James T. McDermott, OSB 933594
`jmcdermott@balljanik.com
`Ball Janik LLP
`101 SW Main Street, Suite 1100
`Portland, OR 97204-3219
`Tel: (503) 228-2525
`Fax: (503) 226-3910
`
`Douglas Carsten, admitted pro hac vice
`dcarsten@wsgr.com
`Lauren Wardle, admitted pro hac vice
`lwardle@wsgr.com
`Wilson Sonsini Goodrich & Rosati
`12235 El Camino Real, Suite 200
`San Diego, CA 92130
`Tel: (858) 350-2305
`Fax: (503) 350-2399
`
`Attorneys for Plaintiff Paragon BioTeck, Inc.
`
`
`
`UNITED STATES DISTRICT COURT
`
`DISTRICT OF OREGON
`
`PORTLAND DIVISION
`
`Case No.: 3:15-cv-00189-PK
`
`PARAGON’S RESPONSE TO
`DEFENDANTS’ MOTION TO
`DISMISS OR FOR TRANSFER OF
`VENUE
`
`
`
`
`PARAGON BIOTECK, INC.,
`
`Plaintiff,
`
`
`
`
`v.
`
`ALTAIRE PHARMACEUTICALS, INC., and
`SAWAYA AQUEBOGUE, LLC,
`
`
`
`Defendants.
`
`
`
`Plaintiff Paragon BioTeck, Inc. (“Paragon”) respectfully asks this Court to deny the
`
`motion to dismiss for lack of personal jurisdiction or, alternatively, the motion for transfer of
`
`venue (Doc. 20) filed by defendants Altaire Pharmaceuticals, Inc. (“Altaire”) and Sawaya
`
`Aquebogue, LLC (“Sawaya Aquebogue”).
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE i
`
`1003397\V2
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`PARAGON - EXHIBIT 2004
`
`0001
`
`

`
`TABLE OF CONTENTS
`
`I.
`
`II.
`
`III.
`
`IV.
`
`V.
`
`
`Summary of Argument ........................................................................................................1
`
`This Court should deny the Defendants’ motion to dismiss for lack of personal
`jurisdiction. ..........................................................................................................................1
`
`A.
`
`B.
`
`C.
`
`Both Altaire and Sawaya Aquebogue formed a “continuing relationship”
`with Paragon, which subjects them to personal jurisdiction in Oregon. ..................3
`
`Paragon’s breach-of-contract claim arises out of Defendants’ activities in
`Oregon......................................................................................................................7
`
`Defendants cannot demonstrate that the exercise of personal jurisdiction in
`this case would be unreasonable or unfair. ..............................................................8
`
`Alternately, this Court should permit jurisdictional discovery if this Court does
`not deny the motion to dismiss as to Sawaya Aquebogue outright. ....................................9
`
`Defendants’ motion to transfer venue should be denied because Defendants’
`argument relies on a misreading of the venue clause. .......................................................10
`
`Granting Defendants’ motion to transfer venue would merely shift, not eliminate,
`any of the alleged inconveniences caused by litigating this case in Oregon. ....................13
`
`A.
`
`B.
`
`C.
`
`Defendants fail to establish that transferring this case to New York would
`be more convenient for witnesses. .........................................................................14
`
`Access to sources of proof will not be more convenient in New York than
`it will be in Oregon. ...............................................................................................14
`
`The relative congestion of court dockets does not support granting
`Defendants’ motion to transfer. .............................................................................15
`
`VI.
