Opinion
CIVIL ACTION NO. 07-10455-RWZ.
October 24, 2007
MEMORANDUM OF DECISION
I. Introduction
Plaintiff eSapience, Ltd. ("eSapience") brings this action for damages against defendant C.V. Starr Co., Inc. ("Starr") for breach of a written contract promising payment for consulting services. Defendant moves to dismiss all claims on the ground that the court lacks jurisdiction under Fed.R.Civ.P. 12(b)(2). For the reasons discussed below, the motion to dismiss is denied.
II. Background and Procedural History
In May 2006, defendant Starr, a New York-based Delaware corporation, contracted with Massachusetts-based eSapience, a self-described "media and research entity," to rehabilitate the public image of Maurice Greenberg, the former Chairman and CEO of American International Group. eSapience proposed a sophisticated program "target[ing] and inform[ing]" influential policymakers and intellectuals "(1) to change the public conversation about Greenberg; (2) to demystify the insurance industry; and (3) to raise questions about the effectiveness of the current legal and regulatory environment." (Id. ¶ 11; Docket # 10, Ex. B (the "Plan"), 1.) The Plan specified billing on a time and materials basis, with hourly rates ranging from $175 to $1,000 per hour. It recommended budgeting $250,000 a month initially, ramping up to $500,000 a month as the program developed. During the next six months of 2006, eSapience implemented the Plan, creating a center, an institute and several web sites, as well as hosting a number of events in furtherance of the Plan's goals. In November 2006, Starr informed eSapience that it intended to terminate their relationship.
eSapience now alleges that Starr failed to pay numerous invoices totaling in excess of $2 million for work completed prior to the termination and seeks damages for: (1) beach of contract; (2) breach of the Massachusetts implied covenant of good faith and fair dealing; and (3) violation of Mass. Gen. Laws ch. 93A, §§ 2 and 11. Starr asserts that this court lacks personal jurisdiction over it and moves to dismiss under Fed.R.Civ.P. 12(b)(2). (Docket # 12.)
III. Legal Standard
A. Burden and Standard
eSapience bears the burden of persuading the court that jurisdiction exists based on specific facts set forth in the record. United Elec., Radio and Mach. Workers of Am. v. 163 Pleasant St. Corp., 987 F.2d 39, 44 (1st Cir. 1993). In the absence of an evidentiary hearing, the court applies a prima facie standard to determine questions of personal jurisdiction.Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 34 (1st Cir. 1998). Under this standard, "the plaintiff [must] proffer evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction." Boit v. Gar-Tec Prod., Inc., 967 F.2d 671, 675 (1st Cir. 1992). Facts put forth by the defendant are only considered to the extent they are uncontradicted by plaintiff's facts construed "in the light most favorable to the plaintiff's jurisdictional claim." Mass. Sch. of Law, 142 F.3d at 34.
B. Specific Jurisdiction
Courts may exercise either general or specific jurisdiction over a defendant. Id. Here, eSapience does not contend that Starr's contacts with Massachusetts are "continuous or systematic" enough to establish general jurisdiction. Id. Rather, it argues that Starr is subject to specific jurisdiction because there is a "demonstrable nexus" between plaintiff's breach of contract claims and "defendant's forum-based activities." Id. Such a determination requires both: (1) that the contacts satisfy the Massachusetts long-arm statute; and (2) "that the exercise of jurisdiction under the statute is consistent with the [due process provisions of the] constitution." Daynard v. Ness, Motley, Loadholt, Richardson Poole, P.A., 290 F.3d 42, 52 (1st Cir. 2002).
The Massachusetts long-arm statute provides for personal jurisdiction over a defendant if the cause of action arises,inter alia, from the defendant's "transacting any business in this commonwealth." Mass. Gen. Laws ch. 223A, § 3(a). For the exercise of jurisdiction to comport with due process: (1) the litigation must directly relate to the defendant's in-state contacts; (2) those contacts must "constitute purposeful availment of the benefits and protections afforded by the forum's laws;" and (3) the exercise of jurisdiction over defendant must be reasonable. Phillips Exeter Acad. v. Howard Phillips Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999).
IV. Discussion
Here, the claims arise from defendant's alleged breach of a contract it made with a Massachusetts corporation having only a single office in Cambridge, Massachusetts. Starr initiated contact with plaintiff on the recommendation of a third-party consultant of eSapience. The contract was negotiated via multiple email messages and telephone calls from defendant into the Commonwealth. During the course of performance of the contract, defendant continued to call and email plaintiff at its Cambridge offices. The majority of the work implementing the Plan was performed by plaintiff's employees in Massachusetts, and one of the conferences contemplated by the Plan took place in Massachusetts. Starr made payments to eSapience at its Massachusetts office or by wire transfer to its Massachusetts bank.
While Starr asserts that it has no office or place of business in Massachusetts, eSapience was directed to submit "all invoices and all attendant documentation" directly to Alan Gray, Inc. ("Gray"), a company located in Boston, Massachusetts, for review and forwarding to defendant for payment. By accepting plaintiff's invoices and forwarding them to Starr for payment, Gray acted as Starr's Massachusetts agent, handling the very transactions at issue in this suit. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (specific jurisdiction requires the cause of action to "arise out of, or relate to" defendant's contacts with the forum state).
Under these circumstances, there is no question that Starr transacted business in the Commonwealth, thereby meeting the requirements of the state's long-arm statute. See Mass. Gen. Laws ch. 223A, § 3(a). In addition, by its frequent email and phone communication during the performance of the contract and its use of a Massachusetts-based agent to channel contract invoices, Starr purposely availed itself of the privilege of conducting activities in the Commonwealth, thus invoking the protection of its laws. See Hahn v. Vermont Law Sch., 698 F.2d 48, 51 (1st Cir. 1983) (finding the requirements of due process met when defendant's contacts consisted of "sending application information and an acceptance letter to [plaintiff] in Massachusetts"); see also Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 208 n. 11 (1st Cir. 1994) ("[A] business relationship almost invariably entails some degree of initiative and forethought on the part of the persons involved, and, therefore, initiation and foreseeability are necessarily present.").
Finally, requiring New York-based Starr to appear in a Massachusetts court is not unreasonable given the interest Massachusetts has in protecting its citizens and the ease of traveling between the two states. See United Elec., Radio and Mach. Workers, 960 F.2d at 1088 (describing the "gestalt" factors which bear on reasonableness); Pritzker v. Yari, 42 F.3d 53, 64 (1st Cir. 1994) (finding a requirement that defendant travel from New York to Puerto Rico not onerous in a "constitutionally significant way.").
V. Conclusion
Accordingly, defendant's motion to dismiss (Docket # 12) is DENIED.