M3 USA Corp. v. Hart
| Decision Date | 29 January 2021 |
| Docket Number | Civil Action No. 20-5736 |
| Citation | 516 F.Supp.3d 476 |
| Court | U.S. District Court — Eastern District of Pennsylvania |
| Parties | M3 USA CORPORATION v. Karie HART, et al. |
Brad W. Goldstein, Eric A. Welter, Welter Law Firm, P.C., Ashburn, VA, Jared Pickell, Buchanan Ingersoll & Rooney PC, Philadelphia, PA, for M3 USA Corporation.
A. Michael Weber, Miguel A. Lopez, Littler Mendelson, P.C., New York, NY, Aaron J. Creuz, Philadelphia, PA, for Karie Hart, et al.
Courts may only exercise jurisdiction over persons consistent with due process. Confirming the remote nature of many sales positions particularly during COVID-19 mitigation, we increasingly review theft of trade secret cases brought by Pennsylvania employers suing departed employees working from their non-Pennsylvania homes who join a competitor in yet another state after allegedly taking the Pennsylvania employer's trade secrets and confidential information. The Pennsylvania employer alleges its former sales executive and her new employer – neither of whom reside in Pennsylvania – harm it in Pennsylvania by first taking and then using trade secrets to induce customers to hire the competitor. We today first decide whether we may exercise personal jurisdiction over a sales executive working almost exclusively from her New Jersey home. We must also decide whether we can also exercise personal jurisdiction over her new Georgia employer allegedly directing her to solicit her former clients by possibly breaching confidentiality covenants with her former Pennsylvania employer. While we lack general personal jurisdiction over both the New Jersey sales executive and her current Georgia employer, we may exercise specific personal jurisdiction consistent with due process over the former employer's contract and tort claims against its former sales executive living in New Jersey. We may also exercise personal jurisdiction over all claims against the Georgia competitor now employing the New Jersey sales executive except for a claim of tortious interference with contracts with former employees residing outside of Pennsylvania. The Pennsylvania employer also states contract and tort claims subject to further discovery.
M3 USA Corporation, headquartered in this District and incorporated in Delaware, provides market research recruitment, data collection, and support services in the healthcare industry and to pharmaceutical companies in the United States, Europe, and Asia.2 M3 contacts potential clients who in turn request "bids and quotes for specific projects."3 M3 calculates its bids through the use of "confidential and proprietary formulas."4 M3 considers its bid-calculating formulas, pricing information, and client information to be proprietary trade secrets.5 M3 invests time and expenses into obtaining and developing this confidential and proprietary information, which it stores on password-protected networks, servers, and equipment.6 M3 requires persons with access to this information to sign confidentiality and non-disclosure agreements.7
Ms. Hart signs a Proprietary Agreement and a Confidentiality Agreement.
M3 managed its business from its Washington, D.C. headquarters in 2009 when it first learned of Karie Hart.8 Ms. Hart sought a position with M3 and identified her boyfriend's Philadelphia address on her resume even though she then lived in Delaware.9 M3 extended her offer addressed to this Philadelphia address.10 Ms. Hart moved to Shamong, New Jersey before accepting M3's offer and has lived there ever since.11
On May 29, 2009, M3 hired Karie Hart as an Inside Sales Manager to begin June 1, 2009.12 Upon accepting her employment offer, Ms. Hart signed M3's Proprietary Information and Inventions Agreement ("Proprietary Agreement"), agreeing to "hold in confidence and not disclose or, except within the scope of [her] employment with company, use any Proprietary information."13 The Proprietary Agreement did not have a forum selection clause but did have a New York choice of law provision.14 Ms. Hart also signed M3's Confidentiality and Non-Solicitation Agreement ("Confidentiality Agreement") as part of her 2010 Commission Plan.15
M3 agreed to pay Ms. Hart with commission from her sales and provide her access to industry information not generally known by the public.16 In exchange, M3 placed a series of restrictions on Ms. Hart designed to protect its confidential information. For example, Ms. Hart agreed to "hold all of the Company's Trade Secrets and Proprietary Information in a fiduciary capacity for the benefit of the Company and to safeguard all such Trade Secrets and Proprietary Information" at all times during and after her employment with M3.17 Ms. Hart agreed she would not directly or indirectly disclose an M3 Trade Secret or Proprietary Information to an outside third party or entity unless the disclosure is in a good faith performance of her duties.18 She agreed she may not "contact, call upon, encourage or solicit on behalf of a competitive business ... any existing or prospective client or customer of [M3], who [she] serviced, or otherwise developed a relationship with, as a result of [her] employment with [M3], nor will [she] attempt to divert or take away from [M3] the business or any such client or customer" while working for M3 and for one year after leaving M3 for any reason, defined as the Restricted Period.19
Ms. Hart agreed the Restricted Period would extend "for a period of time equal to the period of time during which [she] breached the agreement."20 She also agreed M3 would be entitled to "immediate relief," including "a decree for specific performance, a temporary or permanent injunction, equitable accounting of earnings, profits and other benefits arising from the violations."21 Ms. Hart agreed to provide new employers with a copy of the Confidentiality Agreement.22 The parties identified a Washington, D.C. choice of law provision but no forum selection clause.23
Ms. Hart's employment with M3.
