Prevail Legal, Inc. v. Gordon

Background

Prevail Legal, Inc. sued ShakaCode, LLC and Justin Gordon. Prevail alleged that ShakaCode developed software for its cloud-based deposition-testimony platform and delivered that software through Prevail’s GitHub account. Prevail further alleged that a person using the username “gonzalog” deleted the software code and that the defendants authorized the deletion. Prevail said an attorney for ShakaCode later offered to return the code if Prevail paid disputed invoices.

Prevail asserted claims under the federal Computer Fraud and Abuse Act, California’s Comprehensive Computer Data Access and Fraud Act, and for conversion. It sought damages, injunctive relief, and declaratory relief.

Motion and jurisdictional issue

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), (3), and (6), arguing lack of personal jurisdiction, improper venue, and failure to state a claim. Personal jurisdiction is a court’s authority to require a defendant to defend a case in that court.

Prevail did not argue for general personal jurisdiction, which can allow a defendant to be sued on claims unrelated to the forum. The court therefore considered specific personal jurisdiction, which depends on whether the claims arise from or relate to the defendant’s contacts with the forum.

For tort-related conduct, the court applied the Ninth Circuit’s “purposeful direction” test. Under that test, the plaintiff must show an intentional act expressly aimed at the forum state and harm the defendant knew was likely to occur there.

Court’s analysis

The court found that Prevail sufficiently alleged an intentional act because Prevail alleged that agents of ShakaCode, including Gordon and “gonzalog,” intentionally accessed its GitHub account and deleted data without authorization. The defendants conceded that deleting a software branch could qualify as an intentional act.

The court nevertheless found that Prevail failed to show that the defendants expressly aimed their conduct at California. First, the location of the GitHub server could not establish jurisdiction. The server belonged to a third party, and the opinion found no evidence or allegation that the defendants knew or had reason to know that the server hosting the code was in California. The court described that location as random rather than a deliberate contact with California.

Second, the court found that the other alleged California contacts were insufficient. The proposed contract was sent to Prevail’s California address, but Prevail refused to sign it, and the contract was never operative. The proposed contract also selected Hawaii law. The court likewise found that communications by ShakaCode’s attorney with Prevail’s chief executive in California about returning the code did not establish jurisdiction, particularly because the negotiations did not produce an operative agreement.

The court explained that the defendants’ relationship with Prevail, standing alone, was not enough to establish jurisdiction and that Prevail could not be the only link between the defendants and California. Because Prevail failed to establish purposeful direction, the court did not address the remaining requirements for specific jurisdiction. It also did not reach the defendants’ arguments about venue or failure to state a claim.

Disposition

The court granted the defendants’ motion to dismiss for lack of personal jurisdiction. It dismissed the case without prejudice to Prevail refiling in Hawaii state or federal court.