What do Brad Pitt, Angela Joie and a Russian oligarch living in Switzerland have in common? Answer: they combined to help clarify the question of whether there is a basis for asserting personal jurisdiction in California over a foreign national or entity.
In Pitt v. Shefler, issued on June 24, the California Court of Appeal held Brad Pitt could sue the purchaser of a 50% interest in a California winery from Pitt’s former wife, Angela Jolie. Pitt and Jolie were co-owners of the winery before Jolie sold her interest to Tenute del Mondo, N.V., a Dutch company that was a subsidiary of a Cyprian company, SPI Group Holding Limited (SPI Group). Yuri Shefler, a Russian oligarch residing in Switzerland, was the beneficial owner of Tenute. Pitt sued Jolie, Tenute, SPI Group, Shefler and others for breach of contract, tortious interference with a contract and related claims.
Shefler moved to quash a service of summons under Code of Civil Procedure § 418.10 for lack of personal jurisdiction. Shefler asserted that he lived in Switzerland and did not participate in the purchase of the interest in the winery, travel to California or communicate with anyone in California other than a few letters. Accordingly, Shefler contended that he lacked the “minimum contacts” with California in order to satisfy Constitutional standards for establishing personal jurisdiction. See Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. 351 (2021); Snowney v. Harrah’s Entertainment, Inc., 35 Cal. 4th 1054 (2005).
But in reversing the trial court’s order quashing service of the summons, the Court of Appeal held that personal jurisdiction had been established. The court first analyzed whether the personal jurisdiction was general or personal. General jurisdiction exists when the defendant’s contacts with California are so “substantial” or “continuous and systematic” that it is consistent with traditional notions of fair play and substantial justice to subject the defendant to jurisdiction even when the cause of action is unrelated to the defendant’s contacts with the State. Specific jurisdiction requires some nexus between the cause of action and the defendant’s activities in California. The plaintiff must show that the defendant 1) purposefully availed himself or herself of the benefits of California; 2) the controversy is related or arises out of the defendant’s contacts with California; and the assertion of personal jurisdiction would comport with fair play and substantial justice.
The Court of Appeal held that the trial court had specific jurisdiction over Shefler. The evidence showed that through Tenute, Shefler directed activities at California residents and companies, deriving a benefit from those activities and creating ongoing obligations in California. Shefler was involved in structuring and organizing the purchase of Jolie’s interest in the winery. He had ultimate authority over the transaction and allowed $39 million of his personal funds to be used to guarantee Tenute’s payments to Jolie. The court stated, “It defies credulity that Shefler, a sophisticated businessman, would risk almost $40 million of his own money on a transaction about which he knew nothing and which he had no involvement.” Thus, the first prong of the test for specific jurisdiction was satisfied.
Further, Shefler sent letters to Jolie, her business manager in California, and Pitt, reflecting his continuous involvement in the transaction. Pitt’s claims of tortious interference arose out of and related to Shefler’s involvement in the transaction, satisfying the second prong of the analysis. Finally, the exercise of personal jurisdiction over Shefler was not unreasonable or unfair. He had not shown that litigating in California would be a financial hardship or result in a severe disadvantage. While Pitt could obtain satisfaction from other defendants, Pitt and his company alleged that Shefler personally interfered with their rights separate and apart from claims against other defendants.