Blacklidge Emulsions, Inc. v. Blankenship et al
Filing
17
ORDER denying 8 Motion to Dismiss for Lack of Jurisdiction Signed by Chief District Judge Louis Guirola, Jr on 12/10/2013 (Guirola, Louis)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
BLACKLIDGE EMULSIONS, INC.
PLAINTIFF
v.
CAUSE NO. 1:13CV293-LG-JMR
JOHN BLANKENSHIP; RACHEL
BLANKENSHIP; GRACE FUEL, LLC;
SEABOARD ASPHALT PRODUCTS
COMPANY; SPECIALTY EMULSIONS,
INC.; and JOHN DOES 1-10
DEFENDANTS
MEMORANDUM OPINION AND ORDER DENYING
MOTION TO DISMISS FOR LACK OF JURISDICTION
BEFORE THE COURT is the Motion to Dismiss for Lack of Personal
Jurisdiction [8] filed by the defendants Rachel Blankenship and Grace Fuel, LLC.
The plaintiff Blacklidge Emulsions, Inc. (“BEI”), has filed a response in opposition
to the Motion, but the defendants did not file a reply. After reviewing the
submissions of the parties and the applicable law, the Court finds that the Motion
to Dismiss should be denied.
FACTS
BEI manufactures and sells asphalt products, including an “advanced
asphalt emulsion tack” commonly called “Trackless Tack.” (Compl. at 4, ECF No.
1). It employed the defendant John Blankenship from July 5, 2007 until he
resigned on May 24, 2013. (Id. at 5). BEI alleges, “Prior to his resignation,
Blankenship contacted and solicited BEI customers and clients, and sold, or
attempted to sell, asphalt products and/or services on behalf of himself, Grace Fuel,
and other competitors of BEI, including Seaboard Asphalt.” (Id. at 9). BEI also
claims that, in violation of a Non-Compete and Confidentiality Agreement, John
continued to compete with BEI after his resignation by marketing and selling
products similar to those manufactured and sold by BEI. (Id. at 7, 10).
Specifically, John and his wife Rachel formed Grace Fuels, a company that sells
asphalt products. (Id. at 11). BEI claims that John markets Grace Fuel’s asphalt
products to BEI’s customers by utilizing information he acquired while working for
BEI. (Id. at 5-6, 11-12).
BEI filed this lawsuit against John and Rachel Blankenship, Grace Fuel, and
others, alleging that:
The Defendants willfully, knowingly and intentionally agreed and
conspired with each other for the purpose of engaging in unlawful
conduct, for unlawful purposes, including acts of violation of the
Lanham Act, unfair competition, misappropriation of trade secrets,
misappropriation of confidential information, breach of contract and
breach of good faith and loyalty, tortious interference with contractual
and prospective business relations, and for the purpose of engaging in
both otherwise lawful conduct and unlawful conduct by wrongful
conduct and means.
(Id. at 21).
DISCUSSION
Rachel Blankenship and Grace Fuels seek dismissal of BEI’s claims for lack
of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). “A federal court sitting
in diversity may exercise personal jurisdiction only to the extent permitted a state
court under state law.” Paz v. Brush Eng’d Mat., Inc., 445 F.3d 809, 812 (5th Cir.
2006). When the district court considers a motion to dismiss for lack of personal
jurisdiction without an evidentiary hearing, the plaintiff is only required to make a
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prima facie case that jurisdiction is proper. Id. “Any greater burden such as proof
by a preponderance of the evidence would permit a defendant to obtain dismissal
simply by controverting the facts established by a plaintiff through his own
affidavit and supporting materials.” Walk Haydel & Assoc., Inc. v. Coastal Power
Prod. Co., 517 F.3d 235, 241 (5th Cir. 2008). The court’s consideration is not
limited to the pleadings, and the entire record, including affidavits, can be reviewed
while ruling on a Rule 12(b)(2) motion to dismiss. Paz, 445 F.3d at 812.
Nevertheless, uncontroverted allegations in the plaintiff’s complaint must be
accepted as true, and all disputed facts must be construed in the plaintiff’s favor.
Id.; Walk Haydel & Assoc., 517 F.3d at 241.
A court can only exercise jurisdiction if “(1) the state’s long-arm statute
applies, as interpreted by the state’s courts, and (2) if due process is satisfied under
the 14th Amendment to the federal Constitution.” Id. Mississippi’s long-arm
statute provides:
Any nonresident . . . . corporation not qualified under the Constitution
and laws of this state as to doing business herein, who shall make a
contract with a resident of this state to be performed in whole or in
part by any party in this state, or who shall commit a tort in whole or
in part in this state against a resident or nonresident of this state, or
who shall do any business or perform any character of work or service
in this state, shall by such act or acts be deemed to be doing business
in Mississippi and shall thereby be subjected to the jurisdiction of the
courts of this state.
Miss. Code. Ann. § 13-3-57. Thus, the plaintiff must show that either the contract
prong, tort prong, or doing business prong of the Mississippi long-arm statute is
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satisfied before the Court can exercise personal jurisdiction over the defendant.
Wilson v. Highpointe Hospitality, Inc., 62 So. 3d 999, 1001 (¶6) (Miss. Ct. App.
2011).
BEI claims that jurisdiction is proper in the present case under the tort prong
of the long-arm statute. “Under the tort prong of the Mississippi long-arm statute,
personal jurisdiction is proper if any element of the tort (or any part of any element)
takes place in Mississippi.” Paz, 445 F.3d at 812. A tort is committed in
Mississippi when the plaintiff is injured in Mississippi. Yatham v. Young, 912 So.
