United States District Court, D. Minnesota
American Federation of State, County, and Municipal Employees, Council 5, Plaintiff,
Employee Based Systems, LLC, Defendant.
M. Corwin, Esq., Joshua Hegarty Esq. and Gregg M. Corwin
& Associate Law Office, P.C., 1660 South Highway 100,
Suite 500, St. Louis Park, MN 55146.
S. Raether, Esq. and Hellmuth & Johnson PLLC, 8050 W.
78th Street, Edina, MN 55439, counsel for
S. Doty, Judge
matter is before the court upon the motion to dismiss by
defendant Employee Based Systems, LLC (EBS) for lack of
jurisdiction and improper venue. Based on a review of the
file, record, and proceedings herein, and for the following
reasons, the court denies the motion.
contract dispute arises out of EBS's alleged breach of
its contract with plaintiff American Federation of State,
County, and Municipal Employees, Council 5 (AFSCME). AFSCME
is a union based in St. Paul, Minnesota. Compl. ¶ 3. EBS
is a Colorado-based company that develops and provides
payroll software and related services. Id.
¶¶ 4, 9. EBS is not registered to do business in
Minnesota; does not own, use, or possess real property in
Minnesota; does not have bank accounts in Minnesota; and does
not advertise in Minnesota. Duty Decl. ¶¶ 6-8, 10.
summer of 2017, AFSCME decided to replace its existing
payroll system and issued a request for proposal (RFP) from
software vendors. Johnston Aff. ¶¶ 5-6. EBS
responded to the RFP at the urging, and with the assistance,
of a third party. Id. ¶¶ 7-9;
id. Ex. A; Duty Decl. ¶ 17. AFSCME accepted
EBS's proposal and the parties negotiated a twelve-page
contract under which AFSCME agreed to pay EBS $231, 712.48
for software and six years of maintenance and support
services. Johnston Aff. ¶¶ 11-19;
id. Ex. C; Duty Decl. ¶¶ 19-20. All of the
negotiations and related software demonstrations and
discussions were conducted virtually via telephone, computer,
and/or email. Duty Decl. ¶¶ 18-19. No one from EBS
traveled to Minnesota during contract negotiations. Nor did
EBS travel to Minnesota in performance of the
contract.Instead, EBS provided its software to
AFSCME remotely by using Dropbox, Internet Information
Services, and SQL servers, and also remotely provided support
services. Id. ¶¶ 21-27.
did, however, remotely access AFSCME's computer systems
and servers in Minnesota on numerous occasions. Altendorfer
Aff. ¶¶ 17-20. EBS also communicated frequently
with AFSCME in Minnesota. Id. ¶¶ 9-11, 14,
16, 21; id. Ex. A; Johnston Aff. ¶¶ 18,
22, 24-25. AFSCME calculates that its employees spent nearly
ninety hours communicating with EBS during their
relationship. Id. ¶ 21; id. Ex. A.
to AFSCME, EBS breached the contract by failing to develop
functional software. Compl. ¶¶ 11-14. On August 6,
2018, AFSCME filed this action alleging one count of breach
of contract. EBS now moves to dismiss for lack of personal
jurisdiction and improper venue.
Standard of Review
survive a motion to dismiss for lack of personal
jurisdiction, a plaintiff must establish a prima facie case
that the forum state has personal jurisdiction over the
defendant. Stevens v. Redwing, 146 F.3d 538, 543
(8th Cir. 1998). In the absence of an evidentiary hearing, a
court “must look at the facts in the light most
favorable to the nonmoving party and resolve all factual
conflicts in favor of that party.” Dakota Indus.,
Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387
(8th Cir. 1991). A federal court may assume jurisdiction over
a nonresident defendant “only to the extent permitted
by the long-arm statute of the forum state and by the Due
Process Clause.” Romak USA, Inc. v. Rich, 384
F.3d 979, 984 (8th Cir. 2004) (citation and internal
quotation marks omitted). Because the Minnesota long-arm
statute “confers jurisdiction to the fullest extent
permitted by the Due Process Clause, ” the court need
only consider due process requirements. See Coen v.
Coen, 509 F.3d 900, 905 (8th Cir. 2007).
satisfy due process, a defendant must have “sufficient
minimum contacts” with the forum state such that
maintaining the suit “does not offend traditional
notions of fair play and substantial justice.”
Romak, 384 F.3d at 984 (citation omitted).
“Sufficient contacts exist when [a] defendant's
conduct and connection with the forum state are such that
[it] should reasonably ...