Podium Corp. v. Chekkit Geolocation Servs.

PODIUM CORPORATION INC., Plaintiff, v. CHEKKIT GEOLOCATION SERVICES, INC., EUGENE TAGLE, MYLES HIEBERT, DANIEL FAYLE, LEE KLIMPKE, and EMILY FRANZ-LIEN, Defendants.

No. 2:20-cv-352-JNP-DAO

United States District Court, D. Utah

December 6, 2021

Daphne A. Oberg, Magistrate Judge

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS

JILL N. PARRISH, UNITED STATES DISTRICT COURT JUDGE

Before the court are three motions to dismiss filed by the individual defendants^[1] in this case. First, Defendant Eugene Tagle ("Tagle") moves to dismiss two claims: (1) civil conspiracy and (2) aiding and abetting violations of the Computer Fraud and Abuse Act ("CFAA") [ECF No 105]. Second, Defendants Myles Hiebert ("Hiebert") Daniel Fayle ("Fayle"), and Lee Klimpke ("Klimpke") together move to dismiss the same two claims as Tagle [ECF No. 111]. Third, Defendant Emily Franz-Lien ("Franz-Lien) moves to dismiss for lack of personal jurisdiction or, in the alternative, moves to dismiss all three claims against her for failure to state a claim [ECF No. 109]. For the reasons stated below, the court GRANTS the motions to dismiss by Tagle, Hiebert, Fayle, and Klimpke and GRANTS IN PART and DENIES IN PART the motion by Franz-Lien.

BACKGROUND

Plaintiff Podium Corporation ("Podium"), founded in 2014, is a Delaware corporation with its principal place of business in Lehi, Utah. Podium markets cloud-based software that helps small businesses engage customers. Podium's platform includes features such as web-based messaging and tools to generate more online reviews.

Defendant Chekkit Geolocation Services, Inc. ("Chekkit") founded in 2016, is a Canadian corporation with its principal place of business in Winnipeg, Canada. Chekkit began as a customer interaction management platform and, around 2018 added reputation management tools to its offerings. At present, Chekkit sells software that largely mirrors Podium's platform. Chekkit has four directors: Hiebert as Chief Executive Officer, Fayle as Chief Security Officer, Klimpke as Chief Technology Officer, and Franz-Lien as Chief Operating Officer. Each director has worked for Chekkit for the company's entire existence. Chekkit employed Tagle as a sales representative from October 2, 2017 to November 18, 2018, and again from November 11, 2019 to June 2, 2020. Tagle no longer works at Chekkit.

Chekkit and Podium are direct competitors. This dispute arises out of tactics that Chekkit and its employees used to compete with Podium. In early 2018, Defendants hatched a plan to learn more about Podium's features. Defendants hoped to import those same features, along with Podium's general "feel," into their own product. Defendants aimed to create a nearly identical platform that they could market to businesses-many of whom already had contracts with Podium-at a lower price point.

As a first step, Tagle, posing as an employee of a food services business ("Munch Box"), scheduled two demos with Podium sales representatives on April 2, 2018 and April 20, 2018. Tagle and Fayle attended the meetings and asked questions about Podium's review feature, which assists customers with reputation management. In October 2019, Chekkit agents began targeting Podium customers, attempting to convince them to switch to Chekkit. Hiebert, Fayle, and Tagle messaged Podium customers through Podium's webchat widget. They told Podium customers that they could save money while purchasing the exact same product, and provided a link to a webpage comparing Chekkit and Podium's services. At the same time, Klimpke and Franz-Lien worked behind the scenes to assist with onboarding new customers and building features that mirrored Podium's features.

In an attempt to gain further information about Podium's platform, Defendants decided to purchase a Podium subscription. Knowing that Podium would not sell a subscription to Chekkit or its employees, Defendants created the alias "Eric Winters," owner of Munch Box. Defendants built a website and Facebook page for Munch Box. Tagle-masquerading as Winters-scheduled another demo with Podium on December 5, 2019. Tagle used his personal phone number and personal email address to schedule the demo. During the demo, Tagle asked many specific questions about Podium's newest feature, Teamchat. Tagle, as Winters, purchased a Podium subscription for Munch Box the next day using Hiebert's personal credit card and his own personal email and phone number. Tagle signed Podium's Terms of Service and Acceptable Use Policy under the name Eric Winters. Defendants cancelled the Munch Box Podium subscription at the end of December 2019.

