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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ILIS COMPUTER, INC., a Delaware corporation, Plaintiff, v. BLUELINE INTERNATIONAL, LLC, an Ohio limited liability company, Defendant. ) ) ) ) ) ) ) ) ) ) )
C.A. No. 07-285-JJF
OPENING BRIEF OF DEFENDANT BLUELINE INTERNATIONAL, LLC IN SUPPORT OF ITS MOTION TO DISMISS OR TRANSFER
David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766 Attorney for defendant BlueLine International, LLC
Dated: July 5, 2007
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TABLE OF CONTENTS
NATURE AND STAGE OF THE PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SUMMARY OF ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 I. ILIS HAS NOT ESTABLISHED A BASIS FOR DIVERSITY JURISDICTION .................................................................4 THERE IS NO BASIS FOR THE ASSERTION OF PERSONAL JURISDICTION OVER BLUELINE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 A. B. C. D. E. III. 10 DEL. C. §3104(C)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 DEL. C. §3104(C)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 DEL. C. §3104(C)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 10 DEL. C. §3104(C)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ILIS IS NOT ENTITLED TO JURISDICTIONAL DISCOVERY1 ..0
II.
THIS ACTION SHOULD BE DISMISSED OR TRANSFERRED IN LIGHT OF THE FORUM SELECTION CLAUSE BETWEEN THE PARTIES. . . . . . . . . . 11
CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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TABLE OF AUTHORITIES Cases Blue Ball Properties, Inc. v. McClain, 658 F.Supp. 1310 (D. Del. 1987). . . . . . . . . . . . . . 7 Brock v. Entre Computer Systems, Inc., 740 F.Supp. 428 (E.D. Tex 1990). . . . . . . . . . . 11 Chadwick v. Metro Corp., Inc., Del. Supr., No. 44, 2004, 2004 WL 1874652 (Aug. 12, 2004), disposition reported at 856 A.2d 1066 (2004) (TABLE).. . . . . . . . . . . . . . . . . . . . 8 Deerfield Hutterian Ass'n v. Ipswich Bd. of Educ., Ipswich Ind. School Dist. 22-3, 444 F.Supp. 159 (D.S.D. 1978). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Department of Recreation and Sports of Puerto Rico v. World Boxing Association, 942 F.2d 84 (1st Cir. 1991). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 E.I. DuPont de Nemours & Co. v. Rhodia Fiber & Resin Intermediates, 197 F.R.D. 112 (D. Del. 2000), aff'd in part, dismissed in part, 296 F.3d 187 (3rd Cir. 2001). . . . . . . . . . . . . 6 Franceskino v. Womack, No. CIV.3:01CV1835 (AVC), 2002 WL 100602, Covello, J. (D. Conn. Jan. 25, 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ICT Pharms., Inc. v. Boehringer Ingelheim Pharms., Inc., 147 F.Supp.2d 268 (D. Del. 2001) .......................................................................6 J. Royal Parker Associates, Inc. v. Parco Brown & Root, Inc., C.A. No. 7013, 1984 WL 8255, Berger, V.C. (Del. Ch. Nov. 30, 1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Joint Stock Society v. Heublein, 936 F.Supp. 177 (D. Del. 1996). . . . . . . . . . . . . . . . . . . . 6 Mellon Bank East (PSFS), Nat'l Ass'n v. Farino, 960 F.2d 1217 (3rd Cir. 1992). . . . . . . 7 Nagel v. Crain Cutter Co., Inc., 184 N.W.2d 876 (Wis. 1971). . . . . . . . . . . . . . . . . . . . . . 9 Ohrstrom v. Harris Trust Co. of New York, C.A. No. 15709, 1998 WL 8849, Chandler, C. (Del. Ch. Jan. 8, 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Powder Power Tool Corp. v. Powder Actuated Tool Co., 230 F.2d 409 (7th Cir. 1956).. 4 Ramada Inns, Inc. v. Drinkhall, Del. Super., C.A. No. 83C-AU-56, 1984 WL 247023, Taylor, J. (May 17, 1984).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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Silvestre v. De Loaiza, 820 N.Y.S.2d 440 (N.Y. Sup. 2006).. . . . . . . . . . . . . . . . . . . . . . 11 State Farm Mut. Ins. Co. v. Greater Chiropractic Service Corp., 393 F.Supp.2d 1317 (M.D. Fla. 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Stephens v. Entre Computer Centers, Inc., 696 F.Supp. 636 (N.D. Ga. 1988).. . . . . . . . 11 Telcordia Technologies, Inc. v. Alcatel S.A., No. Civ. A. 04-874 GMS, 2005 WL 1268061, Sleet, J. (D. Del. May 27, 2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Terra Intern., Inc. v. Mississippi Chemical Corp., 922 F.Supp. 1334 (N.D. Iowa 1996), aff'd, 119 F.3d 688 (8th Cir.), cert. denied, 522 U.S. 1028 (1997).. . . . . . . . . . . . . . . . . . . . . . 11 Toys `R' Us, Inc. v. Step Two, S.A., 318 F.3d 446 (3rd Cir. 2003). . . . . . . . . . . . . . . . . . 10 Transportes Aeros de Angola v. Ronair, Inc., 544 F.Supp. 858 (D. Del. 1982). . . . . . . . . 6 Vogt-Nem, Inc. v. M/V Tramper, 263 F.Supp.2d 1226 (N.D. Cal. 2002). . . . . . . . . . . . . 11
Other authorities 10 Del. C. §3104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 10 Del. C. §3104(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 Del. C. §3104(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 Del. C. §3104(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 10 Del. C. §3104(c)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 28 U.S.C. §1332(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 28 U.S.C. §1332(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 28 U.S.C. §1404(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Federal Rule of Civil Procedure 12(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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NATURE AND STAGE OF THE PROCEEDINGS Plaintiff ILIS Computer, Inc., a Delaware corporation ("ILIS") filed the present action on May 24, 2007, asserting breach of a confidentiality agreement. Defendant BlueLine International, LLC, an Ohio limited liability company ("BlueLine"), filed a motion to dismiss or transfer on July 5, 2007. This is Blueline's opening brief in support of that motion.
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SUMMARY OF ARGUMENT 1. This Court lacks subject matter jurisdiction over this action. Although
purportedly brought pursuant to diversity jurisdiction, as ILIS is a start-up entity and there is no suggestion of lost sales or any other non-speculative pecuniary injury arising from the alleged disclosure of confidential information, ILIS is not able to satisfy the "amount in controversy" requirement of 28 U.S.C. §1332(a). 2. This Court lacks personal jurisdiction over BlueLine. BlueLine has not
transacted any business or performed any character of work or service in the State, contracted to supply services or things in Delaware, committed (or been accused of) any tortious act in Delaware, and has not regularly done or solicited business or engaged in any other persistent course of conduct in Delaware or derived substantial revenue from services, or things used or consumed in Delaware. 3. This Court should uphold the venue selection provision in the underlying
contract between the parties, as ILIS' claim derives from the commercial relationship between the parties established by that underlying contract, and either dismiss this action or transfer it to the United States District Court for the Southern District of Ohio, in Columbus, Franklin County.
