Leduc Gifts & Specialty Prods., LLC v. New Thermo-Serv, Ltd.
Leduc Gifts & Specialty Prods., LLC v. New Thermo-Serv, Ltd.
Opinion of the Court
This matter is before the Court on Defendant's motion to dismiss for lack of personal jurisdiction. (Dkt. 6.) For the reasons addressed below, Defendant's motion is granted and the complaint is dismissed without prejudice.
BACKGROUND
Plaintiff LeDuc Gifts & Specialty Products, LLC (LeDuc), is a Minnesota limited liability corporation. Until 2018, LeDuc's primary business model was designing, manufacturing, and selling thermal tumblers. Defendant New Thermo-Serv, Ltd. (NTS), is a Texas limited partnership that also sells thermal tumblers. NTS's principal place of business and general partner are located in Texas.
In 2014, one of LeDuc's related entities, 4Brava, LLC (4Brava), entered a partnership with DSC Products Holding, LLC (DSC). The partnership created and sold thermal tumblers for mass-market retailers. The relationship between LeDuc and DSC deteriorated in 2015 when Daniel Sachs, the owner of DSC, allegedly embezzled funds from the partnership and misappropriated LeDuc's trade secrets. LeDuc contends that Sachs unlawfully duplicated and made minor improvements to LeDuc's molds and manufacturing equipment.
LeDuc and 4Brava commenced lawsuits against Sachs and DSC in June 2015 (the "Sachs litigation"). As the Sachs litigation proceeded in the United States District Court for the District of Minnesota, Sachs offered to sell thermal tumbler molds and equipment to NTS. NTS purchased the molds and equipment from Sachs in the fall of 2016. A draft asset purchase agreement (APA) acknowledges the ongoing Sachs litigation. But the final APA does not refer to the litigation. NTS used the molds and equipment purchased from Sachs to sell thermal tumblers, ultimately competing with LeDuc.
After learning of the 2016 sale between Sachs and NTS, LeDuc and 4Brava sent cease and desist letters to NTS.
*888continued to use the molds and equipment and to sell the competing tumblers.
LeDuc initiated this lawsuit on October 4, 2018, alleging claims against NTS for misappropriation of trade secrets, unjust enrichment, tortious interference with prospective economic advantage, and tortious interference with contracts.
ANALYSIS
NTS moves to dismiss the complaint for lack of personal jurisdiction. In opposition to the motion, LeDuc delineates six contacts with Minnesota which, LeDuc argues, justify the exercise of specific personal jurisdiction over NTS. These proffered contacts are (1) NTS's negotiations of the APA with Sachs; (2) NTS's communications with Aroplax, the company storing the molds and equipment; (3) NTS's communications with LeDuc about the molds it purchased from Sachs; (4) Sachs's performance of the APA, including shipping the molds and equipment from Minnesota; (5) NTS's sale of thermal tumblers to Minnesota customers; and (6) NTS's alleged interference with LeDuc's business, which caused harm to LeDuc in Minnesota.
To survive a motion to dismiss for lack of personal jurisdiction, Fed. R. Civ. P. 12(b)(2), a "plaintiff must make a prima facie showing that personal jurisdiction exists," K-V Pharm. Co. v. J. Uriach & CIA, S.A. ,
Federal courts apply state law when determining the bounds of their personal jurisdiction. Walden v. Fiore ,
Due process requires that a non-resident defendant have sufficient minimum contacts with the forum state such that subjecting the defendant to the lawsuit in that forum does not offend "traditional notions of fair play and substantial justice." World-Wide Volkswagen Corp. v. Woodson ,
Courts employ a five-factor test to determine the sufficiency of a defendant's contacts with the forum state: (1) the nature and quality of contacts with the forum state, (2) the quantity of contacts, (3) the relation of the cause of action to the contacts, (4) the interest of the forum state in providing a forum for its residents, and (5) the convenience of the parties. Land-O-Nod Co. v. Bassett Furniture Indus., Inc. ,
I. Primary Factors
When analyzing personal jurisdiction, courts give significant weight to the nature and quality of the asserted contacts, the quantity of contacts, and the relation of the contacts to the cause of action. Each ground for personal jurisdiction that LeDuc advances is analyzed here in light of these primary factors.
A. Negotiation and Performance of the APA and Related Communications
LeDuc contends that NTS's activity related to the APA establishes personal jurisdiction. First, LeDuc alleges that by negotiating the APA, NTS became aware of the ongoing litigation between DSC and LeDuc in Minnesota. Second, LeDuc alleges that NTS communicated with Aroplax and LeDuc, which are Minnesota companies. Third, the APA was performed in Minnesota because, LeDuc asserts, NTS purchased products that were shipped from a Minnesota storage location.