`
`Defendants’ motion to dismiss for failure to state a claim should be denied
`because Sawaya Aquebogue is an indispensable party. .....................................................15
`
`VII. Conclusion .........................................................................................................................16
`
`
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE ii
`
`1003397\V2
`
`0002
`
`

`
`
`
`TABLE OF AUTHORITIES
`
`CASES
`
`AT&T Co. v. Compagnie Bruxelles Lambert,
`94 F.3d 586 (9th Cir. 1996) .................................................................................................9
`
`Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. Of Texas,
`134 S. Ct. 568 (2013) .........................................................................................................10
`
`Ballard v. Savage,
`65 F.3d 1495 (9th Cir. 1995) ...........................................................................................3, 7
`
`Beverage Management Systems, Inc. v. Ott,
`No. 3:12-CV-2126-SI, 2013 WL 1296083 (D. Or. Mar. 26, 2013)
`(J. Simon) .....................................................................................................................3, 4, 6
`
`Boschetto v. Hansing,
`539 F.3d 1011 (9th Cir. 2008) .........................................................................................2, 9
`
`Buckman v. Quantum Energy Partners IV,
`No. 07-CV-1471-BR, 2008 WL 2235234 (D. Or. May 29, 2008)
`(J. Brown) ............................................................................................................................7
`
`Burger King Corp. v. Rudzewicz,
`471 U.S. 462 (1985) .........................................................................................................3, 8
`
`CE Distribution, LLC v. New Sensor Corp.,
`380 F.3d 1107 (9th Cir. 2004) .........................................................................................8, 9
`
`Core-Vent Corp. v. Nobel Indus. AB,
`11 F.3d 1482 (9th Cir. 1993) ...............................................................................................8
`
`Daimler AG v. Bauman,
`134 S. Ct. 746 (2014) ...........................................................................................................2
`
`Decker Coal Co. v. Commonwealth Edison Co.,
`805 F.2d 834 (9th Cir. 1986) .......................................................................................10, 14
`
`Doe 1 v. AOL LLC,
`552 F.3d 1077 (9th Cir. 2009) ...........................................................................................10
`
`Doe v. Unocal Corp.,
`248 F.3d 915 (9th Cir. 2001) ...............................................................................................2
`
`Emmert Indus. Corp. v. Artisan Assocs.,
`No. 03-cv-782-BR, 2003 U.S. Dist. LEXIS 27110 (D. Or. Nov. 12, 2003)
`(J. Brown) rev’d on other grounds,
`497 F.3d 982 (9th Cir. 2007) ...............................................................................................7
`
`
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE iii
`
`1003397\V2
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`0003
`
`

`
`TABLE OF AUTHORITIES
`
`Emmert Industrial Corp. v. Copeland Equipment Parts, Inc.,
`No. 09-229-PK, 2009 WL 2447550 (D. Or. Aug. 7, 2009) (J. Haggerty) .......................4, 5
`
`Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co.,
`907 F.2d 911 (9th Cir. 1990) ...........................................................................................1, 2
`
`Full-Sight Contact Lens Corp. v. Soft Lenses, Inc.,
`466 F. Supp. 71 (S.D.N.Y. 1978) ......................................................................................12
`
`Gray & Co. v. Firstenberg Machinery Co., Inc.,
`913 F2d 758 (9th Cir.1990) .................................................................................................2
`
`Gullete v. Lancaster & Chester Co.,
`No. 14-cv-00537, 2014 WL 3695515 (D. Or. July 23, 2014) (J.
`Hernandez) .......................................................................................................................7, 8
`
`Helicopteros Nacionales De Colombia, S.A. v. Hall,
`466 U.S. 408 (1984) .........................................................................................................2, 3
`
`Hirsch v. Blue Cross, Blue Shield of Kansas City,
`800 F.2d 1474 (9th Cir. 1986) .............................................................................................3
`
`Hunt Wesson Foods, Inc. v. Supreme Oil Co.,
`817 F.2d 75 (9th Cir. 1987) .........................................................................................12, 13
`
`Int’l Shoe Co. v. Washington,
`326 U.S. 310 (1945) .............................................................................................................2
`
`Jones v. GNC Franchising, Inc.,
`211 F.3d 495 (9th. Cir. 2000) ......................................................................................10, 11
`
`Lung v. Yachts Int’l,
`980 F. Supp. 1362 (D. Haw. 1997) ......................................................................................5
`
`Mead Investments, Inc. v. Garlic Jim's Franchise Corp.,
`No. 08-922-HU, 2008 WL 4911911 (D. Or. Nov. 13, 2008) (J. Hubel) .....................12, 13
`
`Millennium Enters., Inc. v. Millennium Music, LP,
`33 F. Supp. 2d 907 (D. Or. 1999) ........................................................................................2
`
`N. Cal. Dist. Council of Laborers v. Pittsburg-Des Moines Steel Co.,
`69 F.3d 1034 (9th Cir. 1995) .............................................................................................11
`
`National Wildlife Federation v. Esp,
`45 F.3d 1337 (9th Cir. 1995) .......................................................................................15, 16
`
`Nike, Inc. v. Lombardi,
`732 F. Supp. 2d 1146 (D. Or. 2010) (J. Hubel) .................................................................14
`
`
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE iv
`
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`0004
`
`

`
`TABLE OF AUTHORITIES
`
`Oregon ex rel. Hydraulic Servocontrols Corp. v. Dale,
`657 P.2d 211 (1982) .............................................................................................................2
`
`Pelleport Investors, Inc. v. Budco Quality Theatres, Inc.,
`741 F.2d 273 (9th Cir. 1984) .......................................................................................11, 12
`
`Ravelo Monegro v. Rosa,
`211 F.3d 509 (9th Cir. 2000) .............................................................................................11
`
`Roth v. Garcia Marquez,
`942 F.2d 617 (9th Cir. 1991) ...............................................................................................4
`
`Shaffer v. Heitner,
`433 U.S. 186 (1997) .............................................................................................................7
`
`Shamrock Building Materials, Inc. v. Overseas Building Supply, LLC,
`189 Or. App. 302 (2003) ......................................................................................................6
`
`Shute v. Carnival Cruise Lines,
`897 F.2d 377 (9th Cir. 1990) .........................................................................................6, 13
`
`Slayden v. Schulz Boat Co.,
`No. 3:13-CV-02259-AC, 2015 WL 225731 (D. Or. Jan. 16, 2015) (J.
