Avanti Systems USA v. Sanchez

Background

Avanti Systems USA, LLC sued Nicolas Sanchez, Solite Systems LLC, and Mark Johnson for alleged breach of contract, misappropriation of trade secrets, tortious interference with contract, and related injunctive and declaratory relief. Avanti alleged that Sanchez worked for Avanti, accessed its technical and intellectual-property files, helped form Solite while still employed by Avanti, and later competed with Avanti. Avanti also alleged that Sanchez and Solite failed to make payments required by a settlement agreement resolving earlier litigation.

The defendants moved to dismiss for lack of personal jurisdiction—the court’s authority over a defendant. Avanti argued that jurisdiction existed because Sanchez signed a restrictive-covenant employment agreement containing a clause selecting New York courts, and because the settlement agreement also contained a New York jurisdiction clause. Avanti separately moved for sanctions under Federal Rule of Civil Procedure 11, arguing that the defendants’ jurisdiction arguments were frivolous.

Personal jurisdiction over Sanchez

The employment agreement stated that jurisdiction would be proper in New York State or the United States District Court for the Southern District of New York. Sanchez argued that he never properly agreed to the agreement. The court rejected that argument at this stage. Sanchez signed and returned the agreement’s signature page, and a person who signs a contract is generally presumed to have agreed to its terms. The court also said that, on this type of jurisdiction motion, it had to view the facts in the light most favorable to Avanti rather than resolve conflicting evidence from affidavits.

The court concluded that Avanti had made a preliminary showing that the court had personal jurisdiction over Sanchez. It stated that the defendants’ conflicting evidence could be addressed at an evidentiary hearing rather than on the motion to dismiss.

Personal jurisdiction over Solite

The court rejected both of Avanti’s jurisdiction arguments concerning Solite. First, the settlement agreement stated that it would become void, except for one specified provision, if Solite and Sanchez failed to make required payments. The parties did not dispute that no payments were made. The court therefore concluded that the settlement agreement’s general New York jurisdiction clause was also void. The agreement instead provided that, if it became void, Avanti could bring the action in New York State Supreme Court in Westchester County.

Second, the court rejected Avanti’s argument that Solite was sufficiently connected to Sanchez to be bound by the employment agreement’s forum-selection clause. Only Sanchez signed that agreement. The court also found that Avanti had not alleged facts supporting an alter-ego theory—treating one entity as legally indistinguishable from another—such as disregard of corporate formalities, inadequate capitalization, or intermingling of funds. The court concluded that Avanti had not shown a basis for personal jurisdiction over Solite.

Personal jurisdiction over Johnson

The court reached a different conclusion for Johnson. Avanti alleged that Johnson tortiously interfered with the employment agreement. The court held that the agreement’s forum-selection clause could cover that claim because resolving the claim requires analyzing the underlying agreement. The court therefore concluded that personal jurisdiction could be exercised over Johnson.

Limited discovery and sanctions

Because Avanti made a preliminary showing of personal jurisdiction over Sanchez and Johnson, the court granted the defendants’ request for limited jurisdictional discovery. The opinion does not state that the court finally resolved every jurisdictional factual dispute.

The court denied Avanti’s sanctions motion. The defendants’ arguments concerning Solite were not frivolous because the court granted the motion as to Solite. The defendants’ arguments concerning Sanchez also were not so unreasonable as to justify sanctions because the issue involved conflicting evidence and could benefit from a fuller factual record.

Disposition

Judge Kenneth M. Karas denied the defendants’ motion to dismiss in part and granted it in part. The ruling denied the motion as to the preliminary showing of personal jurisdiction over Sanchez and Johnson, and granted it as to Solite. The court also granted limited jurisdictional discovery and denied Avanti’s cross-motion for sanctions. The court directed the clerk to terminate the pending motions and scheduled a status conference for November 19, 2025.