Veliq USA, Inc. v. Mobillogix, LLC

Filing 14

Judge Allison D. Burroughs: ORDER entered. MEMORANDUM AND ORDER, Motions terminated: 6 First MOTION to Dismiss for Lack of Jurisdiction filed by Mobillogix, LLC. "...For the foregoing reasons, Mobillogixs Motion to Dismiss for Lack of PersonalJurisdiction or, in the Alternative, to Transfer is DENIED.SO ORDERED."(Folan, Karen)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
VELIQ USA, INC.,
Plaintiff,
v.
MOBILLOGIX, LLC,
Defendant.

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15-cv-10197-ADB

MEMORANDUM AND ORDER
March 6, 2015
BURROUGHS, D.J.
I.

Introduction
In this action for breach of contract and declaratory judgment, VeliQ USA, Inc. (“VeliQ

USA”) alleges that Mobillogix, LLC (“Mobillogix”) breached a Master Service Agreement
(“MSA”) under which Mobillogix was to purchase licenses to VeliQ USA’s platform,
incorporate that platform into Mobillogix’s own product, and then sell that product to
Mobillogix’s end user customers. VeliQ USA alleges that Mobillogix breached the MSA by
refusing to pay VeliQ USA for the licenses it agreed to purchase.
VeliQ USA is a Massachusetts corporation based in Boston, Massachusetts, and
Mobillogix is a Delaware corporation with an address in Baltimore, Maryland.
Before the Court is Mobillogix’s Motion to Dismiss for Lack of Personal Jurisdiction or,
in the Alternative, to Transfer (ECF No. 7). As to the alternative request, if the Court finds that
dismissal is not warranted, Mobillogix asks the Court to transfer the case to the United States
District Court for the District of Arizona pursuant to 28 U.S.C. § 1404. For the reasons discussed
herein, Mobillogix’s motion is denied as to both requests.
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II.

Legal Standard
As the plaintiff, VeliQ USA bears the burden of establishing the Court’s personal

jurisdiction over Mobillogix. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290
F.3d 42, 50 (1st Cir. 2002). Under the “prima facie” standard for determining whether VeliQ
USA has met its burden, “the inquiry is whether the plaintiff has proffered evidence which, if
credited, is sufficient to support findings of all facts essential to personal jurisdiction.” Bluetarp
Fin., Inc. v. Matrix Constr. Co., 709 F.3d 72, 79 (1st Cir. 2013) (quoting Phillips v. Prairie Eye
Ctr., 530 F.3d 22, 26 (1st Cir. 2008)). “The plaintiff’s properly documented evidentiary proffers
are accepted as true for purposes of making the prima facie showing, and we construe these
proffers in a light most favorable to plaintiff’s jurisdictional claim.” Id.
The Massachusetts Long-Arm Statute, G.L. c. 223A, § 3, provides, in relevant part: “A
court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a
cause of action in law or equity arising from the person’s (a) transacting any business in this
commonwealth . . . .” In Massachusetts, “[w]e may sidestep the statutory inquiry and proceed
directly to the constitutional analysis, however, because the Supreme Judicial Court of
Massachusetts has interpreted the state’s long-arm statute ‘as an assertion of jurisdiction over the
person to the limits allowed by the Constitution of the United States.’” Daynard, 290 F.3d at 52
(quoting “Automatic” Sprinkler Corp. of Am. v. Seneca Foods Corp., 361 Mass. 441, 443
(1972)).
The First Circuit applies a three-part test in determining whether the exercise of personal
jurisdiction over a nonresident defendant is constitutional:
(1) whether the claim “directly arise[s] out of, or relate[s] to, the defendant’s forum
state activities;” (2) whether the defendant’s in-state contacts “represent a
purposeful availment of the privilege of conducting activities in the forum state,
thereby invoking the benefits and protections of that state’s laws and making the
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defendant’s involuntary presence before the state’s courts foreseeable;” and (3)
whether the exercise of jurisdiction is reasonable.
C.W. Downer & Co. v. Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st Cir. 2014) (quoting
Daynard, 290 F.3d at 60).
III.

