Patterson Dental Supply, Inc. v. Theodore Vlamis

• Court: Court of Appeals of Minnesota
• Decided: September 6, 2016
• Docket: A16-399
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA IN COURT OF APPEALS A16-0399

Patterson Dental Supply, Inc., Respondent,

vs.

Theodore Vlamis, Appellant.

Filed September 6, 2016 Affirmed Reilly, Judge

Ramsey County District Court File No. 62-CV-15-5908

Charles B. Rogers, Aaron G. Thomas, Briggs and Morgan, P.A., Minneapolis, Minnesota (for respondent)

Thomas H. Boyd, Christina Rieck Loukas, Winthrop & Weinstine, P.A., Minneapolis, Minnesota (for appellant)

Considered and decided by Bjorkman, Presiding Judge; Reilly, Judge; and

Klaphake, Judge.*

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. UNPUBLISHED OPINION

REILLY, Judge

Appellant challenges the district court’s denial of his motion to dismiss, for lack of

personal jurisdiction, respondent’s trade-secret and related claims against appellant.

Because sufficient minimum contacts exist to support the exercise of jurisdiction over

appellant, we affirm.

FACTS

Respondent Patterson Dental Supply, Inc. (Patterson) is a corporation with its

principal place of business in Minnesota. Appellant Theodore Vlamis lives in

Pennsylvania and worked for Patterson for 17 years in Scranton, Pennsylvania, as a branch

manager. In August 2015, Vlamis voluntarily terminated his employment with Patterson

to work for Patterson’s primary competitor in the dental market.1 Patterson alleges that

Vlamis misappropriated confidential and proprietary information using his Patterson

e-mail address to send information to his personal e-mail address upon the termination of

his employment, and that Vlamis used removable storage devices and a personal Internet

cloud storage account to copy, store, and access Patterson’s confidential and proprietary

information and trade secrets from a laptop computer provided to him by Patterson’s

Minnesota office.

In October 2015, Patterson filed a lawsuit against Vlamis in Ramsey County

alleging four causes of action: (1) misappropriation of trade secrets; (2) conversion;

1 Vlamis’s new employer, Henry Schein Inc., is a global company headquartered in Melville, New York.

2 (3) breach of duty of confidentiality; and (4) breach of duty of loyalty. Patterson also

sought injunctive relief prohibiting Vlamis from using or disclosing Patterson’s

confidential and proprietary information and trade secrets and requiring the return of the

information. Vlamis moved to dismiss the lawsuit on the basis that the Minnesota court

lacked personal jurisdiction over him because his only contacts with Minnesota occurred

solely in his capacity as a Patterson employee. The district court denied Vlamis’s motion.

The facts as they relate to personal jurisdiction are as follows. Vlamis’s contacts

with Minnesota are limited to contacts through his employment with Patterson. Vlamis

never resided, owned property, had a bank account, or engaged in personal business

activities in Minnesota. While employed by Patterson, Vlamis’s sales territory was limited

to Pennsylvania, New Jersey, and New York. Vlamis never solicited customers, marketed

products, or made sales in Minnesota. However, while employed by Patterson, Vlamis

visited Minnesota approximately 14 times, including a four-week-long training in 1999,

and annual managers’ meetings beginning in 2004. Patterson alleges that it shared strategic

and confidential business and customer information with Vlamis at the annual managers’

meetings in Minnesota. Patterson further asserts that it generated confidential and

proprietary information and loaded this information onto a laptop in Minnesota. There is

no record of Vlamis being physically present in Minnesota when he allegedly e-mailed

himself and used a removable storage device to obtain the confidential and proprietary

information.

3 DECISION

Vlamis argues the district court erred when it concluded that it had specific personal

jurisdiction over him because he is a nonresident who has never purposefully availed

himself of the privilege of conducting personal business in Minnesota and the contacts

alleged by Patterson are insufficient to satisfy the minimum due-process requirements

necessary to be forced to defend a lawsuit in Minnesota. This court reviews de novo

whether personal jurisdiction exists. Volkman v. Hanover Invs., Inc., 843 N.W.2d 789, 794

(Minn. App. 2014).

To preclude dismissal for lack of personal jurisdiction, a plaintiff must make a prima

facie showing of jurisdiction, and a court accepts as true the complaint and supporting

evidence. Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816

(Minn. 1976). This court must view the evidence in the light most favorable to the plaintiff.

Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 820 (8th Cir. 2014). In a close case,

doubts should be resolved in favor of retaining jurisdiction. Hardrives, 307 Minn. at 296,

240 N.W.2d at 818.

A Minnesota court may exercise personal jurisdiction over an out-of-state defendant

as long as jurisdiction is authorized by the long-arm statute and satisfies constitutional due-

process requirements. Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 570

(Minn. 2004). Minnesota’s long-arm statute extends personal jurisdiction over nonresident

defendants to the limits of federal due process. Minn. Stat. § 543.19, subd. 1 (2014). To

determine whether jurisdiction exists Minnesota courts may look to federal law and “the

inquiry collapses into the single question of whether exercise of personal jurisdiction

4 comports with due process.” Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.2d 816, 818 (8th

Cir. 1994); see also Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn.

1992).

The appropriate test is whether a defendant has sufficient minimum contacts with

Minnesota such that exercising personal jurisdiction over him “does not offend traditional

notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310,

316, 66 S. Ct. 154, 158 (1945) (quotation omitted). The key to the minimum contacts

analysis is whether “[t]he defendant’s conduct and connection with the state must be such

that the defendant should reasonably anticipate being haled into court there.” Wessels,

Arnold & Henderson v. Nat’l Med. Waste, Inc., 65 F.3d 1427, 1432 (8th Cir. 1995) (citation

omitted). The United States Supreme Court recently reiterated that “[t]he proper focus of

the ‘minimum contacts’ inquiry in intentional-tort cases is ‘the relationship among the

defendant, the forum, and the litigation.’” Walden v. Fiore, 134 S. Ct. 1115, 1123-26

(2014) (quoting Calder v. Jones, 465 U.S. 783, 788, 104 S. Ct. 1482, 1487 (1984)).

The exercise of personal jurisdiction can be based on “general” or “specific”

personal jurisdiction. Valspar Corp., 495 N.W.2d at 411. Patterson does not allege

Minnesota courts have general jurisdiction over Vlamis.2 The question on appeal is

whether Minnesota courts have specific personal jurisdiction over Vlamis. “In a specific

2 General jurisdiction occurs when “a defendant conducts so much business within a state that it becomes subject to the jurisdiction of that state’s courts for any purpose.” Valspar Corp., 495 N.W.2d at 411.

5 jurisdiction case, the defendant has few contacts with the forum state: in these cases

involving truly minimal contact, the Due Process Clause requires that the case arise out of

or be related to the contacts with the forum.” Id.

Minnesota courts apply a five-factor test to determine whether sufficient contacts

give rise to the exercise of personal jurisdiction over a nonresident defendant: (1) the

quantity of the defendant’s contacts with Minnesota; (2) the nature and quality of the

defendant’s contacts with Minnesota; (3) the connection between the claims and the

defendant’s contacts; (4) Minnesota’s interest in providing a forum; and (5) the

convenience of the parties. Juelich, 682 N.W.2d at 570. “The first three factors determine

whether minimum contacts exist and the last two factors determine whether the exercise of

jurisdiction is reasonable according to traditional notions of fair play and substantial

justice.” Id. “The first three factors are the primary factors, with the last two deserving

lesser consideration.” Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904,

907 (Minn. 2007). We address these factors in turn.

Quantity, nature, and quality of contacts

Vlamis argues that the quantity, nature, and quality of his contacts are insufficient

to exercise jurisdiction because he “has had no contacts whatsoever in his personal and

individual capacity” and asserts his contacts with Patterson in Minnesota as a Patterson

employee have been “less than minimal” and were all at the direction of Patterson.

Vlamis’s argument is premised on the assertion that contacts solely at the direction of his

employer, Patterson, cannot establish a basis for personal jurisdiction over him. In support

6 of this argument, Vlamis relies on Arkansas Rice Growers Coop. Ass’n v. Alchemy Indus.,

Inc., 797 F.2d 565 (8th Cir. 1986).

In Arkansas Rice Growers, the Eighth Circuit determined that 22 nonresident

guarantors of a contractual obligation did not have sufficient contact with the forum state

to confer jurisdiction. 797 F.2d at 573. The court reasoned “[t]he mere fact that the

individual defendants guaranteed an obligation to an Arkansas corporation does not subject

the guarantors to jurisdiction in Arkansas[,]” and “the guarantors’ status as shareholders in

the debtor corporation did not establish the necessary minimum contacts to satisfy due

process even though the guarantors stood to profit if performance of the contract they

guaranteed was successful.” Id. The court was not persuaded by the fact that three of the

guarantors went to Arkansas on one or more occasions because “[t]he law is clear that a

corporate officer or agent who has contact with the forum state only with regard to the

performance of corporate duties does not thereby become subject to jurisdiction in his or

her individual capacity.” Id. at 574.

