ProMove, Inc. v. Siepman

• Decision Date: 18 January 2019
• Docket Number: Case No. 18-cv-1196 (WMW/KMM)
• Parties: PROMOVE, INC. and Logisys, Inc., Plaintiffs, v. Mark SIEPMAN, Joseph Hammerslough, Sunset Transportation LV, Inc., and Tantara Transportation Group, Defendants.
• Court: U.S. District Court — District of Minnesota

355 F.Supp.3d 816

PROMOVE, INC. and Logisys, Inc., Plaintiffs,

v.Mark SIEPMAN, Joseph Hammerslough, Sunset Transportation LV, Inc., and Tantara Transportation Group, Defendants.

Case No. 18-cv-1196 (WMW/KMM)

United States District Court, D. Minnesota.

Signed January 18, 2019

Thomas R. Revnew, William E. Parker, Seaton, Peters & Revnew, PA, Minneapolis, MN, for Plaintiffs.

Holly N. Mancl, Fisher & Phillips, Charlotte, NC, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

Wilhelmina M. Wright, United States District Judge

Plaintiffs ProMove, Inc., and Logisys, Inc. (collectively, Plaintiffs), brought this action against ProMove's former employees Mark Siepman and Joseph Hammerslough (the individual defendants) as well as Sunset Transportation LV, Inc., and Tantara Transportation Group (the corporate defendants), asserting multiple claims, including breach of contract, tortious interference with contract, and misappropriation of trade secrets. Defendants collectively move to dismiss for lack of personal jurisdiction or, alternatively, to transfer this case to the United States District Court for the District of Nevada. Defendants' motion to dismiss is granted in part and denied in part, and the motion to transfer venue is denied.

BACKGROUND¹

ProMove is a Minnesota corporation with its principal place of business in Las Vegas, Nevada. Logisys, an affiliate of ProMove, is a Michigan corporation with its principal place of business in Chicago, Illinois.

The individual defendants are residents of Las Vegas, Nevada, and former employees of ProMove in Las Vegas. Tantara Transportation Group is a Michigan corporation with its principal place of business in Canton, Michigan. Sunset Transportation LV, Inc., is a Nevada corporation with its principal place of business in Las Vegas, Nevada. Both corporate defendants are direct competitors of ProMove.

Prior to September 2012, the individual defendants owned and operated Lightning Logistics, LLC, in Las Vegas. Logisys purchased Lightning Logistics and retained the individual defendants as employees. The individual defendants, who were ProMove employees for approximately five years, executed employment agreements with ProMove that included confidentiality and non-compete clauses, as well as a choice-of-law and forum-selection clause stating that each party to the agreement "irrevocably submits itself to the non-exclusive personal jurisdiction of the Federal and State courts sitting in Minnesota."

Plaintiffs allege that, while employed by ProMove, the individual defendants made preparations to leave ProMove with the intent to begin employment with the corporate defendants, including the solicitation of ProMove's employees and customers on behalf of the corporate defendants. Plaintiffs allege that the corporate defendants knowingly assisted with this preparation. Plaintiffs also allege that, before leaving ProMove, Hammerslough copied proprietary and confidential information from ProMove computers with the intent to benefit himself, the corporate defendants, or both.

ANALYSIS

I. Defendants' motion to dismiss for lack of personal jurisdiction

Because Defendants move to dismiss for lack of personal jurisdiction, Plaintiffs must make a prima facie showing that personal jurisdiction exists. K-V Pharm. Co. v. J. Uriach & CIA, S.A. , 648 F.3d 588, 591-92 (8th Cir. 2011). To do so, Plaintiffs must plead sufficient facts to support a reasonable inference that the Defendants can be subjected to jurisdiction within the forum state. Id. The evidentiary showing required at the prima facie stage is minimal, Johnson v. Arden , 614 F.3d 785, 794 (8th Cir. 2010), but a plaintiff's prima facie showing is "tested, not by the pleadings alone, but by the affidavits and exhibits" supporting and opposing the motion to dismiss, Dever v. Hentzen Coatings, Inc. , 380 F.3d 1070, 1072 (8th Cir. 2004) (internal quotation marks omitted). When determining whether personal jurisdiction exists, the Court views the evidence in the light most favorable to the plaintiffs, resolving all factual conflicts in the plaintiffs' favor. K-V Pharm. , 648 F.3d at 592.

Minnesota's long-arm statute extends jurisdiction to the maximum limit permitted by due process. Wessels, Arnold & Henderson v. Nat'l Med. Waste, Inc. , 65 F.3d 1427, 1431 (8th Cir. 1995) (citing Minn. Stat. § 543.19 ). Because the Court applies state law when determining the bounds of its personal jurisdiction, Walden v. Fiore , 571 U.S. 277, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014), the Court need only determine whether its exercise of personal jurisdiction comports with due process, Wessels , 65 F.3d at 1431.

