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Gras v. Subcontracting Concepts, LLC

United States District Court, W.D. Washington, Seattle

September 17, 2019

SEATON GRAS, Plaintiff
v.
SUBCONTRACTING CONCEPTS, LLC, PETER FIDOPIASTIS, and RYAN WISE, Defendants,

          ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

          BARBARA J. ROTHSTEIN UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiff Seaton Gras initiated the instant action alleging that Defendant Subcontracting Concepts, LLC (“SCI”), and its President, Peter Fidopiastis, and Vice President of Technology, Ryan Wise, (collectively “Defendants”) intentionally intercepted a telephone call between Plaintiff and a third-party in violation of the Washington's Privacy Act, Wash. Rev. Code § 9.73.030, leading to the souring of business relations between Plaintiff and Defendants. Before the Court is Defendants' motion to dismiss based on lack of personal jurisdiction, improper venue, and failure to state a claim. Dkt. No. 6. Having reviewed the motion, opposition thereto, the record of the case, and the relevant legal authorities, the Court will grant the motion on the basis of lack of personal jurisdiction over Defendants. The reasoning for the Court's decision follows.

         II. BACKGROUND

         Plaintiff is a software developer and entrepreneur who lives and works in the State of Washington. Dkt. No. 1-1 at ¶ 2. SCI, in turn, is a limited liability company organized under Delaware law that is headquartered and primarily conducts business in New York. Id. at ¶ 3; Dkt. No. 6 at 2. SCI is a self-described “third-party administrator for logistic companies and independent owner operators” whose primary business is facilitating payment processing and compliance primarily for the courier industry. Dkt. No. 6 at 2; see also Dkt. No. 1-1 at ¶ 3. Defendants Fidopiastis and Wise are officers of SCI. See Dkt. No. 1-1 at ¶¶ 4-5.

         On October 15, 2013, Plaintiff and Defendants entered into a contract (“the Contract”) for Plaintiff to develop a bidding software application (“the App”) for Defendants to market to their clients. Dkt. No. 1-1 at ¶ 10; Dkt. No. 6 at 2. As Plaintiff describes, the App “would allow trucking companies to post courier delivery routes to independent contractor drivers” for which drivers would be able to bid. Dkt. No. 1-1 at ¶ 11. The App would then place bids in reverse order, allowing the bidder with the lowest price to secure the contract for deliver. “The main purpose of [the App], ” as Plaintiff explains, “is to ensure drivers utilized by businesses like SCI or SCI's clients would be classified by government regulators as bonafide independent contractors, rather than employees, through the app's reverse-auction bidding system.” Id. at ¶ 12.

         There is some disagreement between the parties as to the exact extent to which relevant events in the development of the relationship and the concluding of the Contract occurred in the State of Washington. Defendants, for example, assert that all of the negotiations surrounding the App took place in New York, including the signing of the Contract. Dkt. No. 6 at 2. Plaintiff, however, asserts that the relationship goes back further, including introductions through a mutual contact from Washington, as well as the fact that he developed software for the App while in Washington and “navigate[d] technical details with defendant via email in Seattle.” Dkt. No. 15 at 2-3. Either way, the parties seemed to have differing understandings as to whether software for the App was meant to be exclusive, with Plaintiff thinking he was free to market the product to third-parties, see Dkt. No. 1-1 at ¶ 15-18, while Defendants thought he was not, Dkt. No. 6 at 2.

         The real heart of this case, however, is a phone call that occurred on March 25, 2014 in which Plaintiff marketed the App to several of Defendants' competitors while using Defendants' conference call line. See Dkt. No. 1-1 at ¶ 21; Dkt. No. 6 at 3. According to Plaintiff, Defendants “surreptitiously and illegally” recorded this call without his permission and, upon learning of Plaintiff's intent to market the App to competitors, Defendants decided to “sabotage their contract with [Plaintiff], block [Plaintiff]'s ability to build any other business partnerships, and unilaterally gain control of the [A]pp.” Dkt. No. 1-1 at ¶ 23.

         Again, locations matter. While he failed to state as much in his complaint, Plaintiff asserts that he initiated the call while in Washington State. See Dkt. No. 15 at 6, 7; Dkt. No. 17 at ¶ 5. Defendants, however, assert that “Plaintiff's phone call was initiated on SCI's internal conference call telephone number and equipment, which is solely located [] at SCI's New York office.” Dkt. No. 6 at 3. Defendants add that Plaintiff neither had permission to use their conference call line, nor would permission have been granted if requested. Id. at 3-4.

         As a result of actions taken by Defendant in response to learning of his intent to market the App, Plaintiff claims he was “unable to monetize or raise investment funds for [the App].” He subsequently filed the instant action in King County Superior Court claiming two causes of action: (1) Unlawful Wiretap in violation of the RCW 9.73.030 and (2) the common law tort of Invasion of Privacy. Dkt. No. 1.

         After removal to this Court, see Dkt. No. 1, Defendants moved to dismiss for lack of personal jurisdiction, improper venue, and failure to state a claim upon which relief can be granted pursuant to Federal Rules of Civil Procedure 12(b)(2), (3), and (6), respectively. Dkt. No. 6.[1]Plaintiff opposes dismissal. Dkt. No. 15.[2]

         III. LEGAL STANDARD

         “Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Daimler AG v. Bauman, 571 U.S. 117, 125 (2014).[3] As Washington State's long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution, Shute v. Carnival Cruise Lines, 783 P.2d 78, 79 (Wash. 1989), the Court's “inquiry centers on whether exercising jurisdiction comports with due process, ” Picot, 780 F.3d at 1211. Due process, in turn, “requires that the defendant ‘have certain minimum contacts' with the forum state ‘such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'” Id. (quoting Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)); see also Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011).

         Plaintiff bears the burden of establishing that personal jurisdiction in proper. Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Under the current procedural posture, Plaintiff need only make a prima facie showing of the jurisdictional facts. Id. (citing Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)); see also Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977) (“if a plaintiff's proof is limited to written materials, it is necessary ...


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