Int'l Paper Co. v. Goldschmidt

• Decision Date: 25 May 2012
• Docket Number: Case No. 1:11–cv–910.
• Citation: 872 F.Supp.2d 624
• Parties: INTERNATIONAL PAPER COMPANY, Plaintiff, v. David G. GOLDSCHMIDT, Defendant.
• Court: U.S. District Court — Southern District of Ohio

872 F.Supp.2d 624

INTERNATIONAL PAPER COMPANY, Plaintiff,

v.David G. GOLDSCHMIDT, Defendant.

Case No. 1:11–cv–910.

United States District Court,

S.D. Ohio,

Western Division.

May 25, 2012.

David Kirsten Montgomery, Scott A. Carroll, Jackson Lewis LLP, Cincinnati, OH, Conrad S. Kee, Jackson Lewis LLP, Stamford, CT, for Plaintiff.

Robert Joseph Parker, Beth A. Bryan, Taft Stettinius & Hollister, Cincinnati, OH, Michael T. Morley, William G. Miossi, Winston & Strawn, Washington, DC, for Defendant.

DECISION AND ENTRY: (1) DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION; (2) DENYING DEFENDANT'S MOTION TO DISMISS FOR IMPROPER VENUE; (3) DENYING DEFENDANT'S MOTION TO CHANGE VENUE; AND (4) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM (DOC. 13)

TIMOTHY S. BLACK, District Judge.

This civil action is before the Court on Defendant David Goldschmidt's Motion to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Failure to State a Claim, or in the Alternative for Change of Venue. (Doc. 13). Defendant International Paper Company (“IPC”) filed an Opposition to Defendant's Motion to Dismiss. (Doc. 19). Defendant filed a Reply Brief in Support. (Doc. 22). Defendant's Motion is ripe.

I. BACKGROUND

Plaintiff International Paper Company (“IPC”) is a New York corporation with a principal place of business in Memphis, Tennessee. (Doc. 1, PAGEID 1). xpedx is a division of IPC that does business throughout the United States and maintains its headquarters in Loveland, Ohio. (Doc. 1, PAGEID 1–4). xpedx includes two specialty brands, one of which is Strategic Paper Group (“SPG”), which maintains its headquarters in New York City, though it also maintains offices throughout the United States. ( Id.) xpedx acquired SPG in 2007. (Doc. 19–1, PAGEID 173).

Plaintiff David Goldschmidt (“Goldschmidt”), a California resident, was an employee of SPG/xpedx. (Doc. 1). Goldschmidt's employment with SPG began in 2000 and continued after xpedx acquired SPG in 2007. (Doc. 1, Doc. 19–1). Throughout his employment, Goldschmidt resided in and worked from California. (Doc. 1). In May 2007, Goldschmidt assumed responsibility for the west region of SPG. (Doc. 19–1, PAGEID 189). Effective January 1, 2009, Goldschmidt was promoted to Vice President of SPG. (Doc. 19–1, PAGEID 186, 189). In that position, he functioned as the general manager of SPG's western region and participated in xpedx's management incentive plan. (Doc. 1, PAGEID 2).

As Vice President of SPG, Goldschmidt possessed access to confidential and trade secret information. In consideration and as a condition of employment, Goldschmidt executed an Employee Agreement Concerning Inventions, Intellectual Property, Confidential Information and Conflict of Interest (“Confidentiality Agreement”).

Beginning in mid–2011, Goldschmidt was asked to participate with a group of seven other xpedx managers on xpedx's Directed Buy team to address xpedx's future strategy for its direct buy business. Goldschmidt's participation on the Directed Buy team included frequent communication with xpedx members in Ohio via email communications, videoconferencing and teleconferencing. Members of the Directed Buy team also had access to a password protected xpedx website. In addition to communications by email, video, phone and websites, between May and October 2011, Goldschmidt attended Directed Buy meetings in person in Ohio.

In mid-October 2011, IPC contends that Goldschmidt began meeting with and discussing with xpedx sales professionals he supervised the topic of leaving xpedx and going to work for a competitor company, Midland Paper Company (“Midland”). Soon thereafter, Goldschmidt and these sales professionals purportedly met with Midland in Chicago, Illinois. On December 14, 2011, Goldschmidt abruptly resigned his position as Vice President of SPG and informed xpedx that he had accepted a position with Midland. Six other xpedx employees under Goldschmidt's direct or second-level supervision also resigned their positions with xpedx to purportedly work for Midland.

IPC now brings suit alleging that Goldschmidt: (1) breached the Confidentiality Agreement by virtue of his employment with Midland; (2) violated the Ohio Uniform Trade Secrets Act, Ohio Rev.Code § 1333.61 et seq., by allegedly disclosing IPC's trade secrets; (3) breached fiduciary duties owed to IPC; and (4) breached a duty of loyalty owed to IPC.

