LYNWOOD SMITH, District Judge.
Plaintiffs Molex Company, LLC ("Molex") and Pacific Mining Reagents, Ltd. ("Pacific") originally commenced this action in the Circuit Court of Limestone County, Alabama, asserting claims against defendant Charles Andress, a former consultant for plaintiffs, for a temporary restraining order and injunctive relief to redress violations of the Alabama Trade Secrets Act, Ala.Code § 8-27-1 et seq., monetary damages and permanent injunctive relief under that Act, damages for breach of fiduciary duty, and a declaratory judgment that defendant has an obligation to maintain the confidentiality of and refrain from using plaintiffs' confidential and proprietary information.
The case currently is before this court on the following motions: (1) plaintiffs' motion to remand;
The motion to remand must be considered first, because it addresses this court's subject matter jurisdiction. Federal district courts are tribunals of limited jurisdiction, "`empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,' and which have been entrusted to them by a jurisdictional grant authorized by Congress." University of South Alabama v. The American Tobacco Co., 168 F.3d 405, 409 (11th Cir.1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir.1994)).
Accordingly, an "Article III court must be sure of its own jurisdiction before getting to the merits" of any action. Ortiz v. Fibreboard Corp., 527 U.S. 815, 831, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999) (citing Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 88-89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)).
A removing defendant bears the burden of proving that federal jurisdiction exists. See, e.g., Leonard v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir. 2002); Williams v. Best Buy Co., 269 F.3d 1316, 1319-20 (11th Cir.2001); Kirkland v. Midland Mortgage Co., 243 F.3d 1277, 1281 n. 5 (11th Cir.2001) ("[T]he burden is on the party who sought removal to demonstrate that federal jurisdiction exists.") (citing Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1356 (11th Cir.1996), overruled on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir.2000)).
Further, removal statutes must be construed narrowly, and "all uncertainties as to removal jurisdiction are to be resolved in favor of remand." Russell Corp. v. American Home Assurance Co., 264 F.3d 1040, 1050 (11th Cir.2001) (citing Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (11th Cir.1994)).
Plaintiffs' argument in support of remand is based solely on the assertion that the $75,000 statutory amount in controversy has not been satisfied. See 28 U.S.C. § 1332(a) (setting forth the $75,000 minimal jurisdictional amount in controversy).
Plaintiffs did not request a specific amount of damages on any of the claims in their complaint.
Defendant cannot satisfy his burden through pure speculation, without offering any supporting facts or specific allegations. Lowery v. Alabama Power Co., 483 F.3d 1184, 1209, 1215 (11th Cir.2007). On the other hand, "specific factual allegations establishing jurisdiction and [supporting] them (if challenged by the plaintiff or the court) with evidence combined with reasonable deductions, reasonable inferences, or other reasonable extrapolations" will suffice. Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11th Cir.2010) (bracketed alteration supplied). A removing defendant may offer "a wide range of evidence," including affidavits, depositions, or other "summary judgment-type evidence" to establish the amount in controversy. Id. at 754-56.
Most of defendant's arguments in support of satisfaction of the amount in controversy are either unpersuasive or premised upon inaccurate interpretations of the law.
In his Amended Notice of Removal, defendant makes two statements about the amount in controversy. First, he states that plaintiffs' complaint "indicates that Plaintiff [sic] seeks monetary relief in excess of $75,000.00 and Defendant herein alleges that the actual amount of damages is in excess of the minimum amount in controversy requirement for diversity jurisdiction pursuant to 28 U.S.C. § 1332."
To support that allegation, defendant references paragraph 12 of plaintiffs' complaint, which states:
Plaintiffs aptly point out that their allegations in paragraph 12 do not "relate in any way" to the amount of their damages.
In his response to plaintiffs' remand motion, defendant also points to paragraph 8 of plaintiffs' complaint, in which plaintiffs state that they spent "hundreds of thousands of dollars" developing the Frother Products.
