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C.A., Inc. v. Stonebranch, Inc.

United States District Court, E.D. New York

November 17, 2014

C.A., INC., Plaintiff,



Before the Court is Stonebranch, Inc.'s ("Stonebranch" or "defendant") renewed motion to dismiss pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(2) for lack of personal jurisdiction. For the reasons that follow, Stonebranch's motion is GRANTED.

I. Background

A. Facts

Plaintiff C.A., Inc. ("CA" or "plaintiff') is a management software and solutions company that offers information technology and business process services to a wide range of business and institutional clients. Compl. ¶ 8. Defendant Stonebranch, Inc. ("Stonebranch"), a Georgia corporation with its principal place of business in Alpharetta, Georgia, competes with plaintiff in the mainframe and distributed computer (client/server) job scheduling and workload automation software market, selling and delivering such software to businesses, municipalities and other institutions in North America. Id. at ¶ 12; Dec. Clay (DE 83-3), ¶ 4.[1] Defendant Turpin ("Turpin") resides in St. Petersburg, Florida. Id. at ¶ 5.

On January 3, 2006, plaintiff hired Turpin, who reported to CA's office in Tampa, Florida, as Director of Technical Sales. Id. at ¶ 6. Turpin executed an Employment and Confidentiality Agreement ("employment agreement") wherein he agreed to maintain the confidentiality of CA's proprietary information. The employment agreement also included a covenant not to compete and a forum selection clause, which provided that the agreement was to be governed by and construed in accordance with New York State law and which limited the filing of a legal action to the federal or state courts located in Suffolk County, New York. Id. at ¶¶ 46, 48; Mem. in Supp., Exh. B ¶ 16(d).

Turpin resigned from CA on May 8, 2012 and left plaintiff's employ on May 11, 2012. Compl. ¶¶ 31, 33. On May 14, 2012, Turpin began working for Stonebranch, primarily from his home in St. Petersburg, Florida, as Director of Technical Sales and Services Operations. Id. at ¶ 35; Turpin Decl. ¶¶ 2, 7.

The complaint alleges that Turpin provided Stonebranch with confidential and proprietary CA information in order for Stonebranch to formulate a bid for a Software Upgrade Project for one of CA's existing clients, the Ohio Public Employee Retirement System ("OPERS"). Compl. ¶¶ 25-38. On June 7, 2012, OPERS advised CA that it awarded the upgrade project to Stonebranch instead of CA. Id. at ¶ 39. CA alleges that it lost more than $1.8 million in revenue as a result of losing the OPERS contract. Id. at ¶ 40.

B. Procedural History

On December 4, 2012, CA commenced this action against defendants alleging: (1) faithless servant, breach of contract and breach of fiduciary duties against Turpin; (2) tortious interference with existing and prospective economic relations; (3) misappropriation of trade secrets; and (4) unfair competition against both defendants. CA also seeks attorney's fees and costs against Turpin based on the employment agreement and an injunction enjoining Stonebranch and Turpin from using CA's proprietary information.

Defendants moved to dismiss the complaint pursuant to FRCP 12(b)(2) for lack of personal jurisdiction and 12(b)(3) for improper venue. The motion was referred to Magistrate Judge Arlene R. Lindsay who issued a Report and Recommendation ("Report") recommending that the motion be granted with respect to Stonebranch based upon plaintiff's failure to establish personal jurisdiction over Stonebranch in accordance with New York's Civil Practice Law and Rules ("CPLR") § 302(a)(1). The Report also recommended that plaintiff's application for jurisdictional discovery be denied with leave to renew if plaintiff was granted leave to amend the complaint to assert general jurisdiction over Stonebranch pursuant to CPLR § 301.

Stonebranch objected to the Report's recommendations because plaintiff had not sought leave to amend its complaint and the complaint failed to allege facts consistent with general jurisdiction over Stonebranch. Plaintiff argued that in its memorandum opposing Stonebranch's motion to dismiss, it presented facts establishing personal jurisdiction over defendant under the "solicitation plus" test of "doing business" and therefore it should be granted leave to amend sua sponte. By Order dated March 7, 2014, plaintiff's request to engage in limited discovery in order to determine whether this Court had jurisdiction over Stonebranch pursuant to CPLR § 301 was granted. Following discovery, the parties submitted revised memoranda to Stonebranch's FRCP 12(b)(2) motion.

II. Discussion

A. Legal Standard for Rule ...

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