Custom Conveyor Corp. v. Hyde

237 F.Supp.3d 895

CUSTOM CONVEYOR CORPORATION, Plaintiff,

v.Gregory HYDE, et al., Defendants.

Civ. No. 16–3835 (RHK/HB)

United States District Court, D. Minnesota.

Signed February 22, 2017

Mark V. Steffenson, Henningson & Snoxell, Ltd., Maple Grove, Minnesota, for Plaintiff.

Randall E. Kahnke, Martin S. Chester, Marjan A. Batchelor, Faegre Baker Daniels LLP, Minneapolis, Minnesota, for Defendant Gregory Hyde.

MEMORANDUM OPINION AND ORDER

RICHARD H. KYLE, United States District Judge

INTRODUCTION

Defendant Gregory Hyde previously worked as a sales representative for Plaintiff Custom Conveyor Corporation ("CCC"), a Minnesota company that manufactures water and wastewater treatment systems. In 2016, Hyde, who resides in Georgia, accepted a position with Defendant Jim Myers & Sons, Inc. ("JMS"), one of CCC's direct competitors. CCC then commenced this action, alleging inter alia claims for misappropriation of trade secrets, conversion, and tortious interference with contract. Presently before the Court is Hyde's Motion to Dismiss for lack of personal jurisdiction. For the reasons that follow, the Court will deny the Motion.

BACKGROUND

Hyde has resided in Georgia since 1956. In 2011, he interviewed with CCC in Minnesota after learning of a job opening through a colleague. The company later hired him as a sales manager, marketing and selling its products in various parts of the United States, although not in Minnesota.

Hyde spent five years working as a CCC sales manager; during that time, he performed his duties from a home office and other locations in Georgia. His job involved only occasional travel to Minnesota (albeit sometimes for several days at a time) yet required near constant communication with CCC's Minnesota-based employees. According to records reviewed by Roger Hansen, CCC's Chief Financial Officer, Hyde exchanged more than 24,500 emails with CCC's Minnesota personnel during his employment, an average of nearly 14 per day. Similarly, CCC's records reflect 851 phone calls between Hyde and Minnesota-based CCC employees during just his final year of employment, averaging three calls per day and 22 minutes per call.

In April 2016, Hyde resigned from CCC and accepted a position with one of its competitors, North Carolina-based JMS. Several months later, CCC commenced this action in the Hennepin County District Court, which Defendants removed to this Court. The Complaint alleges that by virtue of his employment with CCC, Hyde became privy to the company's proprietary information, including its unique, "customized pricing scheme" that purportedly gives it a competitive advantage over others (such as JMS) in the marketplace. It further alleges that Hyde used external hard drives and cloud-based storage to copy this proprietary information from CCC's computer systems. And, it alleges that Hyde has disclosed this information to JMS, which has used it to obtain projects on which CCC also was bidding. Among other things, CCC seeks an injunction prohibiting dissemination of its (alleged) trade secrets, the return of any proprietary information held by Hyde or JMS, and an award of damages.

Hyde now moves to dismiss the claims against him for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). His Motion has been fully briefed and is ripe for disposition.

STANDARD OF REVIEW

In order to survive Hyde's Motion, CCC must make only a prima facie showing of jurisdiction. E.g. , Epps v. Stewart Info. Servs. Corp. , 327 F.3d 642, 647 (8th Cir. 2003). This requires it to proffer "sufficient facts ... to support a reasonable inference that [Hyde] can be subjected to jurisdiction within [Minnesota]." Creative Calling Solutions, Inc. v. LF Beauty, Ltd. , 799 F.3d 975, 979 (8th Cir. 2015) (citation omitted); accord, e.g. , Dairy Farmers of Am., Inc. v. Bassett & Walker Int'l, Inc. , 702 F.3d 472, 475 (8th Cir. 2012) (citations omitted). CCC's showing "must be tested[ ] not by the pleadings alone, but by the affidavits and exhibits presented with the motion[ ] and in opposition thereto." Dairy Farmers , 702 F.3d at 475 (citations omitted). Where, as here, the Court has not held an evidentiary hearing, it must "look at the facts in the light most favorable to the nonmoving party, and resolve all factual conflicts in favor of that party." Pangaea, Inc. v. Flying Burrito LLC , 647 F.3d 741, 745 (8th Cir. 2011) (citation omitted). "The evidentiary showing required at the prima facie stage is minimal." Johnson v. Arden , 614 F.3d 785, 794 (8th Cir. 2010) (citation omitted).

