Wilcox v. Hansen, et al. CV-11-551-PB 4/13/12

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Wilcox Industries Corp.

v. Case N o . 11-cv-551-PB Opinion N o .

Mark Hansen, Advanced Life Support Technologies, Inc.

MEMORANDUM AND ORDER

Wilcox Industries Corp. (“Wilcox”), a New Hampshire

corporation, is suing the Virginia-based Advanced Life Support

Technologies, Inc. (“ALST”) and its president and founder, Mark

Hansen. Wilcox claims that ALST is liable for misappropriation

of trade secrets, common-law unfair competition, violation of

the New Hampshire Consumer Protection Act, and intentional

interference with contractual relations. Wilcox asserts that

its claims against ALST arise out of ALST’s contacts with New

Hampshire while the parties were involved in a two-year

consulting relationship. ALST moves to dismiss the complaint

for lack of personal jurisdiction.1 For the reasons provided

below, I deny the motion.

1 Hansen and ALST also move to dismiss the complaint for failure to state a claim upon which relief may be granted. Doc. N o . 1 1 . Alternatively, they move for entry of an order pursuant to Rule 12(e), requiring Wilcox to provide a more definite statement as 1 I. BACKGROUND

Hansen formed ALST in 2006, while he was employed at Wilcox

as Vice President of Virginia Beach Operations. When his

employment at Wilcox ended in 2007, Hansen and Wilcox initiated

discussions about entering into a consulting agreement, whereby

ALST would serve as a consultant for Wilcox in the design and

manufacture of its respirator systems and provide training and

support for those systems to Wilcox’s customers. Teetzel Decl.

¶¶ 5-6, Doc. N o . 19-8. During those discussions, Hansen acted

on behalf of ALST.

He sent emails to Wilcox’s employees in

New Hampshire from his personal email address expressing his

interest in providing consulting services to Wilcox. See Doc.

N o . 19-9; Doc. N o . 19-10. He also communicated with them via

telephone. Teetzel Decl. ¶ 5 , Doc. N o . 19-8.

Wilcox proposed that the parties sign a formal consulting

agreement.

¶ 7 . The proposed agreement named ALST as the

“consultant” and Hansen as “the sole representative” of ALST who

would provide the services outlined in the agreement. See Doc.

N o . 19-11 at 3 . ALST, however, refused to sign that agreement

and indicated that it would not sign any type of formal

agreement. Teetzel Decl. ¶ 8 , Doc. N o . 19-8.

to Counts I and V of the complaint. Doc. N o . 1 2 . I will rule on those motions in a separate order.

2 Hansen subsequently negotiated an informal consulting

arrangement with Wilcox. As was the case during the

negotiations that predated the proposed formal agreement, Hansen

communicated with Wilcox from his personal, as opposed to the

company’s, email address. See Doc. N o . 19-12. Once the

agreement was reached, he stated, “I am ready to go to work!”

ALST later submitted invoices for Hansen’s services to

Wilcox and Wilcox made payments to ALST. See Doc. N o . 19-4;

Doc. N o . 19-5.

In the course of the consulting relationship, Hansen

traveled to Wilcox’s New Hampshire facility to participate in

meetings about the development of Wilcox’s next-generation

PATRIOT life support device. Teetzel Decl. ¶ 1 0 , Doc. N o . 19-8.

During that time, Hansen also traveled with Wilcox’s employees

to various customer locations throughout the world to market

Wilcox’s current PATRIOT product and to train customers on how

to use the device. West Aff. ¶ 8 , Doc. N o . 19-2. Through those

activities, Hansen was allegedly entrusted with trade secrets

that he and ALST subsequently misappropriated and used to

compete unfairly against Wilcox. While purporting to train

Wilcox’s customers and market the life support systems on

Wilcox’s behalf, Hansen also allegedly marketed ALST to Wilcox’s

3 customers and promoted products and services that competed with

Wilcox.

Shortly after the consulting relationship ended in 2009,

ALST began marketing and selling its own hybrid life support

system. Wilcox contends that ALST’s device incorporates

confidential design and mechanical aspects of Wilcox’s next-

generation PATRIOT product that were discussed at meetings that

Hansen attended in New Hampshire and in communications directed

to and from New Hampshire. See Teetzel Decl. ¶¶ 10-11, Doc. N o .

19-8. Wilcox also alleges that ALST used Wilcox’s confidential

customer information, which Hansen learned of in the course of

the consulting relationship, to solicit business from Wilcox’s

existing customers and make harmful statements about Wilcox.