`Acosta) .................................................................................................................................6
`
`Stewart Org., Inc. v. Ricoh Corp.,
`487 U.S. 22 (1988) .............................................................................................................10
`
`Thompson v. N.Y. State Higher Educ. Servs. Corp.,
`751 F. Supp. 868 (D. Or. 1990) ...........................................................................................9
`
`Wells Fargo & Co. v. Wells Fargo Express Co.,
`556 F.2d 406 (9th Cir. 1977) ...............................................................................................6
`
`STATUTES
`
`28 U.S.C. § 1404(a) .......................................................................................................................10
`
`RULES
`
`Federal Rule of Civil Procedure 12(b)(2) ........................................................................................1
`
`Federal Rule of Civil Procedure 19(a)(1)-(1)(A) ...........................................................................15
`
`ORCP 4 L .........................................................................................................................................2
`
`
`
`
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE v
`
`1003397\V2
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`0005
`
`

`
`I.
`
`Summary of Argument
`
`This Court should deny the motion to dismiss for lack of personal jurisdiction. Ninth
`
`Circuit decisions have consistently held that out-of-state defendants that enter into “continuing
`
`relationships” with citizens of the forum state are subject to personal jurisdiction in that forum
`
`state. Altaire entered into just such a contract with Paragon and then conducted business in
`
`Oregon under that contract, which dispositively establishes this Court’s personal jurisdiction
`
`over Altaire. Additionally, the consideration provided by Paragon to Altaire under the contract
`
`was payment of an ownership interest in Paragon to Sawaya Aquebogue, which is an affiliate of
`
`Altaire. Sawaya Aquebogue’s ownership of an interest in Paragon, whose principal place of
`
`business is in Oregon, establishes this Court’s jurisdiction over Sawaya Aquebogue in this
`
`dispute, including claims that arise out of the contract between Paragon and Altaire and directly
`
`implicate Sawaya Aquebogue’s ownership interest.
`
`Defendants erroneously assert that the contract between Paragon and Altaire contains a
`
`mandatory forum-selection clause. This incorrect assumption fails, however, and this failure
`
`should take defendants’ motion for change of venue with it. The venue clause states only that
`
`venue “shall properly lie” in New York state and federal courts, but this provision merely admits
`
`the propriety of venue and jurisdiction in New York courts. This permissive venue clause does
`
`not require the parties to file in any court, as is commonly the case when there is a true forum-
`
`selection clause. Consequently, the contract does not require Paragon to file this case in another
`
`district outside of this Court. Defendants also lack good grounds for asking to transfer venue and,
`
`accordingly, this Court should deny the motion.
`
`II.
`
`This Court should deny the Defendants’ motion to dismiss for lack of personal
`jurisdiction.
`
`Federal Rule of Civil Procedure 12(b)(2) governs motions to dismiss for lack of personal
`
`jurisdiction. In order to defeat a Rule 12(b)(2) motion, the plaintiff is “only required to make a
`
`prima facie showing of jurisdictional facts.” Farmers Ins. Exch. v. Portage La Prairie Mut. Ins.
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 1
`
`1003397\V2
`
`0006
`
`

`
`Co., 907 F.2d 911, 912 (9th Cir. 1990). Under this standard, this Court must accept the plaintiff’s
`
`uncontroverted version of the facts. Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001).
