RocketPower, Inc. v. Strio Consulting, Inc.

Background

RocketPower, Inc. sued Strio Consulting, Inc. for breach of contract. RocketPower alleged that Strio agreed to conduct and review background checks for workers placed with RocketPower’s client, Nuro, Inc., but either failed to conduct the checks or failed to review them adequately for disqualifying offenses. After Nuro conducted its own checks in February 2020 and identified workers who had been flagged, RocketPower alleged that its worker placements with Nuro sharply declined.

RocketPower filed the case in California state court. Strio removed it to the Northern District of California based on diversity jurisdiction. Strio then moved to dismiss for lack of personal jurisdiction, meaning it argued that the California court lacked authority over Strio. In the alternative, Strio moved to transfer the case to the District of Minnesota.

Personal Jurisdiction

The court applied the federal due-process minimum-contacts test. Under that test, the defendant must purposefully direct activities toward the forum, the claim must arise from or relate to those activities, and exercising jurisdiction must be reasonable.

The court held that Strio purposefully directed activities toward California. Strio contracted with RocketPower, a California company, and provided services for Nuro, another California company. The services were tailored to Nuro’s needs, and California workers entered joint-employment agreements with RocketPower and Strio. The court concluded that these contacts were not random, accidental, or too indirect to support jurisdiction.

The court also held that RocketPower’s claim arose from Strio’s California-related activities because the alleged contract breach involved screening workers jointly employed by the parties on behalf of Nuro. The court found that exercising jurisdiction was reasonable. Although defending the case in California could burden Strio, the court noted that RocketPower chose California, and relevant third parties, including Nuro representatives and job applicants, were likely located there. The court therefore concluded that it had personal jurisdiction over Strio.

Transfer of Venue

The court denied transfer under 28 U.S.C. § 1404(a), which permits a court to move a case for the convenience of the parties and witnesses and in the interest of justice. Some factors were neutral: the agreements were negotiated in both California and Minnesota, and both parties had relevant contacts with both states. The court also said it was unclear whether California or Minnesota law would govern the contract claim because the parties had not adequately briefed that issue.

Other factors favored keeping the case in California. RocketPower’s choice of forum favored California. The court also found that relevant nonparty witnesses, including Nuro representatives, job applicants, and workers, were likely located in California, making compulsory attendance and access to evidence more favorable there. The court rejected Strio’s argument that other litigation between the parties in Minnesota justified transfer because those cases involved different issues and did not concern Strio’s employment-screening obligations or the alleged breach involving Nuro.

Disposition

The court DENIED Strio’s motion to dismiss or transfer venue. The opinion resolved Strio’s jurisdiction and venue requests and did not decide the merits of RocketPower’s breach-of-contract claim.