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STATEMENT OF FACTS ILIS is a Delaware corporation that manufactures computer desktops, notebooks and accessories. (Compl. ¶¶4, 12). BlueLine is an Ohio limited liability company that designs and builds websites. (Id. ¶¶5, 14). On or about June 10, 2005, ILIS and BlueLine entered into a contract for BlueLine to design a website for ILIS' business. (Id. ¶14). To facilitate such development, on June 20, 2007, ILIS and BlueLine entered into confidentiality and non-disclosure agreement (the "Confidentiality Agreement"). (Id. ¶15). Pursuant to the Confidentiality Agreement, and in furtherance of the development of ILIS' website, ILIS provided BlueLine with certain confidential information. (Id. ¶17). ILIS claims that BlueLine, without authorization, showed the confidential information to individuals assisting in building the website. (Id. ¶23-33).
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ARGUMENT I. ILIS HAS NOT ESTABLISHED A BASIS FOR DIVERSITY JURISDICTION. ILIS purports to bring this action between a Delaware corporation and an Ohio limited liability company based on diversity of citizenship under 28 U.S.C. §1332(a)(1). Pursuant to that statute, in order to establish diversity, plaintiff must establish not only that the opposing parties are of different states, but also that the amount in controversy exceeds $75,000.00. ILIS makes the naked assertion that "the amount in controversy in this matter exceeds $250,000, exclusive of costs and interests." (Compl. ¶7). However, the mere allegation of satisfaction of the jurisdictional amount, when challenged, is insufficient, and the burden is on ILIS to substantiate its claim. Powder Power Tool Corp. v. Powder Actuated Tool Co., 230 F.2d 409, 414 (7th Cir. 1956); Deerfield Hutterian Ass'n v. Ipswich Bd. of Educ., Ipwsich Ind. School Dist. 22-3, 444 F.Supp. 159, 162 (D.S.D. 1978). ILIS does not explain how it arrived at this figure. ILIS does not claim that its business has been destroyed by the alleged limited disclosure of its alleged trade secrets. ILIS does not allege that anyone who allegedly was exposed to the alleged trade secrets has used said trade secrets to ILIS' disadvantage. ILIS does not allege any facts showing lost sales, lost customers or any pecuniary loss as a result of the alleged misconduct. Indeed, it appears that ILIS is a start-up that has not even begun selling its products. (Declaration of Tareq Bhuiyan ("Bhuiyan Decl.") ¶8, appended hereto as Exhibit A). Where, as here, the figure is not based on any defined loss, but merely appears to be an arbitrary figure pulled out of thin air, ILIS is obligated to prove by a preponderance of the 4
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evidence that its claim meets the jurisdictional minimum. State Farm Mut. Ins. Co. v. Greater Chiropractic Service Corp., 393 F.Supp.2d 1317, 1323-24 (M.D. Fla. 2005). The burden is on ILIS to plead facts sufficient to show that the jurisdictional amount has been satisfied. Department of Recreation and Sports of Puerto Rico v. World Boxing Association, 942 F.2d 84, 88 (1st Cir. 1991). "Any claimed value that cannot be reduced to a monetary standard without unsupported speculation cannot be used to satisfy the jurisdictional minimum." State Farm Mut. Ins. Co., 393 F.Supp.2d at 1323. As ILIS has not alleged any facts supporting its conclusory statement as to the jurisdictional amount, ILIS is obligated to come forth with evidence establishing by a preponderance of the evidence that his claim is susceptible of non-speculative damages above the jurisdictional threshold.
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II.
THERE IS NO BASIS FOR THE ASSERTION OF PERSONAL JURISDICTION OVER BLUELINE. Federal Rule of Civil Procedure 12(b)(2) requires a court to dismiss defendants from
a case upon motion when the court lacks personal jurisdiction over them. E.I. DuPont de Nemours & Co. v. Rhodia Fiber & Resin Intermediates, 197 F.R.D. 112, 119 (D. Del. 2000), aff'd in part, dismissed in part, 296 F.3d 187 (3rd Cir. 2001). In determining whether personal jurisdiction exists, the Court must engage in a twostep analysis. First, the Court must decide whether jurisdiction is authorized by the laws of the forum state. Transportes Aeros de Angola v. Ronair, Inc., 544 F.Supp. 858, 864-65 (D. Del. 1982). Thus, Delaware's long-arm statute, 10 Del. C. §3104 must first be triggered. If the first test is satisfied, the Court must then determine whether there are "minimum contacts" between the defendant and the forum state such that exercising jurisdiction comports with fair play and substantial justice under the Due Process Clause of the Fourteenth Amendment to the Constitution of the United States. Id. The burden is on ILIS, as plaintiff, to allege facts sufficient to make a prima facie showing over BlueLine, an Ohio limited liability company. ICT Pharms., Inc. v. Boehringer Ingelheim Pharms., Inc., 147 F.Supp.2d 268, 270-71 (D. Del. 2001). To meet this burden, ILIS must allege facts which "`establish with reasonable particularity'" that jurisdiction over BlueLine exists. Id. (quoting Joint Stock Society v. Heublein, 936 F.Supp. 177, 193 (D. Del. 1996)). As demonstrated below, ILIS is not able to meet this standard.
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A.
10 DEL. C. §3104(C)(1).
ILIS first invokes Section 3104(c)(1), which allows personal jurisdiction in Delaware where the defendant "transacts any business or performs any character of work or service in the State." (Compl. ¶ No member, manager or employee of BlueLine has ever traveled to Delaware in connection with any BlueLine business. (Bhuiyan Decl. ¶2). Moreover, merely contracting with a Delaware resident does not constitute transacting business in Delaware. Mellon Bank East (PSFS), Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3rd Cir. 1992); Blue Ball Properties, Inc. v. McClain, 658 F.Supp. 1310, 1315 (D. Del. 1987). As such, in the absence of any evidence of any physical presence in Delaware by BlueLine in the negotiation or performance of any agreement between the parties, Section 3104(c)(1) does not provide a basis for the exercise of personal jurisdiction. B. 10 DEL. C. §3104(C)(2).
ILIS also invokes Section 3104(c)(2), which authorizes the assertion of personal jurisdiction over one who "contracts to supply services or things in this State." (Compl. ¶8). The contract at issue in this action is the Confidentiality Agreement, which does not require BlueLine to supply any services or things in Delaware. Moreover, the underlying contract does not require any services to be performed in Delaware. (Bhuiyan Decl. Ex. A). As no goods or services were provided or performed in Delaware pursuant to the Confidentiality Agreement or the underlying contract, Section 3104(c)(2) is inapplicable.
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C.
