Next Techs., Inc. v. ThermoGenisis, LLC

• Decision Date: 04 August 2015
• Docket Number: No. A–15–CV–00225–LY–ML.,A–15–CV–00225–LY–ML.
• Citation: 121 F.Supp.3d 671
• Parties: NEXT TECHNOLOGIES, INC., Plaintiff, v. THERMOGENISIS, LLC, DBA WorkWhileWalking and Imovr, Larry Swanson, and Ron Wiener, Defendants.
• Court: U.S. District Court — Western District of Texas

121 F.Supp.3d 671

NEXT TECHNOLOGIES, INC., Plaintiff,

v.THERMOGENISIS, LLC, DBA WorkWhileWalking and Imovr, Larry Swanson, and Ron Wiener, Defendants.

No. A–15–CV–00225–LY–ML.

United States District Court, W.D. Texas, Austin Division.

Signed Aug. 4, 2015.

Paul Brown Kerlin, Vorys, Sater, Seymour and Pease LLP, Houston, TX, for Plaintiff.

David E. Dunham, Donald R. Taylor, Isabelle Maria Antongiorgi, Sergio R. Davila, Taylor Dunham and Rodriguez, LLP, Austin, TX, for Defendants.

ORDER ON JURISDICTIONAL DISCOVERY

MARK LANE, United States Magistrate Judge.

Before the Court is the above-referenced case, in which Plaintiff Next Technologies, Inc.'s Amended Motion for Limited Discovery on Jurisdiction [Dkt. # 15], Defendants' Response thereto [Dkt. # 17], and Next Technologies, Inc.'s Reply [Dkt. # 16] have been referred to United States Magistrate Judge Mark Lane for disposition. See 28 U.S.C. § 636(b)(1)(B), Fed.R.Civ.P. 72 ; Loc. R. W.D. Tex. App'x. C, Rule 1(d). The Court set the Amended Motion for Limited Discovery on Jurisdiction [Dkt. # 15] and related briefing for hearing on Thursday, July 30, 2015. Counsel for Plaintiff and counsel for Defendants appeared and participated in the hearing.

The issue presently before the Court is not whether Plaintiff has established personal jurisdiction over the Individual Defendants. The Court today decides whether Plaintiff is entitled to pursue limited jurisdictional discovery to support the claim that personal jurisdiction over the Individual Defendants exists. Having considered the Amended Motion for Limited Discovery on Jurisdiction [Dkt. # 15], the related briefing, the argument of counsel at the hearing, the relevant case law, and the case file as a whole, the Court issues the following Opinion and Order.

I. Background

Plaintiff Next Technologies, Inc. manufactures "walking desks" or "treadmill desks" in Texas. Compl. [Dkt. # 1] at ¶ 9. Plaintiff alleges Defendant ThermoGenisis, Inc. ("ThermoGenisis") markets a competing desk product and, in a false advertising scheme, purports to host an "independent review site" called WorkWhileWalking.com. Id. at ¶¶ 13–19. Plaintiff alleges the Individual Defendants, Ron Wiener and Larry Swanson, are responsible for the content of this website. Id. at ¶¶ 16–17. The website reviews the pros and cons of various walking desks, including desks produced by ThermoGenisis and desks produced by its competitors. Id. at ¶ 19. Plaintiff alleges the WorkWhileWalking.com reviews are not independent, but are advertisements for Defendant ThermoGenisis' products. Id. Plaintiff further alleges reviews posted on the WorkWhileWalking.com site contain false, misleading, and defamatory statements about Plaintiff's products. Id. at ¶ 26.

Plaintiff asserts Individual Defendant Ron Wiener, the Manager and CEO of ThermoGenisis and sometime Editor in Chief of WorkWhileWalking.com, approached Plaintiff in 2013 about partnering to make WorkWhileWalking.com a distributor or affiliate of Next Technologies. Id. at ¶¶ 24–25. Plaintiff asserts that, prior to these overtures, WorkWhileWalking.com posted a very favorable review of a Next Technologies product. Id. at ¶¶ 20–21. After Plaintiff declined to enter the proposed business arrangement, however, WorkWhileWalking.com posted a number of allegedly false and defamatory reviews of Plaintiff's products. Id. at ¶ 26.

Plaintiff sent WorkWhileWalking.com a cease and desist letter in January of 2015 and received a response letter signed by Individual Defendant Larry Swanson, who was then acting as Editor in Chief of WorkWhileWalking.com, in February of 2015.Id. at ¶¶ 27–30. Plaintiff asserts this letter suggested that the ratings of its products were tied to whether it was willing to do business with WorkWhileWalking.com as a distributor or affiliate. Id. Plaintiff alleges that in February of 2015, shortly after it received the Swanson letter, the WorkWhileWalking.com review of Plaintiff's NextDesk product was modified to remove some of the defamatory and misleading statements, but that the posted review, as modified, still contained false, misleading, and defamatory statements. Id. at ¶¶ 31–32, 47.