`
`“When no federal statute governs personal jurisdiction, the district court applies the law
`
`of the forum state.” Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). In order to
`
`establish personal jurisdiction, the plaintiff must first show that the “forum state’s long-arm
`
`statute confers personal jurisdiction over the out-of-state defendant[]”. See Gray & Co. v.
`
`Firstenberg Machinery Co., Inc., 913 F2d 758, 760 (9th Cir.1990). Second, the plaintiff must
`
`show that the exercise of jurisdiction comports with the principles of due process. Id. Oregon’s
`
`long-arm statute confers personal jurisdiction over an out-of-state defendant to the extent
`
`permitted by due process. See ORCP 4 L; Oregon ex rel. Hydraulic Servocontrols Corp. v. Dale,
`
`657 P.2d 211, 212 (1982). Accordingly, the personal-jurisdiction analysis in this case collapses
`
`into a single inquiry: whether exercising personal jurisdiction over the out-of-state defendant
`
`comports with due process. See Millennium Enters., Inc. v. Millennium Music, LP, 33 F. Supp.
`
`2d 907, 909 (D. Or. 1999).
`
`Under the due process requirement, a court may only exercise personal jurisdiction over
`
`an out-of-state defendant that has “certain minimum contacts with [the state] such that the
`
`maintenance of the suit does not offend traditional notions of fair play and substantial justice.”
`
`Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted, internal quotation
`
`marks omitted). Following International Shoe, the inquiry into personal jurisdiction has
`
`developed into two branches: (1) whether “the commission of some single or occasional acts of
`
`the corporate agent in a state,” id. at 318, are sufficient to “subject the corporation to jurisdiction
`
`in that State’s tribunals with respect to suits relating to that in-state activity,” Daimler AG v.
`
`Bauman, 134 S. Ct. 746, 754 (2014); or (2) whether “a foreign corporation’s ‘continuous
`
`corporate operations within a state [are] so substantial and of such a nature as to justify suit
`
`against it on causes of action arising from dealings entirely distinct from those activities.’” Id.
`
`(quoting Int’l Shoe, 326 U.S. at 318). These two branches are respectively called “specific” and
`
`“general” jurisdiction. Daimler, 134 S. Ct. at 754; see also Helicopteros Nacionales De
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 2
`
`1003397\V2
`
`0007
`
`

`
`Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn.8-9 (1984). Paragon concedes that this Court does
`
`not have general personal jurisdiction over either Defendant, thus, the analysis below focuses
`
`solely on specific jurisdiction.
`
`The Ninth Circuit employs a three-part test to determine whether the exercise of specific
`
`personal jurisdiction over an out-of state defendant complies with due process:
`
`1)
`
`The nonresident defendant must do some act or consummate some transaction
`with the forum or perform some act by which he purposefully avails himself of
`the privilege of conducting activities in the forum, thereby invoking the benefits
`and protections of its laws;
`
`2)
`
`the claim must be one which arises out of or results from the defendant's forum-
`related activities; and
`
`3)
`
`[the] exercise of jurisdiction must be reasonable.
`
`Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1477 (9th Cir. 1986).
`
`A.
`
`Both Altaire and Sawaya Aquebogue formed a “continuing relationship”
`with Paragon, which subjects them to personal jurisdiction in Oregon.
`
`Altaire formed and maintained a “continuing relationship” with Paragon, whose principal
`
`place of business is in Portland, Oregon, by entering into the contract under which Paragon’s
`
`claims arise in this lawsuit. The U.S. Supreme Court has held that contracting parties who “reach
`
`out beyond one state to create continuing relationships and obligations with citizens of another
`
`state” may be found to have “purposefully availed” themselves of the benefits and protections
`
`under the other state’s laws, subjecting those parties to the personal jurisdiction of the courts of
`
`that state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473-74 (1985) (citation omitted); see
`
`also Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995) (noting that the purposeful-availment
`
`prong is satisfied when an out-of-state defendant has created continuing obligations to residents
`
`of another state).
`
`For example, in Beverage Management Systems, Inc. v. Ott, No. 3:12-CV-2126-SI, 2013
`
`WL 1296083 (D. Or. Mar. 26, 2013) (J. Simon) the out-of state defendant had entered into an
`
`employment agreement with an Oregon-based company. Although the defendant had performed
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 3
`
`1003397\V2
`
`0008
`
`

`
`his duties solely in New Hampshire and had never travelled to Oregon, Judge Simon found that
`
`the employment agreement constituted a “continuing relationship” sufficient to deny the
`
`defendant’s motion to dismiss for lack of personal jurisdiction. Id. at *12. Like the facts in
`
`Beverage Management, in this lawsuit, Altaire knew that it was contracting with a company
`
`based in Oregon. Declaration of Patrick Witham, sworn to April 15, 2015 (“Witham Decl.”) ¶ 4.
