CrateTech, Inc. v. Stockbox Logistics, LLC et al

Filing 35

MEMORANDUM AND ORDER denying 14 Motion to Dismiss for Lack of Jurisdiction. See order for details. Signed by District Judge Monti L. Belot on 04/16/2015. (aa)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

CRATETECH, INC.,

)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
STOCKBOX LOGISTICS, LLC, et al.,
Defendants.

CIVIL ACTION
No.

14-1419-MLB

MEMORANDUM AND ORDER
This

case

comes

before

the

court

on

defendants

StockBox

Logistics (StockBox) and Your Container Services’ (YCS) motion to
dismiss for lack of personal jurisdiction.

(Doc. 14).

The motion is

fully briefed and ripe for decision. (Docs. 15, 21, 30). Defendants’
motion is denied for the reasons herein.
I.

Facts
Plaintiff

CrateTech

is

a

Washington

corporation

with

its

principal place of business in Washington and also has locations in
Wichita, Chicago and North Carolina.

CrateTech is a crating and

packaging supply company that specializes in the custom packaging of
items, including aerospace products.
trademark CRATETECH.

CrateTech is the owner of the

Defendant Daniel McDonald is a resident of

Kansas and was employed by CrateTech until August 31, 2014. Defendant
Ryan Haskin is a resident of Kansas and a past employee of Logistics
Resource, Inc. (LRI).
During

McDonald’s

employment,

McDonald

signed

an

Employee

Confidentiality Agreement (Agreement) in which he agreed that upon his
separation he would not compete with CrateTech for two years.

The

Agreement also required McDonald to protect the confidentiality of
CrateTech’s proprietary business information and not disclose the
information without specific authorization from CrateTech.
On

March

19,

2014,

McDonald

and

Haskin

StockBox, a Texas limited liability company.

formed

defendant

McDonald and Haskin

approached CrateTech with the proposition that StockBox enter into a
licensing agreement with CrateTech.

Under the proposed terms of the

licensing agreement, StockBox would buy CrateTech containers to sell
to

customers

in

Texas.

Ultimately,

negotiations

failed

and

a

licensing agreement was not executed.
Between March and July 2014, McDonald and Haskin solicited
Triumph, CrateTech’s customer located in Texas, by email.

The email

stated that StockBox was formed for CrateTech customers in Texas and
that McDonald, as an officer of CrateTech, was responsible for the
newly formed entity in Texas.
On July 17, 2014, McDonald and Haskin acquired defendant Your
Container Solutions (YCS).

YCS is a Texas corporation that produces

shipping containers.
Before his termination in August 2014, McDonald allegedly
misappropriated CrateTech confidential and trade secret information
by taking hard copies of financial data and a CrateTech laptop
containing trade secret information. In addition, McDonald allegedly
transmitted by email CrateTech’s business and financial information,
customer lists, product drawings, product cost information, product
pricing, employee information and email addresses.
CrateTech filed a complaint against McDonald, Haskin, StockBox
and YCS alleging claims of misappropriation of trade secrets, unfair
-2-

competition,

trademark

infringement,

conversion,

and

civil

conspiracy.1
II.

Analysis
StockBox and YCS move to dismiss the claims against them for

lack of personal jurisdiction pursuant to Federal Rule of Civil
Procedure 12(b)(2). It is well established that under a Rule 12(b)(2)
motion to dismiss, CrateTech must make a prima facie showing that the
court has personal jurisdiction over StockBox and YCS.

See Intercon,

Inc. v. Bell Atl. Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th
Cir. 2000). The court must accept CrateTech’s allegations as true and
resolve all factual disputes in its favor notwithstanding contrary
positions by StockBox and YCS.

Heating and Cooling Master Marketers

Network, Inc. v. Contractor Success Group, Inc., 935 F. Supp. 1167,
1169 (D. Kan. 1996).
A federal court sitting in diversity applies the law of the
forum state.

Marcus Food Co. v. Crown Meat Co., Inc., 779 F. Supp.

514, 518 (D. Kan. 1991). Therefore, the court applies Kansas personal
jurisdiction rules.

