Nashua v. Shores CV-95-177-M 07/31/95 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Nashua Corporation, Plaintiff,

v. Civil No. 95-177-M

Andrew Shores, Defendant.

O R D E R

Nashua Corporation ("Nashua") a a company incorporated in

Delaware with a principal place of business in Nashua, New

Hampshire, brings this diversity claim alleging, inter alia,

breach of contract and misappropriation of trade secrets.

Defendant Andrew Shores ("Shores"), a former employee of Nashua,

is a resident of California. Shores has filed a motion to

dismiss, arguing that this court lacks personal jurisdiction over

him. In the alternative. Shores moves for a venue transfer to

the Central District of California. As explained below. Shores'

motions are denied.

I. FACTUAL BACKGROUND

This case arises out an alleged breach of two employment

contracts entered into by the parties more than twenty years ago. In early 1974, Nashua acquired the tape division of Norton

Company, which was located in Watervliet, New York. At that time

Shores was employed by Norton as a research associate and lived

in Schenectady, New York. Shores became an employee of Nashua

upon the acquisition of the Norton Tape Division.

As a condition of continued employment with Nashua, Shores

siqned aqreements in which he promised to forever maintain

Nashua's (and Norton's) trade secrets and to assiqn to Nashua all

of his discoveries and inventions. Shores continued to work for

Nashua in New York, until late February 1975, when he resiqned.

He subsequently lived and was employed in New Rochelle, New York,

and St. Louis, Missouri, before movinq to California in 1979.

Shores has resided and been employed in California ever since.

Nashua alleqes that in 1992, Shores obtained a United States

patent on technoloqy he had oriqinally developed as an employee

of Nashua, thereby breachinq the employment contracts he siqned.1

1 The technoloqy relates to chemical "release aqents" which are applied to the backinq of adhesive tape, labels, or other adhesive products to facilitate their beinq unwound or unstuck.

2 II. PERSONAL JURISDICTION

A. STANDARD OF REVIEW

In diversity jurisdiction cases, personal jurisdiction over

a non-resident defendant is governed, at least in part, by the

forum state's long-arm statute. Goldman, Antonetti, Ferraiuoli,

Axtmaver and Hertell, Partnership v. Medfit Int'l, Inc.,

(1st Cir. 1993). When personal jurisdiction is

contested, the burden is placed on the plaintiff to demonstrate

that the court has such jurisdiction. Kowalski v. Doherty,

Wallace, Pillsburv and Murphy, Attorneys at La w ,

(1st C i r . 198 6).

Jurisdictional facts are construed in the plaintiff's favor,

Buckley v. Bourdon,

(D.N.H. 1988), and, if the

court proceeds based upon the written submissions of the parties

without an evidentiary hearing, the plaintiff need only make a

prima facie showing that jurisdiction exists.2 Kowalski, 787

2 Shores asserts that the court should reguire Nashua to establish jurisdictional facts not by the traditional prima facia showing, but by a preponderance of the evidence. Bolt v. Gar-tec Products, Inc., 967 F,2d 671, 675-76 (1st Cir. 1992). However, as the First Circuit recently noted in Foster-Miller, Inc. v. Babcock & Wilcox Can.,

(1st Cir. 1995), a heightened standard is most appropriate in cases which feature "conflicting versions of the facts." I_d. at 145. This is not such a case. As the parties stated during the hearing, there is no real

3 F.2d at 8. Bolt v. Gar-Tec Products, Inc.,

(1st Cir. 1992). Nevertheless, the plaintiff's demonstration of

personal jurisdiction must be based upon specific facts set forth

in the record in order to defeat a defendant's motion to dismiss.

And, "[i]n reviewing the record before it a court 'may consider

pleadings, affidavits, and other evidentiary materials without

converting the motion to dismiss to a motion for summary

judgement.'" VDI Technologies v. Price,

, 8 7

(D.N.H. 1991)(guoting Lex Computer and Management Corp. v.

Eslinqer & Pelton, B.C.,

(D.N.H. 1987)).

Before a court may exercise personal jurisdiction over a

non-resident defendant, the plaintiff must show, first, that the

forum state's long-arm statute confers jurisdiction over the

defendant, and second, that the exercise of jurisdiction comports

with constitutional due process standards (by establishing that

the defendant has sufficient "minimum contacts" with the forum

state). Kowalski,

. New Hampshire's applicable

long-arm statute, N.H. RSA 510:4, "provides jurisdiction over

foreign defendants to the full extent that the statutory language

dispute regarding the facts relevant to personal jurisdiction.

4 and due process will allow." Estate of Mullen by Mullen v.

