DocuSign, Inc. v. Clark

Background

DocuSign hired Paul C. Clark as an expert consultant in two patent-infringement cases in the Eastern District of Texas. After the consulting relationship ended and one case was later reopened, Clark and representatives of three law firms signed a 2019 expert-consulting agreement. The agreement stated that Clark had conducted a comprehensive conflicts check and that neither he nor his company had a conflict of interest.

DocuSign alleged that Clark actually had conflicts involving three patents. After later disputes about unpaid invoices, Clark sued DocuSign in Maryland state court; that case settled. He later sued DocuSign for allegedly infringing the three patents. DocuSign then filed this case, ultimately asserting fraud, negligent misrepresentation, concealment, breach of contract, and breach of the implied obligation of good faith and fair dealing. The Second Amended Complaint dropped DocuSign’s patent-related claims.

Motion and legal standard

Clark moved under Federal Rule of Civil Procedure 12(b)(2), which allows dismissal for lack of personal jurisdiction—the court’s authority over a defendant. The court explained that DocuSign needed to allege facts that, if true, would support jurisdiction. Because no federal statute governed personal jurisdiction here, the court applied California law and federal constitutional due-process principles.

The court considered specific jurisdiction, which can exist when a defendant’s contacts with the forum state are connected to the claims. Under the Ninth Circuit’s test, the defendant must purposefully direct activities toward or purposefully conduct business in the state, the claims must arise from those activities, and exercising jurisdiction must be reasonable.

Court’s analysis

The court rejected purposeful availment based on the contract. The mere existence of an agreement with a California company was not enough. The agreement focused on two Texas cases, directed invoices to lawyers in Washington and New York, and did not mention California. The court also found that Clark’s earlier consulting relationship with DocuSign, the four-year gap in that relationship, and communications with people in California did not show substantial California contacts for purposes of purposeful availment.

The court nevertheless found that DocuSign plausibly alleged purposeful direction for its fraud claim. DocuSign alleged that Clark intentionally misrepresented the absence of conflicts and that the misrepresentations induced reliance in California. Relying on Ninth Circuit precedent, the court held that this alleged California inducement of reliance was enough to satisfy the relevant initial requirements for specific jurisdiction, even if Clark made the misrepresentations elsewhere. Clark argued that any statements were made to the lawyers who signed the agreement rather than directly to DocuSign, but the court noted that the agreement said the lawyers were acting on behalf of their clients.

Clark did not challenge the reasonableness requirement. The court therefore found personal jurisdiction over him for the fraud claim. It also exercised related-claim jurisdiction over the remaining claims because they arose from the same core facts concerning the agreement’s formation and terms.

Disposition

The court denied Clark’s motion to dismiss for lack of personal jurisdiction. It ordered him to answer the Second Amended Complaint within 10 days of the order’s issuance. The court set a case-management conference for July 5, 2022, at 2:00 p.m., with the joint case-management statement due June 28, 2022.