GlobeRanger Corporation v. Software AG et al

Filing 71

Memorandum Opinion and Order granting 54 Motion to Dismiss. Software AG Germany is hereby DISMISSED from the case due to Plaintiff's failure to establish a prima facie case of personal jurisdiction. (Ordered by Judge Jane J Boyle on 4/12/2013) (ctf)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
GLOBERANGER CORPORATION,
Plaintiff,
v.
SOFTWARE AG, et al.,
Defendant.

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CIVIL ACTION NO. 3:11-CV-0403-B

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Software AG Germany’s1 (“SAGG”) Motion to Dismiss for
Lack of Personal Jurisdiction filed January 11, 2013 (doc. 54). For the reasons that follow, the Court
GRANTS the Motion and DISMISSES all claims as to Software AG for lack of personal
jurisdiction.
I.
BACKGROUND
This case concerns Defendants Software AG-Germany, Software AG-USA, Inc., Software
AG, Inc., Naniq Systems, LLC, and Main Sail, LLC’s (collectively "Defendants") alleged
misappropriation of GlobeRanger's trade secrets related to the GlobeRanger RFID Solution, a radio
frequency identification ("RFID") system. By way of background, GlobeRanger uses its RFID software
platform, along with necessary hardware, to create custom-tailored GlobeRanger RFID Solutions for

1

The Court uses the term “Software AG Germany” or “SAGG” to refer to Defendant Software AG,
a German-based company, to avoid confusion with Software AG Germany’s United States-based subsidiaries
Software AG-USA, Inc. and Software AG, Inc. (the “U.S. subsidiaries”).

