Crosfield Hastech, Inc. v. Harris Corp.

Citations: 672 F. Supp. 580; 1987 U.S. Dist. LEXIS 10302Docket: Civ. No. 87-90-D

Court: District Court, D. New Hampshire; November 10, 1987; Federal District Court

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Crosfield Hastech, Inc. (CHI) filed a seven-count amended complaint against former employee Randolph W. Duerr and his current employer Harris Corporation in the United States District Court, New Hampshire. The claims include copyright infringement (Counts I and II), misappropriation of trade secrets and unfair competition (Count III), breach of contractual and fiduciary duties (Counts IV and V), inducing breaches of obligations and tortious interference (Count VI), and a declaratory judgment regarding the validity of a Harris patent (Count VII). CHI seeks various forms of relief, including injunctive relief, damages, and inspection rights of Harris’s facilities.

Defendants Harris and Duerr filed nine motions, including six seeking dismissal of the complaint based on lack of personal jurisdiction and requests to transfer the case to Florida under federal copyright venue laws and on grounds of forum non conveniens. They also submitted affidavits from Harris’s Senior Counsel and Duerr. CHI opposed these motions, providing a consolidated legal memorandum and an affidavit from its Vice-President.

Additionally, Harris and Duerr brought three non-jurisdictional motions: a motion to strike the Wilson Affidavit, a request to file a response to CHI’s opposition, and a motion for the production of Duerr's employment contract and information regarding the corporate impact of the alleged events. CHI operates from Manchester, New Hampshire, focusing on computer hardware and software for the newspaper publishing industry, notably marketing a system called 'PagePro.'

CHI claims significant sales success of its PagePro system since its launch in 1981, attributing much of this to the software's ability to meet customer needs for automatic pagination of advertisements and news. The PagePro software, developed by CHI with considerable investment of resources, was led by Duerr, who worked at CHI from April 1972 to March 1982, ultimately serving as the lead programmer. Duerr held significant responsibility for the software's design and had access to confidential information during his tenure. He signed proprietary information agreements with CHI, which mandated that he assign all rights to discoveries made during his employment and prohibited him from disclosing or using CHI’s confidential information for personal gain.

After resigning from CHI, Duerr joined Harris, a much larger competitor, which subsequently launched a system called the Harris 8300 that CHI alleges is competitive with PagePro. CHI contends that Duerr improperly relied on CHI’s confidential information in the development of the 8300 software. Since the 8300's release in 1984, Harris has reportedly sold numerous units, threatening CHI’s market position. CHI also asserts that Harris intentionally recruited Duerr despite his noncompetition and nondisclosure agreements to gain access to proprietary information. Duerr currently works at Harris’s headquarters in Florida, claiming that his role does not require travel to New Hampshire, where he would face personal and professional burdens if compelled to appear in court.

The excerpt addresses the Court's consideration of the first six of the defendants' nine motions regarding its jurisdiction over the action. Three key issues are identified: (1) the assertion of personal jurisdiction over the defendants, (2) the propriety of venue in the district, and (3) the potential transfer of the action to another district under the doctrine of forum non conveniens. The Court prioritizes personal jurisdiction, as it pertains to its authority over the parties, which is typically resolved before venue considerations.

The plaintiff bears the burden of demonstrating that personal jurisdiction exists, requiring only a prima facie showing through specific facts in pleadings, affidavits, and exhibits. The Court may consider additional evidence beyond the pleadings without converting the motion to dismiss into a summary judgment motion. Allegations in support of jurisdiction are to be interpreted in favor of the plaintiff.

Defendant Harris contends that the Court lacks personal jurisdiction, claiming the plaintiff failed to demonstrate Harris's compliance with the New Hampshire long-arm statute, RSA 293-A:121. However, the applicable statute is RSA 293-A:119 I, which permits service of process on foreign corporations with registered agents in New Hampshire. Harris has acknowledged having a registered agent in the state, CT Corporation, which was properly served with the Amended Complaint. A corporation that designates an agent for service of process consents to personal jurisdiction concerning actions within the agent's authority.

