Pacific Scientific Energetic Materials Company (Arizona) LLC et al v. Ensign-Bickford Aerospace & Defense Company

Filing 54

MEMORANDUM OPINION AND ORDER, denying Ensign-Bickford's 18 Motion to Dismiss for Lack of Personal Jurisdiction, for failure to state a claim and for transfer; denying the 37 Motion for Transfer of Venue. Signed by Judge Joseph R Goodwin on 9/23/11.(REW)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA

PACIFIC SCIENTIFIC ENERGETIC
MATERIALS COMPANY (ARIZONA) LLC, et al.,
Plaintiffs,
NO. CV-10-02252-PHX-JRG

v.

ENSIGN-BICKFORD AEROSPACE &
DEFENSE COMPANY,
Defendant.

MEMORANDUM OPINION & ORDER
Pending before the court are the defendant’s Motion to Dismiss, or in the Alternative, to
Transfer to the United States District Court for [the District of] Connecticut [Docket 18] and the
defendant’s Motion to Transfer to the United States District Court for [the District of] Connecticut
[Docket 37]. For the following reasons, the motions are DENIED.
I.

Background
This case arises out of a series of letters exchanged between the plaintiffs and the defendant

regarding the defendant’s patent portfolio. In the first letter, the defendant stated that its technology
might be of use to the plaintiffs and offered to enter into license negotiations. The plaintiffs allege
that as the communications progressed, the defendant accused the plaintiffs of infringing three
United States patents. The plaintiffs brought a declaratory judgment action seeking a declaration

that the defendant’s patents at issue are invalid, unenforceable, and that the plaintiffs are not directly
or indirectly infringing upon them. The plaintiffs additionally allege a state law claim for tortious
interference with a contract.
Pacific Scientific Energetic Materials Company (Arizona), LLC (“PSEMC-Arizona”) and
Pacific Scientific Energetic Materials Company (California), LLC, (“PSEMC-California”)
(collectively “PSEMC”), are two separate entities. PSEMC-California is a California corporation
with its principal place of business in Valencia, California. PSEMC-Arizona is a Delaware
corporation with its principal place of business in Chandler, Arizona. The companies, both named
plaintiffs, allegedly operate as a single 750-employee unit under their parent company, the Danaher
Corporation. (Pls.’ Resp. Def.’s Mot. Dismiss [Docket 33], at 2.) The president, executives, and
staff all serve PSEMC as a whole, and the companies share accounting, expenses, forecasting,
strategic initiatives, planning, and project management. (Id.) PSEMC designs, develops, and
produces ordnance, pyrotechnics, electronics, laser components, and systems for the aerospace,
defense, and commercial industries. (Compl. [Docket 1] ¶ 6.)
The defendant, Ensign-Bickford Aerospace & Defense Company (“Ensign-Bickford”), is a
Connecticut corporation with its principal place of business in Connecticut. Ensign-Bickford is also
registered to do business in Arizona. It has designated a registered agent for service of process in
Arizona and has employees who operate full-time out of an office in Arizona. Although EnsignBickford allegedly competes with PSEMC for customers and government and commercial contracts,
the parties had discussed the possibility of a cooperative business arrangement before this dispute
arose. (Id. ¶¶ 8, 11.)
On May 29, 2009, Ensign-Bickford sent a letter to PSEMC’s president claiming that Ensign-

2

Bickford’s “technology may be of use under U.S. Government programs . . . in which we understand
Pacific Scientific to be involved.” (Def.’s Mot. Dismiss Ex. 1 [Docket 18-1], at 3.) Specifically,
Ensign-Bickford stated that it owns three patents, Nos. 6,584,907, 6,889,610, and 7,278,658, “which
are directed toward an ordnance firing system.” (Id.) Ensign-Bickford then offered to enter into a
licensing agreement with PSEMC. (Id.) According to PSEMC, over the course of sixteen months
Ensign-Bickford sent several additional letters to PSEMC requesting information regarding
PSEMC’s activity in the U.S. Government programs and the patents at issue.1 Ensign-Bickford
claimed that its concerns arose out of “information obtained from customers who have sought either
alternatives to PSEMC or who have been in the process of considering Ensign-Bickford’s system
or PSEMC’s system who understand [Ensign-Bickford’s] patent estate and have expressed that they
don’t see how it is possible that PSEMC is not in conflict with the Ensign-Bickford patent estate.”
(Compl. ¶ 18.)
PSEMC maintained that its product, Smart Energetics Architecture (“SEATM ”), is “wholly
distinct from Ensign-Bickford’s patent portfolio in numerous, significant respects” and, therefore,
according to the plaintiffs, does not infringe upon Ensign-Bickford’s patents. (Id. ¶ 14.) PSEMC
further informed Ensign-Bickford that it “had no intention of disclosing the detailed, highly
confidential, proprietary and sensitive competitive information that Ensign-Bickford requested for
its patent infringement allegations, [because PSEMC] fully and reasonably believed it did not
infringe Ensign-Bickford’s patents.” (Id. ¶ 16.) PSEMC did not respond to Ensign-Bickford’s