Discussion
A. Personal Jurisdiction
In its Opposition brief (ECF No. 12), VeliQ USA makes certain evidentiary proffers

supported by affidavit of its Chief Financial Officer (ECF No. 13). At this stage, the Court
accepts these evidentiary proffers as true. Without reciting all of VeliQ USA’s proffered facts,
the Court highlights those items that are most salient to the First Circuit’s three-part test
regarding the constitutionality of personal jurisdiction.
VeliQ USA is a Massachusetts corporation with its headquarters and sole U.S. office in
Boston. VeliQ USA is wholly owned by VeliQ B.V. LLC, a Dutch company.
Negotiation of the MSA took place primarily through email and telephone
communications between Mobillogix’s founder and Chief Executive Officer and VeliQ USA’s
Vice President of Sales, who was located in Boston. On February 20, 2014, VeliQ USA emailed
a draft of the MSA to Mobillogix. Nearly all of the terms of the MSA were finalized in a
February 24, 2014 telephone call in which VeliQ USA employees participated from their office
in Boston. The MSA was executed later that week, on February 26-27, 2014, in Las Vegas,
Nevada, where both parties’ signatories were attending a convention. The MSA, a two-year
agreement, clearly states on the cover page that VeliQ USA is a Massachusetts corporation with
an address in Boston.
After the MSA was signed, Mobillogix made an initial payment to VeliQ USA by
sending $100,000 to VeliQ USA’s Bank of America account in Boston. VeliQ USA began
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providing support to Mobillogix in the form of integration, technical support, and training. From
March 2014 through October 2014, on multiple occasions, Mobillogix representatives
communicated by telephone and email and participated in online trainings and meetings with
VeliQ USA employees located in Boston. These communications included eight online
demonstrations to Mobillogix employees and Mobillogix’s business prospects, and six other calls
or online presentations with Mobillogix employees, all conducted from VeliQ USA’s Boston
office. In March 2014 and again in September 2014, Mobillogix’s CEO made two trips to Boston
for meetings with VeliQ USA.
Applying the First Circuit’s three-part test to these circumstances, the Court holds that
VeliQ USA has satisfied its burden of establishing personal jurisdiction over Mobillogix.
The first prong, relatedness, requires the plaintiff to show “a demonstrable nexus”
between the plaintiff’s claims and the defendant’s forum-based activities, such that “the litigation
itself is founded directly on those activities.” Downer, 771 F.3d at 66 (quoting Adelson v.
Hananel, 652 F.3d 75, 81 (1st Cir. 2011)). Relatedness is a “flexible, relaxed standard.” Id. In a
contract case, the focus is on “the parties’ ‘prior negotiations and contemplated future
consequences, along with the terms of the contract and the parties’ actual course of dealing.’” Id.
(quoting Daynard, 290 F.3d at 52).
Here, Mobillogix negotiated the MSA with VeliQ USA employees located in Boston. It
entered into a two-year business relationship with VeliQ USA, while fully aware that VeliQ
USA was a Massachusetts corporation with its sole office in Boston. After entering into the
MSA, from March 2014 through October 2014, Mobillogix had frequent contact with VeliQ
USA employees who were providing services in connection with the MSA. Mobillogix’s CEO
also made two trips to Boston for meetings with VeliQ USA. Under these proffered facts, VeliQ

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USA’s claims are sufficiently related to Mobillogix’s forum-based activities. See id. (relatedness
satisfied for breach of contract claim where Canadian corporation entered into long-term contract
with Massachusetts corporation and frequently communicated remotely with employees of
Massachusetts corporation).
The second prong, purposeful availment, asks whether “the defendant’s in-state contacts
. . . represent a purposeful availment of the privilege of conducting activities in the forum state,
thereby invoking the benefits and protections of that state’s laws and making the defendant’s
involuntary presence before the state’s courts foreseeable.” Daynard, 290 F.3d at 61. “The
cornerstones of this inquiry are voluntariness and foreseeability.” Downer, 771 F.3d at 66 (citing
Daynard, 290 F.3d at 61). This factor prohibits jurisdiction where the defendant’s contacts with
the forum state are “random, fortuitous, or attenuated.” Id.
In this case, Mobillogix entered into a two-year contract with VeliQ USA, knowing that
VeliQ was a Massachusetts corporation with its office in Boston. Mobillogix’s employees had
months of frequent contact with VeliQ USA’s employees in Boston via email and telephone, and
Mobillogix’s CEO traveled to Boston for two in-person meetings with VeliQ USA. Under these
proffered facts, Mobillogix’s contacts with Massachusetts were far from “random, fortuitous, or
attenuated,” and the prong of purposeful availment is satisfied. See id. at 67 (purposeful
availment satisfied where the defendant knew it was contracting with a Massachusetts bank and
“the contract was not of a short duration or quickly accomplished”).
The third prong, reasonableness, is assessed by reference to five “gestalt” factors:
(1) the defendant’s burden of appearing [in the forum state], (2) the forum state’s
interest in adjudicating the dispute, (3) the plaintiff’s interest in obtaining
convenient and effective relief, (4) the judicial system’s interest in obtaining the
most effective resolution of the controversy, and (5) the common interests of all
sovereigns in promoting substantive social policies.

