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Continental Materials, Inc. v. Robotex, Inc.

United States District Court, E.D. Pennsylvania

April 17, 2015

CONTINENTAL MATERIALS, INC.,
v.
ROBOTEX, INC. et al.

ORDER-MEMORANDUM

MARK A. KEARNEY, District Judge.

AND NOW, this 17th day of April 2015, upon consideration of Defendants' Motion to Dismiss (ECF Doc. No. 12), Plaintiff's Response (ECF Doc. No. 20), and Defendants' Reply (ECF Doc. No. 23), and the parties' briefs regarding an arbitration issue (ECF Doc. Nos. 24 & 25), and following oral argument, it is ORDERED that Defendants' Motion is GRANTED IN PART AS TO COUNTS III AND IV and OTHERWISE DENIED as described in this Order.

As detailed below, the Court retains personal jurisdiction and venue. We deny the motions to dismiss the Lanham Act claim (Count I) and contract claims in Count II relating to the Supply and Marketing Agreement. We dismiss Count III' (fraud) with leave to amend to specify fraud under Fed. R. Civ.P. 9(b) not barred by the gist of the action doctrine to be filed no later than April 24, 2015. We dismiss Count IV (intentional interference) under the gist of the action doctrine. Defendants shall respond to the Complaint (or Amended Complaint re: Count III) on or before May 8, 2015.

ANALYSIS

A. Defendants' Fed.R.Civ.P. 12(b)(2) motion is DENIED.

Based on the affidavits submitted by the parties, the Court finds that it has specific personal jurisdiction over Defendants Robetex, Inc. ("Robetex") and Kerry Talbot ("Talbot") on Plaintiff Continental Materials, Inc.'s ("CMI") breach of contract claim.[1]

The "totality of the circumstances, including the location and character of the contract negotiations, the terms of the contract, and the parties' actual course of dealing" supports the finding of specific personal jurisdiction over Robetex as to CMI's breach of contract claim. Remick v. Manfredy, 238 F.3d 248, 256 (3d Cir. 2001) (citation omitted). Robetex, through its President, Talbot, entered into a Supply and Marketing Agreement ("SMA") and created "continuing relationships and obligations" with CMI in Pennsylvania; a relationship achieved, in part, by physical trips to Pennsylvania.[2] The SMA, appointing CMI as the exclusive distributor of Robetex's products in North America, amounted to purposeful direction of its activities in Pennsylvania. When a dispute arose regarding performance under the SMA, Talbot flew to Philadelphia to resolve the parties' issues and agreed to a settlement. CMI's breach of contract claim arises out of both the SMA and the Settlement Agreement. We find that Defendants' contacts with Pennsylvania were instrumental in the formation of both the SMA and the Settlement Agreement as well as the alleged breaches of those agreements. See General Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001).[3]

As to CMI's tort based claims against Robetex and Talbot[4] - violations of the Lanham Act (Count I), fraud (Count III) and intentional interference with contractual relations (Count IV) - the Court applies the "effects test" to determine whether there is personal jurisdiction.[5] See Calder v. Jones, 465 U.S. 783 (1984); IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 260-61 (3d Cir. 1998). CMI sufficiently alleges that Robetex and Talbot committed torts, that CMI has been harmed, and that Defendants directed their conduct toward CMI in Pennsylvania to state a prima facie case of jurisdiction over Robetex and Talbot under the "effects test."[6]

Having determined that minimum contacts exist between Robetex and Talbot and Pennsylvania, we find that the Court's exercise of jurisdiction comports with "traditional notions of fair plan and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). "The existence of minimum contacts makes jurisdiction presumptively constitutional and the defendant must present a compelling case that he presence of some other considerations would render jurisdiction unreasonable.'" O'Connor, 496 F.3d at 324 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). Defendants failed to present such a "compelling case."

B. Defendants' motion pursuant to Fed.R.Civ.P. 12(b)(3) to dismiss the complaint for improper venue or, in the alternative, to transfer the action pursuant to 28 U.S.C. § 1404(a) is DENIED.

CMI's asserts venue in this District under 28 U.S.C. § 1391(b)(2) because a "substantial part of the events or omissions giving rise to the claim occurred" here. A defendant seeking to dismiss a case for improper venue under Rule 12(b)(3) bears the burden of demonstrating that venue is improper. Cargill Cocoa & Chocolate, Inc. v. Abco Labs., Inc., No. 13-6004, 2014 WL 4795028, *2 (E.D. Pa. Sept. 26, 2014) (citing Myers v. American Dental Assoc., 695 F.2d 716, 724-725 (3d Cir.1982)). In considering a motion to dismiss for improper venue, the Court accepts as true the allegations in the Complaint, "although the parties may submit affidavits in support of their positions, " and the Court must "draw all reasonable inferences and resolve all factual conflicts in the plaintif [']s favor." Giuliano v. CDSI I Holding Co., No. 13-2776, 2014 WL 1032704, *1 (E.D. Pa. Mar. 17, 2014) (quoting Chester v. Beard, No. 07-4742, 2008 WL 2310946, *5 (E.D. Pa. June 1, 2008)). Based on the above analysis, the Court finds that a "substantial part of the events or omission giving rise" to CMI's claim occurred in Pennsylvania, and venue is proper in this District. Defendants have not met their burden of demonstrating that venue is improper.

The Court declines to transfer this matter to the United States District Court for the Northern District of Georgia under 28 U.S.C. § 1404(a). Under 28 U.S.C. § 1404(a), a district court "[for the convenience of parties and witnesses, in the interest of justice, ... may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties consented." "Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (internal quotation omitted); see also Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995).

The burden of establishing the need for transfer is on the moving party. Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).[7] Defendants argue that the matter should be transferred to Georgia because (1) all of Defendants' witnesses reside in Georgia and North Carolina; (2) all of its records and documents are located in Georgia; and (3) the Northern District of Georgia "has a more significant connection to this dispute" than this Court "because all of the alleged wrongful conduct occurred in Georgia and North Carolina." (ECF Doc. No. 12-2 at 13-14).[8]

While it may be more convenient for Defendants to litigate in the Northern District of Georgia, this factor does not weigh in Defendants' favor.[9] Defendants fail to establish how the convenience of its witnesses trumps that of CMI's; a Pennsylvania corporation that chose its home forum for this litigation. CMI's choice is entitled to deference and should not be lightly disturbed. Jumara, 55 F.3d at 879. Similarly, the fact that Defendants' records and documents are located in Georgia does not weigh in its favor. There is no indication that Defendants cannot simply send its documents and records to this District. CMI would be faced with the same burden if the case were transferred to the Northern District of Georgia. This factor does not weigh in Defendants' favor. Defendants' position merely shifts their ...


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