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its customers. Pl.'s Original Pet. (“Pet.’”) ¶¶ 21-27. Among other allegations, GlobeRanger alleges
that Defendants used their access to GlobeRanger's RFID Solution technology to reverse-engineer
the program and create and market their own RFID Solution. Id. at ¶¶ 42, 44, 88-93.
On February 24, 2011, GlobeRanger filed suit in Texas state court, asserting claims of
misappropriation of trade secrets, conversion, unfair competition, conspiracy, and tortious
interference against Defendants. Id. at ¶¶ 95-119. Defendants removed the action to this Court on
March 1, 2011, alleging that GlobeRanger's state law claims were preempted by the Copyright Act.
Notice of Removal 2. After the Court appointed an international process server to effect service upon
SAGG, on January 11, 2013, SAGG filed its Motion to Dismiss for Lack of Personal Jurisdiction
pursuant to Federal Rule of Civil Procedure 12(b)(2) (“Rule 12(b)(2)”).
II.
LEGAL STANDARD
Rule 12(b)(2) allows for dismissal of an action when the Court lacks personal jurisdiction
over the defendant. On a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the
burden of proving that a nonresident defendant is subject to the Court's jurisdiction. Johnston v.
Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir. 2008) (citation omitted). To establish the
Court’s personal jurisdiction over a defendant, the plaintiff need make only a prima facie case of
jurisdiction. Id. The Court may determine the jurisdictional issue by receiving affidavits,
interrogatories, depositions, oral testimony, or any combination of the recognized methods of
discovery. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985) (citation omitted). All conflicts
between the facts contained in the parties' affidavits and other documentation must be resolved in
the plaintiff's favor. Johnston, 523 F.3d at 609.
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In establishing personal jurisdiction, two preconditions must be met: (1) the nonresident must
be amenable to service of process under Texas' long-arm statute; and (2) the assertion of jurisdiction
over the nonresident must comport with the Due Process Clause of the United States Constitution.
Jones v. Petty–Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992). Because Texas'
long-arm statute has been held to extend to the limits of due process, the Court need only determine
whether jurisdiction over the defendant is constitutionally permissible. Id. at 1067-68 (citation
omitted). To meet the federal constitutional test of due process, two elements must be satisfied: (1)
the defendant must have purposefully availed itself of the benefits and protections of the forum state
by establishing “minimum contacts” with that state such that it would reasonably anticipate being
haled into court there; and (2) the exercise of jurisdiction over the defendant must not offend
traditional notions of fair play and substantial justice. Id. at 1068 (citations omitted).
The “minimum contacts” test can be met by contacts giving rise to either specific or general
jurisdiction. Johnston, 523 F.3d at 6010. General personal jurisdiction exists when the nonresident
defendant's contacts with the forum state, even if unrelated to the cause of action, are continuous,
systematic, and substantial. Id. Specific personal jurisdiction exists when the cause of action arises
from the nonresident defendant's contacts with the forum state. Gundle Lining Constr. Corp. v. Adams
Cnty. Asphalt, Inc., 85 F.3d 201, 205 (5th Cir. 1996). In either context, the court considers the
totality of the circumstances in conducting the minimum contacts analysis; no single factor is
determinative. Stuart, 772 F.2d at 1192.
III.
ANALYSIS
The Petition alleges that the Court has personal jurisdiction over SAGG because SAGG
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“an/or one of its co-conspirators has engaged in tortious conduct against Globeranger in the State
of Texas,” the U.S. subsidiaries and SAGG “are a unitary business operation,” the U.S. subsidiaries
are wholly owned by SAGG, the U.S. subsidiaries are financially dependent on SAGG, SAGG
“consolidates the U.S. [subsidiaries’] financials,” SAGG “selects and assigns the U.S. [subsidiaries’]
key personnel and controls the operations of the U.S. [subsidiaries], including the U.S. [subsidiaries’]
sales [and] marketing and product development, which are the core issues of this lawsuit,” the U.S.
subsidiaries engage in purposeful activities in Texas, the U.S. subsidiaries maintain continuous and
systems contacts with Texas for the benefit of SAGG, and SAGG participated in a conspiracy to
defraud Globeranger in which SAGG or its co-conspirators committed one or more overt acts in
furtherance of the conspiracy in Texas. Pet. ¶ 9. Globeranger has also submitted evidence in the form
of printouts from SAGG’s or its subsidiaries’ website, which purportedly show that SAGG and its
subsidiaries are a unitary business operation.
The Court will examine below these allegations and evidence, as well as SAGG’s evidence,
in determining whether SAGG has sufficient minimum contacts with Texas. In doing so, the Court
notes that Globeranger need only make a prima facie case of personal jurisdiction, as the Court did
not hold a hearing on this motion. See Johnson, 523 F.3d at 609. Further, in determining whether
Globeranger has established a prima facie case, any conflict in jurisdictional evidence favors Plaintiff
Globeranger. See Freudensprung v. Offshore Technical Servs., Inc., 379 F.3d 327, 343 (5th Cir. 2004).
A.

Minimum Contacts
1.

Specific Personal Jurisdiction

The Court first notes that the Petition, while alleging that SAGG “has engaged in tortious
conduct against Globeranger in the State of Texas,” Pet. ¶ 9, does not allege any specific conduct
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taking place in Texas which gives rise to the claims at issue.2 See, e.g., id. at ¶ 67 (alleging exportation
of Globeranger’s RFID Solution to Germany); ¶¶ 69-70 (discussing conduct in lab in Pennsylvania).
Now, on SAGG’s Motion to Dismiss, Globeranger does not argue that SAGG engaged in tortious
conduct in Texas but asserts other grounds to find specific jurisdiction. Specifically, Globeranger first
argues that SAGG directed activities towards Globeranger, a Texas resident, and Globeranger felt
the effects of the injury in its home state, and thus personal jurisdiction may be found under the
“effects test” announced in Calder v. Jones, 465 U.S. 783, 789 (1984). Globeranger also argues that
SAGG’s participation in a “designed and protracted conspiracy directed at a Texas resident to
misappropriate its trade secrets and export them to Germany for [SAGG’s] use,” confers personal
jurisdiction over SAGG. Pl.’s Resp. 11. Finally, Globeranger argues that this court has specific
personal jurisdiction over SAGG based on certain software license keys which were subject to an End
User License Agreement (“EULA”) containing a forum selection clause stating that the user submits
to the jurisdiction of all state and federal courts in Dallas, Texas.
i.