10 DEL. C. §3104(C)(3).
ILIS next claims that jurisdiction is proper pursuant to Section 3104(c)(3), which permits jurisdiction over an individual or entity who "[c]auses tortious injury in the State by an act or omission in this State." (Compl. ¶9). This claim fails for two reasons. First, ILIS is not asserting any tort claim. It is asserting a breach of contract claim, and so may not rely on provisions of Delaware's Long Arm statute relating to tortious conduct. See Franceskino v. Womack, No. CIV.3:01CV1835 (AVC), 2002 WL 100602, WL Op. at *3, Covello, J. (D. Conn. Jan. 25, 2002). Second, in Ramada Inns, Inc. v. Drinkhall, Del. Super., C.A. No. 83C-AU-56, 1984 WL 247023, Taylor, J. (May 17, 1984), the Court recognized that for Section 3104(c)(3) to apply, the defendant has to be physically present in Delaware when committing the alleged tortious act. WL Op. at *5. This principle was approved by the Delaware Supreme Court in Chadwick v. Metro Corp., Inc., Del. Supr., No. 44, 2004, 2004 WL 1874652 (Aug. 12, 2004), disposition reported at 856 A.2d 1066 (2004) (TABLE). As noted above, no representative of BlueLine has been physically present in Delaware. As such, Section 3104(c)(3) is inapposite. D. 10 DEL. C. §3104(C)(4).
Finally, ILIS pins its hopes on Section 3104(c)(4), which permits the assertion of personal jurisdiction where a nonresident "[c]auses tortious injury in the State or outside of the State by an act or omission outside the State if the person regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State." 8
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This proposition fails for several reasons. First, as noted in Section C above, sections of the Long Arm statute addressing tortious conduct may not be utilized where the Complaint merely states contractual, and not tort, claims. Nagel v. Crain Cutter Co., Inc., 184 N.W.2d 876, 878 (Wis. 1971) (rejecting application of similar provision to contract claim). Second, any revenue generated by BlueLine for services it performs in Ohio for Delaware residents does not relate to "services or things used or consumed in the State," as the statute requires. J. Royal Parker Associates, Inc. v. Parco Brown & Root, Inc., C.A. No. 7013, 1984 WL 8255, WL Op. at *3, Berger, V.C. (Del. Ch. Nov. 30, 1984) (contract performed outside of Delaware not subject to Section 3104(c)(4)). See also Ohrstrom v. Harris Trust Co. of New York, C.A. No. 15709, 1998 WL 8849, WL Op. at 4 n.21, Chandler, C. (Del. Ch. Jan. 8, 1998) ("[b]ecause Harris Trust provides no services in Delaware, it cannot `derive[] substantial revenues from services performed in Delaware'"). Additionally, BlueLine's Delaware-related revenues are derived from only two transactions with two customers. (Bhuiyan Decl. ¶4). These transactions do not constitute "substantial revenue" under Section 3104(c)(4). Id. (statute not satisfied where revenue from Delaware does not derive from a persistent course of dealing). For these reasons, Section 3104(c)(4) does not provided a basis for the assertion of personal jurisdiction over BlueLine. As none of the provisions of Section 3104 are applicable, the Court need not address the issue of whether the assertion of personal jurisdiction offends the Due Process clause of the Constitution of the United States.
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E.
ILIS IS NOT ENTITLED TO JURISDICTIONAL DISCOVERY.
Blueline anticipates that ILIS will request the opportunity to take jurisdictional discovery. However, in order to obtain such discovery: "[t]he court must be satisfied that there is some indication that this particular defendant is amenable to suit in this forum." For example, "a plaintiff may not rely on the bare allegations in his complaint to warrant further discovery." Likewise, "a mere unsupported allegation that [a] defendant `transacts business' in an area is `clearly frivolous.'" Rather, "there must be some competent evidence to demonstrate that personal jurisdiction over [a] defendant might exist before allowing discovery to proceed." Furthermore, "[w]hen the lack of personal jurisdiction is clear, ... further discovery serves no purpose and should be denied." Telcordia Technologies, Inc. v. Alcatel S.A., No. Civ. A. 04-874 GMS, 2005 WL 1268061, WL Op. at *9, Sleet, J. (D. Del. May 27, 2005) (citations omitted, italics in original). Before granting jurisdictional discovery, ILIS, Mr. Christ must make some nonspeculative factual assertions that suggest with reasonable particularity the possible existence of the requisite contacts between the defendants and Delaware. Toys `R' Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3rd Cir. 2003). He has not done so and cannot do so, and so the expense of jurisdictional discovery is not justified here.
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III.
THIS ACTION SHOULD BE DISMISSED OR TRANSFERRED IN LIGHT OF THE FORUM SELECTION CLAUSE BETWEEN THE PARTIES. Section 7 of the contract between ILIS and BlueLine states, in pertinent part, that
"[r]egardless of the place of signing of this agreement, the client agrees that for purposes of venue, the contract was entered into in Franklin County, Ohio, and any dispute will be litigated or arbitrated in Franklin Count[]y, Ohio." (Bhiuyan Decl. Ex. A §7).1 ILIS will likely point out that the Confidentiality Agreement is a separate agreement without a similar venue provision. Nonetheless, courts have routinely applied contractual venue provisions to extra-contractual claims, where those claims arose directly or indirectly from the business relationship evidenced by a contract with a venue provision, where the language of the venue provision is broad. E.g., Stephens v. Entre Computer Centers, Inc., 696 F.Supp. 636, 648 (N.D. Ga. 1988) (venue provision covering "any action" and without limiting language such as "arising under or in connection with deemed to include tort claims); Brock v. Entre Computer Systems, Inc., 740 F.Supp. 428, 430 (E.D. Tex 1990). Although these cases involve extra-contractual tort claims, there is no rational reason for not applying the same principle to a related contract claim. ILIS concedes in its Complaint that the Confidentiality Agreement is closely related to the underlying contract. ILIS alleges that the contract with BlueLine was for website development (Compl. ¶14), and the Confidentiality Agreement was entered into to facilitate
1
The use of the word "will" means that the venue provision is mandatory. Silvestre v. De Loaiza, 820 N.Y.S.2d 440, 444 (N.Y. Sup. 2006); Vogt-Nem, Inc. v. M/V Tramper, 263 F.Supp.2d 1226, 1231 (N.D. Cal. 2002); Terra Intern., Inc. v. Mississippi Chemical Corp., 922 F.Supp. 1334, 1373 (N.D. Iowa 1996), aff'd, 119 F.3d 688 (8th Cir.), cert. denied, 522 U.S. 1028 (1997). 11
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BlueLine's performance under the website development contract. (Compl. ¶15). Indeed, although ILIS does not allege that any confidential information was displayed on the website, ILIS assumes that confidential information was disclosed to third parties because ILIS discovered that third parties had assisted in developing ILIS' website. (Compl. ¶¶26, 29). Such assumption is logical only if disclosure of confidential information was material to the creation and development of the website. In light of ILIS' concessions, ILIS claim is directly related to its business relationship with BlueLine and so should be subject to the venue provision it voluntarily entered into with BlueLine. The venue provision requires all litigation to be in Franklin County, Ohio. The Court should enforce the forum selection clause and dismiss this action for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(2). Alternatively, if the Court elects not to dismiss this action, it should be transferred pursuant to 28 U.S.C. §1404(a) to the United States District Court for the Southern District of Ohio, at its Columbus, Ohio location, which is in Franklin County.