Finally, defendant argues that the amount in controversy "
Some of defendant's other arguments, however, are more persuasive. Defendant asserts that, with regard to plaintiffs' claim for declaratory relief, the amount in controversy is the "monetary value of the object of the litigation from [plaintiffs'] perspective." Weiner v. Tootsie Roll Industries, Inc., 412 Fed.Appx. 224, 227 (11th Cir.2011) (quoting Federated Mutual Insurance Co. v. McKinnon Motors, LLC, 329 F.3d 805, 807 (11th Cir.2003); Cohen, 204 F.3d at 1077) (internal quotation marks omitted). According to defendant, the "object of the litigation" is plaintiffs' Frother Products, and the amount in controversy is, therefore, the value of those products. The court disagrees with this characterization. The object of the litigation is defendant's alleged misuse of plaintiffs' trade secrets, and while those trade secrets may be related to the Frother Products, that does not mean that the value of plaintiffs' claim is the same as the value of the products themselves. Instead, plaintiffs should be able to recover an amount sufficient to compensate them for any harm caused by defendant's alleged actions.
Even though defendant has mischaracterized the nature of plaintiffs' damages, the evidence he offers in support of his argument still is helpful in determining the real value of plaintiffs' claims. Defendant offers evidence that plaintiff Pacific sold $188,320 worth of the Frother Products to a company called Simplot Phosphates, LLC ("Simplot") between September 19, 2011 and March 29, 2012, and that Simplot consistently purchased approximately $300,000 worth of those products from Pacific each year.
Defendant also points to plaintiff's right to damages under the Alabama Trade Secrets Act itself. That Act provides, in pertinent part, that "[t]he remedies available for actual or threatened misappropriation of a trade secret" include, in addition to "actual damages,"
Ala.Code § 8-27-4(a)(1)(b). If there is a finding of "willful and malicious misappropriation," the plaintiff also can recover attorney's fees and "[e]xemplary damages in an amount not to exceed the actual award made under subdivision (1), but not less than ten thousand dollars ($10,000)." Ala Code §§ 8-27-4(a)(2)(c) & 8-27-4(a)(3).
Defendant moved to dismiss plaintiffs' complaint for lack of personal jurisdiction, failure to state a claim upon which relief can be granted, and insufficient service of process. He alternatively moved to transfer venue to the United States District Court for the Southern District of Texas, Houston Division. Defendant also moved to strike a portion of plaintiffs' evidentiary submission.
Defendant asks this court to strike the supplemental affidavit of Keith Bennett, which was filed under seal as "Exhibit 1" to plaintiffs' brief in opposition to defendant's motion to dismiss or motion to transfer venue.
Federal Rule of Civil Procedure 12(b) provides, in pertinent part, that a party may assert by motion the defense of lack of personal jurisdiction. Fed. R.Civ.P. 12(b)(2). The plaintiff asserting jurisdiction over a non-resident defendant has the burden of establishing a prima facie case of personal jurisdiction, which can be done by producing enough evidence to withstand a motion for directed verdict. Stubbs v. Wyndham Nassau Resort and Crystal Palace Casino, 447 F.3d 1357, 1360 (11th Cir.2006) (citing Meier ex rel. Meier v. Sun International Hotels, Ltd., 288 F.3d 1264, 1268-69 (11th Cir.2002)). The court must accept as true all the allegations of the plaintiff's complaint, except to the extent that the defendant presents evidence to contradict those allegations. If that occurs, then the burden shifts back to plaintiffs to "produce evidence supporting personal jurisdiction." Stubbs, 447 F.3d at 1360. When the parties present conflicting evidence, the court must "construe all reasonable inferences in favor of the plaintiff." Id.
Alabama's long-arm statute authorizes the exercise of personal jurisdiction to the fullest extent allowed by the Due Process Clause of the Fourteenth Amendment to the United States Constitution; therefore, the traditional two-step personal jurisdiction inquiry of assessing the propriety of jurisdiction under the forum
Due process authorizes the exercise of personal jurisdiction over a nonresident defendant when "(1) the nonresident defendant has purposefully established minimum contacts with the forum; [and] (2) the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice." S.E.C. v. Carrillo, 115 F.3d 1540, 1542 (11th Cir.1997) (citation omitted); see also Horizon Aggressive Growth, L.P. v. Rothstein-Kass, P.A., 421 F.3d 1162, 1166 (11th Cir.2005) (same).