1

At some point between May 29, 2009 and November 16, 2009, the presidents of
Ensign-Bickford and PSEMC met in Arizona and discussed the relevant patents as well as a
potential business collaboration. Additionally, PSEMC (according to the defendant, the
California office only) entered into a confidentiality agreement with Ensign-Bickford for the
purpose of “exploring a cooperative business arrangement.” (Def.’s Mot. Dismiss Ex. 2, at 6.)
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September 30, 2010, letter because it felt that communications had stalled and any response was
futile. (Id. ¶ 22.)
As a result of this dispute, PSEMC filed suit on October 21, 2010, seeking a declaratory
judgment that the patents at issue are invalid, unenforceable, and not being directly or indirectly
infringed.

PSEMC also alleges that Ensign-Bickford tortiously interfered with PSEMC’s

confidentiality agreements with its customers and potential customers. On January 6, 2011, EnsignBickford moved the court to: (1) dismiss the action for lack of personal jurisdiction; (2) dismiss the
action for improper venue; (3) decline to exercise its jurisdiction under the Declaratory Judgment
Act; (4) dismiss the intentional interference with a contract claim for failure to state a claim upon
which relief can be granted; and (5) transfer the case to the United States District Court for the
District of Connecticut pursuant to 28 U.S.C. § 1406 [Docket 18].

On May 5, 2011, Ensign-

Bickford filed its Motion to Transfer to the United States District Court for [the District of]
Connecticut, this time pursuant to 28 U.S.C. § 1404 [Docket 37]. The motions have been fully
briefed, and the matter is ripe for review. The court will address each of Ensign-Bickford’s
arguments in turn.
II.

Motion to Dismiss for Lack of Personal Jurisdiction
Ensign-Bickford moves the court to dismiss for lack of personal jurisdiction. According to

Ensign-Bickford, general jurisdiction does not exist because its principal place of business is in
Connecticut, none of its officers reside in Arizona, its shareholder meeting takes place in
Connecticut, and “[n]one of the activities at Ensign’s Arizona office relate to the patented products
or the patents at issue in this case.” (Def.’s Mot. Dismiss, at 7.) The plaintiffs contend that the court
has general jurisdiction because, among other things, Ensign-Bickford is registered to do business

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in Arizona, has a registered agent for service of process in Arizona, and maintains an office and
employees in Arizona. (Pls.’ Resp. Def.’s Mot. Dismiss, at 6.) The defendant argues that specific
jurisdiction does not exist because the letters and communications exchanged between EnsignBickford and PSEMC during discussions about Ensign-Bickford’s patent estate are the only contacts
directed at the forum state that relate to the claim, and these contacts are insufficient to confer
specific jurisdiction. In response, the plaintiffs assert that these letters amounted to accusations of
patent infringement, and that the case arises out of these contacts.
a.

Standard of Review

When a defendant moves to dismiss a patent case for lack of personal jurisdiction pursuant
to Rule 12(b)(2) of the Federal Rules of Civil Procedure, the court applies Federal Circuit law
“because the jurisdictional issue is intimately involved with the substance of the patent laws.”
Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009) (internal
quotation marks omitted); see also Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1354 (Fed.
Cir. 2002) (“[W]e apply Federal Circuit law to personal jurisdiction inquiries over out-of-state
patentees as declaratory judgment defendants.”). When the court addresses the jurisdictional
question without any discovery, the burden is on the plaintiffs to make a prima facie showing that
the defendant is subject to personal jurisdiction. Autogenomics, 566 F.3d at 1017. In these
circumstances, a court must accept the uncontroverted allegations in the plaintiffs’ complaint as true
and resolve factual conflicts in the affidavits in the plaintiffs’ favor. Id. (citing Elecs. for Imaging,
Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003)). However, the plaintiffs are only entitled to
those inferences that are reasonable. Id. at 1018.
To assess whether personal jurisdiction can be exercised over a non-resident defendant, the

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court applies a two-step analysis. Id. at 1017. First, the court determines whether the long-arm
statute of the state in which the federal court sits permits service of process. Second, the court
determines whether exercising personal jurisdiction over the defendant would comport with the Due
Process Clause.2 Id. (citing Genetic Implant Sys., Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458
(Fed. Cir. 1997) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-76 (1985))). Because
the Arizona long-arm statute is coextensive with the full reach of due process, it is unnecessary in
this case to go through the two-step process to determine whether personal jurisdiction exists. Ariz.
R. Civ. P. 4.2(a); see also Campbell Pet Co. v. Miale, 542 F.3d 879, 884 (Fed. Cir. 2008) (explaining
that when “the state’s long-arm statute extends to the limits of due process, the two-part inquiry
collapses into one”). Rather, the statutory inquiry merges with the constitutional inquiry, and the
analysis centers on whether exercising personal jurisdiction over the defendant is consistent with
the Due Process Clause.
Exercising personal jurisdiction over a non-resident defendant is consistent with the Due
Process Clause if the defendant has sufficient “minimum contacts” with the forum such that
requiring the defendant to defend a lawsuit in the forum would not “offend traditional notions of fair
play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal
quotation marks omitted). The plaintiff may satisfy the “minimum contacts” requirement by
establishing either “specific jurisdiction” or “general jurisdiction.” See Autogenomics, 566 F.3d at
1017.