`
`Altaire negotiated with Paragon’s representatives in Oregon, and Altaire regularly communicated
`
`with Paragon’s representatives in Oregon in fulfilling its duties to Paragon. Witham Decl. ¶¶ 2,
`
`6. Moreover, Altaire’s agreement obligated Altaire to this “continuing relationship” and the
`
`concomitant ties with Oregon for ten years — a much longer period than the two years that the
`
`defendant worked for the plaintiff in Beverage Management. Id. ¶ 2. Paragon’s breach-of-
`
`contract claims arise out of this same contract with Altaire, which, standing alone, confers
`
`personal jurisdiction over Altaire to this Court.
`
`Altaire does not even attempt to distinguish this on-point, controlling precedent in its
`
`motion to dismiss. Rather, Altaire erroneously suggests that personal jurisdiction cannot lie
`
`merely because Paragon first “contacted Altaire to enter into a business relationship.” Doc. 20 at
`
`12. This argument, of course, disregards the facts that Altaire then responded to Paragon’s initial
`
`overture, negotiated with Paragon over the terms of the eventual agreement, entered into a ten-
`
`year contract with Paragon, and, finally, continued its multi-million-dollar relationship with
`
`Paragon for several years. Witham Decl. ¶ 3. See Roth v. Garcia Marquez, 942 F.2d 617, 621
`
`(9th Cir. 1991) (noting that personal jurisdiction was properly asserted over an out-of-state
`
`defendant even though the plaintiff, as opposed to the defendant, had “reached out” to initiate the
`
`parties’ relationship). This Court should disregard Altaire’s unfair and unsupported attempt to
`
`minimize its purposeful, sustained, and knowing contacts with Oregon.
`
`Altaire similarly misplaces reliance on Emmert Industrial Corp. v. Copeland Equipment
`
`Parts, Inc., No. 09-229-PK, 2009 WL 2447550 (D. Or. Aug. 7, 2009) (J. Haggerty), to suggest
`
`that Altaire’s long-term contact with Paragon cannot support finding a “continuing relationship”
`
`making it fair to require Altaire to defend itself in this Court. Doc. 20 at 12. The contract at issue
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 4
`
`1003397\V2
`
`0009
`
`

`
`in Emmert is facially and readily distinguishable from Altaire’s contract with Paragon. In
`
`Emmert, Judge Haggerty found that there was not personal jurisdiction because the repair
`
`contract between the plaintiff and the defendant in that case “contemplated only a single
`
`transaction.” Emmert, 2009 WL 2447550 at *5. This simplicity and brevity, of course,
`
`dramatically differs from Altaire’s contact with Paragon, which involves routine and repeated
`
`interactions and transactions to take place for a period of ten years. Witham Decl. ¶¶ 3, 6. In fact,
`
`not only does Altaire have an obligation under the agreement to routinely manufacture products
`
`for Paragon — and send invoices and batch records to Paragon as a result of these obligations —
`
`but Sawaya Aquebogue, as an affiliate of Altaire and a part-owner of Paragon, receives
`
`invitations from Paragon to attend shareholder meetings in Oregon. Id. ¶¶ 5, 6. In view of this
`
`repeated pattern of transactions having a nexus with Oregon, there can be no serious debate that
`
`the purposeful-availment prong is satisfied. See Lung v. Yachts Int’l, 980 F. Supp. 1362, 1368
`
`(D. Haw. 1997) (finding personal jurisdiction where the contract term was four years long,
`
`creating a “continuing relationship” between the defendant and the plaintiff, a citizen of the
`
`forum state).
`
`Additionally, Altaire has routinely sent its product-batch records and invoices to Paragon
`
`in Oregon, purposefully directing Altaire’s activities towards Oregon. The heart of this case is
`
`Altaire’s breach of its agreement relating to drugs that Altaire is manufacturing for Paragon.
`
`Under its agreement with Paragon, Altaire routinely sends batch records relating to its drug
`
`product to Paragon personnel in Oregon, and it sends invoices related to this product to Oregon.
