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Starbucks Corporation v. Wellshire Farms, Inc.

United States District Court, Ninth Circuit

December 17, 2013

STARBUCKS CORPORATION, Plaintiff,
v.
WELLSHIRE FARMS, INC., Defendant.

ORDER GRANTING MOTION TO DISMISS

MARSHA J. PECHMAN, Chief District Judge.

This matter comes before the Court on the motion of Defendant Hahn Bros. Inc. to dismiss for lack of personal jurisdiction. (Dkt. No. 24.) Having reviewed the motion, the responses (Dkt. No. 28-29), Hahns reply (Dkt. No. 32), and all related papers, the Court finds it lacks personal jurisdiction over Hahn and GRANTS the motion.

Background

Hahn is a Maryland-based corporation specializing in the processing and packaging of meat products. (Dkt. No. 1 at 2.) Its processing of ham for use in Starbucks' sandwiches is the subject of this lawsuit. (Id. at 4.)

This case begins with Starbucks decision to introduce new warm breakfast sandwiches to its stores nation-wide in 2008. (Id. at 1) To those ends, Starbucks provided non-party SK Food Group ("SK Food") with specifications for the new sandwiches. (Id. at 2-3) SK Food is a food assembler, who sourced the ingredients for the new sandwiches, and produced several sandwich options for Starbucks' consideration in blind taste-tests. (Id.) Starbucks selected a ham sandwich with Black Forest ham it believed to be produced by Wellshire Farms, Inc., another defendant in this case. (Id. at 3)

Starbucks also decided to redesign its chilled lunch sandwiches and followed a similar process for choosing a new sandwich: SK Food provided options and Starbucks again choose a sandwich it believed to have Wellshire Farms' Black Forest ham. (Id. at 3) In reality, the ham was processed by Hahn. (Dkt. Nos. 25 at 2, 26 at 2-3.) Starbucks did not have a contract with either Hahn or Wellshire. Instead, Starbucks contracted with the sandwich assemblers, who then contracted with Wellshire, a meat vendor. Only Wellshire contracted with Hahn.

Shortly after the sandwich redesign, Starbucks received customer complaints about spoiled ham. (Dkt. No. 1 at 3.) Starbucks issued "Stop Sell and Discard" notices to its stores. (Id. at 3-4.) Starbucks alleges that only after a second round of complaints and an investigation, did it learn that Hahn-not Wellshire-had actually produced the ham. (Id. at 4.) Starbucks issued a second, followed by a third "Stop Sell and Discard" notice to its stores. (Id.) After these problems persisted, Starbucks suspended its sales of the sandwiches. (Id. at 5.)

Starbucks' settled with the sandwich assemblers for losses they suffered from the alleged defective ham. (Id. at 5-6) In return, the assemblers assigned their rights to bring claims against Hahn and Wellshire to Starbucks. (Id.)

Asserting the sandwich assemblers' assigned rights, Starbucks sues Hahn and Wellshire for breach of implied warranty of fitness for a particular purpose under RCW 62A.2-315, breach of contract on a third-party beneficiary rights theory, negligence, and a claim of violation of Washingtons Consumer Protection Act. (Id. at 6-11.) Starbucks claims at least $4.8 million in damages and attorney fees. (Id. at 11.)

Hahn now moves to dismiss for lack of personal jurisdiction. Hahn argues: (1) general jurisdiction does not exist, because it conducts no business in the state nor has a physical presence in Washington; (2) specific jurisdiction does not exist because it has not purposefully availed itself of the forum, and jurisdiction offends notions of fair play and substantial justice. (Dkt. No. 24 at 10-16.) Indeed, the record shows Hahn has no offices, stores, outlets, distributors, warehouses, or employees within Washington, nor does it have substantial sales of ham or other products here. (Dkt. Nos. 25, 26.)

Starbucks counters that specific jurisdiction exists because Hahn has placed defective products into the stream of commerce, caused economic losses to Starbucks in Washington state, and compelled production of documents from the Starbucks corporation for use in other litigation. (Dkt. No. 29 at 8-15.)

Discussion

A. Legal Standard

As Plaintiff, Starbucks bears the burden of establishing that the court has personal jurisdiction. See, e.g., Zigler v. Indian River Cnty. , 64 F.3d 470, 473 (9th Cir. 1995). Because the court is resolving the motion to dismiss without holding an evidentiary hearing, Starbucks "need make only a prima facie showing of jurisdictional facts to withstand the motion." Wash. Shoe Co. v. A-Z Sporting Goods, Inc. , 704 F.3d 668, 671-72 (9th Cir. 2012). That is, Starbucks need only demonstrate facts that if true would support jurisdiction over [Hahn]. Bancroft & Masters, Inc. v. Augusta Nat'l Inc. , 223 F.3d 1082, 1085 (9th Cir. 2000) ("Where... the district court does not hold an evidentiary hearing but rather decides the ...


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