Opinion
Civ. No. 03-3302 (RHK/FLN)
March 2, 2004
Mark H. Verwys and Stephen R. Boehringer, Plunkett Cooney, P.C., Grand Rapids, Michigan, and David A. Engen, Baxter Engen, Ltd., Lakeville, Minnesota, for Plaintiff
Elizabeth M. Bradshaw and Michael H. King, McGuire Woods Ross Hardies, L.L.P., Chicago, Illinois, and Frederick W. Morris and Timothy P. Griffin, Leonard Street and Deinard, P.A., Minneapolis, Minnesota, for Defendants
MEMORANDUM OPINION AND ORDER
Introduction
Plaintiff SL Montevideo Technology Inc. ("Montevideo") has sued Astromec, Inc. for misappropriation of trade secrets. Astromec contends that its Minnesota contacts are insufficient to permit this Court to exercise personal jurisdiction over it and moves to dismiss the sole remaining count against it pursuant to Fed.R.Civ.P. 12(b)(2). For the reasons set forth below, the Court will deny Astromec's motion.
Astromec is not registered to do business in Minnesota and does not own real estate, maintain offices, or employ a registered agent in Minnesota. (Griffin Original Decl. Ex. B (Castle Original Decl. ¶¶ 3-5).)
See infra Background Part II.
Background
For the factual background of this matter, refer to SL Montevideo Technology Inc. v. Eaton Aerospace. LLC., Civ. No. 03-3302 (RHK/FLN) (D. Minn. Nov. 24, 2003).
I. The Parties
Montevideo is a Minnesota corporation with its principal place of business in Montevideo, Minnesota. (Am. Compl. ¶ 1.) It designs and manufactures high performance precision AC and DC motors, amplifiers, drivers, controllers, and windings for aerospace, defense, and industrial markets. (Id.) Astromec is a Nevada corporation with its principal place of business in Carson City, Nevada. (Id. ¶ 3.) It designs and manufactures custom fractional horsepower motors and other motion control products for aerospace, defense, commercial and industrial markets. (Id.) Co-defendant Eaton Aerospace, LLC ("Eaton") is a Delaware limited liability company with its principal place of business in Cleveland, Ohio. (Id. ¶ 2.) It designs and manufactures fluid power, motion control, load management, and avionics products and systems. (Id.)
II. Procedural History
Montevideo initially filed its Complaint on May 30, 2003. It filed an Amended Complaint on September 4, 2003 in which it alleges: (1) breach of express contract against Eaton (Count I), (2) breach of implied contract against Eaton (Count II), (3) tortious interference with contract against Astromec (Covmt III), (4) misappropriation of trade secrets against both Eaton and Astromec (Count IV), and (5) conversion against both Eaton and Astromec (Count V). (Id. ¶¶ 21-41.)
This Court previously dismissed Counts II, III, and V. SL Montevideo Technology Inc. v. Eaton Aerospace, LLC, Civ. No. 03-3302 (RHK/FLN) (D. Minn. Nov. 24, 2003). Thus, only the misappropriation of trade secrets claim remains with respect to Astromec. Concurrent with its Rule 12(b)(6) Motion, Astromec had also filed a Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction: however, the Court continued Astromec's jurisdictional motion under advisement, ordered jurisdictional discovery, and requested further briefing. Id. Jurisdictional discovery having been completed and the additional briefing submitted, the Court will now address Astromec's Motion to Dismiss for Lack of Personal Jurisdiction.
Standard of Review
To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff need only make a prima facie showing of personal jurisdiction over the defendant. Pecoraro v. Sky Ranch For Boys, Inc., 340 F.3d 558, 561 (8th Cir. 2003) (citing Digi-Tel Holdings, Inc. v. Proteq Telecomm., Ltd., 89 F.3d 519, 522 (8th Cir. 1996)). The Court views the evidence in a light most favorable to the plaintiff.Id. Jurisdiction over a non-resident defendant must satisfy the requirements of the forum state's long-arm statute and of due process.Id. Because Minnesota's long-arm statute permits jurisdiction to the extent permitted by the Due Process Clause, the Court's inquiry is whether the exercise of personal jurisdiction comports with due process. Wessels, Arnold Henderson v. Nat. Med. Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995); see PSINet Consulting Solutions Knowledge Servs, Inc. v. Saudi Petro Gas Co. Ltd., Civ. No. 01-320 (RHK/JMM), 2001 WL 869616, at *5 (D. Mam. Aug. 1, 2001) (Kyle, J.).
