Aspen Corporations, Inc. v. Mundt

          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. ...