Lex Computer & Mgmt. v. Eslinger & Pelton, PC

• Decision Date: 20 November 1987
• Docket Number: Civ. No. 87-320-D.
• Citation: 676 F. Supp. 399
• Court: U.S. District Court — District of New Hampshire
• Parties: LEX COMPUTER & MANAGEMENT CORP., Montage Group, Ltd. v. ESLINGER & PELTON, P.C., CBS, Inc., Laurence Tisch.

676 F. Supp. 399

LEX COMPUTER & MANAGEMENT CORP., Montage Group, Ltd. v. ESLINGER & PELTON, P.C., CBS, Inc., Laurence Tisch.

Civ. No. 87-320-D.

United States District Court, D. New Hampshire.

November 20, 1987.

Brook Haberman, Keene, N.H., for plaintiffs.

Irvin D. Gordon, Concord, N.H., for defendants.

ORDER

DEVINE, Chief Judge.

In this federal question¹ and diversity action,² plaintiffs Lex Computer and Management Corp. ("Lex") and Montage Group, Ltd. ("Montage"), bring suit against defendants CBS, Inc., Eslinger & Pelton, P.C. (attorneys for CBS), and Laurence Tisch (President of CBS). Plaintiffs request a declaratory judgment that a patent held by CBS is invalid, and they seek a temporary restraining order and preliminary³ and/or permanent injunctive relief prohibiting defendants from making defamatory statements and statements that plaintiffs' equipment infringes on said patent. Plaintiffs also seek damages under various state tort claims.⁴

This matter is presently before the Court on defendants' motion to dismiss the complaint for lack of personal jurisdiction, Rule 12(b)(2), Fed.R.Civ.P.; for improper venue, Rule 12(b)(3), Fed.R.Civ.P.; and on defendants' motion for attorney's fees. Plaintiffs' objections to said motions, defendants' response thereto, and plaintiffs' supplemental memorandum, as well as all exhibits and affidavits have been duly considered by the Court.

Factual Background

Plaintiffs Lex and Montage are New Hampshire corporations with their principal places of business in Keene, New Hampshire. Complaint ¶¶ 1, 2. Plaintiffs allege in their complaint that Lex is the owner of Patent No. 4,538,188, which describes a device that "electronically edits movies and television film." Id. ¶ 7; Haberman Affidavit ¶¶ 3, 4. Montage is in the business of selling and leasing a videotape editing system known as the "Montage Picture Processor", which evidently edits film under the Lex patent system. Complaint ¶¶ 7, 8.⁵ Defendant Eslinger & Pelton is a professionally incorporated law firm with its sole place of business in New York, New York. Complaint ¶ 3; Pelton Affidavit ¶ 2.

Defendant CBS is a New York corporation with its principal place of business in New York. Complaint ¶ 4; Bates Affidavit ¶ 2. Defendant Laurence Tisch is the President of CBS and resides in New York City. Complaint ¶ 5; Tisch Affidavit ¶ 2.

On January 23, 1987, Spencer Olson of Eslinger & Pelton, P.C., as counsel for defendant CBS, sent a letter ("E & P letter") to Michael Lowe, President of Montage Computer Corporation, suggesting that the Montage Picture Processor may infringe on the CBS "Ettlinger" patent. (Specifically, the letter stated that the Ettlinger patent was "pertinent to" the Montage Picture Processor.) The letter proposed to grant Montage a nonexclusive license to sell the Montage processor under the Ettlinger patent. Complaint, Exhibit A. Montage sought clarification of the E & P letter, specifically asking how CBS believed the device infringed on its patent, but received no answer. Complaint ¶ 8; Lowe Affidavit ¶ 4.

Plaintiffs then discovered that Eslinger & Pelton had sent similar letters to plaintiffs' clients and prospective clients, suggesting that the Montage Picture Processor infringed on the Ettlinger patent. Complaint ¶ 10; Haberman Affidavit ¶ 9. Plaintiffs allege that the letters had a serious effect on the market for plaintiffs' product and "for a time made it impossible to sell or lease any more Montage film editing systems," Haberman Affidavit ¶ 9, and that the letters impacted Montage's property in New Hampshire. Plaintiffs' Memorandum at 2. Plaintiffs state that when they asked Mr. Olson why he had sent the letters to Montage customers, he replied it was done "to get Montage's attention to the Eslinger & Pelton letter." Haberman Affidavit ¶ 9. As a result of these letters, customers contacted Montage to seek assurance that there was no patent infringement, and Montage had to "guarantee ... that they would hold them harmless from this alleged implied threat." Haberman Affidavit ¶ 10; Lowe Affidavit ¶ 6.

On April 8, 1987, Irving Weiner, Esq., patent counsel for Montage, sent a letter to Eslinger & Pelton asserting that the Ettlinger patent did not apply to the Montage Picture Processor and rejecting the proposed licensing agreement. Complaint ¶ 9 and Exhibit B. The letter also referred to the "disparaging" letters Eslinger & Pelton had sent to Montage's customers and demanded a retraction. Complaint Exhibit B. Plaintiff alleges Eslinger & Pelton continued to send letters, causing "grave concern among Montage's clients and would-be clients." Complaint ¶ 10.