II. STANDARDS OF REVIEW

A. Motion to Dismiss

In objecting to a motion to dismiss for lack of personal

jurisdiction, the plaintiff bears the burden of persuading

the court that personal jurisdiction exists. Astro-Med, Inc.

v . Nihon Kohden Am., Inc.,

, 8 (1st Cir. 2009).

Because I have not held a hearing on the motion, Wilcox must

make a prima facie showing that the court has personal

jurisdiction over ALST. Cossaboon v . M e . Med. Ctr.,

4 2 5 , 31 (1st Cir. 2010). A prima facie showing requires the

plaintiff to “proffer[] evidence which, if credited, is

sufficient to support findings of all facts essential to

personal jurisdiction.” Lechoslaw v . Bank of Am., N.A.,

9 , 54 (1st Cir. 2010) (internal quotation marks

omitted). I will consider Wilcox’s facts to the extent they

are supported by the evidence and consider the facts offered

by ALST “to the extent that they are uncontradicted.”

Cossaboon, 600 F.3d at 31 (internal quotation marks omitted).

Despite the liberality of the prima facie standard, I will

not “credit conclusory allegations or draw farfetched

inferences.” Negron-Torres v . Verizon Commc’ns,

9 ,

23 (1st Cir. 2007).

B. Personal Jurisdiction

Personal jurisdiction in a diversity action over a non-

resident defendant depends on satisfying both the requirements of

the forum state’s long-arm statute and the due process

requirements of the Fourteenth Amendment. See Cossaboon, 600

F.3d at 29 n.1; N . Laminate Sales, Inc. v . Davis,

4 , 24

(1st Cir. 2005). New Hampshire’s long-arm statutes, RSA § 293-

A:15.10 and RSA § 510:4, extend personal jurisdiction to the

5 extent allowed by due process. 2 Hemenway v . Hemenway,

(2010); see also N . Laminate Sales, 403 F.3d at 2 4 ; Jet

Wine & Spirits, Inc. v . Bacardi & Co., Ltd.,

, 7 (1st

Cir. 2002).

A court may exercise either general or specific personal

jurisdiction, depending on the nature of the defendant’s

contacts with the forum state. Carreras v . PMG Collins, LLC,

(1st Cir. 2011). In this case, Wilcox asserts

that specific personal jurisdiction applies.3 Specific personal

jurisdiction has three parts. Adelson v . Hananel,

5 ,

80 (1st Cir. 2011). The first part asks “whether the asserted

causes of action arise from or relate to the defendant’s

contacts with the forum;” the second asks “whether the defendant

purposefully availed itself of the protections of the forum’s

laws by means of those contacts, such that the defendant could

reasonably foresee being haled into the forum’s courts;” and the

third asks “whether an exercise of jurisdiction is consistent

2 RSA is an abbreviation for New Hampshire Revised Statutes Annotated. 3 ALST argues that Wilcox limited itself to a claim of general jurisdiction because it asserted in its complaint that Hansen was ALST’s alter ego. This argument is obviously incorrect. Alter ego liability can serve as a basis for either general or specific jurisdiction in an appropriate case. Here, it is quite clear that Wilcox is basing its personal jurisdiction argument on a claim that the court has specific personal jurisdiction over ALST. 6 with principles of justice and fair play” in light of the so-

called gestalt factors. Carreras,

(internal

quotation marks and citations omitted). All three requirements

must be satisfied to support a finding of specific personal

jurisdiction. Negron-Torres,

5 .

II. ANALYSIS

ALST contends that Wilcox has not made a prima facie showing

that this court has personal jurisdiction over ALST.

Specifically, ALST argues that the evidence Wilcox submitted in

support of personal jurisdiction establishes, at most, that

Hansen entered into the consulting agreement with Wilcox not on

behalf of ALST but in his personal capacity. Accordingly, ALST

argues, Hansen’s conduct in New Hampshire that gave rise to this

suit is not attributable to ALST. Because the record evidence,

viewed in the light most favorable to Wilcox, establishes a prima

facie case for personal jurisdiction, I deny ALST’s motion.

A. ALST’s Contacts with the Forum

To establish that ALST had sufficient minimum contacts with

New Hampshire such that the exercise of personal jurisdiction

would be proper, Wilcox may rely on “actions imputed to [ALST]

through its agents — as indeed it must, because any action

legally attributed to a corporation is that of one agent or 7 another.” Jet Wine & Spirits,

; see United Elec.,

Radio & Mach. Workers of Am. v . 163 Pleasant S t . Corp.,

, 1090 (1st Cir. 1992) (due to the nature of the corporate

form, “the contacts of a corporation’s agent can subject the

corporation to personal jurisdiction”). The disputed issue is

whether Hansen acted on behalf of ALST in providing consulting

services to Wilcox such that his resulting contacts with New

Hampshire can be imputed to ALST.