Jurisdiction is appropriate only where a defendant has sufficient "minimum contacts" with the forum state that are more than random, fortuitous, or attenuated, "such that summoning the defendant would not offend traditional notions of fair play and substantial justice."Pecoraro, 340 F.3d at 561 (citations and internal quotations omitted). "The central question is whether a defendant has purposefully availed itself of the privilege of conducting activities in the forum state and should, therefore, reasonably anticipate being haled into court there." Id. at 562 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). The Court considers the defendant's aggregate forum contacts and looks at the totality of the circumstances. Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1388 (8th Cir. 1995). To this end, "[m]inimum contacts must exist either at the time the cause of action arose, the time the suit is filed, or within a reasonable period of time immediately prior to the filing of the lawsuit."Pecoraro, 340 F.3d at 562 (citation omitted).
With these principles in mind, the Court examines five distinct factors: (1) the nature and quality of the contacts with the forum state, (2) the quantity of those contacts, (3) the relation of the cause of action to the contacts, (4) the interest of the forum state in providing a forum for its residents, and (5) the convenience of the parties. Id. (citing Digi-Tel, 89 F.3d at 522-23). The first three are of primary importance, while the last two are secondary. Id. The third factor distinguishes specific from general jurisdiction. Digi-Tel, 89 F.3d at 522 n. 4. Specific personal jurisdiction refers to jurisdiction over causes of action "arising from or related to a defendant's actions within the forum state," id. (citing Helicopteros Nacionales de Colombia. S.A. v. Hall, 466 U.S. 408, 414 nn. 8 9 (1984)), while general personal jurisdiction refers to the powers of the forum state to adjudicate any cause of action involving a particular defendant regardless of where the cause of action arose if the defendant maintains "continuous and systematic" contacts with the forum state, Morris v. Barkbuster, Inc., 923 F.2d 1277, 1281 (8th Cir. 1991) (quotingHelicopteros, 466 U.S. at 416, 418-19).
Analysis
Having carefully reviewed the parties' submissions, and viewing the record in a light most favorable to Montevideo, the Court concludes that it has general personal jurisdiction over Astromec. Montevideo has made a prima facie showing that Astromec's aggregate Minnesota contacts — at the time its cause of action arose and immediately prior to the filing of this suit — are of the nature, quality, and quantity that justify the conclusion that they are sufficiently "continuous and systematic" to support general personal jurisdiction. Those contacts fall into five categories which are discussed below.
The parties dispute the time frame in which to assess Astromec's contacts. Astromec contends that the relevant period is January 2000, an apparently arbitrary starting point, through May 2003, when the Complaint was filed (Astromec Supplemental Mem. in Supp. at II.B; Astromec Response Mem. at 1-2), while Montevideo asserts that the analysis should start in May 1998, when its cause of action "commenc[ed]" (Montevideo Second Supplemental Mem. in Opp'n at 3). As noted above, "[m]inimum contacts must exist either at the time the cause of action arose, the time the suit is filed, or within a reasonable period of time immediately prior to the filing of the lawsuit." Pecoraro, 340 F.3d at 562. Viewed in a light most favorable to Montevideo, the record supports its assertion that for the purposes of personal jurisdiction its cause of action arose in May 1998. Thus, Astromec must have had sufficient contacts either in May 1998, May 2003 (when the suit was filed), or within a reasonable period of time immediately prior to May 2003.
First, in 1996-97, approximately one year prior to when Montevideo's cause of action arose, two Astromec employees and an Astromec manufacturer's representative made business trips to Minnesota: a Wisconsin-based Astromec employee, Robert Bohm, made Minnesota sales calls (Griffin Supplemental Decl. Ex. A (Castle Supplemental Decl. ¶ 3); id. Ex. B (Castle Dep. Tr. at 12)); Steven Castle, Astromec's Chief Executive Officer, attended a conference of the Small Motors Motion Association held in Minneapolis (Castle Supplemental Decl. ¶¶ 1, 5); and a manufacturer's representative traveled to Minnesota to generate business for Astromec (Castle Dep. Tr. at 13).