Effects test

Globeranger cites Calder v. Jones, 465 U.S. at 789, for the proposition that if the brunt of the
injury is felt by the plaintiff in his home state, the defendant should reasonably anticipate being
hailed into court in that state, under the effects test. Globeranger argues that SAGG engaged in a
conspiracy to misappropriate Globeranger’s RFID solution, see Pet. ¶¶ 60-62, which are “specific
activities directed” toward Texas-resident Globeranger, and thus personal jurisdiction is proper.
However, courts have explained that even after Calder, personal jurisdiction under the effects test

2

But see Pet. ¶ 88 (alleging marketing presentation in Texas after alleged misappropriation of
Globeranger’s trade secrets).

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is rare, and plaintiffs must still show that a defendant purposefully availed itself of the benefits of the
forum state or purposely directed conduct at the forum state. See Stroman Realty v. Wercinski, 513
F.3d 476, 486 (5th Cir. 2008); see also Hoffman v. L&M Arts, 774 F. Supp. 2d 826, 843-45 (N.D.
Tex. 2001) (the effects test “is but one facet of the ordinary minimum contacts analysis, to be
considered as part of the full range of the defendant’s contacts with the forum, and the plaintiff’s
residence in the forum, and suffering of harm there, will not alone support jurisdiction under
Calder.”) (citing, inter alia, Revel v. Lidov, 317 F.3d 467, 473 (5th Cir. 2002); Panda Brandywine Corp.
v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001) (plaintiff must show purposeful
availment besides the plaintiff’s residence in the state and the foreseeability of defendant’s actions
causing injury in Texas)).
Here, Globeranger has not established through a prima facie case that SAGG specifically
directed any conduct towards Texas. In light of the full range of SAGG’s minimal contacts with
Texas, even considering the alleged harm to Globeranger, the effects test alone does not support
personal jurisdiction over SAGG in this case.
ii.

Conspiracy

Globeranger argues that SAGG’s participation in an alleged conspiracy, where its coconspirators committed one or more overt acts in furtherance of the conspiracy in Texas,3 confers
personal jurisdiction on this Court. However, even with allegations of a conspiracy, the Court must
still evaluate each of the Defendants' contacts separately to determine whether personal jurisdiction
exists. Nat'l Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995) (“[W]e decline to

3

It is unclear what “overt acts” allegedly took place in Texas.

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recognize [an] assertion of personal jurisdiction over a nonresident defendant based solely upon the
effects or consequences of an alleged conspiracy with a resident in the forum state.”); see also Delta
Brands Inc. v. Danieli Corp., 99 F. App’x 1, 6 (5th Cir. 2004) (plaintiff has to show that defendant
“individually, and not as part of the conspiracy, had minimum contacts with Texas”) (citing Guidry
v. U.S. Tobacco Co., 188 F.3d 619, 625 (5th Cir. 1999)). Globeranger must show that either the
alleged conspiracy or SAGG’s alleged tortious conduct was related to or arose out of SAGG’s
contacts with Texas. See id.
Here, the Petition, along with Globeranger’s Response and related appendices, do not show
that the conspiracy was related to SAGG’s contacts with Texas. They also do not show that SAGG’s
actions were related to or arose out of these contacts with Texas. Even assuming that SAGG’s
employees were involved with the Navy project discussed in the Petition or with the development
of RFID technology in the United States, a point disputed by SAGG’s sworn declaration, see Def.’s
App. 4, there is no indication of the conspiracy’s connection to Texas, aside from the alleged harm
to a Texas resident, Globeranger. As such, SAGG’s alleged participation in a conspiracy to
misappropriate Globeranger’s trade secrets is not a basis for specific personal jurisdiction over SAGG
in the Northern District of Texas.
iii.