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CONCLUSION WHEREFORE, for the foregoing reasons, defendant BlueLine International, LLC respectfully requests that this Court either dismiss this action or, in the alternative, transfer it to the United States District Court for the Southern District of Ohio in its Columbus, Franklin County location.
Dated: July 5, 2007
Respectfully submitted,
/s/ David L. Finger David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766 Attorney for defendant BlueLine International, LLC
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CERTIFICATE OF SERVICE I, David L. Finger, hereby certify that on this 5th day of July, 2007, I caused the foregoing document to be electronically filed with the Court via CM/ECF, which caused electronic notice thereof to be served on the below-listed counsel of record:
Kevin W. Goldstein, Esq. Michael P. Migliore, Esq. Stradley Ronon Stevens & Young, LLP 300 Delaware Avenue, Suite 800 Wilmington, DE 19801
/s/ David L. Finger David L. Finger (DE Bar ID #2556) Finger & Slanina, LLC One Commerce Center 1201 Orange Street, Suite 725 Wilmington, DE 19801-1155 (302) 884-6766
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ILlS COMPUTER, INC., A Delaware corporation, Plaintiff:
v.
BLUELINE INTERNATIONAL LLC, an Ohio limited liability company, Defendant.
) ) ) )
)
) )
)
)
)
)
C.A. No. 07-285 JJF
DECLARATION' OF TAREQ BHUIY AN
1.
My name is Tareq Bhuiyan. I am a member and manager of BlueLine
International LLC, an Ohio limited liability company ("BlueLine"), and am authorized to
make this declaration on its behalf I am over twenty-one years of age, and have personal
knowledge of the facts contained in this Declaration.
2.
No
member~
manager or employee of BlueLine has ever traveled to
Delaware in connection with any BlueLine business.
3.
BlueLine does not possess, have any interest in or manage any real
property located in Delaware.
4.
Out of two hundred customers, BlueLine has only two in Delaware as per
the clients· provided records for their business addresses. Those two companies are: ILlS Computer, Inc., the plaintiff in this lawsuit, which became a client in 2005 and another company, which became a client in 2007. In 2005, ILlS Computer, Inc. paid BlueLine
$20,093.90, which is less than 6% of that year's revenue. In 2006, ILlS Computer Inc.
paid BlueLine $25,292.10, which is less than 5.5% of that year's revenue. In 2007, ILlS Computer, Inc. paid BJueLine $5947.50 and the other company paid $5621.00 and the
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p.2
payments received from these two companies this year are less than 3% of the projected
yearly revenue of BlueLine.
5.
I executed the nondisclosure agreement that is at issue in this lawsuit in
Ohio.
6. 7.
BlueLine has not aimed its marketing efforts specifically at Delaware.
Attached hereto as Exhibit A is a true and correct copy of the contract
entered into between BlueLine and ILlS Computer, Inc.
8. It is my understanding that ILlS Computer, Inc. is a startup business, and
has not yet begun selling its products.
9. I declare under penalty of perjury under the laws of the United States and
the State ofDelaware, pursuant to 28 U.S.C. §1748) that the foregoing is true and correct.
Executed on this 14th day of June~ 2007 in Columbus, Ohio.
T~
3024254117 06/08/2005 Case 1:07-cv-00285-JJF 20:01
Document 5-2 BMSN Filed 07/05/2007
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Website
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P'rc;posa~ for
LkUMod
liDs Computer, Inc..
Your long Term IT Partner
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Here are the steps we follow before the actual website launch:
· First Draft of Workirtg.,Functionality:
We first present you with the first draft of working functionality on our presentatipn server
location for your approval.
· Mgdiflcations:
Changes, corrections, and modifications are made as per your requirements.
· Testing and Debugging:
Our Quality Assurance Team makes checks again using a bug-tracking system.
· Final freserttation:
After successful debugging and testing, we present you with the final draft of the website.
· Website Launch:
The website is up'loaded on the final server location as specified by you.
· Final Testing:
After the final product has been delivered to you! we make final tests to check the smooth
functionality of the site.
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Our desire is to delight the client.. One way is to make clear our understandings with each other. These are the
terms of our agreement together:
1. Authorization.
The above.. named client is engaging BlueLine International, LLC, located at 1029 Dublin Road, CoJumbus OH, 43215 for the specific project of developing a worJ,d wide website to be instaHed on a hosting server. The client also authorizes BJueLine International .. LLc to publici2:e their completed website to Web search engines, as well as other Web directories and indexes.
2. Web hosting/Server:
BlueLtne wilt also be responsjble for web server hosting. BJueLlne will ensure the maximum avallabllJty of the website.
3. TwO Month Code Guarantee=
BlueLlne will give two month of code guarantee to the customer. During the first two montll, BlueLJne will fiX code bugs for
free of charge. Additional enhancements are not included in this.
3024254117 06/08/2005 Case 1:07-cv-00285-JJF 20:01
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02
"lour long Term !T Partner
4. Support: If customer wants B(ueline to support the website, a $39,00 fee per hour wiU be charged.
5. Changes to Submitted Text Please send us your finill text, images and ather rnilterial. Time required to make substantive changes to cllent"'submltted stuff after the webpages have been constructed wlU be addittonal/ billed at the hourly rate ($39/hr).
6.. Completion Date
BlueLine will provide you a website solution and we will do the job right the first time. Your e-Commerce website wU[ be live within 1 week after the project is completed and approved by the cJient. prease submit your eJectronic confirmation to start the proje~t: and down payment In timely manner so that we can start the work as Cluickly as possible. It is very important for us to have your timely feedback and aU the text and other materfat from you to finish the project on time. If feedback Is not received from you within 2 days, the project deadline will shift according to that.
7. Payment of Fees Fees to BlueLine International, lLC are due and payable on th@ feHowlng schedul@: a non refund~ble 35 % upon signing this contract, a non refundable 35% after design and database is complete and a non refundable 30% after completionw Getting the password of the hosting control pane) and advertising the pages to Web search engines and updating occur only after the final payment Is made. AU payments will be made In US funds. B!ueLine will need to have a credit card in file, 50 that web hosting charges and support charges can be charged to that card. Customer authorizes BlueLine International LLC to charge the credit card for hosting and support charges. The support charges wiH only be charged, after getting customer's approval to move forward with any changesa
In order for BlueLine IntemationaJ 1 LLC to remain in business, payments must be made promptly. Delinquent bilJs wiH be assessed a $100 charge if payment is not recelved within 10 days of the due date. If an amount remains delin~uent 30 days after its due date, an additional 10% penalty will be added for each month of delinquency. BlueLine International, LLC reserves the right to remove webpages from viewing on the Internet untU final payment is made. In case collection proves necessary, the client agrees to pay all fees incurred by that process. This agreement becomes effective only when slgned by the client. Regardless of the place of signing of thts agreement, the client agrees that for purposes of venue, this contract was entered into jn Franklin Country, OhiO, and any dispute will be litigated or arbitrated In Franklin Country, Ohio. Please pay on time.
