Barranco v. 3D Sys. Corp.

• Citation: 6 F.Supp.3d 1068
• Decision Date: 17 March 2014
• Docket Number: Civil No. 13–00412 LEK–RLP.
• Court: U.S. District Court — District of Hawaii
• Parties: Ronald BARRANCO, Plaintiff, v. 3D SYSTEMS CORPORATION, a Delaware corporation, 3D Systems, Inc., a California corporation, Abraham Reichental, Damon Gregoire, Defendants.

6 F.Supp.3d 1068

Ronald BARRANCO, Plaintiff,

v.3D SYSTEMS CORPORATION, a Delaware corporation, 3D Systems, Inc., a California corporation, Abraham Reichental, Damon Gregoire, Defendants.

Civil No. 13–00412 LEK–RLP.

United States District Court,

D. Hawai‘i.

Signed March 17, 2014.

Jack R. Naiditch, Kula, HI, Joachim P. Cox, Kamala S. Haake, Robert K. Fricke, Cox Fricke a Limited Liability Law Partnership LLP, Honolulu, HI, for Plaintiff.

Christopher C. Lam, Nexsen Pruet, LLC, Charlotte, NC, Marguerite S. Willis, Nikole S. Mergo, Nexsen Pruet, LLC, Columbia, SC, Thomas Benedict, Dawn T. Sugihara, Goodsill Anderson Quinn & Stifel LLLP, Honolulu, HI, for Defendants.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(b)(2) OR, IN THE ALTERNATIVE, TO TRANSFER PURSUANT TO 28 U.S.C. § 1404

LESLIE E. KOBAYASHI, District Judge.

On October 21, 2013, Defendants 3D Systems Corporation (“3D Corp.”), 3D Systems, Inc. (“3D Inc.,” collectively, “3D Systems”), Abraham Reichental (“Reichental”), and Damon Gregoire (“Gregoire,” collectively “Defendants”) filed their Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2) or, in the Alternative, to Transfer Pursuant to 28 U.S.C. § 1404 (“Motion”). [Dkt. no. 6.] Plaintiff Ronald Barranco (“Plaintiff”) filed his memorandum in opposition on January 6, 2014, and Defendants filed their reply on January 14, 2014. [Dkt. nos. 27, 30.]

On January 31, 2014, this Court issued an entering order vacating the hearing on the Motion. [Dkt. no. 34.] After careful consideration of the Motion, supporting and opposing memoranda, and the relevant legal authority, Defendants' Motion is HEREBY DENIED, for the reasons set forth below.

BACKGROUND

The Complaint asserts that, for the past thirty years, Plaintiff has worked in the field of 3D printing, which is the “additive manufacturing process of making a three-dimensional solid object of virtually any shape from a digital model.” [Complaint at ¶ 16.] Over the past fifteen years, Plaintiff also developed and owned several businesses in the 3D printing industry. [ Id. at ¶ 17.]

The Complaint alleges that, over the past twenty years, Plaintiff created and owned more than 100 domain names associated with different technologies and businesses in the 3D printing industry. [ Id. at ¶ 18.] Examples of domain names that Plaintiff created include: (1) www. stereo lithography. com (“Stereolithography.com”); and (2) www. lasersintering. com (“Lasersintering.com”). Plaintiff created Stereolithography.com and Lasersintering.com on October 31, 1997 and February 13, 2004, respectively. [ Id. at ¶¶ 19, 23.] Stereolithography.com and Lasersintering.com were to license their respective domain names, websites, and instant online quote engines to “third parties who broker physical, three-dimensional printed objects.” [ Id. at ¶¶ 22, 26.]

According to the Complaint, 3D Corp. is incorporated in Delaware and operates through its subsidiaries in the United States, Europe, and the Asia–Pacific region. 3D Corp. provides 3D content-to-print solutions, and produces 3D printers, integrated print materials, and on-demand custom parts services. Plaintiff alleges that 3D Inc. is a subsidiary of 3D Corp. Plaintiff also alleges that 3D Inc. is the alter ego and/or agent of 3D Corp., and that 3D Corp. is actively involved in the day-to-day operations of 3D Inc. Plaintiff asserts that both 3D Corp. and 3D Inc. have: corporate offices located at the same address in Rock Hill, South Carolina; and common officers and directors, including Reichental and Gregoire. 3D Corp. is involved in the acquisitions of 3D Inc., and also transacts business by or on behalf of 3D Inc. [ Id. at ¶¶ 27–34.]

The Complaint alleges that, on July 10, 2001, 3D Systems contacted Plaintiff in Hawai'i to see if he would be interested in selling Stereolithography.com and its related business, but Plaintiff declined. 3D Systems contacted Plaintiff again on June 6, 2009, this time to see if he would be interested in selling both Stereolithography.com and Lasersintering.com (collectively “Primary Domains”) and their related businesses. Plaintiff again declined. [ Id. at ¶¶ 35–36.] Plaintiff asserts that 3D Systems invented the stereolithography process and was a major participant in the stereolithography and laser sintering sectors of the industry. Nevertheless, 3D Systems did not own the domain names “Stereolithography.com” and “Lasersintering.com”, which were valuable to 3D Systems. Plaintiff declined to sell his Primary Domains to 3D Systems when a representative called him in Hawai'i on April 6, 2010. [ Id. at ¶¶ 37–41.]