Due process requires that a nonresident defendant have sufficient minimum contacts with the forum state such that personal jurisdiction over the defendant does not offend "traditional notions of fair play and substantial justice." World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 292, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (internal quotation marks omitted). To meet this legal standard, a defendant must establish purposeful availment of the privilege of conducting activities within the forum state, which in turn invokes the benefits and protections of the forum state's laws. Fastpath, Inc. v. Arbela Techs. Corp. , 760 F.3d 816, 821 (8th Cir. 2014). When there are multiple defendants, the Court must assess each defendant's contacts with the forum state. Calder v. Jones , 465 U.S. 783, 790, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984).

Personal jurisdiction over a defendant may be general or specific. See Burger King Corp. v. Rudzewicz , 471 U.S. 462, 473 n.15, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Here, only specific jurisdiction is at issue.² Accordingly, the alleged injury must have occurred in the forum state or have some other connection to the forum state such that the defendant's activities have been purposefully directed toward the forum state. Steinbuch v. Cutler , 518 F.3d 580, 586 (8th Cir. 2008) (citing Burger King , 471 U.S. at 472, 105 S.Ct. 2174 ).

The Court considers three primary factors when deciding whether it has specific jurisdiction over the defendants: the nature and quality of such contacts with the forum state, the quantity of contacts, and the relation of the cause of action to the contacts. K-V Pharm. , 648 F.3d at 592. Two secondary factors, the interest of the forum state in providing a forum for its residents and the convenience of the parties, also are germane to the Court's specific jurisdiction analysis. Id. Ultimately, whether the Court has personal jurisdiction over the defendants depends on the "totality of the circumstances." Johnson , 614 F.3d at 794.

A. Individual Defendants

Plaintiffs seek to establish a prima facie showing of personal jurisdiction over the individual defendants based primarily on the employment agreements, which include a forum-selection clause that prescribes that each contracting party submits to personal jurisdiction in the state and federal courts of Minnesota.

"Due process is satisfied when a defendant consents to personal jurisdiction by entering into a contract that contains a valid forum selection clause." Dominium Austin Partners, L.L.C. v. Emerson , 248 F.3d 720, 726 (8th Cir. 2001). Here, however, the record does not include signed copies of the employment agreements. Based on this omission, Defendants argue that the forum-selection clause is not enforceable against them. But the question before the Court is not whether the contracts are enforceable. Rather, for personal jurisdiction, the central question is whether a defendant has purposefully availed itself of the laws of the forum state. Fastpath , 760 F.3d at 821. The presence of a valid forum-selection clause typically obviates the need to analyze a defendant's contacts with a forum state because the contract itself establishes the defendant's voluntarily consent to personal jurisdiction in the forum. See Rykoff-Sexton, Inc. v. Am. Appraisal Assocs., Inc. , 469 N.W.2d 88, 90 (Minn. 1991) ("With consent, resort to the constitutional test for personal jurisdiction is not required because the defendant obviously can reasonably anticipate being haled into court after consenting to jurisdiction." (internal quotation marks omitted) ). The legal issue here is whether the individual defendants, through their employment agreements, voluntarily consented to personal jurisdiction in Minnesota, not whether signed copies of the employment agreements are in the record.

Strong circumstantial evidence exists that the individual defendants voluntarily consented to the terms of the employment agreements, including the forum-selection clause. Before Logisys purchased Lightning Logistics in 2012, each individual defendant executed a Letter of Intent with Beltmann Group Incorporated (BGI)³ addressing the terms of the sale. According to the letter, BGI would structure acceptable employment agreements for the individual defendants in light of the "importance of retaining key employees of [Lightning Logistics] after the closing date." When Paul Zagaria, the executive vice president of BGI and ProMove, inquired of both individual defendants by email whether they had signed their employment agreements, Hammerslough replied that he had signed the agreement and that he would be willing to resend a copy to Zagaria. Both individual defendants subsequently became employees of ProMove and continued in that capacity for approximately five years.

Moreover, other factors support the requisite "minimum contacts" for personal jurisdiction. The individual defendants were ProMove employees for slightly less than five years and, although there are no allegations that either traveled to Minnesota, both individual defendants were employees of ProMove, a Minnesota company. They both executed the Letter of Intent with BGI, also a Minnesota company. And that letter clearly displayed in the letterhead BGI's Roseville, Minnesota address. Jeanne...