Foster-Miller, Inc. v. Babcock & Wilcox Canada, Civ. A. No. 93-12465-RGS.

• Decision Date: 25 February 1994
• Docket Number: Civ. A. No. 93-12465-RGS.
• Citation: 848 F. Supp. 271
• Parties: FOSTER-MILLER, INC. v. BABCOCK & WILCOX CANADA.
• Court: U.S. District Court — District of Massachusetts

848 F. Supp. 271

FOSTER-MILLER, INC. v. BABCOCK & WILCOX CANADA.

Civ. A. No. 93-12465-RGS.

United States District Court, D. Massachusetts.

February 25, 1994.

James J. Foster, Wolf, Greenfield & Sacks, Boston, MA, for plaintiff.

Peter L. Resnik, Cherie L. Krigsman, McDermott, Will & Emery, Boston, MA, for defendant.

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

STEARNS, District Judge.

Foster-Miller, Inc. has brought suit in Massachusetts against Babcock & Wilcox Canada BWC alleging violation of a confidentiality agreement, misappropriation of trade secrets, and unfair competition. Jurisdiction of the court is claimed pursuant to the Massachusetts Long Arm Statute, G.L. c. 223A. The case is before the court on BWC's motion to dismiss for lack of personal jurisdiction, or alternatively on grounds of forum non conveniens.

STANDARD TO BE APPLIED

When personal jurisdiction is challenged, a plaintiff bears the burden of establishing that jurisdiction exists. Ealing Corp. v. Harrods Ltd., 790 F.2d 978, 979 (1st Cir. 1986). As described in Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 675-678 (1st Cir.1992), three different methods of adjudicating disputes over personal jurisdiction have evolved, each with its own quantification of the showing that a plaintiff must make. The most prevalent is the prima facie standard. It requires that a district court accept any affirmatively supported proffer of evidence by a plaintiff as true. If the proffered evidence, duly credited, is sufficient to support findings of all facts necessary to establish jurisdiction, the plaintiff has met its burden. "A court may however determine that in the circumstances of a particular case it is unfair to force an out-of-state defendant to incur the expense and burden of trial on the merits in the local forum without first requiring more of the plaintiff than a prima facie showing of facts essential to in personam jurisdiction." Boit, supra at 676. This added showing may take the form of a quasi-evidentiary hearing in which the court takes oral testimony as well as receiving stipulations, affidavits, deposition transcripts, authenticated documents, answers to interrogatories and requests for admissions. In evaluating the proffered evidence the court may apply a preponderance of the evidence standard or a standard intermediate between preponderance of the evidence and prima facie showing. Applying the intermediate standard, a court "even though allowing an evidentiary hearing and weighing evidence to make findings ... may merely find whether the plaintiff has shown a likelihood of the existence of each fact necessary to support personal jurisdiction." Boit, supra at 677. This "middle course" is recommended as avoiding "troubling" issues of preclusion that may arise when a court finds conclusively a fact in a pretrial setting that is contrary to the position a party wishes to assert at a jury trial. See Boit, supra at 677-678; Val Leasing, Inc. v. Hutson, 674 F.Supp. 53, 55 (D.Mass.1987).

The middle course was the one chosen here. There is no dispute that BWC, a Canadian corporation, is a stranger to Massachusetts. The grounds for personal jurisdiction under the Long Arm Statute rest on a single event, the presence of a BWC employee, Daniel St. Louis, at a technical briefing at Foster-Miller's Waltham, Massachusetts plant on May 11, 1990. Foster-Miller alleges that St. Louis was given confidential information during the briefing that BWC later exploited to its own advantage. That anything of a proprietary nature was disclosed at the Waltham meeting or subsequently misused by BWC is hotly disputed in the supporting materials accompanying BWC's motion to dismiss. Having weighed the substantial conflicts in the proffered evidence, the essentiality of that evidence to a finding of jurisdiction, and the squandering of time and resources of the court and litigants that would result should plaintiff ultimately fail in carrying its jurisdictional burden, I agreed with the Judge who had the case before me that plaintiff should be put to its proof in a preliminary hearing of the kind authorized by Boit.

On February 1 and 2, 1994, the hearing was held. Each party presented several live witnesses, and offered affidavits, deposition testimony, and a number of documents. Final arguments on the motion to dismiss were heard on February 15, 1994, after the filing of post-hearing memoranda.

