Travel Leaders Leisure Grp. v. Cruise & Travel Experts, Inc., Case No. 19-cv-02871 (SRN/ECW)

Travel Leaders Leisure Group, LLC, d/b/a Cruise Specialists, Plaintiff, v. Cruise & Travel Experts, Inc., Thomas Baumann, Bonnie Childs, Lynne Cox,Debra Dickerson, Michelle Boots, and Mary Ellsworth, Defendants.

Case No. 19-cv-02871 (SRN/ECW)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

August 11, 2020

MEMORANDUM OPINION AND ORDER

Danielle Fitzsimmons, Gregory J. Stenmoe, and Samuel N. Louwagie, Taft Stettinius & Hollister LLP, 200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402, for Plaintiff.

Andrew Peterson, Joel D. O'Malley, and Katie M. Connolly, Nilan Johnson Lewis PA, 250 Marquette Avenue South, Suite 800, Minneapolis, MN 55401, for Defendants Cruise & Travel Experts, Inc., Thomas Baumann, Bonnie Childs, Lynne Cox, Debra Dickerson, Michelle Boots, and Mary Ellsworth.

Daniel S. Gross and Richard E. Spoonemore, Sirianni Youtz Spoonemore Hamburger PLLC, 3101 Western Avenue, Suite 350, Seattle, WA 98121, for Defendant Cruise & Travel Experts, Inc.

SUSAN RICHARD NELSON, United States District Judge

This matter comes before the Court on Defendants Cruise & Travel Experts, Inc.'s, Thomas Baumann's, Bonnie Child's, Lynne Cox's, Debra Dickerson's, Michelle Boots', and Mary Ellsworth's Motion to Dismiss for Lack of Personal Jurisdiction (Doc. No. 24). For the following reasons, the Court grants in part, and denies in part without prejudice, Defendants' Motion.

I. BACKGROUND

A. The Parties

Plaintiff Travel Leaders Leisure Group, LLC (TLLG), which does business as Cruise Specialists (CS) and will generally be referred to as CS in this order, is a Delaware corporation with a principal place of business in Minnesota. (Compl. [Doc. No. 1] ¶ 1; see also Scrivanich Decl. [Doc. No. 38] ¶ 3.)¹ CS is a luxury travel agency specializing in selling luxury cruises and tours; it has done so since 1987. (Compl. ¶ 25.) Given its tenure, CS has developed significant experience in the cruise sales industry, and its clients are typically high net-worth individuals. (Id. ¶¶ 26-28.)

Defendant Cruise & Travel Experts, Inc. (CTE) is a Michigan corporation with a principal place of business in Michigan. (Id. ¶ 2.) CTE is also a luxury travel agency specializing in selling luxury cruises and tours, and directly competes with CS. (Id.) CTE was formed in September 2014. (Id. ¶ 65; see also Baumann Decl. [Doc. No. 28] ¶ 12.)

Defendant Thomas Baumann is a citizen of Florida, the former president of CS, and the founder and owner of CTE. (Baumann Decl. ¶¶ 1, 5, 12; Compl. ¶¶ 4, 42-43, 65.)

Defendant Bonnie Childs is a citizen of Washington, a former cruise consultant for CS, and a current cruise consultant for CTE. (Compl. ¶¶ 5, 13, 66, 68, 72; Childs Decl. [Doc. No. 30] ¶ 1.)

Defendant Lynne Cox is a citizen of Michigan, a former cruise consultant for CS (at which time she lived in Washington), and a current cruise consultant for CTE. (Compl. ¶¶ 6, 13, 66-67, 72; Cox Decl. [Doc. No. 31] ¶ 1.)

Defendant Debra Dickerson is a citizen of Washington, a former cruise consultant for CS, and a current cruise consultant for CTE. (Compl. ¶¶ 7, 13, 66, 69, 72; Dickerson Decl. [Doc. No. 32] ¶ 1.)

Defendant Michelle Boots is a citizen of Oregon, a former cruise consultant for CS, and a current cruise consultant for CTE. (Compl. ¶¶ 8, 13, 66, 70, 72; Boots Decl. [Doc. No. 29] ¶ 1.)

Defendant Mary Ellsworth is a citizen of Washington, a former cruise consultant for CS, and a current cruise consultant for CTE. (Compl. ¶¶ 9, 13, 66, 71, 72; Ellsworth Decl. [Doc. No. 33] ¶ 1.)

Collectively, the Court will refer to Childs, Cox, Dickerson, Boots, and Ellsworth—all cruise consultants at various times for CS and CTE—as the "Employee Defendants."

B. Factual Background

1. Cruise Specialists and Employee Defendants

Cruise Specialists was formed in 1987 in Seattle, Washington. (Compl. ¶ 25.) Each of the Employee Defendants was hired by CS as cruise consultants, and were responsible for selling cruise reservations, servicing high-value CS clients, and consulting oninsurance, hotel, and other amenity options for those clients. (Id. ¶ 39.) CS hired Childs in 1997, Cox in 2000, Dickerson in 2001, Ellsworth in 2004, and Boots in 2006. (Id. ¶ 13; see also Childs Decl. ¶ 2; Cox Decl. ¶ 2; Dickerson Decl. ¶ 2; Ellsworth Decl. ¶ 2; Boots Decl. ¶ 2.)

