United States District Court, D. Colorado
ASPEN CORPORATIONS, INC., a Delaware corporation d/b/a Aspen Media Plaintiff,
v.
CARRIE MUNDT, DIZA BESNER, JOSH OUDEH, KEITH STREHLE, RANDY BARE, FELIX FERNANDEZ, Defendants.
ORDER GRANTING MOTION TO DISMISS
WILLIAM J. MARTÍNEZ, UNITED STATES DISTRICT JUDGE
In this
action, Plaintiff Aspen Corporations, Inc.
(“Plaintiff” or “Aspen”), brings
various claims against Defendants Carrie Mundt, Diza Besner,
Josh Oudeh, Keith Strehle, Randy Bare (collectively,
“Former Employees”), and Felix Fernandez
(“Fernandez”) (collectively,
“Defendants”). (ECF No. 1.) Before the Court is
Defendants' Motion to Dismiss (the “Motion”;
ECF No. 35). For the reasons set forth below, the Court
grants the Motion and dismisses the case without prejudice
for lack of personal jurisdiction.
I.
BACKGROUND
The
following factual summary is drawn from Plaintiff's
complaint. (ECF No. 1.)
Plaintiff
describes itself as a company “engaged in the business
of business process outsourcing and marketing and research
for business to business and business to customer services,
” and names an entity called “ECCO Corp.”
(“ECCO”) as another company “engaged in the
business of process outsourcing.” (Id. at 2-3,
¶¶ 1 & 7.) Plaintiff alleges that ECCO is
co-owned by Fernandez and that Fernandez uses ECCO “to
raid and compete with Aspen.” (Id. at 3,
¶ 7.) Plaintiff is a Delaware corporation and alleges
that its principal place of business is in Colorado.
(Id. at 2, ¶ 1.) The Defendants are citizens of
California, Florida, Iowa, Nebraska, Ohio, and Virginia.
(Id. at 2-3, ¶¶ 2-7.)
In
January 2017, Plaintiff and the “Dominican Republic
affiliate of ECCO, ECCO Outsourcing Group, S.R.L. entered
into an Outsourcing Partnership Agreement [the
‘Agreement'].” (Id. at 7, ¶
22.) Plaintiff asserts that the Agreement “contained a
section defining proprietary information, and restricting the
use thereof.” (Id.) In addition, Plaintiff
alleges that the Agreement contained an
“exclusivity” and “non circumvention”
provisions “wherein ECCO agreed not to solicit, attempt
to solicit, divert or appropriate, directly or indirectly,
the business relationship with any Customer, person or entity
providing goods or services to Aspen-which would include
Aspen clients and employees.”
(Id.)[1] Plaintiff alleges, however, that the
Agreement “became a ‘front' or beachhead in
[ECCO's] plan to raid Aspen” and steal its
employees and clients. (Id.)
Furthermore,
Plaintiff alleges that all of its employees are required to
read and acknowledge the Aspen Media Employee Handbook
(“Handbook”). (Id. at 5, ¶ 16.)
Included in Section 18 of the Handbook is the following
prohibition: “After you leave [your employment with
Plaintiff], you are still legally prohibited from disclosing
sensitive, proprietary, trade secret, or confidential
information.” (Id.; see ECF No. 1-1
at 2.) In addition, Plaintiff alleges that each of its
employees are “required to sign a Confidentiality
Agreement [‘NDA'] restricting the disclosure and
use of the confidential information and/or trade secrets of
Aspen.” (ECF No. 1 at 5, ¶ 16; see, e.g.,
ECF No. 1-2.) Though not explicitly stated, it appears that
Plaintiff is suggesting that each of the Former Employees
read and acknowledged the Handbook and executed a NDA.
The
Former Employees were initially employed by Plaintiff, where
they held the following the positions: (1) client services
manager; (2) director of business development and client
management; (3) senior vice president of operations; and (4)
“client reporting, invoicing and accounts
payable/finance” employee. (ECF No. 1 at 6-7,
¶¶ 17-21.) Plaintiff alleges that the Former
Employees were “intimately familiar with Aspen's
clients and its confidential information.”
(Id.)
From
November 14, 2017, until February 23, 2018, the Former
Employees departed from their positions with Plaintiff and
started working for ECCO. (Id.) As a result of their
departure, Plaintiff alleges that it “began to lose
business, projects and even relationships with several large
clients.” (Id. at 7, ¶ 23.) Plaintiff
asserts that “[t]hese lost relationships and business
can be directly tied to the confidential information
improperly used and the contacts the Former Employees, in
their positions of trust, had with these clients.”
(Id. at 8, ¶ 23.) Thus, Plaintiff alleges that
“Defendants collectively conspired to utilize
Aspen's confidential information and abuse their
positions of trust to ‘raid' Aspen by stealing key
employees and clients to benefit themselves.”
(Id. at 2.)
Plaintiff
filed this action on June 14, 2018. (ECF No. 1.) Plaintiff
brings claims against the Defendants for breach of contract,
breach of fiduciary duty, misappropriation of trade secrets
under the Colorado Uniform Trade Secrets Act (Colo. Rev.