Software license keys

Globeranger also argues that certain software license keys acquired by or at the direction of
SAGG were subject to an End User License Agreement with a forum selection clause selecting the
federal or state courts of Dallas County as proper forums and stating that the signers submit to the
jurisdiction of these courts. Pl.’s Resp. 10 (citing Pet. ¶ 70, Ex. A ¶ 7.6). However, neither the
Petition nor any evidence submitted allege or show that SAGG was a party to the EULA at issue.
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Rather, the pleadings and evidence submitted to the Court suggest that Defendant Naniq Systems,
LLC (“Naniq”) was the only party to such agreement with Globeranger. See, e.g., Pet. ¶ 74
(discussing Globeranger letter to Naniq regarding obligations of the EULA). Courts cannot bind a
non-party to a contract, because the non-party never agreed to the terms of set forth in the contract.
See, e.g., Adams v. Unione Mediterranea Di Sicurta, 364 F.3d 646, 652 (5th Cir. 2004). As such,
Globeranger’s invocation of the forum selection clause in the EULA as a basis to confer personal
jurisdiction over SAGG is unavailing.
Overall, examining the totality of the circumstances, Globeranger has not alleged or shown
that its claims arise from SAGG’s contacts with Texas. As such, Globeranger has not met its burden
of showing, by establishing a prima facie case, that the Court has specific personal jurisdiction over
SAGG.
2.

General Personal Jurisdiction

Globeranger also argues that this Court has general personal jurisdiction over SAGG, given
its allegations that SAGG regularly conducts business in the State of Texas and that SAGG exercised
a significant degree of control over its wholly owned subsidiaries in directing their actions with
respect to the alleged conspiracy.
In order to establish a prima facie case of general personal jurisdiction over a defendant, a
plaintiff must show that the defendant has “substantial, continuous, and systematic” contacts with
a particular jurisdiction. See, e.g., Johnston, 523 F.3d at 609. Further, these contracts must be
continuous and systematic over a reasonable number of years up to the date the suit was filed. Id. at
609-10. Globeranger alleges that SAGG regularly conducts business in Texas and has a significant
degree of control over its wholly owned subsidiaries in directing their actions with respect to the
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alleged conspiracy. FAC ¶ 9; Pl.’s Resp. 11-12 (alleging that SAGG directs and controls its
subsidiaries’ strategy, sales, marketing, research and development through a German executive board
and a German Chief Technology Officer). Globeranger also argues that this Court has general
personal jurisdiction over SAGG, based on the contacts of its subsidiaries, through an alter ego or
single business enterprise theory under Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir.
1983).
Based on the Original Petition and Globeranger’s Response to SAGG’s Motion to Dismiss
and accompanying appendices, Globeranger has not established a prima facie case of general personal
jurisdiction. SAGG’s sworn declaration states that SAGG is a registered stock corporation under
German law, with its principal office in Germany and no offices, employees, or property in the State
of Texas. SAGG is also not registered to do business in Texas and does not conduct business in or
direct business to Texas, and it does not advertise or market in Texas. Def.’s App. 3. Indeed, the
Petition contains no allegations discussing any action by SAGG or SAAG’s presence specifically in
Texas. On SAGG’s Motion to Dismiss, Globeranger now produces printouts from SAGG’s or its
subsidiaries’ website which purportedly show SAGG’s contacts with Texas. However, even assuming
that these printouts indicate that SAGG has some contacts with Texas through its websites, rather
than SAGG’s subsidiaries’ contacts, such contacts are not the substantial, continuous, and systematic
contacts required in order to assert general personal jurisdiction. As such, Globeranger has not
established a prima facie case showing that SAGG has sufficient minimum contacts with Texas to
confer general personal jurisdiction on this Court.
Further, the Petition does not establish a prima facie case of personal jurisdiction under an
alter ego or single enterprise theory based on the contacts of SAGG’s U.S. subsidiaries. “[A] foreign
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parent corporation is not subject to the jurisdiction of a forum state merely because its subsidiary is
present or doing business there.” Hargrave, 710 F.2d at 1159. Courts must presume that subsidiaries,
even one wholly-owned, are independent of their parents for jurisdictional purposes. Gonzalez v. Bank
of America Ins. Servs., Inc., 454 F. App’x 295, 300 (5th Cir. 2011). To overcome this presumption
and impute the contacts of a subsidiary onto a parent corporation, a plaintiff must show by “clear
evidence” that the parent possesses control over the subsidiary to a great degree than that normally
associated with common ownership. Id. at 300-01. In examining whether a parent exercises this
degree of control, courts look to, but not limited to, the Hargrave factors: the amount of stock owned
by the parent of the subsidiary, whether the two corporations have separate headquarters, whether
they have common officers and directors, whether they observe corporate formalities, whether they
maintain separate accounting systems, whether the parent exercises complete authority over the
subsidiaries’ general policy, and whether the subsidiary exercise complete authority over its daily
operations. Hargrave., 710 F.2d at 1160.
Here, Globeranger does not establish a prima facie case, much less show by clear evidence,
that SAGG exercises greater control over its U.S. subsidiaries than that normally exercised by a
corporate parent. The corporations have separate headquarters, separate bylaws and board meetings,
separate assets and bank accounts, and they file separate tax returns. Def.’s App. 3-4. The U.S.
subsidiaries are responsible for setting some of their own general policies, including most hiring and
firing decisions, and they also control their own daily operations, including marketing and sales
functions and determination of their own supply requirements. Id. at 4. The Court recognizes that
the U.S. subsidiaries are wholly-owned by SAGG with some central oversight exercised by SAGG,
a point not disputed by SAGG. See Pet. ¶¶ 9, 65-66. However, such fact is outweighed by the
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indicators of “separateness” listed above, such that Plaintiffs have not shown by clear evidence that
SAGG exercises greater than normal control over its subsidiaries. The Court also finds Globeranger’s
evidence in the form of website printouts insufficient evidence that SAGG exercises greater than
normal control. See EsNtion Records, Inc. v. JonesTM, Inc., No. 3:07–CV–2027–L, 2008 WL
2415977, *4 (N.D. Tex. June 16, 2008) (website printouts and other evidence did not suggest more
than a normal parent-subsidiary corporate relationship).
In light of the foregoing, the Court presumes that SAGG and its subsidiaries are independent
for jurisdictional purposes, and Globeranger has not overcome this presumption. As such, the Court
can not impute the contacts of SAGG’s subsidiaries to SAGG for jurisdictional purposes, and
Globeranger has not presented a prima facie case of general personal jurisdiction through an alter ego
theory. Given that Globeranger has not presented a prima facie case of this Court’s general personal
jurisdiction or specific personal jurisdiction over SAGG, the Court GRANTS SAGG’s Motion to
Dismiss for Lack of Personal Jurisdiction.4
B.