Establishing general jurisdiction “requires that the defendant have ‘continuous and

2

Because this is a federal question, the Due Process Clause of the Fifth Amendment
applies. Although the Supreme Court’s constitutional jurisprudence of personal jurisdiction
analyzes only state and diversity cases, the Federal Circuit applies the minimum contacts
standard in federal cases. LSI Industries, Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 n.5
(Fed. Cir. 2000).
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systematic’ contacts with the forum state and confers personal jurisdiction even when the cause of
action has no relationship with those contacts.” Id. at 1017 (citing Silent Drive v. Strong Indus., Inc.,
326 F.3d 1194, 1200 (Fed. Cir. 2003)). “Specific jurisdiction, on the other hand, must be based on
activities that arise out of or relate to the cause of action, and can exist even if the defendant’s
contacts are not continuous and systematic.” Id. Because the court finds that there is general
jurisdiction over Ensign-Bickford in Arizona, the court need not address whether specific
jurisdiction exists.
General jurisdiction is appropriate only where the defendant’s contacts with the forum are
“continuous and systematic.” Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415
(1984). Applying the principle of general jurisdiction requires navigating between two Supreme
Court mileposts: Helicopteros, in which the Court found general jurisdiction lacking, and Perkins
v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), in which the Court found it satisfied.
In Perkins, an Ohio court exercised personal jurisdiction over a Philippine corporation that was
operating in Ohio as its “home away from home” during the Japanese occupation of the
Phillippines. See 342 U.S. at 438, 445. The president of the company kept an office in Ohio, where
he maintained files, held meetings, and carried on correspondence. These contacts convinced the
Court that the foreign company was “carrying on in Ohio a continuous and systematic, but limited,
part of its general business,” thus justifying exercising personal jurisdiction over the defendant. Id.
at 438. In Helicopteros, by contrast, the defendant never had an office in the Texas, never was
authorized to perform business in Texas, never had a registered agent for service of process, and
never had an employee based there, performed any services there, or sold any product there. See
466 U.S. at 411. In short, the Court found that the defendant’s fleeting contacts with Texas did not

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“constitute the kind of continuous and systematic general business contacts the Court found to exist
in Perkins.” Id. at 416.
Once a party has sustained a prima facie showing of minimum contacts, the court must
determine whether exercising jurisdiction would be reasonable. Patent Rights Prot. Grp. v. Video
Gaming Tech., 603 F.3d 1364, 1369 (Fed. Cir. 2010). The factors commonly considered as part of
this analysis include: (1) the burden on the defendant; (2) the forum state’s interest in adjudicating
the dispute; (3) the importance of the chosen forum to the plaintiff’s interest in obtaining relief; (4)
the most efficient forum for judicial resolution of the dispute; and (5) the “shared interest of the
several States in furthering fundamental substantive social policies.” World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 292 (1980). When the defendant purposefully directs its activities at the
forum, it must present a compelling case that the presence of other factors renders jurisdiction
unreasonable. These compelling cases “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.”
Patent Rights Prot. Grp., 603 F.3d at 1369 (citing Beverly Hills Fan Co. v. Royal Sovereign Corp.,
21 F.3d 1558, 1568 (Fed. Cir. 1994)).
b.

Discussion

To determine whether a defendant’s activities with the forum state are “continuous and
systematic,” the court must look at the facts in each case and make a determination. LSI Indus. Inc.
v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000). Ensign-Bickford has the following
contacts with Arizona: (1) it is registered to do business in Arizona; (2) it has designated a registered

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agent for service of process; (3) it maintains an office in Tempe, Arizona;3 and (4) as of January
2011, two engineers worked at the Tempe office as Ensign-Bickford employees. Furthermore,
Ensign-Bickford does not controvert the plaintiffs’ assertion that Ensign-Bickford has negotiated
and entered into an asset purchase agreement with Special Devices, Incorporated, an Arizona-based
corporation, and is a major supplier to Raytheon Missile Systems and Orbital Sciences Corporation
in Arizona. (Pls.’ Res. Def.’s Mot. Dismiss, at 6.) See LSI Indus. Inc., 232 F.3d at 1375 (finding
that the defendant’s millions of dollars of sales of lighting products in Ohio over several years
combined with its broad distributorship network in Ohio established general jurisdiction over the
defendant in Ohio). The plaintiffs point to several additional contacts: (1) Ensign-Bickford solicited
and hired Arizona residents, including former PSEMC employees; (2) it sent employees to
continuing education courses in Arizona; and (3) it attends supplier conferences in Arizona.
Considering all of these contacts together, I find that the plaintiffs have made a prima facie showing
that Ensign-Bickford is conducting a continuous and systematic, but limited, part of its general
business in Arizona, and therefore has sufficient minimum contacts with Arizona. See Perkins, 342
U.S. at 438.4

