Pensmore Reinforcement Technologies, LLC, d/b/a Helix Steel v. McClay Industries PTY, Ltd. et al

Filing 23

OPINION and ORDER Denying 17 Motion to Dismiss. Signed by District Judge Stephen J. Murphy, III. (DPar)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
PENSMORE REINFORCEMENT
TECHNOLOGIES, LLC,

Case No. 2:20-cv-13073
HONORABLE STEPHEN J. MURPHY, III

Plaintiff,
v.
MCCLAY INDUSTRIES PTY, LTD.,
and REUBEN RAMSAY,
Defendants.

/

OPINION AND ORDER
DENYING MOTION TO DISMISS [17]
In the present trade secrets case, Defendants moved to dismiss the amended
complaint under Federal Rule of Civil Procedure 12(b)(2) for lack of personal
jurisdiction. ECF 17. The parties fully briefed the motion, and a hearing is
unnecessary. See E.D. Mich. L.R. 7.1(f)(2). For the following reasons, the Court will
deny the motion to dismiss.
BACKGROUND
Defendant McClay Industries is incorporated and has a principal place of
business in Australia. ECF 16, PgID 233; ECF 17-1, PgID 314. Its Director, Reuben
Ramsay, is Australian and resides there as well. ECF 17-1, PgID 313–14.
Defendants’ connections to the United States are limited. In 2013, McClay
Industries signed a non-disclosure agreement (“NDA”) with Plaintiff. ECF 16-1, PgID
267; ECF 17-1, PgID 315. The NDA ended in January 2020. ECF 16-1, PgID 267. The
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NDA was “binding upon the Parties, their officers, employees[,] and agents” and was
“subject to the laws and jurisdiction of the State of Michigan.” Id. McClay later signed
a 2019 NDA with Plaintiff that was also “binding upon the Parties, their officers,
employees[,] and agents” and “subject to the laws and jurisdiction of the State of
Michigan.” ECF 16-2, PgID 269; ECF 17-1, PgID 316. The NDA ends in 2024. ECF
16-2, PgID 269. Director Ramsay signed both NDAs on behalf of McClay Industries.
ECF 16-1, PgID 267; ECF 16-2, PgID 269.
McClay Industries “does not directly sell or distribute any products in the
United States” and has maintained no office or property in the United States. ECF
17-1, PgID 314. McClay Industries does not have employees in the United States. Id.
at 315. Director Ramsay claimed that he has only thrice traveled to the United States
for business; and two of those times he traveled to a Las Vegas trade show and stayed
at a home that Plaintiff rented. Id. at 317–18; ECF 20-1, PgID 513. Plaintiff, however,
asserted that Director Ramsay has traveled to the United States twice more for sales
trips. ECF 20-1, PgID 513.
LEGAL STANDARD
When a defendant moves to dismiss for lack of personal jurisdiction “the
plaintiff always bears the burden of establishing that jurisdiction exists.” Serras v.
First Tenn. Bank Nat’l Assoc., 875 F.2d 1212, 1214 (6th Cir. 1989) (citations omitted).
The Court may decide the motion based on “affidavits alone,” may permit discovery
before deciding the motion, or “may conduct an evidentiary hearing.” Id. (citation
omitted). If the Court resolves the motion “on written submissions alone,” and the

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defendant submits affidavits to combat a finding of personal jurisdiction, the plaintiff
must assert specific facts that show jurisdiction. Id. (citation omitted). The Court
considers all written submissions, including pleadings and affidavits, “in the light
most favorable to the plaintiff.” Id. (citation omitted).
If the Court’s jurisdiction is based on federal question, then “personal
jurisdiction over a defendant exists ‘if the defendant is amenable to service of process
under the forum state’s long-arm statute and if the exercise of personal jurisdiction
would not deny the defendant due process.’” Bridgeport Music, Inc. v. Still N the
Water Publ’g, 327 F.3d 472, 477 (6th Cir. 2003) (quoting Bird v. Parsons, 289 F.3d
865, 871 (6th Cir. 2002)) (alterations omitted). But when “the state long-arm statute
extends to the limits of the due process clause, the two inquiries are merged and the
court need only determine whether exercising personal jurisdiction violates
constitutional due process.” Id. (citing Nationwide Mut. Ins. Co. v. Tryg Int’l Ins. Co.,
91 F.3d 790, 793 (6th Cir. 1996)); see also J. McIntyre Mach., Ltd. v. Nicastro, 564
U.S. 873, 903 n.8 (2011) (listing Michigan as a state whose “long-arm provision[]
allow[s] the exercise of jurisdiction subject only to a due process limitation”).
DISCUSSION
Michigan’s general personal jurisdiction statute for corporations allows courts
to exercise jurisdiction over a corporation if the corporation consents to personal
jurisdiction. Mich. Comp. Laws § 600.711(2); see also § 600.701(3) (same for
individuals). “[A] foreign corporation may consent to Michigan jurisdiction through a
valid forum selection and choice of law clause.” Belanger, Inc. v. Car Wash

