AtriCure, Inc. v. Meng
| Decision Date | 08 October 2019 |
| Docket Number | Case No. 1:19-cv-00054 |
| Parties | AtriCure, Inc., Plaintiff, v. Dr. Jian Meng, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION & ORDER
This matter is before the Court upon Defendants'—Dr. Jian Meng ("Meng") and Beijing Medical Scientific Co. Ltd ("Med-Zenith")—Motion to Dismiss for Lack of Personal Jurisdiction or, Alternatively, Under Forum Non Conveniens.1 (Docs. 21, 22). AtriCure has filed a Response (Doc. 32) and Defendants filed a Reply (Doc. 33).
Plaintiff AtriCure is an Ohio-based medical device company that develops and sells surgical ablation systems used for the treatment of atrial fibrillation. (Doc. 1, ¶ 1). Defendant Meng is a citizen of the People's Republic of China and resides in Beijing. (Doc. 1, ¶ 8). Meng is the Founder of ZenoMed, a Chinese company that distributescardiovascular devices, and President of Defendant Med-Zenith. (Doc. 22 at PageID 177-78); (Doc. 32-1, Exhibit A, ¶ 6). Defendant Dr. Guanglu Bai ("Bai")3 is a Chinese citizen residing in Beijing and the former Director of Research and Development of non-defendant ZenoMed. (Doc. 1, ¶¶ 4, 8). Med-Zenith is a Chinese company, with its principal office in Beijing, which develops, manufactures, and sells medical equipment. (Doc. 1, ¶ 10); (Doc. 22 at PageID 177).
In 2005, Meng contacted AtriCure to develop a partnership wherein Meng would, through one of his entities, secure certain distribution and marketing rights for AtriCure's medical devices in China and serve as AtriCure's exclusive distributor in China. (Doc. 32-1, Exhibit A, ¶ 31); see (Doc. 32-1, Exhibit 7, PageID 359-79 ("Exclusive Distribution Agreement for AtriCure, Inc. Products"). "From 2005 to 2017, ZenoMed and AtriCure entered into a series of agreements regarding ZenoMed's acting as a distributor for AtriCure products in" China. (Doc. 22 at PageID 178) (citing (Doc. 22-1, ¶ 10)). For example, AtriCure and ZenoMed entered into a 2016 Distribution Agreement, in which ZenoMed was to secure regulatory approvals in China for AtriCure's medical products and act as exclusive distributor for certain AtriCure products in China. (Doc. 1, ¶¶2, 20-23); (Doc. 1-2).
Meng visited AtriCure's Ohio facilities twice, each time for one day, to discuss training and marketing for the distribution of AtriCure's products in China. (Doc. 22-1, ¶ 11). Meng and his related entities have engaged in numerous telecommunications and emails with AtriCure's Ohio employees. (Doc. 32-1, Exhibit A, ¶ 35). Meng was the mainnegotiator and contact point on the business relationship between Meng, his entities, and AtriCure. Id.
AtriCure brings eight causes of action against the three Defendants: tortious interference, misappropriation of trade secrets, unfair competition, deceptive trade practices, fraud, negligent misrepresentation, aiding and abetting, and civil conspiracy. (Doc. 1). AtriCure alleges that Meng and Bai used their roles as partners with AtiCure through ZenoMed—beginning over a decade before but including the 2016 Distribution Agreement—to acquire AtriCure's confidential information and intellectual property. (Doc. 1, ¶ 39). AtriCure asserts that Meng and Bai subsequently provided that information to Med-Zenith, which is creating facially identical counterfeit versions of AtriCure's products and seeking patent approval and licensing to compete with AtriCure in China. (Doc. 1, ¶¶ 38-40).
Federal Rule of Civil Procedure 12(b)(2) provides that a defendant may seek dismissal if the court lacks personal jurisdiction over that defendant. "The party seeking to assert personal jurisdiction bears the burden of demonstrating that such jurisdiction exists." Schneider v. Hardesty, 669 F.3d 693, 697 (6th Cir. 2012) (quoting Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002)). In the face of a supported motion to dismiss, the plaintiff may not rest on his pleadings, but must, by affidavit or otherwise, set forth specific evidence supporting jurisdiction. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir. 1974)).
When a court considers a motion to dismiss pursuant to Rule 12(b)(2) without an evidentiary hearing, as here,4 the plaintiff's burden is "relatively slight." Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) (quoting Am. Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988)). Likewise, when a court considers a motion to dismiss pursuant to Rule 12(b)(2) without an evidentiary hearing, the plaintiff "'need only make a prima facie showing of jurisdiction.'" Bird, 289 F.3d at 871 (quoting Neogen, 282 F.3d at 887) (internal citation omitted). A plaintiff can make prima facie showing of personal jurisdiction by "establishing with reasonable particularity sufficient contacts between [the defendants] and the forum state to support jurisdiction." Neogen, 282 F.3d at 887 (citing Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987)).
