Crawford & Company, Inc. v. Cunningham Lindsey U.S., Inc. et al
Filing
76
ORDER denying 17 Motion to Dismiss. Signed by Judge Thomas W. Thrash, Jr on 11/15/2017. (ss)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
CRAWFORD & COMPANY, INC.,
Plaintiff,
v.
CIVIL ACTION FILE
NO. 1:17-CV-2988-TWT
CUNNINGHAM LINDSEY U.S.,
INC., et al.,
Defendants.
OPINION AND ORDER
This is an action for, inter alia, misappropriation of trade secrets. It is before
the Court on the Defendant Michael P. McKeown’s Motion to Dismiss for Lack of
Personal Jurisdiction [Doc. 17]. For the following reasons, McKeown’s Motion to
Dismiss [Doc. 17] is DENIED.
I. Background
The Plaintiff, Crawford & Company, Inc., is a Georgia corporation with its
principal place of business in Atlanta, Georgia.1 The corporate Defendant,
Cunningham Lindsey U.S., Inc., is a Texas corporation with its principal place of
1
Compl. ¶ 5.
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business in Lewisville, Texas.2 Both companies provide insurance claims management
services. They are direct competitors in the marketplace.3 The Defendant Michael P.
McKeown is a resident of Pennsylvania.4 He worked for Crawford out of its MidAtlantic office, located in Pennsylvania, from February 2016 through his June 2017
resignation, at which time he began working for Cunningham Lindsey.5
While employed as a Regional Account Executive for Crawford, McKeown
was responsible for sales in New Jersey, Pennsylvania, Delaware, Maryland, and
Virginia. In that role, he called on existing and potential clients in his territory to
develop new business and grow market share for Crawford.6 By virtue of this position,
McKeown had access to some of Crawford’s confidential information and trade
secrets, including detailed information about clients, pricing, and business strategies.7
2
Id. at ¶ 7.
3
Id. at ¶ 8.
4
Id. at ¶ 10. There is another individual Defendant, Larry Daniel, but he
is not relevant to this Motion.
5
Id.
6
Id. at ¶ 22.
7
Id. at ¶ 23.
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Because of his access to such information, Crawford required McKeown to sign
a Confidentiality & Nonsolicitation Agreement.8 In the Agreement, McKeown
acknowledged the importance of Crawford’s propriety information and agreed to
respect and protect the confidentiality of that information.9 In order to protect this
information, Crawford adopted policies prohibiting the use of personal devices to
store confidential information and the use of personal email to transmit work-related
documents.10 McKeown also agreed to not solicit any of Crawford’s clients or
employees should he leave Crawford at some point in the future.11
On June 24, 2017, McKeown decided to leave Crawford and return to
Cunningham Lindsey, where he had been previously employed.12 While he was being
recruited to return, he allegedly sent five emails to his personal account containing a
total of 37 confidential and proprietary files.13 McKeown has also allegedly solicited
some of Crawford’s clients to come over to Cunningham Lindsey.14 Crawford
8
Id. at ¶ 26.
9
Id. at ¶ 27.
10
Id. at ¶¶ 35-36.
11
Id. at ¶¶ 32-33.
12
Id. at ¶ 49.
13
Id. at ¶ 50.
14
Id. at ¶ 56.
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eventually filed this action, alleging that inter alia McKeown violated his Agreement
with Crawford and misappropriated its trade secrets. McKeown now moves to dismiss
the action for lack of personal jurisdiction.
II. Legal Standard
“In the context of a motion to dismiss for lack of personal jurisdiction in which
no evidentiary hearing is held, the plaintiff bears the burden of establishing a prima
facie case of jurisdiction over the movant, nonresident defendant.”15 The facts
presented in the plaintiff’s complaint are taken as true to the extent they are
uncontroverted.16 “Where … the defendant challenges jurisdiction by submitting
affidavit evidence in support of its position, the burden traditionally shifts back to the
plaintiff to produce evidence supporting jurisdiction.”17 If the plaintiff's complaint and
supporting evidence conflict with the defendant's affidavits, the court must construe
all reasonable inferences in favor of the plaintiff.18
III. Discussion
15
Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988).
16
Foxworthy v. Custom Tees, Inc., 879 F. Supp. 1200, 1207 n.10 (N.D. Ga.
1995).
17
Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249,
1257 (11th Cir. 2010) (quotations omitted).
18
Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990).