To establish personal jurisdiction, CrateTech

must show that: 1) the jurisdiction is authorized under Kansas law and
2) the exercise of such jurisdiction would not offend due process.
See Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006).
A. Kansas Long-Arm Statute
The Kansas long-arm statute specifies that a party submits to
the jurisdiction of Kansas if the cause of action against it “arises
from

the

doing

of

any

of

[eleven

1

particular]

acts,”

including

Additionally, CrateTech asserts claims of breach of contract,
breach of fiduciary duty and computer fraud against McDonald.
-3-

committing a tortious act in the state.
Circuit

has

interpreted

the

Kansas

K.S.A. 60-308(b).
long-arm

statute

The Tenth
“to

allow

jurisdiction to the full extent permitted by due process,” such that
these two inquiries become duplicative.

Federated Rural Elec. Ins.

Corp. v. Kootenai Elec. Coop., 17 F.3d 1302, 1305 (10th Cir. 1994);
see also OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086,
1090 (10th Cir. 1998).
This court has recognized that the Kansas long-arm statute
provides jurisdiction over a non-resident defendant alleged to have
engaged with an in-state actor in a scheme or conspiracy that causes
damages within the state.

See, e.g., Dodson Int'l Parts, Inc. v.

Altendorf, 181 F. Supp.2d 1248, 1253–54 (D. Kan. 2001); Prof'l Inv.
Life Ins. Co., Inc. v. Roussel, 445 F. Supp. 687, 696 (D. Kan. 1978)
(acknowledging existence of personal jurisdiction over nonresident
co-conspirators in scheme to commit business torts with foreseeable
consequences in Kansas). CrateTech alleges that defendants conspired
to form and acquire companies so that they could unfairly compete with
CrateTech.

Further,

the

complaint

alleges

that

the

theft

of

CrateTech’s confidential information which occurred in Kansas was an
overt act in furtherance of their conspiracy.

Based upon CrateTech’s

complaint and affidavit, the court concludes that the alleged tortious
actions of StockBox and YCS subject them to jurisdiction under the
“commission of a tortious act” provision of the Kansas long-arm
statute, K.S.A. 60–308(b)(1)(B).
B. Due Process
The

court

next

determines

whether

exercise

of

personal

jurisdiction over StockBox and YCS satisfies constitutional due
-4-

process requirements.

OMI Holdings, Inc. v. Royal Ins. Co. of Cal.,

148

(10th

F.3d

1086,

1090

Cir.

1998);

Washington, 326 U.S. 310, 316 (1945).

see

Int'l

Shoe

Co.

v.

“The Due Process Clause

protects an individual's liberty interest in not being subject to the
binding judgments of

a forum with which he has established no

meaningful ‘contacts ties, or relations.’” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 471–72 (1985).

Therefore, a “court may

exercise personal jurisdiction over a nonresident defendant only so
long as there exist ‘minimum contacts' between the defendant and the
forum state.”

World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,

291 (1979).
The requisite minimum contacts may be established under one of
two theories: “specific jurisdiction” or “general jurisdiction.”
CrateTech contends that specific jurisdiction is applicable in this
case.

Specific jurisdiction, which applies when the suit arises out

of or relates to a defendant’s contacts with the forum state, calls
for a two-step inquiry.

Monge v. RG Petro-Machinery (Grp.) Co. Ltd.,

701 F.3d 598, 613 (10th Cir. 2012). First, has CrateTech shown that
StockBox and YCS have sufficient minimum contacts with the State?
Second, would personal jurisdiction over StockBox and YCS offend
“traditional notions of fair play and substantial justice”?

The

requisite minimum contacts may be established if StockBox and YCS have
purposefully

availed

themselves

of

the

privilege

of

conducting

activities within the forum State, or if they have purposefully
directed their activities at the forum state.

The “purposefully

availed” inquiry is typically employed in contract cases, while the
“purposefully directed” inquiry is more often used in tort cases.
-5-

Dudnikov v. Chalk & Vermillion Fine Arts, Inc., 514 F.3d 1063, 1071
(10th Cir. 2008). A defendant’s conduct and connection with the forum
must be such that “he should reasonably anticipate being haled into
court there.”

Monge, 701 F.3d at 613 (quoting World-Wide Volkswagen

Corp. v. Woodson, 444 U.S. 286, 297 (1980)); see also Fireman’s Fund
Ins. Co. v. Thyssen Min. Const. of Canada, Ltd., 703 F.3d 488 (10th
Cir. 2012).
1.

Purposefully Directed

In considering whether StockBox and YCS purposefully directed
their activities toward Kansas, the court must examine their contacts
with Kansas.

