United States District Court, D. Arizona
ORDER
G.
MURRAY SNOW CHIEF UNITED STATES DISTRICT JUDGE.
Pending
before the Court are Defendants Convergence Systems Limited,
et al.'s (“Convergence”) and Jerry
Garrett's (“Garrett”) individual Motions to
Dismiss pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(3), (Doc.
14, 15). Also pending before the Court are Plaintiff Hill-Rom
Services Inc.'s (“Plaintiff”) Motion for
Jurisdictional Discovery (Doc. 18) and Motion for Protective
Order (Doc. 28). For the following reasons, Convergence's
Motion to Dismiss is denied and Garrett's Motion to
Dismiss is granted. Plaintiff's Motion for Jurisdictional
Discovery is denied as moot. Defendants shall notify the
Court within 14 days if they continue to object to
Plaintiff's Motion for Protective Order.[1]
BACKGROUND
Plaintiff,
an Indiana corporation, brings this action against
Convergence and Garrett for, inter alia, the theft
of its trade secrets and breach of an implied in fact
contract. Convergence is organized under the laws of the Hong
Kong Special Administrative Region and maintains its
headquarters there. Garrett, a member of Convergence, is a
citizen of the Hong Kong Special Administrative Region.
Plaintiff
is a health company that provides a range of patient care
solutions. To assist healthcare personnel with the detection
of incontinence events in hospital beds, Plaintiff began
developing moisture detection systems that would detect and
signal the presence of incontinence events to healthcare
personnel (the “Project”). Convergence, which
specializes in the design of radio frequency identification
(“RFID”), was part of the design group on the
Project. Convergence became involved in the Project through
its relationship with Helvetia Wireless, LCC
(“Helvetia”), a non-party to this action.
Helvetia
is a Delaware limited liability company with its principal
place of business in Arizona. Helvetia sought
Convergence's assistance integrating Convergence's
RFID antennas and readers with Helvetia's moisture sensor
system to help prepare a prototype sensor pad that could be
shown, and possibly sold, to Plaintiff. As part of this
collaboration, Convergence and Helvetia executed a Mutual
Non-Disclosure Agreement (“NDA”). The NDA
provides that “[a]ll Confidential Information shall
remain the property of the discloser.” (Doc. 14-1 at
3.) (alterations in original). The NDA also contains an
Arizona choice of law clause and a provision designating
Arizona as the venue where disputes arising out of the NDA
will be arbitrated. The location where the NDA was executed
is not alleged. Plaintiff asserts that by entering into the
NDA Convergence “agreed to treat and hold all Project
information disclosed to it in strict confidence.”
(Doc. 1 at 8.) Plaintiff further asserts that Convergence
entered into the NDA “for the benefit of
[Plaintiff].” (Doc. 1 at 9.) It is undisputed, however,
that Plaintiff was not a signatory to the NDA.
Throughout
the course of the Project, Convergence made eight Project
related shipments of Convergence products to Helvetia's
Arizona office and engaged in frequent communications with
Helvetia and other project personnel. In February 2014, at
the request of Helvetia, Garrett, on behalf of Convergence,
attended a Project meeting at Helvetia's Arizona office.
Garrett gave a single presentation at the meeting regarding
Convergence's products. According to Plaintiff, the
Arizona meeting also included discussions, review, and
testing of the incontinence detection solution proposed to
Plaintiff at that time. Plaintiff also claims that during his
time in Arizona, Garrett was privy to discussions regarding
certain of Plaintiffs trade secrets. (Doc. 19-1 at 5.)
Plaintiff contends that it made a presentation to the meeting
attendees, including Garrett, explaining that the Project was
confidential to Plaintiff and that all information, designs,
and intellectual property generated from the Project were
owned by Plaintiff.
Sometime
after Convergence's involvement in the Project ceased,
Convergence filed for and was issued United States Patent No.
10, 134, 489 (the “Patent”). Garrett is named as
an Inventor on the Patent, but Convergence is the named
assignee. Plaintiff claims that the Patent improperly uses
and discloses Plaintiff's trade secrets that Convergence
and Garrett learned at the Arizona meeting. As a result,
Plaintiff brought this action alleging, inter alia,
misappropriation of trade secrets and breach of an implied in
fact contract to maintain the confidentiality of any
information disclosed during the Project. Convergence and
Garrett move, in separate motions, to dismiss the Complaint
in full for lack of personal jurisdiction pursuant to Federal
Rule of Civil Procedure 12(b)(2) and for improper venue
pursuant to Rule 12(b)(3). (Doc. 14, 15.) Plaintiff responded
in opposition to Defendants' motions arguing that
Defendants are subject to personal jurisdiction pursuant to
Rule 4(k)(1), or in the alternative Rule 4(k)(2). In a
separate paper, Plaintiff requested the Court to issue an
order granting 90 days for Plaintiff to conduct
jurisdictional discovery. (Doc 18.)
DISCUSSION
I.