`
`Witham Decl. ¶ 6. Those batch records are not mere formalities. As a prescription-drug product,
`
`those batch records are the hallmark of quality assurance for the safety and efficacy of this drug
`
`product. Id. The Altaire-created batch records are subject to review and inspection by the United
`
`States Food and Drug Administration at any time. Id. Copies are stored by Paragon in Oregon.
`
`Id.
`
`Defendants do not deny any of this. Rather, Defendants focus the bulk of their argument
`
`on their lack of physical presence in Oregon. Doc. 20 at 7-8, 12-13. This argument cannot avail
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 5
`
`1003397\V2
`
`0010
`
`

`
`Defendants, however, because, under black-letter Ninth Circuit precedent, “the physical absence
`
`of the defendant and the transaction from the forum cannot defeat the exercise of personal
`
`jurisdiction.” Shute v. Carnival Cruise Lines, 897 F.2d 377, 382 (9th Cir. 1990). Like the facts in
`
`Beverage Management, a defendant’s lack of physical “presence” in the forum state is irrelevant
`
`when that defendant has purposely directed its activities into the forum state as Altaire has done
`
`in this case. See, e.g., Slayden v. Schulz Boat Co., No. 3:13-CV-02259-AC, 2015 WL 225731, *2
`
`(D. Or. Jan. 16, 2015) (J. Acosta) (noting that sending invoices into Oregon demonstrated that
`
`the defendants’ purposeful interjection into Oregon was extensive); Shamrock Building
`
`Materials, Inc. v. Overseas Building Supply, LLC, 189 Or. App. 302, 308 (2003) (finding
`
`personal jurisdiction when the out-of-state defendant “was faxing invoices daily to Oregon for
`
`payment and the consequences of [defendant’s] alleged breach of contract were felt directly by
`
`[plaintiff] in Oregon”).
`
`Sawaya Aquebogue’s ownership of a significant amount of Paragon stock, which
`
`Paragon transferred to Sawaya Aquebogue as the sole source of payment to Altaire under their
`
`contract, subjects Sawaya Aquebogue to personal jurisdiction in Oregon for claims relating to
`
`that agreement. Sawaya Aquebogue’s sole apparent function is to hold stock in Paragon. Witham
`
`Decl. ¶ 4. While Defendants may argue that stock ownership, standing alone, does not meet the
`
`requirements of due process, cases like this are inapplicable to Sawaya Aquebogue’s ownership
`
`of Paragon stock in this lawsuit. For example, in Wells Fargo & Co. v. Wells Fargo Express Co.,
`
`556 F.2d 406, 411 (9th Cir. 1977) the plaintiffs brought trademark-infringement and unfair-
`
`competition claims against two defendants. These claims were completely unrelated to the
`
`defendants’ stock ownership and, predictably enough, were not sufficient to confer personal
`
`jurisdiction over the defendants. But in Paragon’s lawsuit before this Court, Paragon’s claims
`
`arise directly from, and present a direct challenge to, Sawaya Aquebogue’s stock ownership.
`
`Doc. 1 at p. 15. [Complaint]. Accordingly, Wells Fargo and its like are inapposite.
`
`Because the agreement in which stock was transferred to Sawaya Aquebogue was
`
`breached by Altaire, Sawaya Aquebogue is no longer the rightful owner of this stock.
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 6
`
`1003397\V2
`
`0011
`
`

`
`Accordingly, Paragon’s breach-of-contract claim is directly related to Sawaya Aquebogue’s
`
`unlawful ownership of its stock. This connection, of much more than simple ownership, confers
`
`personal jurisdiction over Sawaya Aquebogue on this Court. See Shaffer v. Heitner, 433 U.S.
`
`186, 208 (1997) (suggesting that jurisdiction survives in cases in which the “defendant’s
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`ownership of the property is conceded but the cause of action is otherwise related to rights and
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`duties growing out of that ownership”).
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`B.
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`Paragon’s breach-of-contract claim arises out of Defendants’ activities in
`Oregon.
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`In order to demonstrate that the plaintiff’s cause of action arises out of the defendant’s
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`contacts for purposes of establishing personal jurisdiction, the plaintiff must demonstrate that
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`“but for” the defendant’s contacts with the forum state, its claims would not have arisen. Ballard,
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`65 F.3d at 1500. The causational nexus in this case, of course, is straightforward and irrefutable:
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`if the Defendants had not entered into an Agreement with Paragon, a citizen of Oregon, then
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`Paragon’s breach of contract claim would never have arisen. See Emmert Indus. Corp. v. Artisan
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`Assocs., No. 03-cv-782-BR, 2003 U.S. Dist. LEXIS 27110, at *19 (D. Or. Nov. 12, 2003) (J.