Stat. § 7-74-101), intentional interference with
prospective business relationships, unjust enrichment, civil
theft (Colo. Rev. Stat. 18-4-401), civil conspiracy, and
intentional interference with contractual relations.
(Id. at 8-12.) On August 22, 2018, Defendants moved
to dismiss this action pursuant to Federal Rules of Civil
Procedure 12(b)(1), 12(b)(2), 12(b)(3), 12(b)(6), and
12(b)(7). (ECF No. 35.) Plaintiff subsequently filed a
response to the Motion (“Response”; ECF No. 40),
to which Defendants replied (ECF No. 41).
II.
LEGAL STANDARD
A.
Considering Personal Jurisdiction Before Subject-Matter
Jurisdiction
In the
Motion, Defendants raise the possibility that Plaintiff is a
citizen of California or Florida, which, if true, would
destroy diversity jurisdiction. Thus, the Court must
determine at the outset the appropriate sequence for
addressing the issues presented by this case. With possible
exceptions not applicable here, “jurisdiction generally
must precede merits in dispositional order.”
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577
(1999); see also Gadlin v. Sybron Int'l Corp.,
222 F.3d 797, 799 (10th Cir. 2000). “Jurisdiction to
resolve cases on the merits requires both authority over the
category of claim in suit (subject-matter jurisdiction) and
authority over the parties (personal jurisdiction), so that
the court's decision will bind them.” Id.
While
“there is no unyielding jurisdictional hierarchy”
requiring federal courts to sequence one jurisdictional issue
before the other, “in most instances subject-matter
jurisdiction will involve no arduous inquiry” and
“both expedition and sensitivity to state courts'
coequal stature should impel the federal court to dispose of
that issue first.” Ruhrgas, 526 U.S. at 578,
587-88. However, if “a district court has before it a
straightforward personal jurisdiction issue presenting no
complex question of state law, and the alleged defect in
subject-matter jurisdiction raises a difficult and novel
question, the court does not abuse its discretion by turning
directly to personal jurisdiction.” Id. at
588.
Upon
review of the parties' arguments regarding both
jurisdictional issues, the Court deems it appropriate to
address personal jurisdiction first. The personal
jurisdiction question presents straightforward issues
regarding the sufficiency of Defendants' contacts with
Colorado. Conversely, subject-matter jurisdiction presents
difficult and novel issues regarding the citizenship of
Plaintiff. This is because the parties' competing
submissions raise the possibility that no location can be
considered Plaintiff's principal place of business or
nerve center. Also, as discussed below, Plaintiff has only
recently attempted to transform itself into an explicitly
Colorado-based entity. Given these considerations, the Court
finds it appropriate and efficient to first address personal
jurisdiction.
B.
Personal Jurisdiction Standard
The
purpose of a motion to dismiss pursuant to Rule 12(b)(2) is
to test whether the Court has personal jurisdiction over the
named parties. The plaintiff bears the burden of establishing
personal jurisdiction over a defendant. Behagen v.
Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th
Cir. 1984). As is true here, when the court does not hold an
evidentiary hearing before ruling on jurisdiction, “the
plaintiff need only make a prima facie
showing” of personal jurisdiction to defeat a motion to
dismiss. Id. A plaintiff “may make this
prima facie showing by demonstrating, via affidavit
or other written materials, facts that if true would support
jurisdiction over the defendant.” OMI Holdings,
Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091
(10th Cir. 1998). To defeat the plaintiff's prima
facie case, a defendant “must present a compelling
case demonstrating ‘that the presence of some other
considerations would render jurisdiction
unreasonable.'” Id. (quoting Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).
To
obtain personal jurisdiction over a nonresident defendant,
the plaintiff “must show that jurisdiction is
legitimate under the laws of the forum state and that the
exercise of jurisdiction does not offend the due process
clause of the Fourteenth Amendment.” Benton v.
Cameco Corp., 375 F.3d 1070, 1075 (10th Cir. 2004).
Colorado's long arm statute confers the maximum
jurisdiction permitted by the due process clauses of the
United States and Colorado constitutions. Archangel
Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo.
2005) (referring to Colo. Rev. Stat. § 13-1-124). Thus,
the Court need only address the constitutional question of
whether the exercise of personal jurisdiction over the
defendant comports with due process. Dudnikov v. Chalk
& Vermillion Fine Arts, Inc., 514 F.3d 1063, 1070
(10th Cir. 2008) (the state jurisdictional analysis in
Colorado “effectively collapses into the second,
constitutional, analysis”).
At this
stage, the Court accepts the well-pled (that is, plausible,
non-conclusory, and non-speculative) factual allegations of
the complaint as true to determine whether Plaintiff has made
a prima facie showing that personal jurisdiction
exists. Id. Any factual conflicts arising from
affidavits or other submitted materials are resolved in
Plaintiff's favor. Wenz v. Memery Crystal, 55
F.3d 1503, 1505 (10th Cir. 1995).
III.
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