3

Ensign-Bickford does not suggest that either the employees operating in Arizona or the
business office licensed with the Secretary of State are somehow legally distinct from the main
Ensign-Bickford campus in Connecticut.
4

Ensign-Bickford relies on two Arizona state cases, rather than Federal Circuit cases, in
support of its position that it is not subject to general jurisdiction in Arizona, both of which are
inapposite to the court’s holding in this case. First, it asserts that the mere act of naming a
registered agent for service of process in a state does not subject a corporation to general
jurisdiction. See Armstrong v. Aramco Services Co., 746 P.2d 917, 924 (Ariz. Ct. App. 1987).
In that case, one of the defendants was qualified to do business in Arizona, but none of the
defendants owned any facilities in Arizona or had any employees in Arizona. Rather, the
defendants generally recruited employees from Arizona to work elsewhere. See id. at 918-19.
Accordingly, Armstrong stands for the proposition that sporadic contacts coupled with
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Having determined that the plaintiffs have made a prima facie showing that Ensign-Bickford
has sufficient minimum contacts with Arizona, the burden shifts to the defendant to “present a
compelling case that the presence of some other considerations would render jurisdiction
unreasonable.” See Burger King Corp., 471 U.S. at 476-77. Ensign-Bickford has not presented a
compelling case demonstrating that exercising jurisdiction in this case would be unreasonable.
Accordingly, the court DENIES Ensign-Bickford’s Motion to Dismiss for Lack of Personal
Jurisdiction.
III.

Motion to Dismiss for Improper Venue Pursuant to 28 U.S.C. § 1406
Next, Ensign-Bickford moves this court to dismiss the Complaint for improper venue under

28 U.S.C. § 1406. Ensign-Bickford argues that venue in Arizona is improper because the plaintiffs
failed to establish personal jurisdiction in Arizona. (Def.’s Mot. Dismiss, at 9.) Ensign-Bickford
additionally argues that the plaintiffs failed to show that a substantial part of the events giving rise
to the claim occurred in Arizona. (Id. at 9-10.) The plaintiffs maintain that “[v]enue is proper in
this Court . . . because Ensign-Bickford is subject to personal jurisdiction in this district and thus
resides in this district, and a substantial part of the alleged events or omissions giving rise to the
claims occurred in this district.” (Compl. ¶ 4.)

registration as a corporation to do business in Arizona are insufficient to subject it to general
jurisdiction. Second, Ensign-Bickford maintains that its office in Arizona does not subject it to
general jurisdiction in Arizona. See, e.g., Van Denburgh v. Tungsten Reef Mines Co., 63 P.2d
647, 651 (Ariz. 1936) (finding no personal jurisdiction in Arizona in an action brought by an
administrator of a deceased stockholder—who was appointed by a California court—to set aside
a contract entered into in California by directors of a Nevada corporation, even though the
Nevada corporation had an office in Arizona and had designated a statutory agent in Arizona,
because there was no “attempt to protect the rights of any citizen of Arizona”). Not only are the
facts in Van Denburgh distinguishable, but the case predates International Shoe and thus has
little, if any, precedential value.
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Section 1406(a) of Title 28 provides that “[t]he district court in which is filed a case laying
venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such
case to any district or division in which it could have been brought.” 28 U.S.C.§ 1406(a). Venue
in actions not founded solely on diversity of citizenship is proper when brought in:
(1) a judicial district where any defendant resides, if all defendants reside in the same
State, (2) a judicial district in which a substantial part of the events or omissions
giving rise to the claim occurred, or a substantial part of property that is subject of
the action is situated, or (3) a judicial district in which any defendant may be found,
if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(b). If the defendant is a corporation, it “shall be deemed to reside in any judicial
district in which it is subject to personal jurisdiction at the time the action is commenced.” 28
U.S.C. § 1391(c); see VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed.
Cir. 1990), cert. denied, 499 U.S. 922 (1991).
The court finds that venue is proper under 28 U.S.C. § 1391 (b) and (c) because general
personal jurisdiction exists over Ensign-Bickford in Arizona. Accordingly, Ensign-Bickford’s
motion to dismiss under § 1406(a) is DENIED.
IV.

Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404
In a separate motion, Ensign-Bickford moves the court to transfer this case to the United

States District Court for the District of Connecticut under 28 U.S.C. § 1404. According to EnsignBickford, because the allegedly infringing components of the SEA™ product are made by PSEMCCalifornia, not PSEMC-Arizona, the plaintiffs’ chosen venue of Arizona is entitled to less deference.
Additionally, the defendant contends that the plaintiffs’ choice is entitled to less deference because
PSEMC filed suit to preempt Ensign-Bickford’s choice of forum. Turning to public interest factors,
Ensign-Bickford argues that due to docket congestion in Arizona, a strong public policy favoring

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settlement, and the plaintiffs’ attempted forum-shopping, transferring the case to Connecticut is
appropriate and in the interests of justice. Finally, Ensign-Bickford asserts that Connecticut would
have compulsory process over relevant non-party witnesses, that relevant documents are located in
Connecticut, and that litigation would be less expensive in Connecticut. The plaintiffs oppose the
motion by arguing that their choice of forum should be entitled to substantial deference. According
to the plaintiffs, deference should be strong here because “plaintiff chose to file suit in its home
forum and where it has its base of operations.” (Pls.’ Resp. Def.’s Mot. Transfer [Docket 41], at 4.)
The plaintiffs also maintain that they are not forum-shopping, but merely trying to resolve an longrunning dispute. According to PSEMC, transferring the case to Connecticut would simply shift the
inconvenience from one party to another. Thus, PSEMC asserts, such a transfer is inappropriate and
fundamentally against the interests of justice.
a.