"Furthermore, it is important to remember that the conduct at issue is that of the defendants. No plaintiff can establish jurisdiction over a defendant through his own actions." Ruiz de Molina v. Merritt & Furman Ins. Agency, Inc., 207 F.3d 1351, 1356 (11th Cir.2000) (emphasis supplied) (citing Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). Therefore, this court must determine what this defendant did to purposefully avail himself "of the benefits of doing business in Alabama such that the notions of reasonableness and fairness are not offended by requiring [him] to defend [himself] in an Alabama court." Id. (alterations supplied).
Plaintiffs do not appear to assert that there is "general" jurisdiction over defendant in this court. Instead, they assert that this court's jurisdiction over defendant is "specific" to this case. "Specific jurisdiction arises out of a party's activities in the forum that are related to the cause of action alleged in the complaint." McGow v. McCurry, 412 F.3d 1207, 1214 n. 3 (11th Cir.2005) (citation omitted). The exercise of personal jurisdiction on a specific jurisdiction theory is proper where a defendant's contacts with the forum state satisfy all of the following criteria: (1) they are related or give rise to the plaintiff's cause of action; (2) they involve some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum; and (3) the defendant's contacts with the forum are such that the defendant should reasonably anticipate being haled into court there. See, e.g., Sloss, 488 F.3d at 925; McGow, 412 F.3d at 1214; Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1546 (11th Cir.1993). That said, the court recognizes that a minimum contacts analysis is "immune to solution by checklist," and that such contacts must be viewed both quantitatively and qualitatively. Sloss, 488 F.3d at 925.
In plaintiffs' complaint, they allege that defendant first agreed to serve as a consultant for Molex, an Alabama company, in the 1990s, and he that "assisted in the testing, verifying and validating the performance of the prototype formulations" since that time.
Plaintiffs bolstered those allegations by submitting the supplemental affidavit of Keith Bennett.
Defendant has attempted to counter plaintiffs' allegations about his contacts with the State of Alabama by stating:
These allegations are further supported by Andress's affidavit, in which he states:
A close examination of plaintiffs' and defendant's respective factual allegations reveals that they are not actually contradictory. Instead, although the parties do not explicitly so state, they seem to disagree more about the scope of the minimum contacts inquiry. Plaintiffs would like the court to examine defendant's contacts with the State of Alabama throughout the entire time he served as a consultant for both Molex and Pacific. Defendant, on the other hand, wants the focus to be solely on his contacts with Alabama during the time period when he was actually employed by or consulting for Pacific. The court does not understand how the inquiry can be limited in the manner suggested by defendant. The court acknowledges that only defendant's contacts with Alabama that are related to the claims asserted in this action are part of the specific jurisdiction inquiry. However, plaintiffs' substantive allegations of trade secret violations are based on knowledge defendant allegedly gained throughout all of his consulting and employment relationships with both Molex and Pacific. Therefore, all of defendant's contacts with the State of Alabama related to all of those professional relationships are relevant to the personal jurisdiction analysis.
Taking into consideration all of defendant's contacts with the State of Alabama throughout his consulting and employment relationships with Molex and Pacific, the court easily finds that plaintiffs have satisfied their burden of establishing sufficient "minimum contacts" with the State of Alabama to warrant the exercise of personal jurisdiction over defendant in an Alabama court. Even though defendant never maintained an office in Alabama, sold to clients in Alabama, or even set foot in Alabama, those types of direct contacts are not necessary to satisfy constitutional concerns. See Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 858 (1990) ("In our technologically sophisticated world permitting interstate business transactions by mail, wire and satellite signals, physical presence by the nonresident defendant is not
Defendant purposefully availed himself of the privilege of conducting activities within the State of Alabama by: performing consulting services for an Alabama company; receiving payment, in part, by funds drawn from an Alabama banking institution; frequently contacting Molex employees in Alabama by telephone, email, and facsimile to discuss the results of the tests he performed; requesting test samples and customer orders of Molex products from the Athens, Alabama office; discussing marketing strategies, customer information, and product formulations with Molex's Alabama staff; and submitting his expense reports to Molex in Alabama. See Diamond Crystal Brands v. Food Movers International, Inc., 593 F.3d 1249, 1268-69 (11th Cir.2010) ("Courts have considered a defendant's initiating the contractual relationship, visiting the plaintiff's factory to assess or improve quality, sending materials to the plaintiff for inspection or use in shipping, participating in the manufacturing process, establishing a relationship by placing multiple orders, requiring performance in the forum, negotiating the contract via telefaxes or calls with the plaintiff; the list goes on.") (citations omitted); Air Products & Controls, Inc. v. Safetech International, Inc., 503 F.3d 544, 551-52 (6th Cir.2007) (finding personal jurisdiction over defendant who contacted the plaintiff in the forum state on several hundred occasions through telephone, email, facsimile, and regular mail to discuss and place orders); Exhibit Icons, LLC v. XP Companies, LLC, 609 F.Supp.2d 1282, 1292-94 (S.D.Fla.2009) (holding that numerous electronic communications, including 188 telephone calls, directed by the defendant to the forum state were sufficient to establish personal jurisdiction).
