Turner W. Branch, P.A. v. William Shane Osborn & Mehaffyweber, PC

• Decision Date: 26 March 2014
• Docket Number: Civ. No. 13-00110 MV/WPL
• Parties: TURNER W. BRANCH, P.A., Plaintiff, v. WILLIAM SHANE OSBORN and MEHAFFYWEBER, PC, Defendants.
• Court: U.S. District Court — District of New Mexico

TURNER W. BRANCH, P.A., Plaintiff, v. WILLIAM SHANE OSBORN and MEHAFFYWEBER, PC, Defendants.

Civ. No. 13-00110 MV/WPL

UNITED STATES DISTRICT COURT DISTRICT OF NEW MEXICO

March 26, 2014

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on Defendant MehaffyWeber PC's Motion and Supporting Memorandum to Dismiss for Lack of Personal Jurisdiction ("Motion to Dismiss for Lack of Personal Jurisdiction") [Doc. 11], Defendant MehaffyWeber, PC's Motion and Supporting Memorandum to Dismiss for Lack of Subject Matter Jurisdiction and for Failure to State a Claim ("MW's Motion to Dismiss for Lack of Subject Matter Jurisdiction and Failure to State a Claim") [Doc. 13], and Defendant William Shane Osborn's Motion and Supporting Memorandum to Dismiss for Lack of Subject Matter Jurisdiction and for Failure to State a Claim ("Osborn's Motion to Dismiss for Lack of Subject Matter Jurisdiction and Failure to State a Claim") [Doc. 14]. The Court, having considered the motions, briefs, and relevant law, and being otherwise fully informed, finds that the Motion to Dismiss for Lack of Personal Jurisdiction is well taken and will be granted, MW's Motion to Dismiss for Lack of Subject Matter Jurisdiction and Failure to State a Claim is moot and will be denied as moot, and Osborn's Motion to Dismiss for Lack of Subject Matter Jurisdiction and Failure to State a Claim is well taken in part and will be granted in part.

BACKGROUND

Plaintiff filed a verified complaint against Defendants William Shane Osborn ("Osborn") and MehaffyWeber, PC ("MW"), alleging that that they violated the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030, and the New Mexico Trade Secrets Act ("NMTSA"), N.M. Stat. Ann. § 57-3A-1 et seq. The claims in the complaint arise out of Defendant Osborn's undisputed action of accessing a computer owned by Plaintiff Turner W. Branch, P.A. ("Plaintiff"), and downloading information from that computer onto a flash drive. [Doc. 1, ¶¶ 13, 15, 16; Doc. 14 at 17]. The complaint implicates Defendant MW by alleging that MW obtained and thereafter retained the information downloaded by Osborn. [Doc. 1, ¶¶ 33, 41, 42, 43, 48, 50, 50]. The complaint alleges that Plaintiff is a New Mexico professional association that conducts business in New Mexico, Osborn is a Texas resident, and MW is a Texas professional corporation that conducts business in Texas. [Id. ¶¶ 1-3].

The complaint alleges the following additional facts. Plaintiff operates a law firm in Albuquerque, New Mexico, which focuses on personal injury and mass tort litigation. [Id. § 7]. Defendant Osborn was employed by Plaintiff's Houston affiliate, Branch Law Firm, LLP (the "LLP"). [Id. ¶ 8]. Plaintiff and the LLP worked closely on certain matters, and the LLP made attorneys and resources available to Plaintiff as needed. [Id.]. Osborn regularly commuted to Albuquerque to work at Plaintiff's office and had access to Plaintiff's privileged and confidential documents and computer files. [Id. ¶ 13].

The complaint also alleges that the LLP terminated Plaintiff's employment on May 7, 2012. That termination is the subject of litigation Osborn initiated against the LLP in the 164th District Court of Harris County, Texas, Cause No. 2012-34395 (the "Texas litigation"). [Id. ¶ 14]. In the course of discovery in the Texas litigation, the LLP learned that Osborn downloadedinformation belonging to Plaintiff from Plaintiff's computer system. [Id. ¶ 15]. At some point, Osborn made some or all of the downloaded files available to MW, and MW copied the files onto its own computer system. [Id. ¶ 33]. MW is the attorney for Osborn in the Texas litigation. [Doc. 13 at 3 n.2]. The complaint also alleges the information stolen belongs to Plaintiff, but that the LLP has a duty to recover the information Osborn downloaded, that this duty stems Osborn's employment with the LLP, and that the LLP is attempting to recover the information in the Texas litigation. [Doc. 1, ¶ 38].