Plaintiff has sued ThermoGenisis (d/b/a WorkWhileWalking.com and iMovr), Wiener, and Swanson. Plaintiff sues ThermoGenisis under the Lanham Act, 15 U.S.C. § 1125, alleging the entire "independent" WorkWhileWalking.com website is a false advertising scheme for ThermoGenisis products. Id., Counts One and Two. Plaintiff has sued all Defendants, including Wiener and Swanson, for copyright violation pursuant to 17 U.S.C. § 106, alleging the images of Next Technologies' products displayed on the WorkWhileWalking.com website were posted without authorization. Id., Count Three. Plaintiff further alleges against all Defendants, including Wiener and Swanson, state law claims of tortious interference with contractual relations and prospective business relationships, defamation per se, and defamation. Id., Counts Four to Seven.

ThermoGenisis, LLC ("ThermoGenisis") has answered the Complaint, see Answer [Dkt. # 7], thus conceding personal jurisdiction is proper in the Western District of Texas. See Fed.R.Civ.P. 12(b)(2), 12(h). Larry Swanson and Ron Wiener (the "Individual Defendants") have responded to the Complaint with a Motion to Dismiss for Lack of Personal Jurisdiction [Dkt. # 6], asserting the fiduciary shield doctrine applies to nullify any contacts with Texas arising out of their work on behalf of ThermoGenisis. Id. at 5–9. The merits of this motion are not currently before the Court. First, it is necessary to determine whether Plaintiff is entitled to limited jurisdictional discovery before answering the Individual Defendants' Motion to Dismiss [Dkt. # 6].

Plaintiff's Amended Motion for Limited Discovery on Jurisdiction [Dkt. # 15], filed in response to the Individual Defendants' Motion to Dismiss [Dkt. # 6], seeks discovery to support its contention that the fiduciary shield doctrine does not prevent this Court from exercising specific personal jurisdiction over Wiener and Swanson. Am. Mot. Disc. [Dkt. # 15] at 7–10. There are two exceptions to the fiduciary shield doctrine: It does not shield an individual from personal jurisdiction arising out of his own allegedly tortious actions, even if taken while working for a corporate entity, and it does not apply when the corporation at issue is merely an alter ego of the individual Defendant. Stuart v. Spademan, 772 F.2d 1185, 1197–98 (5th Cir.1985). Plaintiff asserts both exceptions apply here. Am. Mot. Disc. [Dkt. # 15] at 7–10.

First, Plaintiff alleges Wiener was individually responsible for soliciting Plaintiff in Texas as a business partner. Id. at 9–10. Plaintiff further alleges Wiener was individually responsible for causing defamatory reviews of Plaintiff's products to be posted on WorkWhileWalking.com in retaliation for Plaintiff's refusal to do business with him. Id. at 7–8. With regard to Swanson, Plaintiff alleges he signed and sent a letter implying that the website's negative reviews of Plaintiff's products would continue unless Plaintiff agreed to reopen negotiations concerning a business relationship with Defendants.Id. at 8. Plaintiff further alleges Swanson, as the Editor in Chief of WorkWhileWalking.com in February of 2015, was individually responsible for causing the still-defamatory modifications to the original negative reviews of Plaintiff's product to be posted to WorkWhileWalking.com. Id. at 7–8.

Additionally and in the alternative, Plaintiff asserts the alter ego exception to the fiduciary shield doctrine applies with respect to Individual Defendant Ron Wiener. Id. at 9. Plaintiff points out that Wiener solicited Plaintiff's business without disclosing the existence of ThermoGenisis, and one of the reasons Plaintiff declined the proffered business relationship was that Wiener did not seem to have a fully-formed business at the time of the negotiations. Id. Plaintiff also notes that, in the course of its due diligence, it was informed and believed that Wiener had started several businesses that had failed. Id. at 9 and n. 9. Plaintiff alleges it is therefore reasonable to infer that Wiener has a pattern of engaging in business ventures that are inadequately capitalized, and that ThermoGenisis/WorkWhileWalking.com is likely cut from the same cloth. Id. at 9. Plaintiff therefore seeks jurisdictional discovery into the issue of whether ThermoGenisis is or was being operated as an alter ego of Wiener from 2013 to the present. Id.

Plaintiff has propounded 13 Requests for Production and 7 Interrogatories to the Defendants, focusing on the issues described above. Am. Mot. Disc. [Dkt. # 15], Ex. A. Defendants have objected to the legal basis for allowing any jurisdictional discovery, see generally Df's Resp. [Dkt. # 17], but have not lodged any objection as to the content of any of individual requests for production and interrogatories propounded, should jurisdictional discovery be granted. See id. At the hearing, the Court specifically inquired into any objections Defendants might have as to the individual requests and interrogatories, and no objection to the content of the discovery requests was raised.

II. Standard of Review

Plaintiff alleges this Court has specific personal jurisdiction over the Individual Defendants. Specific jurisdiction must be analyzed on a claim-by-claim basis. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 660 (Tex.2010) ; Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 275 (5th Cir.2006). The Court need not assess contacts on a claim-by-claim basis, however, "if all claims arise from the same forum contacts." Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150–51 (Tex.2013).

To the extent there is a factual dispute regarding the existence of contacts sufficient to support personal jurisdiction, it is the Court's responsibility to determine whether the disputed contact occurred—"regardless of whether that contact is also an...