Ms. Hart began working for M3 on June 1, 2009.24 M3 moved its principal place of business into this District (Fort Washington) in 2012.25 M3's Director of Human Resources swears, "[m]ajor company functions are performed at M3's Fort Washington headquarters such as: The Human Resources Department, the Corporate Department, the corporate Finance Department, the IT department, the Marketing Department, and Operations."26
Ms. Hart worked from her New Jersey home which is about fifty miles from M3's Fort Washington headquarters.27 Ms. Hart swears she would visit the Fort Washington office three to four times a year.28 She requested and received a key fob in 2020 to access the Fort Washington headquarters.29 Ms. Hart represented M3 with customers across the United States, including in California, Connecticut, Delaware, Washington, D.C., Florida, Georgia, Idaho, Illinois, Maryland, Minnesota, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, South Carolina, Utah, Texas, Virginia, and Wisconsin.30 She also serviced M3's international clients, including in India, Germany, France, the United Kingdom, Spain, Italy, Sweden, Norway, Finland, Denmark, and Japan.31 She works with M3 employees and supervisors in several different states and countries, including New York, New Jersey, Texas, North Carolina, and Pennsylvania.32 The parties dispute how frequently Ms. Hart interacted with her Pennsylvania supervisor Jim Anderson.33
M3 provided Ms. Hart with confidential and proprietary information during her tenure as Inside Sales Manager.34 M3 promoted Ms. Hart to the position of Senior Account Manager in March 2014.35 Within nine months, M3 again promoted Ms. Hart to a Senior Vice President of Sales.36 In this senior role, Ms. Hart oversaw M3's BluePrint Research Group Account and served as the primary contact for BluePrint Research Group.37
On December 19, 2016, M3 and BluePrint Research Group entered into a Market Research Master Services Agreement (BluePrint Master Agreement), allowing M3 to provide healthcare market research services to BluePrint Research Group. The BluePrint account produced a "steady and increasing revenue stream" between 2016 and 2019.38
M3 senior employees resign from M3 to work with competitor in 2020.
Atlas Primary, Inc. is a healthcare primary research company providing similar services as M3, occasionally to the same clients.39 Atlas is incorporated in Delaware and headquartered in Georgia.40
On January 1, 2020, M3's Chief Revenue Officer Indrani DasGupta resigned to become Atlas's Chief Executive Officer.41 Ms. DasGupta is a Texas resident. Ms. DasGupta began "poaching M3's current employees and clients" shortly after she accepted this position despite knowing of M3's confidentiality and restrictive covenant agreements with employees.42
About six months later, M3 Project Manager Savanah Haunert from Oklahoma resigned from M3. She worked on the BluePrint account. She joined Ms. DasGupta at Atlas as Director of Market Research Operations.43
Sometime between February 2020 and June 2020, Ms. DasGupta recruited Ms. Hart from New Jersey to leave M3, join Atlas, and bring M3's BluePrint account with her.44 M3's activity logs on Ms. Hart's username in the M3 Market Research system reveal Ms. Hart's "unusual and increased" access to information between February 2020 and May 2020.45 Between April 2020 and July 2020, M3's BluePrint bids experienced a "substantial reduction" each month, and BluePrint bids became significantly lower when compared to BluePrint bids between April 2019 and July 2019.46 From 2019 to 2020, M3 calculated a 7.69% "win rate" reduction for BluePrint bids, forty-two less bid counts for BluePrint projects, and a drop in average quote count on BluePrint bids.47 M3 attributes part of its lost business to BluePrint choosingAtlas during this time.48
Ms. Hart resigns from M3 on July 30, accesses its confidential information on July 31, and...
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