Standard of Review

Section 1404(a) of Title 28 authorizes a district court to transfer a case to another judicial
district “[f]or the convenience of parties and witnesses, in the interest of justice.” 28 U.S.C.
§ 1404(a). This motion to transfer pursuant to § 1404(a) is governed by regional circuit law. See
Storage Tech. Corp. v. Cisco Sys., Inc., 329 F.3d 823, 836 (Fed. Cir. 2003).
In deciding whether to transfer a case under § 1404(a), a court must first determine whether
the action might “have been brought” in the transferee district. Then the court must weigh both
public factors and private factors. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843
(9th Cir. 1986). Courts may consider: (1) the location where the relevant agreements were negotiated
and executed; (2) the state most familiar with the governing law; (3) the plaintiff’s choice of forum;
(4) the parties’ contacts with the forum state; (5) events related to the cause of action that took place

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in the forum state; (6) differences in cost of litigation between the two forums; (7) availability of
compulsory process for non-party witnesses; and (8) ease of access to sources of proof. Jones v.
GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000).
The party bringing a motion for transfer—here, the defendant—bears the burden of showing
the propriety of transfer. Decker Coal Co., 805 F.2d at 843. Moreover, the plaintiff’s choice of
forum is accorded great weight. See Tuazon v. R.J. Reynolds Tobacco, Co., 433 F.3d 1163, 1180 (9th
Cir. 2006) (“[A] plaintiff need not select the optimal forum for his claim, but only a forum that is not
so oppressive and vexatious to the defendant as to be out of proportion to plaintiff’s convenience.”)
(internal quotation marks omitted). The decision whether to transfer a matter to another district under
§ 1404(a) is committed to the sound discretion of the district court. Stewart Org., Inc. v. Ricoh Corp.,
487 U.S. 22, 29 (1988).
b.

Discussion

As Ensign-Bickford notes, there is no requirement under § 1404(a) that a transferee court have
personal jurisdiction over the plaintiff; there is only a requirement that the transferee court have
jurisdiction over the defendants in the transferred complaint. Hoffman v. Blaski, 363 U.S. 335, 34344 (1960). Because Ensign-Bickford is registered to do business in Connecticut and has its principal
place of business in Connecticut, for purposes of § 1404(a), this case could have been brought in the
District Court for the District of Connecticut. My inquiry, therefore, focuses on whether EnsignBickford has met its burden of establishing that a transfer to the District of Connecticut is proper.
1.

Location Where the Relevant Agreements Were Negotiated and the State
Most Familiar with the Governing Law.

The first factor does not influence the court’s decision because there are no “relevant
agreements” at issue in this case. The second factor favors Arizona, although not strongly. Arizona
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is most familiar with the Arizona state law claim, but the federal courts are equally familiar with the
federal patent law issues presented in this case.
2.

The Plaintiffs’ Choice of Forum

The parties dispute the weight that should be given to the plaintiffs’ choice of forum. EnsignBickford argues that Arizona is not the home forum because PSEMC-California is the “entity that
makes the potentially infringing products, not Pacific-Arizona.” Therefore, Ensign-Bickford
contends, the plaintiffs’ choice of Arizona is entitled to less deference. (Def.’s Mot. Transfer [Docket
37], at 7.) The plaintiffs assert that PSEMC operates as a single company with its “base” in Arizona
and that “PSEMC’s president in Chandler, Arizona, is ultimately responsible for the accused product,
including its production. Moreover, part of the accused product is manufactured by PSEMC in its
Chandler, Arizona facility.” (Pls.’ Resp. Def.’s Mot. Transfer [Docket 41], at 4-5.) Accordingly,
PSEMC argues that Arizona is the home forum and the plaintiffs’ choice should be given substantial
deference.
Under § 1404(a), a plaintiff’s choice of forum is generally accorded substantial weight. See
Warfield v. Gardner, 346 F. Supp. 2d 1033, 1044 (D. Ariz. 2004). “However, when the plaintiff’s
chosen forum is not his residence, or when the plaintiff’s forum lacks a significant connection to the
events that gave rise to the Complaint, the deference given to Plaintiff’s choice of forum is slight, if
any.” Leyvas v. Bezy, No. CV 07-1032, 2008 WL 2026276, at *5 (D. Ariz. May 9, 2008)
(unpublished).
PSEMC-Arizona’s principal place of business is in Arizona. PSEMC’s president, based in
Arizona, is “ultimately responsible for the accused product.” (Pls.’ Resp. Def.’s Mot. Transfer, at
7.) Moreover, according to the plaintiffs, roughly two dozen Arizona employees work or have

