United States District Court, E.D. Pennsylvania
B. BRODY, J.
Neopart Transit, LLC (“Neopart”) brings suit
against Management Consulting, Inc. (“Mancon”) as
well as two individual defendants, Jeshua Smith and Robert
Montgomery (the “Individual Defendants”). Neopart
makes eleven separate allegations in its Complaint, sounding
in both tort and contract, including Misappropriation of
Trade Secrets, violation of the Defend Trade Secrets Act,
Unfair Competition, Breach of Contract, Conversion, and
Intentional Infliction with Prospective Business Advantage.
Mancon and the Individual Defendants move to dismiss this
suit for lack of personal jurisdiction over the Individual
Defendants, as well as improper venue, and failure to state a
claim on which relief can be granted. I exercise jurisdiction
over this dispute pursuant to federal question jurisdiction,
28 U.S.C. § 1331, and supplemental jurisdiction, 28
U.S.C. § 1367.
Neopart and Defendant Mancon are competitors in the parts
management and supply chain services market. Neopart deals
primarily with transit authorities and bus manufacturers to
provide bus parts and parts management services. Mancon's
line of business is broader-they provide a wide array of
services including staffing and industrial products, as well
as transit parts management. Neopart is a Delaware limited
liability company with its principal place of business in
Sinking Springs, Pennsylvania. Undisputed Facts ¶ 1, Joint
Statement as to Undisputed and Disputed Facts Relevant to
Personal Jurisdiction and Venue (“JSF”), ECF No.
60. Mancon is a Virginia corporation with its principal place
of business in Virginia Beach, Virginia. Undisputed Facts
¶ 5, JSF.
2010 until 2015, Neopart provided parts management services
for transit buses at the Rochester-Genesee Regional Transport
Authority (“RGRTA”) in Rochester, New York.
Undisputed Facts ¶ 3, JSF. The RGRTA is a public benefit
corporation of the State of New York. N.Y. Pub. Auth. Law
§ 1299-dd. Neopart provided these services to the RGRTA
pursuant to a Parts Management Services Agreement dated
February 12, 2010. Undisputed Facts ¶ 3, JSF. To
effectuate performance of this contract, Neopart hired
several individuals to carry out work at the RGRTA, including
the Individual Defendants Jeshua Smith and Robert
Montgomery. Smith and Montgomery were already working
at the RGRTA facility, although as employees of NAPA Auto
Parts, the previous owner of the parts management service
contract. Defs.' Disputed Facts ¶ 2-3, JSF. They are
both residents of New York. Undisputed Facts ¶ 9, JSF.
Pennsylvania personnel participated in the recruitment and
hiring process, Neopart interviewed and hired Smith and
Montgomery in New York for employment in New York. Undisputed
Facts ¶ 10, JSF. As a condition of their employment,
both Individual Defendants signed Confidentiality Agreements.
Compl. ¶ 42-43, ECF No. 1. These agreements did not
contain choice-of-law or forum selection provisions. Neither
Smith nor Montgomery signed employment agreements. Although
neither Individual Defendant was ever assigned to work
outside of New York, both attended a one-day training session
in Honey Brook, Pennsylvania in March 2011.
December 2014, the RGRTA decided to seek new bids for its
parts management contract. It issued a request for proposals
to which both Neopart and Mancon, among others, submitted
bids. Undisputed Facts ¶ 7, JSF. On April 28, 2015,
Mancon was awarded the RGRTA contract. Compl. ¶ 25.
Neopart claims that Mancon, which allegedly had never
provided parts management services for transit buses before,
colluded with New Flyer, a transit bus parts distributor, to
undermine Neopart's bid and secure the contract for
itself. Compl. ¶ 20-24. Neopart claims that Mancon's
request for proposal to the RGRTA required the use of
confidential information and trade secrets that belonged to
Neopart. Compl. ¶ 33. These trade secrets are
“Neopart's methods of identifying unique supplier
that provide parts for transit buses; its pricing
arrangements with suppliers; its methods of storeroom
operations; the identities and compensation or employees; and
its unique inventory management.” Compl. ¶ 26.
These alleged trade secrets were created and stored at
Neopart's headquarters in Pennsylvania. Pl.'s Resp.
Mot. Dismiss 12, ECF No. 27.
servicers of the RGRTA parts management contract had done in
the past, Mancon sought to hire employees who already worked
at the RGRTA. On May 22, 2015, in the midst of this turnover
process, Neopart alleges that Mancon obtained copies of
Neopart's trade secrets from the RGRTA. Compl. ¶ 36.
