ASANTETECHNOLOGIES,INC.v.PMC-SIERRA,INC.

1、ASANTE TECHNOLOGIES, INC. v. PMC-SIERRA, INC.No. C 01-20230 JW.164 F.Supp.2d 1142 (2001)ASANTE TECHNOLOGIES, INC., Plaintiff, v. PMC-SIERRA, INC., Defendant.United States District Court, N.D. California, San Jose Division.July 30, 2001.Jeffrey J. Lederman, Gray Cary Ware & Freidenrich, Palo Alto, CA

2、, for plaintiff.Michael A. Jacobs, Morrison & FOerster, San Francisco, CA, for defendant.ORDER DENYING MOTION TO REMAND AND REQUEST FOR ATTORNEYS FEESWARE, District Judge.I. INTRODUCTIONThis lawsuit arises out of a dispute involving the sale of electronic components. Plaintiff, Asante Technologies I

3、nc., filed the action in the Superior Court for the State of California, Santa Clara County, on February 13, 2001. Defendant, PMC-Sierra, Inc., removed the action to this Court, asserting federal question jurisdiction pursuant to 28 U.S.C. section 1331. Specifically, Defendant asserts that Plaintiff

4、s claims for breach of contract and breach of express warranty are governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG). Plaintiff disputes jurisdiction and filed this Motion To Remand And For Attorneys Fees. The Court conducted a hearing on June 18, 2001

5、. Based upon the submitted papers and oral arguments of the parties, the Court DENIES the motion to remand and the associated request for attorneys fees.II. BACKGROUNDThe Complaint in this action alleges claims based in tort and contract. Plaintiff contends that Defendant failed to provide it with e

6、lectronic components meeting certain designated technical specifications. Defendant timely removed the action to this Court on March 16, 2001.Plaintiff is a Delaware corporation having its primary place of business in Santa Clara County, California. Plaintiff produces network switchers, a type of el

7、ectronic component used to connect multiplecomputers to one another and to the Internet. Plaintiff purchases component parts from a number of manufacturers. In particular, Plaintiff purchases application-specific integrated circuits (ASICs), which are considered the control center of its network swi

8、tchers, from Defendant.Defendant is also a Delaware corporation. Defendant asserts that, at all relevant times, its corporate headquarters, inside sales and marketing office, public relations department, principal warehouse, and most design and engineering functions were located in Burnaby, British

9、Columbia, Canada. Defendant also maintains an office in Portland, Oregon, where many of its engineers are based. Defendants products are sold in California through Unique Technologies, which is an authorized distributor of Defendants products in North America. It is undisputed that Defendant directe

10、d Plaintiff to purchase Defendants products through Unique, and that Defendant honored purchase orders solicited by Unique. Unique is located in California. Determining Defendants place of business with respect to its contract with Plaintiff is critical to the question of whether the Court has juris

11、diction in this case.Plaintiffs Complaint focuses on five purchase orders.1Four of the five purchase orders were submitted to Defendant through Unique as directed by Defendant. However, Plaintiff does not dispute that one of the purchase orders, dated January 28, 2000, was sent by fax directly to De

12、fendant in British Columbia, and that Defendant processed the order in British Columbia. Defendant shipped all orders to Plaintiffs headquarters in California.2Upon delivery of the goods, Unique sent invoices to Plaintiff, at which time Plaintiff tendered payment to Unique either in California or in

13、 Nevada.The Parties do not identify any single contract embodying the agreement pertaining to the sale. Instead, Plaintiff asserts that acceptance of each of its purchase orders was expressly conditioned upon acceptance by Defendant of Plaintiffs Terms and Conditions, which were included with each P

14、urchase Order. Paragraph 20 of Plaintiffs Terms and Conditions provides APPLICABLE LAW. The validity and performance of this purchase order shall be governed by the laws of the state shown on Buyers address on this order. (Contos Decl., Exh. H, 16.) The buyers address as shown on each of the Purchas

