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LeDuc Gifts & Specialty Products, LLC v. New Thermo-Serv, Ltd.

United States District Court, D. Minnesota

May 29, 2019

LeDuc Gifts & Specialty Products, LLC, Plaintiff,
v.
New Thermo-Serv, Ltd., Defendant.

          ORDER GRANTING MOTION TO DISMISS

          Wilhelmina M. Wright United States District Judge

         This matter is before the Court on Defendant's motion to dismiss for lack of personal jurisdiction. (Dkt. 6.) For the reasons addressed below, Defendant's motion is granted and the complaint is dismissed without prejudice.

         BACKGROUND

         Plaintiff LeDuc Gifts & Specialty Products, LLC (LeDuc), is a Minnesota limited liability corporation. Until 2018, LeDuc's primary business model was designing, manufacturing, and selling thermal tumblers. Defendant New Thermo-Serv, Ltd. (NTS), is a Texas limited partnership that also sells thermal tumblers. NTS's principal place of business and general partner are located in Texas.

         In 2014, one of LeDuc's related entities, 4Brava, LLC (4Brava), entered a partnership with DSC Products Holding, LLC (DSC). The partnership created and sold thermal tumblers for mass-market retailers. The relationship between LeDuc and DSC deteriorated in 2015 when Daniel Sachs, the owner of DSC, allegedly embezzled funds from the partnership and misappropriated LeDuc's trade secrets. LeDuc contends that Sachs unlawfully duplicated and made minor improvements to LeDuc's molds and manufacturing equipment.

         LeDuc and 4Brava commenced lawsuits against Sachs and DSC in June 2015 (the “Sachs litigation”). As the Sachs litigation proceeded in the United States District Court for the District of Minnesota, Sachs offered to sell thermal tumbler molds and equipment to NTS. NTS purchased the molds and equipment from Sachs in the fall of 2016. A draft asset purchase agreement (APA) acknowledges the ongoing Sachs litigation. But the final APA does not refer to the litigation. NTS used the molds and equipment purchased from Sachs to sell thermal tumblers, ultimately competing with LeDuc.

         After learning of the 2016 sale between Sachs and NTS, LeDuc and 4Brava sent cease and desist letters to NTS.[1] NTS continued to use the molds and equipment and to sell the competing tumblers.

         LeDuc initiated this lawsuit on October 4, 2018, alleging claims against NTS for misappropriation of trade secrets, unjust enrichment, tortious interference with prospective economic advantage, and tortious interference with contracts.

         ANALYSIS

         NTS moves to dismiss the complaint for lack of personal jurisdiction. In opposition to the motion, LeDuc delineates six contacts with Minnesota which, LeDuc argues, justify the exercise of specific personal jurisdiction over NTS. These proffered contacts are (1) NTS's negotiations of the APA with Sachs; (2) NTS's communications with Aroplax, the company storing the molds and equipment; (3) NTS's communications with LeDuc about the molds it purchased from Sachs; (4) Sachs's performance of the APA, including shipping the molds and equipment from Minnesota; (5) NTS's sale of thermal tumblers to Minnesota customers; and (6) NTS's alleged interference with LeDuc's business, which caused harm to LeDuc in Minnesota.

         To survive a motion to dismiss for lack of personal jurisdiction, Fed.R.Civ.P. 12(b)(2), a “plaintiff must make a prima facie showing that personal jurisdiction exists, ” K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591 (8th Cir. 2011). In doing so, a plaintiff must plead facts sufficient “to support a reasonable inference that the defendant can be subjected to jurisdiction within the state.” K-V Pharm. Co., 648 F.3d at 592 (internal quotation marks omitted) (alteration omitted). Although the quantum of evidence necessary to make this prima facie showing is minimal, pleadings alone are insufficient. Id. Such evidence must be supported by the affidavits and exhibits and sufficient to withstand a challenge that is similarly robust. Id. When analyzing whether a plaintiff has satisfied this requisite showing, the district court views the evidence in the light most favorable to the plaintiff and resolves all factual conflicts in the plaintiff's favor. Digi-Tel Holdings, Inc. v. Proteq Telecomms. (PTE), Ltd., 89 F.3d 519, 522 (8th Cir. 1996).

         Federal courts apply state law when determining the bounds of their personal jurisdiction. Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014). Because Minnesota's long-arm statute, Minnesota Statutes Section 543.19, extends jurisdiction to the maximum limit permitted by due process, a federal court in Minnesota need only determine whether its exercise of personal jurisdiction comports with due process. Wessels, Arnold & Henderson v. Nat'l Med. Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995).

         Due process requires that a non-resident defendant have sufficient minimum contacts with the forum state such that subjecting the defendant to the lawsuit in that forum does not offend “traditional notions of fair play and substantial justice.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92 (1980) (internal quotation marks omitted). “Sufficient minimum contacts requires some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 821 (8th Cir. 2014) (internal quotation marks omitted). And the defendant's contact with the forum state must be “such that [the defendant] should reasonably anticipate being haled into court there.” World-Wide Volkswagen, 444 U.S. at 297.

         Courts employ a five-factor test to determine the sufficiency of a defendant's contacts with the forum state: (1) the nature and quality of contacts with the forum state, (2) the quantity of contacts, (3) the relation of the cause of action to the contacts, (4) the interest of the forum state in providing a forum for its residents, and (5) the convenience of the parties. Land-O-Nod Co. v. Bassett Furniture Indus., Inc., 708 F.2d 1338, 1340 (8th Cir. 1983). The first three factors have “primary” importance, whereas the latter two are “secondary” factors. Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010); accord Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996). The third factor, the relation of the contacts to the cause of action, can be satisfied by either general or specific jurisdiction. Burlington, 97 F.3d at 1102-03. Specific personal ...


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