GTI Spindle Tech. v. Bukowitz

GTI Spindle Technology, Inc. v. David Bukowitz, Paul Berberian, and Jose Flores

No. 216-2021-CV-00248

Superior Court of New Hampshire, Hillsborough

September 15, 2021

ORDER

DAVID A. ANDERSON, JUDGE

Plaintiff brought this action against Defendants alleging several claims arising out of Defendants' alleged breach of employment agreements and alleged tortious conduct during and subsequent to Defendants' employment. Defendants move to dismiss the action in its entirety for lack of personal jurisdiction over the defendants. Defendants also move to stay the pending action and compel arbitration. Plaintiff objects to both motions. For the reasons that follow Defendants' motions are DENIED.

Factual Background

The following facts are drawn from the verified complaint exhibits to the verified complaint, Plaintiff's president's affidavit, and the pleadings of the parties. Plaintiff is a New Hampshire corporation with a principal place of business in Manchester, New Hampshire. Defendants are former employees of Plaintiff and are residents of Texas in the cases of Mr. Bukowitz and Mr. Flores, and Maryland, in the case of Mr. Berberian. Plaintiff "is one of the oldest and largest spindle repair companies in the United States." (Compl. ¶ 14.)

Plaintiff's services include preventative and predictive spindle maintenance by vibration analysis. (See id. ¶ 14.) Around 2010, Plaintiff began developing technology to conduct such maintenance via a data acquisition box to connect sensors to an iPad. (See id. ¶ 20.) Due to the promise of this technology, in 2011 Plaintiff established GTI Predictive Technology, a division of Plaintiff, to develop and market predictive systems directly to consumers. (See id. ¶ 25.) In June 2011 Plaintiff contracted with Motionics, LLC to develop the necessary software for its predictive maintenance applications for market. (See id. ¶ 26.) Mr. Bukowitz was then-employed by Motionics and executed a non-disclosure agreement between Motionics and Plaintiff. (See id. ¶¶ 30-31.) Per the agreement, Mr. Bukowitz was to maintain all information received by Motionics relating to Plaintiff's confidential and proprietary information in the strictest confidence. (See id. ¶ 32.)

On January 14, 2013, Plaintiff hired Mr. Bukowitz to serve as its chief software developer. (See id. ¶ 40.) On March 15, 2013, Mr. Bukowitz allegedly executed a confidentiality and non-disclosure agreement as a condition of his employment with Plaintiff. (See id., Ex. 1.) Mr. Bukowitz allegedly sent the executed agreement to New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 4.) On January 2, 2014, Plaintiff hired Mr. Berberian as Vice President of Sales and Marketing to lead GTI Predictive's sales and marketing efforts. (See Compl. ¶ 51.) On the same date, Mr. Berberian also allegedly executed a confidentiality and non-disclosure agreement containing the same terms as the agreement Mr. Bukowitz executed. (See Compl., Ex. 2.) Mr. Berberian allegedly sent this executed agreement to New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 10.) On September 4, 2017, Plaintiff hired Mr. Flores to expand its sales and marketing team. (See Compl. ¶ 57.) On August 29, 2017, Mr. Flores allegedly executed a confidentiality and non-disclosure agreement containing the same terms as the agreement Mr. Bukowitz executed and sent it to New Hampshire. (See Compl., Ex. 3; see also Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 15.)

Mr. Bukowitz and Mr. Flores worked out of an office in Austin, Texas. (See Def.'s Mot. Dismiss ¶ 1.) Mr. Berberian worked from his home in Maryland. (See id.) As a condition of their employment, Defendants traveled to Plaintiff's facility in Manchester, New Hampshire several times. (See Compl. ¶ 62.)

Over the course of his employment, Mr. Bukowitz had nearly daily contact with Plaintiff's other employees who were working in New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 5.) Mr. Bukowitz also regularly received information pertinent to his work from New Hampshire. (See id.) The software Mr. Bukowitz worked on was field tested and approved for production in New Hampshire, with his direct involvement conducted by video and phone. (See id.) Mr. Bukowitz's business card listed a Manchester, New Hampshire address. (See Pl.'s Obj. Mot. Dismiss, Ex. A.)

Mr. Berberian routinely communicated with Plaintiff's employees working in New Hampshire. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 11.) Mr. Berberian often traveled to New Hampshire to participate in strategic meetings and other events that he helped plan and facilitate. (See id. ¶ 12.) Plaintiff's records indicated that Mr. Berberian was in New Hampshire on GTI business for multiple days on at least thirteen separate occasions in 2018 and 2019, and at other times in earlier years. (See id.) Mr. Berberian managed three individuals located in New Hampshire. (See id. ¶ 14.) He would also participate in weekly sales calls with others in New Hampshire. (See id.) Mr. Berberian's business card and email signature listed a Manchester, New Hampshire address. (See Pl.'s Obj. Mot. Dismiss, Ex. C.)

