OPINION & ORDER
[Resolving Doc. 9]
JAMES S. GWIN, District Judge.
Plaintiff NMS, Inc. brings claims for misappropriation of trade secrets, tortious interference with business relationships, and breach of contract against Brey & Co., Gayla Russell and Amy Diamond. Responding to NMS's complaint, Defendants Russell and Diamond move to dismiss for lack of personal jurisdiction. For the following reasons, this Court DENIES Defendants' motion.
I. Background
Plaintiff NMS, an Ohio corporation, provides accounting services to Ohio and Florida clients.1 Defendant Brey & Co., a Florida corporation, also provides accounting services.2
Until November 9, 2012, Florida residents Russell and Diamond were important Brey & Co. employees. On November 9, 2012, NMS purchased Brey & Co. through an Asset Purchase Agreement. Under the Asset Purchase Agreement, NMS purchased "all of Brey's intangibles, intellectual and proprietary property, including all of Brey's client lists, and the clients' business and other records."3 The Asset Purchase Agreement included a Florida choice of law provision.4
On November 9, 2012 NMS also entered into Employment Agreements with Russell and Diamond.5 The employment agreements had loyalty and best efforts, non-disclosure, nonsolicitation, and non-compete provisions.6 These employment agreement provisions restricted Russell and Diamond for two years after the end of Defendants' NMS employment. The Employment Agreements also had a Florida choice of law provision and a venue provision that required the employees—but did not require NMS—to bring employment-related claims in Hillsborough County, Florida.7
While at NMS, Russell and Diamond worked in Florida, serviced Florida clients, and communicated with NMS at NMS's Ohio offices. Defendants never knowingly serviced Ohio clients or supervised Ohio employees.8 Defendants did not have any relevant physical presence in Ohio.9
In April 2015, Russell and Diamond resigned from NMS.10 After their resignation, NMS says that Russell and Diamond used NMS' proprietary information and serviced NMS clients. Plaintiff NMS says this violated the Asset Purchase Agreement and Employment Agreements.11
On March 2, 2016, Plaintiff NMS filed a state court action in the Geauga County Common Pleas Court.12 On March 7, 2016, Defendants removed the case to this Court.13 On March 28, 2016, Plaintiffs filed an amended complaint.14
On April 4, 2016, Defendants Russell and Diamond moved to dismiss for lack of personal jurisdiction. With their motion, Defendants say that they do not come under the Ohio long-arm statute and that this Court's exercise of personal jurisdiction over them would violate their due process rights.15
With its opposition, Plaintiff says the Ohio long arm statute gives this Court jurisdiction because Defendants transacted business in Ohio. Plaintiff also says this Court has specific jurisdiction over Defendants from numerous Ohio contacts: the long-term Employment Agreements, NMS supervision, regular communication with NMS, and work with Ohio clients.
Defendants say that they signed the Employment Agreements in Florida and say that those agreements are insufficient to give Ohio jurisdiction. They also say that they never supervised Ohio employees and that NMS rarely supervised Defendants. Defendants also say they never knowingly serviced Ohio clients.
II. Legal Standard
Under Federal Rule of Civil Procedure 12(b)(2), a defendant may move a court to dismiss for lack of personal jurisdiction.16 In a diversity case, the law of the forum state determines whether jurisdiction exists.17
In the absence of an evidentiary hearing, the non-movant must make a prima facie showing of jurisdiction.18 In Ohio, the party claiming jurisdiction needs to show that the defendant falls under Ohio's long arm statute19 and that jurisdiction comports with the Fourteenth Amendment's due process requirements.20 Without discovery or an evidentiary hearing, the Court views the pleadings and affidavits in the light most favorable to the party claiming Ohio jurisdiction.21
III. Discussion
This Court has personal jurisdiction over Defendants Russell and Diamond because their conduct falls under the Ohio long-arm statute and because personal jurisdiction over these Defendants meets due process requirements.
A. Ohio's Long Arm Statute
Ohio gives "personal jurisdiction over a person . . . as to a cause of action arising from the person's . . . [t]ransacting any business in this state."22 Courts determine whether a particular defendant transacted business in Ohio, and then whether the causes of action that a plaintiff asserts "arise from" that business.
Ohio courts read the "transacting business" prong broadly. Ohio courts interpret "transact" to mean "to prosecute negotiations; to carry on business; [or] to have dealings."23 Transact is broader than the word "contract."24
The court in OnX USA LLC v. Sciacchetano found a foreign defendant's on-going contractual relationship with an Ohio corporation enough to qualify as "transacting business" for purposes of Ohio's long arm statute.25
By comparison, in Kroger Co. v. Malease Foods Corp., the court found that a Delaware corporation had not "transacted business" in Ohio because the Delaware corporation never directly negotiated with an Ohio corporation. The Kroger defendant had only negotiated with a Tennessee corporation, and the Tennessee corporation negotiated with the Ohio corporation.26
Like OnX USA, Defendants Russell and Diamond transacted business in Ohio when they entered into long-term Employment Agreements with Ohio corporation NMS. Unlike Kroger, Defendants negotiated their NMS Employment Agreements directly with NMS.