Vlamis argues that we must apply the “clear law” that contact with the forum state

in performance of employment duties is not sufficient to confer jurisdiction. Vlamis’s

argument is not persuasive because Arkansas Rice Growers is factually distinguishable

from the instant case. Further, we are not persuaded that Arkansas Rice Growers stands

for the premise that an employee’s contacts with a forum at the direction of a corporation

cannot be the basis for establishing sufficient minimum contacts to exercise jurisdiction.

Compare Arkansas Rice Growers, 797 F.2d at 573 with C.H. Robinson Worldwide, Inc. v.

FLS Transp., Inc., 772 N.W.2d 528, 538 (Minn. App. 2009) (exercising jurisdiction over

7 out-of-state employees based solely on contacts that occurred through their employment),

review denied (Minn. Nov. 24, 2009); see also U.S. Surgical Corp. v. Imagyn Med. Techs.,

Inc., 25 F. Supp. 2d 40, 45 (D. Conn. 1998) (finding exercise of jurisdiction over a

nonresident employee constitutional based on employment contacts with the forum state);

Blue Beacon Int’l, Inc. v. Am. Truck Washes, Inc., 866 F. Supp. 485, 490-91 (D. Kan. 1994)

(finding exercise of jurisdiction over a nonresident employee constitutional based on

employment contacts with the forum state).

Vlamis’s status as an employee of a Minnesota-based corporation is different from

that of a guarantor. Unlike the guarantors in Arkansas Rice Growers, Vlamis was not

merely a “passive investor.” 797 F.2d at 574. Throughout the entire duration of his 17-

year employment relationship with Patterson, Vlamis had direct and consistent contact with

the Minnesota office. As early as 1999, Vlamis traveled to Minnesota for work. Once

Vlamis was promoted to branch manager his travel to Minnesota was an annual occurrence.

See Hardrives, Inc., 307 Minn. at 295, 240 N.W.2d at 817 (considering whether a

defendant’s contacts were “numerous and fairly frequent or regular in occurrence”). In

addition to Vlamis’s physical presence in the state, he had other employment-related

contacts. He communicated almost daily with the Minnesota corporate office; at times

during his employment he received compensation and benefits paid from Minnesota; and

a manager from Minnesota supervised him. Vlamis was an at-will employee who benefited

from his employment with Patterson, which included travel and extensive contacts with the

Patterson office in Minnesota. Thus, we conclude that the quantity, nature, and quality of

Vlamis’s contacts support the exercise of jurisdiction.

8 Connection of the contacts with the cause of action

The connection of the contacts with the cause of action in this case also favors an

exercise of jurisdiction. Patterson alleges Vlamis acquired confidential business

information and customer lists in Minnesota at the annual managers’ meetings and the

confidential and proprietary information alleged to be misappropriated was provided to

Vlamis on a laptop with information from Minnesota. See Trident Enters. Int’l, Inc. v.

Kemp & George, Inc., 502 N.W.2d 411, 415 (Minn. App. 1993) (“[W]hen the cause of

action arises out of the contacts, [even] a single transaction can be sufficient to establish

personal jurisdiction over the defendant.”). Thus, Vlamis’s connections are not merely

based on his status as an employee of a corporation with a principal place of business in

Minnesota, because the lawsuit involves allegations that he misappropriated confidential

and proprietary information provided to him from Minnesota. Cf. Arkansas Rice Growers,

797 F.2d at 573 (holding that merely guaranteeing an obligation to a corporation in the

forum state is not a sufficient basis to exercise jurisdiction). There is a nexus between the

lawsuit and Vlamis’s contacts with Minnesota, and as such, this factor favors the exercise

of jurisdiction.

Minnesota’s interest in providing a forum

Vlamis argues that Minnesota does not have an interest in providing a forum for the

lawsuit because he is a Pennsylvania resident, who was employed in Pennsylvania, and

because any information taken from Patterson was taken in Pennsylvania and therefore

would only cause harm to Patterson’s market in Pennsylvania, not Minnesota. However,

Patterson’s principal place of business is in Minnesota and some of the confidential and

9 proprietary information alleged to have been misappropriated was generated in Minnesota.

Vlamis’s argument fails because, although Pennsylvania may also have an interest in

resolving the lawsuit, it does not follow that Minnesota does not have an interest in

providing a forum. When a case involves an alleged injury to a Minnesota resident, both

the resident and Minnesota have an interest in resolving the dispute here. C.H. Robinson,

772 N.W.2d at 538. Thus, we conclude that Minnesota’s interest in providing a forum

favors the exercise of jurisdiction.