"To determine whether personal jurisdiction exists over a defendant, federal courts apply the law of the forum state." CompuServe, 89 F.3d at 1262. "Under Ohio law, personal jurisdiction over non-resident defendants is available only if (1) the long-arm statute confers jurisdiction and (2) jurisdiction is proper under the Federal Due Process Clause." Conn, 667 F.3d at 712 (citing Kauffman Racing Equip., L.L.C. v. Roberts, 126 Ohio St.3d 81, 930 N.E.2d 784, 790 (2010); Goldstein v. Christiansen, 70 Ohio St.3d 232, 638 N.E.2d 541, 543 (1994)).
AtriCure asserts that Defendants waived personal jurisdiction by entering a general appearance with the court. (Doc. 32 at PageID 288-89) (citing Gerber v. Riordan, 649 F.3d 514, 520 (6th Cir. 2011) ()).
The Sixth Circuit has explained that, rather than establishing a steadfast rule that an attorney's entry of a general appearance on a defendant's behalf constitutes waiver of personal jurisdiction, the Gerber rule asks "whether a defendant's conduct prior to raising the defense [of personal jurisdiction] has given the plaintiff 'a reasonable expectation' that the defendant will defend the suit on the merits or whether the defendant has caused the court to 'go to some effort that would be wasted if personal jurisdiction is later found lacking.'" King v. Taylor, 694 F.3d 650, 659 (6th Cir. 2012) (citing Gerber, 649 F.3d at 519); see Cnty. Sec. Agency v. Ohio Dep't of Commerce, 296 F.3d 477, 483 (6th Cir. 2002) ().
Unlike the defendants in Gerber, who waited three years before raising the defense of personal jurisdiction, Defendants in this case filed a Notice with the Court of their declination to comply with discovery requests and conferences to protect their personal jurisdiction defense (Doc. 24). Based on the record before it, the Court finds that Defendants have neither given AtriCure a reasonable expectation that they would defend this case on the merits nor caused the Court to expend unnecessary efforts or resources.See King, 694 F.3d at 659; Gerber, 649 F.3d at 519. Defendants did not waive their defense of personal jurisdiction.
Under Ohio's long-arm statute, "[a] court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's: (1) Transacting any business in this state." Ohio Rev. Code § 2307.382(A)(1). The term "transacting any business" has been given broad interpretation. Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc., 559 N.E.2d 477, 481 (Ohio 1990); see Brunner v. Hampson, 441 F.3d 457, 464 (6th Cir. 2006). "The word 'transact' used in the long-arm statute is broader than the term 'contract' and embraces in its meaning 'to carry on business' and 'to have dealings.'" Franklin Prods., Inc. v. Gen. Nutrition Corp., No. 2:05-CV-1061, 2007 WL 2462665, at *4 (S.D. Ohio Aug. 27, 2007) (quoting Mustang Tractor & Equip. Co. v. Sound Envt'l Serv., Inc., 727 N.E.2d 977, 981 (Ohio Com. Pl. 1999)).
"[M]ere solicitation of business does not constitute transacting business in Ohio for purposes of establishing jurisdiction under Section 2307.382(A)(1)." Mobile Conversions, Inc. v. Allegheny Ford Truck Sales, No. 1:12cv369, 2012 WL 12893476, at *2 (S.D. Ohio Oct. 15, 2012). Rather, in determining what constitutes "transacting business," courts typically consider two factors: (1) whether the defendant initiated the "business dealing," and (2) whether the parties conducted their negotiations in Ohio or with terms affecting Ohio. Thomas v. Dykstra, 309 F. Supp. 3d 480, 484 (N.D. Ohio 2018) (citing Shaker Constr. Grp., LLC v. Schilling, No. 1:08cv278, 2008 WL 4346777, at *3 (S.D. Ohio Sept. 18, 2008)).
Here, Meng's self-described "partnership" with AtriCure is more than "mere solicitation of business." (Doc. 32-1, Exhibit A, ¶¶ 31, 35), (Doc. 32-1, Exhibit 8, PageID 383-84). Defendants' actions are similar to those of the defendants in Kendle v. Whig Enters., LLC, No. 2:15cv1295, 2016 WL 5661680 (S.D. Ohio Sept. 30, 2016), wherein the defendants frequently referred to the plaintiff as their business "partner" and their relationship was based on the defendants' intent to expand the plaintiff's medical sales business "regardless of which specific corporate entity might be involved." Id. at *3. Meng contacted AtriCure to develop a partnership "through one of his entities" beginning in 2005. (Doc. 32-1, Exhibit A, ¶ 31). Meng then contracted with AtriCure through various entities throughout a decades-long partnership. (Doc. 32-1, Exhibit...
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