MaxLite, Inc. v. ATG Elecs., Inc.

Decision Date24 June 2016
Docket NumberCivil Action No. 15-1116
Citation193 F.Supp.3d 371
Parties MAXLITE, INC., a New Jersey Corporation, f/k/a SK America, Inc., d/b/a MaxLite, Plaintiff, v. ATG ELECTRONICS, INC., James D. Steedly, Sophia C. Galleher, and Matthew Kim, Defendants.
CourtU.S. District Court — District of New Jersey

Peter S. Pearlman, Erika Rochelle Piccirillo, Joseph Bernard Brown, Kelly Magnus Purcaro, Cohn, Lifland, Pearlman, Herrmann & Knopf, LLP, Saddle Brook, NJ, for Plaintiff.

Alexander Friedman, Westport, CT, Shari Amster, Law Office of Shari Amster, Philadelphia, PA, Jae Yoon John Kim, Pashman Stein PC, Hackensack, NJ, for Defendants.

OPINION FOR PUBLICATION

John Michael Vazquez, United States District Judge.

This matter comes before the Court on Defendant ATG Electronics, Incorporated's ("ATG") supplemental motion to dismiss for lack of personal jurisdiction or, alternatively, to transfer.1 This case concerns allegations that ATG improperly interfered with the contractual relationship between Plaintiff MaxLite, Incorporated ("Plaintiff" or "MaxLite") and three of its employees, when ATG hired the employees and used them to compete with MaxLite. ATG and MaxLite are business competitors. All three employees had agreements with MaxLite, which contained non-competition, non-disclosure, and non-solicitation provisions. The agreements also provided that disputes would be resolved in New Jersey. ATG was aware of the agreements and their key components before hiring the employees. For the reasons stated below, the motion is denied.

I. BACKGROUND
A. Procedural Background

On February 12, 2015, MaxLite filed the initial Complaint in this matter against Defendants Sophia C. Galleher ("Galleher"), Matthew Kim ("Kim"), James D. Steedly ("Steedly") (together, "Employee Defendants"), and ATG. D.E. 1.2 On June 23, 2015, MaxLite filed an Amended Complaint. D.E. 87.3 The eight-count Amended Complaint asserts the following causes of action: Count I—Breach of Contract, Count II—Breach of Implied Covenant of Good Faith and Fair Dealing, Count III—Conversion and Misappropriation, Count IV—Unfair Competition/ Breach of Duty of Loyalty, Count V—Tortious Interference of Contractual Relationships, Count VI—Tortious Interference of Present and Prospective Business Advantage, Count VII—Civil Conspiracy, and Count VIII—Unjust Enrichment. AC ¶¶ 91-129. The current motion concerns only those counts brought against ATG: Counts V, VI, VII and VIII.

On March 12, 2015, prior to the filing of the Amended Complaint, ATG and the Employee Defendants moved to dismiss the Complaint for lack of personal jurisdiction or, in the alternative, to transfer the case to the Central District of California. D.E. 17. Oral argument was held on April 21, 2015 before Judge Wigenton. D.E. 56. Judge Wigenton denied the motion as to the Employee Defendants, finding their contacts with the State of New Jersey sufficient to allow the court to exercise in personam jurisdiction over them. D.E. 63 ¶ 1. However, Judge Wigenton found that MaxLite had not presented sufficient evidence to meet its burden of showing that ATG had sufficient contacts for purposes of personal jurisdiction. Id. ¶ 2. Yet, the Court permitted Plaintiff to conduct limited jurisdictional discovery on the issue. Id.4 Judge Wigenton denied the motion to transfer as to the Employee Defendants and held in abeyance her ruling as to ATG pending the outcome of the discovery. D.E. 56.5

ATG's primary argument is that it does not have sufficient contacts with New Jersey to subject it to either specific or general personal jurisdiction. ATG contends that even if it was subject to the Court's jurisdiction, it would be unreasonable to require ATG to defend itself in New Jersey and asks the Court to transfer this case to the Central District of California. Plaintiff responds that the jurisdictional discovery demonstrates that ATG does, in fact, have sufficient contacts with this forum, subjecting it to both specific and general jurisdiction here. Plaintiff further urges this Court to reject ATG's motion to transfer venue due to, among other things, Judge Wigenton's prior ruling denying transfer.

B. Factual Background6
The Parties

MaxLite is a New Jersey corporation engaged in the business of designing, engineering, developing, manufacturing, and distributing energy efficient lighting products. AC ¶¶ 1, 10. MaxLite's headquarters are located in West Caldwell, New Jersey. Id. ¶ 1. MaxLite specializes in the conversion of traditional light sources to light emitting diode ("LED") products, including compact fluorescent lamps. Id. ¶ 10.