ANALYSIS

To establish a prima facie case of personal jurisdiction, CCC must show that Minnesota's long-arm statute has been satisfied and that exercising jurisdiction would comport with the Due Process Clause of the Fourteenth Amendment. E.g. , Creative Calling Solutions , 799 F.3d at 979. These two inquiries collapse into one, however, because Minnesota's long-arm statute extends jurisdiction to the outer limits of the Due Process Clause. E.g. , Guinness Import Co. v. Mark VII Distribs., Inc. , 153 F.3d 607, 614 (8th Cir. 1998) ; Soo Line R.R. Co. v. Hawker Siddeley Can., Inc. , 950 F.2d 526, 528 (8th Cir. 1991).

Due process requires that Hyde have sufficient "minimum contacts with [Minnesota] such that maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ " Daimler AG v. Bauman , –––U.S. ––––, 134 S.Ct. 746, 754, 187 L.Ed.2d 624 (2014) (quoting Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). This means he must have "fair warning" that his Minnesota contacts "may subject [him] to ... jurisdiction" here. Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (citation omitted); accord, e.g. , Creative Calling Solutions , 799 F.3d at 980 (defendant's contacts must permit him to "reasonably anticipate being haled into court" in foreign state). The "fair warning" requirement will be met if Hyde "has ‘purposefully directed’ his activities at residents of [Minnesota], and the litigation results from alleged injuries that ‘arise out of or relate to’ those activities." Burger King , 471 U.S. at 472–73, 105 S.Ct. 2174 (citations omitted). In other words, his Minnesota contacts "must not [have] arise[n] due to mere fortuity," Pangaea, Inc. , 647 F.3d at 745, but rather he must have "purposefully availed himself of the benefits and protections of th[is] state," Johnson , 614 F.3d at 794.

In order to determine whether Hyde has sufficient minimum contacts with Minnesota, the Court must consider five factors: (1) the nature and quality of his Minnesota contacts; (2) the quantity of those contacts; (3) the relationship between CCC's claims and the contacts;¹ (4) Minnesota's interest in providing a forum for CCC; and (5) the convenience of the parties. E.g. , Johnson , 614 F.3d at 794 ; Romak USA, Inc. v. Rich , 384 F.3d 979, 984 (8th Cir. 2004). The first three factors are of primary importance, while the remaining two are secondary. Burlington Indus., Inc. v. Maples Indus., Inc. , 97 F.3d 1100, 1102 (8th Cir. 1996). The Court must consider these factors in the aggregate rather than simply counting the number of factors suggesting jurisdiction does or does not exist. E.g. , Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A. , 51 F.3d 1383, 1388 (8th Cir. 1995) ("In determining whether there is personal jurisdiction, ... courts ... look at the totality of the circumstances.").

Hyde argues that the three "primary" factors—the nature and quality of his Minnesota contacts, the quantity of those contacts, and the relationship between them and CCC's claims—do not support the exercise of jurisdiction over him in this state. He notes that although he was employed and paid by a Minnesota company, none of his customers were located here, and none of his duties were performed in this state. (Def. Mem. at 7.) He further notes that he traveled here infrequently ("never more than two or three times per year" (id. )) and that his contacts with Minnesota were by telephone and email, which courts have generally deemed insufficient to establish jurisdiction.² And, he argues there is an insufficient nexus between his Minnesota contacts and CCC's claims, which allege he disclosed trade secrets while in Georgia to a North Carolina-based competitor of CCC. (Id. at 9.)

To be sure, Hyde's argument is superficially appealing, particularly as the Supreme Court has taken a narrower view of specific jurisdiction in recent years. See, e.g. , Walden v. Fiore , ––– U.S. ––––, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014). Yet, a case with strikingly similar facts decided by the Minnesota Court of Appeals barely three months ago counsels that his Motion must be denied. Given the overwhelming similarities, the facts of that case, Patterson Dental Supply, Inc. v. Vlamis , No. A16-0399, 2016 WL 4596881 (Minn. Ct. App. Nov. 15, 2016), review denied (Minn. Nov. 15, 2016), are block-quoted below:

Respondent Patterson Dental Supply, Inc. (Patterson) is a corporation with its principal place of business in Minnesota. Appellant Theodore Vlamis lives in Pennsylvania and worked for Patterson for 17 years in Scranton, Pennsylvania, as a branch manager. In August 2015, Vlamis voluntarily terminated his employment with Patterson to work for Patterson's primary competitor in the dental market[, which was headquartered in New York]. Patterson alleges that Vlamis misappropriated confidential and proprietary information using his Patterson e-mail address to send information to his personal e-mail address upon the termination of his employment, and that Vlamis used removable storage devices and a personal Internet cloud storage account to copy, store, and access Patterson's confidential and proprietary information and trade secrets from a laptop computer provided to him by Patterson's Minnesota office.

In October 2015, Patterson filed a lawsuit against Vlamis in Ramsey County

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