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Consultants, Inc., 452 F. Supp. 2d 761, 764 (E.D. Mich. 2006) (citing Burger King
Corp. v. Rudzewicz, 741 U.S. 462, 473 n.14 (1985)); see also Innovation Ventures, LLC
v. Custom Nutrition Labs., LLC, 946 F. Supp. 2d 714, 718–19 (E.D. Mich. 2013).
McClay Industries consented to Michigan’s general jurisdiction because the
parties agreed to the forum selection clause in the NDAs. The NDAs’ plain text stated
that each NDA is “subject to the laws and jurisdiction of the State of Michigan.” ECF
16-1, PgID 267; ECF 16-2, PgID 269 (emphasis added). The forum selection clause
also applies to Ramsay—McClay Industries’s Director. ECF 16-1, PgID 267; ECF 162, PgID 269; ECF 17-1, PgID 313; see Wilson v. 5 Choices, LLC, 776 F. App’x 320, 329
(6th Cir. 2019) (“[N]on-parties should . . . be subject to forum selection clauses where
the alleged conduct of the non-parties is so closely related to the contractual
relationship that the forum selection clause applies to all defendants.”) (quotation
and quotation marks omitted). After all, the NDAs that Director Ramsay signed were
“binding upon the Parties, their officers, employees[,] and agents.” ECF 16-1, PgID
267; ECF 16-2, PgID 269 (emphasis added). And when tort claims “ultimately depend
on the existence of the contractual relationship between the parties, or . . . [the]
interpretation of the contract, or . . . involve the same operative facts as a parallel
claim for breach of contract,” the conduct is linked to the contract and thus binding
on non-parties. Thomas-Williams v. MGM Grand Detroit LLC, No. 08-11030, 2009
WL 916952, at *4 (E.D. Mich. 2009). Like many trade secrets cases, Plaintiff’s claims
hinge on whether Defendants misused information shared under the parties’ NDAs.
See generally ECF 16.

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Contrary to Defendants’ arguments, ECF 21, PgID 518–19, the unambiguous
command of the forum selection clause is a specific consent to personal jurisdiction.
ECF 16-1, PgID 267; ECF 16-2, PgID 269 (stating that the NDAs are “subject to the
laws and jurisdiction of the State of Michigan.”); see Jurisdiction, Black’s Law
dictionary (11th ed. 2019) (“A government’s general power to exercise authority over
all persons and things within its territory . . . . A geographic area within which
political or judicial authority may be exercised.”). “Michigan law . . . requires the
Court to enforce unambiguous contract language.” Decoration Design Sols., Inc. v.
Amcor Rigid Plastics USA, Inc., --- F. Supp. 3d ---, 2021 WL 3510834, at *2 (E.D.
Mich. 2021) (Murphy, J.) (quoting Vill. of Edmore v. Crystal Automation Sys. Inc.,
322 Mich. App. 244, 263 (2017)). Because the parties plainly agreed to the
“jurisdiction of the State of Michigan,” the Court will enforce the NDAs as written.
Next, the forum selection clause does not fall under the Mich. Comp. Laws
§ 600.745(2)(b) exception.1 Under the exception, the Court may not enforce a forum
selection claims if Michigan is not “a reasonably convenient place for the trial of the
action.” The Court must weigh several factors to find whether the exception applies.
Lease Acceptance Corp. v. Adams, 272 Mich. App. 209, 226–27 (2006).
Defendants highlighted two reasons why Michigan is not a reasonably
convenient place to try the case. First, the “relevant events occurred in
Australia . . . and most relevant witnesses are in Australia.” ECF 17, PgID 309

Defendants argued only that subsection (2)(b) applies to the present motion. ECF
17, PgID 301.