2d 467, 470 (¶7) (Miss. 2005). “Mississippi’s long-arm statute contains no
requirement that the part of the tort which causes the injury be committed in
Mississippi when the injury results in this state.” Baker & McKenzie, LLP v.
Evans, 123 So. 3d 387, 405 (¶64) (Miss. 2013) (quoting Sorrells v. R & R Custom
Coach Works, Inc., 636 So. 2d 668, 672 (Miss. 1994)).
In the present case, BEI is a Mississippi corporation with its principal place
of business in Gulfport, Mississippi. As a result, BEI’s alleged injuries occurred in
Mississippi, and the tort prong of the long arm statute is satisfied. See Werner v.
Landstar LLC, No. 1:05CV50-D-D, 2006 WL 1029956 at *3 (N.D. Miss. Apr. 18,
2006) (“Because the Plaintiff is a resident of Mississippi at the time of the tort, the
Court finds that his injuries occurred in Mississippi.”); see also United Brands, Inc.
v. Teders, 868 F. Supp. 2d 572, 579 (S.D. Miss. 2012) (“Here a loss of profits and
prospective contracts as well as a loss of income would necessarily occur in
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Mississippi as the principal place of business for [the plaintiff].”).
The next consideration is whether due process is satisfied under the 14th
Amendment to the federal Constitution. Paz, 445 F.3d at 812.
Exercising personal jurisdiction over a nonresident defendant is
consistent with due process when (1) [the] defendant has purposefully
availed himself of the benefits and protections of the forum state by
establishing minimum contacts with the forum state, and (2) the
exercise of jurisdiction over that defendant does not offend traditional
notions of fair play and substantial justice.
Id. at 813. “Minimum contacts” may give rise to either specific or general personal
jurisdiction. Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1994).
BEI advocates the exercise of specific jurisdiction in the present case. The
Fifth Circuit has adopted a three-step test for determining whether specific
jurisdiction exists:
(1) whether the defendant has minimum contacts with the forum state,
i.e., whether it purposely directed its activities toward the forum state
or purposefully availed itself of the privileges of conducting activities
there; (2) whether the plaintiff’s cause of action arises out of or results
from the defendant’s forum-related contacts; and (3) whether the
exercise of personal jurisdiction is fair and reasonable.
McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009).
“[A]n act done outside the state that has consequences or effects within the
state will suffice as a basis for jurisdiction in a suit arising from those consequences
if the effects are seriously harmful and were intended or highly likely to follow from
the nonresident’s conduct.” McFadin, 587 F.3d at 761. “[F]oreseeable injury alone
is not sufficient to confer specific jurisdiction, absent the direction of specific acts
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toward the forum.” Id. at 762; see also Calder v. Jones, 465 U.S. 783, 783-84 (1984)
(Intentional, tortious actions aimed directly at the forum state, rather than “mere
untargeted negligence” justified the exercise of personal jurisdiction).
BEI claims that Rachel Blankenship and Grace Fuel conspired with John
Blankenship and others to steal the customers and trade secrets of BEI. These
alleged contacts with Mississippi arise from and are directly related to the cause of
action asserted by BEI. BEI has not alleged negligent acts that fortuitously caused
harm in Mississippi; rather, it has alleged that the defendants combined efforts
with BEI’s former employee to specifically and deliberately harm BEI, which is a
Mississippi corporation with its principal place of business located in Mississippi.
Thus, the Court finds the existence of minimum contacts sufficient to establish a
prima facie case of specific personal jurisdiction.
The exercise of personal jurisdiction is also fair and reasonable in this case.
John and Rachel Blankenship are the member-managers of Grace Fuel, and all
three of these defendants are represented by the same attorney. The claims filed
against these defendants arise out of the same facts and circumstances. As a result,
the Court finds that the burden placed on Rachel and Grace Fuel in defending the
case in this jurisdiction would be minimal, while the burden placed on BEI would be
great if it were required to litigate its claims in two different jurisdictions. See USave Auto Rental of Amer., Inc. v. Moses, No. 1:02CV689-GU-RO, 2006 WL 211955
at *3 (S.D. Miss. Jan. 27, 2006) (holding that it would be inefficient to require
plaintiffs to pursue their claims against one of the defendants in another forum
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where the defendants were closely related and the claims filed against them were
intertwined). In addition, Mississippi has an interest in seeing that its corporations
are protected from tortious conduct. See Unifed Brands, Inc. v. Teders, 868 F. Supp.
2d 572, 581 (S.D. Miss. 2012) (Mississippi has a significant interest in a case arising
out of harm directed at a business located within its borders). Since the exercise of
personal jurisdiction would not be unfair or unreasonable, the Court finds that BEI
has established a prima facie case that personal jurisdiction is proper in the present
case.
CONCLUSION
Fore the foregoing reasons, the Court finds that the Motion to Dismiss filed
by Rachel Blankenship and Grace Fuel should be denied.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion to
Dismiss for Lack of Personal Jurisdiction [8] filed by the defendants Rachel
Blankenship and Grace Fuel, LLC, is DENIED.
IT IS, FURTHER, ORDERED AND ADJUDGED that the parties shall
promptly notify the magistrate judge of this order and submit a proposed order
lifting the stay entered in this matter on September 4, 2013.
SO ORDERED AND ADJUDGED this the 10th day of December, 2013.
s/
Louis Guirola, Jr.
LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE
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