Cooper Materials Handling, Inc. v. Tegeler
Filing
13
MEMORANDUM OPINION re Motion to Dismiss. Signed by District Judge James C. Cacheris on 9/24/14. (klau, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
COOPER MATERIALS HANDLING,
INC.,
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
GORDON TEGELER,
Defendant.
M E M O R A N D U M
1:14cv956 (JCC/TRJ)
O P I N I O N
This matter is before the Court on Defendant Gordon
Tegeler’s (“Defendant” or “Tegeler”) Motion to Dismiss for Lack
of Jurisdiction, [Dkt. 7], and corresponding Memorandum in
Support, [Dkt. 8].
Plaintiff Cooper Materials Handling, Inc.
(“Plaintiff” or “Cooper Materials”) has brought this action
alleging breach of contract, breach of fiduciary duties, and
conversion arising from Tegeler’s previous employment with
Cooper Materials.
(See Compl. [Dkt. 1] ¶¶ 19, 25, 31.)
For the
reasons set forth below, the Court will deny Defendant’s motion.
I. Background
Cooper Materials is a small business specializing in
project management, design/build and materials handling
equipment.
(Compl. ¶ 1.)
It is incorporated under the laws of
1
Virginia with its headquarters in Vienna, Virginia.
Tegeler is a Maryland citizen.
(Id. ¶ 1.)
(Id. ¶ 4.)
From January 21, 2012 until July 11, 2014, Tegeler
worked at Cooper Materials as Director of Preconstruction.
¶ 3.)
(Id.
The complaint does not detail where Tegeler was based
during his time at Cooper Materials.
worked in Frederick, Maryland.
According to Tegeler, he
(Def.’s Mot. to Dismiss Mem.
[Dkt. 8], Tegeler Decl. at 2 [hereinafter Tegeler Decl.].)
A
few weeks after starting on the job, Tegeler signed a
confidentiality agreement.
(Compl. ¶ 4.)
In his role, Tegeler
had access to Cooper Materials’s confidential and proprietary
information.
(Id. ¶ 4.)
One of Tegeler’s job responsibilities was coordinating
efforts between Cooper Materials and Montage, Inc. (“Montage”)
on joint bids for projects for the U.S. State Department and the
Federal Bureau of Investigation.
Tegeler was Cooper Materials’s
representative on a joint bid for a State Department project in
Abu Dhabi.
(Id. ¶ 5.)
bidding process.
He traveled to Abu Dhabi as part of the
(Id. ¶ 5.)
Upon his return, Tegeler informed
Cooper Materials that Montage was not awarded the project.
¶ 6.)
(Id.
According to Cooper Materials, unbeknownst to it at the
time Montage was, in fact, awarded the project.
(Id. ¶ 6.)
Shortly after returning from the Abu Dhabi trip,
Tegeler submitted his resignation to Cooper Materials,
2
“indicating that he did not feel that he was being successful in
his role at Cooper and that although he did not have another job
lined-up, he felt that it was best that he end his employment
with Cooper.”
(Id. ¶ 7.)
He tendered his resignation on July
7, 2014, stating his last day was July 11, 2014.
(Id. ¶ 7.)
Cooper Materials alleges that while Tegeler was still
in its employ, Tegeler diverted business opportunities from
Cooper Materials to Montage, including the Abu Dhabi project.
(Id. ¶ 12.)
At some point between July 7 and July 11, Cooper
Materials alleges that Tegeler made copies of its confidential
and proprietary information, including bids and bid-related
documents.
(Id. ¶ 11.)
The complaint does not detail where
this copying occurred, but many of Cooper’s confidential records
are held on the company’s computer server located and
administered in Virginia.
(Pl.’s Opp. [Dkt. 10] at 3.)
Tegeler
maintains that if any copying occurred, it took place in
Maryland, not Virginia.
(Def.’s Mot. to Dismiss Mem. at 4.)
Cooper Materials filed this suit on July 25, 2014
alleging three causes of action: (1) breach of contract under
the confidentiality agreement for the misappropriation of
confidential company information; (2) breach of the fiduciary
duties of good faith and loyalty; and (3) conversion of the
confidential information.
Tegeler filed the instant motion,
arguing that the complaint should be dismissed because this
3
Court lacked personal jurisdiction over him.
(Def.’s Mot. to
Dismiss Mem. at 1.)
Having been fully briefed and argued, Tegeler’s is
ripe for adjudication.
II. Standard of Review
Federal Rule of Civil Procedure 12(b)(2) permits a
defendant to raise lack of personal jurisdiction as a defense in
a pre-answer motion.
