ProMove, Inc. v. Siepman

Background

ProMove, Inc. and Logisys, Inc. asserted multiple claims, including breach of contract, tortious interference with contract, and misappropriation of trade secrets, against former ProMove employees Mark Siepman and Joseph Hammerslough and corporate defendants Sunset Transportation LV, Inc. and Tantara Transportation Group. The complaint alleged that the individual defendants prepared to leave ProMove, solicited ProMove employees and customers for the corporate defendants, and that Hammerslough copied proprietary and confidential information. The corporate defendants allegedly assisted with this preparation.

The individual defendants’ employment agreements allegedly included confidentiality and non-compete provisions and a clause stating that each party submitted to the personal jurisdiction of Minnesota’s state and federal courts. The record did not include signed copies of those agreements. The defendants moved to dismiss for lack of personal jurisdiction and alternatively sought dismissal or transfer to the District of Nevada.

Personal Jurisdiction Over the Individual Defendants

Personal jurisdiction is a court’s authority to exercise power over a defendant. The court concluded that the plaintiffs made the required preliminary showing that Minnesota had specific personal jurisdiction over Siepman and Hammerslough. Although signed employment agreements were not in the record, the court found strong circumstantial evidence that the individual defendants had agreed to the employment terms, including the Minnesota forum clause. Hammerslough had stated that he signed his agreement, and both individuals worked for ProMove for approximately five years.

The court also relied on additional Minnesota contacts. The individual defendants were employees of a Minnesota company, had executed letters of intent with an affiliated Minnesota company whose letterhead displayed a Minnesota address, submitted expense reports to Minnesota, and had paychecks and expense reports processed in Minnesota. Viewing the evidence in the plaintiffs’ favor, the court denied the motion to dismiss for lack of personal jurisdiction as to both individual defendants.

Personal Jurisdiction Over the Corporate Defendants

The court granted the motion to dismiss for lack of personal jurisdiction as to Sunset Transportation LV, Inc. and Tantara Transportation Group. The court rejected the argument that the corporate defendants were bound by a forum-selection clause in employment contracts to which they were not parties and of which they might have been unaware.

The plaintiffs also argued that the companies’ alleged tortious conduct created jurisdiction under the “effects test,” which can apply when a defendant intentionally directs tortious conduct and its consequences toward the forum state. The court found that the plaintiffs had not alleged direct and intentional conduct showing that the companies knew their actions would substantially affect Minnesota. The companies’ general commercial websites, without more, were insufficient. Because the plaintiffs provided no evidence of other contacts with Minnesota, the court found no prima facie showing of jurisdiction over the corporate defendants.

Transfer and Forum

The court rejected dismissal under the common-law doctrine that may allow a case to be heard in a more suitable forum, explaining that federal law generally provides for transfer rather than outright dismissal when another federal court is available. The court treated the defendants’ alternative request as one to transfer the case to Nevada under 28 U.S.C. § 1404(a), which permits transfer for the convenience of parties and witnesses and in the interests of justice.

The court denied transfer. It gave substantial weight to the likely enforceability of the Minnesota forum-selection clause and to the plaintiffs’ choice of forum. Although the court recognized that Minnesota was inconvenient for the individual defendants, particularly Siepman because of a medical condition that impeded travel, and that several participants and events were in Nevada, it concluded that the defendants had not met their heavy burden to show that transfer was warranted.

Disposition

The order granted in part and denied in part the defendants’ motion to dismiss. It denied the motion as to Mark Siepman and Joseph Hammerslough, granted it as to Sunset Transportation LV, Inc. and Tantara Transportation Group, and dismissed the plaintiffs’ complaint without prejudice as to the two corporate defendants. The court also denied the motion to transfer venue to Nevada. Judge Wilhelmina M. Wright signed the order.