American Commercial Lines v. Northeast Maritime, 4:08-cv-96-SEB-WGH.

• Decision Date: 01 December 2008
• Docket Number: No. 4:08-cv-96-SEB-WGH.,4:08-cv-96-SEB-WGH.
• Parties: AMERICAN COMMERCIAL LINES, LLC, Plaintiff, v. NORTHEAST MARITIME INSTITUTE, INC., Defendant.
• Court: U.S. District Court — Southern District of Indiana

588 F.Supp.2d 935

AMERICAN COMMERCIAL LINES, LLC, Plaintiff, v. NORTHEAST MARITIME INSTITUTE, INC., Defendant.

No. 4:08-cv-96-SEB-WGH.

United States District Court, S.D. Indiana, New Albany Division.

December 1, 2008.

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David R. Monohan, R. Joseph Stennis, Jr., Woodward Hobson & Fulton LLP, Louisville, KY, Sean F. McDonough, Morrison Mahoney LLP, Boston, MA, for Plaintiff.

Paul J. Bishop, Louisville, KY, Phillip N. Beauregard, Richard E. Burke, Jr., Beauregard, Burke & Franco, New Bedford, MA, for Defendant.

ORDER ADDRESSING PENDING MOTIONS

SARAH EVANS BARKER, District Judge.

This cause is before the Court on the Motion for Preliminary Injunction [Docket No. 10] filed by Plaintiff, American Commercial Lines, LLC ("American"), on July 7, 2008, pursuant to Federal Rule of Civil Procedure 65; the Motion to Dismiss for Lack of Personal Jurisdiction or for Change of Venue [Docket No. 18], filed on July 16, 2008 by Defendant, Northeast Maritime Institute, Inc. ("NMI"); and the Motion for Oral Argument [Docket No. 29], filed by NMI on July 17, 2008. American requests that the Court order NMI to return property belonging to American that NMI has in its possession and to release former NMI students' transcripts relating to course work the students completed at the school run by NMI. NMI argues that the Court does not have personal jurisdiction over the claim, and, alternatively, that the Court should transfer the cause to the District of Massachusetts because it is the more convenient forum for the litigation. For the reasons detailed in this entry, we DENY Defendant's Motion to Dismiss, DENY Defendant's Motion for Change of Venue, DENY Defendant's Motion for Oral Argument, and GRANT in part and DENY in part Plaintiff's Motion for Preliminary Injunction.

Factual Background

Plaintiff, American, is a limited liability corporation formed under the laws of Delaware with its principal place of business in Indiana. American is a large marine transport company that provides barge transportation on inland waterways throughout the United States. Defendant, NMI, is a family-owned, Massachusetts close corporation with its principal place of business in Fairhaven, Massachusetts. NMI operates a school in Massachusetts, where the company offers courses for training students in maritime careers, including river boat piloting.

In 2005, executives of the predecessor to American¹ contacted NMI about the possibility of engaging NMI's training services. Over the course of the months that followed, executives and employees of both companies made trips back and forth between Massachusetts and Indiana to develop a business relationship and work toward a binding agreement. In March 2006, American and NMI entered into a contract under which NMI was to train American employees to be river pilots. That contract was later modified by agreement in January 2007. Although the contract contains no forum selection clause, it does contain a choice-of-law clause, which states that the agreement is to be interpreted under and governed by Indiana law.

The agreement was to remain in full force and effect until March 2011, but in June 2008, American discovered that its manager, Kenneth Davidson, who had been responsible for negotiating the financial terms of the contract, had been secretly working for NMI. American represents that it has just begun to investigate this situation, but that, to date, it has uncovered documentation showing that Mr. Davidson: (1) sent confidential information to NMI about American's acquisition targets; (2) identified himself to a South American company as "President of NMI Human Factors USA"; (3) attempted to negotiate a contract on behalf of NMI with this same South American company; and (4) approved invoices from NMI totaling in excess of $1.3 million in "tuition charges" for American students relating to courses that were never taught by NMI or attended by employees of American.

Because of these alleged acts, American terminated its agreement with NMI and, on June 20, 2008, filed the original complaint in this case in the Southern District of Indiana, asserting numerous unfair business practices. On June 25, 2008, in response to American's termination of the agreement, NMI filed a separate suit against American in Massachusetts Superior Court seeking injunctive relief and alleging breach of contract and unfair business conduct. American removed NMI's state case to the U.S. District Court for the District of Massachusetts on June 30, 2008.