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`Brown) rev’d on other grounds, 497 F.3d 982 (9th Cir. 2007) (noting that the “but for” test was
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`satisfied because “the underlying breach of contract . . . claims would not have occurred ‘but for’
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`Defendant contracting with Plaintiff to perform moving services”). Paragon’s assent to the
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`contract was based on Defendants’ contact with the forum by means of emails and telephone
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`calls. That is, Paragon’s claims arise out of and relate to Defendants’ contacts with Oregon
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`because the alleged contract would not have been formed “but for” the Defendants’ contacts with
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`Oregon. See Buckman v. Quantum Energy Partners IV, No. 07-CV-1471-BR, 2008 WL
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`2235234, *7 (D. Or. May 29, 2008) (J. Brown) (finding that the “but for” test was satisfied when
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`the “alleged assent to the agreement was based on Defendants’ contact with the forum by means
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`telephone calls and emails”).
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`Plaintiffs rely on Gullete v. Lancaster & Chester Co., No. 14-cv-00537, 2014 WL
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`3695515 (D. Or. July 23, 2014) (J. Hernandez) to suggest that “a contract with an Oregon
`
`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 7
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`resident is insufficient on its own to satisfy this prong.” Doc. 20 at 13. But Gullette is clearly
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`distinguishable from the facts of Paragon’s claims, as Judge Hernandez came to his conclusion
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`only after also finding that the out-of-state defendant had not purposefully availed himself to the
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`forum state. Id. at *5 (finding that the contract for the one-time renovation of a railcar in South
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`Carolina, which took less than a single year to complete, was insufficient to establish personal
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`jurisdiction in Oregon). That is not the case here, as the purposeful-availment prong is satisfied
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`by the long-term and oft-repeated contacts with Oregon contemplated and performed under
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`Altaire’s contract with Paragon discussed above.1
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`C.
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`Defendants cannot demonstrate that the exercise of personal jurisdiction in
`this case would be unreasonable or unfair.
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`Once the plaintiff has shown that there are sufficient minimum contacts to satisfy due
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`process, the burden shifts to the defendant to “present a compelling case” that the exercise of
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`jurisdiction would not be reasonable. Burger King, 471 U.S. at 476-78. The Ninth Circuit
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`considers seven factors under this prong of the analysis: “(1) the extent of the defendants’
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`purposeful interjection into the forum state’s affairs; (2) the burden on the defendant of
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`defending in the forum; (3) the extent of conflict with the sovereignty of the defendants’ state;
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`(4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution
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`of the controversy; (6) the importance of the forum to the plaintiff’s interest in convenient and
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`effective relief; and (7) the existence of an alternative forum.” Core-Vent Corp. v. Nobel Indus.
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`AB, 11 F.3d 1482, 1487-88 (9th Cir. 1993).
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`Defendants cannot demonstrate unreasonableness under any of these factors. First,
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`Defendants have purposefully availed themselves of the privilege of doing business in Oregon,
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`as discussed above. Second, the mere fact that litigation may be more inconvenient for them if
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`this case moves forward in Oregon is not enough. See CE Distribution, LLC v. New Sensor
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`1 For the same reasons, Defendants’ motion to dismiss for improper venue must fail. The same
`contacts with Oregon permitting personal jurisdiction here support venue in this district.
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`PARAGON’S RESPONSE TO DEFENDANTS’ MOTION TO DISMISS OR TRANSFER VENUE — PAGE 8
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`Corp., 380 F.3d 1107, 1112 (9th Cir. 2004) (observing that “with the advances in transportation
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`and telecommunications and the increasing interstate practice of law, any burden is substantially
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`less than in days past” in litigating in another state). Third, there is no conflict with the
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`Defendants’ home state, New York, because, as discussed below, the venue provision is
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`permissive and does not implicate New York’s sovereign interest. This Court is perfectly well-
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`suited to determine and apply New York law. See Thompson v. N.Y. State Higher Educ. Servs.
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`Corp., 751 F. Supp. 868, 870 (D. Or. 1990) (applying New York law in a breach-of-contract
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`action). Fourth, Or