Glick, 1994 U.S. Dist. Lexis 16020 at *5 (D.N.H. November 3,

1994) (quoting Phelps v. Kingston,

(1987)).

Accordingly, the court's "proper inquiry ... focuses on

whether jurisdiction comports with federal constitutional

guarantees." Mullen, supra, at *6; see also McClarv v. Erie

Engine & Mfg. Co.,

(D.N.H. 1994). Before a

court can exercise jurisdiction over a foreign defendant in a

manner consistent with the Constitution, the plaintiff must

demonstrate that the defendant has "certain minimum contacts with

[the forum] such that the maintenance of the suit does not offend

'traditional notions of fair play and substantial justice.1"

Helicopteros Nacionales De Colombia, S.A. v. Hall,

(1984)(citations omitted). Before finding that a defendant

has such "minimum contacts," a court must be satisfied that the

defendant's conduct bears such a "substantial connection with the

forum State" that the defendant "should reasonably anticipate

being haled into court there." Burger King Corp. v. Rudzewicz,

(1985) (citing World-Wide Volkswagen Corp.

v. Woodson,

(1980)).

5 A court may exercise either general or specific jurisdiction

over a defendant. "General jurisdiction exists when the

litigation is not directly founded on the defendant's forum-based

contacts, but the defendant has nevertheless engaged in

continuous and systematic activity, unrelated to the suit, in the

forum state." United Electrical, etc. v. 163 Pleasant Street

Corp.,

, 1088 (1st Cir. 1992) . Nashua does not

contend that Shores has engaged in "continuous and systematic"

activity in New Hampshire such as would give rise to general

personal jurisdiction. Accordingly, if the court may properly

exercise personal jurisdiction over Shores, it must be specific

jurisdiction.

A court may exercise specific jurisdiction when the cause of

action arises directly out of, or relates to, the defendant's

forum based contacts. United Electrical, 960 F.2d at 1088-89.

In an effort to assist district courts in determining whether

they might properly exercise specific jurisdiction, the court of

appeals has formulated a three-part test:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the

6 privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

United Electrical, 960 F.2d at 1089.

B. DISCUSSION

1. Relatedness

"[T]he relatedness test is, relatively speaking, a

flexible, relaxed standard." Pritzker v. Yari,

(1st Cir. 1994). In explaining the application of the

"relatedness" prong of the test, the Court of Appeals has:

suggested an analogy between the relatedness reguirement and the binary concept of causation in tort law under which both elements - cause in fact (i.e., the injury would not have occurred "but for" the defendant's forum-state activity) and legal cause (i.e., the defendant's in-state conduct gave birth to the cause of action) - must be satisfied to . . . support specific jurisdiction.

United Electrical, 960 F.2d at 1089.

Nashua alleges Shores had the following contacts with New

Hampshire: 1) he travelled to New Hampshire once at the start of

his employment to tour Nashua's facilities, at least three times

7 during his tenure to discuss his research and development

activities, and finally to tender his resignation; 2) he

voluntarily signed two employment agreements with Nashua, one of

which was executed in New Hampshire; 3) he was paid from New

Hampshire using checks drawn on New Hampshire banks; and 4) he

regularly contacted his supervisor both by phone and in writing

at Nashua's headguarters in New Hampshire in order to discuss his

research.

It is clear that defendant's contacts with New Hampshire are

closely related to Nashua's legal claims. The gravamen of

Nashua's complaint sounds in contract. Shores' contacts with New

Hampshire all flow from, or impact on, his employment contracts.

As such, "the very document that represents [Shores'] forum-

related activity . . . comprises the source and substance of, and

is thus related to," Nashua's claims against him. Pritzker,

. Put simply, but for the contract, there would not

have been contact with this forum nor cause for this suit.

To the extent Nashua's claims are based in tort, the

relatedness prong may be satisfied where it is foreseeable that

the tort's resultant harm will be felt in the forum state. VDI Technologies,

; see also Phelps v. Kingston,

(1987) ("even where the litigation does not 'arise

out of or relate t o 1 forum contacts, those contacts directed at

New Hampshire citizens may satisfy due process for jurisdictional

purposes provided they are substantial.") Here, as more fully

discussed below, there can be no doubt that the intentionally

harmful acts allegedly committed against Nashua would be most

seriously felt in New Hampshire. Accordingly, the court finds

the element of relatedness to be satisfied.