8 .. Copyrights and Trademarks The client unconditionally guarantees that any elements of text, graphics, photos, designs, trademarks, or other ~rtwork furnished to BlueLine lnternational, LLC for incl usion in webpages are owned by the client, or that the client has permission from the rightful owner to use each of these elements, and will hold harmless" protect, and defend BlueLine International, LLC and its subcontractors from any claim or suit arising from the use of such elements furnished by the client.
Legal Stuff BlueLlne International.. LLC does not warrant that the functions contained in these webp<;tges wiH be completely uninterrupted or error·free. In no event will BlueUne Internationar, LLC be liable to the client or any third party for any damages, Including any Jost profJts, lost savings or other incidental, consequential or speCial damages arising aut of the operation of or inability to operate these webpages or website, eVen if BlueLine International, LlC has been advised of the possibility of such damages. If any provision of this Qgreement shall be unlawful, void, or for any reason unenforceable, then that provision shaH be deemed severabre rrom this agreement Qnd shall not affect the validity and enforceability of any remaining provisions.
CHent to Release and Indemnify B~ueline International LLC. Client hereby jointry and severalJy (1) releases l acC/uits J forgives.l and discharges, (2) assumes fun responsibility for, and (3) agrees to indemnrfy, defend and protect Blueline International LLC from and ag~instr <3ny and all actions, SUits, proceedings, investigatlons t claims, demands, judgments, costs (fncluding without limitation costs of settrement), expenses (including without limitation attorneys fees), and/or liabilities of any kind Or nature, whether arising in equity or in Jaw and whether of a civil, administrative or criminal nature, that relate to or ariSe wholly/ partially, or arguably from, out of, or in connection with the Client's Website ..
Cap an Blueline International I.LC Liability. The liability to Client and/or any party affiHated with Client of BrueHne International LJ.C and/or any partjes afffJJated With Blueline Intern.!;ltional LLC for any actions, claims, demands, sUU:s.. agreements, judgments, costs, expenses, liabilitJes.. and/or proceedings of any kjnd, that arises out of, resultrng from, or in any way connected With, the performance or breach or this Agreement shall in aU events be limited to the amount actualJy paid by Client for the portion of the services InvoJved. This limit~tion shall apply regardless of the form Ot nature of the action or the under[ying theory of recovery, including Without limitation actions premised on breach of contract, negligence, end/or strict
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liability.
10. Assignment of Project
BrueLine InternationQJ, LlC reserves the right to assign subcontractors to this project to enSure the right fit for the job as well as on-time completion.
11. Laws Affec:ting Electronic: Commerce From time to tfme governments enact laws and levy taxes and tariffs affecting Internet electronic commerce. The client agrees that the client is sorely responsibJe for cornpfyrng with such laws, taxes.. and tariffs, and wHt hold harmless, protect, and defend BfueLlne International .. LLC and its subcontractors from any claim, suit penalty, tax, or tariff 'arising from the c:lientls exercise of Internet electronrc commerce.
12, Copyright to Webpages
06/08/2005
Case 1:07-cv-00285-JJF 3024254117 20:01
Ilis Computer,. Inc.
II P I
Document 5-2 BMSN Filed 07/05/2007
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03
Webs~te ?rc~~c~:sal for
UUklta:U IJIIUUUIJ'
Your long Term IT Partner
Copyright to the finished assembled work of webpages produced by BlueLine International.. Ll.C is owned jOintly by client and 6lueL.ine International, L.l.C. Upon final p~yment of this contract, the client Is assigned rights to use as a website the design, graphics, and text: contained in the finished assembled website. BlueLine International, LLC retains the right to display graphics and other Web design eJements as examples of their work In Its portfolio and put the text "'developed by BlueLine with a link to BlueLlne's website on the developed website, BlueLJnels written permission is needed if client wants to give the c:ode to any other third party for modification. Client or third party cannot sell or use this code for any other website.
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13.. Work Document All the work related to this project Is defined In the attached proposal. The attached proposal Will be considered as addendum to this contract. 14. Sole Agreement
The agreement contained in this "Website Design ContractU constitutes the sole agreement between BlueLine International,
LI.C and the client regarding this website. Any additional work not specified in this contract must be authorized by a written change order. All prices speCified in this contract wiH be honored far two (2) months after both parties sign this contract" continued services after that time will require a new agreement4
15. Pilyment and Refund Polic:y
LL.C 10 Be Paid For Services Rendered. Notwitl1standing anything in this Agreement or the Solution SpecifJcatlons to the contrary, Client shall be responsible for payment to BJueline International LLC for all Services rendered through the termination date.
Ca) £Uueline International
(b) Deemed Default by Client for Uncured Billing Problem. If for any reason the billing information provided by Client becomes invalid, or Blueline International LlC cannot for any other reason collect p~yment due in accordance with this Agreement l BJueline Internetional LLC shaJi make reasonable efforts to contact the Client in order to give notice of the problem. If Client fails to remedy such problem within five (5) business days of receiving such notice" or if Bluellne International LLC is unable to contact and/or obtain a response from Client within fifteen (15) business days after commencing its efforts to contact Client, a material default shall be deemed to have occurred, and Blueline International LLC may at its sole discretion deem that Client terminated this Agreement, as of the date upon which Brueline International LLC first discovered the probJem.
(c) Cancellation Fee. If the client halts work and applies by registered letter for a refund within 5 business daysl to BlueLlne International, L.LC1 1029 Dublin Road, Columbus OH, 43215, phone (6S8) 485-0100, a $100 cancellation fee as well as work completed shall be billed at the hourly rate stated above, ~nd deducted from the initiaJ paymentl the baJance af whith shall be returned to the client. If, at the time of the request for refund r $100 cancellation fee and work has been completed beyond the amount covered by the initial payment, the client shall be liable to pay for all work completed at the hourly rate of $39 piUS the $100.00 cancellation fee. No portion of this initial payment will be refunded unress written application ts made within 5 business days of signing this contract-
Cd) Rescheduling Fee. If Client delays or elects to reschedule the commencement or performance of this project for a period of more than thirty (3D) business days after the Acceptance Date Client shall pay to Blueline International LLC a $250 "R.escheduling fee N in addition to any other tees as outlined in this Agreement. Blueline International LLC may demand payment of such Rescheduling Fee prior to commencing or recommencing Its work hereunder.
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(e) Collection; Processing and CoJJection Fee. Accounts that are not collectible by Blueline InternationaJ LLC Cifter 45 days may be turned over to an outside collection agency for collection4 If your account is turned over for coHection r Client agrees to pay BlueUne International LLC a "Processing and Collection" fee of $150.00. In the event that payment shourd result In any thJrd-party expenses (SUch CIS overdraft c:harges or banking fees r coUectlon agency fees, postage, etc,), such e)(penses shaH be the soJe obligation of the CJient.
