Production Group Intern., Inc. v. Goldman

• Decision Date: 23 September 2004
• Docket Number: No. 1:04 CV 686.,1:04 CV 686.
• Citation: 337 F.Supp.2d 788
• Parties: PRODUCTION GROUP INTERNATIONAL, INC. Plaintiff, v. Michael GOLDMAN, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

337 F.Supp.2d 788

PRODUCTION GROUP INTERNATIONAL, INC. Plaintiff, v. Michael GOLDMAN, Defendant.

No. 1:04 CV 686.

United States District Court, E.D. Virginia, Alexandria Division.

September 23, 2004.

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Bart Fitzpatrick Higgins, Sopuch Arnett Higgins & Gauvert LLP, Chicago, IL, for Plaintiffs/Movants.

Elizabeth Ann Childers Smith, Pillsbury Winthrop LLP, McLean, VA, for Defendants/Respondents.

MEMORANDUM OPINION

ELLIS, District Judge.

At issue in this diversity breach of contract case are questions of personal jurisdiction, venue, and transfer of venue.

I.¹

Plaintiff Production Group International, Inc. is a Delaware corporation headquartered in Alexandria, Virginia, with over two dozen offices throughout the United States, including three in Florida. Plaintiff creates, produces, and manages promotional events for its corporate clients. Defendant Michael Goldman, a longtime Florida resident, worked in plaintiff's Orlando, Florida office as an event producer from May 1998 until March 2004.

The business relationship between the parties commenced in or around May 1998 with a series of recruiting meetings in Orlando. During the course of the meetings, defendant was interviewed by three of plaintiff's employees, two from plaintiff's Orlando office and one from its Virginia headquarters. As result of the meetings, plaintiff made defendant an offer of employment conditioned on defendant's signing a "Code of Conduct Agreement" prohibiting him from (1) "solicit[ing] or divert[ing]" any of plaintiff's clients for eighteen months after termination of employment, or (2) "divulg[ing]," at any time during employment or after termination, information related to plaintiff's business operations. The agreement was drafted in Virginia, but contained neither choice-of-law nor choice-of-forum clauses. Defendant received the agreement via U.S. mail at his home in Florida, where he signed and delivered it to his supervisor in Orlando. During the ensuing six-year period of employment, defendant communicated frequently with plaintiff's Virginia employees on business matters, and made three trips to plaintiff's Virginia headquarters for business meetings.

In late 2002 or early 2003, defendant, via teleconference and email, assisted some of plaintiff's Virginia-based employees ("the Virginia team") with the creation of a sales pitch for Red Bull GmbH ("Red Bull"), an Austrian energy-drink manufacturer with an American subsidiary headquartered in Santa Monica, California. As a result of the sales pitch, Red Bull hired plaintiff to produce and manage two promotional motorcycle racing events in 2003, the first in October in Dallas, Texas, and the second in November in Las Vegas, Nevada. From his Florida office, defendant served as the executive producer of both events.

In late 2003 or early 2004, defendant — again, through electronic means of communication — helped the Virginia team plan a series of similar events for Red Bull to take place in the summer of 2004. In March 2004, however, defendant resigned his employment with plaintiff and began working for MJM Creative Services ("MJM"), a Florida-based competitor of plaintiff's, where he allegedly used the plans he helped the plaintiff's Virginia team generate to solicit and divert Red Bull's patronage from plaintiff to MJM.

In June 2004, plaintiff filed this diversity action for breach of the Code of Conduct Agreement's non-solicitation and confidentiality clauses. Defendant now moves to dismiss for lack of personal jurisdiction and for improper venue, or, in the alternative, for transfer of venue to the Middle District of Florida. For the reasons that follow, this motion must be denied.

II.

A. Personal Jurisdiction

Defendant contends that his alleged contacts with the Commonwealth of Virginia — accepting and maintaining employment with a Virginia-based company, communicating regularly with Virginia-based colleagues on business matters, and traveling to Virginia three times for business purposes — are insufficient to establish personal jurisdiction under either the Virginia long-arm statute, Va.Code § 8.01-328.1, or the Due Process Clause of the Fourteenth Amendment.