Wilcox contends that it entered into a consulting

arrangement with ALST through Hansen as its agent. Wilcox

further asserts that Hansen, as the sole representative of ALST

who provided the agreed-upon services, attended meetings in New

Hampshire where he was entrusted with Wilcox’s trade secrets

that he and ALST subsequently misappropriated. In addition,

Wilcox asserts that ALST, through Hansen, directed email and

telephone communications to New Hampshire-based employees of

Wilcox discussing those trade secrets.

ALST disputes that Hansen acted on behalf of the company

when he entered into the consulting arrangement and provided

services to Wilcox. ALST argues that the evidence Wilcox

submitted in support of personal jurisdiction establishes, at

most, that the two companies contemplated entering into a

consulting agreement, but that ALST refused to sign i t . 8 According to ALST, the evidence shows that Hansen then entered

into a consulting arrangement with Wilcox not on behalf of ALST

but in his personal capacity. Accordingly, his conduct in New

Hampshire that gave rise to this suit is not attributable to

ALST.

Evidence in the record, viewed in the light most favorable

to Wilcox, supports Wilcox’s assertions that Hansen acted on

behalf of ALST. ALST does not dispute that Hansen acted as its

agent in attempting to negotiate a formal agreement between the

two companies. That agreement named ALST as the consultant and

Hansen as the sole representative of ALST who would provide

consulting services to Wilcox. See Doc. N o . 19-11 at 3 . When

ALST refused to sign the agreement, Hansen continued to

negotiate with Wilcox on an informal consulting arrangement.

Nothing in the record suggests that Hansen began acting in a

personal capacity rather than as ALST’s agent when he negotiated

the informal agreement with Wilcox.

In arguing otherwise, ALST makes much of the fact that

Hansen used his personal, as opposed to the company’s, email

address in the subsequent communications with Wilcox, and

stated, “I am ready to go to work,” as evidence that he was

acting in his personal capacity. See Doc. N o . 19-12. ALST,

however, fails to mention that Hansen used the same email 9 address during the initial negotiations between Wilcox and ALST

that predated the proposed formal agreement, and that in those

emails, he similarly referred to himself as the person who would

provide the consulting services to Wilcox. See Doc. N o . 19-9.

In any event, the fact that ALST submitted invoices to

Wilcox for Hansen’s consulting services and that Wilcox made

payments directly to ALST is sufficient to show that Hansen

acted as ALST’s agent in providing those services. By knowingly

accepting the benefits of the arrangement, ALST ratified

Hansen’s actions, such that they are treated as having been

authorized from the outset. See Daynard v . Ness, Motley,

Loadholt, Richardson & Poole, P.A.,

2 , 55 (1st Cir.

2002) (“Whether or not an agent is initially authorized to act

on behalf of a principal, the agent’s actions may be attributed

to the principal, for purposes of personal jurisdiction, if the

principal later ratifies the agent’s conduct.”); Inn Foods,

Inc. v . Equitable Co-op. Bank,

9 4 , 598 n.7 (1st Cir.

1995) (noting that “benefits received are certainly strong

evidence that the principal acquiesced in the agent’s

transaction”). Therefore, it is consistent with due process to

attribute to ALST Hansen’s contacts with New Hampshire in the

course of the consulting arrangement.

10 B. Personal Jurisdiction over Misappropriation Claim

With respect to its misappropriation claim, Wilcox has made

a prima facie showing that this court has personal jurisdiction

over ALST. Wilcox has satisfied its burden to demonstrate that

the claim is related to ALST’s contacts in New Hampshire, that

ALST purposefully availed itself of the benefits of conducting

business in the forum, and that the exercise of jurisdiction is

reasonable. I discuss each element in turn.

1. Relatedness

The relatedness inquiry asks whether “the cause of action

[underlying the litigation] either arises directly out o f , or is

related t o , the defendant’s forum-based contacts.” Harlow v .

Children’s Hosp.,

0 , 61 (1st Cir. 2005). Wilcox’s

asserted causes of action against ALST sound in tort.

Therefore, the court “must probe the causal nexus between the

defendant’s contacts and the plaintiff’s cause of action.”

Phillips Exeter Acad. v . Howard Phillips Fund, Inc.,

(1st Cir. 1999). In undertaking this inquiry, courts

ordinarily ask both whether “the injury would not have occurred

‘but for’ the defendant’s forum-state activity” (cause in fact)

and whether “the defendant’s in-state conduct gave birth to the

cause of action” (proximate cause). Mass. Sch. of Law v . Am.