15、e Orders is in San Jose, California. Alternatively, Defendant suggests that the terms of shipment are governed by a document entitled PMC-Sierra TERMS AND CONDITIONS OF SALE. Paragraph 19 of Defendants Terms and conditions provides APPLICABLE LAW: The contract between the parties is made, governed b

16、y, and shall be construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein, which shall be deemed to be the proper law hereof . (Wechsler Decl., Exh. D, 6.)Plaintiffs Complaint alleges that Defendant promised in writing that the chips would me

17、et certain technical specifications. (Compl. 13, 14, 15, 17, 18, 22, 23, & 25.) Defendant asserts that the following documents upon which Plaintiff relies emanatedfrom Defendants office in British Columbia: (1) Defendants August 24, 1998 press release that it would be making chips available for gene

18、ral sampling (Doucette Decl. 13); (2) Defendants periodic updates of technical specifications (Doucette Decl., Exh. H); and (3) correspondence from Defendant to Plaintiff, including a letter dated October 25, 1999. It is furthermore undisputed that the Prototype Product Limited Warranty Agreements r

19、elating to some or all of Plaintiffs purchases were executed with Defendants British Columbia facility. (Doucette Decl., Exhs. B & C.)Defendant does not deny that Plaintiff maintained extensive contacts with Defendants facilities in Portland Oregon during the development and engineering of the ASICs

20、. (Amended Supplemental Decl. of Anthony Contos, 3.) These contacts included daily email and telephone correspondence and frequent in-person collaborations between Plaintiffs engineers and Defendants engineers in Portland. (Id.) Plaintiff contends that this litigation concerns the inability of Defen

21、dants engineers in Portland to develop an ASIC meeting the agreed-upon specifications. (Id.)Plaintiff now requests this Court to remand this action back to the Superior Court of the County of Santa Clara pursuant to 28 U.S.C. section 1447(c), asserting lack of subject matter jurisdiction. In additio

22、n, Plaintiff requests award of attorneys fees and costs for the expense of bringing this motion.III. STANDARDSA defendant may remove to federal court any civil action brought in a state court that originally could have been filed in federal court. 28 U.S.C. 1441(a);Caterpillar, Inc. v. Williams,482

23、U.S. 386, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). When a case originally filed in state court contains separate and independent federal and state law claims, the entire case may be removed to federal court. 28 U.S.C. 1441 (c).The determination of whether an action arises under federal law is guided b

24、y the well-pleaded complaint rule.Franchise Tax Board v. Construction Laborers Vacation Trust,463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). The rule provides that removal is proper when a federal question is presented on the face of the Complaint.Id.at 9, 103 S.Ct. 2841. However, in areas w

25、here federal law completely preempts state law, even if the claims are purportedly based on state law, the claims are considered to have arisen under federal law.Ramirez v. Fox Television Station, Inc.,998 F.2d 743(9th Cir. 1993). Defendant has the burden of establishing that removal is proper.Gaus

26、v. Miles, Inc.,980 F.2d 564(9th Cir.1992). If, at any time before judgment, the district court determines that the case was removed from state court improvidently and without jurisdiction, the district court must remand the case. 28 U.S.C. 1447(c).The Convention on Contracts for the International Sa

27、le of Goods (CISG) is an international treaty which has been signed and ratified by the United States and Canada, among other countries. The CISG was adopted for the purpose of establishing substantive provisions of law to govern the formation of international sales contracts and the rights and obli

28、gations of the buyer and the seller. U.S. Ratification of 1980 United Nations Convention on Contracts for the International Sale of Goods: Official English Text, 15 U.S.C.App. at 52 (1997). The CISG applies to contracts of sale of goods between parties whose places of business are in different State

29、s . when the States are Contracting States. 15 U.S.C.App., Art.1(1)(a). Article 10 of the CISG provides that if a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance. 15 U.S.C.App. Art. 10.IV. DISCUSSIONDefen