Neopart claims that on June 17 and June 22, 2015, Mancon
requested and Montgomery and Smith provided access to
Neopart's trade secrets and other confidential
information. Compl. ¶ 44-51. Neopart alleges that these
requests were sent by Mancon to the personal email addresses
of Smith and Montgomery. Neopart also alleges that on July 7,
2015, Montgomery provided Mancon with a credit application
for one of Neopart's suppliers, in violation of his
Confidentiality Agreement. Compl. ¶ 50. Further, in
Montgomery's final days of employment with Neopart,
Neopart alleges that he downloaded email files and other
documents to a thumb drive and gave it to Robert Whitley, a
Mancon executive. Pl.'s Disputed Facts ¶ 15, JSF;
Montgomery Dep. 80:17-81:20; 109:2-10. Neopart claims that
all of this occurred while Montgomery and Smith were still
employees of Neopart. Compl. ¶ 51. On August 12, 2015,
Montgomery and Smith left their positions with Neopart and
became employees of Mancon. Compl. ¶ 51.
17, 2016, Neopart filed a Complaint in this Court against
Mancon and eight individuals. ECF No. 1. On July 13, 2016,
Mancon and the eight individuals moved to dismiss
Neopart's Complaint in its entirety. ECF No. 15. On
November 16, 2016, the parties voluntarily dismissed six of
the individuals named in the Complaint, leaving only Jeshua
Smith and Robert Montgomery as individual defendants. ECF No.
37. Neopart now asserts eleven claims against Mancon and the
Individual Defendants, separately and collectively: (1)
Misappropriation of Trade Secrets in violation of the
Pennsylvania Uniform Trade Secrets Act, 12 Pa.C.S.
§5301, et seq., (“PUTSA”), as to
all Defendants; (2) Violation of the Defend Trade Secrets Act
of 2016, 18 U.S.C. §1836, as to all Defendants; (3)
Unfair Competition as to Mancon; (4) Breach of Contract as to
the Individual Defendants; (5) Unjust Enrichment as to all
Defendants; (6) Breach of Fiduciary Duty as to the Individual
Defendants; (7) Aiding and Abetting the Breach of Fiduciary
Duty as to all Defendants; (8) Conversion as to all
Defendants; (9) Civil Conspiracy as to all Defendants; (10)
Intentional Interference with Prospective Business Advantage
as to all Defendants; and (11) Preliminary and Permanent
Injunction pursuant to 12 Pa.C.S. § 5303 as to all
Defendants. ECF No 1.
moves to dismiss this action primarily on two grounds: lack
of personal jurisdiction over the Individual Defendants
pursuant to Fed.R.Civ.P. 12(b)(2), and improper venue
pursuant to Fed.R.Civ.P. 12(b)(3). In the alternative, Mancon
moves to dismiss several claims pursuant to Fed.R.Civ.P.
12(b)(6). Mancon asserts that New York law applies to this
action and it moves to dismiss Counts I, VIII and XI as not
cognizable under New York law. Further in the alternative,
Mancon moves to dismiss Counts V, VI, VII and IX as not
cognizable under Pennsylvania law, in the event Pennsylvania
law applies to this action.
PERSONAL JURISDICTION OVER THE INDIVIDUAL DEFENDANTS
to Fed.R.Civ.P. 12(b)(2), a court must grant a motion to
dismiss if it lacks personal jurisdiction. “To survive
a motion to dismiss for lack of personal jurisdiction, a
plaintiff bears the burden of establishing the court's
jurisdiction over the moving defendants.” Miller
Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir.
2004). When a court restricts its review of the motion to
affidavits and written evidence and does not hold an
evidentiary hearing, the plaintiff need only make a prima
facie showing that jurisdiction is proper. Id.;
see also Carteret Sav. Bank, FA v. Shushan, 954 F.2d
141, 142 n. 1 (3d Cir. 1992). At this stage, a plaintiff is
entitled to have disputed facts construed in his or her
favor. Pinker v. Roche Holdings Ltd., 292 F.3d 361,
368 (3d Cir. 2002) (citation omitted). Plaintiff,
however, must support allegations with affidavits or other
competent evidence. See Dayhoff Inc. v. H.J.
Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996).
federal court sitting in Pennsylvania may exercise
jurisdiction over nonresident defendants to the extent
provided under Pennsylvania law. See Fed. R. Civ. P.
4(k)(1). Pennsylvania's long-arm statute is co-extensive
with the due process requirements of the United States
Constitution. See 42 Pa. C.S.A. § 5322(b);
Mellon Bank (East) PSFS, Nat'l Ass'n v.
Farino, 960 F.2d 1217, 1221 (3d Cir. 1992). Thus, a
court may exercise personal jurisdiction over a defendant as
long as the defendant has “certain minimum contacts
with . . . [Pennsylvania] such that the maintenance of the
suit does not offend traditional notions of fair play and
substantial justice.” O'Connor v. Sandy Lane
Hotel Co., 496 F.3d 312, 316 (3d Cir. 2007) (internal
quotations and citation omitted). Analysis of personal
jurisdiction requires a court to “examine the
relationship among the [defendants], the forum, and the
litigation.” Miller Yacht Sales,
Inc., 384 F.3d at 96 (internal quotations and citation
may have either general or specific personal jurisdiction
over a nonresident defendant. Dollar Sav. Bank v. First
Sec. Bank of Utah, N.A., 746 F.2d 208, 211 (3d Cir.
1984). General personal jurisdiction exists only when a
defendant's contacts with a forum are “so
continuous and systematic as to render [it] essentially at
home in the forum State.” Daimler AG v.
Bauman, 134 S.Ct. 746, 761 (2014) (quotations and
citation omitted). Neopart concedes that the Individual
Defendants are not “at home” in Pennsylvania and
therefore are not subject to general personal jurisdiction.
Pl.'s Resp. Mot. Dismiss 6. The only question, therefore,
is whether this Court has specific jurisdiction over the
jurisdiction exists “when the claim is related to or
arises out of the defendant's contacts with the
forum.” Dollar Sav. Bank, 746 F.2d at 211.
Usually, a court determines specific jurisdiction on a
claim-by-claim basis. O'Connor, 496 F.3d at 318.
Claim-specific analysis is appropriate for analyzing a case
with both contract and tort claims because “there are
different considerations in analyzing jurisdiction over
contract claims and over certain tort claims . . . .”
Remick v. Manfredy, 238 F.3d 248, 255-56 (3d Cir.
2001). However, claim-specific analysis may not be necessary
“for certain factually overlapping claims.”
O'Connor, 496 F.3d at 318 n. 3; see also
Bhd. of Locomotive Eng'rs & Trainmen v. United
Transp. Union, 413 F.Supp.2d 410, 417 (E.D. Pa. 2005)
(“[W]here the considerations in analyzing jurisdiction
do not differ between particular claims, a claim specific
analysis is not necessary.”). Because Neopart's
statutory, contract and tort claims all stem from the same
conduct, the alleged misappropriation of confidential
information and trade secrets, a claim-specific analysis is
not necessary. See Defs.' Resp. to Supp. Br. on
Jurisdiction and Venue 5, ECF No. 46 (“Here,
Neopart's claims all arise from the same factual
Third Circuit has outlined a three-prong test for determining
the existence of specific personal jurisdiction. Specific
personal jurisdiction exists when: (1) the defendant
“purposefully directed [its] activities” at the
forum; (2) the litigation “arise[s] out of or relate[s]
to” at least one of the defendant's activities in
Pennsylvania; and (3) the exercise of jurisdiction comports
with notions of ‘fair play and substantial
justice.'” O'Connor, 496 F.3d at 317
(quoting Burger King Corp. v. Rudzewicz, 471 U.S.
462, 476 (1985)). In intentional tort cases, if a court finds
jurisdiction lacking after applying the preceding test,
courts employ the Calder v. Jones effects test,
which requires that: (1) a nonresident defendant committed an
intentional tort; (2) the plaintiff felt the brunt of the
harm in the forum; and (3) the defendant “expressly
aimed” its tortious conduct at the forum. 465 U.S. 783,
Individual Defendants Montgomery and Smith argue that they
are each nonresidents of Pennsylvania and that they lack
sufficient contacts with Pennsylvania to support the exercise
of specific personal jurisdiction over them. Neopart
contends, however, that specific personal jurisdiction exists
in Pennsylvania over the Individual Defendants because the
claims arise from their employment with a Pennsylvania
company. I find that Neopart has alleged sufficient contacts
to support the exercise of personal jurisdiction.
threshold inquiry is whether the defendant
“purposefully avails itself of the privilege of
conducting activities within the forum [s]tate.”