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worked on the product at issue, and components of the accused product were designed in Chandler,
Arizona, and others were manufactured there. (Pls.’ Resp. Def.’s Mot. Dismiss, at 2-3.) Finally,
PSEMC asserts that several of the letters and emails exchanged during their discussions regarding
the patents at issue went to and from Arizona, and Ensign-Bickford’s president met with PSEMC
representatives in Arizona to discuss the dispute. (Pls.’ Resp. Def.’s Mot. Transfer, at 5.) Thus,
because Arizona has significant connections to the events that gave rise to the Complaint, the
plaintiffs’ choice of forum is accorded substantial weight.
Alternatively, Ensign-Bickford argues that this declaratory judgment was simply a race to the
courthouse and, as a result, the choice of forum should be given little deference. PSEMC asserts that
this is not an attempt at forum-shopping because Connecticut does not have personal jurisdiction over
PSEMC; thus, PSEMC is not preempting Ensign-Bickford from filing there. Additionally, the
plaintiffs assert that they are seeking to resolve a long-running dispute by clearing their name and
clarifying legal rights.
Despite the futility of any further negotiations, there is no evidence that Ensign-Bickford was
poised to file suit, and Ensign-Bickford has not filed a patent infringement suit to date. Cf. Z-Line
Designs, Inc. v. Bell’O Int’l, LLC, 218 F.R.D. 663, 665 (N.D. Cal. 2003) (“A suit is anticipatory when
the plaintiff filed [an action] upon receipt of specific, concrete indications that a suit by defendant
was imminent.”). The court finds that PSEMC’s declaratory judgment action was not anticipatory
and the forum-shopping argument lacks merit. Therefore, the weight awarded the plaintiffs’ choice
of forum is not affected.
In sum, because Arizona has a significant connection to the events that gave rise to the
Complaint and because there is no evidence of forum-shopping, the plaintiffs’ choice of forum is

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awarded considerable weight. Accordingly, this factor weighs against transferring this case to
Connecticut.
3.

Parties’ Contacts with the Forum State

Both parties in this case have contacts with Arizona. PSEMC is based in Arizona and the
disputed product was designed and created in Arizona, as well as California. PSEMC’s president is
in Chandler, Arizona, and PSEMC’s vice president and members of the design and development team
split their time between Arizona and California. Even if, as the defendant argues, the components
manufactured in Arizona are not the infringing components of the product, the plaintiffs maintain
significant contacts with the forum state. Ensign-Bickford also has significant ties to the forum state.
Ensign-Bickford is registered to do business in Arizona, has designated a registered agent for service
of process in Arizona, and has employees who operate full-time out of an office in Arizona. Both
parties’ numerous contacts with the forum state persuade the court that this factor weighs strongly
in favor of the Arizona venue.
4.

Events Related to the Cause of Action That Took Place in the Forum State

“Courts have observed that intellectual property infringement suits often focus on the
activities of the alleged infringer, its employees, and its documents; therefore the location of the
alleged infringer’s principal place of business is often the critical and controlling consideration in
adjudicating transfer of venue motions.” Spiegelberg v. Collegiate Licensing Co., 402 F. Supp. 2d
786, 791-92 (S.D. Tex. 2005) (internal quotations omitted).
In the instant case, numerous events related to the cause of action, including design work and
product manufacturing, allegedly took place in Arizona. Moreover, according to Ensign-Bickford,
the majority of additional events related to the cause of action took place in California. Either way,

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this factor does not weigh in favor of transferring the case to Connecticut.5
5.

Differences in Cost of Litigation Between the Two Forums and Ease of
Access to Proof

With respect to this factor, Ensign-Bickford mainly argues that “highly relevant documents
are located in Connecticut” and that “[i]f the trial is held in Connecticut . . . the material witnesses
located in Connecticut will not have to travel [and] the total cost of litigation will be reduced.”
(Def.’s Mot. Transfer, at 14.) The defendant also notes that the plaintiffs’ witnesses in California will
have to travel regardless of whether the trial is held in Arizona or Connecticut. These arguments are
unpersuasive. There are relevant documents in Arizona and Connecticut, so that issue does not
persuade the court that transfer is appropriate. Moreover, the plaintiffs have named several key
witnesses who either reside in Arizona or split time between Arizona and California. The court has
no way of determining where these witnesses will be located at the time of the trial or whether they
will need to travel to attend the trial. Accordingly, this factor does not weigh heavily in the
determination of whether to transfer to Connecticut.
6.

Availability of Compulsory Process for Non-Party Witnesses

Ensign-Bickford asserts that a named inventor for all three patents at issue resides in
Connecticut. The attorney familiar with the prosecution of the applications of the patents is also in
Connecticut. Finally, Ensign-Bickford asserts that “[o]ther witnesses with relevant testimony also
reside in Connecticut,” and Connecticut can compel the attendance of these witnesses. (Id. at 12.)