I have characterized my conclusions as "findings." These are not findings in the traditional sense, but rather signification of my assessment that the parties have shown a likelihood of the existence of each of the facts I have "found." The First Circuit has analogized the intermediate standard to the "likelihood of success on the merits" standard applied to a motion for a preliminary injunction. I prefer an analogy to probable cause in a Fourth Amendment sense, that is, whether a reasonable person evaluating the evidence would find it probable that a fact essential to jurisdiction does (or does not) exist, although the choice of analogies I doubt is of any material significance.

FINDINGS

Based on the credible evidence, I find the probable existence of the following facts.

1. Foster-Miller is a Massachusetts corporation based in Waltham. Its principal business is the supply of sludge and particle removal services to operators of U.S. nuclear steam boiler. Foster-Miller, while it does not maintain Canadian offices, regularly solicits and conducts business in Canada. The creative force behind Foster-Miller is Robert A.S. Lee, the inventor of CECIL (Consolidated Edison Combined Inspection & Lancing system), a robot that uses a flexible lance to direct a pressurized jet of water at metallic sludge deposits that accumulate in a nuclear generator's boiler. The flexible lance is the innovative aspect of CECIL, as it allows a 90° penetration of the configuration of heat exchange tubes common in U.S. built nuclear boilers. The patent to the CECIL technology is owned by Electric Power Research Institute, a District of Columbia corporation headquartered in Palo Alto, California. The technology is licensed exclusively in the United States and Canada to Foster-Miller. CECIL is also protected by a Canadian patent.

2. BWC is a division of Babcock & Wilcox Industries, Ltd., a Canadian corporation with a principal place of business in Cambridge, Ontario. BWC builds and services nuclear steam generators of the Candu design, the most common nuclear generator in use in Canada. The Candu system's boiler differs from its American counterpart in deploying a more densely packed configuration of heat exchange tubes with consequently narrower intertubal gaps. BWC is not licensed to do business in Massachusetts. It has no Massachusetts offices, owns no domestic property, provides no services to Massachusetts utilities, and does not solicit business from Massachusetts residents.

3. BWC's cleaning technology had historically resembled CECIL in relying on a high pressure hydraulic jet directed by a manipulable lance. However, unlike CECIL's flexible lance, BWC's rigid lance, even when augmented by an articulated segment, allowed only a 30° penetration of the tube bundle in the Candu boiler. Recognizing the limitations of its lancing system, BWC in 1989 began to develop a flexible lance of its own. A prototype made of stainless steel proved unsatisfactory because of metal fatigue. BWC consequently began looking for a more durable alternative. All of the key personnel involved in the redesign of BWC's lance were familiar with the CECIL technology. The basic principles of the technology were widely disseminated within the nuclear industry and were the subject of an illustrated article, co-authored by a Foster-Miller engineer, that appeared in January, 1989, in Nuclear Engineering International, a trade journal. The article had been carefully studied by BWC engineers.

4. As early as 1988, Foster-Miller and BWC had discussed the possibility of a joint venture to provide sludge removal services to Ontario Hydro, one of Canada's largest nuclear utilities. These discussions, however, had ended before the May 11, 1990 meeting.

5. In late 1989, the Candu Owners' Group, of which Ontario Hydro is a member, commissioned Foster-Miller to study the possibility of adapting CECIL for use in servicing the Candu boiler. (BWC received a similar contract to develop a competing alternative of its own). The task was initially assigned by Foster-Miller to one of its engineers, William Leary. Leary undertook to locate a hose of a small enough gauge to fit within the narrow Candu tubal apertures, yet durable enough to withstand the extremely high water pressure required to effectively dislodge contamination. Leary surveyed commercially available hoses without finding any of sufficient pressure tolerance and flexibility. Leary did find a hose reinforced with a Kevlar wrap. This may have inspired his idea of doubling the Kevlar sheath to increase the hose's bursting strength. Leary broached the concept with Hugo Kruesi, the President of U.S. Composites, then Foster-Miller's hose supplier. On April 3, 1990, U.S. Composites delivered to Foster-Miller a double wrapped hose based on a prior Foster-Miller exemplar that met Leary's specifications. Hose in hand, Leary began designing the appropriate fittings.

6. In March of 1990, Robert Lee and Daniel St. Louis, a BWC engineer, attended a nuclear sludge management conference in Nashville, Tennessee. St. Louis had met Lee the previous month during a visit Lee made to BWC's offices where they had casually discussed the high pressure hosing incorporated in Foster-Miller's water lance. St. Louis was then and afterwards involved in BWC's effort to develop a flexible lance. At the Nashville conference, Lee made a presentation on the CECIL technology. Lee and St. Louis discussed the concept of reinforcing hydraulic hoses...