Insituform Technologies, Inc. v. Reynolds, Inc.

• Decision Date: 07 October 2005
• Docket Number: No. 4:05CV1116 CDP.,4:05CV1116 CDP.
• Citation: 398 F.Supp.2d 1058
• Parties: INSITUFORM TECHNOLOGIES, INC., Plaintiff, v. REYNOLDS, INC., et al., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

398 F.Supp.2d 1058

INSITUFORM TECHNOLOGIES, INC., Plaintiff, v. REYNOLDS, INC., et al., Defendant.

No. 4:05CV1116 CDP.

United States District Court, E.D. Missouri, Eastern Division.

October 7, 2005.

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COPYRIGHT MATERIAL OMITTED

Charles M. Poplstein, Lynn T. Reid, Thompson Coburn LLP, St. Louis, MO, for Plaintiff.

Brian E. McGovern, McCarthy and Leonard, Chesterfield, MO, David B. Vornehm, Robert J. Orelup, Drewry and Simmons, Indianapolis, IN, for Defendants.

MEMORANDUM AND ORDER

PERRY, District Judge.

Plaintiff Insituform Technologies, Inc. sued Larry Dean Purlee, along with three other defendants, on various counts after a former Insituform employee, Robert Steven Vance, left Insituform and began working for a competitor, defendant Reynolds Inliner, LLC. Insituform seeks damages on three grounds: tortious interference with a contract, misappropriation of trade secrets, and conspiracy. Purlee now moves to dismiss these claims against him for lack of personal jurisdiction. For the reasons set forth below, I will deny Purlee's motion.

Facts

Insituform, a Delaware corporation with its principal place of business in Missouri, has been engaged in the business of providing proprietary technologies and services for rehabilitating sewer, water, and other underground piping systems for over twenty years. Among the processes Insituform uses is trenchless technology, a process which allows underground pipes to be repaired from the inside, without having to dig them up and replace them. Insituform competes in the trenchless technology business with Reynolds, Inc. and its subsidiary, Reynolds Inliner, LLC, both Indiana corporations.

Robert Steven Vance worked for Insituform for over ten years.¹ During his tenure with the company, he learned of and was granted access to many of Insituform's trade secrets, including production and installation techniques and practices, employee training procedures, information concerning costs, pricing, finances, and marketing methods, and information regarding pricing and bidding strategies, margins and techniques. In May, 2002, Vance entered into a "Confidentiality, Work-Product and Non-Competition Agreement" with Insituform. By the express terms of this agreement, Vance agreed that he would not "be employed by, provide any service to, operate or acquire any ownership interest in, any business that competes with the products or services provided by [Insituform]" for one year and one month after termination of his employment.

Despite this Agreement, Vance telephoned Purlee in 2003 and again in January, 2004, seeking employment. Purlee is a Vice President of Reynolds, Inc. and an Executive Vice President of Reynolds Inliner, LLC. Purlee invited Vance to travel from Missouri to Indiana for an interview in April, 2004. On May 26, 2004, Purlee sent Vance a written offer of employment with Reynolds Inliner, LLC, as the Operations Manager in the Baytown, Texas office. Soon thereafter, Vance informed Purlee of the confidentiality and non-compete agreement he had with Insituform, and faxed Purlee a copy of the Agreement. Purlee did not rescind Vance's offer.

On or about June 14, 2004, Vance submitted his resignation to Insituform. Sometime in July or August he accepted Purlee's offer of employment and began working as the Operations Manager at Reynolds Inliner, LLC's Baytown, Texas office.

On October 18, 2004, Insituform filed a lawsuit in St. Louis County Circuit Court seeking to enforce the terms of the Agreement. In April, 2005, the state court entered a preliminary injunction against Vance, at which time Reynolds Inliner, LLC terminated Vance's employment. Insituform filed an amended complaint in state court on June 9, 2005, and the defendants removed the case to this Court on July 19, 2005. Three counts against Reynolds, Inc., Reynolds Inliner, LLC, and Purlee remain: (1) misappropriation of trade secrets in violation of the Missouri Uniform Trade Secret Act, Mo.Rev.Stat. § 417.450, et seq.; (2) tortious interference with contract; and (3) conspiracy.

Discussion

A court reviewing a motion to dismiss for lack of personal jurisdiction must engage in a two-part inquiry. First, the court must examine whether the defendant is subject to the court's jurisdiction under the state long-arm statute. Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir.1998) (citation omitted). If so, then the court must determine "whether the exercise of personal jurisdiction comports with the requirements of due process." Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693 (8th Cir.2003). When making both of these determinations, a court must review written submissions in a light most favorable to the non-moving party. Id. (citing Wines v. Lake Havasu Boat Mfg., Inc., 846 F.2d 40, 42 (8th Cir.1988) (per curiam)). Additionally, a court is permitted to consider matters outside the pleadings. Stevens, 146 F.3d at 543.

