Eurothreads LLC v. Medsthetics LLC
| Decision Date | 22 November 2022 |
| Docket Number | Civil Action H-21-0601 |
| Parties | EUROTHREADS LLC, Plaintiff, v. MEDSTHETICS LLC, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
EUROTHREADS LLC, Plaintiff,
v.
MEDSTHETICS LLC, Defendant.
Civil Action No. H-21-0601
United States District Court, S.D. Texas, Houston Division
November 22, 2022
MEMORANDUM OPINION AND ORDER
SIM LAKE, SENIOR UNITED STATES DISTRICT JUDGE
Plaintiff, EuroThreads LLC ("Plaintiff"), filed suit in the District Court of Harris County on January 27, 2021, against defendant Medsthetics LLC ("Defendant"). [1] Plaintiff asserts claims for trade secret misappropriation, breach of fiduciary duty, tortious interference with contracts, unfair competition in violation of 15 u.s.c. § 1125(a), civil conspiracy, and breach of contract.[2] Pending before the court is Defendant Medsthetics LLC's Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Failure to State a Claim ("Defendant's Motion to Dismiss" or "Defendant's MTD") (Docket Entry No. 45). For the
reasons stated below, Defendant's Motion to Dismiss will be granted in part and denied in part.
I. Factual and Procedural Background
A. Procedural History
Plaintiff filed its Complaint in Harris County District Court on January 27, 2021.[3] Defendant removed the case to this court on February 24, 2021.[4] Defendant filed its Motion to Dismiss on September 16, 2022.[5] Plaintiff filed Plaintiff's Response to Medsthetics LLC's Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue and Failure to State a Claim ("Plaintiff's Response"} (Docket Entry No. 48} on October 14, 2022. [6] Defendant filed Defendant Medsthetics LLC's Reply in Further Support of Its Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Failure to State a Claim ("Defendant's Reply") (Docket Entry No. 49} on October 21, 2022. [7]
B. Plaintiff's Allegations
"Plaintiff, EuroThreads, LLC, is a Domestic Limited Liability Company whose principal place of business is located in 1621
Central Avenue, Cheyenne, Wyoming 82001."[8] Defendant Medsthetics is a New York Limited Liability Company with its offices in New York.[9]
"On September 6, 2018, [Plaintiff and Defendant] executed an Independent Sales Organization Agreement (the "ISO") . "[10] "The ISO licensed [Defendant] and its representatives to order and place [Plaintiff]'s cosmetic threads in patients. "[11] "The ISO includes terms governing the relationship and obligates [Defendant] with non-competition and non-solicitation covenants."[12]
Defendant "failed to comply with its management and training obligations. Moreover, [Defendant] took unauthorized orders in direct contradiction to [Plaintiff]'s authority and instruction not to do so. [Defendant] has also attempted to steal [Plaintiff]'s clients and representatives."[13] "On January 26, 2021, [Plaintiff] issued correspondence to [Defendant] instructing it to cease and desist from the aforementioned conduct and terminating the ISO for
cause. "[14] "Provisions prohibiting [Defendant] from soliciting [Plaintiff]'s clients and representatives survive the ISO's termination. "[15]
C. The ISO Agreement
Plaintiff offers the Independent Sales Organization (ISO) Agreement ("ISO Agreement") in opposition to Defendant's Motion to Dismiss. The ISO Agreement authorized Defendant to sell Plaintiff's products in exchange for a commission.[16] It states that Defendant "shall not carry additional competing product lines without the full knowledge and written consent of" Plaintiff and that it will not "engage in any business activity which is competitive with" Plaintiff.[17] It also states that "[d]uring the term of this agreement, and for one (1) year immediately thereafter, [Defendant] agrees not to solicit any employee or independent contractor of [Plaintiff] on behalf of any other business, enterprise, nor shall [Defendant] induce any employee or independent contractor" of Plaintiff to breach their contract with Plaintiff.[18] The ISO Agreement states that it is to be construed according to Texas law.[19]
D. Tamara Moore's Affidavit
Plaintiff also offers the Affidavit of Tamara Moore ("Moore Affidavit"). [20] Moore states that she is Plaintiff's Director of Operations and has personal knowledge of Defendant's "contract with [Plaintiff], Defendant's Texas clients, Wendy Germond's scope of employment as a sales representative for [Defendant] in Texas, and [Plaintiff's] clients that [Defendant] solicited and signed in violation of the non-solicitation and non/compete clauses in [Defendant's [ISO]] Agreement with" Plaintiff. [21] Moore states that Defendant employed "Wendy Germond in Texas beginning in February 2019," and that Germond was responsible for "communicating with [Defendant's] clients for sales, soliciting new accounts for [Defendant] by promoting [Plaintiff's] treatments to potential customers, providing customer service support for[Defendant's] clients, arranging and providing Eurothread[s] training sessions for [Defendant's] new clients, and filling thread orders for [Defendant's] clients." [22] Moore states that Germond "was paid by [Defendant] on a commission basis for her work as a Medsthetics sales representative in Texas." [23] For example, Germond earned $20,042.10 in commissions in October 2020. [24]
Moore states that Defendant •solicited (Plaintiff's] clients, including Texas clients, for the purpose of selling them competing, non-Eurothreads products and services." Moore provides a list of ten of Plaintiff's clients in Texas that Defendant "solicited and signed as new accounts in competition with" Plaintiff.[25]
E. Karounis Declaration
Defendant offers the Karounis Declaration in support of its arguments that this court lacks personal jurisdiction and that it should transfer the case to the Southern District of New York. [26]Karounis states that she is the sole proprietor of Defendant. [27]
Karounis states that neither she nor Defendant is a Texas resident, that she has never been to Texas, that Defendant has no real property and no office in Texas, that Defendant "does not have any bank accounts in Texas, has never paid real or personal property taxes in Texas, does not have a telephone listing in Texas, and does not advertise its services in Texas."[28] Karounis states that "[t]he only connections between this dispute and Texas are (i) the contract's choice of law provision and (ii) one Medsthetics independent contractor-Wendy Germond-who promotes and
sells [Plaintiff's] products in Texas."[29] She states that...
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