(f) Charge"'Back Fee. Client ~cknowledges that Bluerine Internt;ttional LLc does a significant amount Of business through credit cards and that "Charge-Backs'" against credit card payments cause or have the potential to cause significant special costs induding emong other things, damaged rerationships with the credit card companies. In the event that Client charges back an amount paid to Bluellne Xnternational LLC against a credit card, and it is determined that Blueline International LLC was entitled to such payment under this Agreement.. Client accordingly a~ree5 to pay to Blueline International LLC a '''Charge... Bitck Fee" of $500 as Jiquidated damages for its additional costs. Client further and specifiCClJJy agrees that all disputes concerning the propriety of a give charge...bac:k shall be subject to the 1AChoice of Law and Forum 1r provfsions of this Agreement.
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(9) BfueUne InternationaJ LLC Entitled to Attorneysr, Experts" and Other Fees. In the event of any litigation between the pattres or their representatives, or by a party or jts representative before a bankruptcy or similar court that has jurJsdrctlon over another party hereto or over any of such other party"s property or assets" concerning any provision(s) of this Agreement Or the rights Qnd duties of any person or entity in reJation thereto Bluelfne International LLC shan be entitled, in addition to any other relief; 1:0 all reasonable expenses (as determined by the Court) incurred in connection· WIth any successful effort to enforce its tights under this Agreement or to defend against a suit brought by Client (and in any separate action brought for the purpose of t"ecovery under this paragraph), incJudJng without limitation all court costs and all reasonable attorneys', accountants', experts', and other professional fees.
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04
Website Proposal for I~is Computer, Inc..
J 1*1 U 1*1 U. UI:III
Your Long Term IT Partneg'liNn " I I ,
Wire Transfer Information: Account information: BlueLine International LLC ABA Routing #: 044000037 Account #: 632776159
Check or Money Orders:
To: BlueLine International LLC.
Credit Card Transactions: You may put up to $2500 on
credit cards.
Send to address:
1029 Dublin Road Columbus OH 43215
Please call us at 614-488-8094 to make
Bank: Bank One, Columbus, Ohjo 43271
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This agreement begins with an initial payment of $ If the client halts wOl"'k and applies by registered letter for a refund within S business days, to the founders BlueLine International, LLC J 1029 Dublin Road, Columbus OH .. 43215, phone (888) 485-0100, a $200 cancellation fee as well as work completed shall be billed at the hourly rate stated above.. and deducted from the initial payment, the balance of which shall be returned to the client. If, at the time of the request for l"'efund, $200 cancellation fee and work has been completed beyond the amount covered by the initial payment, the client shall be liabJe to pay for all work completed at the hourly rate of $39 pfus the $200.00 cancellation fee. No portion of this initial payment will be refunded unless written application Is made within 5 business days of Signing thiS contract.
b. G.:32 S(JSD. 01
The undersigned agrees to the terms of this ag reement on behalf of his or her organization or business .
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Employer Identification #: 020667670
1029 Dublin Road
Columbus, OH 43215
Phone 888 485-0100 or (614) 488,..8094
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http://www~BJueLinelT.com
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Case 1:07-cv-00285-JJF
Document 5-3
Filed 07/05/2007
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856 A.2d 1066 856 A.2d 1066, 2004 WL 1874652 (Del.Supr.), 33 Media L. Rep. 1573 (Cite as: 856 A.2d 1066)
Page 1
Chadwick v. Metro Corp. Del.Supr.,2004. (The decision of the Court is referenced in the Atlantic Reporter in a `Table of Decisions Without Published Opinions.') Supreme Court of Delaware. H. Beatty CHADWICK, Plaintiff Below, Appellant, v. METRO CORP., a Pennsylvania corporation, publisher of Philadelphia Magazine, Christopher McDougall, and Barbara Chadwick aka Barbara Applegate, Defendants Below, Appellees. No. 44, 2004. Submitted July 14, 2004. Decided Aug. 12, 2004. Background: Plaintiff brought action in Delaware against publisher, author, and declarant for defamation, invasion of privacy, and conspiracy to injure his reputation. Author and declarant brought motions to dismiss based on lack of personal jurisdiction, and publisher brought motion to stay based on similar action pending in Pennsylvania. The Superior Court, New Castle County, granted the motions, and later granted publisher's motion to dismiss. Plaintiff appealed. Holdings: The Supreme Court held that: (1) court did not abuse discretion in dismissing action in favor of first-filed Pennsylvania action, and (2) trial court lacked personal jurisdiction over declarant and author.
106 Courts 106VII Concurrent and Conflicting Jurisdiction 106VII(C) Courts of Different States or Countries 106k514 k. Pendency and Scope of Prior Proceeding. Most Cited Cases Trial court in Delaware did not abuse discretion in dismissing defamation action in favor of first-filed Pennsylvania defamation action, although Pennsylvania action had been deferred until plaintiff complied with civil contempt order; Pennsylvania court was competent and capable, Pennsylvania court believed plaintiff was capable of compliance with civil contempt order, suits involved substantially similar parties and issues, and ties to Delaware were tenuous at best. 10 Del.C. § 3104(c)(3). [2] Courts 106 12(2.25)
106 Courts 106I Nature, Extent, and Exercise of Jurisdiction in General 106k10 Jurisdiction of the Person 106k12 Domicile or Residence of Party 106k12(2) Actions by or Against Nonresidents; "Long-Arm" Jurisdiction in General 106k12(2.25) k. Tort Cases. Most Cited Cases Delaware trial court lacked personal jurisdiction over declarant and author of allegedly defamatory article, where author was Pennsylvania resident and declarant was Maine resident, author conducted interview with declarant by telephone from author's house in Pennsylvania to declarant's residence in Maine, author wrote and edited article in Pennsylvania, and declarant's only connection to Delaware was occasional travel on interstate. Court Below: Superior Court of the State of Delaware in and for New Castle County, C.A. No. 02-11-115.
Affirmed. West Headnotes [1] Courts 106
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Case 1:07-cv-00285-JJF
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856 A.2d 1066 856 A.2d 1066, 2004 WL 1874652 (Del.Supr.), 33 Media L. Rep. 1573 (Cite as: 856 A.2d 1066) Before STEELE, Chief Justice, HOLLAND, and BERGER, Justices. ORDER *1 This 12th day of August 2004, upon consideration of the briefs and oral argument of the parties, it appears to the Court as follows: (1) H. Beatty Chadwick appeals the dismissal with prejudice of his complaint for defamation, invasion of privacy, and conspiracy to injure his reputation against publisher Metro Corp., author Christopher McDougall, and Chadwick's ex-wife, Barbara Chadwick a/k/a Barbara Applegate. (2) In 1992, Barbara Applegate filed for divorce in the Pennsylvania Court of Common Pleas. During the divorce proceedings, Chadwick represented to the court that he had transferred $2,502,000 of the couple's marital assets to an overseas account to satisfy a debt. The trial judge did not accept his explanation and eventually ordered Chadwick, inter alia, to return the entire sum to a court administered account. Chadwick refused to comply with the July 22, 1994 order. The trial judge found him in civil contempt. (3) In September 1994, Chadwick fled to Delaware to evade capture and incarceration. He was arrested in Philadelphia in April 1995, and remains incarcerated in Pennsylvania pursuant to the civil contempt order. Chadwick has repeatedly challenged the contempt order and sought release from jail. The resulting decisions consistently upheld the finding of contempt and have repeatedly reminded Chadwick of the fact that he remains incarcerated by his own will and actions.FN1 In short, Chadwick "holds the keys to the jailhouse" because the Pennsylvania Court has concluded that he is able to comply with the civil contempt order, but refuses to do so. FN1. See, e.g., Chadwick v. Janecka, 2002 WL 12292 at *7 n. 2, Chadwick v. Janecka, 312 F.3d 597, 613 (3d Cir.2002), cert. denied, 538 U.S. 1000, 123 S.Ct. 1914, 155 L.Ed.2d 828 (2003).
