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., 982 F.2d
686, 690 (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 , 787 F.2d 7, 8
(1st C i r . 198 6).
Jurisdictional facts are construed in the plaintiff's favor,
Buckley v. Bourdon, 682 F.Supp. 95, 98 (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., 46 F.3d 138 (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., 967 F.2d 671, 674-75
(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, 781 F.Supp. 85, 8 7
(D.N.H. 1991)(guoting Lex Computer and Management Corp. v.
Eslinqer & Pelton, B.C., 676 F.Supp. 399, 402 (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, 787 F.2d at 9-10. 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, 130 N.H. 166, 177 (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., 856 F.Supp. 52, 54 (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, 466 U.S. 408,
414 (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,
471 U.S. 462, 473-75 (1985) (citing World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 297 (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., 960 F.2d 1080, 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, 42 F.3d 53, 61
(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.
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, 42
F.3d at 61. 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, 781 F.Supp. at 92; see also Phelps v. Kingston, 130
N.H. 166, 172 (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, 42 F.3d at 61 (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 . , 355 U.S.
220, 223 (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, 471 U.S. at 476 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, 436 U.S. 84, 96
(1978)); see also Pritzker, 42 F.3d at 62 ("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, 130
N.H. at 172-73; see also, Hugel v. McNeil, 886 F.2d 1 , 4 (1st
Cir. 1989) cert, denied, McNeil v. Hugel, 494 U.S. 1079 (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, 701 F. Supp. 272, 276 (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, 509 F.2d 1137, 1142 (7th Cir.
1975) (injury from infringement occurred at patent owner's
principal place of business); Acrison, Inc. v. Control and
Metering Ltd., 730 F.Supp. 1445, 1448 (N.D. 111. 1990) (same);
but see, Beverly Hills Fan Co. v. Roval Sovereign Corp., 21 F.3d
1558, 1571 (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, 893 F.2d 459, 465 (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., 1989 WL 508485 (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, 42 F.3d at 64 (discussing
travel from New York to Puerto Rico); see also VDI Technologies,
781 F.Supp. at 90-92 (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., 465
U.S. 770, 776 (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, 625 F.Supp. 591, 594 (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 62 F.Supp.
430, 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,
330 U.S. 501, 508 (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., 672
F.Supp. 580, 589 (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,
672 F.Supp. at 589.
Finally, the "interests of justice," Gulf Oil Co r p ., 330
U.S. at 508, 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.