5

Ensign-Bickford argues that a relevant confidentiality agreement was signed by
PSEMC-California, not PSEMC-Arizona, and thus relevant events occurred in California. While
this document lists PSEMC as having an office and place of business in California, it is unclear
whether this document applies only to PSEMC-California, as Ensign-Bickford asserts. (Def.’s
Mot. Transfer, at 7 n.4.)
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The plaintiffs, on the other hand, maintain that other fact witnesses reside in Arizona, including
potential witnesses from Raytheon, the parties’ mutual customer. The willingness of non-parties to
testify voluntarily mitigates the relevance of this factor, but the court cannot speculate on which
witnesses would be so willing. Ensign-Bickford has identified two specific and relevant non-party
witnesses in Connecticut, while PSEMC has referenced only potential non-party witnesses over
whom Arizona has compulsory process. This factor weighs in favor of transfer.
7.

Other Considerations

Ensign-Bickford raises additional public interest factors that it asserts are relevant to this
court’s consideration, including the congestion of the Arizona docket and the public policy favoring
settlement. Docket congestion is one of many factors that may be considered in a motion to transfer,
but it does not persuade this court that transfer is appropriate in light of the other factors that weigh
against a transfer. Next, although Ensign-Bickford argues that the public policy of settlement favors
transfer to Connecticut, it fails to adequately explain how transfer to Connecticut advances this
policy. The court recognizes that “the first to file rule in [a race to the courthouse situation] would
thwart settlement negotiations, encouraging intellectual property holders to file suit rather than
communicate with an alleged infringer.” Z-Line Designs, Inc., 218 F.R.D. at 665. In this case,
however, the first to file rule is inapposite as there are no similar suits pending elsewhere.
Accordingly, Ensign-Bickford’s public interest arguments are not sufficient to persuade the court that
transfer to
Connecticut is appropriate.6

6

In its Motion to Dismiss, Ensign-Bickford urges the court to decline to exercise its
jurisdiction under the Declaratory Judgment Act because the parties’ negotiations were ongoing
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Having considered all of the factors set forth in Jones and the relevant public interest
factors, the court concludes that a transfer to Connecticut for convenience or in the interests of
justice is unwarranted. The plaintiffs’ choice of forum is accorded considerable weight, and a
transfer motion will be denied if it would merely shift the inconvenience from the defendant to
the plaintiffs. Decker Coal, 805 F.2d at 843. In addition, the court is unconvinced that EnsignBickford will suffer any great hardship by litigating away from home in Arizona. In light of the
factors above, the court DENIES the Motion for Transfer of Venue pursuant to §1404(a).
V.

Motion to Dismiss Count Four for Failure to State a Claim
Finally, Ensign-Bickford moves this court to dismiss the state law tortious interference with

a contract claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The plaintiffs, according to
Ensign-Bickford, have not alleged that Ensign-Bickford “had knowledge of the contracts with which
Ensign allegedly interfered[,]” (Def.’s Mot. Dismiss, at 15) and that the claim does not “provide
notice of what contracts are the subject of the claim, and which customers were induced to breach

and the plaintiffs brought their action simply as “tactical maneuvering designed to preempt
Ensign’s choice of forum.” (Def.’s Mot. Dismiss, at 13.) “The Declaratory Judgment Act was
not intended to affix competitor with a right to feign negotiation in order to delay patentee’s
filing of an infringement in an effort to secure a preferable forum.” Trading Tech. Int’l Inc. v.
CGQ, Inc., No. 05 C 4811, 2005 WL 3601936, at *3 (N.D. Ill. Oct. 31, 2005) (unpublished).
However, “[a]llowing competitors to sue for declaratory judgment serve[s] to clear the air,
protect their customers, and to define their rights without accumulating injuries related to
waiting for patentee to decide whether to bring suit.” Id. In the instant case, the court finds that
there is no sound basis for refusing to adjudicate the matter. In fact, this appears to be one of the
situations the Act was designed to accommodate. Accordingly, the court will exercise its valid
jurisdiction to hear this case under the Declaratory Judgment Act. “When there is an actual
controversy and a declaratory judgment would settle the legal relations in dispute and afford
relief from uncertainty or insecurity, in the usual circumstances the declaratory judgment action
is not subject to dismissal.” Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir.
1993) (overruled in part on other grounds by Wilton v. Seven Falls Co., 515 U.S. 277, 289
(1995)).
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their contracts.” (Id.) In response, the plaintiffs assert that they sufficiently pled Ensign-Bickford’s
knowledge of the contracts and that “Ensign itself informed PSEMC that it had contacted PSEMC’s
customers to obtain information.” (Pls.’ Resp. Def.’s Mot. Dimiss, at 15.) Thus, according to the
plaintiffs, Ensign-Bickford knows with whom there was a business expectancy and which customers
were induced to breach their contracts.
a.