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(4) Metro published a series of articles in Philadelphia Magazine detailing the circumstances surrounding Chadwick's divorce and incarceration. The first article, published in February 1995, included allegations by Applegate that Chadwick physically and mentally abused her during their marriage. In June 1995, Metro published a follow-up article describing the details of Chadwick's arrest at a Philadelphia dental office. Metro published a third article in January 1996. Later that year, Chadwick sued Metro and Lisa DePaulo, the author of the articles, for defamation in a Pennsylvania court. The Pennsylvania court has since deferred the suit until Chadwick complies with the July 1994 civil contempt order. (5) In December 2001, Philadelphia Magazine published an article updating the status of Chadwick's divorce and incarceration that contained many of the factual statements included in the earlier articles. In November 2002, Chadwick sued publisher Metro, author Christopher McDougall, and ex-wife Barbara Applegate for, inter alia, defamation in the Delaware Superior Court. (6) In February 2003, the trial judge granted motions to dismiss the claims against McDougall and Applegate for lack of personal jurisdiction. Metro moved to stay the Delaware suit pending resolution of Chadwick's substantially similar, first-filed Pennsylvania suit. The trial judge stayed the suit against Metro in February 2003, and ordered a report on the status of the Pennsylvania motion in six months. Chadwick immediately filed a motion for reconsideration and a motion for entry of a final judgment or, in the alternative, for certification of interlocutory appeal. The trial judge denied both motions and this Court denied Chadwick's motion for an interlocutory appeal. On October 16, 2003, Metro filed a motion to dismiss and following argument in January 2004, the trial judge dismissed the complaint. Chadwick appeals the January 23, 2004 order dismissing Metro, and the February 24, 2003 orders dismissing Applegate and McDougall for lack of personal jurisdiction. *2 (7) After careful review, we are satisfied that the trial judge acted appropriately within his discretion by dismissing Chadwick's Delaware complaint in
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Case 1:07-cv-00285-JJF
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856 A.2d 1066 856 A.2d 1066, 2004 WL 1874652 (Del.Supr.), 33 Media L. Rep. 1573 (Cite as: 856 A.2d 1066) favor of the first-filed Pennsylvania suit. The McWane doctrine permits a Delaware judge to dismiss or stay an action in favor of a first-filed action pending in another jurisdiction.FN2 Our courts generally do not consider a motion to dismiss under traditional forum non conveniens analysis when a similar action is pending elsewhere.FN3 Rather, we apply the McWane factors to determine whether the later-filed action should be stayed or dismissed. Under McWane and its progeny, a judge, in the exercise of his or her discretion, may stay or dismiss a later-filed suit where a first-filed suit is pending in a court capable of administering prompt and complete justice, and involves substantially similar parties and issues.FN4 FN2. McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng'g Co., 263 A.2d 281, 283 (Del.1970). FN3. Id. at 284 ("We reaffirm ... the application of the established rules of forum non conveniens where (1) no other action is pending elsewhere between the same parties involving the same issues, or (2) such other pending action was filed subsequently to the Delaware action."). FN4. Id. at 283; Dura Pharms., Inc., v. Scandipharm, Inc., 713 A.2d 925, 930 (Del.Ch.1998). (8) In the matter sub judice, the first-filed Pennsylvania suit is pending in a competent, capable court although it has been stayed until Chadwick complies with the civil contempt order. We recognize that the Pennsylvania courts believe that Chadwick is fully capable of compliance. Chadwick, while arguing otherwise, nonetheless has chosen not to do so. (9) Further, it is clear that the Pennsylvania and Delaware suits involve substantially similar parties and issues. In Delaware, under the McWane doctrine, a duplicative action that is substantially or functionally identical to an earlier suit may be dismissed or stayed.FN5 In both the Pennsylvania and Delaware actions, Chadwick alleges injury to
Page 3
his reputation, resulting from statements by Applegate published in Metro's Philadelphia Magazine. Chadwick insists that the two actions are dissimilar because different people authored the 2001 article and the three earlier articles. The 2001 article, however, merely constituted an update on the earlier articles regarding Chadwick's incarceration. The 2001 article contained virtually all of the allegedly defamatory statements previously published in the 1995 and 1996 articles. Further, it is clear that the articles arise out of a " common nucleus of operative facts," FN6 involving Applegate's claims of physical and emotional abuse and Chadwick's non-compliance with the civil contempt order of the Pennsylvania court. Both the Pennsylvania and Delaware suits allege that the Applegate statements are defamatory. Accordingly, Chadwick's functionally identical claims may be fully adjudicated by Pennsylvania when Chadwick complies with the civil contempt order. FN5. See, e.g., Dura Pharms., 713 A.2d at 930 ("Thus, there is certainly a close enough identity of issues ... to implicate the McWane comity analysis."); AT & T Corp. v. Prime Sec. Distribs., Inc., 1996 WL 633300 at *2 (Del.Ch. Oct.24, 1996) ( "To grant a stay, it is not required that the parties and issues in both actions be identical. Substantial or functional identity is sufficient."); Schnell v. Porta Sys. Corp., 1994 WL 148276 at *4 (Del.Ch. Apr.12, 1994) (stating that "all claims arising from a common nucleus of operative facts [should] be brought at the same time whenever possible"). FN6. Dura Pharms., 713 A.2d at 930. (10) We find the trial judge's decision to dismiss rather than extend the stay for an additional, potentially lengthy time, appropriately supported by the ends of judicial efficiency.FN7 No party to this action is a Delaware citizen. In fact, it appears that even the collective ties of all parties to Delaware are tenuous at best. Chadwick's choice of Delaware as a forum for this lawsuit seems predicated on the fact that a Pennsylvania court will not allow him to
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Case 1:07-cv-00285-JJF
Document 5-3
Filed 07/05/2007
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856 A.2d 1066 856 A.2d 1066, 2004 WL 1874652 (Del.Supr.), 33 Media L. Rep. 1573 (Cite as: 856 A.2d 1066) proceed, for reasons previously stated, with a functionally identical suit. For Delaware to allow Chadwick to proceed in our courts under these particular circumstances would be, in effect, to subvert the civil contempt order pending in Pennsylvania. FN7. McWane, 263 A.2d at 283 ("Judicial efficiency encourages confining litigation to the forum where the parties first commence the action when a prior, pending action in another jurisdiction involves the same parties and issues."); E.I. du Pont de Nemours & Co. v. Cigna Prop. & Casualty Co., Del. Ch., C.A. No. 12386, Allen, C. (Jul. 17, 1992) *3 [1] (11) From the outset, the trial judge expressed concern over presiding over this, a potentially "lifelong case." The trial judge made it clear to the parties' that he was "concerned about how quickly things are done." Later, he expressed some uncertainty about how this matter would proceed, stating, "having cases that are lasting for years is not a good thing for a judge, how do I deal with that?" In deference to the potential merits of the suit, the trial judge granted a stay and ordered the parties to report on the status of the matter after six-months. Eleven months later, the trial judge granted Metro's motion to dismiss, explaining: It's difficult for the-for our system-it's difficult for me to envision a situation where the resources of this Court and the money that-of this state should be utilized to benefit someone whose only connection to the state is a fugitive status.FN8