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Id. at 69 (quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 209 (1st Cir. 1994)); see
also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985). These factors play a more
limited role in this case than they would in a case where “the minimum contacts question is very
close.” Downer, 771 F.3d at 69 (quoting Adelson, 510 F.3d at 51). Moreover, because VeliQ
USA’s “showing on the first two prongs of the inquiry is strong,” Mobillogix “carries the burden
of defeating jurisdiction with a similarly strong showing of unfairness.” Id. at 71. Mobillogix has
not met this burden.
The first factor, the defendant’s burden of appearance, is “only meaningful where a party
can demonstrate some kind of special or unusual burden.” Pritzker v. Yari, 42 F.3d 53, 64 (1st
Cir. 1994). Mobillogix has not alleged any special or unusual burden.
The second factor, the forum state’s interest, favors exercising personal jurisdiction
because “Massachusetts has ‘significant’ interests in providing a convenient forum for disputes
involving its citizens and in ensuring that its companies have easy access to a forum when their
commercial contracts are said to be breached by out-of-state defendants.” Downer, 771 F.3d at
70 (citing Champion Exposition Svcs., Inc. v. Hi-Tech Elec., LLC, 273 F. Supp. 2d 172, 179 (D.
Mass. 2003)). Mobillogix argues that Massachusetts has little or no interest in this action because
the parties contractually agreed that the MSA and any related disputes would be governed by
New York law. In fact, a forum state’s interest in adjudicating the dispute is independent of the
substantive law that governs the dispute. Id. at 70 n.6.
The third factor, the plaintiff’s interest, weighs in favor of personal jurisdiction in light of
the deference traditionally accorded to a plaintiff’s choice of forum. See Daynard, 290 F.3d at
62.

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The fourth factor, effective judicial administration, is “[u]sually . . . a wash,” Nowak v.
Tak How Investments, Ltd., 94 F.3d 708, 718 (1st Cir. 1996), as the Court concludes it is in this
case.
The fifth and final factor, public policy, favors exercising personal jurisdiction because
Mobillogix voluntarily entered into a two-year agreement with VeliQ USA, knowing that its
contracting partner was a Massachusetts entity with its sole office in Massachusetts, and should
not be able to force VeliQ USA to travel to a foreign jurisdiction to enforce its contractual rights.
See Champion, 273 F. Supp. 2d at 179 (holding that public policy counsels in favor of
jurisdiction in an action “about a business agreement with a Massachusetts entity, formed as a
result of [the defendant’s] Massachusetts contacts”).
In sum, under the First Circuit’s three-part test, VeliQ USA has met its burden of
establishing the Court’s personal jurisdiction over Mobillogix.
B.

Change of Venue Request

Mobillogix’s alternative request to transfer the case to the District of Arizona pursuant to
28 U.S.C. § 1404 is denied. The decision to change venue is in the trial judge’s discretion. See
Champion, 273 F. Supp. 2d at 180. “[T]he defendant must bear the burden of proving both the
availability of an adequate alternative forum and that considerations of convenience and judicial
efficiency strongly favor litigating the claim in the alternative forum.” Id. (quoting Nowak, 94
F.3d at 719). “The plaintiff’s choice of forum will be disturbed only rarely.” Id. The only ground
that Mobillogix offers in support of its change of venue request is that litigating in Arizona
would be more convenient for Mobillogix. In light of the demanding standard for granting a
change of venue, the Court declines to exercise its discretion to transfer the case merely on the
basis of Mobillogix’s convenience.

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IV.

Conclusion
For the foregoing reasons, Mobillogix’s Motion to Dismiss for Lack of Personal

Jurisdiction or, in the Alternative, to Transfer is DENIED.
SO ORDERED.
Dated: March 6, 2015
/s/ Allison D. Burroughs
ALLISON D. BURROUGHS
DISTRICT JUDGE

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