linked) jurisdiction over Straumann | Straumann purposefully availed itself by negotiating and contracting with Rodo (increase to 30%, board seats, distributorship, option to acquire majority) and thus its forum contacts relate to plaintiffs' tort claims | Straumann’s minority investment and contracts with a California company are insufficient; plaintiffs fail to connect Straumann’s forum contacts to the tort claims | Straumann purposefully availed itself, but plaintiffs failed to show the tort claims arise out of or relate to Straumann’s forum-directed activities; jurisdiction denied |
| Whether California has specific jurisdiction over Hemm (individual director-officer) | Hemm led negotiations on Straumann’s behalf while a Rodo director and thus availed himself of forum; his board conduct ties him to plaintiffs’ claims | Hemm disclosed his conflict, recused from the vote, did not draft the information statement, and plaintiffs offer no competent evidence of tortious acts directed at California | Hemm had purposeful contacts, but plaintiffs produced no competent evidence tying Hemm’s forum contacts to the alleged fraud or breaches; jurisdiction denied |
| Whether plaintiffs met their burden of competent evidence for jurisdictional facts | Plaintiffs relied on board participation, transaction documents, and Rivelli’s declarations to show wrongdoing and forum-related acts | Defendants produced uncontradicted evidence showing Swiss residence, corporate separateness, no California presence; plaintiffs’ declarations lacked specific evidentiary detail | Plaintiffs failed to present competent, particularized evidence connecting defendants’ forum contacts to the specific tort claims; burden unmet |
Key Cases Cited
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (establishes purposeful availment/minimum contacts analysis)
- Walden v. Fiore, 571 U.S. 277 (jurisdiction requires defendant's own forum-directed conduct creating the connection)
- Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (claims must have a connection to defendant's forum contacts)
- Daimler AG v. Bauman, 571 U.S. 117 (limits general jurisdiction to forums where a defendant is essentially at home)
- Vons Companies, Inc. v. Seabest Foods, Inc., 14 Cal.4th 434 (California law on purposeful availment via ongoing contractual obligations)
- Pavlovich v. Superior Court, 29 Cal.4th 262 (California framework for case-linked jurisdiction: purposeful availment, relatedness, reasonableness)
- Automobile Antitrust Cases I & II, 135 Cal.App.4th 100 (require some evidence tying each defendant's forum contacts to the alleged conspiracy)
- Taylor-Rush v. Multitech Corp., 217 Cal.App.3d 103 (personal jurisdiction over individual directors requires evidence of their tortious acts directed at forum)
- Checker Motors Corp. v. Superior Court, 13 Cal.App.4th 1007 (contacts including negotiation/execution of agreements can constitute purposeful availment)
- Epic Communications, Inc. v. Richwave Technology, Inc., 179 Cal.App.4th 314 (forum contacts from coming to California to negotiate agreements can support jurisdiction)