Plaintiff Kevin Gelasio, a California resident, collaborated with Defendant Haris Bin Zafar, a UK resident, and Project Ether Limited, a Hong Kong corporation with its primary place of business in the UK, to create a digital art project involving non-fungible tokens. Gelasio alleges he contributed over $750,000 in return for promises of repayment and a share of proceeds, which were not fulfilled. He further alleges that Bin Zafar surreptitiously recorded a conference call Gelasio was on and posted it to YouTube. Gelasio sued in the Northern District of California for breach of contract and tort claims. Defendants moved to dismiss for lack of personal jurisdiction, arguing they were not subject to the court's authority. The district court granted the motion, leading Gelasio to appeal.
The Ninth Circuit reviewed the jurisdictional dismissal de novo, applying the three-part test for specific personal jurisdiction established in Briskin v. Shopify, Inc. First, the court analyzed whether defendants purposefully directed activities at California. Using the Calder effects test for tort claims, the court found that defendants committed intentional acts expressly aimed at the forum state. Although Gelasio initiated contact, the defendants chose to make repeated loan requests from him and surreptitiously record a call, knowing he was in California. Additionally, defendants employed staff in California, solicited California residents for NFT presales, and offered NFTs to California residents. The court clarified that differential targeting is not required to satisfy express aiming, and contacts with a plaintiff known to be in the forum are highly relevant. Second, the court found the claims arose out of or related to these forum activities, as the solicitation of loans and the recording occurred while Gelasio was in California. Because Gelasio satisfied the first two prongs, the burden shifted to defendants to demonstrate that exercising jurisdiction would be unreasonable. The court applied a seven-factor balancing test for fair play and substantial justice. While the availability of alternative forums weighed slightly against jurisdiction, the other factors were neutral or favored California. The court concluded defendants failed to present a compelling case that jurisdiction was unreasonable.
The case is remanded to the Northern District of California to proceed on the merits. The decision clarifies that non-resident defendants engaging in digital commerce and recording communications with known California residents may be subject to personal jurisdiction in the state, even if their primary business operations are abroad. It reinforces that the availability of alternative forums alone is insufficient to defeat jurisdiction when the first two prongs of the specific jurisdiction test are met.
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