The President and CEO of MaxLite, Yon W. Sung ("Sung") described its business activities in New Jersey as follows:

MaxLite is a New Jersey company: one hundred percent (100%) of MaxLite's corporate decisions are made in New Jersey; sixty-five percent (65%) of its shipping and assembly work is performed in New Jersey; ninety percent (90%) of its Product Management and Product Engineering work is performed in New Jersey; one hundred percent (100%) of its Marketing is performed in New Jersey; one hundred percent (100%) of its IT work is performed in NJ; ninety percent (90%) of its customer service work is performed in New Jersey; ninety-five percent (95%) of its warrant service work is performed in New Jersey; one hundred percent (100%) of its accounting and financing work is performed in New Jersey; and seventy-three (73) employees work at its headquarters in New Jersey.

Sung Decl. ¶ 9.7 While MaxLite maintains an office in California, the office is "responsible for less than ten percent (10%) of product development, testing, and certification, and less than sixteen percent (16%) of total company sales." Id. ¶ 23.

ATG is incorporated and headquartered in California, and is a direct competitor of MaxLite. Id. ¶ 6. Since at least 2013, ATG has "sought to gain a competitive advantage in the niche LED lighting marketplace." Id. ¶ 79.

Defendant Steedly was hired by MaxLite on or about September 25, 2009 as its Director of Engineering. AC ¶ 15. Steedly's employment was conditioned on his entering into a written Proprietary Information Agreement (the "Agreement").8

Id. ¶ 18. Initially, Steedly worked for MaxLite at its headquarters in New Jersey. Id. ¶ 16. As Director of Engineering, Steedly helped transition customers from their use of traditional light sources, including researching and designing products to fit the customers' needs. Id. ¶ 15. At Steedly's request, he was relocated to MaxLite's office in Anaheim, California. Id. ¶ 16. Steedly remained a MaxLite employee until his resignation on October 20, 2014, thereafter joining ATG. Id. ¶ 21. Plaintiff alleges that Steedly violated the Agreement when he stole and destroyed confidential information, worked for ATG, and solicited other MaxLite employees to work for ATG. Id. ¶¶ 22-39.

Defendant Galleher was hired by MaxLite on or about May 22, 2012 as its Strategic Marketing and Business Development Analyst. Id. ¶ 40. Like Steedly, Galleher's employment was conditioned on her signing the Agreement. Id. ¶ 45. Galleher was primarily responsible for coordinating and updating LED market trends, product development, and marketing strategies. She was also involved with installation, rebate, and incentive programs. Id. ¶ 42. Galleher worked in MaxLite's New Jersey office until July 2014 when, at her request, she was transferred to MaxLite's office in California and promoted to Product Research and Development Associate. Id. ¶¶ 41, 43. Galleher remained a MaxLite employee until her resignation on October 24, 2014, just four days after Steedly's resignation, and thereafter joined ATG. Id. ¶ 48. Plaintiff alleges Galleher stole confidential information from MaxLite, worked directly for ATG, and solicited MaxLite employees to leave MaxLite, all in violation of the Agreement. Id. ¶¶ 49-60.

Defendant Kim was hired by MaxLite on or about July 5, 2013 as its National Project Sales Manager. Id. ¶ 61. Kim also signed the Agreement with MaxLite. Id. ¶ 65. During his employment with MaxLite, Kim worked both remotely, from his home in Georgia, and occasionally from MaxLite's headquarters in New Jersey. Id. ¶ 62. In his position as National Project Sales Manager, Kim was responsible for developing national accounts and other projects. Id. ¶ 63. Kim remained at MaxLite until resigning in December 2014. Id. ¶ 68. Kim commenced employment with ATG on January 5, 2015, less than a week after his final day at MaxLite. Id. ¶ 69. Plaintiff alleges that Kim stole confidential information acquired during his employment with MaxLite, solicited business from MaxLite customers, and worked for ATG, all in violation of the Agreement. Id. ¶¶ 69-78.

Plaintiff alleges that ATG tortiously interfered with MaxLite's business through the theft of confidential and proprietary information, obtained by hiring the Employee Defendants in violation of their Agreements. Id. ¶¶ 79-80. Plaintiff further alleges that ATG "conspired with" the Employee Defendants, and after impermissibly gaining access to confidential information, used that information to gain an unfair advantage over MaxLite. Id. ¶¶ 81-84. As a result of this alleged improper activity, ATG gained inside knowledge of MaxLite's product research and development, as well as illicit access to MaxLite's customers, vendors, distributors and suppliers. Id. ¶¶ 85-86. Plaintiff concludes that "ATG has systematically targeted MaxLite's top sales agents and employees, using unlawfully obtained confidential, proprietary information, as part of its overall scheme to engage in unfair business practices to the detriment of MaxLite." Id. ¶ 87.

The Agreement

As discussed, each of the three Employee Defendants signed an Agreement when they began employment at MaxLite. Id. ¶¶ 18, 45, 65. Relevant to the present dispute, the Agreement contains a confidentiality clause (Section 1.1), a non-compete section (Section 3.2), a non-solicitation provision (Section 3.3) and a choice of law and...

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