Hungerstation LLC v. Fast Choice LLC

Background

Hungerstation LLC sued Fast Choice LLC, doing business as Pace, and Inspiring Trading Apps LLC, doing business as Swyft. The opinion states that all three companies were formed under the laws of Saudi Arabia and had their principal places of business there. Hungerstation alleged that the defendants tried to recruit or exploit its employees, accessed its GitHub repositories and Amazon Web Services data using valid Hungerstation credentials, copied its source code and confidential information, and used the copied code in competing delivery apps.

Hungerstation asserted six claims: misappropriation of trade secrets under the federal Defend Trade Secrets Act; misappropriation of trade secrets under California law; copyright infringement; violation of the federal Computer Fraud and Abuse Act; violation of California’s Comprehensive Computer Data Access and Fraud Act; and unfair competition under California law. Hungerstation also sought a preliminary injunction, which is a temporary court order intended to preserve or prevent conduct while a case proceeds.

Motions and Personal Jurisdiction

Fast Choice moved to dismiss for lack of personal jurisdiction and based on forum non conveniens. Inspiring Trading Apps moved to dismiss for lack of personal jurisdiction, improper service, and failure to state a claim. Hungerstation moved for a preliminary injunction.

Personal jurisdiction is the court’s authority over a defendant. The court explained that Hungerstation had to make an initial showing that jurisdiction existed. It considered traditional specific jurisdiction, which concerns claims connected to a defendant’s forum-related conduct, and jurisdiction under Federal Rule of Civil Procedure 4(k)(2), which looks at a defendant’s contacts with the United States as a whole in certain federal-law cases.

For traditional specific jurisdiction, the court focused on whether the defendants purposefully directed their alleged conduct at California. Hungerstation argued that the defendants had done so by accessing data on servers in the United States, copying source code onto GitHub’s servers, working with California-based Apple and Google, and making their apps available through those companies’ platforms.

The court held that these connections were too accidental and indirect. The fact that GitHub, Amazon Web Services, Apple, and Google had California connections or used servers located in California did not show that the defendants expressly aimed their conduct at California. The court also found that the defendants did not control where those third-party companies stored data. The availability of the apps through Apple and Google, and agreements with those companies containing California choice-of-law provisions, likewise did not establish jurisdiction over Hungerstation’s claims because Hungerstation was not a party to those agreements.

The court noted that the defendants’ alleged contacts with California were especially weak because the parties were Saudi Arabian companies, the apps targeted delivery services in Saudi Arabia and Bahrain, and the defendants had no property or employees in the United States according to the evidence submitted for Inspiring Trading Apps. The court concluded that Hungerstation had not shown purposeful direction toward California.

The court reached the same conclusion under Rule 4(k)(2). Although the first two requirements for that rule were satisfied, the defendants’ use of third-party servers somewhere in the United States was not a meaningful enough nationwide contact to support personal jurisdiction. Because the court found no personal jurisdiction, it did not address the defendants’ alternative arguments.

Ruling

Judge Haywood S. Gilliam, Jr. granted the defendants’ motions to dismiss for lack of personal jurisdiction. The court denied Hungerstation’s motion for a preliminary injunction because a district court cannot grant that relief when it lacks personal jurisdiction over the defendants. The court also granted Hungerstation’s administrative motion to submit a letter about later factual developments and directed the clerk to terminate the case. The opinion does not state that the dismissal was with or without prejudice.