Bar Ass’n,

6 , 35 (1st Cir. 1998). “Although ‘strict 11 adherence to a proximate cause standard in all circumstances is

unnecessarily restrictive,’ in most cases, ‘the proximate cause

standard better comports with the relatedness inquiry because it

so easily correlates to foreseeability, a significant component

of the jurisdictional inquiry.’” Harlow,

(quoting Nowak v . Tak How Invs., Ltd.,

0 8 , 715 (1st

Cir. 1996)).

The relatedness inquiry begins “by identifying the alleged

contacts, since there can be no requisite nexus between the

contacts and the cause of action if no contacts exist.” United

States v . Swiss Am. Bank, Ltd.,

1 0 , 621 (1st Cir.

2001). ALST’s relevant contacts with New Hampshire are as

follows: (1) travel to Wilcox’s New Hampshire facility to

participate in meetings about the development of Wilcox’s next-

generation PATRIOT life support device; and (2) email and

telephone communications between Wilcox and ALST discussing

design and improvements to the device.

Wilcox’s claim that ALST misappropriated its trade secrets

arises directly out of those contacts with New Hampshire. It

was during those meetings and communications that Wilcox

entrusted ALST with its confidential trade secret information.

Hence, the relationship between Wilcox’s misappropriation claim

and ALST’s contacts with the forum is neither attenuated nor 12 indirect. See United Elec. Workers, 960 F.2d at 1089. Rather,

ALST’s acquisition of Wilcox’s trade secrets through its actions

in New Hampshire forms an “important, or at least material,

element of proof in the plaintiff’s case.” Id. (internal

quotations and alterations omitted). Although actual

misappropriation of trade secrets occurred elsewhere, ALST’s

conduct in New Hampshire “gave birth to the cause of action.”

See Mass. Sch. of Law,

5 . Hence, the relatedness

requirement is easily satisfied with respect to Wilcox’s

misappropriation claim.

2. Purposeful Availment

By engaging in a consulting arrangement with a New

Hampshire corporation, ALST purposefully availed itself of the

privilege of conducting business activities in this forum. “The

function of the purposeful availment requirement is to assure

that personal jurisdiction is not premised solely upon a

defendant’s ‘random, isolated, or fortuitous’ contacts with the

forum state.” Sawtelle v . Farrell,

(1st Cir.

1995) (citing Keeton v . Hustler Magazine, Inc.,

7 0 ,

774 (1984)). Hence, the cornerstones of purposeful availment

are voluntariness and foreseeability. Id.

Here, ALST’s communications directed to New Hampshire and

its travel to the state to attend meetings at Wilcox’s facility 13 were not random, isolated, or fortuitous. Those contacts were

knowing and purposeful. At the time it entered into the

consulting arrangement, ALST knew that Wilcox was a New

Hampshire corporation. Thus, ALST could have foreseen that,

should a claim arise out of Hansen’s actions on behalf of the

company in New Hampshire, it would likely be haled into court in

the forum.

3. The Gestalt Factors

Lastly, I consider whether it is fair and reasonable to

subject ALST to the authority of a court in New Hampshire. The

relevant factors for consideration include “(1) the defendant’s

burden of appearing, (2) the forum state’s interest in

adjudicating the dispute, (3) the plaintiff’s interest in

obtaining convenient and effective relief, (4) the judicial

system’s interest in obtaining the most effective resolution of

the controversy, and (5) the common interests of all sovereigns

in promoting substantive social policies.” United Elec. Radio &

Mach. Workers of Am. v . 163 Pleasant S t . Corp.,

9 , 46

(1st Cir. 1993).

First, ALST’s burden of litigating this case in New

Hampshire falls short of reaching constitutional significance.

The sole representative of ALST with knowledge and involvement

in the underlying facts of this case is Hansen, ALST’s co- 14 defendant who has submitted to the jurisdiction of this court.

Moreover, ALST has not demonstrated any unique burden of

litigating in the state. See Pritzker v . Yari,

3 , 64

(1st Cir. 1994) (“[I]nsofar as staging a defense in a foreign

jurisdiction is almost always inconvenient and/or costly, we

think this factor is only meaningful where a party can

demonstrate some kind of special or unusual burden.”).

Second, New Hampshire has a demonstrable interest in

adjudicating the dispute. As the First Circuit has observed,

“[t]he purpose of [this] inquiry is not to compare the forum’s

interest to that of some other jurisdiction, but to determine

the extent to which the forum has an interest.” Foster–Miller,

Inc. v . Babcock & Wilcox Canada,

3 8 , 151 (1st Cir.