30、dant asserts that this Court has jurisdiction to hear this case pursuant to 28 U.S.C. section 1331, which dictates that the district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. Specifically, Defendant contends t

31、hat the contract claims at issue necessarily implicate the CISG, because the contract is between parties having their places of business in two nations which have adopted the CISG treaty. The Court concludes that Defendants place of business for the purposes of the contract at issue and its performa

32、nce is Burnaby, British Columbia, Canada. Accordingly, the CISG applies. Moreover, the parties did not effectuate an opt out of application of the CISG. Finally, because the Court concludes that the CISG preempts state laws that address the formation of a contract of sale and the rights and obligati

33、ons of the seller and buyer arising from such a contract, the well-pleaded complaint rule does not preclude removal in this case.A. Federal Jurisdiction Attaches to Claims Governed By the CISGAlthough the general federal question statute, 28 U.S.C. 1331(a), gives district courts original jurisdictio

34、n over every civil action that arises under the . treaties of the United States, an individual may only enforce a treatys provisions when the treaty is self-executing, that is, when it expressly or impliedly creates a private right of action.See Tel-Oren v. Libyan Arab Republic,726 F.2d 774, 808 (D.

35、C.Cir.1984) (Bork, J., concurring);Handel v. Artukovic,601 F.Supp. 1421, 1425 (C.D.Cal.1985). The parties do not dispute that the CISG properly creates a private right of action.See Delchi Carrier v. Rotorex Corp.,71 F.3d 1024, 1027-28 (2d Cir.1995);Filanto, S.p.A. v. Chilewich Intl Corp.,789 F.Supp

36、. 1229, 1237 (S.D.N.Y.1992); U.S. Ratification of 1980 United Nations Convention on Contracts for the International Sale of Goods: Official English Text, 15 U.S.C.App. at 52 (1997) (The Convention sets out substantive provisions of law to govern the formation of international sales contracts and the

37、 rights and obligations of the buyer and seller. It will apply to sales contracts between parties with their places of business in different countries bound by Convention, provided the parties have left their contracts silent as to applicable law.). Therefore, if the CISG properly applies to this ac

38、tion, federal jurisdiction exists.3B. The Contract In Question Is Between Parties From Two Different Contracting StatesThe CISG only applies when a contract is between parties whose places of business are in different States.415 U.S.C.App., Art. 1(1)(a). If this requirement is not satisfied, Defenda

39、nt cannot claim jurisdiction under the CISG. It is undisputed that Plaintiffs place of business is Santa Clara County, California,U.S.A. It is further undisputed that during the relevant time period, Defendants corporate headquarters, inside sales and marketing office, public relations department, p

40、rincipal warehouse, and most of its design and engineering functions were located in Burnaby, British Columbia, Canada. However, Plaintiff contends that, pursuant to Article 10 of the CISG, Defendants place of business having the closest relationship to the contract at issue is the United States.5Th

41、e Complaint assertsinter aliatwo claims for breach of contract and a claim for breach of express warranty based on the failure of the delivered ASICS to conform to the agreed upon technical specifications. (Compl. 40-53.) In support of these claims, Plaintiff relies on multiple representations alleg

42、edly made by Defendant regarding the technical specifications of the ASICS products at issue. Among the representations are: (1) an August 24, 1998 press release (Id., 13); (2) materials released by Defendant in September, 1998 (Id., 14); (3) revised materials released by Defendant in November 1998

43、(Id., 15); (4) revised materials released by Defendant in January, 1999 (Id., 17); (5) revised materials released by Defendant in April, 1999 (Id., 18); (6) a September, 1999 statement by Defendant which included revised specifications indicating that its ASICS would comply with 802.1q VLAN specific

44、ations (Id., 22); (7) a statement made by Defendants President and Chief Executive Officer on October 25, 1999 (Id., 23); (8) a communication of December, 1999 (Id., 24); and (9) revised materials released by Defendant in January, 2000 (Id., 25). It appears undisputed that each of these alleged repr

