NMOTION, Inc. v. Environmental Tectonics Corp.
| Decision Date | 21 November 2001 |
| Docket Number | CV 01-524-BR. |
| Citation | 196 F.Supp.2d 1051 |
| Parties | nMOTION, INC., Plaintiff, v. ENVIRONMENTAL TECTONICS CORPORATION and ETC-PZL Aerospace Industries SP. Z O.O., Defendants. |
| Court | U.S. District Court — District of Oregon |
Michael M. Ratoza, Christine M. McLaughlin, Laura Caldera Taylor, Ratoza Long, P.C., Portland, OR, for Plaintiff.
Regina Hauser, David W. Axelrod, Schwabe, Williamson & Wyatt, P.C., Portland, OR, for Defendants.
This matter comes before the Court on Defendant ETC-PZL's Motion to Dismiss (# 18) for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).
Plaintiff nMotion, Inc. brought six claims against Defendants. The first two claims are based on the alleged breach of two confidentiality agreements entered into by nMotion and Defendant Environmental Tectonics Corporation (ETC-USA). In its third claim, nMotion alleges those breaches violated the Oregon Trade Secret Act. In claims four and five, nMotion alleges ETC-USA's wrongful acts give rise to claims against both ETC-USA and ETC-PZL for quasi contract and unjust enrichment. Finally, nMotion alleges ETC-USA induced and assisted a former principal of nMotion to breach his duty of loyalty to nMotion and wrongfully usurped nMotion's corporate opportunities.
nMotion seeks compensatory damages including Defendants' gains, profits and advantages, punitive damages, attorneys' fees, costs, and an order enjoining ETC-USA and ETC-PZL from using nMotion's confidential information.
For the reasons that follow, the Court DENIES without prejudice ETC-PZL's Motion to Dismiss to the extent it is based on an asserted lack of specific personal jurisdiction.
nMotion is a small, closely-held Oregon corporation that was organized for the purpose of developing and implementing a business plan centered around three-dimensional flight simulator computer software called "Pro Pilot."
ETC-USA is incorporated under the laws of Pennsylvania and is headquartered in that state. ETC-USA designs, manufactures, and sells airplane flight simulation hardware and software, including a product known as the General Aviation Trainer (GAT).
ETC-PZL, a Polish corporation, is the software programming arm of ETC-USA. ETC-PZL wrote the programming code for ETC-USA's flight training software, including the software employed in GAT. ETC-USA owns 95% of ETC-PZL.
In September 1999, nMotion's principals, Mark Pechnick, Robert Schyberg, and William McHugh, learned that Havas Interactive Software recently purchased Sierra On-Line, Inc., the developer of the Pro Pilot software. nMotion became aware that Havas intended to sell the programming code for Pro Pilot, and nMotion contacted Sierra about acquiring the program. Sierra agreed not to actively work with any other party regarding the sale of Pro Pilot while nMotion attempted to locate a partner to acquire and to implement the software.
In January 2000, nMotion was aware that ETC-USA was seeking to improve its GAT program. While ETC-USA generally was pleased with the appearance and functionality of the flight gauges and flight models that ETC-PZL had written for the GAT product, it was not happy with the "out of window" visual experience.
At that time, ETC-PZL already was working on enhanced coding for ETC-USA's proposed "GAT 2" software.1 This work was being performed as part of a new contract that ETC-USA had entered into with the Nigerian government. ETC-USA wished to have the software completed by May 2000. ETC-USA, however, was disappointed with the visual qualities of the software upgrades then being produced by ETC-PZL.
On January 18, 2000, Pechnick, Schyberg, and McHugh flew to Florida to present nMotion's proposal to ETC-USA. nMotion proposed a business venture involving the acquisition of Pro Pilot and the enhancement of the GAT software by incorporating the favorable features of Pro Pilot. Those favorable features included a more realistic real world flight experience for the pilot and an out-of-window graphical view of North America, Europe, the Hawaiian Islands, and some 2,500 airports.
Between January and March 2000, nMotion and ETC-USA engaged in negotiations pertaining to the proposed joint venture. nMotion's principals met in Pennsylvania and in Oregon with engineers and executives who worked for ETC-USA. nMotion provided ETC-USA with a software development proposal that contained detailed information regarding the integration of Pro Pilot into GAT 2 and a proposed budget that enabled ETC-USA to create a fishbone diagram showing the development of the GAT 2 simulator with and without the integration of Pro Pilot. At some point, nMotion gave ETC-USA permission to contact Sierra directly to discuss the acquisition of Pro Pilot.