Second, from 1998 through 2000 Astromec conducted telephone and direct mail marketing that targeted numerous Minnesota companies. (Castle Supplemental Decl. ¶ 3; Castle Dep. Ex. 5 (Astromec Act Minnesota Contact Report).) For example, Astromec sent advertising mailers to at least two dozen representatives of Minnesota companies on several occasions in 1998 (including May 8, July 16, August 17, September 25, October 16, and November 13) and in 1999 (including February 3, February 17, March 15, May 18, June 18, August 17, and September 16). (Castle Dep. Ex. 5 (Astromec Act Minnesota Contact Report).) In its smaller 2000 distribution of advertising mailers, Astromec sent mailers to one Minnesota company in January and to several employees of another Minnesota company in December. (Id.) In addition to these marketing efforts, Astromec also advertised in national publications and was listed in the Thomas Register in 2000. (Castle Supplemental Decl. ¶ 4.)
The Thomas Register is an online, CD-ROM, and print resource where a manufacturer can list information about its products or services.See http://www.thomasregister.com/About.aspx?Help=FAQs.
Third, beginning in January 2003, and continuing to the present, Astromec has been in regular e-mail and telephone communication with Windings, Inc., a New Ulm, Minnesota, company, regarding Windings's manufacture of a component part for use in Astromec's new motor. (Castle Supplemental Decl. ¶¶ 8, 10, Ex. 1; Castle Dep. Ex. 6 (Astromec Minnesota Vendor (Windings, Inc.) Report).)
Fourth, in May 2003 Astromec sold $250 worth of capstans — small wheels that go on the shaft of a motor that drives magnetic tape — to Lockheed Martin in Eagan, Minnesota. (Castle Dep. Tr. at 19-20; Astromec Supplemental Mem. in Supp. at III.A.I.)
Astromec also had a previous Minnesota-related sale in 2002. At that time, Astromec negotiated the sale of a $500 prototype motor (unrelated to the motor at issue) with Midas Rex. All of Astromec's e-mail, telephone, and in-person contacts with Midas Rex were in Texas. After negotiations began, however, Midas Rex was purchased by Medtronic, a Minnesota company. Astromec shipped the motor to Texas, but sent its invoice to, and received payment from, Minnesota. (Castle Supplemental Decl. ¶ 6.) The Court, however, finds this contact too attenuated for personal jurisdiction analysis and does not rely upon it. Astromec's contacts with Midas Rex occurred solely in Texas, and it was not until Medtronic purchased Midas Rex that Astromec established a Minnesota contact by sending its invoice to Medtronic for the sale it negotiated with Midas Rex.
Finally, twelve Minnesota residents have utilized Astromec's website. Two have downloaded Astrowiz, which is a computer program that computes engineering calculations (Castle Dep. Tr. at 41, Ex. 4), four have filled out an Internet information request form (Id. at 25, Ex. 3), and six have contacted Astromec after first visiting its website (Id. at 33-34; Astromec's Supplemental Mem. in Supp. at III.A.2).
Although the Court previously continued this Motion under advisement and allowed jurisdictional discovery, in part, because of a recent Eighth Circuit case, Lakin v. Prudential Sec., Inc., 348 F.3d 704 (8th Cir. 2003), which addressed personal jurisdiction and Internet contacts, Montevideo now asserts that Castle's deposition and deposition exhibits establish personal jurisdiction "without the necessity for any website-presence analysis under Lakin." (Montevideo Supplemental Mem. in Opp'n at 2.) True to its word, Montevideo does no such analysis and apparently no longer relies upon Astromec's Internet contacts to the extent originally contemplated.