OMI Holdings, 149 F.3d at 1092.

StockBox and YCS argue

that the actions alleged in the complaint were not purposefully
directed at Kansas because CrateTech’s principal place of business is
in Washington.

(Doc. 15 at 8).

In tort cases, however, courts have

utilized the “effects test” of Calder v. Jones, 465 U.S. 783, 104 S.
Ct. 1482 (1984), in which purposeful direction is established when
defendants’ intentional actions are “expressly aimed at the forum
state” with “knowledge that the brunt of the injury would be felt in
the forum state.”

Dudnikov, 514 F.3d at 1072.

The “effects test”

does not merely determine where a corporation’s principal place of
business is.
In Far West Capital, Inc. v. Towne, 46 F.3d 1071 (10th Cir.
1995),

the

Tenth

Circuit

held

that

allegations

of

tortious

interference of a forum resident’s contractual rights is insufficient
to establish personal jurisdiction. The Tenth Circuit instructed that
a court is to determine whether the forum jurisdiction was the “focal
point” of the tort and its harm.

Towne, 46 F.3d at 1080.
-6-

The fact

that a corporation may suffer a financial effect where it has its
principal place of business is not enough to establish personal
jurisdiction.

Id. at 1081.

is in Washington.

CrateTech’s principal place of business

However, the allegations in the complaint focus on

defendants’ conduct which occurred in Kansas at CrateTech’s branch in
Wichita.
In Thermal Components Co. v. Griffith, 98 F. Supp.2d 1224 (D.
Kan. 2000), the individual defendants were prior employees of the
plaintiff.

The complaint alleged that the individual defendants, who

were Missouri residents, misappropriated trade secrets during their
employment and used that information to interfere and compete with the
plaintiff’s business in a newly formed Missouri corporation which was
also named as a defendant.

The court held that all defendants were

subject to personal jurisdiction in Kansas.

The court reasoned that

the use of confidential information by the non-resident defendants
subjected them to personal jurisdiction in Kansas because they should
have been aware that these acts harmed the plaintiff in Kansas.
The allegations in this case are similar to Thermal Components.
The complaint alleges that McDonald stole confidential information,
including customer lists, pricing information, product drawings and
email lists while he was employed by CrateTech in Kansas.

The

complaint alleges that defendants, including StockBox and YCS, are
utilizing that information in an attempt to compete with CrateTech’s
Kansas branch.

Moreover, that information was allegedly stolen after

McDonald formed StockBox and YCS.

-7-

These allegations are sufficient

to support a finding that StockBox and YCS committed intentional acts2
which were expressly aimed at Kansas.

Dudnikov, 514 F.3d at 1072.

CrateTech’s complaint and affidavit also show that StockBox and
YCS acted with “knowledge that the brunt of the injury would be felt
in the forum state.”

Dudnikov, 514 F.3d at 1072.

The allegations in

the complaint state that defendants are utilizing the confidential
information to directly compete with CrateTech’s Kansas branch.
Moreover, CrateTech’s affidavit states that StockBox and YCS’ use of
the confidential information and potential diversion of CrateTech’s
Wichita customers would result in the loss of business in Kansas and
a potential loss of jobs to its Kansas employees.

Therefore, it can

be reasonably inferred that StockBox and YCS were aware that the use
of CrateTech’s proprietary information would cause CrateTech harm in
Kansas.3 See Thermal Components, 98 F. Supp.2d at 1230.
2.

Fair Play and Substantial Justice

The

court

next

inquires

whether

the

exercise

of

personal

2

CrateTech spends time in its response on each specific claim
against defendants and the facts supporting personal jurisdiction on
those claims.
In deciding whether this court has personal
jurisdiction, the court is not required to do a claim by claim
analysis. If this court has personal jurisdiction against StockBox
and YCS on the basis of the allegations of one claim, i.e.
misappropriation of trade secrets, then the court can exercise
personal jurisdiction against them for all of the claims alleged in
the complaint as the claims arise out of the same facts. See United
States v. Botefuhr, 309 F.3d 1263, 1272 (10th Cir. 2002)(“[O]nce a
district court has personal jurisdiction over a defendant for one
claim, it may ‘piggyback’ onto that claim other claims over which it
lacks independent personal jurisdiction, provided that all the claims
arise from the same facts as the claim over which it has proper
personal jurisdiction.”)
3

While the court agrees with StockBox and YCS that CrateTech
would presumably suffer harm in Washington, there is no authority for
the proposition that the harm can only be felt at a corporation’s
principal place of business.
-8-

jurisdiction would “offend traditional notions of fair play and
substantial justice.”