Leave to Depose
Globeranger argues that if the Court finds it does not have jurisdiction over SAGG, it should

be allowed to take jurisdictional discovery. A court may grant jurisdictional discovery when the
plaintiff has established a “preliminary showing of jurisdiction” over the nonresident parent company.
EsNtion Records, 2008 WL 2415977, at *6 (citing Fielding v. Hubert Burda Media, Inc., 415 F.3d 419,
429 (5th Cir. 2005)). Here, Globeranger has not shown a preliminary finding of jurisdiction. Further,

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As the Court does not find sufficient minimum contacts, in either the general or specific personal
jurisdiction framework, the Court does not consider the “fair play and substantial justice” prong of the due
process inquiry.

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Globeranger’s arguments in support of jurisdictional discovery do not show that such discovery would
add any significant facts to its jurisdictional claims. See Kelly v. Syria Petroleum Dev. B.V., 213 F.3d
841, 856-57 (5th Cir. 2000) (district court did not abuse discretion in denying jurisdictional
discovery given that plaintiffs offered no basis to show that proposed depositions of corporate
representatives would contradict those representatives’ sworn declarations). As such, the Court
DENIES Globeranger’s request for jurisdictional discovery.
IV.
CONCLUSION
For the reasons listed above, Software AG Germany’s Motion to Dismiss is GRANTED.
Software AG Germany is hereby DISMISSED from the case due to Plaintiff’s failure to establish a
prima facie case of personal jurisdiction.

SO ORDERED.
SIGNED: April 12, 2013.

_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE

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