The determination of whether minimum contacts exist "is one in which few answers will be written `in black and white. The greys are dominant and even among them the shades are innumerable.'" Kulko v. California Super. Ct., 436 U.S. 84, 92 (1978) (citation omitted). Nevertheless, while none of these contacts alone would be sufficient to establish jurisdiction, taken cumulatively, and in a light most favorable to Montevideo, the Court concludes that Astromec "has purposefully availed itself of the privilege of conducting activities in [Minnesota] and should, therefore, reasonably anticipate being haled into court here." Pecoraro, 340 F.2d at 562 (citations omitted); see Ballistic Prods., Inc. v. Precision Reloading. Inc., Civ. No. 03-2950 (ADM/AJB), 2003 WL 21754816, at *3, 4 (D. Minn. July 28, 2003) (finding general personal jurisdiction over non-resident defendants).
The Court recognizes that Astromec has very few physical contacts with Minnesota. However, the United States Supreme Court has observed that
[j]urisdiction . . . may not be avoided merely because the defendant did not physically enter the forum State. Although territorial presence frequently 2will enhance a potential defendant's affiliation with a State and reinforce the reasonable foreseeability of suit there, it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State. . . . So long as a commercial actor's efforts are "purposefully directed" toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.Burger King, 471 U.S. at 476 (citations omitted) (emphasis in original).
Having determined that Astromec purposefully established minimum contacts within Minnesota, the Court may then consider other factors to determine whether the assertion of personal jurisdiction over Astromec comports with "fair play and substantial justice." Burger King, 471 U.S. at 476 (citation and internal quotation omitted). Thus, the following considerations "sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required": (1) the burden on the defendant, (2) the forum State's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental substantive social policies. Id. at 476-77 (citations omitted); see Lakin v. Prudential Sec., Inc., 348 F.3d 704, 713 (8th Cir. 2003) (discussing application of reasonableness analysis in a general jurisdiction case); Clune v. Alimak AB, 233 F.3d 538, 542 (8th Cir. 2000); Ballistic Prods., 2003 WL 21754816, at *4.
These factors are intended to be weighed with a mind toward protecting against the use of jurisdictional rules to make litigation "so gravely difficult and inconvenient" that a party is at a "severe disadvantage" in comparison with his opponent. Burger King, 471 U.S. at 478 (citations and internal quotations omitted); see Ballistic Prods., 2003 WL 21754816, at *4.
In the present case, these considerations establish the reasonableness of jurisdiction over Astromec upon a lesser showing of minimum contacts than would otherwise be required. First, the burden on Astromec to defend itself in Minnesota is minimal. With modern technology and transportation, Astromec should have little difficulty transporting documents and witnesses to Minnesota. See Clune, 233 F.3d at 545-46. Second, Minnesota has the strongest interest of any forum in adjudicating this dispute. The trade secrets involved in this case are those of a Minnesota company, the Motor at issue was developed in Minnesota, and Montevideo employs Minnesota residents. No other state has a more compelling connection to this case. See Id. at 546 (identifying similar factors in assessing forum state's interest). Third, Montevideo's interest in obtaining convenient and effective relief is best satisfied by adjudicating this dispute in Minnesota. Fourth, trying this case in Minnesota satisfies the judicial system's interest in obtaining the most efficient resolution of this entire controversy. Dismissing Astromec from this case would assuredly cause a second proceeding to be commenced elsewhere. It is a more efficient use of judicial resources for this Court to address Montevideo's trade secret misappropriation claims against both Astromec and co-defendant Eaton in a single proceeding.See Lakin, 348 F.3d at 713 (finding it "much more efficient for all parties to have the litigation centered in one location"). In sum, the adjudication of this dispute in Minnesota ensures the fundamental social policy of protecting trade secrets.
Where a defendant has purposefully directed its activities at forum residents, "he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King, 471 U.S. at 477; see Ballistic Prods., 2003 WL 21754816, at *4. Although Astromec's documents and witnesses are located in Nevada (Astromec Supplemental Mem. in Supp. at III.D), it has not presented a compelling case that these considerations would make jurisdiction in Minnesota unreasonable.
Therefore, in light of Astromec's "continuous and systematic" contacts with Minnesota, and the reasonableness of jurisdiction over it, the Court finds due process satisfied and personal jurisdiction over Astromec appropriate.
Conclusion
Based on the foregoing, and all of the files, records, and proceedings herein, IT IS ORDERED that Defendant Astromec, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction (Doc. No. 14) is DENIED.