The plaintiff bears the burden of proving
to the court the existence of jurisdiction over the defendant by
a preponderance of the evidence.
New Wellington Fin. Corp. v.
Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005)
(citation omitted).
If there are disputed factual questions as
to the existence of jurisdiction, the court may hold a separate
evidentiary hearing or may defer ruling pending relevant
evidence produced at trial.
See Combs v. Bakker, 886 F.2d 673,
676 (4th Cir. 1989); Long v. Chevron Corp., No. 4:11cv47, 2011
WL 3903066, at *3 (E.D. Va. Sept. 2, 2011).
In the absence of
an evidentiary hearing, the burden on the plaintiff is simply to
make a prima facie showing of a sufficient jurisdictional
basis.
New Wellington, 416 F. 3d at 294.
In determining
whether a plaintiff has met this burden, courts “‘must construe
all relevant pleading allegations in the light most favorable to
the plaintiff, assume credibility, and draw the most favorable
4
inferences for the existence of jurisdiction.’”
Id. (quoting
Combs, 886 F.2d at 676).
III. Analysis
Federal courts exercise personal jurisdiction in the
manner provided by state law.
New Wellington, 416 F.3d at 294.
Determining whether personal jurisdiction exists involves two
steps: (1) whether the state’s long-arm statue authorizes the
exercise of jurisdiction and, if so (2) whether the exercise of
jurisdiction is consistent with the Due Process Clause of the
Fourteenth Amendment.
Eagle Paper Int’l, Inc. v. Expolink, Ltd.
No. CIV.A. 2:07CV160, 2008 WL 170506, at *3 (E.D. Va. Jan. 17,
2008).
In Virginia, “[i]t is manifest that the purpose of
Virginia’s long-arm statute is to assert jurisdiction over
nonresidents who engage in some purposeful activity in this
State to the extent permissible under the due process clause.”
Peninsula Cruise, Inc. v. New River Yacht Sales, Inc., 512
S.E.2d 560, 562 (Va. 1999).
Because Virginia’s long-arm statute
is intended to extend personal jurisdiction to the outer limits
of due process, the constitutional and statutory inquiry merge.
Id.; see also Consulting Eng’rs Corp. v. Geometric Ltd., 561
F.3d 273, 277 (4th Cir. 2009).
There are two types of personal jurisdiction that meet
the requirements of due process: specific and general
jurisdiction.
Burger King Corp. v. Rudzewicz, 471 U.S. 462,
5
473-74 (1985).
In both instances, a non-resident defendant must
have sufficient “minimum contacts” with the forum state such
that “the maintenance of the suit does not offend traditional
notions of fair play and substantial justice.”
Int'l Shoe Co.
v. Washington, 326 U.S. 310, 316 (1945).
A. Specific Jurisdiction
To adequately allege specific jurisdiction, the
plaintiff must show that a defendant “purposefully directed his
activities at the residents of the forum and the litigation
results from alleged injuries that arise out of those
activities.”
Burger King, 471 U.S. at 472 (citations omitted)
(internal quotation marks omitted).
This test protects a
defendant from having to defend himself in a forum where he
could not have anticipated being sued.
561 F.3d at 276.
Consulting Engineers,
It prevents “jurisdiction solely as a result
of random, fortuitous, or attenuated contacts.”
Burger King,
471 U.S. at 475 (citations omitted) (internal quotation marks
omitted).
In analyzing the due process requirements for
asserting specific jurisdiction, the Fourth Circuit has set out
a three-part test in which the Court must consider, in order,
(1) “the extent to which the defendant purposefully availed
itself of the privilege of conducting activities in the State;”
(2) “whether the plaintiffs' claims arise out of those
6
activities directed at the State;” and (3) “whether the exercise
of personal jurisdiction would be constitutionally reasonable.”
Consulting Engineers, 561 F.3d at 279 (citing ALS Scan, Inc. v.
Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir.
2002)).
Each factor will be considered in turn.
1. Purposeful Availment
“The first prong articulates the minimum contacts
requirement of constitutional due process that the defendant
purposefully avail himself of the privilege of conducting
business under the laws of the forum state.”
Engineers, 561 F. 3d at 278.