By late February, ETC-USA requested nMotion's principal, Pechnick, to travel to Warsaw in order to determine whether ETC-PZL's Warsaw programmers were capable of assisting in the integration of Pro Pilot into GAT 2. Pechnick had written much of the software code for Pro Pilot. nMotion alleges ETC-USA wanted Pechnick to work closely with ETC-PZL's programmers and to supervise the programming for the integration of the Pro Pilot software into the GAT 2 software. In fact, by the end of March 2000, ETC-USA indicated it was interested in purchasing Pro Pilot only if Pechnick would supervise the future development of the software.
During the course of these negotiations, the parties signed two reciprocal confidentiality agreements that covered both Pro Pilot and other "software engineering solutions." On March 28, 2000, Pechnick ended his business relationship with nMotion. ETC-USA thereafter refused to enter into the joint venture agreement with nMotion.
ETC-USA subsequently acquired Pro Pilot as nMotion had proposed. ETC-USA then formed an entity in Eugene, Oregon, called ETC-Interactive headed by Pechnick. nMotion alleges Pechnick's duties include the supervision of ETC-PZL's Polish programmers.
nMotion further alleges ETC-USA recently offered for sale a new GAT 2 product that incorporates Pro Pilot features and code. nMotion also alleges ETC-PZL developed part of the system software for this new GAT 2 simulator, including the visual display systems.
nMotion contends Pechnick, the developer of the Pro Pilot code, would have had to work closely with ETC-PZL's programmers in Warsaw to integrate Pro Pilot into the GAT 2 software. nMotion further contends it would have been impossible for Pechnick to complete the integration of Pro Pilot into GAT 2 within the time required for the Nigerian sale without constant and detailed communication between ETC-Interactive in Oregon and ETC-PZL's Warsaw office.
nMotion has the burden of establishing personal jurisdiction. Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir.1995). When a motion to dismiss for lack of personal jurisdiction is made as a defendant's initial response to a complaint and the court decides the jurisdictional issue based on affidavits and written discovery materials as opposed to an evidentiary hearing, the plaintiff is only required to make a prima facie showing of jurisdictional facts to defeat the motion to dismiss. Myers v. Bennett Law Offices, 238 F.3d 1068, 1071 (9th Cir.2001). See also Farmers Ins. Ex. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir.1990). "[T]he plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant." Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). Unless directly controverted, the plaintiff's version of the facts is taken as true for purposes of a Rule 12(b)(2) motion to dismiss. Id. Conflicts in the evidence set forth in the parties' affidavits must be resolved in the plaintiff's favor. Id.
When pertinent facts bearing on the question of jurisdiction are controverted or a more satisfactory showing of the facts is necessary, the trial court may permit discovery to aid in determining whether personal jurisdiction exists. Data Disc, Inc. v. Systems Technology Assoc., Inc., 557 F.2d 1280, 1285 n. 1 (9th Cir.1977). The trial court has broad discretion to grant or to deny discovery "and will not be reversed except upon the clearest showing that denial of discovery results in actual and substantial prejudice to the complaining litigant." Id. In addition, the district court has the discretion to take evidence at a preliminary hearing if the pleadings and affidavits raise issues of credibility or disputed questions of fact with regard to jurisdiction. Id. at 1285. At such a hearing, the plaintiff has the burden to show jurisdictional facts by a preponderance of the evidence. Id.
When the jurisdictional facts are "intertwined" with the merits and a decision on the jurisdictional issues is dependent on a decision on the merits, it is preferable for the Court to decide the jurisdictional issues at trial to avoid the risk of prejudicing the plaintiff's case on the merits. Id. at 1285 n. 2. Thus, the trial court may decide the plaintiff should not be required to meet the higher burden of proof that is associated with the presentation of evidence. Id.
nMotion argues this Court has both general and specific personal jurisdiction over ETC-PZL.2 Under either test, the same threshold requirement of due process applies.
The Due Process Clause of the Fourteenth Amendment to the United States Constitution permits personal jurisdiction over a defendant in any State with which the defendant has certain minimum contacts ... such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. In judging minimum contacts, a court properly focuses on the relationship among the defendants, the forum, and the litigation.
Calder v. Jones, 465 U.S. 783, 788, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) (quotations and citations omitted).
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