2. Purposeful Availment

To satisfy the "purposeful availment" prong of the

jurisdictional test, Nashua must show that Shores' contacts

constitute "'a purposeful availment of the privilege of

conducting activities in [New Hampshire], thereby invoking the

benefits and protections of [its] laws and making the defendant's

involuntary presence before [the New Hampshire] court

foreseeable.'" Pritzker,

(guoting United

Electrical, 960 F.2d at 1089). The court is satisfied that

Shores purposely availed himself of the privilege of conducting

activities in New Hampshire and, therefore, submitted himself to

the jurisdiction of this court. It is well settled that the entry into even a single

contract with a resident of the forum state can support

jurisdiction. See McGee v. International Life Ins. Co . ,

(1957) ("It is sufficient for purposes of due process

that the suit was based on a contract which had substantial

connection with that State."); Burger King,

n.18

("even a single act can support jurisdiction"). In Burger King,

the Supreme Court held that a Florida court could properly

exercise jurisdiction over a Michigan resident in a breach of

contract action, even though the defendant's only contacts with

Florida were contractual in nature. The court stated that "where

individuals 'purposefully derive benefit1 from their interstate

activities ... it may well be unfair to allow them to escape

having to account in other States for conseguences that arise

proximately from such activities; the Due Process Clause may not

readily be wielded as a territorial shield to avoid interstate

obligations that have been voluntarily assumed." I_d. at 473-475

(guoting Kulko v. California Superior Court,

(1978)); see also Pritzker,

("the jurisprudence of

minimum contacts casts a wide net, and a nonresident defendant

may not always be able to elude the net by such simple expedients

10 as remaining physically outside the forum or limiting contact

with the forum to a single commercial transaction").

Nashua asserts that Shores voluntarily entered into

employment contracts with it, knowing its corporate headguarters

were in New Hampshire. He executed at least one of the contracts

in New Hampshire. Payroll checks issued in performance of the

employment contract were issued in New Hampshire and drawn on New

Hampshire banks. He travelled to New Hampshire in the normal

course of his own performance under the contract. A supervisor

travelled from New Hampshire to New York on a weekly basis in

order to meet with Shores and discuss his work. Finally, Shores

had freguent written and telephone contact with his superiors in

New Hampshire. Taken together, these factors support finding

that Shores purposefully availed himself of the privilege of

conducting activities in New Hampshire such that his subseguent

involuntary presence before a court in this jurisdiction in

connection with those activities was reasonably foreseeable.

Moreover, Shores' alleged intentional breach of contract and

intentionally tortious activity also constitute purposeful

availment. The constitutional reguirements of personal

11 jurisdiction may be satisfied when "it [is] reasonably

foreseeable that the consequences of the defendant's out-of-state

activities would manifest themselves in the forum." Phelps,

; see also, Hugel v. McNeil,

, 4 (1st

Cir. 1989) cert, denied, McNeil v. Hugel,

(1990)

("knowledge that the major impact of the injury would be felt in

the forum State constitutes a purposeful contact"); Concord Labs,

Inc. v. Ballard Medical Products,

(D.N.H.

1988) (jurisdiction proper in New Hampshire "since the brunt of

the harm would be felt in New Hampshire at the plaintiff's

principal place of business").

Here, it was certainly foreseeable to Shores that no matter

where he breached his employment contract or committed the

intentional tort of conversion of Nashua's intellectual property,

the major harm would be felt in New Hampshire at Nashua's

principal place of business. First, Nashua would obviously

suffer economic harm most acutely at its principal place of

business in New Hampshire. But, more significantly, when Shores

obtained a patent on what Nashua alleges to be its own

technology, he prevented Nashua from exercising, in New Hampshire

and elsewhere, the essential right of a patent holder — the

12 right to exclude others from using the patented technology.

Finally, it should be noted by analogy that many courts, when

determining the place of injury in patent infringement suits,

have concluded that the legal situs of the injury is the

principal place of business of the legal owner. See e.g.,

Honeywell v. Metz Apparatewerke,

(7th Cir.

1975) (injury from infringement occurred at patent owner's

principal place of business); Acrison, Inc. v. Control and

Metering Ltd.,

(N.D. 111. 1990) (same);

but see, Beverly Hills Fan Co. v. Roval Sovereign Corp.,

(Fed. Cir. 1994) (injury occurs at place where

infringing sale is made). The same principle should be

applicable here, where Nashua claims to have been deprived of its

property rights, including patent rights, by one who unlawfully

obtained a patent.

In sum. Shores, through both his contracting with a New

Hampshire company and his allegedly intentional breach of

contract and tortious activity directed at a resident of New

Hampshire, has purposely submitted himself to the jurisdiction of

this court.