Consulting
In evaluating this requirement,
courts have considered various nonexclusive factors, including:
whether the defendant maintains offices or
agents in the forum state; whether defendant
owns property in the forum state; whether
the defendant reached into the forum state
to solicit or initiate business; whether the
defendant
deliberately
engaged
in
significant or long-term business activities
in the forum state; whether the parties
contractually agreed that the law of the
forum state would govern disputes; whether
the defendant made in-person contact with
the resident of the forum in the forum state
regarding the business relationship; the
nature, quality, and extent of the parties’
communications
about
the
business
being
transacted; and whether the performance of
contractual duties was to occur within the
forum.
Consulting Engineers, 561 F. 3d at 278 (citations omitted).
Here, Tegeler was employed by a Virginia corporation.
7
He could
have turned down Plaintiff’s job offer and worked somewhere
else, but instead he made a conscious choice to work for
Plaintiff.
Cf. National Corp. Housing, Inc. v. Ayres, No. 1:11-
cv-1391 (AJT-TCB), 2012 WL 1081170, at *6 (E.D. Va. Mar. 28,
2012) (stating there was no evidence in the record that
defendants negotiated or signed any employment contracts with
Virginia company that acquired defendant’s previous employer).
He traveled to Vienna, Virginia for the job interview.
Opp. at 3.)
(Pl.’s
As part of his job duties, he regularly
communicated with colleagues in Virginia and made several visits
to company headquarters in Virginia.
(Id.)
Among projects in
other locations, Tegeler managed construction projects in
Virginia.
(Id.)
Tegeler worked for Plaintiff for two years and
had substantial responsibility for the company.
On these facts,
Tegeler can be said to have “purposefully availed” himself of
conducting business in Virginia.
2. “Arising From”
This prong requires the defendant’s contacts with the
forum state to form the basis for the suit.
471 U.S. at 472.
See Burger King,
As relevant here, Virginia’s long-arm statute
permits Virginia courts to exercise personal jurisdiction over
an individual where the cause of action “arises from” the
person’s:
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(1)
transacting
Commonwealth;
any
business
in
this
(2) contracting to supply services or things
in this Commonwealth;
(3) causing tortious injury by
omission in this Commonwealth;
an
act
or
(4)
causing
tortious
injury
in
this
Commonwealth by an act or omission outside
this Commonwealth if he regularly does or
solicits business, or engages in any other
persistent course of conduct, or derives
substantial revenue from goods used or
consumed or services rendered, in this
Commonwealth[.]
VA. CODE. ANN. § 8.01-328.1(A)(1)-(4).
Though Plaintiff’s
Opposition states all four of these circumstances apply here,
its brief is focused on § 8.01-328.1(A)(1), transacting any
business in the Commonwealth.
(Pl.’s Opp. at 3.)
Virginia is a single act state, requiring only one
transaction in Virginia to confer jurisdiction on its courts.
John G. Kolbe, Inc. v. Chromodern Chair Co., 180 S.E.2d 664, 667
(Va. 1971).
“A single act of business can confer jurisdiction
provided that it is significant and demonstrates purposeful
activity in Virginia.”
Prod. Grp. Int’l v. Goldman, 337 F.
Supp. 2d 788, 793 (E.D. Va. 2004); see also English & Smith v.
Metzger, 901 F.2d 36, 38 (4th Cir. 1990); Dollar Tree Stores,
Inc. v. Mountain Pacific Realty, LLC, Civil No. 12-1130, 2013 WL
8216346, at *2 (Va. Cir. Ct. Jan. 29, 2013).
When a contract
between the parties gives rise to a defendant’s business in
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Virginia, courts look at: “(i) where any contracting occurred,
and where the negotiations took place; (ii) who initiated the
contact; (iii) the extent of the communications, both telephonic
and written, between the parties; and (iv) where the obligations
of the parties to the contract were to be performed.”
Dollar
Tree Stores, 2013 WL 8216346, at *2.
In this case, the parties’ relationship arises from a
contract.
Tegeler was physically present in Plaintiff’s
headquarters in Vienna, Virginia when he was hired and was
physically present in the same Virginia office when he signed
the confidentiality agreement at issue in this litigation. 1
(Pl.’s Opp. at 3.)
It is unclear whether or where any
negotiations to the contract took place, but it may be presumed
that any negotiations on Plaintiff’s end were conducted at the
Vienna headquarters and Tegeler was aware of that fact.
It is
similarly unclear who initiated contact between the two parties
(i.e. whether Tegeler was recruited to the company or whether he
responded to a job posting).
However, this prong seeks to
ascertain whether a defendant “reached into” Virginia, and
initiating contact is one way to do so.
WL 8216346, at *3.
