Shirokov v. Ardatovskiy

Background

Plaintiffs are an individual and a company that own or operate the Rail Ninja website and mobile app, which has operated since 2016 and is used to book train tickets worldwide. Plaintiffs sued several individuals and companies, alleging, among other things, trade-secret misappropriation. They allege that one individual defendant helped improve the website and develop the app before that individual and others created a competing business called Rail Monsters. Plaintiffs also assert copyright, trade-dress, and unfair-competition claims.

The pending motions were defendants’ motion to dismiss for lack of personal jurisdiction and plaintiffs’ motion for expedited discovery. Plaintiffs stated that they intended to amend the complaint to drop the individual defendants, leaving the entity defendants in the case. The court therefore considered the entity defendants’ contacts with the United States.

Personal Jurisdiction

Personal jurisdiction is a court’s authority to exercise power over a defendant. The parties agreed that the issue was specific jurisdiction, which concerns claims connected to a defendant’s activities involving the forum. Plaintiffs did not argue that general jurisdiction applied.

The court applied a three-part test: whether the defendants purposefully directed activities toward the forum or purposefully benefited from conducting activities there; whether the claims arose from or related to those activities; and whether exercising jurisdiction would be reasonable. Because the motion was based on written materials rather than an evidentiary hearing, plaintiffs needed to make only a preliminary showing of jurisdictional facts.

The court held that plaintiffs made the required preliminary showing as to the entity defendants’ purposeful direction of activities toward the United States. The record showed that the defendants made regular sales to U.S. customers, with U.S. customers accounting for approximately 5% to 8% of sales when viewed conservatively. The court found those sales were not random, isolated, or accidental. It also relied on evidence that the defendants made the Rail Monsters website and app available in the United States and used Google Ads targeted to U.S. customers.

The court also concluded that exercising jurisdiction would be reasonable. After plaintiffs satisfied the first two parts of the test, the defendants had to present a compelling case that jurisdiction would be unreasonable. The court found that most of the relevant factors favored plaintiffs. Although the defendants faced some burden from litigating in the United States, technology could reduce that burden, plaintiffs were willing to take depositions in the United Kingdom if necessary, and the defendants had not shown that litigation would jeopardize their financial future. The court also considered that plaintiffs’ claims arose under U.S. and California law.

Expedited Discovery and Disposition

Plaintiffs stated at the hearing that their motion for expedited discovery was moot, and the parties’ stipulation to stay discovery confirmed that position. The court nevertheless stated that limited merits discovery could occur before alternative dispute resolution to help facilitate an early resolution. It directed the parties to meet and confer about narrowly tailored discovery and scheduled a further status conference to address any disputes.

The court denied defendants’ motion to dismiss for lack of personal jurisdiction, based on the understanding that plaintiffs would make the amendments they had described. The court found plaintiffs’ motion for expedited discovery moot. The order disposed of Docket Nos. 26 and 57.