Motions to Dismiss for Lack of Personal Jurisdiction
A.
Legal Standard
“When
a defendant moves to dismiss for lack of personal
jurisdiction, the plaintiff bears the burden of demonstrating
that the court has jurisdiction over the defendant.”
Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th
Cir. 2006). Where, as here, the motion to dismiss a complaint
for lack of personal jurisdiction “is based on written
materials rather than an evidentiary hearing, ‘the
plaintiff need only make a prima facie showing of
jurisdictional facts.'” Schwarzenegger v. Fred
Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004).
When
determining the sufficiency of a prima facie showing,
“[t]he court may consider evidence presented in
affidavits.” Doe v. Unocal Corp., 248 F.3d
915, 922 (9th Cir. 2001). The court must assume as true all
uncontroverted facts in the complaint and must interpret all
evidentiary disputes in the plaintiff's favor. See
Schwarzenegger, 374 F.3d at 800. However, “the
plaintiff cannot simply rest on the bare allegations of its
complaint” if controverted by evidence incorporated
into the defendant's motion. Id. (internal
quotation omitted); see also Data Disc, Inc. v.
Sys. Tech. Assocs., 557 F.2d 1280, 1284 (9th Cir. 1977)
(A court “may not assume the truth of allegations in a
pleading which are contradicted by affidavit.”). All
evidence must be admissible to be considered. See
Travelers Cas. & Sur. Co. of Am. v. Telstar Const. Co.,
Inc., 252 F.Supp.2d 917, 923 (D. Ariz. 2003).
B.
Personal Jurisdiction
A
federal court sitting in diversity “applies the
personal jurisdiction rules of the forum state provided the
exercise of jurisdiction comports with due process.”
Scott v. Breeland, 792 F.2d 925, 927 (9th Cir.
1986). The Arizona long arm statute is co-extensive with the
limits of federal due process. See Doe v. Am. Nat'l
Red Cross, 112 F.3d 1048, 1050 (9th Cir. 1997) (citing
Batton v. Tenn. Farmers Mut. Ins. Co., 153 Ariz.
268, 270, 736 P.2d 2, 4 (1987)); see also Ariz. R.
Civ. P. 4.2(a). “Due process requires that nonresident
defendants have certain minimum contacts with the forum
state, so that the exercise of personal jurisdiction does not
offend traditional notions of fair play and substantial
justice.” Doe, 112 F.3d at 1050 (citing
Int'l Shoe Co. v. Wash., 326 U.S. 310, 316
(1945)).
There
are two types of personal jurisdiction-general and specific.
See Daimler AG v. Bauman, 571 U.S 117, 126-27
(2014). Plaintiff does not argue that Convergence or Garrett
is subject to general personal jurisdiction in Arizona; thus,
only specific personal jurisdiction need be considered.
1.
Convergence
Convergence
has sufficient minimum contacts with Arizona to be subject to
specific personal jurisdiction in the state. “There are
three requirements for a court to exercise specific
jurisdiction over a nonresident defendant: (1) the defendant
must either ‘purposefully direct his activities'
toward the forum or ‘purposefully avail[ ] himself of
the privileges of conducting activities in the forum';
(2) ‘the claim must be one which arises out of or
relates to the defendant's forum-related activities';
and (3) ‘the exercise of jurisdiction must comport with
fair play and substantial justice, i.e. it must be
reasonable.'” Axiom Foods, Inc. v. Acerchem
Int'l, Inc., 874 F.3d 1064, 1068 (9th Cir. 2017)
(quoting Dole Food Co., Inc. v. Watts, 303
F.3d 1104, 1111 (9th Cir. 2002)). Plaintiff bears the burden
of establishing the first two prongs of the test.
Id. If Plaintiff succeeds, the defendant must show
that exercising jurisdiction over it would be unreasonable.
Id. at 1069.
a.
Purposeful Availment/Direction
The
first prong of the specific jurisdiction test is divided into
two concepts: “purposeful direction” and
“purposeful availment.” See Schwarzenegger v.
Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir.
2004). Purposeful direction is typically used in tort
actions, while purposeful availment is typically used in
contract actions. Id. Although Plaintiff alleges
claims that sound in both tort and contract, it may establish
jurisdiction for all claims under either test. See Picot
v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015)
(“If personal jurisdiction exists over one claim, but
not others, the district court may exercise pendent personal
jurisdiction over any remaining claims that arise out of the
same ‘common nucleus of operative facts' as the
claim for which jurisdiction exists.”).
Purposeful
direction requires the defendant to “(1) commit[] an
intentional act, (2) expressly aimed at the forum state, (3)
causing harm that the defendant knows is likely to be
suffered in the forum state.” Dole Food Co.,
Inc., 303 F.3d at 1111. Plaintiff does not argue that
Convergence expressly aimed any conduct at Arizona, or that
it was foreseeable that Plaintiff would suffer any harm in
Arizona. Instead, Plaintiff ...