On July 7, 2008, American filed a motion to change venue from the District of Massachusetts to the Southern District of Indiana. That same day, American filed a motion in this court for a preliminary injunction against NMI. In response, on July 31, 2008, NMI filed a Motion to Dismiss for Lack of Personal Jurisdiction or for Change of Venue of the cause before us.

Since the filing of NMI's Motion to Dismiss or for Change of Venue, Judge Richard G. Stearns of the U.S. District Court for the District of Massachusetts granted American's Motion to Transfer NMI's suit against American from the District of Massachusetts to the Southern District of Indiana. Judge Stearns based his ruling on the fact that American was the first party to file its lawsuit in the present dispute. He granted the motion on July 22, 2008, and shortly thereafter, on July 30, 2008, Magistrate Judge William G. Hussman of the Southern District of Indiana consolidated the two cases. For at least the time being, therefore, the case reposes with this Court, confronting us with two general issues: (1) where, under the laws of personal jurisdiction and venue, may or should this case be tried; and (2) if it may and should be tried here, whether American has demonstrated entitlement to an injunction against NMI. We address these questions in turn below.

Legal Analysis

I. Personal Jurisdiction

In a diversity action filed under 28 U.S.C. § 1332, a federal district court has personal jurisdiction over a non-resident defendant "only if a court of the state in which it sits would have such jurisdiction." Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 779 (7th Cir.2003). A district court may properly exercise personal jurisdiction over a non-resident defendant if a two-step analysis is undertaken and satisfied. First, the party resisting the exercise of jurisdiction must be amenable to service of process under the state's long-arm statute; second, the exercise of personal jurisdiction must comport with the due process clause of the Constitution. Id. Indiana's long-arm statute, Indiana Rule of Trial Procedure 4.4(A), "expand[s] personal jurisdiction to the full extent permitted by the Due Process Clause." LinkAmerica Corp. v. Albert, 857 N.E.2d 961, 966 (Ind.2006). Thus, the sole question before us is whether due process would be offended were we to exercise personal jurisdiction over NMI.

For a court to acquire personal jurisdiction over a defendant, due process requires "that the defendant have such `minimum contacts' with the forum state as will make the assertion of jurisdiction over him consistent with `traditional notions of fair play and substantial justice[.]'" Lakeside Bridge & Steel Co. v. Mountain State Const. Co., 597 F.2d 596, 600 (7th Cir.1979) (quoting International Shoe v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). In other words, a defendant must have "fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Shaffer v. Heitner, 433 U.S. 186, 218, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977) (Stevens, J., concurring in judgment)).

Personal jurisdiction may be either specific or general. A court may exercise specific jurisdiction over a defendant if the cause of action arises out of or relates to a defendant's purposefully established contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Burger King Corp., 471 U.S. at 472, 105 S.Ct. 2174. General jurisdiction, on the other hand, "is proper when a defendant has `continuous and systematic business contacts' with a state, and it allows a defendant to be sued in that state regardless of the subject matter of the lawsuit." Premiere Credit of North America, LLC v. AAT Fabrication, Inc., 2005 WL 1123636, at *2 (S.D.Ind.2005), citing Helicopteros, 466 U.S. at 416, 104 S.Ct. 1868; see also Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir.2002); RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1277 (7th Cir.1997).

Based on the information before us, it is clear that the Court does not have general jurisdiction over NMI. The focus of our analysis is therefore on specific personal jurisdiction, an analysis that "is fact-specific and determined on a case-by-case basis." Brockman v. Kravic, 779 N.E.2d 1250, 1256 (Ind.App.Ct.2002). The jurisdiction question here stems from the events surrounding the formation and performance of the parties' contract. Conceding that contract was executed in Indiana, NMI nonetheless argues that a contract alone does not establish the minimum contacts necessary to satisfy due process. Furthermore, NMI argues that any additional contacts were the result of American's solicitation, contending specifically that its "only real contact with Indiana was limited to four visits-one pre-contract appearance at the ... invitation of [American] and the others more for convenience to [American] than necessity to NMI." Def.'s Br. in Supp. at 8. Finally, according to NMI, performance of the contract took place in Massachusetts, not in Indiana. Id. For all of these reasons, NMI asserts that it would be improper for the Court to exercise specific jurisdiction over the company in ...