Hanson v. Denckla, 357 U.S. 235, 253 (1958).
Physical presence in the forum is not required, but a party
must “deliberate[ly] target” the forum.
O'Connor, 496 F.3d at 317 (internal quotations
omitted). While “informational communications, ”
such as intermittent phone calls or letters in furtherance of
a contract, are insufficient on their own to establish
jurisdiction, Vetrotex Certainteed Corp. v.
Consolidated Fiber Glass Prods., Co., 75 F.3d
147, 152 (3d Cir. 1996) (citation omitted), “mail and
telephone communications sent by the defendant into the forum
may count toward the minimum contacts that support
jurisdiction.” Grand Entm't Group, Ltd. v. Star
Media Sales, Inc., 988 F.2d 476, 482 (3d Cir. 1993). In
assessing jurisdiction for breach of contract claims, a court
must consider “the totality of the circumstances,
including . . . the parties' actual course of
dealing.” Remick, 238 F.3d at 256; see
also Burger King, 471 U.S. at 479 (“[C]ontemplated
future consequences [of the contract] . . . must be evaluated
in determining whether the defendant purposefully established
minimum contacts with the forum.”). The Supreme Court
has “emphasized the need for a highly realistic
approach that recognizes that a contract is ordinarily but an
intermediate step serving to tie up prior business
negotiations with future consequences which themselves are
the real object of the business transaction.”
Burger King, 471 U.S. at 479 (quotations omitted).
analyzing “purposeful availment” in suits by
employers against nonresident employees, courts in this
Circuit have found jurisdiction proper when “all of the
essential functions that allowed [the nonresident employee]
to earn a living were channeled through Pennsylvania.”
Numeric Analytics, LLC v. McCabe, 161 F.Supp.3d 348,
355 (E.D. Pa. 2016). These “essential functions”
include “payroll, benefits . . . [m]edical coverage,
medical benefits, and retirement plans.” Id.
Other Circuits have found an employee's contacts with a
forum state “purposeful” even when such
communications are required by the employer. Equifax
Servs., Inc. v. Hitz, 905 F.2d 1355, 1359 (10th Cir.
1990) (“[W]hen forum contacts are a natural result of a
contractual relationship, it indicates purposeful affiliation
with the forum through an interstate contractual
relationship.”); see also Burger King, 471
U.S. at 479-81. Furthermore, with respect to claims of
misappropriation of trade secret claims against former
employees, courts have found that purposeful availment is
established when the former employee learns of trade secrets
only as a consequence of his or her employment. See
Thermal Components Co. v. Griffith, 98 F.Supp.2d 1224,
1229 (D. Kan. 2000) (“By misappropriating the trade
secrets to which the individual defendants became privy only
as a result of their employment by the plaintiff, and by
using that information to interfere with [plaintiff's]
pre-existing and future contractual relations . . . the
individual defendants' previous employment relationship
with[ a forum state] resident establishes the requisite
contacts with the forum state.”).
this is a close case, I find that the Individual Defendants
have purposefully availed themselves of conducting activities
in Pennsylvania. They were indeed interviewed in New York,
hired in New York, and signed their Confidentiality
Agreements in New York, but they nonetheless were employed by
and interacted with a Pennsylvania corporation on a near
daily basis. First, communicating with Pennsylvania was a
necessary component of the Individual Defendants'
employment. Montgomery's immediate supervisor, Paul
Delong, was located in Pennsylvania and the two exchanged
emails approximately three times a week. Montgomery Dep.
21:23-22:9. Montgomery regularly contacted the Neopart
facility in Pennsylvania for questions related to parts,
emergency orders and other issues related to RGRTA parts
management. Montgomery Dep. 22:14-22. Performing
Montgomery's job necessitated contact with Pennsylvania
because approximately 30 to 50 percent of the parts supplied
to the RGRTA project came from Neopart's facility in
Honey Brook, PA. Boade Aff. ¶ 8, attached as Ex. A to
Pl.'s Resp. Mot. Dismiss, ECF No. 27 (“Boade
Aff.”). The email server by which each of the
Individual Defendants conducted their job requirements was
located in Pennsylvania. Boade Aff. ¶ 9. Over a two-year
period of time, Neopart alleges that Montgomery and Smith
sent, received or were copied on more than 10, 000 emails
with Neopart personnel in Pennsylvania.
the Individual Defendant's very ability to earn a living
was channeled through Pennsylvania. At the time of hire,
Neopart alleges that Smith and Montgomery completed paperwork
that documented the employee's connection to Honey Brook.
