GRANGE CONSULTING GROUP et al v. BERGSTEIN et al

Filing 65

MEMORANDUM & ORDER granting 22 Motion to Dismiss for lack of jurisdiction. Signed by Judge Peter G. Sheridan on 10/22/2014. (eaj)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

GRANGE CONSULTING GROUP and
PAUL PARMAR,

Civil Action Entry 13-cv-06768 (PGS)

PlaintiJJ,

MEMORANDUM AND ORDER

V.

DAVID BERGSTETN, PINEBOARD
HOLDINGS, INC., ROBERT B.
SILVERMAN, ALBERT HALLAC,
JEFFREY HALLAC, LAWRENCE
TWERSKY, WESTON CAPITAL
MANAGEMENT LLC, SOVRIN HEALTH
SYSTEMS, INC., ALEX M.
WEINGARTEN and WEINGARTEN
BROWN LLP

Defendants.

This matter is before the Court on a motion to dismiss the Complaint for lack of personal
jurisdiction, or alternatively, to compel arbitration, brought by Defendant Sovrin Health Systems.
Inc. (“Sovrin”) (Dkt. Entry 22). In this case, Plaintiffs allege claims against Sovrin for
misappropriation of trade secrets. Sovrin asserts that it never had “continuous and systemic”
contacts with New Jersey to exercise general jurisdiction over it, nor even had minimum contacts
required for the Court to have specific jurisdiction.

For the reasons set forth below, the motion to

dismiss for lack ofjurisdiction is granted’.

1

As such, the alternative motion is not discussed herein.

I.

In September, 2011, Pegasus Blue Star Fund (“Pegasus”), an entity controlled by Paul
Parmar (“Parmar”). sold the assets of MD Tablet, Inc. (“MD Tablet”) to Pineboard Holdings, Inc.
(“Pineboard”). The computer servers of MD Tablet were located in Parmar’s office in East
Brunswick, New Jersey. In May, 2012, Lawrence Twersky (“Twersky”) (the CEO of Sovrin)
appeared at Parmar’s office in order to identify and gather the computer servers of MD Tablet.
During removal of the MD Tablet computers, Twersky seized control of computers owned by
Grange Consulting Group and Parmar. (See Memorandum and Order at Dkt. Entry 35).
Sovrin is incorporated in the State of Delaware, and is located in Los Angeles California.
According to the President of Sovrin, Kia Jam, Sovrin has never had a presence in New Jersey.
Sovrin has never conducted or transacted business in New Jersey, and has never sold any product or
service in New Jersey. The computer equipment that was taken from Parmar’s office was sent to
Sovrin’s offices in Glendale, California.
Pursuant to Federal Rule of Civil Procedure 1 2(h)(2), a complaint may he dismissed for lack
of personal jurisdiction. “if an issue is raised as to whether a court lacks personal jurisdiction over a
defendant, the plaintiff bears the burden of showing that personal jurisdiction exists.” Marten v.
Godwin, 499 F.3d 290, 295-96 (3d Cir. 2007). “To meet this burden, the plaintiff must establish
either that the particular cause of action sued upon arose from the defendant’s activities within the
forum state (‘specific jurisdiction’) or that the defendant has continuous and systematic contacts’
with the forum state (‘general jurisdiction’).” Provident Nat’l Bank v. CA Fed. Say. &

Loan

Assn.,

819 F.2d 434. 437 (3d Cir. 1987) (citations omitted). Under Federal Rule of Civil Procedure 4(k), “a
federal district court may assert personal jurisdiction over a nonresident of the state in which the
court sits to the extent authorized by the law of that state.” Id. at 296 (quoting Provident Nai’l Bank,
819 F.2d at 437). Pursuant to the New Jersey long-arm rule, N.J. Court R. 4:4-4(c), personal

jurisdiction in New Jersey “extends to the limits of the Fourteenth Amendment Due Process
protection.” CarteretSav. Bank, FA v. Shushan, 954 F.2d 141, 145 (3d Cir. 1992). Therefore, this
Court is “constrained, under New Jersey’s long-arm rule, only by the ‘traditional notions of fair
play and substantial justice,’ inhering in the Due Process Clause of the Constitution.” Id. (quoting

Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Those notions require that a defendant
have certain minimum contacts with the forum state based upon the defendant’s own purposeful

availment “of the privilege of conducting activities within the forum State, thus invoking the benefits
and protections of its laws.” Burger King C’orp. v. Rudzewicz, 47lU.S.462, 475 (1985). Unilateral
activity on the part of the Plaintiff will not cause the defendant to be subject to personal jurisdiction
in that forum. Id. However, physical entry into the forum state is not necessary to maintain personal
jurisdiction over a defendant. Id. at 476. While a presence in the forum will only serve to enhance a
defendant’s affiliation therewith and serve to reinforce foreseeability of suit therein, “it is an
inescapable fact of modern commercial life that a substantial amount of business is transacted solely
by mail and wire communications across state lines, thus obviating the need for physical presence
within a State in which business is conducted.” Id. All that is necessary for sufficient minimum
contacts to be established in the forum state is for “a commercial actor’s efforts [to be] ‘purposefully
directed’ toward residents of another State.” Id.
In this case, Sovrin’s one visit to New Jersey to identify and gather computers of MD
Tablet is insufficient to meet the continuous and systemic contacts to exercise general
jurisdiction, or the minimum contacts necessary to exercise specific jurisdiction over it.
Combining Sovrin and Twersky’s activities together does not meet the standard to assert
jurisdiction over Sovrin. The connections to New Jersey, if any, are remote and speculative.

ORDER
This matter having come before the Court on a motion to dismiss brought by Defendant
Sovrin Health Systems (Dkt. Entry 20), and the Court having reviewed the submissions of the
parties; and for good cause shown;
IT IS on this 22nd day of October, 2014;
ORDERED that motion to dismiss the Complaint against for lack of personal jurisdiction
is granted (Dkt. Entry 22).

PETER G. SHERIDAN. U.S.D.J.