Torcup, Inc. v. Aztec Bolting Servs., Inc.

386 F.Supp.3d 520

TORCUP, INC., Plaintiff,

v.AZTEC BOLTING SERVICES, INC., et al., Defendants.

CIVIL ACTION No. 19-1560

United States District Court, E.D. Pennsylvania.

Signed July 9, 2019

John S. Harrison, Broughal & Devito, LLP, Bethlehem, PA, for Plaintiff.

Frank A. Chernak, Kelly Kathleen Huff, Montgomery McCracken Walker & Rhoads LLP, Philadelphia, PA, for Defendants.

OPINION

CHAD F. KENNEY, JUDGE

I. INTRODUCTION

Currently before the Court is Defendant, Aztec Bolting Services, Inc.'s ("ABS"), Motion to Dismiss the Amended Complaint (ECF No. 18), Defendant, Christopher Earl High's ("High"), Motion to Dismiss Plaintiff's Amended Complaint (ECF No. 19), Plaintiff's Response to Defendants' Motions (ECF No. 20), and ABS's Reply (ECF No. 22).

II. BACKGROUND

Plaintiff initiated the instant matter by way of a Complaint filed on April 11, 2019. On May 6, 2019, Plaintiff filed its Amended Complaint, which is the subject of the Defendants' Motions to Dismiss. According to Plaintiff's Amended Complaint, High was hired by Plaintiff on May 21, 2018 as a sales representative for its Houston, Texas region. ECF No. 14 at ¶ 51. On or around February 25, 2019, Plaintiff alleges that High left Plaintiff's employ and began working for ABS, a Texas corporation with its principle place of business in League City, Texas. ECF No. 14 at ¶¶ 2 and 75. ABS is both a competitor and customer of Plaintiff's. ECF No. 20 at 2-3. Plaintiff alleges that High misappropriated Plaintiff's entire customer list for the Houston, Texas area when he provided said customer list to ABS. ECF No. 14 at ¶¶ 68 and 74. Plaintiff's Amended Complaint alleges three Counts against Defendants: 1) interference with contractual relations; 2) violation of uniform trade secrets act; and 3) breach of contract (as to High, only). Id. at ¶¶ 79-94.

Plaintiff, in its Complaint, asserts this Court has diversity jurisdiction over the parties. Id. at ¶¶ 4-5. In support of its assertion that this Court has personal jurisdiction over the Defendants, and venue is appropriate in this District, Plaintiff's Complaint sets forth the following allegations:

1) "Plaintiff TorcUP designs, manufactures, and sells tools and accessories from its plant in Easton, Pennsylvania"; 2) "Defendant ABS is a regular customer of Plaintiff"; 3) "Defendant ABS has been a customer of [Plaintiff] for approximately twenty years"; 4) "Defendant ABS places approximately one order for tools or parts every week or two to Plaintiff TorcUP in Easton, Pennsylvania"; 5) "Defendant ABS sends regular e-mails to Plaintiff TorcUP in Easton, Pennsylvania, inquiring if it has tools or parts in stock and requesting quotations"; 6) "Defendant ABS receives quotations via e-mail from Plaintiff TorcUP in Easton, Pennsylvania"; 7) "Defendant ABS sends orders via e-mail to Plaintiff TorcUP in Easton, Pennsylvania"; 8) "Plaintiff TorcUP makes shipments of ordered parts and tools from its address in Easton, Pennsylvania, to Defendant ABS"; 9) "Defendant ABS sent payments to Plaintiff TorcUP in Easton, Pennsylvania, via check"; 10) "Defendant ABS currently sends payments to one of Plaintiff TorcUP's bank accounts in Pennsylvania via wire transfer"; 11) "Plaintiff TorcUP receives regular phones calls in its office in Easton, Pennsylvania, from Defendant ABS employees who have questions about Plaintiff TorcUP tools"; 12) "Defendant ABS has Plaintiff TorcUP tools in its rental fleet of tools"; 13) "Defendant ABS resells tools it purchased from Plaintiff TorcUP"; 14) "Defendant ABS owner or President, as well as various employees, have been to Plaintiff TorcUP's plant in Easton, Pennsylvania, for training"; 15) "Defendant High was trained by Plaintiff TorcUP in Easton, Pennsylvania"; 16) "Defendant High signed his Employee Confidentiality and Non-Competition Agreement in Easton, Pennsylvania"; 17) "Defendant High, while employed by Plaintiff TorcUP, reported to his sales managers in Easton, Pennsylvania, via phone and e-mail on a daily basis"; 18) "Defendant High, while employed by Plaintiff TorcUP, was selling Plaintiff TorcUP's tools and accessories which sales were processed and shipped from Plaintiff TorcUP's plant in Easton, Pennsylvania"; 19) "Plaintiff TorcUP's customer list is maintained in its offices in Easton, Pennsylvania"; 20) "Plaintiff TorcUP's sales information is maintained in its offices in Easton, Pennsylvania"; 21) "Plaintiff TorcUP's finances are based in Easton, Pennsylvania"; 22) "Plaintiff TorcUP's corporate headquarters is in Easton, Pennsylvania"; 23) "Plaintiff TorcUP is being harmed in Easton, Pennsylvania, by the conduct of Defendants in stealing its customer list"; 24) "Plaintiff TorcUP ships tools and accessories to customers from Easton, Pennsylvania"; 25) "Defendants were aware that their conduct would harm Plaintiff TorcUP in Easton, Pennsylvania"; 26) "Defendants' solicitation of and sales to Plaintiff TorcUP's customers harmed Plaintiff TorcUP in Pennsylvania"; 27) "Defendant ABS was aware that Defendant High was employed by Plaintiff TorcUP"; and 28) "Defendant ABS hired Defendant High because he has access to Plaintiff TorcUP's customer list which is maintained and updated in Pennsylvania." Id. at ¶¶ 6-35.