Having determined that defendant purposefully availed himself of the privilege of doing business in Alabama, the court next must consider whether the exercise of personal jurisdiction over defendant in an Alabama court would offend the "traditional notions of `fair play and substantial justice.'" World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (in turn quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940))). In making that inquiry, the court should consider factors including: (1) the burden on the defendant from litigating in the forum state; (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; (5) and the states' combined interests in furthering fundamental social policies. World-Wide Volkswagen, 444 U.S. at 290-92, 100 S.Ct. at 564 (citations omitted). "[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King Corp., 471 U.S. at 477, 105 S.Ct. 2174.
Defendant asserts that being forced to litigate in Alabama would place an undue burden on him because "[n]one of the records, files, or witnesses are located in [Alabama.]"
In summary, plaintiffs have established that defendant has constitutionally significant minimum contacts with the State of Alabama, and defendant has not established that the exercise of jurisdiction over him in an Alabama court would offend traditional notions of fair play and substantial justice. Therefore, it is constitutionally proper for this court to exercise personal jurisdiction over defendant. Defendant's motion to dismiss for lack of personal jurisdiction is due to be denied.
Federal Rule of Civil Procedure 12 provides, in pertinent part, that a defendant may raise by motion the defenses of insufficient process and insufficient service of process. Fed.R.Civ.P. 12(b)(4) & (5). Defendant asserts that "the Court should dismiss the suit and/or quash the service of process because service by Fedex was inadequate and improper according to the Alabama Rules of Civil Procedure as well as the Federal Rules of Civil Procedure. Plaintiffs' [sic] attempted to Fedex and email the petition to Andress."
In summary, defendant's motion to dismiss for insufficient process and insufficient service of process is meritless and even borderline frivolous. It will be denied. Defendant's counsel is forewarned, however, that this court does not suffer fools gladly, and if counsel persists in making arguments similar to those addressed in this order, harsh sanctions shall swiftly follow.
Defendant next argues that plaintiffs' complaint should be dismissed for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). That rule must be read together with Rule 8(a), which requires that a pleading contain only a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). While that pleading standard does not require "detailed factual allegations," Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 550, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), it does demand "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citations omitted). The Supreme Court elaborated this standard in its Iqbal opinion, as follows:
Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937 (emphasis added).
Defendant first asserts that plaintiffs' complaint contains too many conclusory allegations to satisfy the requirements of the Supreme Court's Twombly and Iqbal decisions. That argument, like much else of defendant's attorney's trite contentions, is meritless. Defendant pulled ten sentences or short paragraphs from plaintiffs' complaint and characterized each one as conclusory. For the most part, defendant's characterizations are inaccurate, for many of the identified sentences actually do contain factual allegations, even when viewed in isolation. Some of the other sentences identified by defendant seem conclusory when viewed in isolation, but even a quick review of the complaint itself reveals that those sentences are accompanied by others that provide more factual detail.
Defendant also asserts that plaintiffs' complaint does not assert a plausible claim for relief because plaintiffs acknowledge that defendant never entered into a nondisclosure agreement with either of them. That argument is equally meritless, as defendant has cited no authority, and this court knows of none, to support the proposition that a written non-disclosure agreement is a necessary prerequisite to a claim for wrongful disclosure of trade secrets.
In summary, defendant's motion to dismiss for failure to state a claim upon which relief can be granted is due to be denied.
In the caption of defendant's motion to dismiss, he states that he is asserting both a motion to dismiss for improper venue and a motion to transfer venue.
