Krypt, Inc. v. RoPaar LLC

Background

Krypt, Inc. alleged that former employee Clay Robinson took confidential information and trade secrets before leaving Krypt and joining Ropaar LLC. Krypt sued Robinson and Ropaar under the federal Defend Trade Secrets Act and the California Uniform Trade Secrets Act. Krypt also brought a breach-of-contract claim against Robinson, but that claim was not at issue in Ropaar’s motion.

Ropaar moved under Federal Rule of Civil Procedure 12(b)(2), which allows dismissal when a court lacks personal jurisdiction—the legal power to exercise authority over a defendant. Krypt did not argue that Ropaar was subject to general jurisdiction in California, so the court considered only specific jurisdiction, which may exist when a defendant’s forum-related conduct is connected to the claims.

Personal Jurisdiction Analysis

The court applied the Ninth Circuit’s three-part test for specific jurisdiction. The plaintiff must show that the defendant purposefully acted toward the forum, that the claims arose from or related to those forum contacts, and that exercising jurisdiction would be reasonable. Because the trade-secret claims sounded in tort, the court used the purposeful-direction, or “effects,” test. That test asks whether the defendant committed an intentional act expressly aimed at the forum and caused harm the defendant knew was likely to occur there.

The court concluded that Krypt had not shown that Ropaar committed the required intentional act. The alleged physical acts involving the confidential information—accessing files, uploading them, and copying Robinson’s laptop—were attributed to Robinson, not Ropaar. Krypt alleged that Ropaar and Robinson acted together, but the court found that allegation conclusory because Krypt provided no facts about when or how the alleged plan was formed, whether it was express or implied, or who acted for Ropaar. Ropaar submitted evidence that it did not direct Robinson to misappropriate the information, did not receive the information, and was unaware that Robinson had copied files. Krypt did not submit evidence contradicting those statements.

The court also rejected Krypt’s argument that a conspiracy or agency relationship could be inferred from Ropaar’s hiring of Robinson, Ropaar’s hiring of other Krypt employees, Robinson’s timing, or Robinson’s access to a Ropaar email account. The court found that these facts supported only suspicion, not a reasonable inference that Ropaar participated in the alleged misappropriation. It further noted that Krypt did not allege or provide evidence that Ropaar received, possessed, used, or used the information to compete with Krypt.

The court separately held that Ropaar’s hiring of Robinson was not conduct expressly aimed at California. Ropaar was headquartered in Texas and represented that it did not conduct or seek business in California. Robinson was an Arkansas resident, and his earlier work for Krypt in California did not create a meaningful connection between Ropaar and California. The court therefore found that Krypt failed to show both an intentional act and express aiming. Because that failure was dispositive, the court did not reach the third part of the effects test concerning reasonableness.

Disposition

The court granted Ropaar’s motion to dismiss the two claims against it for lack of personal jurisdiction, with leave to amend. The court determined that amendment was not clearly futile and allowed Krypt to file an amended complaint by February 7, 2020. Any amendment was limited to the defects discussed in the order and Ropaar’s motion. Krypt could not add new parties or claims without the court’s prior express permission.