Foundry v. Trade Secret Web Printing, Inc.
| Decision Date | 25 July 2012 |
| Docket Number | 11 Civ. 9553 (ALC) (KNF) |
| Parties | The Foundry, A Print Communications Company LLC a Virginia limited liability company, Plaintiff, v. Trade Secret Web Printing, Inc., a Canadian corporation, and Bashir "Dave" Harb, an individual, Defendants. |
| Court | U.S. District Court — Southern District of New York |
INTRODUCTION
Plaintiff The Foundry brings the present suit against Defendant Trade Secret Web Printing, Inc. and Bashir "Dave" Harb alleging breach of contract, tortious interference with existing business relationships, defamation, prima facie tort, and negligence. Plaintiff asserts that this Court has jurisdiction over Defendants pursuant to the federal courts' diversity jurisdiction, 28 U.S.C. § 1332. Defendants challenge the Court's personal jurisdiction and move for dismissal of the Complaint pursuant to Rules 12(b)(2) of the Federal Rules of Civil Procedure, or in the alternative, to dismiss the Complaint pursuant to the doctrine of forum non conveniens. Defendants also move to dismiss four of the five counts in the Complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). On June 7,2012, Plaintiff moved for an order of pre-judgment attachment, for which a hearing was held on June 29,2012.
For the reasons stated below, the Court denies Defendant Harb's motion to dismiss for lack of personal jurisdiction, but grants Defendants' motion to dismiss the Complaint pursuant to the doctrine of forum non conveniens. Accordingly, Plaintiff's motion for an order of pre-judgment attachment is moot.
The following facts are taken from the Complaint unless otherwise indicated.
Plaintiff is a Virginia limited liability company named The Foundry, A Print Communications Company, LLC ("The Foundry" or "Plaintiff"). The Foundry is a global printing company that serves the printing needs of corporate, travel, hospitality, publishing, automotive, college, university, and other markets. The Foundry produces books, magazines, directories, packaging, security-printed items and other forms of media.
Defendant is a Canadian corporation located in Toronto named Trade Secret Web Printing, Inc. ("Trade Secret"). Defendant, Bashir "Dave" Harb ("Harb") is a principal of Trade Secret. Trade Secret handles printing for customers across the world, including those located in New York State.
On or about July 15, 2010, Michael Cialdella ("Cialdella"), a principal of The Foundry, emailed a request to Trade Secret in Toronto for a quote on a potential print order of 20,000 magazines to be shipped to locations in Virginia and New York. (Affidavit of Bashir Harb at f 9-10, ECF #14 ("Harb's Aff.")). Pre-order discussions took place via email and telephone over the course of the next two to three months between Cialdella in Virginia and Trade Secret in Canada. (Harb's Aff at f 9.) This agreement was memorialized on September 9, 2010, when The Foundry issued a print order to Trade Secret outlining the terms between the parties and allof the pertinent details of the project (the "Print Order"). Pursuant to the terms of the Print Order, The Foundry agreed to pay $43,000 to Trade Secret.
The Foundry hired Trade Secret for the sole purpose of printing an order for a new client of The Foundry's, The American Academy of Hospitality Services ("AAHS"). AAHS hired The Foundry on August 1, 2010 to print a total of 20,000 magazines of the Star Diamond World publication Issue No. 6. (the "Project").1 The Foundry viewed the Project as a tremendous opportunity to showcase its services for a new, highly-profitable customer. AAHS agreed to pay The Foundry $50,100 in order to complete the printing of the Project.
The Print Order between The Foundry and Trade Secret contained a clause prohibiting Trade Secret from soliciting The Foundry's customers (the "non-solicitation clause"). This clause provided:
By reviewing the specifications/supplying a quote, the printer agrees NOT to contact directly or indirectly the above client without written authorization, for as long as the client above remains a Foundry account/prospect and for three years after. Under penalty of undermining The Foundry, we will hold you liable for any potential losses associated with your contact and you will be responsible for any legal fees incurred by The Foundry.
Although the Print Order (attached to the Complaint as Exhibit 2, ECF #1-1) does not expressly mention AAHS (other than noting "Project #AH-01," which presumably refers to AAHS), The Foundry conveyed to Trade Secret the importance of the Project, and there is no indication that Trade Secret was unaware that the Project was for AAHS since Trade Secret shipped the magazines to AAHS.