III. DISCUSSION

A. Personal Jurisdiction

Defendants' Motions to Dismiss argue that this Court lacks personal jurisdiction over the Defendants. Because this Court did not have an evidentiary hearing, to defeat Defendants' Motions to Dismiss for lack of personal jurisdiction, Plaintiff must show a prima facie case that personal jurisdiction exists. Miller Yacht Sales, Inc. v. Smith , 384 F.3d 93, 97 (3d Cir. 2004). "The plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor." Id . Further, Plaintiff bears the burden of demonstrating that personal jurisdiction exists in the forum. O'Connor v. Sandy Lane Hotel Co. , 496 F.3d 312, 316 (3d Cir. 2007).

Per Fed. R. Civ. P 4(k), a district court analyzes personal jurisdiction based on the law of the state where it sits. Id. Therefore, the Pennsylvania long-arm statute must be applied. Id . This statute allows the Court to exercise personal jurisdiction over an individual "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." 42 Pa. Stat. and Cons. Stat. Ann. § 5322(b). Initially, in the determination of the existence of personal jurisdiction, this Court must ask whether under the Due Process Clause the defendant has "certain minimum contacts with ... [Pennsylvania] such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." O'Connor , 496 F.3d at 317 (alteration in original) (quoting Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). Here, Plaintiff claims this Court has specific personal jurisdiction over both ABS and High.¹ ECF No. 20 at 9.

1. Traditional Specific Jurisdiction

Courts apply a three-part test in the determination of specific jurisdiction.² O'Connor , 496 F.3d at 317. "First, the defendant must have ‘purposefully directed [its] activities’ at the forum." Id. (alteration in original) (quoting Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ). A defendant purposefully avails itself of the laws and "privileges" of a forum state by "conducting activities within the forum." Id. (quoting Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958) ). No physical entry is required, but the defendant must have "deliberate[ly] target[ed]" the forum. Id. "In assessing whether a commercial entity has availed itself of the privileges of a forum's laws, jurisdiction is proper if the defendant has taken ‘action ... purposefully directed toward the forum State.’ " Pinker v. Roche Holdings Ltd. , 292 F.3d 361, 370 (3d Cir. 2002) (quoting Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal. , 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (plurality opinion of O'Connor, J.)). "This purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts." Burger King , 471 U.S. at 475, 105 S.Ct. 2174 (quotation marks omitted).

Second, plaintiff's claims must "arise out of or relate to" defendant's purposefully targeted activities in the forum. See O'Connor , 496 F.3d at 318 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) ). When analyzing the relatedness of purposeful contacts to the forum state, the Third Circuit Court of Appeals does not subscribe to a bright-line rule or categorical method of analysis. Id. at 322 ("[T]here is no ‘specific rule’ susceptible to mechanical application in every case."). The Third Circuit requires a causal connection between the defendant's purposeful contacts within the forum and the claims alleged. Id. This causal connection is "a closer and more direct causal connection than that provided by the but-for test"³ but "somewhat looser than the tort concept of proximate causation." Id. at 323. "But in the course of this necessarily fact-sensitive inquiry, the analysis should hew closely to the reciprocity principle upon which specific jurisdiction rests. With each purposeful contact by an out-of-state resident, the forum state's laws will extend certain benefits and impose certain obligations. Specific jurisdiction is the cost of enjoying the benefits." Id. (citations omitted). The causal connection between the defendant's purposeful forum contacts and the alleged claims must "be intimate enough to keep the quid pro quo proportional and personal jurisdiction reasonably foreseeable." Id .

Finally, if sufficient minimum contacts exist, jurisdiction is "presumptively constitutional." Id . However, the court must determine whether the...