Standard of Review

A motion to dismiss filed under Rule 12(b)(6) tests the legal sufficiency of a complaint or
pleading. Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011). A pleading must contain a “short
and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8. As
the Supreme Court reiterated in Ashcroft v. Iqbal, that standard “does not require ‘detailed factual
allegations’ but ‘it demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.’” 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007)). “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’
requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986),
for the proposition that “on a motion to dismiss, courts ‘are not bound to accept as true a legal
conclusion couched as a factual allegation’”). A court cannot accept as true legal conclusions in a
complaint that merely recite the elements of a cause of action supported by conclusory statements.
Iqbal, 129 S. Ct. at 1949-50. “To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 1949
(quoting Twombly, 550 U.S. at 570). To achieve facial plausibility, the plaintiff must plead facts that
allow the court to draw the reasonable inference that the defendant is liable, and those facts must be

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more than merely consistent with the defendant’s liability to raise the claim from merely possible to
probable. Id.
In determining whether a plausible claim exists, the court must undertake a context-specific
inquiry, “[b]ut where the well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is
entitled to relief.’” Id. at 1950 (quoting Fed. R. Civ. P. 8(a)(2)). A complaint must contain enough
facts to “nudge[] [a] claim across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.
b.

Discussion

The Supreme Court of Arizona recognizes a cause of action for tortious interference with a
contract.7 Safeway Ins. Co., Inc. v. Guerrero, 210 Ariz. 5, 10 (2005). The first issue raised by the
defendant is whether the Complaint sufficiently pled that Ensign-Bickford had knowledge of
PSEMC’s valid contractual relationship or business expectancy.
The Complaint alleges:
Ensign-Bickford intentionally and improperly interfered with contracts between
PSEMC and several confidential customers by, inter alia, inducing those customers
to disclose PSEMC’s highly confidential, proprietary and sensitive competitive
information to Ensign-Bickford in violation of those customers’ confidentiality
agreements with PSEMC.
(Compl. ¶ 40.)

7

To establish tortious interference, a party must prove the following:
1) existence of a valid contractual relationship;
2) knowledge of the relationship on the part of the interferor;
3) intentional interference inducing or causing a breach;
4) resultant damage to the party whose relationship has been
disrupted; and
5) that the defendant acted improperly.
Safeway Ins. Co., Inc. v. Guerrero, 210 Ariz. 5, 10 (2005).
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Although the Complaint does not explicitly state that Ensign-Bickford had knowledge of the
contracts, it follows from PSEMC’s allegation that Ensign-Bickford “intentionally . . . interfered with
contracts” that Ensign-Bickford knew the contracts existed.
The defendant also argues that the Complaint does not provide notice of “what contracts are
the subject of the claim, and which customers were induced to breach their contracts.” (Def.’s Mot.
Dismiss, at 15.) Although the Complaint does not point to individual contracts, its allegation that the
defendant induced the plaintiffs’ customers to violate a specific class of contracts, namely, their
confidentiality agreements with PSEMC, survives a motion to dismiss. See Swingless Golf Club
Corp. v. Taylor, No. C 08-05574, 2009 WL 2031768, at *4 (N.D. Cal. Jul. 7, 2009) (finding a
complaint stated a claim even though it “does not point to any single contract, it does allege a specific
class of existing contracts that the defendants purportedly induced the breach thereof—those existing
between plaintiff and its customers”). The court thus FINDS that the plaintiffs have satisfied their
burden as to the intentional interference with a contract claim.8 Accordingly, the court DENIES the
defendant’s Motion to Dismiss Count Four.
VI.

Conclusion

8

Ensign-Bickford additionally argues that the claim is preempted by the Arizona
Uniform Trade Secrets Acts (“UTSA”). Under Arizona law, however, a claim is not preempted
“to the extent that the [complaint] alleges that the intentional interference of business expectancy
is based on acts, other than the misappropriation of trade secrets, that ‘induc[ed] or otherwise
caus[ed] a third person not to enter into or continue’ a business relationship with [the plaintiff].”
Cosmetic Alchemy, LLC v. R & G, LLC, No. CV-10-1222, 2010 WL 4777553, at *3 (D. Ariz.
Nov. 17, 2010); see also A.R.S. § 44-407(A) (the UTSA does not affect “[o]ther civil remedies
that are not based on misappropriation of a trade secret.”).
The plaintiffs are not alleging misappropriation of trade secrets. Rather, the plaintiffs
allege that Ensign-Bickford contacted PSEMC customers and induced them to violate their
confidentiality agreements. In doing so, Ensign-Bickford is “taking away PSEMC’s customer
opportunities, and has caused damage to PSEMC’s relationships with its customers.” (Compl.
¶ 41.) Therefore, the court finds that Count Four is not preempted by the UTSA.
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For the foregoing reasons, the court DENIES Ensign-Bickford’s Motion to Dismiss for Lack
of Personal Jurisdiction, for failure to state a claim, and for transfer pursuant to § 1406(a) [Docket
18]. The court further DENIES the Motion for Transfer of Venue pursuant to § 1404(a) [Docket
37].
The court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER: September 23, 2011

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