Fastpath, Inc. v. Arbela Techs. Corp.

• Decision Date: 25 July 2014
• Docket Number: No. 13–2585.,13–2585.
• Citation: 760 F.3d 816
• Parties: FASTPATH, INC., Plaintiff–Appellant v. ARBELA TECHNOLOGIES CORPORATION, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

760 F.3d 816

FASTPATH, INC., Plaintiff–Appellant
v.
ARBELA TECHNOLOGIES CORPORATION, Defendant–Appellee.

No. 13–2585.

United States Court of Appeals,
Eighth Circuit.

Submitted: April 17, 2014.
Filed: July 25, 2014.

[760 F.3d 818]

Stephen H. Locher, argued, Des Moines, IA, for Plaintiff–Appellant.

Amanda G. Jansen, argued, Des Moines, IA, (Edward W. Remsburg, Des Moines, IA, on the brief), for Defendant–Appellee.

Before LOKEN and MURPHY, Circuit Judges, and PERRY, District Judge. ¹

PERRY, District Judge.

Fastpath, Inc. sued Arbela Technologies Corp. for breach of a mutual confidentiality agreement. Arbela moved to dismiss for lack of personal jurisdiction. The district court ² dismissed. Fastpath appeals.

[760 F.3d 819]

Having jurisdiction under 28 U.S.C. § 1291, we affirm.

I

Fastpath, an Iowa corporation, develops and markets security software. Arbela is a California services and software corporation offering security software. Arbela has no office or employees in Iowa and conducts no business there.

After an Arbela employee saw a Fastpath display at a trade show in Atlanta, Georgia in 2010, Arbela emailed Fastpath in Iowa about the possibility of pursuing potential business opportunities together. In October of 2011, Arbela's President and CEO Nima Bakhtiary visited Fastpath's booth at a trade show in Las Vegas, Nevada and inquired about some of its software tools. In March of 2012, Bakhtiary and Fastpath's Vice President Andy Snook were both guest speakers at a conference in Houston, Texas. After the conference, they discussed a potential partnership, and on May 7, 2012, Bakhtiary emailed Snook and proposed a conference call to discuss each company's business capabilities. Snook agreed, and he and Bakhtiary exchanged emails to schedule the conference call.

The call took place on May 21, 2012, between Snook, who was in Iowa, and Bakhiarty, who was not, and lasted about 30 minutes. During the call, the parties agreed to a “show and tell” webinar. Snook then emailed Arbela to schedule the webinar. Attached to Snook's email was a proposed confidentiality agreement with a covenant not to compete. Arbela requested that the covenant be made mutual. Fastpath agreed, made the proposed changes to the agreement, and emailed it to Arbela. Arbela executed the agreement (“Agreement”), and then Fastpath signed it in Iowa.

The Agreement recites that its purpose is to facilitate the exchange of information “for the purpose of evaluating and negotiating a possible investment, acquisition, divestiture, partnership and/or joint venture transaction between” Arbela and Fastpath. The Agreement contains a confidentiality provision and a three-year covenant not to compete that is unlimited in geographic scope. It also provides that it “shall be construed and interpreted in accordance with the laws of the state of Iowa, without giving effect to its conflict of law provisions.” The Agreement does not contain a forum selection clause.

Instead of the webinar, Arbela attended a sales presentation made by Fastpath in Seattle, Washington to prospective customers. Arbela then emailed Fastpath about its potential client Hexcel. Fastpath discovered that Arbela was marketing a new product to Hexcel as an alternative to one of Fastpath's products.

On February 20, 2013, Fastpath's sales director participated in a conference call with Arbela at Arbela's request. The next day, Fastpath watched from Iowa an interactive, public webinar presentation hosted by Arbela. During this webinar, Arbela discussed a product that Fastpath claims is in direct competition with one of its products, allegedly in breach of the Agreement. The parties never did any business together, and Arbela denies that any confidential information was ever exchanged under the Agreement.

Fastpath sued Arbela in Iowa state court for allegedly breaching the Agreement's covenant not to compete. Arbela removed the action to federal district court and moved to dismiss for lack of personal jurisdiction. The district court granted the motion and dismissed the action, concluding that it lacked personal jurisdiction over Arbela.

II

“We review personal jurisdiction issues de novo.”