Between September 9,2010, and September 22,2010, The Foundry attempted to communicate with Trade Secret concerning the latter's progress on the Project. Trade Secret also ignored The Foundry's requests for certain information important to successfully printingthe magazines. Trade Secret failed to deliver the Project by the September 22, 2010 deadline. Between September 22, 2010 and September 27, 2010, Trade Secret ignored The Foundry's repeated requests for updates on the Project's status. On September 28, 2010, Trade Secret admitted to outsourcing a portion of the Project and that Trade Secret's outside vendor had yet to begin work because that vendor's outside supplier had not been paid.
On October 1, 2010, Trade Secret shipped some, but not all, of the magazines directly to AAHS in New York. AAHS immediately contacted The Foundry to complain of numerous problems with the printing. In order to try and salvage The Foundry's business relationship with AAHS, Cialdella traveled to New York City on October 5, 2010, in order to meet with AAHS representatives and to ensure them that the problems with the magazines would be rectified. Cialdella also traveled to Trade Secret's facilities in Toronto for an explanation on the status of the Project, because Trade Secret was failing to communicate with The Foundry. The Foundry determined that the additional shipments had not shipped because Trade Secret failed to fully pay its vendor for a portion of the Project. Cialdella also paid Trade Secret's vendor for its work so that the Project could be completed. Nevertheless, Trade Secret did not deliver the full balance of the magazines until October 20, 2010, and even then, many of the publications allegedly were of poor quality or contained errors and inaccuracies. AAHS and The Foundry incurred additional costs to accommodate the new delivery deadlines, all of which Trade Secret failed to meet. Ultimately, as a result of the many errors associated with the Project, AAHS failed to pay The Foundry for its work on the Project and for subsequent work.
The Complaint also alleges that Trade Secret and Harb (collectively, "Defendants"), who had access to the names of The Foundry's various existing customers and prospects, proceeded, almost immediately and without authorization, to directly solicit these customers and prospectsin New York City and elsewhere. The Foundry specifically advised Defendants that they could not even contact AAHS unless Cialdella was out of the country and if The Foundry was not immediately available to communicate with AAHS. And even then, Trade Secret could only update AAHS as to the status of the Project. At some point "not long after" the failure of the Project, Trade Secret and Harb contacted AAHS, claiming that The Foundry was to blame for the problems with the Project and referred to The Foundry as "crooks," a "bad" printing company, and "other words to this effect."2 As a result, AAHS decided to utilize the services of Trade Secret and another printing company for its printing needs. Additionally, AAHS has threatened The Foundry with legal action due to the alleged loss of revenue from advertisers who were disappointed with the quality of the publications.
The Complaint also alleges that Defendants contacted an existing customer of The Foundry, Sunny Day Guides ("Sunny Day"), and made similar statements as those made to AAHS. The Foundry enjoyed annual net revenues of $75,000 due to its relationship with Sunny Day, which consisted of printing the travel guides for various destinations, including Branson, the Smoky Mountains, Myrtle Beach, Ocean City, the Outer Banks and Colonial Williamsburg. However, as a result of the Defendants' comments, Sunny Day has refused to provide printing jobs to The Foundry.
On December 23, 2011, The Foundry sued Trade Secret and Harb in the Southern District of New York. Although Trade Secret concedes that New York has personal jurisdiction over it, Harb argues that he is not individually subject to personal jurisdiction in New York. Both defendants additionally move to dismiss all the causes of action except for breach of contractpursuant to Fed. R. Civ. P 12(b)(6). Finally, in the alternative, defendants move to dismiss this ease under the doctrine of forum non conveniens. For its part, The Foundry opposes these motions, and petitions the Court to attach defendants' assets pursuant to Fed. R. Civ. P. 64 and C.P.L.R. §6201.
"When responding to a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). Where, as here, a court relies on pleadings and affidavits, rather than conducting a "full-blown evidentiary hearing," "the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant." Id. ).3 "[U]ntil such a hearing is held, a prima facie showing suffices,...
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