1. Missouri's Long-Arm Statute

To determine whether the Court has personal jurisdiction over Purlee, I must first consider whether Insituform "has made a prima facie showing that the claims in [its] suit fall within the scope of the Missouri long-arm statute." Stevens, 146 F.3d at 543. "United States District Courts located in Missouri are required to construe the state's long arm statute in the same manner that Missouri state courts do." Koch Supplies, Inc. v. Charles Needham Indus., 1990 WL 274485, at *2 (W.D.Mo. Nov.14, 1990) (citing Institutional Food Marketing Associates, Ltd. v. Golden State Strawberries, 747 F.2d 448 (8th Cir.1984)). Missouri courts have construed the state's long-arm statute to extend jurisdiction of the state's courts over nonresident defendants to the extent possible under the Due Process Clause. Moog World Trade Corp. v. Bancomer, 90 F.3d 1382, 1384 (8th Cir.1996) (citations omitted).

The relevant provisions of Missouri's long-arm statute read as follows:

1. Any person of firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts:

. . . . .

(3) The commission of a tortious act within this state;

. . . . .

3. Only causes of action arising from acts enumerated in this section may be asserted against a defendant in an action in which jurisdiction over him is based upon this section.

Mo.Rev.Stat. § 506.500. The phrase "commission of a tortious act within this state" has been interpreted by Missouri courts as including "extraterritorial acts which produce actionable consequences in Missouri." Harrison v. Union Pacific R.R. Co., 45 F.Supp.2d 680, 682 (E.D.Mo.1999) (citations omitted). "A single tortious act may be sufficient to justify a Missouri court's exercise of personal jurisdiction over a nonresident defendant." Golden State Strawberries, 747 F.2d at 453. Because the facts establishing jurisdiction under this statutory provision are identical to the merits of the tort claim itself, a plaintiff must make a prima facie showing that the defendant has committed the tort alleged in the complaint in order to survive a motion to dismiss for lack of personal jurisdiction. Peabody Holding Co., Inc., et al. v. Costain Group PLC, et al., 808 F.Supp. 1425, 1433 (E.D.Mo.1992) (citation omitted).

Insituform brings three tort claims against Purlee in his individual capacity. First, Insituform alleges that Purlee misappropriated trade secrets in violation of the Missouri Uniform Trade Secret Act, Mo.Rev.Stat. § 417.450, et seq. The statute defines "misappropriation" to include the "[a]cquisition of a trade secret of a person by another person who knows or has reason to know that the trade secret was acquired by improper means." Mo.Rev.Stat. § 417.453(2). "Improper means" includes a "breach or inducement of a breach of a duty to maintain secrecy." Mo.Rev.Stat. § 417.453(1). To make out a prima facie case of misappropriation against Purlee, Insituform is not required to show that Purlee personally accepted, used and/or disclosed Insituform's trade secrets. See Grothe v. Helterbrand, 946 S.W.2d 301, 304-05 (Mo.Ct.App.1997). Rather, Insituform must simply provide sufficient evidence from which a jury could reasonably infer that Purlee aided and abetted the corporation's acts of misappropriation. Id.

Insituform has met this standard. Insituform's allegations portray Purlee as the in-house architect of a plan that resulted in the transfer of Insituform's trade secrets to Reynolds Inliner, LLC through the hiring of Vance. According to the complaint, Purlee was well aware of the knowledge and expertise Vance possessed in trenchless technology, as well as the confidential nature of this information and the non-compete agreement. Nevertheless, Purlee did not retract his offer of employment to Vance. The complaint further alleges that once Vance began working for Reynolds Inliner, LLC, he shared confidential information with his new employer. While Insituform does not allege, by name, that Purlee accepted, used, and/or disclosed Insituform's trade secrets, it does present sufficient allegations which, if proved, could lead a reasonable jury to conclude that Purlee aided and abetted the alleged acts of misappropriation.

Second, Insituform alleges that Purlee tortiously interfered with Vance and Insituform's "Confidentiality and Non-Compete Agreement." Under Missouri law, a claim of tortious interference with a contract consists of the following elements: (1) a contract; (2) defendant's knowledge of the contract; (3) intentional interference by the defendant inducing or causing a breach of the contract; (4) absence of justification; and (5) damages resulting from the defendant's conduct. Community Title Co. v. Roosevelt Fed. Sav. and Loan Ass'n, ...