"The decision whether to transfer venue is within the discretion of the trial court, and each case should be decided on its particular facts." American Aircraft Sales International, Inc. v. Airwarsaw, Inc., 55 F.Supp.2d 1347, 1351 (M.D.Fla. 1999) (citations omitted). Relevant factors include:
Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n. 1 (11th Cir.2005) (citing Gibbs & Hill, Inc. v. Harbert International, Inc., 745 F.Supp. 993, 996 (S.D.N.Y.1990)). "If the transfer would `merely shift the inconvenience from one party to the other,' or if the balance of all factors is but slightly in favor of the movant, the plaintiff's choice of venue should be given deference." Johnston v. Foster-Wheeler Constructors, Inc., 158 F.R.D. 496, 503 (M.D.Ala.1994) (citations omitted).
The court first must determine whether the case could originally have been brought in the Southern District of Texas, defendant's alternative choice of venue. The federal venue statute provides that venue is proper in "a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located." 28 U.S.C. § 1391(b)(1). Defendant resides in Houston, Texas, which is encompassed within Southern District of Texas. Accordingly, venue would have been proper in the United States District Court for the Southern District of Texas, if the case originally had been brought there.
The next question is whether, considering the balance of all factors, and giving particular weight to plaintiffs' choice of venue in the Northern District of Alabama, transferring the case to the Southern District of Texas would further the convenience of the parties and witnesses and serve the interest of justice. Defendant offers little more than a conclusory recitation of the relevant factors to support his argument for transfer. First he states that "[t]he current forum does not have any meaningful ties to the controversy."
Defendant also asserts that litigating in Texas will be more convenient for his witnesses, who allegedly are unwilling to testify in an Alabama trial and are outside the subpoena power of this court.
Next, defendant offers the conclusory assertion that "[p]ractical considerations make the trial of this case more efficient and less expensive in the Southern District of Texas."
Finally, defendant asserts that the "Southern District of Texas is more familiar with the law that will govern the case," because "non-competes are disfavored by public policy in the State of Texas."
Defendant's motion to dismiss for lack of subject matter jurisdiction, improper venue, insufficient form and service of process, failure to state a claim on which relief can be granted, and, alternatively, motion to transfer will be denied in its entirety. As the case will remain with this court, the court finds it appropriate to offer some cautionary words to defendant's counsel. The court will not be pleased to have its time wasted with any more motions like defendant's motion to dismiss or to transfer venue, which offered a smattering of undeveloped, conclusory, and borderline frivolous arguments. Any future similar motions may be met with summary denial and/or the imposition of monetary sanctions. Thereafter, contempt proceedings may be considered.
This court entered an order on June 28, 2012, directing the parties to "proceed to discovery on all matters that may be relevant to plaintiffs' application for preliminary injunctive relief."
Because the Motion for Protection no longer is at issue in the Texas court, plaintiffs request this court to lift the stay on discovery and reset an evidentiary hearing on the remainder of the pending motions in the case.
With regard to plaintiffs' request to reset the evidentiary hearing on all remaining pending motions, the court has been able to decide the remainder of the motions addressed in this opinion without the need for additional argument or evidence. Therefore, plaintiffs' motion to reset an evidentiary hearing on those motions is due to be denied.
In accordance with the foregoing, plaintiffs' motion to remand, defendant's motion to dismiss or to transfer venue, and defendant's motion to strike all are DENIED. The case will remain in this court, despite the fact that neither party wants it here.
Plaintiffs' motion for lift of the stay on discovery and to reschedule the evidentiary hearing is GRANTED in part and DENIED in part. For the reasons discussed above, the evidentiary hearing will not be rescheduled. However, it is ORDERED that the stay on discovery is lifted, and that the parties must proceed to discovery on all matters that may be relevant to plaintiffs' application for preliminary injunctive relief. Plaintiffs' motion to compel discovery is GRANTED, and defendant is ORDERED to participate in good faith in the discovery process in compliance with the following directives: Response times for all written discovery requests related to the application for preliminary injunctive relief are shortened to seven (7) calendar days. Defendant must make himself available for deposition on all matters related to plaintiffs' request for preliminary injunctive relief within ten (10) days of the date of this order.
The parties are ORDERED to file a joint report, on or before August 20, 2012, addressing the status of defendant's motion for protection from discovery.
A hearing on plaintiffs' motion for preliminary injunctive relief will be reset by separate order.