Fenix Partners Group, LLC v. Slap Gear Protective, LLC

Background

Fenix Partners Group, LLC and SperiWorks, LLC alleged that Slap Gear Protective, LLC, Elizabeth Truong, and T&T Global Logistics Services and Trading Joint Stock Company breached contractual obligations to deliver 660,000 boxes of nitrile gloves during the COVID-19 pandemic. The plaintiffs alleged that only 161,200 boxes were delivered. Their complaint asserted claims including fraud, conspiracy to defraud, conversion, civil theft, interference with contractual relations, breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and unfair business practices under California law.

The alleged transactions involved a master services agreement between Fenix Partners and Slap Gear governed by California law, and a sale and purchase agreement between Fenix Partners and T&T Global governed by Vietnamese law. The opinion states that Fenix Partners and SperiWorks were based in Texas, Slap Gear was based in California, and T&T Global was based in Vietnam.

The clerk entered T&T Global’s default after it failed to respond to the complaint. SperiWorks then moved for default judgment. Magistrate Judge van Keulen recommended denying the motion because the court lacked personal jurisdiction over T&T Global. After reassignment, District Judge P. Casey Pitts reviewed the challenged portions of the recommendation independently.

Personal Jurisdiction

The court first concluded that it lacked general personal jurisdiction over T&T Global. T&T Global was incorporated and had its principal place of business in Vietnam, and the plaintiffs had not shown that its contacts with California were so continuous and systematic that it was essentially at home there.

The court also concluded that it lacked specific personal jurisdiction. For the tort claims, the court found that T&T Global had not purposefully directed its activities at California. The alleged conduct occurred outside California, the goods were to be delivered to Texas, and the plaintiffs were based in Texas. The court rejected the argument that communications through California-based Slap Gear or the alleged conduct of Slap Gear established that the plaintiffs suffered the relevant harm in California.

For the contract claims, the court found that the plaintiffs had adequately alleged, in a general sense, that T&T Global purposefully availed itself of California by entering into a distribution relationship involving a California entity. But the claims against T&T Global arose from a separate sale and purchase agreement with Fenix Partners, not from the master services agreement between Fenix Partners and Slap Gear. The court held that this relationship was too tenuous to establish specific jurisdiction.

The court further held that exercising jurisdiction would be unreasonable. It cited the burden on T&T Global of defending itself from Vietnam, California’s limited interest in a dispute governed by Vietnamese law involving products that were not delivered in California, the Texas location of the plaintiffs, and the availability of Texas as an alternative forum for the contract claims.

Ruling

Judge P. Casey Pitts agreed with Magistrate Judge van Keulen that the court lacked personal jurisdiction over T&T Global. The court denied SperiWorks’s motion for entry of default judgment against T&T Global. It stated that T&T Global must be dismissed from the case and ordered the clerk to close the file because no defendants remained in the litigation.