United States District Court, D. Minnesota
MEMORANDUM AND ORDER
A. MAGNUSON UNITED STATES DISTRICT COURT JUDGE.
matter is before the Court on Plaintiff's Motion for
Preliminary Injunction. For the following reasons, the Motion
dispute in this case revolves around software source code for
payroll systems. Twenty years ago, Plaintiff MPAY and many of
the Defendant entities, all of whom are payroll processors,
formed a limited liability company called OnePoint Solutions,
LLC, to license a payroll software called Millenium from
MPAY. The parties executed both a Member Control Agreement
for OnePoint (Am. Compl. (Docket No. 17) Ex. 3) and a
Software Development and License Agreement between MPAY and
OnePoint (id. Ex. 4). Both Agreements gave OnePoint
and its members the right to use MPAY's software.
(Id. Ex. 3 § 5.1; Ex. 4 § 2(a).)
License Agreement also contemplated a “Phase II”
of the parties' relationship, during which OnePoint could
modify the software to develop “Enhanced Software
Products.” (Id. §§ 2(e), 3.) As part
of Phase II, MPAY agreed to convey any copyrights in the
Enhanced Software Products to OnePoint. (Id. §
3(d).) Phase II was to begin less than two years after the
parties entered into the License Agreement. Although only
OnePoint is a Minnesota company, the member control agreement
provides for venue in Minnesota. (Am. Compl. Ex. 3.) The
License Agreement stipulates to jurisdiction and venue in
Minnesota, and also has a Minnesota choice-of-law provision.
(Id. Ex. 4.)
to MPAY, Defendants are breaching the terms of the Member
Control Agreement by providing the software source code to
other entities. According to Defendants, MPAY has continually
breached its obligations under the License Agreement by
failing to provide the complete source code to OnePoint for
development of the enhanced products. MPAY's claims are
based in copyright and trade secrets, but the copyrights on
which it relies did not issue until March 2019, shortly
before it filed this lawsuit.
first challenge the Court's personal jurisdiction,
contending that they do not have the requisite minimum
contacts with Minnesota to make the exercise of jurisdiction
over them proper. After additional briefing on the issue,
Defendant Proliant, Inc., no longer contests the exercise of
jurisdiction over it. Although Proliant is a Nevada
Corporation, it has a registered office in Minnesota. The
remaining Defendants, however, continue to argue that they do
not have sufficient contacts with Minnesota to warrant the
exercise of jurisdiction.
Court can exercise personal jurisdiction over a nonresident
defendant if (1) Minnesota's long-arm statute, Minn.
Stat. § 543.19, is satisfied; and (2) the exercise of
personal jurisdiction does not offend due process.
Stanton v. St. Jude Med., Inc., 340 F.3d 690, 693
(8th Cir. 2003). Because Minnesota's long-arm statute
extends the personal jurisdiction of Minnesota courts as far
as due process allows, see e.g., In re Minn.
Asbestos Litig., 552 N.W.2d 242, 246 (Minn.1996), the
Court need only evaluate whether the exercise of personal
jurisdiction comports with the requirements of due process.
See Guinness Import Co. v. Mark VII Distribs., Inc.,
153 F.3d 607, 614 (8th Cir. 1998).
process requires that the defendant have “certain
minimum contacts” with the forum state “such that
the maintenance of the suit does not offend
‘traditional notions of fair play and substantial
justice.'” Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (citation omitted).
Sufficient minimum contacts exist when the
“defendant's conduct and connection with the forum
State are such that [it] should reasonably anticipate being
haled into court there.” World-Wide Volkswagen
Corp. v. Woodson, 444 U.S. 286, 297 (1980). There must
be some act by which the defendant “purposefully avails
itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of
its laws.” Hanson v. Denckla, 357 U.S. 235,
253 (1958). In contrast, contacts that are merely random,
fortuitous, attenuated, or that are the result of
“unilateral activity of another party or a third
person” will not support personal jurisdiction.
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985) (citation omitted).
determine the sufficiency of a defendant's conduct with
the forum state, the Court examines five factors: (1) the
nature and quality of the contacts; (2) the quantity of the
contacts; (3) the relation between the contacts and the
action; (4) the forum state's interest in the litigation;
and (5) the convenience of the parties. Epps v. Stewart
Info. Servs. Corp., 327 F.3d 642, 648 (8th Cir. 2003).
The third factor distinguishes between general and specific
jurisdiction. Wessels, Arnold & Henderson v.
Nat'l Med. Waste, Inc., 65 F.3d 1427, 1432 & n.4
(8th Cir. 1995). General jurisdiction is present whenever a
defendant's contacts with the forum state are so
“continuous and systematic” that it may be sued
in the forum over any controversy, independent of whether the
cause of action has any relationship to the defendant's
activities within the state. Helicopteros Nacionales de
Columbia, S.A. v. Hall, 466 U.S. 408, 416 (1984).
Specific jurisdiction refers to jurisdiction over causes of
action arising from or related to the defendant's actions
within the forum state. Burger King, 471 U.S. at
472-73. The fourth and fifth factors are secondary to the
analysis. Minn. Mining & Mfg. Co. v. Nippon Carbide
Indus. Co., 63 F.3d 694, 697 (8th Cir. 1995). It is
MPAY's burden to plead facts supporting “a
reasonable inference that [Defendants] can be subjected to
jurisdiction within the state.” Dever v. Hentzen
Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004).
However, “[t]he evidentiary showing required at the
prima facie stage is minimal.” Johnson v.
Arden, 614 F.3d 785, 794 (8th Cir. 2010) (quotation
omitted). And the Court views the evidence in the light most
favorable to MPAY, resolving all factual conflict in
MPAY's favor when determining whether MPAY has met its
burden. K-V Pharm. Co. v. J. Uriach & CIA, S.A.,
648 F.3d 588 592 (8th Cir. 2011) (citation omitted).
argues that the exercise of specific jurisdiction is
appropriate because Defendants are members of OnePoint, which
consented to the jurisdiction of Minnesota courts in the
License Agreement's forum-selection clause. MPAY further
argues that specific jurisdiction lies because the Defendant
entities are members, and Clayton is the manager, of a
Minnesota LLC. MPAY also contends that the “totality of
the circumstances” warrants the exercise of
initial matter, it is clear that Clayton has sufficient
contacts with Minnesota to support the exercise of at minimum
specific, if not general, jurisdiction over him. Clayton is
the manager of OnePoint, a Minnesota LLC, and is CEO of
Proliant, Inc., which has a registered office in ...