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Powerdsine, Inc. v. Broadcom Corp.

January 29, 2008

POWERDSINE, INC., AND POWERDSINE, LTD., PLAINTIFFS,
v.
BROADCOM CORP., MARTIN MCNAREY, AND DOUGLAS WANG, DEFENDANTS.



The opinion of the court was delivered by: Feuerstein, J.

OPINION & ORDER

I. Introduction

Plaintiffs PowerDsine, Inc. ("PowerDsine USA") and PowerDsine, Ltd. ("PowerDsine Israel," and collectively "Plaintiffs" or "PowerDsine") commenced this action on June 20, 2007 against Defendants Martin McNarney ("McNarney") and Douglas Wang ("Wang," and, together with McNarney, the "Individual Defendants") for breach of confidentiality and non-competition agreements and against Broadcom Corporation ("Broadcom" and, together with the Individual Defendants, "Defendants") for tortious interference with Plaintiffs' contractual relationships with the Individual Defendants. The Individual Defendants move for dismissal for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(5). In addition, the Defendants move for dismissal, or, in the alternative, transfer of venue, pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a) or 28 U.S.C. § 1404(a).

For the reasons set forth below, the motions are granted in part and denied in part.

II. Background

A. The Parties

1. PowerDsine & Microsemi

PowerDsine Israel is a corporation organized under the laws of Israel, with its principal place of business in Hod Hasharon, Israel. PowerDsine USA, its wholly-owned subsidiary, is a New York corporation with its principal place of business in Melville, New York. The Plaintiffs design and sell computer hardware. Components designed, produced and sold by Plaintiffs are also incorporated into other products by Plaintiffs' customers who then market the integrated product. Plaintiffs' components permit the system into which they are incorporated to provide data and operating power through the same Ethernet cable. (Complaint ("Compl.") ¶ 8) . In or about October 2006, PowerDsine was acquired by non-party Microsemi Corporation ("Microsemi"), a Delaware corporation with its principal place of business in Irvine, California. (Dyer-Bruggeman Affidavit ("Aff.")).

2. Broadcom

Broadcom is a Delaware corporation with its principal place of business in Irvine, California which competes with Plaintiffs. (Compl. p. 2).

3. McNarney

McNarney was hired as West Coast Sales Manager by PowerDsine USA in November 2004. McNarney executed a Confidentiality and Non-Competition Agreement on December 18, 2004 (the "McNarney Agreement") which provided: "This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of New York the courts of which shall have exclusive jurisdiction over the subject matter and the parties in connection with any dispute hereunder." (Compl. Exhibit ("Exh.") A). In September 2005, he was promoted to the position of Director of Sales for North America.

Following the Microsemi purchase, McNarney executed an Assignment of Inventions and Copyrights and Confidential Information Agreement on January 17, 2007 which did not contain a forum selection clause. He held the position of Director of ICS sales following the Microsemi acquisition until April 2007.*fn1

During his career at PowerDsine USA, McNarney worked from California, traveling to New York on four (4) occasions and staying for two to three (2-3) days. Following his promotion in September 2005, he supervised a sales manager who dealt with some New York customers. His payroll checks were issued by the PowerDsine office in New York until about February 2007, when he began to be paid by Microsemi in California.

In early April 2007, McNarney received an offer letter from Defendant Broadcom, and on April 5, 2007, he tendered his resignation to Microsemi and accepted the position of Senior Product Line Manager at Broadcom.

4. Wang

Wang was hired by PowerDsine Israel as a consultant in September 2004. On October 17, 2004, he executed a Confidentiality and Non-Competition Agreement (the "Wang Agreement") which provided: "This Agreement shall be governed by, construed and enforced, at the sole election of the Company at any court." (Compl. Exh. B). He was hired as a full-time Application Engineering Manager in November 2004.

During his career at PowerDsine Israel, Wang visited New York once, in October 2005, for a company-wide sales meeting.

In February 2007, after Microsemi acquired PowerDsine, Wang received a letter from Microsemi stating that his refusal to sign a new employment letter amounted to a voluntary resignation. In May 2007, Wang accepted a position with Broadcom in Taiwan.

III. Personal Jurisdiction

The Individual Defendants move for dismissal for lack of personal jurisdiction pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(5).*fn2

A. Standard

The plaintiff bears the burden of establishing jurisdiction. Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001); Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994). A plaintiff may carry this burden "by making a prima facie showing of jurisdiction" Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998) (citations omitted), through "affidavits and supporting materials[,]" Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981), containing "an averment of facts that, if credited . . ., would suffice to establish jurisdiction over the defendant." Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996); see also Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). Where, as here, the issue is addressed on affidavits, "all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor[.]" A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993).

B. Forum Selection Clauses

Plaintiffs argue that the Individual Defendants consented to personal jurisdiction in this Court by executing confidentiality agreements containing forum selection clauses. The Individual Defendants argue that the forum selection clauses are unenforceable or, in the alternative, that enforcement of the clauses would be unreasonable and unjust.

"Parties can consent to personal jurisdiction through forum-selection clauses in contractual agreements." D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 103 (2d Cir. 2006); see also National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 315 (1964) ("parties to a contract may agree in advance to submit to the jurisdiction of a given court"). When such a clause is part of the contract that forms the basis of the action, it "will be enforced, obviating the need for a separate analysis of the propriety of exercising personal jurisdiction." Packer v. TDI Sys., 959 F. Supp. 192, 196 (S.D.N.Y. 1997).

"Determining whether to dismiss a claim based on a forum selection clause involves a four-part analysis. The first inquiry is whether the clause was reasonably communicated to the party resisting enforcement. See, e.g., D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 103 (2d Cir. 2006). The second step requires us to classify the clause as mandatory or permissive, i.e., to decide whether the parties are required to bring any dispute to the designated forum or simply permitted to do so. See John Boutari & Son, Wines & Spirits, S.A. v. Attiki Imps. & Distribs. Inc., 22 F.3d 51, 53 (2d Cir. 1994). Part three asks whether the ...


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