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U, Incorporated v. Shipmate, Inc.

United States District Court, D. Kansas

December 10, 2014

U, INCORPORATED, Plaintiff,
v.
SHIPMATE, INC. and COORDINATING COMMITTEE FOR AUTOMOTIVE REPAIR, Defendants.

MEMORANDUM AND ORDER

J. THOMAS MARTEN, District Judge.

Before the court are defendant ShipMate, Inc.'s ("ShipMate") Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. 41) and Plaintiff U, Inc.'s Motion Seeking Leave to File a Supplemental Brief (Dkt. 53). This case arises out of the parties' competing online hazardous materials training courses. Plaintiff originally filed a seven-count complaint against ShipMate and the Coordinating Committee for Automotive Repair ("CCAR") in Kansas state court. Four of the counts are directed at ShipMate. The issue before the court is whether ShipMate's conduct directed at the state of Kansas is sufficient to subject it to personal jurisdiction for these claims.

I. Background

ShipMate is a California corporation providing online training course content and hosting with its principal place of business in Sisters, Oregon. (Dkt. 43, at 1). Co-defendant CCAR is a foreign corporation whose principal place of business was in Kansas until 2011. CCAR specializes in marketing educational materials to automotive dealers. (Dkt. 38, at 4). Plaintiff is a Kansas corporation headquartered in Overland Park, Kansas. (Dkt. 38, at 2). It develops and markets web-based training courses on a variety of subjects to individuals residing in Kansas and throughout the United States. (Dkt. 38, at 4).

Beginning in June 2005, ShipMate developed original content for an online hazardous materials training program called "HazMatU, " which CCAR agreed to host. (Dkt. 43, at 2). However, CCAR lacked the capacity to host HazMatU and turned to plaintiff for hosting services. On or about March 16, 2007, plaintiff contracted with CCAR to host HazMatU on plaintiff's online learning management system ("LMS")[1] (Dkt. 38, at 5). The parties were thus situated regarding HazMatU: ShipMate provided the course content, plaintiff hosted and provided interface and administrative services for the content, and CCAR marketed the content. HazMatU was hosted alongside plaintiff's own safety training program called "S/P2". (Dkt. 38, at 6). The HazMatU arrangement lasted until October 2013, when plaintiff terminated the agreement, citing CCAR's non-performance. (Dkt. 38, at 8).

The contractual relationship between CCAR and plaintiff for hosting HazMatU lasted from March 2007 to July 2013. The contract provided CCAR with passcode access to plaintiff's LMS, including confidential customer information. (Dkt. 39, at 8). The contract forbade the use of any customer information other than to further plaintiff's interests. It also provided that, after termination, CCAR must cease using and return or destroy all confidential information derived from plaintiff's LMS. (Dkt. 38, at 8).

Beginning on or about July 7, 2013, ShipMate developed a new hazardous materials course called GHS HazCom2012 ("GHS"), which has been hosted on ShipMate's own LMS since late summer 2013.[2] (Dkt. 43, at 3). In spring 2014, CCAR contracted with ShipMate to make a new product called "CCAR HazmatU" to replace HazMatU (Dkt. 43, at 3-4). CCAR HazmatU is an expanded version of ShipMate's GHS content that is hosted on ShipMate's LMS and marketed by CCAR. (Dkt. 43, at 3). GHS and CCAR HazmatU are direct competitors of plaintiff's S/P2 product.

Shortly after the launch of CCAR HazmatU, plaintiff filed this case in Kansas state court. Defendants removed the case to federal court, and plaintiff amended its complaint on August 25, 2014. (Dkt. 38) The Amended Complaint alleges the following five counts against ShipMate: violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, for unauthorized use of plaintiff's customer list with intent to defraud; violation of the Kansas Uniform Trade Secrets Act, K.S.A. 60-3320 et seq., for misappropriating plaintiff's customer list; false advertising in violation of the Lanham Act, 15 U.S.C. § 1125, for directly or impliedly stating that CCAR courses have the characteristics or achieved recognition actually belonging to S/P2; intentional interference with current and prospective business advantage for interfering with plaintiff's current and known prospective customers via information appropriated by CCAR; and trademark infringement for defendants' inclusion of plaintiff's S/P2 mark in online marketing to plaintiff's current and known prospective customers.

ShipMate now moves to dismiss for lack of personal jurisdiction.

II. Analysis

A court must exercise personal jurisdiction over the parties to render a valid judgment. OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1090 (10th Cir. 1998). Plaintiff bears the burden of establishing personal jurisdiction over defendant when opposing a motion to dismiss for lack thereof. Id. at 1091. The court "must accept as true" the well-pled facts of the complaint "to the extent they are uncontroverted by the defendant's affidavits." Toytrackerz LLC v. American Plastic Equip., Inc., 615 F.Supp.2d 1242, 1248-49 (D. Kan. 2009) (citing Ten Mile Indust. Park v. W. Plains Serv. Corp., 810 F.2d 1518, 1524 (10th Cir. 1987)). "To obtain personal jurisdiction over a defendant not a resident of nor found in the forum state, the federal court must follow the state's jurisdictional statute... which is subject to the bounds of constitutional due process." Leney v. Plum Grove Bank, 670 F.2d 878, 879 (10th Cir. 1982); see also FED. R. CIV. P. 4(e). "Because the Kansas long-arm statute is construed liberally so as to allow jurisdiction to the full extent permitted by due process, we proceed directly to the constitutional issue." OMI Holdings, Inc., 149 F.3d at 1090 (quoting Federated Rural Electric Ins. Corp. v. Kootenai Electric Coop., 17 F.3d 1302, 1305 (10th Cir. 1994)).

The Due Process Clause protects a party from being subject to judgment in a forum "with which he has established no meaningful contacts, ties, or relations." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quotation omitted). "Due process requirements are satisfied when in personam jurisdiction is asserted over a nonresident corporate defendant that has certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1985) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)) (alteration in Helicopteros ). The minimum contacts' requirement is satisfied when a defendant's "conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Two categories of personal jurisdiction arise under the minimum contacts' requirement: general jurisdiction and specific jurisdiction. Daimler AG v. Bauman, 134 S.Ct. 746, 754 (2014).

A. General Jurisdiction

"A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so continuous and systematic' as to render them essentially at home in the forum State." Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011) (quoting International Shoe, 326 U.S. at 317). "Mere purchases, even if occurring at regular intervals" are alone insufficient to warrant general jurisdiction. Daimler AG, 134 S.Ct. at 757 (quotation omitted). Business dealings, contractual relationships, or correspondence with forum residents do not subject a defendant to general jurisdiction. Shrader v. Biddinger, 633 F. 1235, 1247 (10th Cir. 2011). "[G]eneral jurisdiction over a website that ...


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