Excentus Corp. v. Success Sys.
| Decision Date | 26 November 2019 |
| Docket Number | CIVIL ACTION NO. 3:19-CV-0897-S |
| Parties | EXCENTUS CORPORATION v. SUCCESS SYSTEMS, INC. and SMART C-STORES, LLC |
| Court | U.S. District Court — Northern District of Texas |
This Order addresses Defendants' Motion to Dismiss for Lack of Personal Jurisdiction, and Motion to Transfer Venue [ECF No. 18]. For the following reasons, the Court grants the Motion to Dismiss for Lack of Personal Jurisdiction and finds as moot the Motion to Transfer Venue.
"This is a suit for a declaration that no legal contract exists between" Plaintiff Excentus Corporation ("Plaintiff") and Defendants Success Systems, Inc. ("Success") and Smart C-Stores, LLC ("Smart C-Stores") (collectively, "Defendants"). Am. Compl. ¶ 1. Plaintiff is a Texas corporation that develops and operates various loyalty programs, including a fuel rewards program with Shell Oil. See id. ¶¶ 8, 17. Success is a Connecticut corporation that, among other things, offers its clients a tobacco loyalty program. See ECF No. 19-1 ("Decl. of Scott Tarlow") ¶ 4; Am. Compl. ¶¶ 9, 19. Success and Smart C-Stores, which is a Delaware limited liability company with its principal place of business in Connecticut,1 contend to have an agreement with Plaintiff that is the subject of this action. See Decl. of Scott Tarlow ¶¶ 38, 51; Am. Compl. ¶¶ 10, 13.
One of Plaintiff's clients is Johnson Oil, which is a Shell Oil wholesaler in Illinois and Iowa. See Am. Compl. ¶ 18. According to the Complaint, Johnson Oil informed Plaintiff in late 2018 that it wanted to implement a tobacco loyalty program through Success, which would require Success to gain access to Plaintiff's confidential information. See id. ¶ 19. At Johnson Oil's request, Plaintiff worked with Success to facilitate "two integration tests" of the tobacco loyalty program for Johnson Oil. Id. ¶ 21. Plaintiff contends that its relationship with Defendants "went no further," that Plaintiff did not provide or promise to provide Defendants its confidential information, and that it expressly refused to enter into a broad partnership with Success. See id. ¶¶ 21-23. The Complaint further states that Plaintiff requested Success to destroy all of the confidential information it had already received, but that Success refused to do so.2 See id. ¶ 24.
According to Plaintiff, however, Defendants believe that the parties entered into an oral agreement "to integrate [Plaintiff's] Fuel Rewards program with Success'[s] [tobacco loyalty] program." Id. ¶ 25. On March 11, 2019, Defendants sent Plaintiff a letter notifying it that it was in breach of this agreement and requesting a response by March 13, 2019. See ECF No. 25-1 ("Aff. of Anthony Logsdon") Ex. 4. Plaintiff responded by filing the present action for declaratory judgment on March 13, 2019, in the 116th Judicial District Court of Dallas County, Texas, see Notice of Removal Ex. A-1, and Defendants filed an action in the U.S. District Court for the District of Connecticut on March 27, 2019, alleging, among other things, antitrust violations and breach of contract claims. See Aff. of Anthony Logsdon Ex. 5 ( ).
Thereafter, Defendants removed Plaintiff's action to this Court and filed the present Motion to Dismiss for Lack of Personal Jurisdiction and Motion to Transfer Venue, which are now fully briefed and before this Court.
Federal Rule of Civil Procedure 12(b)(2) allows defendants to move to dismiss claims for lack of personal jurisdiction. The plaintiff bears the burden of making a prima facie showing that a court has personal jurisdiction over a defendant. Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 431 (5th Cir. 2014). "Proof by a preponderance of the evidence is not required." Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008) (citation omitted). In considering a motion to dismiss pursuant to Rule 12(b)(2), the court must accept the plaintiff's "uncontroverted allegations, and resolve in its favor all conflicts." Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 215 (5th Cir. 2000). The court may consider "affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery." Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). The court "must assess each defendant's contacts with the forum state individually" to determine if personal jurisdiction exists as to each defendant. See Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins., 921 F.3d 522, 543 (5th Cir. 2019) (citing Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985)).