When a defendant challenges a court's exercise of personal jurisdiction, the plaintiff ordinarily must "prove the existence of a ground for jurisdiction by a preponderance of the evidence." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). But when, as here, a court addresses the question solely on the basis of threshold motion papers, pleadings, and supporting memoranda, the plaintiff's burden is merely to make a prima facie showing of a sufficient jurisdictional basis. Id. Under such circumstances, a court must construe all relevant pleading allegations in the light most favorable to the plaintiff and draw all reasonable inferences for the existence of jurisdiction. Id; see also Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir.1993).²

Resolution of a personal jurisdiction challenge by a non-resident defendant requires a two-step inquiry. Ellicott Mach. Corp., Inc. v. John Holland Party Ltd., 995 F.2d 474, 477 (4th Cir.1993); English & Smith v. Metzger, 901 F.2d 36, 38 (4th Cir.1990). First, a court must assess whether Virginia's long-arm statute authorizes jurisdiction over the defendant in the circumstances presented. Ellicott, 995 F.2d at 477. Second, it must determine whether due process forbids the exercise of jurisdiction in those circumstances. Id.; English & Smith, 901 F.2d at 38. This two-step jurisdictional analysis, applied here, compels the conclusion that personal jurisdiction is proper in this case.

1. Virginia's Long-Arm Statute

Plaintiff's argument in favor of personal jurisdiction relies exclusively on subsection (A)(1) of the Virginia long-arm statute, which provides for the exercise of personal jurisdiction over a defendant "transacting any business" in Virginia, provided that the cause of action asserted "arises from" the business transacted. Va.Code § 8.01-328.1(A)(1) (2004).³ Virginia's long-arm statute is a "single act" statute, which means that even a single act of business can confer jurisdiction provided that it is "significant" and demonstrates "purposeful activity" in Virginia. John G. Kolbe, Inc. v. Chromodern Chair Co., Inc., 211 Va. 736, 180 S.E.2d 664, 667 (1971); DeSantis v. Hafner Creations, Inc., 949 F.Supp. 419, 424 (E.D.Va.1996). While no bright-line rule exists to distinguish the level of activity sufficient to confer jurisdiction from the level that falls short, it is clear that merely entering into a contract with a resident party will not subject a nonresident defendant to personal jurisdiction in the resident's forum unless some substantial part of contractual formation or performance occurs in Virginia.⁴ It is equally clear, however, that actual physical presence in the Commonwealth by the defendant is not required. See, e.g., Peanut Corp. of Am. v. Hollywood Brands, Inc., 696 F.2d 311 (4th Cir.1982) (upholding personal jurisdiction based on the defendant's exchange of communications with the resident plaintiff during the contracting process). Determining whether a nonresident defendant's business activity meets the "significance" standard requires an examination of the nature and quality of all of a defendant's business contacts with Virginia that underlie the cause of action, and, in many instances, no single factor or aspect is dispositive. See Raymond, Colesar, Glaspy & Huss, P.C. v. Allied Cap. Corp., 761 F.Supp. 423, 426 (E.D.Va.1991); cf. English & Smith, 901 F.2d at 39 n. 4 (stating formal place of contracting and governing law less important than "extent of [defendant's] contacts" with Virginia); Peanut, 696 F.2d at 314 (finding jurisdiction based on "sufficient contracting" in Virginia despite fact that contract sued upon was formally formed elsewhere).

Before the "significance" of contacts can be determined, however, a court must first identify which of a nonresident defendant's business contacts with Virginia are eligible to be taken into account in the jurisdictional analysis. This entails construing the long-arm statute's requirement that the cause of action "arise from" the acts proffered as "transacting business" in Virginia. In the context of this case, therefore, the question is whether "arising from" includes all of defendant's Virginia-related contacts occurring pursuant to his employment with plaintiff, i.e., all of his electronic communications with plaintiff's Virginia headquarters and business-related travels to Virginia, or, instead, only those contacts directly related to the specific alleged breach, i.e., his telephone calls, facsimiles, and emails regarding the Red Bull account.

Whether "arising from" should be construed broadly or narrowly is, of course, a question of legislative intent. While no decision of the Fourth Circuit or Supreme Court of Virginia answers the specific question presented here,⁵ controlling authority uniformly holds that Virginia's purpose in enacting the long-arm statute was "to assert jurisdiction over nonresidents who engage in some purposeful activity in [Virginia] to the extent permissible under the due process clause." Kolbe, 180 S.E.2d at 667; accord Krantz v. Air Line Pilots Assoc., 245 Va. 202, 427 S.E.2d 326, 328 (1993); Nan Ya Plastics Corp. v. DeSantis, 237 Va. 255, 377 S.E.2d 388, 391 (1989). Under due process principles, personal jurisdiction may be conferred for a specific cause of action not only by the acts giving rise to the claim, but also by acts "related to" the claim itself. See, e.g., Burger King v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); Precept Med. Prods., Inc. v. Klus, 282 F.Supp.2d 381, 386-87 (W.D.N.C.2003). An interpretation of "arising from" that would exclude acts of contract performance not directly related to the alleged breach, therefore, would limit the reach of the long-arm statut...