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Ninth Circuit:
Defaming California Lawyer Does Not, Alone, Create Jurisdiction in California Courts
By a MetNews Staff Writer
A Mexican company did not subject itself to jurisdiction of courts in California by telling clients of a Palm Springs attorney who specializes in cases involving timeshare disputes that their lawyer runs a “scam operation” and they should report him to the State Bar of California, the Ninth U.S. Circuit Court of Appeals held yesterday.
The decision came in a memorandum opinion signed by Judges Ronald M. Gould, Kenneth Kiyul Lee, and Lawrence VanDyke. It affirms an order by District Court James V. Selna of the Central District of California dismissing, with prejudice, an action brought by attorney Mitchell Reed Sussman against Playa Grande Resort, S.A. de C.V. which operates a resort in Cabo San Lucas and sells timeshares.
Sussman brought his action in Riverside Superior Court and Playa Grande removed it to federal court. Sussman alleged in his complaint that Playa Grande “owns and operates a post office box in Los Angeles, California for the purposes of collecting fees and other funds from timeshare clients living in the United States, by virtue of its continuous and systematic advertising on the internet to California residents and by causing effects within this state.”
Clients in Washington
However, the defendant had no other presence in California and the clients he advised concerning their timeshares—to whom Playa Grande directed its allegedly libelous remarks about Sussman—reside in the State of Washington.
Selna said, in dismissing the action:
“Although Playa Grande may have committed an intentional act—sending this letter to clients of Sussman’s—this act was not ‘expressly aimed’ at California. If anything, it was aimed at Washington state.”
In affirming, the Ninth Circuit said:
“The parties do not dispute that Playa Grande committed an intentional act by sending the letter to the timeshare members. But the letter was not expressly aimed at California. To satisfy the express aiming requirement, the relationship between the defendant, the forum, and the suit ‘must arise out of contacts that the defendant himself creates with the forum State.’…Here, the lawsuit did not arise out of any contacts that Playa Grande initiated with California.”
Disciplinary Action
The appeals court went on to say:
“The only link between Playa Grande’s letter and California is that it discussed the allegedly wrongful actions of Sussman—an attorney licensed to practice in California—and suggested that the timeshare members may want to seek disciplinary action against Sussman for misleading them….
“Sussman argues that the letter was expressly aimed at California because Playa Grande knew that he practiced law in California, that any disciplinary action would occur there, and that any reputational harm would be felt there. But a defendant’s knowledge of the plaintiffs forum connections, coupled with foreseeable harm to the plaintiff in the forum, is insufficient to meet the express aiming standard….And when we have found express aiming in cases involving reputational harm, the defendant’s conduct included publication in the forum state, which is absent here.”
The case is Sussman v. Playa Grande Resort, S.A. de C.V, 20-55563.
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