Contrary to Defendants' arguments, Defendants did not need to supervise Ohio employees or be supervised by Ohio employees. The fact that Defendants chose to negotiate and enter into Asset Purchase and Employment Agreements with an Ohio business is sufficient to "transact business" in Ohio.27
Plaintiff NMS also needs to show that the causes of action it brings "arise from" the business Defendants had in Ohio.
The "arising from" language requires proximate cause between the claims and the defendants' Ohio conduct.28 Suits for breach of contract satisfy this requirement when an Ohio individual is party to the underlying contract.29
In this case, Plaintiff's causes of action arise out of its former employment relationships with Russell and Diamond. These employment relationships were governed by the Defendants' Employment Agreements. Defendants negotiated these agreements with NMS. Therefore, Defendants' business with an Ohio party proximately caused Plaintiff's alleged harms.
Defendants fall under the Ohio long-arm statute.
B. Constitutional Due Process
Plaintiff must show that this Court's exercise of jurisdiction comports with the Due Process Clause of the Fourteenth Amendment. Due process protects an individual's liberty interest by limiting jurisdiction over defendants who lack sufficient contacts with that jurisdiction to provide them with fair warning that their activities may subject them to suit in the forum.30
Plaintiff does not argue that Defendants have such "continuous and systemic" contacts to allow for jurisdiction over any claim—usually called "general" jurisdiction.31 Instead, Plaintiff argues that this Court has "specific" jurisdiction because the lawsuit arises from or is related to the Defendants' contacts with the forum state.32
The Sixth Circuit has articulated a three-part test for determining whether the exercise of specific personal jurisdiction comports with due process:
First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum to make the exercise of jurisdiction over the defendant reasonable.33
Further explaining, the Sixth Circuit said,
business is transacted in a state when obligations created by the defendant or business operations set in motion by the defendant have a realistic impact on the commerce of that state; and the defendant has purposefully availed himself of the opportunity of acting there if he should have reasonably foreseen that the transaction would have consequences in that state.34
i. Purposeful Availment
The "purposeful availment" requirement is satisfied when the defendant's contacts with the forum state "proximately result from actions by the defendant himself that create a `substantial connection' with the forum State," and when the defendant's conduct and connection with the forum are such that he "should reasonably anticipate being haled into court there."35 The "purposeful availment" requirement ensures that "random," "fortuitous," or "attenuated" contacts do not cause a defendant to be called into a jurisdiction.36 Furthermore,
[t]he Supreme Court has emphasized, with respect to interstate contractual obligations, that parties who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to regulation and sanctions in the other State for the consequences of their activities.37
Plaintiff makes out a prima facie showing that Defendants purposefully availed themselves of the privilege of doing business in Ohio. According to Plaintiff's complaint and NMS president affidavit, Defendants Russell and Diamond entered into Employment Agreements that created substantial and long-lasting obligations and benefits between Defendants and NMS in Ohio.38 Defendants consistently communicated with NMS Ohio employees while working for NMS.39 NMS allegedly supervised Defendants, even though Defendants worked from Florida.40 NMS processed Defendants' salary and reimbursements from Ohio.41 In their work, Defendants accessed Ohio-based servers through remote-access software.42 Defendant Russell allegedly "contacted NMS' [Ohio and Florida] clients and readily used proprietary information purchased and owned by NMS in providing services to these clients."43 Defendant Diamond also allegedly "misappropriated NMS' trade secrets by soliciting and taking NMS' clients."44
By contracting with an Ohio business and then allegedly breaching contract terms, Defendants could reasonably have foreseen that their actions would have Ohio consequences. Defendants purposefully availed themselves of the privilege of doing Ohio business.
ii. "Arise From"
A cause of action arises from the Defendants' activities in the forum state if the Defendants' forum state contacts are related to the operative facts of the controversy.45
Defendants' contractual obligations and alleged Ohio client servicing are related to Plaintiff's causes of action. As explained above, Defendants' alleged servicing of former NMS clients and use of proprietary NMS information proximately caused damages. Therefore, the causes of action for this suit sufficiently arise from Defendants' alleged activities in Ohio.
iii. Reasonableness
Courts must consider whether exercising personal jurisdiction would be reasonable and comport with "traditional notions of fair play and substantial justice."46 Courts consider several factors including burden on the defendant, interest of the forum state, the plaintiff's interest in obtaining relief, and the interest of other states in efficient resolution.47 If the first two elements of specific jurisdiction are found, an inference arises that this third reasonableness factor is also present.48
This Court finds that Defendants purposefully availed themselves of the privilege of doing business in Ohio and that the causes of action arise from Defendants' alleged Ohio conduct. Therefore, this Court may infer that Ohio jurisdiction is reasonable.
While defending themselves in Ohio burdens Defendants Russell and Diamond, Ohio has an interest in vindicating alleged wrongs against Ohio parties. Plaintiff has interests in enforcing its employment contract and in protecting its trade secrets. Thus, jurisdiction over Defendants is reasonable despite some burden to Defendants.
IV. Conclusion
For the reasons above, this Court DENIES Defendants' motion to dismiss for lack of personal jurisdiction.
IT IS SO ORDERED.