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(emphasis omitted). And second, “Michigan does not have an interest in regulating
competition in Australia.” Id.
But the arguments are incomplete. Although Defendants have allegedly
downloaded confidential information and trade secrets from Australia, ECF 16, PgID
236, 246–47, the servers that they accessed were in Michigan and other States, id. at
236, 249. And the servers recorded Defendants’ electronic footprints each time they
accessed the servers. Id. at 245. Defendants also received confidential information
and trade secrets in emails sent from Plaintiff’s Michigan employees. Id. at 250.
Defendants eventually sold products using the confidential information and trade
secrets to sell a California product. Id. at 237. At minimum, based on the acts set
forth in the amended complaint, the relevant events occurred in both Australia and
Michigan. Plus, Michigan has a significant interest in protecting its businesses’
intellectual property. The present case is therefore a far cry from “regulating
competition in Australia”; ECF 17, PgID 309, it is about protecting Michigan
businesses from foreigners who allegedly steal their sensitive information during a
prolonged business relationship. At bottom, Michigan is a reasonably convenient
place to try the present trade secrets dispute, and the Mich. Comp. Laws
§ 600.745(2)(b) exception does not apply.
Still, Defendants claimed that the forum selection clause is unenforceable.
ECF 17, PgID 301. Federal law applies to whether a forum selection clause is invalid.
See Williams Ins. & Consulting, Inc. v. Goosehead Ins. Agency, L.L.C., 533 F. Supp.
3d 555, 557–58 (E.D. Mich. 2020) (Cleland, J.) (collecting cases); see also Mich.

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Custom Machs., Inc. v. AIT Worldwide Logistics, Inc., 531 F. Supp. 3d 1208, 1214
(E.D. Mich. 2021) (“Federal courts construing forum selection clauses apply federal
common law.”) (citation omitted). “Under federal law, ‘[a] forum selection clause
should be upheld absent a strong showing that it should be set aside.’” Goosehead Ins.
Agency, L.L.C., 533 F. Supp. 3d at 558 (citing Wong v. PartyGaming, Ltd., 589 F.3d
821, 828 (6th Cir. 2009)). “[A] valid forum-selection clause should be given controlling
weight in all but the most exceptional cases.” Atl. Marine Constr. Co. v. U.S. Dist. Ct.
for W. Dist. of Tex., 571 U.S. 49, 63 (2013) (quotation and alteration omitted).
Defendants bear the burden to show that the Court should not enforce the forum
selection clause. Wong, 589 F.3d at 828 (citation omitted).
In short, Defendants do not meet the burden. The court considers three factors
to determine whether to enforce a forum selection clause: “(1) whether the clause was
obtained by fraud, duress, or other unconscionable means; (2) whether the designated
forum would ineffectively or unfairly handle the suit; and (3) whether the designated
forum would be so seriously inconvenient such that requiring the plaintiff to bring
suit there would be unjust.” Smith v. Aegon Cos. Pension Plan, 769 F.3d 922, 930 (6th
Cir. 2014) (quotation omitted). The first two factors do not apply and neither party
has suggested otherwise. ECF 17, PgID 308–09; ECF 20, PgID 504–06. And the third
factor is merely a rehash of Defendants’ arguments that the forum selection clause
falls under the Mich. Comp. § 600.745(2)(b) exception to general jurisdiction. See ECF
17, PgID 301, 308–09 (explaining that Defendants’ arguments about whether
Michigan is “reasonably convenient” is the same as whether exercising jurisdiction

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over Defendants would be unreasonable). No good reason exists for why it would be
unjust to require Defendants to litigate the case in Michigan; Defendants allegedly
had a business agreement with Plaintiff and then violated the terms to steal
information from Michigan servers. Because the forum selection clause is not
“unreasonable and unjust,” the clause also “does not offend due process.” Burger King,
471 U.S. at 472 n.14.
Beyond the three factors, the Court may set aside the forum selection clause
“if ‘enforcement would contravene a strong public policy’ of the forum state.” Shell v.
R.W. Sturge, Ltd., 55 F.3d 1227, 1229–30 (6th Cir. 1995) (citing Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 15 (1972)). But Defendants have not identified a strong
Michigan policy against enforcing the forum selection clause. See ECF 17, PgID 309.
To the contrary, “[i]t is undisputed that Michigan’s public policy favors the
enforcement of contractual forum-selection clauses and choice-of-law provisions.”
Turcheck v. Amerifund Fin., Inc., 272 Mich. App. 341, 345 (2006) (citation omitted).
Last, Defendants’ argument that the NDAs cannot “serve as the basis of
Plaintiff’s claims” is improper to assert in a Rule 12(b)(2) motion. ECF 17, PgID 300.
The argument would, however, be proper in a Rule 12(b)(6) motion that tests whether
the amended complaint’s allegations about the NDAs “fail[] to state a claim upon
which relief can be granted.”
Because the Court has general personal jurisdiction over Defendants, the
Court need not resolve whether there is specific personal jurisdiction. The Court will
therefore deny the Rule 12(b)(2) motion to dismiss the amended complaint.

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ORDER
WHEREFORE, it is hereby ORDERED that the motion to dismiss [17] is
DENIED.
SO ORDERED.
s/ Stephen J. Murphy, III
STEPHEN J. MURPHY, III
United States District Judge
Dated: January 7, 2022
I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on January 7, 2022, by electronic and/or ordinary mail.
s/ David P. Parker
Case Manager

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