Likewise, Mr. Flores communicated with Plaintiff's employees working in New Hampshire on a daily basis. (See Pl.'s Obj. Mot. Dismiss, Ex. 1 ¶ 16.) He participated in weekly sales calls with others in New Hampshire. (See id.) He also visited New Hampshire as part of his role. (See id. ¶ 17.) Mr. Flores' email signature listed a Manchester, New Hampshire address. (See Pl.'s Obj. Mot. Dismiss, Ex. D.)

Mr. Berberian and Mr. Flores had access to Plaintiff's confidential customer and vendor information. (See Compl. ¶ 63.) Plaintiff alleges that although it moved its customer and vendor information to a secure cloud-based network in 2019, Mr. Berberian downloaded and maintained the information so that he could possess and exploit it. (See id. ¶ 67.) For other reasons, Mr. Berberian was terminated for cause on October 1, 2019. (See id. ¶¶ 74-75.) Mr. Flores gave his notice on July 28, 2020. (See id. ¶ 79.) On July 31, 2020, Mr. Bukowitz stated his intention to resign from Plaintiff, but wanted to maintain the software he had developed. (See id. ¶ 83.) On September 9, 2020, Plaintiff and Mr. Bukowitz entered into a licensing agreement whereby Plaintiff would be granted "a nonexeclusive, worldwide, perpetual, irrevocable, transferrable license to use the framework of the Software including the source code," in exchange for $100, 000. (See Compl., Ex. 4. at §§ 2.1 and 3.1(A).) Mr. Bukowitz ceased working for Plaintiff on October 9, 2020. (See Compl. ¶ 95.)

Shortly thereafter, Plaintiff learned that Defendants were all affiliated with SensOS, LLC, serving in various positions. (See id. ¶ 96.) In addition, SensOS was offering applications for commercial sale which directly competed with Plaintiff's vibration analysis system. (See id. ¶ 97.) Plaintiff alleges Defendants misappropriated and/or used the software architecture and source code of Plaintiff's applications. (See id. ¶ 100.) Plaintiff identifies several other instances of efforts by Defendants to misappropriate trade secrets and confidential information including: Mr. Bukowitz creating a rival company, Rotovibes, while employed by Plaintiff; Mr. Bukowitz registering multiple software copyrights while employed by Plaintiff; Mr. Bukowitz developing software for a client of Plaintiff's, without disclosure to Plaintiff, while employed by Plaintiff; SensOS working with a vendor who had previously approached Plaintiff and been rejected on Mr. Bukowitz' recommendation; SensOS and its affiliate companies contacting Plaintiff's sensor vendors; and SensOS and its affiliate companies contacting a number of Plaintiff's customers. (See id. ¶ 102.) Further, SensOS has announced that it will soon be releasing additional applications identical to a number of Plaintiff's applications. (See id. ¶ 106.)

Plaintiff filed the present action on April 22, 2021, alleging six claims. Count I alleges Defendants misappropriated trade secrets related to its applications' source code and software architecture, its hardware's source code and software architecture, and Plaintiff's customer information. (See id. ¶¶ 107-15.) Count II alleges Defendants materially breached confidentiality and non-disclosure agreements. (See id. ¶¶ 116- 19.) Count III alleges Defendants converted Plaintiff's confidential information. (See id. ¶¶ 120-23.) Count IV alleges Defendants breached their fiduciary duty of loyalty in that Defendants used and disclosed Plaintiff's trade secrets and confidential information and by competing against Plaintiff via unfair and deceptive acts while employed by Plaintiff. (See id. ¶¶ 124-27.) Count V alleges Defendants improperly interfered with Plaintiff's established relationships with its customers and vendors by using Plaintiff's customer and vendor information and contacting Plaintiff's customers and vendors for the purpose of improperly competing with Plaintiff. (See id. ¶¶ 128-32.) Count VI alleges violation of the Consumer Protection Act (CPA), RSA ch. 358-A, in that Defendants' actions constitute unfair and deceptive methods of competition in the conduct of trade or commerce. (See id. ¶¶ 133-36.)

Analysis

I. Personal Jurisdiction

Defendants argue that this case must be dismissed for lack of personal jurisdiction over Defendants as they "lacked any substantive contacts with New Hampshire." (Def.'s Mot. Dismiss ¶ 1.) Plaintiff objects, arguing that Defendants have sufficient minimum contacts with New Hampshire for the Court to properly exercise jurisdiction.

The "standard of review for rulings on motions to dismiss for lack of personal jurisdiction varies according to the case's procedural posture." Kimball Union Acad v. Genovesi, 165 N.H. 132, 136 (2013). When the Court rules...