II. PERSONAL JURISDICTION

Goldschmidt moves dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(2), arguing that he maintained sporadic, tenuous and insignificant contacts with Ohio, and, therefore, this Court lacks personal jurisdiction over him under Ohio's long-arm statute and the Due Process Clause of the U.S. Constitution. “The party seeking to assert personal jurisdiction bears the burden of demonstrating that such jurisdiction exists.” Youn v. Track, Inc., 324 F.3d 409, 417 (6th Cir.2003) (citing Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883 (6th Cir.2002)); see also Bird v. Parsons, 289 F.3d 865 (6th Cir.2002); Schneider v. Hardesty, 669 F.3d 693 (6th Cir.2012).

In cases where plaintiff seeks to invoke this Court's jurisdiction on the basis of diversity, the Court must “examine the law of the forum state to determine whether personal jurisdiction exists.” Estate of Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 361 (6th Cir.2008) (citing Calphalon Corp. v. Rowlette, 228 F.3d 718 (6th Cir.2000)). If Ohio law authorizes jurisdiction over Defendant, the Court must then “determine whether that authorization comports with the Due Process Clause of the Fourteenth Amendment.” Id. (citing Brunner v. Hampson, 441 F.3d 457 (6th Cir.2006)); see also Schneider, 669 F.3d at 699 (stating that because “Ohio's long-arm statute is not coterminous with federal constitutional limits[,]” plaintiff “must demonstrate that both due process and Ohio's long-arm statute are satisfied”).

In the absence of an evidentiary hearing, plaintiff's “burden is merely that of making a prima facie showing that personal jurisdiction exists[,]” and the court “must consider the pleadings and affidavits in the light most favorable to the plaintiff.” Serras v. First Tenn. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir.1989) (citations omitted). Where, however, “ ‘plaintiff has received all of the discovery it sought with respect to personal jurisdiction and there does not appear to be any real dispute over the facts relating to jurisdiction,’ the prima facie ‘proposition loses some of its significance.’ ” Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir.2012) (citations omitted).

Here, neither party requested an evidentiary hearing, and while IPC was granted leave to depose Goldschmidt, such deposition apparently never occurred. Accordingly, the Court will employ the standard requiring IPC to make a prima facie showing of personal jurisdiction.

A. Ohio's Long–Arm Statute

IPC contends that Defendant is subject to Ohio's long-arm statute, Ohio Rev.Code § 2307.382, as a result of Defendant causing tortious injury in Ohio and/or by transacting business in Ohio. Specifically, Ohio's long arm statute provides that:

A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:

(1) Transacting any business in this state;

...

(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;

Ohio Rev.Code § 2307.382(A)(1) and (4).

The term “transact” used in subsection (A)(1), “encompasses ‘to carry on business' and ‘to have dealings,’ and is broader than the word ‘contract.’ ” Contech Bridge Solutions, Inc. v. Keaffaber, No. 1:11–cv–216, 2011 WL 5037210, at *7 (S.D.Ohio Oct. 24, 2011) (citing Goldstein v. Christiansen, 70 Ohio St.3d 232, 638 N.E.2d 541 (Ohio 1994); Ky. Oaks Mall Co. v. Mitchell's Formal Wear, Inc., 53 Ohio St.3d 73, 559 N.E.2d 477 (Ohio 1990)). Subsection (A)(4) of Ohio's long-arm statute requires two things: “(1) a tortious injury must occur in Ohio; and (2) defendant must have conducted a regular course of business in Ohio, or have collected substantial revenues from activities in the state.” Weiskopf Industries Corp. v. Hidden Valley Towel, Inc., Case No. 67436, 1994 WL 716342 (Ohio App. Dec. 22, 1994) (citations omitted). In support of IPC's contention that jurisdiction is proper under subsections (A)(1) and (4), IPC relies primarily on two cases: Coast to Coast Health Care Services, Inc. v. Meyerhoffer, No. 2:10–cv–734, 2012 WL 169963 (S.D.Ohio Jan. 19, 2012); and The Rightthing, LLC v. Brown, No. 3:09CV135, 2009 WL 249694 (N.D.Ohio 2009).

In Meyerhoffer, plaintiff brought suit in Ohio against two former employees, one of whom resided in Utah, after the employees “established ... a competing business[.]” Id. at *1. There, the court found that plaintiff made a prima facie showing of personal jurisdiction over the Utah defendant under subsections (A)(1) and (A)(4) where: (1) plaintiff was an Ohio corporation with its principal place of business in Ohio; (2) plaintiff negotiated defendant's employment contract over the phone from Ohio; (3) plaintiff provided defendant with “software, programming, and other tools” needed “to carry out her employment” with plaintiff; (4) “secretly conspired to start a competitor company and utilized plaintiff's ... client lists, prospective client lists, and independent contractor physician provider lists;” and (6) defendant was paid for work by plaintiff from Ohio and reported directly to a supervisor in Ohio. Id. at *3.

In The Rightthing, plaintiff, a company with a principal place of business in Ohio, sued defendant, a lifelong California resident, in Ohio following defendant's...