On May 5, 1987, Mr. Lowe sent a letter to defendant Laurence Tisch, President of CBS, asking him to assure current and potential users of the Montage Picture Processor that the equipment did not interfere with the CBS patent. Complaint ¶ 11. On July 6, 1987, Montage received CBS's July 2 reply that in the opinion of its patent counsel the Montage Picture Processor infringed on the Ettlinger patent. Complaint, Exhibit C.

Discussion

Because defendants have denied personal jurisdiction, plaintiffs assume the burden of proving that jurisdiction exists in this court. Ealing Corp. v. Harrods, Ltd., 790 F.2d 978, 979 (1st Cir.1986) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936)); Dustin v. Cruise Craft, Inc., 487 F.Supp. 67, 69 (D.N.H. 1980). Plaintiffs must not only plead facts sufficient to support jurisdiction, but must also go beyond the pleadings and make affirmative proof. Chlebda v. H.E. Fortna & Brother, Inc., 609 F.2d 1022, 1024 (1st Cir.1979). However, plaintiffs need make only a prima facie showing of jurisdictional facts to avoid defendants' motion to dismiss. Data Disc, Inc. v. Systems Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir.1977); Dustin v. Cruise Craft, Inc., supra, 487 F.Supp. at 69. The Court may consider pleadings, affidavits, and other evidentiary materials without converting the motion to dismiss to a motion for summary judgment. Papafagos v. Fiat Auto, S.p.A., 568 F.Supp. 692, 693 n. 1 (D.N.H. 1983).

Personal Jurisdiction

This Court may assert personal jurisdiction over defendants only if plaintiffs show that defendants are subject to the applicable New Hampshire long-arm statute and that assertion of jurisdiction is consistent with the due process, or minimum contacts, requirement of the United States Constitution.⁶ Kowalski v. Doherty, Wallace, Pillsbury & Murphy, 787 F.2d 7, 9-10 (1st Cir.1986); Hahn v. Vermont Law School, 698 F.2d 48 (1st Cir.1983). This is a two-step process; the constitutional analysis is not reached unless plaintiffs first establish that the state long-arm criteria have been met. Kowalski, supra, 787 F.2d at 10.

Although plaintiffs have not specified the New Hampshire statute under which they claim personal jurisdiction over defendants, the Court finds New Hampshire Revised Statutes Annotated ("RSA") 510:4 (1983) to be the relevant provision. RSA 510:4 provides:

I. JURISDICTION. Any person who is not an inhabitant of this state and who, in person or through an agent, transacts any business within this state, commits a tortious act within this state, or has the ownership, use, or possession of any real or personal property situated in this state submits himself, or his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from or growing out of the acts enumerated above.

Jurisdiction vests if any of the three acts enumerated in the statute are present. See, e.g., Kinchla v. Baumner, 114 N.H. 818, 330 A.2d 112 (1974).

Defendants CBS and Eslinger & Pelton

Plaintiffs argue that defendants are subject to this Court's jurisdiction because they have "committed a tortious act within the state." RSA 510:4. Specifically, plaintiffs assert that defendants sent allegedly defamatory letters to purchasers and prospective purchasers of the Montage Picture Processor which adversely interfered with plaintiffs' contractual and business relations. Defendants argue that these letters were sent solely to nonresidents of New Hampshire from New York, an assertion which is uncontradicted by plaintiffs' pleadings and affidavits. Defendants therefore contend they have not committed a tortious act in New Hampshire.

The New Hampshire Supreme Court has established that RSA 510:4 subjects a non-resident defendant to jurisdiction here when the impact in New Hampshire of the defendant's out-of-state conduct has allegedly resulted in a New Hampshire tort and was more than fortuitous, so that the defendant knew or should have known his conduct could injure a person here. Estabrook v. Wetmore, 129 N.H. 520, 529 A.2d 956 (1987) (citing Hall v. Koch, 119 N.H. 639, 406 A.2d 962 (1979); Tavoularis v. Womer, 123 N.H. 423, 462 A.2d 110 (1983)). A thorough review of the pleadings and affidavits shows that the impact of the alleged torts here occurred in New Hampshire.

Plaintiffs Montage and Lex are New Hampshire corporations with their principal places of business in New Hampshire. Complaint ¶¶ 1, 2. If, as plaintiff alleges, defendants sent defamatory letters to Montage's customers and prospective customers stating that the editing equipment those customers had obtained or could obtain from Montage was covered by a patent held by CBS (Haberman Affidavit ¶ 9), and if this adversely affected plaintiffs' business relations, the effect was felt in New Hampshire. The fact that the letters were sent to companies outside New Hampshire does not preclude a finding that injury occurred in New Hampshire. Tavoularis, supra, 462 A.2d at 112. Regarding plaintiffs' defamation count (Count VI), although the tort of libel is generally held to occur wherever the offending material is circulated, Restatement (Second) of Torts § 557A comment a (1977), false statements of fact harm not only the readers of the...