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McKeown has moved to dismiss this action under Rule 12(b)(2) for lack of
personal jurisdiction. “A federal court sitting in diversity undertakes a two-step
inquiry in determining whether personal jurisdiction exists: the exercise of jurisdiction
must (1) be appropriate under the state long-arm statute and (2) not violate the Due
Process Clause of the Fourteenth Amendment to the United States Constitution.”19
Both steps of the inquiry are often the same, as the long-arm statutes of many states
are coextensive with procedural due process.20
However, this is not the case in Georgia.21 Georgia’s long-arm statute “imposes
independent obligations that a plaintiff must establish for the exercise of personal
jurisdiction that are distinct from the demands of procedural due process.”22 This
means that sometimes Georgia’s long-arm statute extends beyond, and is therefore
limited by, procedural due process, while in other situations it is more restrictive.23 As
19
Diamond Crystal, 593 F.3d at 1257–58 (quoting United Techs. Corp. v.
Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009)).
20
See, e.g., CAL. CIV. PROC. CODE § 410.10 (“A court of this state may
exercise jurisdiction on any basis not inconsistent with the Constitution of this state
or of the United States.”).
21
Diamond Crystal, 593 F.3d at 1259, 1261-62.
22
Id.
23
Id. at 1262.
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such, this Court must proceed through both steps of the personal jurisdiction analysis
independently.
A. Georgia’s Long-arm Statute
Georgia’s long-arm statute permits jurisdiction where a defendant:
(1) Transacts any business within this state;
. . . [or]
(3) Commits a tortious injury in this state caused by an act or omission
outside this state if the tort-feasor regularly does or solicits business, or
engages in any other persistent course of conduct, or derives substantial
revenue from goods used or consumed or services rendered in this state
. . . .24
as long as the plaintiff’s cause of action “arises out of” that conduct.25
The Plaintiff argues that jurisdiction over McKeown arises under the
requirements of both subsection (1) and (3). Georgia courts have interpreted “transacts
any business within the state” to mean that the “nonresident defendant has
purposefully done some act or consummated some transaction in [Georgia]. . . .”26
Although “Georgia courts have yet to fully explain the scope” of this language, it is
24
O.C.G.A. § 9–10–91.
25
Id. at 1264.
26
Aero Toy Store, LLC v. Grieves, 279 Ga. App. 515, 517 (2006). See also
Diamond Crystal, 593 F.3d at 1260 n.11 (explaining why courts should only use the
first prong of the Aero Toy Store test during the long-arm statute analysis).
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clear that “a defendant need not physically enter the state.”27 As a result, the Court
must “examine all of a nonresident's tangible and intangible conduct and ask whether
it can fairly be said that the nonresident has transacted any business within Georgia.”28
In this case, although he was based in Pennsylvania, McKeown took a number
of actions directed at Georgia in the context of his employment relationship with
Crawford. Because Crawford is headquartered in Georgia, McKeown communicated
frequently with Georgia-based Crawford employees.29 McKeown also visited Georgia
on work-related trips on two separate occasions.30 McKeown can therefore be said to
have transacted business within Georgia during the course of his employment
relationship with Crawford. And because Crawford’s causes of action necessarily arise
from that relationship, this Court has personal jurisdiction under subsection (1) of the
Georgia long-arm statute.31
B. Due Process Clause
27
Diamond Crystal, 593 F.3d at 1262, 1264.
28
Id.
29
Tolson Decl. ¶ 11 [Doc. 32-1].
30
Id. at ¶¶ 8-9; see also McKeown Dep. at 29:1-6, 29:21-31:25, 32:2033:17 [Doc. 32-2].
31
Because subsection (1) is satisfied, the Court need not examine
subsection (3), which is a much more restrictive authorization of jurisdiction.
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The Constitution’s Due Process Clause requires that in order for a court to have
personal jurisdiction over a defendant, the defendant must have “certain minimum
contacts with [the forum] such that the maintenance of the suit does not offend
‘traditional notions of fair play and substantial justice.’”32 These minimum contacts
exist when “the defendant's conduct and connection with the forum State are such that
he should reasonably anticipate being haled into court there.”33 A defendant’s
relationship with a forum state can lead to two types of jurisdiction: general and
specific jurisdiction.34 “A party is subject to general jurisdiction only when it has
continuous and systematic contacts with the forum state.”35 There is no dispute that
McKeown did not have this level of contact with Georgia. Thus, to the extent this
Court has personal jurisdiction over McKeown, it must be specific.