Int'l Shoe, 326 U.S. at 316. Because CrateTech

has met the minimum contacts threshold, StockBox and YCS must “present
a compelling case that the presence of some other considerations would
render jurisdiction unreasonable.” Pro Axess, Inc. v. Orlux Distrib.,
Inc., 428 F.3d 1270, 1280 (10th Cir. 2005). In making such an inquiry
courts traditionally consider the following factors:
(1) the burden on the defendant, (2) the forum state's
interests in resolving the dispute, (3) the plaintiff's
interest in receiving convenient and effectual relief, (4)
the interstate judicial system's interest in obtaining the
most efficient resolution of controversies, and (5) the
shared interest of the several states in furthering
fundamental social policies.
Dudnikov, 514 F.3d at 1080.
StockBox and YCS argue that the first factor weighs in their
favor because they are Texas companies.
be inconvenient for their witnesses.

They argue that Kansas would

In light of the fact that their

two chief officers are Kansas residents and that they have failed to
identify which witnesses would have to make the arduous journey from
Texas, the court is not persuaded that litigating this action in
Kansas would be burdensome.
The second factor is the interest of the State of Kansas in
resolving the dispute. StockBox and YCS argue that Kansas has “little
interest

in

adjudicating

Washington corporation.

this

action”

because

(Doc. 15 at 11).

CrateTech

is

a

The court disagrees.

CrateTech has brought allegations of torts which occurred in Kanas,
including a violation of the Kansas Uniform Trade Secrets Act. Kansas
has an interest in interpreting its own laws.
Corp., 282 Kan. 433, 474 (2006).

Merriman v. Crompton

The court finds that Kansas has a
-9-

substantial interest in the present dispute.
The third factor is CrateTech’s interest in convenient and
effective relief.

The law of the alternate forum and CrateTech's

burden in bringing this action in that forum are essential to the
inquiry.

OMI Holdings, 149 F.3d at 1096–97.

convenient

forum

for

CrateTech

to

bring

Kansas is a more

this

action

because

CrateTech's claims against Haskin and McDonald, who do not seek
dismissal, will be decided here. If the court decides not to assert
jurisdiction over StockBox and YCS, CrateTech must either litigate its
claims concurrently in Kansas and Texas (or Washington), or delay the
adjudication of these claims.

Although forcing CrateTech to litigate

in Texas poses no foreseeable threat to CrateTech's chance of recovery
or its ability to maintain suit, Kansas is clearly the forum that
offers CrateTech the most effective and convenient relief.
Next, the court examines whether exercising personal jurisdiction
would best further the interstate judicial system's interest in
obtaining the efficient resolution of controversies. To evaluate this
factor,

courts

consider

the

location

of

witnesses,

where

the

underlying wrong occurred, what substantive law will apply and whether
jurisdiction is necessary to prevent piecemeal litigation.

See id.

This factor weighs in favor of CrateTech as the identified witnesses
are in Kansas, the alleged wrong occurred in Kansas and Kansas law
will apply.

Overall, the court finds that the interests of the

interstate system are best served by suit in Kansas.
The fifth factor in the reasonableness determination is the
shared interest of the states in furthering fundamental substantive
social policies. The court discerns no facts which favor either party
-10-

on this issue.
After reviewing all of the relevant factors, the court concludes
that exercising personal jurisdiction over StockBox and YCS will not
violate traditional notions of fairness and due process.

The court

finds that it has personal jurisdiction over StockBox and YCS.
III. Conclusion
StockBox and YCS’ motion to dismiss is denied.

(Doc. 14).

A motion for reconsideration of this order is not encouraged.
Any such motion shall not exceed 3 double-spaced pages and shall
strictly comply with the standards enunciated by this court in Comeau
v. Rupp, 810 F. Supp. 1172, 1174 (1992).

The response to any motion

for reconsideration shall not exceed 3 double-spaced pages.

No reply

shall be filed.

IT IS SO ORDERED.
Dated this

16th

day of April 2015, at Wichita, Kansas.

s/ Monti Belot
Monti L. Belot
UNITED STATES DISTRICT JUDGE

-11-