CS generally spends approximately one year with a prospective client in order to develop a relationship with them before ever booking any travel for that client. (Compl. ¶ 30.) That approach allows CS to compile comprehensive data on the prospective client's preferences. (Id.) That data is placed into what CS calls its "Confidential Luxury Customer Database" (CLC Database), which serves as the "playbook" for CS. (Id. ¶¶ 30-31.) The information in the CLC Database is apparently not publicly available and is used by CS to give itself a competitive advantage within the industry. (Id. ¶¶ 32-33.) Cruise consultants working for CS are given access to the CLC Database while working for the company. (Id. ¶ 34.)

Over the course of their time at CS, the Employee Defendants either worked in CS's Seattle office or from their homes. From 1997 through 2007, Childs worked out of CS's Seattle-based office, then switched to working from her Washington home. (Child Decl. ¶¶ 3.1-3.3.) Cox worked out of CS's Seattle-based office for the entire duration of her employment with CS. (Cox Decl. ¶¶ 4-5.) Dickerson worked in CS's Seattle-based office from 2001 to 2008, then switched to working from home in Washington. (Dickerson Decl. ¶¶ 2-3.1.) Similarly, Ellsworth worked in CS's Seattle-based office from 2004 to 2007, then switched to remote work out of her home in Washington. (Ellsworth Decl. ¶¶ 3.1-3.2.) Finally, Boots worked from her home in Oregon for the entire duration of heremployment with CS. (Boot Decl. ¶¶ 3-3.1.) Four of the five Employee Defendants have either never been to Minnesota or have only been in the state on a flight layover. (See Boots Decl. ¶ 14; Cox Decl. ¶ 14; Dickerson Decl. ¶ 14; Ellsworth Decl. ¶ 14.) The only Employee Defendant to have visited Minnesota in any other respect, Childs, did so when attending an employee engagement event in April 2005, unrelated to any of the claims asserted by Plaintiff in this lawsuit. (Childs Decl. ¶ 14.)

While employed by CS, the Employee Defendants were issued computer hardware and software to be used by them in their role as cruise consultants, although the parties dispute whether that equipment originated from Minnesota or Seattle. (Compare Childs Decl. ¶ 7-8; Cox Decl. ¶ 7-8; Dickerson Decl. ¶ 7-8; Ellsworth Decl. ¶ 7-8; Boots Decl. ¶ 7-8, with Scrivanich Decl. ¶ 10.) Similarly, Plaintiff contends that each Employee Defendant ultimately reported to Dave Zitur, CS's Chief Information Officer and Chief Operating Officer, who was based out of Minnesota. (Compl. ¶ 12.) However, each Employee Defendant claims they never communicated with anyone by that name at any time during their employment with CS, and that they instead reported to other supervisors. (Childs Decl. ¶ 4-6; Cox Decl. ¶ 4-6; Dickerson Decl. ¶ 4-6; Ellsworth Decl. ¶ 4-6; Boots Decl. ¶ 4-6.) Plaintiff also alleges that for the past twelve to fifteen years, most of CS's essential functions, such as its electronic network (including its servers), its human resources functions, and its payroll, benefits, and sales contracts have all originated out of Minnesota for the benefit of the company's employees. (Scrivanich Decl. ¶¶ 6-8.) Moreover, Plaintiff contends that CS's employment policies and practices—which governed the company's employees—were issued from or designed in Minnesota, and alllegal and public relations functions for the company operated out of Minnesota. (Id. ¶¶ 8, 13-14.)

2. Sale of Cruise Specialists and Creation of Non-Competition/Non-Disclosure Agreements and Conditions of Employment/Confidentiality Agreements

In 2004, Carlson Companies began efforts to acquire CS. (See Compl. ¶ 41.) At the time, Defendant Baumann was employed by Carlson Leisure Group—a wholly owned subsidiary of Carlson Companies—as Executive Vice President for the Vacation and Business Travel Division and was responsible for running "company owned" travel agencies and acquiring new travel agencies. (Baumann Decl. ¶ 2.) Baumann worked from Michigan, but had an office in Minnesota that he occasionally used. (Id.) In his role, Baumann became involved in Carlson Companies' effort to purchase CS. (Compl. ¶ 41; Baumann Decl. ¶ 4.) Eventually, Carlson Companies acquired CS, effective January 1, 2005. (Compl. ¶ 41, 55; Baumann Decl. ¶ 4.) Following the acquisition, CS was run by Carlson Leisure Group, and Baumann became President of CS. (Compl. ¶¶ 41-43.)

Plaintiff alleges that Baumann, as President, had CS cruise consultants sign two agreements as a condition of their employment with Carlson Companies: a Non-Compete/Non-Disclosure Agreement, and a "Conditions of Employment" Agreement (together, the "Employment Contracts"). (Id. ¶¶ 42-44.) The Employee Defendants all signed the Conditions of Employment Agreement, and all but Boots signed the Non-Compete/Non-Disclosure Agreement. (See Compl. ¶¶ 45-49; Compl. Exs. A-H [Doc. No. 5]; see also Childs Decl. ¶ 15.2; Cox Decl. ¶ 15; Dickerson Decl. ¶ 15.2; Ellsworth Decl. ¶ 15; Boots Decl. ¶¶ 15.1-15.2.)

The Non-Compete/Non-Disclosure Agreement—identical for all Employee Defendants—contains several relevant provisions. Each Employee Defendant (except Boots) agreed that they would "[n]ot disclose or use, except as necessary in [their] employment . . . and not to use in any way which may be contrary to Carlson Leisure Group's interest or direction, during or at any time after termination of [the employee's] employment with Carlson Leisure Group . . . any confidential, proprietary or trade secret information of Carlson Leisure Group or any of Carlson Leisure Group's clients." (Compl. Ex. A.) They also agreed that for 12 months after their employment with Carlson Leisure Group terminated, they would not,...