See Dollar Tree, 2013
Based on the parties’ statements, it appears
Tegeler “reached into” Virginia for this job, even though his
1
There is no separate written employment contract that governs the
relationship between Tegeler and Plaintiff.
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office was in Maryland.
Compare Ayres, 2012 WL 1081170, at *6
(failing to find personal jurisdiction in Virginia where an Ohio
company originally employing defendants was sold to a Virginia
company and defendants continued to work for the new company
without any formal employment agreements) with Production Group,
337 F. Supp. 2d at 792 (stating one factor contributing to the
exercise of personal jurisdiction was a Florida defendant’s
acceptance of employment with a Virginia company during meetings
in Florida) and I.T. Sales, Inc. v. Dry, 278 S.E.2d 789, 789-90
(Va. 1981) (finding personal jurisdiction in Virginia where an
employee, then a Virginia resident, entered into an employment
contract that required him to move to California to conduct
sales for a Virginia company).
With respect to the extent of communications between
the parties, Tegeler regularly communicated with Plaintiff’s
Virginia employees.
(Pl.’s Opp. at 5.)
Tegeler avers that he
traveled to Virginia “only occasionally” to visit construction
sites.
(Tegeler Decl. ¶ 4.)
His “best estimate” of the number
of trips he made to Virginia “in connection with my employment”
was “no more often than once per month.”
(Id. ¶ 4.)
At most,
this means Tegeler made twenty-four employment-related trips to
Virginia.
Though it is difficult for this Court to conclusively
establish how many times Tegeler came to Virginia for work, it
is enough at this stage to know that there was more than one
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occasion in which he traveled to the Commonwealth for business.
See Production Group, 337 F. Supp. 2d at 796 (finding personal
jurisdiction in light of defendant’s acceptance of employment
with a Virginia company, his regular communications with
Virginia colleagues in the course of performing his job duties,
and his three trips to plaintiff’s Virginia headquarters in
performance of his employment contract).
Finally, Tegeler was contractually obligated not to
disclose confidential and proprietary information.
4.)
(Compl. ¶
Such information includes cost information, bid strategies,
and internal cost structures, much of which is maintained in
records held on Cooper’s computer server located and
administered in Virginia.
(Pl.’s Opp. at 3.)
Thus, much of the
subject matter of the contract is located in Virginia.
Without citing any case law in support of his
position, Tegeler argues in his brief that Plaintiff’s
allegations – the copying of files and the aiding of a
competitor firm - do not arise out of his contacts with
Virginia.
(Def.’s Mot. to Dismiss Mem. at 4.)
At oral
argument, Tegeler’s counsel maintained that the trips to
Virginia cannot fairly be construed as fulfilling obligations
under the confidentiality agreement.
According to counsel,
Tegeler’s purpose in traveling to Virginia was not to “keep
secrets.”
Rather, Tegeler traveled to Virginia in order to
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perform his job duties, not to refrain from divulging
confidential information. These arguments are unpersuasive.
Plaintiff’s allegations are based on the confidentiality
agreement that Tegeler signed in Virginia with a Virginia
company.
Any alleged actions taken by Tegeler flow from that
agreement, and thus any copying and aiding competitors all arise
from a promise he made in Virginia to keep Plaintiff’s business
information confidential.
While Tegeler maintains that the
preparation of the Abu Dhabi bid did not take place in Virginia
(Tegeler Decl. ¶ 5.), Plaintiff alleges wrongdoing arising from
“other potential projects.”
(Compl. ¶ 12.)
These other
projects could arise out of his contacts with Virginia, as
Tegeler was responsible for construction projects in the
District of Columbia, Virginia, and West Virginia.
Downs Decl. ¶ 17.)
(Pl.’s Opp.,
Additionally, in traveling to Virginia to
perform his job duties, Tegeler was necessarily fulfilling the
promise he made when he signed the confidentiality agreement.
Keeping certain information confidential was part of his job,
and he has conceded that he was in Virginia several times over
the course of two years to do his job.
Therefore, his trips to
Virginia did, in fact, involve his obligations under the
confidentiality agreement.
Even if the acts giving rise to the breach do not
“arise from” his specific contacts with Virginia, it is
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appropriate to consider the scope of any contract-related
activities in determining whether personal jurisdiction exists.
See Production Group, 337 F. Supp. 2d at 794.
In Peninsula
Cruise, Inc. v. New River Yacht Sales, Inc., the Supreme Court
of Virginia considered whether a Virginia court could exercise
personal jurisdiction over a Florida defendant.
563 (Va. 1999).
The defendant sold plaintiff, a Virginia
corporation, a boat.
in Florida.