13 3. Gestalt Factors

The "Gestalt" factors, which make up the third element in

the specific jurisdiction analysis, are:

[T]he plaintiff's interest in obtaining convenient and effective relief; the burden imposed upon the defendant by requiring it to appear; the forum's adjudicatory interest; the interstate judicial system's interest in the place of adjudication; and the common interest of all affected sovereigns, state and federal, in promoting substantive social policies.

Donatelli v. National Hockey League,

(1st Cir.

1990) (citations omitted). The burden is imposed on the

defendant to establish the unreasonableness of the forum. Snow

v. American Morgan Horse Assoc., Inc.,

(D.N.H.).

Here, an examination of the Gestalt factors weighs heavily in

favor of exercising personal jurisdiction over Shores. Since its

principal place of business is in New Hampshire, Nashua has a

strong interest in litigating the case here. Although Shores

will be required to travel from California to New Hampshire for

the trial, the distance "creates no especially ponderous burden

for business travelers." Pritzker,

(discussing

travel from New York to Puerto Rico); see also VDI Technologies,

(California to New Hampshire). Also,

14 because the complaint alleges serious harm to a New Hampshire

resident, the state has a substantial interest in the resolution

of the dispute. See e.g., Keeton v. Hustler Magazine Inc.,

(1984) ("[I]t is beyond dispute that New Hampshire

has a significant interest in redressing injuries that actually

occur within the State"). Finally, no other forum has a greater

interest in deciding this case. Accordingly, the court finds

that the Gestalt factors also support the exercise of in personam

jurisdiction over defendant.

Accordingly, Shore's motion to dismiss for lack of in

personam jurisdiction is necessarily denied as the exercise of in

personam jurisdiction over him is consistent with both the

applicable statute and constitutional due process reguirements.

Ill. VENUE

Shores also moves, pursuant to 28 U.S.C. 1404(a), to

transfer this case to the United States District Court for the

Central District of California. Section 1404(a) provides:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any district where it might have been brought.

15 This litigation might have been brought in the Central District

of California. That court may exercise subject matter

jurisdiction on diversity grounds (plaintiff is a resident of New

Hampshire, the defendant resides in California, and the amount in

controversy exceeds $50,000). 28 U.S.C. 1332(a).

Authority to transfer a case pursuant to 28 U.S.C. 1404(a)

is committed to the court's broad discretion. United States ex

rel. La Valiev v. First Nat'l. Bank,

(D.N.H.

1985). When considering a motion to transfer under Section

14 0 4 (a), the court will consider such factors as the "convenience

of the parties and witnesses and the availability of documents

needed for evidence." Buckley v. McGraw-Hill, Inc., 7

, 439 (D.N.H. 1991). Shores bears the burden of demonstrating

that these factors weigh in favor of transfer. I_d. "[T]he

Supreme Court has held that ' [u]nless the balance is strongly in

favor of the defendant, the plaintiff's choice of forum should

rarely be disturbed.'" I_d. (guoting Gulf Oil Corp. v. Gilbert,

(1947)) .

Applying this standard, transfer is not warranted here.

First, although it certainly would be more convenient for Shores

16 to litigate this matter closer to his home, "[t]ransfer is

inappropriate if the effect is merely to shift inconvenience from

one party to the other." Buckley, 762 F.Supp. at 439 (citations

omitted); see also Crosfield Hastech, Inc. v. Harris Corp.,

(D.N.H. 1987) (in order to justify transfer, the

balance of conveniences must strongly favor moving party).

Moreover, the convenience of the witnesses is the most

significant factor to be considered in Section 1404(a) analysis.

Buckley, 762 F.Supp. at 440. Here, the plaintiff has

demonstrated that all of the witnesses so far identified, with

the exception of Shores, live on the east coast. The majority

live in New Hampshire. Shores argues that he will call several

as yet unidentified witness, all of whom live in California.

However, "amorphous allegations of need as to unnamed witnesses

. . . are inadeguate to satisfy" his burden. Crosfield Hastech,

.

Finally, the "interests of justice," Gulf Oil Co r p .,

, do not mandate transfer of this matter. Nashua's

principal place of business is in New Hampshire, the majority of

the witnesses are in New Hampshire, the injury, if any, was

keenly felt here, and Shores is properly subject to suit in New

17 Hampshire. In the final analysis, this case belongs in New

Hampshire. Accordingly, the defendant's motion for transfer is

also denied.

IV. CONCLUSION

For the foregoing reasons. Shores' motion to dismiss and

alternate motion for transfer of venue (document no. 5) are both

denied.

SO ORDERED.

Steven J. McAuliffe United States District Judge

July 31, 1995

cc: Bruce W. Felmly, Esg. Brian E. Pastuszenski, Esg. Peter S. Cowan, Esg. Robert Strauss, Esg.

18