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Chadwick's-either to come to his senses or die.FN9 FN9. Id. at pp. 19-20. We are convinced that the trial judge acted appropriately within his inherent authority to manage his own trial docket, and consistently with the reasonable expectations of the litigants when he dismissed Chadwick's suit. At some point, it became clear to the trial judge that the later-filed Delaware suit was likely an end run by Chadwick. Our trial courts should rightfully deny sanctuary to the purpose evident at the heart of Chadwick's suit: to subvert the effect of a lawful Pennsylvania civil contempt order. Our Delaware trial judges are renown for their temperament and prudence; our trial courts for their efficiency and fairness of procedure. The trial judge here acted patiently and ultimately decisively when he stayed and then dismissed the complaint against Metro. His actions reflect reasonable exercise of judicial discretion. [2] (12) Chadwick also appeals the dismissal of his complaints against McDougall and Applegate. We review de novo a trial judge's decision to dismiss a defendant for lack of personal jurisdiction.FN10 Delaware courts apply a two-step analysis to determine whether the court has in personam jurisdiction over a non-resident defendant. The court must first consider whether the long-arm statute applies, and then evaluate whether exercise of jurisdiction would violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Chadwick alleges that McDougall and Applegate are subject to personal jurisdiction under 10 Del. C. § 3104(c)(3), the section of the long-arm statute that grants jurisdiction if a defendant "causes tortious injury in the State by an act or omission in this State." FN11 We find that neither McDougall nor Applegate committed a tortious act or omission in Delaware. McDougall is a Pennsylvania resident with virtually no contacts to Delaware. He conducted his interview with Applegate over the telephone from his house in Pennsylvania to Applegate's residence in Maine. McDougall wrote and edited the article in Pennsylvania. Applegate is a resident of Maine and has never lived in Delaware. Her contact to
FN8. Trial Transcript on Motion Dismiss (January 20, 2004) at pg. 11.
to
We have stayed the matter for a period of time hoping that-that Mr. Chadwick would comply with those orders and allow that case to proceed. It hasn't. It appears that Mr. Chadwick is satisfied to live the remaining years if his life incarcerated. And it would be unfair to the Defendant to allow the action to be stayed forever, waiting for Mr.
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856 A.2d 1066 856 A.2d 1066, 2004 WL 1874652 (Del.Supr.), 33 Media L. Rep. 1573 (Cite as: 856 A.2d 1066) Delaware has generally been limited to her travels on I-95. Based on these facts, the trial judge properly dismissed McDougall and Applegate from the litigation because Delaware lacked personal jurisdiction over them. FN10. Hercules, Inc. v. Leu Trust & Banking, Ltd., 611 A.2d 476, 481 (Del.1992), cert. dismissed, 507 U.S. 1025, 113 S.Ct. 1836, 123 L.Ed.2d 463 (1993). FN11. 10 Del. C. § 3104(c)(3) (2004). *4 Accordingly, we AFFIRM the Superior Court's judgments that dismissed the complaints against Metro, McDougall, and Applegate. Del.Supr.,2004. Chadwick v. Metro Corp. 856 A.2d 1066, 2004 WL 1874652 (Del.Supr.), 33 Media L. Rep. 1573 END OF DOCUMENT
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Not Reported in F.Supp.2d Not Reported in F.Supp.2d, 2002 WL 100602 (D.Conn.) (Cite as: Not Reported in F.Supp.2d)
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Franceskino v. Womack D.Conn.,2002. Only the Westlaw citation is currently available. United States District Court, D. Connecticut. Thomas H. FRANCESKINO, Jr. Plaintiff, v. Michael O. WOMACK and Womack Material Handling Sys., Inc., Defendants No. CIV.3:01CV1835 (AVC). Jan. 25, 2002. RULING ON THE DEFENDANT WOMACK'S MOTION TO DISMISS COVELLO, Chief District J. *1 This is an action for damages alleging breach of a contract of employment. The defendant, Michael O. Womack, moves pursuant to Fed.R.Civ.P. 12(b)(2) to dismiss the action for want of personal jurisdiction. He argues that since he a resident of Florida and the complaint seeks damages against him for actions allegedly taken by him in his capacity as an employee and officer of a corporation, he is beyond the reach of Connecticut's long arm statute. Moreover, Womack asserts that requiring him to litigate in Connecticut would offend the due process clause of the Fourteenth Amendment to the United States Constitution. The issues presented are: (1) whether the Connecticut long arm statute, Conn. Gen.Stat. § 52-59b, authorizes the exercise of jurisdiction over Womack; and (2) whether requiring Womack to litigate in Connecticut comports with the due process clause of the Fourteenth Amendment to the United States Constitution. For the reasons hereinafter set forth, the court concludes that Womack is within the reach of the Connecticut long arm statute, and that requiring Womack to litigate in Connecticut would not offend the due process clause of the Fourteenth
Amendment. Accordingly, the motion to dismiss is DENIED. FACTS Examination of the complaint, pleadings, and affidavit accompanying the motion to dismiss, and the responses thereto, disclose the following undisputed, material facts. In July of 1978, the defendant, Michael O. Womack, founded a distribution company known as Womack Material Handling Systems, Inc. (WMHSI), in Wallingford, Connecticut. On October 20, 1980, Womack hired the plaintiff, Thomas H. Franceskino, to work in an undisclosed capacity and, in 1982 promoted him to the position of operations manager. In this capacity, the plaintiff alleges that, under the direction of Womack, he handled a variety of issues, including customer relations, company hiring, training, and the supervision of service technicians. During February of 1985, Womack promoted the plaintiff to the position of Vice President and allegedly promised to give him a 10% equity position in WMHSI in consideration for his expanding role, his non-compensated efforts over the previous three years, and his continued and expanding commitment to WMHSI. (See Franceskino Aff. at ¶ 9). The complaint alleges that, in this regard, Womack promised the plaintiff, inter alia, that when he was ready to leave or retire, or when Womack sold WMHSI, Womack would assess a 10% value of WMHSI at a year end 1985 value and then subtract that figure from the 10% value of WMHSI at the time of his departure. Womack would then pay the difference to the plaintiff as his equity position. (Franceskino Aff. at ¶ 9, compl. at ¶ 12). In 1994, Womack moved to Florida but continued to conduct business in Connecticut. On or about February 11, 1996, the plaintiff met with Womack at Womack's condominium in Quarry Village in
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