512 S.E.2d 560,
Id.
Id. at 561-62.
The transaction occurred
The parties agreed that the defendant would
ship the boat from Florida to South Carolina, whereupon the
plaintiff’s employees would accept delivery.
Id.
En route to
South Carolina, the boat developed an oil leak and sustained
damage to the propeller.
Id. at 562.
For additional
consideration, the defendant delivered the boat all the way to
Virginia instead.
Id. at 562.
The defendant’s employees
physically transported the boat within Virginia and delivered
the boat to the plaintiff in Virginia.
Id. at 563.
There were
several telephone conversations regarding repairs, and the
defendant told the plaintiff over the phone that the plaintiff
should have the necessary repairs done and submit the invoices
for reimbursement.
Id. at 563.
A dispute then arose over
whether defendant was liable for repairs to the boat, and the
plaintiff sued in Virginia state court.
Id. at 561.
The
Supreme Court of Virginia found Virginia courts could exercise
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personal jurisdiction over the defendant.
Id. at 563.
Subsequent courts have interpreted Peninsula Cruise as support
for the proposition that part performance of a contract in a
forum gives rise to personal jurisdiction, even if the contract
was consummated elsewhere.
See Production Group, 337 F. Supp.
2d at 795; Prolinks, Inc. v. Horizon Organic Dairy, Inc., No.
193616, 2001 WL 1829993, at *2-3 (Va. Cir. Ct. July 9, 2001).
Here, Tegeler’s part performance of the
confidentiality agreement involved Virginia contacts.
First,
part of Tegeler’s job responsibilities included projects in
Virginia.
Second, Tegeler’s employment required regular contact
with Virginia, including in-person visits to client locations
and company headquarters in the Commonwealth.
Finally, a large
portion of the confidential information is stored in Virginia.
Tegeler states the alleged breach “had nothing to do with
Virginia.” (Def.’s Reply [Dkt. 11] at 3.)
While the
confidentiality agreement was entered into in Virginia and
supposedly breached elsewhere, this apparent inverse of the
situation in Peninsula Cruise does not negate the fact that
Tegeler reached into Virginia to enter into the contract in the
first place.
See I.T. Sales, 278 S.E.2d at 790 (finding
personal jurisdiction proper where a contract was made in
Virginia but substantially all of the performance under the
contract took place outside of Virginia).
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3. Constitutionally Reasonable
Finally, a court must consider whether the exercise of
personal jurisdiction is constitutionally reasonable.
A court
may consider additional factors to ensure the appropriateness of
the forum.
Such factors include:
(1)
the
burden
on
the
defendant
of
litigating in the forum; (2) the interest of
the forum state in adjudicating the dispute;
(3) the plaintiff’s interest in obtaining
convenient and effective relief; (4) the
shared interest of the states in obtaining
efficient resolution of disputes; and (5)
the interests of the states in furthering
substantive social policies.
Consulting Engineers, 561 F.3d at 279.
Considering these
factors here leads to the conclusion that personal jurisdiction
in Virginia is constitutionally reasonable.
Tegeler is a
Maryland resident, and though litigating elsewhere might be more
convenient for him, it is not so unduly burdensome to litigate
here that would warrant disturbing Plaintiff’s choice of forum.
If Plaintiff’s allegations are true, then harm to the
corporation will be felt significantly here in Virginia, where
the corporation is incorporated and has its principal place of
business.
After considering all three factors, this Court finds
that Plaintiff has met its burden to show specific jurisdiction
exists over Tegeler in Virginia.
B. General Jurisdiction
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General jurisdiction exists for claims entirely
distinct from the defendant’s in-state activities when a
defendant’s activities in the state have been “continuous and
systematic.”
Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414 & n. 9 (1984).
Plaintiff has not made a prima
facie case that Tegeler is subject to general jurisdiction in
Virginia.
Though Tegeler owns real property in Virginia, it is
an investment property which he rents to others.
¶ 6.)
(Tegeler Decl.
In the last few years, he has visited the house no more
than once or twice a year.
(Id.)
Tegeler does not visit
Virginia for leisure purposes and owns no additional real
property in Virginia.
(Id. ¶ 7.)
Taken together, these facts
do not rise to the level of continuous and systematic contacts
required to support general jurisdiction.
Accordingly, this
Court cannot assert general jurisdiction over Tegeler.
IV. Conclusion
For the reasons set forth above, the Court will deny
Defendant’s Motion to Dismiss.
An appropriate order will
follow.
September 24, 2014
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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