JKB Daira, Inc. v. OPS-Technology, LLC
| Decision Date | 27 September 2022 |
| Docket Number | 3:20-cv-1564 (SRU) |
| Parties | JKB DAIRA, INC., Plaintiff, v. OPS-TECHNOLOGY, LLC, ET AL., Defendant. |
| Court | U.S. District Court — District of Connecticut |
RULING ON MOTION TO DISMISS
This case centers on a dispute between two competitor companies both of which supply weapons and associated products to a select group of Japanese clients. The plaintiff, JKB Daira Inc., brought this action in 2020 against a number of defendants, principally alleging that certain of its senior employees had conspired with its competitors to divert lucrative contracts with its current and former customers to those competitors. Nippon Aircraft Supply (“NAS”), the only remaining defendant in the action, now moves to dismiss all remaining claims levied against it for lack of personal jurisdiction and failure to state a claim upon which relief can be granted. For the reasons that follow, the motion to dismiss is granted in part and denied in part.
JKB is a New York corporation that maintains a principal place of business in Norwalk, Connecticut. Second Amended Complaint (“SAC”), Doc. No. 96 at ¶ 2. Founded in 1987, JKB is in the business of supplying weapons and associated equipment to a specialized array of clients, including the Japanese Ministry of Defense (“MOD”), the Japan Coast Guard (“JCG”), and the Japanese National Police Agency (“NPA”), among others. Id. at ¶¶ 8-9. In order to ensure that its products meet its clients' specialized needs, JKB works closely with the MOD and JCG throughout the product development process, which can take five years or more. Id. at ¶¶ 10 -11.
At the end of that lengthy development process, the MOD issues a request for quotes (“RFQ”) for a particular product, one that, as a result of the collaborative development process, JKB is often uniquely capable of meeting. Id. at ¶ 13. After JKB submits a reply to the MOD's RFQ, the Japanese government issues a formal purchase contract for the product. Id. at ¶ 14. Only when it fulfills that contract does JKB earn back the “substantial research and development costs” it has expended during development. Id. at ¶ 16.
In 2012, JKB hired Tatsumi Fukasawa as its Manager of International Affairs. Id. at ¶ 17. In 2015, Fukasawa was promoted to Vice President of International Affairs, a role he retained until 2020. Id. As Vice President, Fukasawa was responsible for: “communicating with JKB's customers regarding current and potential future purchase orders, working on the research and development of JKB's products, serving as Administrator of JKB's computer systems, and coordinating with JKB's Japanese subsidiary.” Id. JKB avers that, as Vice President, Fukasawa had “access to JKB's trade secrets and customer lists.” Id.
In February 2014, in connection with his work for JKB and at JKB's expense, Fukasawa traveled to Japan. Id. at ¶ 25. While in Japan, and without JKB's knowledge or permission, he visited NAS's Japan office, met with its president and CEO, and entered into a consulting contract with NAS, one of JKB's competitors. Id. at ¶¶ 25, 103. The following month, Fukasawa provided NAS with his bank account information so that NAS could pay him for his services. Id. at ¶ 26. Between 2014 and 2018, Fukasawa made a number of additional trips to Japan, which were similarly sponsored by JKB. Id. at ¶ 27. During the course of those trips, Fukasawa provided NAS with documents and information relevant to “potential contracts with the MOD.” Id. On one occasion, Fukasawa gave a presentation to NAS's employees regarding the MOD's process of procuring defense equipment. Id. at ¶ 28.
In February 2017, NAS Managing Director and Senior Vice President Hiroshi Minami wrote to Fukasawa to discuss the possibility of extending the consulting contract. Id. at ¶ 29. In October of that same year, without JKB's knowledge or approval, Fukasawa and NAS entered into a written consulting contract, pursuant to which Fukasawa agreed to “offer services to [NAS] such as giving advice[] and instructions for [NAS's] operation and business planning, etc., in order to contribute to the growth of [NAS].” Id. at ¶¶ 30-31; Ex. A, Doc. No. 96-1. In turn, NAS agreed to pay Fukasawa an annual consulting fee of $100,000, with additional “incentive payments” when NAS made a profit based on advice provided by Fukasawa. SAC at ¶ 32. The contract further provided that Fukasawa could use an email address with NAS's domain while working as an employee of NAS, and would be given business cards identifying him as “Corporate Advisor, Business Development and Marketing for NAS.” Id. at ¶¶ 33-34; see also Ex. A, Doc. No. 96-1; Ex. C, Doc. No. 96-3. Fukasawa's work for NAS principally involved sales to acquire new business, maintenance of current business, gathering information from the MOD, and supporting NAS's current clients and those of its American subsidiary, Air Frame Manufacturing & Supply Co., Inc. (“AFM”). SAC at ¶ 42.