Specific jurisdiction is based on affirmative answers to three questions:
(1) whether the plaintiff's claims “arise out of or relate to” at least one
of the defendant's contacts with the forum; (2) whether the nonresident
32
Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414
(1984) (alteration in original) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310,
316 (1945)).
33
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting
World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).
34
Paul, Hastings, Janofsky & Walker, LLP v. City of Tulsa, OK, 245 F.
Supp. 2d 1248, 1253 (N.D. Ga. 2002).
35
Id. (quotations omitted).
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defendant “purposefully availed” himself of the privilege of conducting
activities within the forum state, thus invoking the benefit of the forum
state's laws; and (3) whether the exercise of personal jurisdiction
comports with “traditional notions of fair play and substantial justice.36
“The plaintiff bears the burden of establishing the first two prongs. . . .”37 Should he
do so, the defendant then bears the burden of making a compelling case that
establishes the third.38
As the Court already discussed in relation to Georgia’s long-arm statute, the
Plaintiff’s claims clearly arise out of the employment relationship between McKeown
and Crawford, which satisfies the first prong. For similar reasons, the Defendant’s
employment relationship also satisfies the second prong. Crawford alleges numerous
claims against McKeown. With regard to the contract, statutory, and equitable claims,
McKeown purposefully availed himself of the privilege of conducting activities in
Georgia when he decided to work for Crawford, a Georgia company. Although he was
primarily based in Pennsylvania, he frequently made calls to Georgia-based
employees, he made multiple work-related trips to Georgia for training, and he signed
an employment contract with a Georgia company. “Each of these, by itself, might not
36
Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1355 (11th Cir.
2013).
37
Id.
38
Id.
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be enough to confer jurisdiction.”39 But when taken together, it becomes clear that
McKeown’s employment with Crawford led to a more significant relationship with
Georgia than mere incidental contact.
The tort claims, meanwhile, are analyzed slightly differently than the others. In
addition to the traditional minimum contacts test, intentional torts can also be
evaluated under the “effects” test. Under the effects test, a defendant establishes
purposeful availment when the tort was: “(1) intentional; (2) aimed at the forum state;
and (3) caused harm that the defendant should have anticipated would be suffered in
the forum state.”40 Taking the allegations as true, the alleged torts were clearly
intentional. McKeown allegedly targeted this forum by stealing information from a
Georgia-based company, and he should have anticipated that the harm caused by his
misappropriation would be suffered in Georgia. “The Constitution is not offended by
the exercise of [Georgia’s] long-arm statute to effect personal jurisdiction over
[McKeown] because his intentional conduct in his state of residence was calculated
to cause injury to [Crawford] in [Georgia].”41 Thus, all of the claims satisfy the
minimum contacts requirements of the Due Process Clause.
39
Numeric Analytics, LLC v. McCabe, 161 F. Supp. 3d 348, 355 (E.D. Pa.
2016) (finding jurisdiction over remote employees with regard to contract claims).
40
Licciardello v. Lovelady, 544 F.3d 1280, 1286 (11th Cir. 2008).
41
Id. at 1288.
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Turning to the only remaining issue, the burden now rests on the Defendant to
make a compelling case that exercising jurisdiction over him would violate traditional
norms of fair play and substantial justice. This is a burden he fails to meet. The Court
must consider the “the burden on the defendant, the forum's interest in adjudicating
the dispute, the plaintiff's interest in obtaining convenient and effective relief and the
judicial system's interest in resolving the dispute.”42 Although McKeown would be
inconvenienced by having to travel, that burden is outweighed by Crawford’s interest
in litigating this case in a single forum.43 The Defendant argues that because
McKeown lives in Pennsylvania, and most of the relevant and necessary witnesses and
evidence are located within Georgia, that litigating here in Georgia would be unduly
burdensome on him. But these facts actually support the opposite conclusion. Given
that most of the evidence is here, the witnesses are here, and the harm was suffered
here, Georgia clearly has a strong interest in adjudicating this dispute. Additionally,
McKeown knew that he was working for a Georgia company, and that his alleged
actions would cause harm that was primarily felt in Georgia. For all of these reasons,
the Court finds that exercising jurisdiction over the Defendant would not violate
traditional notions of fair play and substantial justice.
42
Id. (citing World–Wide Volkswagen, 444 U.S. at 292).
43
Numeric Analytics, 161 F. Supp. 3d at 356.
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IV. Conclusion
For the following reasons, the Defendant’s Motion to Dismiss for Lack of
Personal Jurisdiction [Doc. 17] is DENIED.
SO ORDERED, this 15 day of November, 2017.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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