Cherry Hill Programs, Inc. v. Sullivan

CHERRY HILL PROGRAMS, INC. and CHERRY HILL ACQUISITION HOLDINGS, INC., Plaintiffs, v. JONAS SULLIVAN, Defendant.

No. 1:21-cv-20248-NLH-SAK

United States District Court, D. New Jersey

April 12, 2022

CRAIG M. WAGENBLAST MATTHEW EVAN BECK CHIESA SHAHINIAN &amp GIANTOMASI PC On behalf of Plaintiffs

AARON RICHARD KRAUSS COZEN O'CONNOR On behalf of Jonas Sullivan

OPINION

NOEL L. HILLMAN, U.S.D.J.

Currently before the Court is Cherry Hill Programs, Inc. and Cherry Hill Acquisition Holdings, Inc. (“Plaintiffs”) motion for preliminary injunction (ECF 12). Also before the Court is the defendant's, Jonas Sullivan's (“Sullivan”), motion to dismiss the amended complaint for lack of personal jurisdiction.

(ECF 14). For the reasons expressed below and on the record on March 21, 2022, the Court has granted in part and denied in part Plaintiffs' motion for a preliminary injunction and has denied Sullivan's motion to dismiss.

BACKGROUND

Plaintiffs comprise a company that puts together Santa meet-and-greets and holiday photo opportunities in malls around the country. (See ECF 11 at 2). Plaintiffs hired Sullivan in 2015 and for almost six years Sullivan served as a Senior Vice President and for a portion of that time as a board member for the company. (Id. at 2-3). In those roles, he had substantial access to proprietary business information belonging to Plaintiffs. (Id.) During his tenure Sullivan primarily worked from a home office in California or Colorado but traveled to New Jersey for work at least three times per year. (ECF 22 at 2). On August 3, 2021, Sullivan announced that he would be resigning from his position and that same day copied approximately 4, 000 files from his work computer onto an external USB drive.^[1] (ECF 11 at 3).

“Those files include highly confidential information and trade secrets such as [Plaintiffs'] three-year business plan-a non-public strategy document containing an executive analysis on [Plaintiffs'] new revenue opportunities, sales projections, and [Plaintiffs'] competition.” (Id. at 1).

At the end of his employment, Sullivan told Plaintiffs' CEO that he had not retained any proprietary company information. (Id.) However, Sullivan continued to access Plaintiffs' proprietary information. (Id. at 3). Sullivan ultimately returned his work laptop to Plaintiffs at their headquarters in New Jersey but did not return the personal USB device. (See id.) Plaintiffs paid Sullivan severance payments in exchange for his agreement not to compete. (Id.)

Plaintiffs initially filed this action on November 29, 2021. (ECF 1). On January 31, 2022, Plaintiffs filed an amended complaint. (ECF 11). On February 11, 2022, Plaintiffs filed a motion for preliminary injunction (ECF 12) along with a motion to expedite discovery (ECF 13). Shortly thereafter, on February 14, 2022, Sullivan filed a motion to dismiss the amended complaint for lack of personal jurisdiction. (ECF 14). On March 2, 2022, the Court denied Plaintiffs' motion to expedite discovery and set the motion to dismiss and the motion for preliminary injunction down for a hearing for March 21 2022. (ECF 19). At the hearing by oral opinion, the Court denied Sullivan's motion to dismiss for lack of personal jurisdiction and granted in part and denied in part Plaintiffs' motion for preliminary injunction. (ECF 28, 29). As the Court indicated on that date it would do, this Opinion supplements its oral opinion given that day.

DISCUSSION

I. Subject Matter Jurisdiction

This Court has original jurisdiction under 28 U.S.C. § 1331 and § 1367.