JKB alleges (“upon information and belief”) that Fukasawa entered into that contract in Connecticut. Id. at ¶ 38. In support of that allegation, JKB submits that it “found a copy of the Consulting Service Contract between NAS and Fukasawa on the desktop computer that Fukasawa used in his work for JKB in JKB's Norwalk, Connecticut office.” Id. JKB further avers that, when NAS entered into the contract with Fukasawa, NAS knew that Fukasawa was employed by JKB, knew that JKB maintained a principal place of business in Norwalk, Connecticut, and knew that Fukasawa worked for JKB in Connecticut. Id. at ¶ 20.
In addition, JKB submits that Fukasawa performed the majority of his work for NAS from JKB's Connecticut office, using a desktop computer given to him by JKB. Id. at ¶ 23. Specifically, between July 2012 and July 2020, Fukasawa exchanged over four thousand emails with NAS personnel “relating to [his] work for NAS,” copies of which JKB discovered on the desktop computer Fukasawa used in JKB's Connecticut office. Id. at ¶¶ 24, 39. In addition, Fukasawa sent monthly reports to NAS from Connecticut between 2017 and 2020. Id. at ¶ 46.
Fukasawa's work for NAS continued into 2020, even after his promotion to the role of Vice President at JKB. Id. at ¶¶ 19, 24. In connection with his work for NAS, Fukasawa sent reports to NAS “discussing opportunities for NAS to obtain contracts to sell firearms and other weapons to JKB's customers,” id. at ¶ 47, and “suggesting sales strategies, customer analyses, and opportunities for NAS to sell firearms, night vision devices, and other products sold by JKB, including to JKB's customers,” id. at ¶ 53, and disclosed to NAS confidential information about JKB's customers and products, id. at ¶ 47.
In particular, Fukasawa “informed NAS of the opportunity” to sell certain products to those customers from various suppliers that JKB worked with, including Amtec Less-Lethal Systems (“ALS”), SIG Sauer, Beretta, and SAKO. Id. at ¶¶ 47-50. Specifically, Fukasawa shared with NAS information regarding the products JKB sold from those suppliers and the customers in Japan to which it sold them. Id. Fukasawa also shared with NAS information about specific products JKB was testing or marketing, including the SmartRay X-Ray Vision Systems, see Id. at ¶ 51, and confidential information regarding certain models of SIG Sauer and Beretta firearms. Id. at ¶¶ 54-55. In addition, Fukasawa drafted “product brochures” for NAS to use in promoting its night vision devices, firearms, and ammunition - products that were also sold by JKB. Id. at ¶ 57.
In the fall of 2018, Fukasawa recommended that NAS meet with the Japan Ground SelfDefense Force to attempt to sell night vision devices and firearms - products that were also sold by JKB. Id. at ¶ 60. Acting on Fukasawa's suggestion, NAS employees arranged the sales meeting. Id. at ¶¶ 60-61. In October of that same year, Fukasawa personally attended a meeting with the JCG to discuss potential sales, and followed up the meeting with an email indicating that some of the products he was selling would be handled by NAS. Id. at ¶ 62. A few weeks later, Fukasawa sent a second email, this one vouching for NAS's credibility and recommending that the JCG explore opportunities to purchase products from NAS. Id. at ¶ 63.
In February 2018, Fukasawa, working from JKB's Connecticut office, sent a memorandum to NAS personnel providing confidential information regarding JKB's customers, including the Japan Ground Self-Defense Force, the Japan Maritime Self-Defense Force, the JCG, and the NPA, and products those customers had previously purchased from JKB, “including night vision devices, breaching kits, Beretta pistols, and SIG Sauer firearms.” Id. at ¶ 65. Fukasawa asked that the recipients of the email keep the information confidential. Id.
In June 2020, the Japan Maritime Self-Defense Force, a long-time customer of JKB, awarded NAS a ¶2,634,500 contract to sell night vision devices, id. at ¶ 66, and in November 2020, awarded NAS a ¶6,105,000 contract to sell breaching kits. Id. at ¶ 68. In October 2020, the JCG, another longtime customer of JKB, awarded NAS a ¶27,720,000 contract to sell night vision devices. Id. at ¶ 67.
In addition, JKB alleges that, in January 2020, AFM sold 10 anti-drone net gun/net launcher systems to the JCG, and again in October 2020, sold 55 of the anti-drone net gun/net launcher systems to the JCG, a product similar to one JKB had previously (and unsuccessfully) marketed to the JCG. Id. at ¶¶ 73-75. Both sales were routed through “Ginza Gun Ltd.,” a licensed Japanese consignee that had previously served as JKB's contracting agent. Id. at ¶¶ 72 -74.
JKB filed this action in 2020 against a number of defendants, and...
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