Plaintiff alleges that, in mid-February 2011, Abraham Reichental, President and CEO of 3D Systems, invited Plaintiff and Deelip Menezes to 3D Systems's corporate headquarters in Rock Hill, South Carolina to discuss Print3D Corporation (“Print3D”), which Plaintiff and Menezes own. On February 17, 2011, Plaintiff and Menezes met with Reichental, Senior Vice President and Chief Financial Officer Damon Gregoire, and other 3D Systems representatives in Rock Hill to discuss. Plaintiff alleges that, during this meeting, 3D Systems told Plaintiff and Menezes that it was interested in acquiring Print3D's assets, and the parties agreed on a purchase price of $10 million. [ Id at ¶¶ 42–44.] Plaintiff also informed Reichental that he was undergoing daily chemotherapy treatments for leukemia, which he had been diagnosed with in September 2009. The Complaint asserts that, due to the progression of Plaintiff's leukemia, he was interested in selling Print3D. [ Id. at ¶ 45.]

Plaintiff alleges that, on March 27, 2011, Reichental called Plaintiff in Hawai'i to ask whether Plaintiff was interested in selling his Primary Domains to 3D Systems. [ Id. at ¶ 46.] During that phone call, Plaintiff told Reichental that he would meet with him and other 3D Systems representatives to discuss the possible sale of his Primary Domains. Plaintiff alleges that, at this time, he was still undergoing daily chemotherapy treatments, which affected his mental health. The parties agreed to meet in Los Angeles, California, in early April 2011. The Complaint asserts that, by April 2011, Plaintiff was receiving annual license fees of approximately $150,000 for Stereolithography.com, pursuant to a non-exclusive license agreement with non-party Cranston LLC (“Cranston”). [ Id. at ¶¶ 47–50.] Plaintiff was also receiving approximately $100,000 annually for Lasersintering.com, pursuant to a non-exclusive license agreement with non-party Additive Manufacturing LLC (“Additive”). [ Id. at ¶ 51.]

The Complaint alleges that, on April 3, 2011, Plaintiff and Menezes met with Gregoire, and in-house counsel for 3D Systems, Andrew Johnson, in Los Angeles for about three hours and twenty minutes. The first three hours of the meeting concerned the sale of Print3D to 3D Systems. Menezes then left, and the remainder of the meeting was between Plaintiff, Gregoire, and Johnson, regarding the sale of the Primary Domains to 3D Systems. [ Id. at ¶¶ 52–53.] The Complaint alleges that, during this portion of the meeting, Gregoire confirmed that Plaintiff should receive between $5 million and $10 million for the sale of his Primary Domains to 3D Systems. [ Id. at ¶ 54.] Gregoire invited Plaintiff to meet with him and Reichental again on April 5, 2011. At their first meeting on April 5, Gregoire emailed Plaintiff a summary of 3D Systems's valuation of Lasersintering.com and Plaintiff's interest in the Print3D assets. [ Id. at ¶¶ 55–57 (citing id., Exh. A).] Plaintiff alleges that this summary valued Lasersintering.com at $1,649,322, and that the summary did not include a valuation of Stereolithography.com, which was generating approximately fifty percent more income. [ Id. at ¶ 58.]

Later that same day, the parties met again, and Plaintiff alleges that Gregoire and Reichental told him that 3D Systems wanted to structure the sale of the Primary Domains “as a ‘buy-out’ so that a relatively small amount of the purchase price would be paid on the closing, with the balance of most of the purchase price for the Primary Domains to be paid over a period of time based on revenues generated by the Primary Domains' businesses after the closing of the sale.” [ Id. at ¶¶ 59–60.] Gregoire and Reichental also told Plaintiff that, in addition to the Primary Domains, 3D Systems wanted to purchase related domain names (“Defensive Domains”).¹ [ Id. at ¶ 61.] According to Gregoire and Reichental, $6 million represented a fair price for the Web Domains, and Plaintiff would make more than that through the buy-out mechanism. Plaintiff alleges that, in order to induce him to accept the proposed buy-out structure, Gregoire and Reichental represented that, after acquisition, 3D Systems would “make a substantial commitment of resources to the Web Domains' businesses to ensure that Plaintiff would receive the $6 million plus purchase price for the sale of his Web Domains.” [ Id. at ¶¶ 62–63.] Furthermore, Gregoire and Reichental represented that Lasersintering.com's existing license agreement with Additive would remain in place after the close of the sale. Gregoire and Reichental indicated that 3D Systems would likely terminate Stereolithography.com's license agreement with Cranston. In order to induce Plaintiff to sell the Web Domains, however, they assured Plaintiff that 3D Systems would replace the lost Cranston revenue with a revenue stream that exceeded the current $150,000 annual income from Cranston. [ Id. at ¶ 64.]

Plaintiff alleges that Gregoire wrote an outline of the structure for the purchase price of the Web Domains: “first, a buyout based on the initial $250,000 of revenue generated by the Primary Domains; second, on development of the Web Domains; and third, on the $225,000 annual compensation to be paid to Plaintiff.” [ Id. at ¶ 65 (citing id., Exh. B.) ] In order to further induce Plaintiff, Gregoire and Reichental told Plaintiff that 3D Systems...