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New Phase Development, LLC v. Cook

United States District Court, D. Idaho

September 25, 2014

NEW PHASE DEVELOPMENT, LLC, and WAYNE JONES, Plaintiffs,
v.
JEFF COOK and NICOR INC., Defendants.

MEMORANDUM ORDER

EDWARD J. LODGE, District Judge.

INTRODUCTION

Pending before the Court in the above-titled matter is Defendants' Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2) for lack of personal jurisdiction, and in the alternative, Motion to Dismiss Because of Improper Venue pursuant to Federal Rules of Civil Procedure 12(b)(3). Plaintiffs have responded to the Motion, and Defendants have replied. The matter is now ripe for the Court's review. Having fully reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this Court without oral argument.

FACTUAL AND PROCEDURAL BACKGROUND

This case arises from failed negotiations to create a joint business venture. Plaintiff Wayne Jones ("Jones") is an Idaho resident, and plaintiff New Phase Development LLC ("New Phase") is domiciled in Idaho. Defendant Jeff Cook ("Cook") is a Texas resident, and defendant Nicor Inc. ("Nicor") has its principal place of business in Texas.

Nicor is a distributor of plastic lids for water meters but is not a plastics molder or manufacturer. (Jeff Cook Affidavit, Dkt. 11-1, Ex. A, p. 2). Nicor initially learned from one of its industry contacts that New Phase, a plastics/tooling company, could be a potential manufacturing partner. Id. ; (Wayne Jones Affidavit, Dkt. 12-1, p. 2). Shortly thereafter, Cook called Jones and discussed a potential business opportunity. (Jones Aff., p. 2). In anticipation of an in-person meeting in Montana and further discussions of the potential business opportunities, the parties entered into a Mutual Non-Disclosure Agreement ("NDA") dated February 28, 2013. (Jones Aff., Ex. A). Cook and Jones each signed individually and on behalf of their respective companies. Id. Jones pursued NDA negotiations because he "possessed the specific expertise...that Nicor lacked" and saw intellectual property as "key to any potential transaction." (Jones Aff., p. 3).

Following the in-person meeting, the parties communicated by phone and email on numerous occasions. (Jones Aff., p. 4) During those communications, Plaintiffs disclosed to Defendants specific processes, methodologies and mold designs. Id. The parties evaluated a variety of business structures, including a joint business venture, and traded business agreements. (Jones Aff., p. 2); (Cook Aff., p. 5). Defendants suggested a potential business structure and unsuccessfully sought loans for the joint business venture from Wells Fargo and Bingham & Taylor ("Bingham"). (Cook Aff., p. 3-4). The parties entered into new NDAs with Wells Fargo & Bingham before sharing confidential information. Id. Cook and a Bingham representative met Jones in Idaho, and the Bingham representative toured a potential Idaho manufacturing site. (Jones Aff., p. 4-5).

Soon after, the business relationship deteriorated. The parties met in Texas to salvage a deal but failed. (Jones Aff., p. 5). In their final communications, Cook allegedly stated that he intended to use his knowledge of confidential information, subject to the NDAs, to engage another manufacturer. Id. Plaintiffs filed a claim alleging breach of contract, violation of Idaho's Trade Secrets Act, unjust enrichment and seeking an injunction. (Dkt. 1). Defendants then filed the instant Motion to Dismiss asserting that this Court lacks personal jurisdiction. (Dkt. 11). In the Alternative, Defendants claim that venue is improper and move for transfer. (Dkt. 11). The Court has considered the parties' arguments and finds as follows.

STANDARD OF REVIEW

When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff "bears the burden of demonstrating that jurisdiction is appropriate." Dole Food, Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). The plaintiff "need only make a prima facie showing of jurisdictional facts." Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990).

Where, as here, there is no applicable federal statute governing personal jurisdiction, the law of the state in which the district court sits applies. Boschetto v. Hansing, 539 F.3d 1101, 1015 (9th Cir. 2008). The Idaho Supreme Court has determined that Idaho's long-arm statute (Idaho Code ยง 5-514) allows a broader application of personal jurisdiction than permitted under the Due Process Clause. See Smalley v. Kaiser, 950 P.2d 1248 (Idaho 1997). Thus, the Court need only decide whether asserting personal jurisdiction complies with due process. Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir. 1987).

ANALYSIS

1. Personal Jurisdiction

A. Types of Jurisdiction: General and Specific

There are two types of personal jurisdiction-general and specific. Lake, 817 F.2d at 1420. General jurisdiction is exercised by a state when personal jurisdiction is asserted over a "defendant in a suit not arising out of or related to the defendant's contacts with the forum." Helicoptores Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 n. 9 (1984). This occurs when the defendant has "substantial" or "continuous and systematic" contacts with the state to the extent that these contacts approximate physical presence. Bancroft & Masters, Inc. v. Augusta Nat. Inc., 223 F.3d 1082 (9th Cir. 2000). Plaintiffs do not seek to invoke general jurisdiction in this case. B. Requirements for Specific Jurisdiction

Specific jurisdiction is exercised by a state when it asserts personal jurisdiction over a defendant in a lawsuit arising out of or related to the defendant's contacts with the forum state. Helicoptores, 466 U.S. at 414 n. 8. Specific jurisdiction depends on the quality and nature of the defendant's contacts with the forum state in relation to the cause of action. Lake, 817 F.2d at 1421. The Ninth Circuit established a three-part test to determine whether a court may exercise specific personal jurisdiction over a nonresident defendant:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise ...

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