[760 F.3d 820]

K–V Pharm. Co. v. J. Uriach & CIA, S.A, 648 F.3d 588, 591(8th Cir.2011). When personal jurisdiction is challenged by a defendant, the plaintiff bears the burden to show that jurisdiction exists. K–V Pharm., 648 F.3d at 591–92; Viasystems, Inc. v. EBM—Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 592 (8th Cir.2011); Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090 (8th Cir.2008); Dever v. Hentzen Coatings, 380 F.3d 1070, 1072 (8th Cir.2004); Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir.2003). To successfully survive a motion to dismiss challenging personal jurisdiction, a plaintiff must make a prima facie showing of personal jurisdiction over the challenging defendant. K–V Pharm., 648 F.3d at 591 (“To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that personal jurisdiction exists....”); Steinbuch v. Cutler, 518 F.3d 580, 585 (8th Cir.2008) (“To survive a motion to dismiss, the plaintiff must state sufficient facts in the complaint to support a reasonable inference that defendants may be subjected to jurisdiction in the forum state.”); Epps, 327 F.3d at 647; Clune v. Alimak AB, 233 F.3d 538, 541 (8th Cir.2000). A plaintiff's prima facie showing “must be tested, not by the pleadings alone, but by affidavits and exhibits supporting or opposing the motion.” K–V Pharm., 648 F.3d at 592 (quoting Dever, 380 F.3d at 1072–73). Where no hearing is held on the motion, we must view the evidence in a light most favorable to the plaintiff and resolve factual conflicts in the plaintiff's favor; however, the party seeking to establish the court's personal jurisdiction carries the burden of proof and that burden does not shift to the party challenging jurisdiction. Epps, 327 F.3d at 647.

“Personal jurisdiction can be specific or general.” Viasystems, 646 F.3d at 593. Fastpath argues only that Arbela is subject to specific jurisdiction in Iowa. “Specific jurisdiction refers to jurisdiction over causes of action arising from or related to a defendant's actions within the forum state....” Miller, 528 F.3d at 1091 (quoting Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 819 (8th Cir.1994)) (internal quotation marks omitted). “Specific personal jurisdiction can be exercised by a federal court in a diversity suit only if authorized by the forum state's long-arm statute and permitted by the Due Process Clause of the Fourteenth Amendment.” Dairy Farmers of America, Inc. v. Bassett & Walker Int'l, Inc., 702 F.3d 472, 475 (8th Cir.2012) (quoting Viasystems, 646 F.3d at 593). “Because Iowa's long-arm statute ‘expands Iowa's jurisdictional reach to the widest due process parameters allowed by the United States Constitution,’ our inquiry is limited to whether the exercise of personal jurisdiction comports with due process.” Wells Dairy, Inc. v. Food Movers Int'l, Inc., 607 F.3d 515, 518 (8th Cir.2010) (quoting Hammond v. Florida Asset Fin. Corp., 695 N.W.2d 1, 5 (Iowa 2005)).

Due process requires that a non-resident have minimum contacts with the forum state such that the maintenance of the lawsuit does not offend traditional notions of fair play and substantial justice. World–Wide Volkswagen v. Woodson, 444 U.S. 286, 291–92, 100 S.Ct. 559, 564–65, 62 L.Ed.2d 490 (1980); Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945); Guinness Import Co. v. Mark VII Distribs., Inc., 153 F.3d 607, 614 (8th Cir.1998). Minimum contacts is based on the notion that “those who live or operate primarily outside a State have a due process right not to be subjected to judgment in its courts as a general matter.” J. McIntyre Mach., Ltd. v. Nicastro, ––– U.S. ––––, 131 S.Ct. 2780, 2787, 180 L.Ed.2d 765 (2011). A defendant's contacts with the forum state must be sufficient so that a non-resident defendant should reasonably anticipate being

[760 F.3d 821]

haled into court there. World–Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567; Stanton v. St. Jude Med., Inc., 340 F.3d 690, 694 (8th Cir.2003); Epps, 327 F.3d at 648. Sufficient minimum contacts requires some act by which the defendant “purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” J. McIntyre, 131 S.Ct. at 2787 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958)); see Romak USA, Inc. v. Rich, 384 F.3d 979, 984 (8th Cir.2004).

The “purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as the result of random, fortuitous, or attenuated contacts or of the unilateral activity of another party or a third person.” Stanton, 340 F.3d at 693–94 (quoting Burger King v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985)). “For a State to exercise jurisdiction consistent with due process, the defendant's suit-related conduct must create a substantial connection with the forum State.” Walden v. Fiore, ––– U.S. ––––, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014). This means that “the relationship must arise out of contacts that the defendant hims...