Boade Aff. ¶ 9. Neopart alleges that both Individual
Defendants received paychecks from Pennsylvania, and each of
their yearly tax documents listed Honeybrook, Pennsylvania as
their employer's address. Boade Aff. ¶ 7; 2014 W-2
Forms, attached as Ex. 7-3 to Boade Aff. Both Individual
Defendants visited their employer's home office in
Pennsylvania in 2011. When Montgomery received a promotion to
Parts Manager in June 2012, his offer letter listed
“Honeybrook, Pennsylvania” as his employer's
address. Boade Aff ¶ 9. Montgomery exchanged emails with
human resources personnel in Pennsylvania on a regular basis,
and he interacted with Human Resources personnel in
Pennsylvania for all of his vacation and benefits. Montgomery
Dep. 21:4-22. Smith as well made numerous, regular, sometimes
daily phone calls to Honeybrook, PA. Boade Aff. ¶ 8.
Neopart contends that the confidential information and trade
secrets allegedly misappropriated by the Individual
Defendants were created and prepared in Pennsylvania.
Pl.'s Resp. Mot. Dismiss 12; Boade Aff. ¶ 12.
Neopart alleges that the thumb drive Montgomery gave to
Mancon executive Randy Whitman contained proprietary
information and trade secrets that were downloaded from a
computer connected to Neopart's computer servers in
Pennsylvania. Pl.'s Disputed Facts ¶ 15, JSF.
Individual Defendants' contacts with Pennsylvania satisfy
the purposeful availment requirement. Although the Individual
Defendants were hired in New York to perform work in New
York, they knew they were entering into a relationship with a
Pennsylvania company. Amenability to suit in that
jurisdiction is an “anticipated future
consequence” of such a relationship. Burger
King, 471 U.S. at 479. The contacts between the
Individual Defendants and Neopart personnel in Pennsylvania
were not merely “informational communications”
but more “entangling contacts” that occurred on a
near daily basis. Remick, 238 F.3d at 256. In order
to both perform their jobs and earn a living, both Individual
Defendants made repeated contacts with Pennsylvania. The
realities of modern day electronic commerce, in which
employees can perform their jobs remotely, call for a
“highly realistic approach” to assessing
purposeful availment in the personal jurisdiction context.
When, as here, “all of the essential functions”
that allowed Smith and Montgomery “to earn a
living” and perform their jobs “were channeled
through Pennsylvania, ” Numeric Analytics,
LLC, 161 F.Supp.3d at 355, I find that both Individual
Defendants have made purposeful contact with this state.
purposeful contact with the forum is identified, the analysis
proceeds to the second step of the specific personal
jurisdiction inquiry, the relatedness requirement. A
plaintiff's claims must “arise out of or relate
to” a defendant's forum contacts. For claims to
“arise out of or relate to” a defendant's
contacts, the “causal connection can be somewhat looser
than the tort concept of proximate causation, but it must
nonetheless be intimate enough to keep the quid pro quo
proportional and personal jurisdiction reasonably
foreseeable.” O'Connor, 496 F.3d at 323
(citation omitted). The inquiry is “necessarily
fact-sensitive.” Id. “The animating
principle behind the relatedness requirement is the notion of
a tacit quid pro quo that makes litigation in the forum
reasonably foreseeable.” Id. at 322.
has satisfied the relatedness requirement. Neopart's
claims are inherent to their employment relationship with the
Individual Defendants. As explained above, it was reasonably
foreseeable that, upon agreeing to employment with a
Pennsylvania company and interacting with that company each
day, Smith and Montgomery could be subject to suit in
Pennsylvania. Courts in this Circuit have ruled that an
action against a nonresident employee for breach of an
employment-related agreement with a Pennsylvania company
“certainly arise[s] out of and relate[s] to [the
employee's] contacts with Pennsylvania.”
Numeric Analytics, LLC, 161 F.Supp.3d at 355.
What's more, Smith and Montgomery only had access to
Neopart's trade secrets as a consequence of their
employment. Smith and Montgomery became privy to
Neopart's methods of identifying unique suppliers,
pricing arrangements, and inventory management methods via
emails and telephone calls to Pennsylvania and access to
Pennsylvania computer ...