Defendants move to dismiss the complaint on various grounds. Defendant MW argues that the Court should dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) because the Court does not have personal jurisdiction over MW. In addition, Defendants MW and Osborn argue that the Court should dismiss the complaint pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction and Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Plaintiff argues that the Court has both personal and subject matter jurisdiction over Defendants and that the complaint states valid CFAA and NMTSA claims. In the alternative, with respect to the motion to dismiss for lack of personal jurisdiction, Plaintiff asks the Court to award jurisdictional discovery instead of dismissal.¹

STANDARD

I. Personal Jurisdiction.

Motions to dismiss brought under Federal Rule of Civil Procedure 12(b)(2) test a plaintiff's theory of personal jurisdiction as well as the facts supporting personal jurisdiction. The Rule12(b)(2) standard governing a motion to dismiss for lack of personal jurisdiction is well established. When a defendant challenges the court's jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction exists. See McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995) (citations omitted). In the preliminary stages of litigation, this burden is "light," and prior to trial a "plaintiff is only required to establish a prima facie showing of [personal] jurisdiction." Doe v. Nat'l Med. Serv., 974 F.2d 143, 145 (10th Cir. 1992). The plaintiff may make the required prima facie showing by coming forward with facts, via affidavit or other written materials, that would support jurisdiction over the defendant if true. See OMI Holdings v. Royal Ins. Co., 149 F.3d 1086, 1091 (10th Cir. 1998). Only the well-pled facts of a plaintiff's complaint, however, as opposed to mere conclusory allegations in pleadings or other materials, must be accepted as true. See Ten Mile Indus. Park v. W. Plains Serv. Corp., 810 F.2d 1518, 1524 (10th Cir. 1987); Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). Moreover, a plaintiff's jurisdictional allegations are not automatically accepted as true when contradicted by affidavit, although if the parties present conflicting affidavits, all factual disputes must be resolved in the plaintiff's favor. See Wenz, 55 F.3d at 1505.

"To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment." Far W. Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir. 1995) (citation omitted); see also World-Wide Volkswagen v. Woodson, 444 U.S. 286, 291 (1980) (holding that the Fourteenth Amendment's Due Process Clause requires that a defendant be subject to a court's personal jurisdiction before a judgment can be rendered against it). In New Mexico, a federal court haspersonal jurisdiction over a non-resident defendant only to the extent that the state's long-arm statute permits. See Fid. & Cas. Co. v. Philadelphia Resins. Corp., 766 F.2d 440, 442 (10th Cir. 1985), cert. denied, 474 U.S. 1082 (1986). That statute provides, in pertinent part:

A. Any person, whether or not a citizen or resident of this state, who in person or through an agent does any of the acts enumerated in this subsection thereby submits himself or his personal representative to the jurisdiction of the courts of this state as to any cause of action arising from:

(1) the transaction of any business within this state;

. . .

(3) the commission of a tortious act within this state.

N.M. Stat. Ann. § 38-1-16. In determining whether personal jurisdiction exists over an out-of-state defendant under the long-arm statute, New Mexico courts apply a three-part test, which asks whether (1) the defendant committed an act or omission specifically set forth in the long-arm statute; (2) the plaintiff's cause of action arises out of the alleged acts or omissions; and (3) the defendant established sufficient minimum contacts with New Mexico to satisfy due process concerns. See Tercero v. Roman Catholic Diocese, 48 P.3d 50, 54 (N.M. 2002) (citations omitted). In applying this test, the analysis of whether the defendant transacted business or committed a tortious act within New Mexico merges with the inquiry regarding whether such activities constitute minimum contacts sufficient to satisfy due process concerns. See id. at 54-55 (citing Telephonic, Inc. v. Rosenblum, 543 P.2d 825, 827 (N.M. 1975) ("We have repeatedly equated the 'transaction of business' . . . with the due process standard of 'minimum contacts[.]'"); Tarango v. Pastrana, 616 P.2d 440, 441 (N.M. Ct. App. 1980) (equating the terms "transaction of any business" and "commission of a tortious act" with minimum contacts sufficient to satisfy due process)). This is because New Mexico courts have interpreted the state's long-armstatute as being coextensive with the Fourteenth Amendment's Due Process Clause, such that if jurisdiction is permitted under the Due Process Clause, it also is authorized by the long-arm statute. See Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006) (citation omitted); Tercero, 48 P.3d at 54 (citation omitted).

The Fourteenth Amendment's Due Process Clause requires that for a court to assert personal jurisdiction over a defendant, the defendant must have (1) sufficient "minimum contacts" with the forum state (2) such that subjecting the defendant to the court's jurisdiction will not offend traditional conceptions of fair play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted). The "defendant's conduct and connection with the forum State [must be] such that [the defendant] should...