CT has been appointed as Harris's registered agent, and Harris has not contested CT's authority to accept service on its behalf, thereby consenting to the Court's personal jurisdiction under RSA 293-A:119 I, irrespective of RSA 293-A:121. The New Hampshire legislature did not limit RSA 293-A:119's applicability solely to cases involving the long-arm statute. Consequently, Harris's motion to dismiss for lack of personal jurisdiction is denied.

To determine whether the Court can assert personal jurisdiction over Duerr, a two-step analysis is employed: first, whether the statutory requirements of RSA 510:4 I, New Hampshire's long-arm statute for nonresident individuals, are met; and second, whether Duerr's contacts with New Hampshire satisfy due process requirements. Duerr argues that he does not meet either requirement. RSA 510:4 I establishes jurisdiction for nonresidents who transact business, commit tortious acts, or possess property in New Hampshire, and the New Hampshire Supreme Court has interpreted this statute broadly to include various transactions.

In this case, all three jurisdictional grounds are satisfied. Duerr acknowledges he was employed by CHI in New Hampshire for approximately ten years and received income and benefits during that time, which constitutes transacting business. Regarding tortious injury, Duerr admits that CHI's claims for copyright infringement and theft of trade secrets qualify as torts but argues the statute does not apply because the actions did not occur in New Hampshire. This argument is rejected, as the Court must assume the truth of the allegations in the complaint, which assert that tortious actions and injuries, such as loss of proprietary material and breach of fiduciary duty, occurred within the state. Thus, the allegations align with the statute's provisions.

The complaint against Duerr alleges that he possessed CHI's personal property and trade secrets during his employment. The claims are based on his alleged misappropriation of proprietary material, satisfying the requirements of RSA 510:4 I. To assert personal jurisdiction over Duerr, the court must ensure compliance with the due process standards set forth in the U.S. Constitution, particularly the Fourteenth Amendment, which restricts states from exercising jurisdiction over nonresidents without sufficient grounds.

The court follows a two-part analysis: first, CHI must demonstrate that Duerr purposefully availed himself of the privilege of conducting activities in New Hampshire, which implies he should have reasonably anticipated being subject to its laws. Second, Duerr must have established "minimum contacts" with the state, ensuring that litigation in New Hampshire does not violate principles of fair play and substantial justice.

Factors influencing the assessment of minimum contacts include the burden on Duerr, the interests of New Hampshire, and CHI's interest in seeking relief. Duerr's actions, such as accepting employment in New Hampshire, working there for a significant duration, and entering into contractual and fiduciary obligations, indicate he purposefully engaged with the state. Allegations suggest that his misappropriation of CHI's property and breaches of duty occurred while he was employed in New Hampshire, further supporting the court's jurisdiction.

Duerr should have reasonably anticipated that any litigation related to his employment would occur in a New Hampshire court. The allegations in the complaint suggest that Duerr's actions caused damages, specifically lost sales for CHI, which occurred at CHI's principal place of business in New Hampshire. Therefore, CHI is not required to pursue legal action in Florida, as Duerr's actions directly caused injury in New Hampshire. New Hampshire has a significant interest in protecting its trade secrets and intellectual property developed by local companies, as well as in addressing injuries that occur within the state. CHI has vested interests at stake, including proprietary rights and market leadership, and may be entitled to proceeds from the sale of misappropriated material if the allegations are proven. The potential burden on Duerr of defending in New Hampshire is outweighed by his substantial contacts with the state and the interests of both New Hampshire and CHI. Consequently, the court finds that CHI has established a prima facie case for personal jurisdiction, leading to the denial of Duerr's motion to dismiss for lack of jurisdiction.

Regarding venue, Harris and Duerr contend that the case should be transferred due to improper venue under 28 U.S.C. § 1400(a), which allows copyright-related cases to be filed where the defendant resides or can be found. Harris concedes proper venue for itself but claims a derivative right for dismissal or transfer based on venue being improper for Duerr. However, if venue is proper for Duerr, Harris's derivative claim fails. The court will determine whether venue is proper for Duerr, noting that as he does not reside or have an agent in New Hampshire, it must be established that he can "be found" there for § 1400(a) to apply.

