Seatig v. BizLog

Background

Seatig alleged that it entered into agreements with BizLog, formerly known as eSocial, LLC, to provide employees who developed components of TripLog technology. A 2015 agreement included a non-solicitation provision barring BizLog and its affiliated entities from hiring Seatig’s current or former employees, consultants, workers, or freelancers for up to 20 years after they worked on BizLog projects as Seatig employees.

Seatig alleged that, after BizLog tried to hire one employee and later ended the agreement, the defendants solicited and hired three Seatig employees. Seatig’s Second Amended Complaint asserted a breach-of-contract claim against all defendants and a breach of the implied covenant of good faith and fair dealing against TripLog and Advance.

Personal Jurisdiction

The court held that BizLog consented to personal jurisdiction in the specified New York courts through the agreement’s mandatory forum-selection clause. The defendants argued that the entire agreement was illegal because Seatig allegedly lacked licenses required under New York and Chinese law. The court rejected that argument at this stage because the defendants did not identify a defect specifically affecting the forum-selection clause.

TripLog and Advance did not sign the agreement. The court declined to extend the closely related doctrine to establish personal jurisdiction over them because that doctrine does not by itself satisfy the constitutional requirement that a defendant have sufficient contacts with the forum. Seatig’s complaint made only bare assertions that TripLog and Advance were third-party beneficiaries, assignees, closely related to BizLog, or had assumed the agreement. The court also found that Seatig had not plausibly alleged that TripLog and Advance were alter egos of BizLog. The complaint alleged overlapping ownership and business operations, but did not adequately allege disregard of corporate formalities, inadequate capitalization, intermingling of funds, or similar facts showing that the companies’ separate legal identities had collapsed.

The court further found that the complaint did not connect TripLog or Advance to New York apart from alleging that Seatig was based there. It therefore granted the motion to dismiss all claims against TripLog and Advance for lack of personal jurisdiction.

Subject Matter Jurisdiction

The complaint invoked diversity jurisdiction, which requires complete diversity between the parties and an amount in controversy exceeding $75,000. The court found that complete diversity was satisfied and that Seatig had plausibly alleged an amount in controversy exceeding $75,000 through claimed lost revenue, goodwill, and other damages. The court rejected the defendants’ argument that the damages allegations were legally incapable of reaching the required amount at this stage.

Because the court dismissed TripLog and Advance for lack of personal jurisdiction, it did not decide the subject-matter-jurisdiction issues specific to those defendants. The court denied the motion to dismiss for lack of subject matter jurisdiction with respect to BizLog.

Breach-of-Contract Claim Against BizLog

The court denied the motion to dismiss Seatig’s breach-of-contract claim against BizLog. Applying New York law, the court found that Seatig adequately alleged the formation of a contract, its own performance, BizLog’s breach through solicitation and hiring of Seatig employees, and resulting damages.

The defendants argued that the non-solicitation provision was an unenforceable restrictive covenant because it applied to hiring for any purpose, lasted up to 20 years, and had no geographic limit. The court noted that the provision raised serious questions, but held that enforceability was fact-dependent and generally could not be decided on a motion to dismiss. The court also noted that New York law may allow partial enforcement of an unreasonable restrictive covenant in some circumstances, depending on the parties’ conduct and the possibility of severing overbroad provisions.

The court also rejected the defendants’ arguments that Seatig had not adequately alleged causation and that the agreement was void because Seatig allegedly lacked required licenses. The court found that Seatig sufficiently alleged a connection between the alleged breach and its damages. It declined to consider declarations about the alleged licensing violations because they were not part of, incorporated into, or integral to the complaint; considering them would have required converting the motion to dismiss into a motion for summary judgment.

Disposition

The court granted in part and denied in part the defendants’ motion to dismiss. It granted the motion with respect to TripLog and Advance for lack of personal jurisdiction and dismissed Seatig’s claims against those defendants without prejudice to refiling in a court that has jurisdiction over them. It denied the motion with respect to Seatig’s breach-of-contract claim against BizLog. BizLog was ordered to answer the Second Amended Complaint within 14 days, and TripLog and Advance were terminated as parties.