Convenience of the parties

Vlamis argues that the convenience of the parties does not favor Minnesota

exercising personal jurisdiction over him because Patterson has a substantial presence and

engages in extensive business activities in Pennsylvania so there is no inconvenience to

Patterson to litigate the dispute in Pennsylvania. This factor is not usually dispositive in

the minimum-contacts analysis. See Pope v. Elabo GmbH, 588 F. Supp. 2d 1008, 1021

(D. Minn. 2008) (“When minimum contacts have been established, often the interests of

the plaintiff and the forum in the exercise of jurisdiction will justify even the serious

burdens placed on the alien defendant.”) (quoting Asahi Metal Indus. Co. v. Superior

Court, 480 U.S. 102, 114, 107 S. Ct. 1026, 1033 (1987)); see also Multi-Tech Sys., Inc. v.

VocalTec Commc’ns, Inc., 122 F. Supp. 2d 1046, 1052 (D. Minn. 2000) (“[D]efeats of

otherwise constitutional personal jurisdiction ‘are limited to the rare situation in which the

plaintiff’s interest and the state’s interest in adjudicating the dispute in the forum are so

attenuated that they are clearly outweighed by the burden of subjecting the defendant to

litigation within the forum.’”) (quoting Viam Corp. v. Iowa Export-Import Trading Co., 84

10 F.3d 424, 429 (Fed. Cir. 1996)). Pennsylvania is not so far away that requiring Vlamis to

travel to Minnesota makes jurisdiction unreasonable. See Volkman, 843 N.W.2d at 797

(noting that requiring the defendant to travel from Maryland did not make jurisdiction

unreasonable). This case does not present the rare situation where Vlamis’s convenience

is clearly outweighed by Patterson’s interest in adjudicating the dispute in Minnesota.

In sum, an analysis of the five factors used to determine whether an exercise of

jurisdiction is constitutional favors the exercise of jurisdiction in this case. Vlamis’s

contacts with Minnesota throughout his employment with Patterson and the allegations that

some of the misappropriated confidential and proprietary information originated in

Minnesota and was provided to Vlamis in Minnesota are contacts sufficient to exercise

jurisdiction in this case. This is not the rare case where the burden placed on Vlamis to

defend against a lawsuit in Minnesota is outweighed by Patterson’s interest in resolving

the dispute in Minnesota.

Vlamis also argues the district court erred when it concluded Minnesota courts have

jurisdiction over him because it misread C.H. Robinson, and material differences between

the facts of the instant case and C.H. Robinson demonstrate a lack of specific personal

jurisdiction over him. This argument is not persuasive. Personal jurisdiction depends upon

a defendant’s contacts with the forum in the aggregate, and the totality of the

circumstances. C.H. Robinson, 772 N.W.2d at 538 (quoting Nw. Airlines, Inc. v. Astraea

Aviation Svcs. Inc., 111 F.3d 1386, 1390 (8th Cir. 1997)). As discussed above, analyzing

the totality of the circumstance in this case demonstrates that sufficient contacts exist to

exercise specific personal jurisdiction over Vlamis in Minnesota. Although, unlike the

11 employees in C.H. Robinson, Vlamis did not sign a choice-of-law provision, choice-of-law

provisions are not determinative of jurisdiction. Fastpath, Inc. v. Arbela Techs. Corp., 760

F.3d 816, 821 (8th Cir. 2014) (“The district court properly rejected the choice-of-law

provision as a determinative factor in establishing jurisdiction as ‘choice-of-law provisions

specifying that the forum state’s laws govern are insufficient on their own to confer

personal jurisdiction.’”). Because we look to the contacts in the aggregate and the totality

of the circumstances, the absence of specific facts that were present in C.H. Robinson does

not preclude the exercise of jurisdiction over Vlamis in the instant case.3

Affirmed.

3 In C.H. Robinson, a corporation with its principal place of business in Minnesota alleged that eight former employees breached non-disclosure agreements. 772 N.W.2d at 532. The employees resided in locations ranging from Canada to Louisiana. Id. at 538. The employees signed employment agreements which contained a Minnesota choice-of-law provision. Id. In addition, C.H. Robinson alleged that the former employees all had ongoing contact with Minnesota, that the employees relied on C.H. Robinson to handle travel, expense reimbursement; and personnel issues, that the employees’ supervisors were located in Minnesota; and that the employees visited Minnesota for training. Id. at 537. Based on these facts, we concluded that C.H. Robinson “satisfied its burden of showing that minimum contacts between its former employees and Minnesota exist so as to create specific personal jurisdiction.” Id. at 538.