For venue determination under section 1400(a), defendants can be "found" in any jurisdiction where personal jurisdiction is established. Since the court has established personal jurisdiction over Duerr due to his contacts with the forum, venue is deemed proper in this district for him, and he cannot claim rights for dismissal or transfer of the action. Defendants' motions to transfer for improper venue are denied.

Regarding the motions to transfer based on forum non conveniens under 28 U.S.C. 1404(a), defendants argue that the majority of their key witnesses and evidence are in Florida, asserting that transporting them to New Hampshire would disrupt their business operations. They also claim that Duerr might struggle to present live testimony due to individual constraints. The court must consider the convenience of parties, witnesses, and evidence in such motions, but defendants carry the burden of proving that these factors strongly favor transfer. The Supreme Court emphasizes that a plaintiff's choice of forum should only be disturbed if the balance of conveniences strongly favors the defendant. Merely shifting inconvenience from the defendant to the plaintiff is insufficient to justify a transfer. The defendants fail to specify the Florida witnesses or the volume of documents needed, while CHI, the plaintiff, indicates that its key witnesses are based in New Hampshire, strengthening its position for maintaining the current venue.

Witnesses and documentation relevant to Duerr's agreements with CHI, access to proprietary information, and damages incurred by CHI due to alleged misappropriation are located in New Hampshire. The Court notes that defendants have not countered CHI's claim regarding the location of the National Accounts Division of the Harris Information Systems group in Nashua, New Hampshire. Although defendants assert potential hardship in transporting witnesses and documents to New Hampshire, they have not demonstrated that such hardship would be greater than what CHI would encounter if the case were moved to Florida. The interests of justice favor maintaining the case in New Hampshire, where Harris, being a larger firm, is better equipped to handle litigation expenses. New Hampshire has a vested interest in adjudicating injuries that occur within its jurisdiction.

The Court finds that defendants did not prove the balance of conveniences strongly favors them, nor that justice would be better served in Florida, thus denying their motions to transfer the case under the doctrine of forum non conveniens. Defendants' motion to strike the Wilson Affidavit is also denied, as the affidavit contains specific allegations that clarify the complaint, despite defendants' claims of vagueness. Other objections regarding the affidavit can be addressed through discovery or at trial. 

Defendants' request to file a response memorandum is unnecessary, as their previous submissions sufficiently present their arguments. Furthermore, the Court has independently reviewed the issues and finds no support for the defendants' position. Defendants' motion for CHI to disclose specific information about damaged corporate entities is denied due to lack of legal justification, while CHI's objection regarding the vagueness of defendants' request for corporate history is deemed valid.

Permitted discovery is broadly defined under the Federal Rules of Evidence, allowing the acquisition of non-privileged, relevant information regardless of its admissibility at trial, provided that it can lead to admissible evidence (Rule 26(b), Fed. R. Civ. P.). However, requests must be described with reasonable particularity (Rule 34(b), Fed. R. Civ. P.). The Court found that the defendants' request for corporate "history" was too vague to warrant a proper response, leading to the denial of their motion to compel production. Consequently, motions 14 through 32 by the defendants are denied, and both parties are instructed to conduct discovery per the Federal Rules. The defendants are reminded to answer the Amended Complaint within ten days (Rule 12(a), Fed. R. Civ. P.). The case involves multiple counts, including copyright claims under 17 U.S.C. and common law protections against misappropriation, with jurisdiction based on 28 U.S.C. provisions. Venue is deemed appropriate in this district (28 U.S.C. 1391(b) and 1400(a)). CHI, the successor to Hastech, Inc. and Hendrix Electronics, Inc., is implicated in the ongoing proceedings. Additionally, the defendants' motion regarding the production of Duerr's employment agreements was acknowledged but not addressed since CHI agreed to produce the documents.