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Leachman Cattle of Colorado, LLC v. American Simmental Association

United States District Court, D. Colorado

August 29, 2014

LEACHMAN CATTLE OF COLORADO, LLC, a Colorado Limited Liability Corporation and VERIFIED BEEF, LLC, A Montana Limited Liability Corporation, Plaintiffs,
v.
AMERICAN SIMMENTAL ASSOCIATION, a Montana Association, Defendant

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[Copyrighted Material Omitted]

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For Leachman Cattle of Colorado, LLC, a Colorado Limited Liability Corporation, Plaintiff: David W. Morris, Heather M. Khassian, John F. Luman, III, Bracewell & Giuliani LLP-Houston, Houston, TX; Mark E. Lacis, Timothy G. Atkinson, Ireland Stapleton Pryor & Pascoe, P.C., Denver, CO.

For Verified Beef, LLC, a Montana Limited Liability Corporation, Plaintiff: Heather M. Khassian, John F. Luman, III, David W. Morris, Bracewell & Giuliani LLP-Houston, Houston, TX; Mark E. Lacis, Timothy G. Atkinson, Ireland Stapleton Pryor & Pascoe, P.C., Denver, CO.

For American Simmental Association, a Montana Association, Defendant: V. Gene Summerlin, Jr., Husch Blackwell LLP-Lincoln, Lincoln, NE.

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ORDER

R. Brooke Jackson, United States District Judge.

This matter is before the Court on Defendant's Motion to Dismiss First Amended Complaint for Lack of Personal Jurisdiction or in the Alternative to Transfer Venue [ECF No. 30]. The plaintiffs assert that the Court has subject matter jurisdiction over the federal claims pursuant to 28 U.S.C. § 1331 and supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367.[1] The plaintiffs do not contend that the Court has diversity jurisdiction over the state law causes of action.

The Court held a hearing on the motion on August 11, 2014. The parties were notified ahead of time that the hearing would be their opportunity to present evidence on the jurisdictional questions. None of the parties submitted additional evidence. Upon review of the record and the arguments of counsel, the Court concludes that it has no personal jurisdiction over the defendant for the alleged patent infringement or Lanham Act violations, even though it has subject matter jurisdiction over both claims. Further, while the Court may have had personal jurisdiction over the defendant for the alleged torts that took place within Colorado, there is no

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independent subject matter jurisdiction over these state law claims. As such, all claims must be dismissed.

BACKGROUND

This case appears to present a more difficult question than it actually does. Because the parties agree that the Court can only assert original jurisdiction over the federal law causes of action, the Court must first consider only the facts giving rise to the federal claims. If those facts would support personal jurisdiction over the defendant, the Court can maintain this action. If they would not, the Court must dismiss the federal law claims, and, in turn, dismiss the state law claims that only could have been heard pursuant to supplemental jurisdiction.

Before we delve into the facts, it is worth distinguishing between the state law claims and the federal law causes of action. The plaintiffs bring the following state law claims against the defendant: (1) trade secret misappropriation; (2) intentional interference with prospective business relations; and (3) misappropriation of business value.[2] These claims are based on conduct that allegedly occurred in the summer and fall of 2013. The plaintiffs assert the following federal law claims: (1) infringement of the '888 Patent; (2) infringement of the '557 Patent; and (3) Lanham Act violations. These claims are based on conduct that allegedly occurred in 2014. The two distinct time periods are worth keeping in mind as we discuss the background of this case.

Since we are at the pleading stage, the Court considers true the plaintiffs' factual assertions that are plausible on their face. However, because this is a motion to dismiss for lack of personal jurisdiction, " [t]he allegations in the complaint must be taken as true [only] to the extent they are uncontroverted by the defendant's affidavits." Kennedy v. Freeman, 919 F.2d 126, 128 (10th Cir. 1990) (citation and quotation marks omitted).

Plaintiff Leachman Cattle of Colorado, LLC (" Leachman Cattle" ) is a Colorado limited liability company with its principal place of business in Wellington, Colorado. Plaintiff Verified Beef, LLC (" Verified Beef" ) is a Montana limited liability company with its principal place of business in Bozeman, Montana. Defendant American Simmental Association (" ASA" ) is a Montana nonprofit corporation with its principal place of business in Bozeman, Montana.

According to the plaintiffs, Leachman Cattle developed an innovative method for determining the relative economic value of a group of existing commercial calves and reporting that value to the owners and potential buyers of that group. First Amended Complaint [ECF No. 28] at ¶ 8. The plaintiffs have developed commercial products embodying this calculation method, including the Reputation Feeder Cattle® and the Genetic Merit Scorecard® programs (collectively the " Programs" ). Id. It is unclear when this method was developed. However, on or around March 19, 2013 the plaintiffs distributed introductory press releases and marketing materials concerning their Programs. Id. at ¶ 9. These materials invited ranchers, feed yards, and buyers in the cattle industry to contact the plaintiffs for further information. Id.

Facts Giving Rise to State Law Claims: Summer & Fall 2013

On or about April 12, 2013 the plaintiffs met with representatives from ASA to discuss

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the Programs.[3]Id. at ¶ 10. Only publicly available information was shared with ASA at this meeting. About a month later, on May 10, 2013, representatives of the parties met at the offices of Verified Beef in Montana to discuss the potential of entering into a business relationship. Id. at ΒΆ 12. During the meeting, Verified Beef (and not Leachman Cattle) and ASA entered into a confidentiality and non-disclosure agreement (" Confidentiality Agreement" ). The Confidentiality Agreement assured that the parties would keep confidential any information shared at that meeting, and that they would only use said information " for the purposes of discussion of potential business relationship and will not disclose or disseminate such confidential information except upon written consent of The Parties." [ECF No. 28-1]. Once the ...


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