45、esentations regarding the technical specifications of the product was issued from Defendants headquarters in British Columbia, Canada. (SeeOpposition Brief at 3.)Rather than challenge the Canadian source of these documents, Plaintiff shifts its emphasis to the purchase orders submitted by Plaintiff

46、to Unique Technologies, a nonexclusive distributor of Defendants products. Plaintiff asserts that Unique acted in the United States as an agent of Defendant, and that Plaintiffs contacts with Unique establish Defendants place of business in the U.S. for the purposes of this contract.Plaintiff has fa

47、iled to persuade the Court that Unique acted as the agent of Defendant. Plaintiff provides no legal support for this proposition. To the contrary, a distributor of goods for resale is normally not treated as an agent of the manufacturer. Restatement of the Law of Agency, 2d 14J (1957) (One who recei

48、ves goods from another for resale to a third person is not thereby the others agent in the transaction.);Stansifer v. Chrysler Motors Corp.,487 F.2d 59, 64-65 (9th Cir.1973) (holding that nonexclusive distributor was not agent of manufacturer where distributorship agreement expressly stated distribu

49、tor is not an agent). Agency results from the manisfestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. Restatement of the Law of Agency, 2d, 1 (1957). Plaintiff has produced no evidence of consent by Def

50、endant to be bound by the acts of Unique. To the contrary, Defendant cites the distributorship agreement with Unique, which expresslystates that the contract does not allow Distributor to create or assume any obligation on behalf of Defendant for any purpose whatsoever. (Doucette Decl. Exh. M, 1.6(b

51、).) Furthermore, while Unique may distribute Defendants products, Plaintiff does not allege that Unique made any representations regarding technical specifications on behalf of Defendant. Indeed, Unique is not even mentioned in the Complaint. To the extent that representations were made regarding th

52、e technical specifications of the ASICs, and those specifications were not satisfied by the delivered goods, the relevant agreement is that between Plaintiff and Defendant. Accordingly, the Court finds that Unique is not an agent of Defendant in this dispute. Plaintiffs dealings with Unique do not e

53、stablish Defendants place of business in the United States.Plaintiffs claims concern breaches of representations made by Defendant from Canada. Moreover, the products in question are manufactured in Canada, and Plaintiff knew that Defendant was Canadian, having sent one purchase order directly to De

54、fendant in Canada by fax. Plaintiff supports its position with the declaration of Anthony Contos, Plaintiffs Vice President of Finance and Administration, who states that Plaintiffs primary contact with Defendant during the development and engineering of the ASICs at issue . was with Defendants faci

55、lities in Portland, Oregon. (Contos Amended Supplemental Decl. 3.) The Court concludes that these contacts are not sufficient to override the fact that most if not all of Defendants alleged representations regarding the technical specifications of the products emanated from Canada. (See supraat 7:1-

56、12.) Moreover, Plaintiff directly corresponded with Defendant at Defendants Canadian address. (SeeDoucette Decl. 15.) Plaintiff relies on all of these alleged representations at length in its Complaint. (See supraat 7:1-12.) In contrast, Plaintiff has not identified any specific representation or co

57、rrespondence emanating from Defendants Oregon branch. For these reasons, the Court finds that Defendants place of business that has the closest relationship to the contract and its performance is British Columbia, Canada. Consequently, the contract at issue in this litigation is between parties from

58、 two different Contracting States, Canada and the United States. This contract therefore implicates the CISG.C. The Effect of the Choice of Law ClausesPlaintiff next argues that, even if the Parties are from two nations that have adopted the CISG, the choice of law provisions in the Terms and Condit

59、ions set forth by both Parties reflect the Parties intent to opt out of application of the treaty.6Article 6 of the CISG provides that the parties may exclude the application of the Convention or, subject to Article 12, derogate from or vary the effect of any of its provisions. 15 U.S.C.App., Art. 6. Defendant