Panterra Engineered Plast. v. Transportation Sys., 3:05CV01447 (JBA).

• Decision Date: 12 October 2006
• Docket Number: No. 3:05CV01447 (JBA).,3:05CV01447 (JBA).
• Citation: 455 F.Supp.2d 104
• Court: U.S. District Court — District of Connecticut
• Parties: PANTERRA ENGINEERED PLASTICS, INC., Plaintiff, v. TRANSPORTATION SYS. SOLUTIONS, LLC, et al., Defendants.

455 F.Supp.2d 104

PANTERRA ENGINEERED PLASTICS, INC., Plaintiff, v. TRANSPORTATION SYS. SOLUTIONS, LLC, et al., Defendants.

No. 3:05CV01447 (JBA).

United States District Court, D. Connecticut.

October 12, 2006.

COPYRIGHT MATERIAL OMITTED

Christopher J. Major, Robinson & Cole, Stamford, CT, for Plaintiff.

Charles A. Burke, Robert D. Mason, Jr., Womble Carlyle Sandridge & Rice, PLLC-Winston-Salem-NC, Winston-Salem, NC, Marc L. Zaken, Edwards & Angell, Stamford, CT, for Defendants.

RULING ON DEFENDANTS' MOTION TO DISMISS, OR ALTERNATIVELY, MOTION TO TRANSFER VENUE [DOC. # 161191

ARTERTON, District Judge.

In its Second Amended Complaint [Doc. # 15], plaintiff claims misappropriation of trade secrets, breach of fiduciary duty, violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), conspiracy, and false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). Defendants now move to dismiss this case for lack of personal jurisdiction and improper venue, or alternatively, to transfer it to the Middle District of North Carolina [Doc. # 16/19]. For the reasons explained below, defendants' motion to dismiss and motion to transfer are DENIED.

I. Background

Plaintiff Panterra Engineered Plastics, Inc. ("Panterra") is incorporated in Delaware with its principal place of business in Stamford, Connecticut. Defendant, Transportation System Solutions, LLC ("TSS"), f/k/a A.R. Haire, Inc., was incorporated in North Carolina and has its principal place of business in Guilford County, North Carolina. The individual defendants A.R. Haire, Darryl J. Heffline, and Larry Lansford are residents of North Carolina. Subject matter jurisdiction is based on federal question and diversity jurisdiction, pursuant to 28 U.S.C. § 1331 and § 1332, respectively, and venue under 28 U.S.C. §§ 1391(b) and (c).

Defendants argue that personal jurisdiction is not conferred by the Connecticut long-arm statutes, Conn. Gen. Stats. § 33-929(f) and § 52-59(b), and that even if such grounds existed, "minimum contacts" satisfying due process requirements between defendants and Connecticut are non-existent. Defendants also claim that this is an improper venue for the action. Finally, and in the alternative, defendants maintain that the Court should transfer this case to the United States District Court for the Middle District of North Carolina.

II. Factual Allegations

The Complaint and plaintiff's record in opposition to defendant's motion allege the following facts. Sometime prior to 2002, Phelps Engineered Plastics, Inc. ("Phelps"), a Connecticut corporation, developed and marketed a core-manufacturing process for thermoplastic "honeycomb technology," a lightweight structural material used in the transportation industry, for instance, in place of wood for the sides and floors of large trucks. Millenium/A.R. Haire, Inc., a North Carolina transportation company for whom Haire and Heffline were officers, was one of Phelps's clients and approached Phelps and its founder Edwin Phelps around 2002 about a possible merger. Around April 2003, Millenium/A.R. Haire, Inc. and Phelps were merged into Innovative Materials & Technology, Inc. ("IM & T"), with Danbury, Connecticut as its principal place of business. Having acquired Phelps's assets, IM & T began marketing its PepCore line of honeycomb material.

Subsequently, defendants Haire and Heffline became officers in IM & T, but on September 29, 2003, IM & T was forced into involuntary bankruptcy in the District of Connecticut by Phelps. See In re Innovative Materials & Tech., Inc., No. 03-51300 (AHWS) (Bankr.D.Conn.2004). On October 22, 2003 Edwin Phelps and the Phelps corporations also brought an action in this District against Haire. See Phelps et al. v. Haire, No. 03cv01825 (JBA). Haire did not contest personal jurisdiction in that case. It is plaintiff's contention that during the time period of the bankruptcy proceedings (2003-2004) the individual defendants conspired to appropriate for themselves the IM & T honeycomb technology that plaintiff bought at the bankruptcy auction, instructing managers Luis Soto and Robert Dawson to download records and trade secrets in Danbury and ship them to North Carolina for use there. After IM & T's bankruptcy proceeding commenced, Haire and Heffline allegedly left IM & T to reactivate A.R. Haire, Inc., using the stolen technology and trade secrets to manufacture a product competitive with IM & T's PepCore line. Plaintiff also claims that around March 2004, Haire, Heffline, and Lansford began business discussions with Panterra's President Thomas J. St. Denis, and that Haire and Lansford came to Connecticut for meetings with St. Denis for this purpose.