II. Motion to Dismiss

a. Standard for Motion to Dismiss for Lack of Personal Jurisdiction

We begin with Sullivan's arguments regarding personal jurisdiction “[b]ecause the issue of whether this Court may exercise personal jurisdiction over [a defendant] is dispositive to the viability of the entire suit[.]” See Exporting Commodities Int'l, LLC v. S. Minerals Processing, LLC, 2017 WL 5513682, *3 (D.N.J. Nov. 17, 2017). Federal Rule of Civil Procedure 12(b)(2) provides for dismissal of an action when the Court does not have personal jurisdiction over a defendant. “Once challenged, the plaintiff bears the burden of establishing personal jurisdiction.” O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007) (citing Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001)). A Rule 12(b)(2) motion “is inherently a matter which requires resolution of factual issues outside the pleadings, i.e. whether in personam jurisdiction actually lies.” Patterson by Patterson v. F.B.I., 893 F.2d 595, 603-04 (3d Cir. 1990) (quoting Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61 n.9 (3d Cir.1984)) (quotations and other citations omitted). “Once the defense has been raised, then the plaintiff must sustain its burden of proof in establishing jurisdictional facts through sworn affidavits or other competent evidence.” Id. “[A]t no point may a plaintiff rely on the bare pleadings alone in order to withstand a defendant's Rule 12(b)(2) motion to dismiss for lack of in personam jurisdiction, ” and “[o]nce the motion is made, plaintiff must respond with actual proofs, not mere allegations.” Id.

A defendant is subject to the jurisdiction of a United States district court if the defendant “is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located[.]” Fed.R.Civ.P. 4(k)(1)(A). “A federal court sitting in New Jersey has jurisdiction over parties to the extent provided under New Jersey state law.” Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 96 (3d Cir. 2004)(citations omitted). The New Jersey long- arm statute “permits the exercise of personal jurisdiction to the fullest limits of due process.” IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998) (citing DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981)).

There are two types of personal jurisdiction. General and specific. “General jurisdiction exists when a defendant has maintained systematic and continuous contacts with the forum state.” Marten v. Godwin, 499 F.3d 290, 296 (3d Cir. 2007). “The paradigm forum for the exercise of general jurisdiction is the individual's domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.” Olsen v. Ratner Companies, L.C., 2021 WL 912896, at *2 (D.N.J. Mar. 10, 2021) (quoting Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (citations omitted)). Specific jurisdiction may be present when the cause of action arises out of the defendant's conduct in the forum state. Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (“[S]pecific jurisdiction is present only if the plaintiff's cause of action arises out of a defendant's forum-related activities, such that the defendant should reasonably anticipate being haled into court in that forum.”).

A court in assessing the existence of specific jurisdiction undertakes a two-part test. Trinity Packaging Supply, LLC v. Countrywide Pallet, Inc., 2019 WL 2611101, at *4 (D.N.J. June 26, 2019). First, under the Due Process clause, the exercise of personal jurisdiction over a non-resident defendant is appropriate when the defendant has “certain minimum contacts with [the forum 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) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). A defendant establishes minimum contacts by “‘purposefully avail[ing] itself of the privilege of conducting activities within the forum State, '” thereby invoking “‘the benefits and protections of [the forum State's] laws.'” Asahi Metal Indus. Co., Ltd. v. Sup. Ct. of California, 480 U.S. 102, 109 (1987) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). This “purposeful availment” requirement assures that the defendant could reasonably anticipate being haled into court in the forum and is not haled into a forum as a result of “random, ” “fortuitous” or “attenuated” contacts with the forum state. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980); see also Burger King Corp., 471 U.S. at 472, 475 (internal citations omitted).

In deciding whether a defendant's contacts with a forum are sufficient to confer personal jurisdiction over that party, the Court must consider whether such contacts are related to or arise out of the cause of action at issue in the case. The Court may exercise specific personal jurisdiction over a defendant where the cause of action is related to or arises out of activities by the defendant that took place within the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984).

Second, once the Court determines that the defendant has minimum contacts with the forum state, it must also consider whether the assertion of personal jurisdiction over the defendant “comport[s] with ‘fair play and substantial justice'” to satisfy the due process test. Burger King Corp., 471 U.S. at 476 (quoting Int'l Shoe, 326 U.S. at 320). In this regard, it must be reasonable to require the defendant to litigate the suit in the forum state, and a court may consider the following factors to determine reasonableness: the burden on the defendant, the forum state's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining an efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies. Id. at 477 (citing World Wide Volkswagen, 444 U.S. at 292).

b. Analysis

The Court holds that Plaintiffs have met their...