When the assertion of specific personal jurisdiction is based on a contract, courts consider the "terms of the contract and its contemplated future consequences," including whether the contract is for the development or sale of any products in the forum state. Fastpath ,
The circumstances surrounding a contract are generally insufficient, without more, to support a court's exercise of personal jurisdiction over a non-resident defendant. For example, "scattered emails, phone calls, and a wire-transfer of money" are not sufficient contacts for personal jurisdiction. Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG ,
NTS's conduct relating to the contract, the APA, includes negotiation of the APA, conversations related to the APA, and performance of the APA. But this conduct is not of sufficient quality or quantity to establish minimum contacts with Minnesota. LeDuc does not allege that the APA was negotiated in Minnesota or that NTS made any payments to Minnesota. Cf. Wells Dairy ,
Although the negotiation of the APA, the surrounding communications about the APA, and the performance of the APA loosely relate to LeDuc's causes of action, these contacts are of insufficient quality and quantity to establish specific personal jurisdiction over NTS.
B. Sales to Minnesota Customers
LeDuc next asserts that NTS's sales to Minnesota customers support this Court's exercise of specific personal jurisdiction over NTS.
A defendant's single, direct sale to the forum state may be sufficient to confer personal jurisdiction. See Pope v. Elabo GmbH ,
Here, LeDuc argues that NTS sold thermal tumblers to Minnesota residents using intermediaries including Amazon, Walmart, Bed Bath & Beyond, and Overstock. LeDuc makes no allegations of any direct sales by NTS to Minnesota customers, however. NTS's nationwide sales via third-party retailers, which might have included sales to Minnesota customers, are not sufficient *891minimum contacts. See
Accordingly, NTS's sales to Minnesota customers do not justify this Court's exercise of specific personal jurisdiction over NTS.
C. Tortious Conduct
Finally, LeDuc alleges that NTS tortiously interfered with LeDuc's prospective economic advantage and contracts in a manner that caused harm in Minnesota.
A defendant's tortious conduct can support a court's exercise of personal jurisdiction if a plaintiff establishes that "the defendant's acts (1) were intentional, (2) were 'uniquely' or expressly aimed at the forum state, and (3) caused harm, the brunt of which was suffered-and which the defendant knew was likely to be suffered-there." Zumbro, Inc. v. Cal. Nat. Prods. ,
LeDuc alleges that NTS's sales of thermal tumblers constituted intentional torts. Yet even assuming (without deciding) that NTS's actions were tortious, LeDuc fails to provide any basis to conclude that NTS's sales were "performed for the very purpose of having [the] consequences felt" in Minnesota. Dakota Indus. ,
D. Cumulative Contacts
None of LeDuc's proffered contacts is sufficient to confer specific personal jurisdiction over NTS. Nor are the contacts sufficient when considered together. Isolated conversations, nationwide sales, and a contract with, at best, tenuous Minnesota connections do not establish NTS's purposeful availment of the privileges of conducting business in Minnesota. See Fastpath ,
II. Secondary Factors
In addition to the preceding personal jurisdiction analysis, a court may consider the interest of the forum state in providing a forum for its residents and the convenience of the parties. Land-O-Nod Co. ,
For these reasons, LeDuc has not met its prima facie burden of establishing this Court's personal jurisdiction over NTS.
ORDER
Based on the foregoing analysis and all the files, records and proceedings herein, IT IS HEREBY ORDERED :
1. Defendant's motion to dismiss, (Dkt. 6), is GRANTED .
2. Plaintiff's complaint, (Dkt. 1), is DISMISSED WITHOUT PREJUDICE .
LET JUDGMENT BE ENTERED ACCORDINGLY.
LeDuc's cease and desist letters rely on a March 30, 2017 order from the Sachs litigation in which the district court found that Sachs and DSC breached their respective fiduciary duties to LeDuc. See LeDuc Gifts & Specialty Prods., LLC v. Sachs , No. 15-cv-2743,
LeDuc argues that the expectation of litigation in Minnesota supports this Court's exercise of personal jurisdiction over NTS. But LeDuc produces no case law, nor has the Court's research produced any, holding that an expectation of litigation, without more, is a cognizable contact for the purpose of a personal-jurisdiction analysis. An awareness that other entities are involved in litigation in Minnesota does not establish that NTS "purposefully avail[ed] itself of the privilege of conducting activities" in Minnesota. Hanson v. Denckla ,
LeDuc asserts that, if the Court lacks personal jurisdiction over NTS, the interests of justice support transferring this case "[b]ecause of potential statutes of limitations barring claims in the event that the filing date is delayed by dismissal." But LeDuc does not identify the applicable statutes of limitation, the approaching deadlines, or the district to which this matter should be transferred. Nor did LeDuc supplement its briefing following the oral argument, despite LeDuc's representation to the Court that it would do so. As the Court identifies no compelling reason to transfer the case, it declines LeDuc's requested alternative disposition. See Viracon, Inc. ,
Reference
- Full Case Name
- LEDUC GIFTS & SPECIALTY PRODUCTS, LLC v. NEW THERMO-SERV, LTD.
- Cited By
- 3 cases
- Status
- Published