For the reasons discussed below, the Court finds that it lacks personal jurisdiction over Defendants and grants the Motion to Dismiss for Lack of Personal Jurisdiction. Accordingly, the Court finds the Motion to Transfer as moot.
Plaintiff does not dispute that the Court lacks personal jurisdiction over Smart C-Stores. In its efforts to defeat the Motion to Dismiss, Plaintiff limits its argument to showing that the Court has personal jurisdiction over Success. See Resp. to Defs.' Mot. to Dismiss ("Resp.") 9-17. Theonly evidence before the Court concerning Smart C-Stores is Defendants' Affidavit stating that Smart C-Stores has no offices in Texas and made no relevant contact with Texas. See Decl. of Scott Tarlow ¶¶ 38-56. Thus, Plaintiff abandoned any argument that the Court has personal jurisdiction over Smart C-Stores, and did not meet its burden of making a prima facie showing of personal jurisdiction as to this Defendant. See Monkton, 768 F.3d at 431. Therefore, the Court grants Defendants' Motion to Dismiss for Lack of Personal Jurisdiction as to Smart C-Stores.
Because Texas's long-arm statute extends to the limits of federal due process, this Court has personal jurisdiction over a nonresident defendant so long as the assertion of jurisdiction comports with the Due Process Clause of the United States Constitution. See Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 101 (5th Cir. 2018). Personal jurisdiction can be general or specific. See Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001). In this case, Plaintiff concedes that the Court lacks general jurisdiction as to Success. See Resp. 7 n.3. The Court agrees that it lacks general jurisdiction over Success, because its contacts with Texas are not "so 'continuous and systematic' as to render [Success] essentially at home in [Texas]." Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Therefore, the Court will only address whether it has specific jurisdiction over Success.
In evaluating whether due process allows the exercise of specific jurisdiction, courts consider:
(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable.
Carmona v. Leo Ship Mgmt., Inc., 924 F.3d 190, 193 (5th Cir. 2019) (quoting Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d. 266, 271 (5th Cir. 2006)). "Because 'specific personal jurisdiction is a claim-specific inquiry,' '[a] plaintiff bringing multiple claims that arise out of different forum contacts of the defendant must establish specific jurisdiction for each claim.'" Inmar Rx Sols., Inc. v. Devos, Ltd., No. 18-11443, 2019 WL 4440400, at *3 (5th Cir. Sept. 16, 2019) (quoting McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009)).
A defendant has sufficient minimum contacts with the forum state if the defendant "purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there." Id. (quoting Seiferth, 472 F.3d at 271). For example, a defendant can create sufficient minimum contacts to be subject to a court's specific jurisdiction by directing tortious actions toward the forum. Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 212 (5th Cir. 1999) (). In the contract context, a defendant may be subject to specific jurisdiction if the defendant negotiates remotely with a resident of the forum state "over an extend period of time," travels to that state, and "the benefit[s] of the [contract] would be realized" in that state. Liberty Bankers Life Ins. v. Lenhard, Civ. A. No. 3:16-CV-02417-N, 2018 WL 4026339, at *5 (N.D. Tex. Apr. 9, 2018); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985) ().
In contrast, "[a] plaintiff's or third party's unilateral activities cannot establish minimum contacts between the defendant and forum state." Moncrief Oil Int'l Inc. v. OAO Gazprom, 481 F.3d 309, 311 (5th Cir. 2007) (citing Hydrokinetics, Inc. v. Alaska Mech., Inc., 700 F.2d 1026,1028 (5th Cir. 1983)). And, while "[a] single act directed at the forum state can confer personal jurisdiction so long as that act gives rise to the claim asserted," id. (citations omitted), merely contracting with a resident of a forum state does not create minimum contacts sufficient to subject the defendant to specific jurisdiction in that state. Conn Appliances, Inc. v. Williams, 936 F.3d 345, 348 (5th Cir. 2019). Similarly, merely negotiating a contract via the telephone with an entity located in the forum state "is insufficient purposeful availment to establish [specific] jurisdiction." Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d 485, 489 (5th Cir. 20...
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