Sometime in 2004, TSS became the successor-in-interest of A.R. Haire, Inc., incorporated in North Carolina. In summer 2004, TSS recruited from IM & T Soto and engineer Ralph Eighme, both of whom had extensive knowledge of IM & T technologies, and signed, them to one-year contracts. At the July 8, 2004 bankruptcy auction of IM & T assets, Panterra (through its predecessor-in-interest Saugatuck Land Trust Co.) outbid TSS to acquire all of IM & T's intellectual property ("IP"), including patents, utility models, inventions, trade secrets, confidential business information, copyrightable works, industrial designs, trademarks, rights in computer data files and web addresses, rights in license agreements, and the right to enforce confidentiality and nondisclosure, of which it assumed ownership on August 4, 2004. (See "IP Assignment" & "Schedule A," Pl.Ex. A.) Plaintiff also obtained the "right to sue and recover for, and the right to profits or damages due or accrued arising out of or in connection with, any and all past, present and future infringements or dilution of or damage or injury to the Intellectual Property." ("IP Assignment," Pl.Ex. A.)

A.R. Haire, Inc./TSS purchased some of IM & T's production equipment, including three core-forming machines, and by bankruptcy court order retrieved certain parts for this equipment from a repairer in Connecticut. On July 20, 2004, Panterra wrote to A.R. Haire, Inc., Soto, and Eighme, demanding return of the allegedly purloined IP and threatening suit. A.R. Haire, Inc. filed suit against St. Denis in North Carolina on July 30, 2004, which was later dismissed. See A.R. Haire, Inc. v. St. Denis, 625 S.E.2d 894 (N.C.Ct.App. 2006) (reversing decision of Superior Court and dismissing for lack of personal jurisdiction).

II. Discussion

A. Personal jurisdiction

1. Legal standard

"When responding to a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999). However, as with any motion to dismiss, "[w]e construe the pleadings and affidavits in the light most favorable to [the plaintiff], resolving all doubts in his favor." DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir.2001) (internal citations omitted). At the time this Motion was filed, the parties had only just commenced discovery, which is not yet completed. See Order [Doc. # 38]. "Where plaintiff has engaged in jurisdictional discovery, but no evidentiary hearing [has been] conducted, the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited .. . would suffice to establish jurisdiction over the defendant.'" Tex. Int'l Magnetics, Inc. v. Auriga-Aurex, Inc., 334 F,3d 204, 206 (2d Cir.2003) (citing Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990)); see also Tomra of N. Amer., Inc. v. Envtl. Prods. Corp., 4 F.Supp.2d 90, 91-92 (D.Conn.1998) and cited cases. The same standard is applicable to review of venue. See Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005).

Since this is a federal question case¹ involving foreign defendants, the Court first looks to the federal statute to see whether it provides for national service of process. See PDK Labs., Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir.1997). Because the Lanham Act, 15 U.S.C. § 1114 et seq., does not so provide, the Court applies Connecticut's long-arm statutes to determine whether sufficient basis exists for exercising personal jurisdiction over the defendants. See Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22 (2d Cir.2004); Girl Scouts of the United States v. Steir, 102 Fed.Appx. 217, 219 (2d Cir. 2004). "If jurisdiction is appropriate under the relevant statute, the court must then decide whether exercise of jurisdiction comports with due process," Savin v. Ranier, 898 F.2d 304, 306 (2d Cir.1990) (internal citation omitted), which is derived from the Fifth Amendment in federal question cases, see Broadcast Marketing Int'l, Ltd. v. Prosource Sales & Marketing, Inc., 345 F.Supp.2d 1053, 1060 n. 6 (D.Conn.2004).

The due process analysis has two steps: minimum contacts and reasonableness. The "minimum contacts" analysis, see World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), differentiates between specific and general jurisdiction. "Specific jurisdiction exists where the suit arises from the defendant's contacts with the forum . . . . Unlike general jurisdiction, where the plaintiff has a more stringent burden of proving 'continuous and systematic contacts' with the forum, no such burden is required in cases of specific jurisdiction." Broadcast Marketing, 345 F.Supp.2d at 1060 n. 7. The "reasonableness" analysis considers:

1) the burden that the exercise of jurisdiction will impose on the defendant; 2) the interests of the forum state in adjudicating the case; 3) the plaintiffs interest in obtaining convenient and effective relief; 4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and 5) the shared interest of the states...