Once Podium discovered Chekkit's scheme, Podium sent Chekkit a cease-and-desist letter on December 24, 2019. The letter demanded that Chekkit immediately cease and desist from accessing Podium's services, using any information Chekkit obtained from Podium's services, using Podium's name to promote non-Podium services, using Podium's trademarks without authorization, using Podium's webchat widget to target Podium's customers, and making unauthorized copies of Podium's copyrighted materials. On January 14, 2020, Chekkit acknowledged the cease-and-desist letter and promised that it was in compliance with the letter's demands. But, according to Podium, Chekkit continued to engage in the type of conduct proscribed by the letter. On January 21, 2020, Podium invoked the dispute resolution clause contained within its Terms of Service, which required that the parties engage in mediation by February 22, 2020. After receiving no response from Chekkit, Podium proceeded to file this lawsuit. Podium outlined ten causes of action, seven of which pertain solely to Defendant Chekkit. Two of the remaining claims, intentional interference with Podium's existing and prospective economic relations and civil conspiracy, are directed at all Defendants. The final claim, aiding and abetting violations of the CFAA, pertains to the individual defendants.

ANALYSIS

The court first addresses Franz-Lien's personal jurisdiction arguments asserted under Federal Rule of Civil Procedure 12(b)(2). It then addresses the individual defendants' Rule 12(b)(6) motions to dismiss the civil conspiracy and aiding and abetting violations of the CFAA claims. Finally it addresses Franz-Lien's Rule 12(b)(6) motion to dismiss the intentional interference claim.

I. MOTION TO DISMISS PURSUANT TO RULE 12(b)(2)

A plaintiff bears the burden of establishing that a court has personal jurisdiction over a defendant. Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011). When the issue of personal jurisdiction "is raised early on in litigation, based on pleadings (with attachments) and affidavits, that burden can be met by a prima facie showing." Id. As with all motions to dismiss, the court "must accept all the well-pleaded allegations of the complaint as true and must construe them in the light most favorable to the plaintiff." Aiders v. Bd. of Cnty. Comm'rs, 771 F.3d 697, 700 (10th Cir. 2014) (citation omitted). Finally, "[i]n evaluating a motion to dismiss, we may consider not only the complaint, but also the attached exhibits." Commonwealth Prop. Advocs., LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194, 1201 (10th Cir. 2011).

Podium advances two independent justifications for the court to find personal jurisdiction over Franz-Lien. First, it argues that Franz-Lien-through Fagle's signature-consented to personal jurisdiction in this court by agreeing to Podium's Terms of Service, which require parties to submit to personal jurisdiction in Utah. Second, it contends that, even if Franz-Lien is not bound by the Terms of Service, this court still has personal jurisdiction based on Franz-Lien's contacts with Utah. The court begins by addressing the second rationale, the traditional personal jurisdiction test.

A. Traditional Personal Jurisdiction Test

Determining whether a court has personal jurisdiction over a defendant requires a two-part inquiry: Does exercising personal jurisdiction comport with (1) a state's long-arm statue and (2) principles of constitutional due process? Because Utah's long-arm statute "should be applied so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause," the court need only address whether the exercise of personal jurisdiction over Defendants comports with constitutional due process. UTAH CODE § 78B-3-201(3).

For the court to exercise personal jurisdiction, due process requires that "the nonresident defendant must have 'certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" New World Int'l, Inc. v. Ford Glob. Techs., LLC, 859 F.3d 1032, 1037 (Fed. Cir. 2017) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Personal jurisdiction may be either general or specific. To exercise general jurisdiction over a nonresident defendant, the defendant must engage in "continuous and systemic general business contacts," Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984), "of a sort that approximate physical presence in the state," Shrader, 633 F.3d at 1243 (citation omitted). Franz-Lien had no systemic contacts with Utah. Therefore, the only issue is whether the court may exercise specific personal jurisdiction over Franz-Lien.

Under specific personal jurisdiction, a district court can hear claims against a defendant only where that defendant "has purposefully directed his activities at residents of the forum, and the litigation results from alleged injuries that arise out of or relate to those activities." Burger King Corp. v. Rudzewicz, 471 U.S. 462,...