1995) (emphasis in original). New Hampshire has a strong

interest in the prosecution of a case where an out-of-state

defendant came into the state, obtained trade secrets from a New

Hampshire business, and then injured that business by

misappropriating its trade secrets. Hence, this factor also

cuts in favor of jurisdiction.

Third, Wilcox has a considerable interest in obtaining

convenient and effective relief in its home state. I need not

dwell on this factor because “plaintiff’s choice of forum must

15 be accorded a degree of deference with respect to the issue of

its own convenience.” Sawtelle,

.

Fourth, the judicial system’s interest in obtaining the

most effective resolution of the controversy does not appear to

cut in either direction here, as is frequently the case. See Jet

Wine & Spirits,

2 ; Sawtelle,

;

Ticketmaster-N.Y., Inc. v . Alioto,

0 1 , 211 (1st Cir.

1994).

The fifth and last of the gestalt factors, which implicates

the common interests of all sovereigns in promoting substantive

social policies, weighs in favor of jurisdiction. “Here, the

most prominent policy implicated is the ability of a state to

provide a convenient forum for its residents to redress injuries

inflicted by out-of-forum actors.” Sawtelle,

.

When a company does business in New Hampshire or directs its

actions at New Hampshire from outside the state, “it might

frustrate the relevant state substantive social policies (those

embodied in its contract and tort law) to insulate [that

company] from the legal consequences of its actions.” Jet Wine

& Spirits,

2 . Hence, this factor weighs in favor

of the exercise of jurisdiction as well.

16 In sum, relatedness, purposeful availment, and the gestalt

factors all support the exercise of personal jurisdiction over

ALST with respect to Wilcox’s misappropriation claim.

C. Pendent Personal Jurisdiction over Remaining Claims

In addition to the trade secrets misappropriation claim,

Wilcox asserts that ALST is liable for common-law unfair

competition, violation of the New Hampshire Consumer Protection

Act, and intentional interference with contractual relations. I

need not decide whether Wilcox has established jurisdiction over

ALST with respect to those claims because I will exercise

pendent personal jurisdiction over them.

The doctrine of pendent personal jurisdiction provides that

“a district court has discretion to exercise personal

jurisdiction over a claim that it ordinarily lacks personal

jurisdiction over only when that claim arises out of the same

common nucleus of operative fact as does a claim that is within

the in personam jurisdiction power of the court.” 4A Charles

Alan Wright & Arthur R. Miller, Federal Practice and Procedure §

1069.7 (3d ed. 2010); see Aftokinito Properties, Inc. v .

Millbrook Ventures, LLC, 09-CV-415-JD,

, at *6

(D.N.H. May 2 5 , 2010); GT Solar Inc. v . Goi, CIV. 08-CV-249-JL,

, at *12 (D.N.H. Oct. 1 6 , 2009); D’Jamoos v .

Atlas Aircraft Ctr., Inc.,

6 7 , 174 (D.N.H. 17 2009); see also Action Embroidery Corp. v . Atlantic Embroidery,

Inc.,

(9th Cir. 2004) (“When a defendant

must appear in a forum to defend against one claim, it is often

reasonable to compel that defendant to answer other claims in

the same suit arising out of a common nucleus of operative

facts. We believe that judicial economy, avoidance of piecemeal

litigation, and overall convenience of the parties is best

served by adopting this doctrine.”); United States v . Botefuhr,

(10th Cir. 2002) (“[T]he majority of federal

district courts and every circuit court of appeals to address

the question have upheld the application of pendent personal

jurisdiction . . . . ” ) .

Wilcox’s remaining claims against ALST arise from the same

nucleus of facts as the misappropriation claim, namely, ALST’s

actions in the course of the consulting relationship with

Wilcox. Specifically, the common nucleus is the allegation that

ALST, through its contacts with New Hampshire, had access t o ,

used improper means to obtain, and subsequently misappropriated

the proprietary information regarding Wilcox’s next-generation

PATRIOT device and its customers. Therefore, I will exercise

pendent personal jurisdiction over Wilcox’s remaining claims.

18 IV. CONCLUSION

For the aforementioned reasons, I deny ALST’s motion to

dismiss for lack of personal jurisdiction (Doc. N o . 1 0 ) .

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

April 1 3 , 2012

cc: Jeremy T . Walker, Esq. Nicholas F. Casolero, Esq. Stephen B . Mosier, Esq. Todd A . Sullivan, Esq.

19