Innovative Computer Professionals, Inc. v. Outdoors Online, LLC

Background

Innovative Computer Professionals, Inc., doing business as Digital Cash Processing (DCP), and Outdoors Online, LLC, doing business as GunBroker.com, entered into an original contract and an amended contract. The agreements provided that DCP would be GunBroker.com’s exclusive provider of payment-processing services.

DCP alleged that GunBroker.com breached the agreements by moving its customers away from DCP’s platform, refusing to let DCP perform the contracted services, selecting a third party to replace DCP, and refusing to pay fees. DCP also alleged that GunBroker.com repudiated its future obligations, violated confidentiality provisions by sharing pricing information, and breached the duty of good faith and fair dealing.

DCP filed the action in state court, and GunBroker.com removed it to federal court. GunBroker.com then moved to dismiss for lack of personal jurisdiction and failure to state a claim. Alternatively, it asked the court to transfer the case to the District of Arizona.

Personal Jurisdiction and Transfer

The court applied the requirements for personal jurisdiction under Minnesota law and the Constitution. It considered the nature and quality of GunBroker.com’s Minnesota contacts, the number of those contacts, their relationship to the claims, Minnesota’s interest in providing a forum, and the convenience to the parties.

The court found that GunBroker.com had entered into two contracts with a Minnesota corporation; about 50 percent of the contracted services were performed in Minnesota; the parties met in Minnesota; and GunBroker.com sent and received thousands of emails with DCP there. The contract also contemplated monthly payments to DCP in Minnesota for ten years and required the agreements to be interpreted under Minnesota law.

The court concluded that these contacts made it reasonably foreseeable that GunBroker.com could be sued in Minnesota. It therefore denied GunBroker.com’s motion to dismiss for lack of personal jurisdiction and denied its alternative request to transfer the case to the District of Arizona.

Failure to State a Claim

The court applied Rule 12(b)(6), which asks whether the complaint alleges enough facts to present a plausible claim for relief. For the breach-of-contract claim, the court found that DCP plausibly alleged that it had an agreement with GunBroker.com, performed payment-processing services, and that GunBroker.com violated provisions concerning exclusivity, payment of fees, confidentiality, and the use of third-party providers.

The court also found that DCP plausibly alleged anticipatory breach. GunBroker.com’s hiring of a third party to replace DCP and failure to pay fees provided sufficient support for DCP’s allegation that GunBroker.com did not intend to perform future obligations.

Finally, the court found that DCP’s allegations plausibly supported an inference that GunBroker.com acted in bad faith. The court identified the allegations that GunBroker.com replaced DCP, refused to pay processing fees, and shared confidential pricing information.

Ruling

Judge Donovan W. Frank denied GunBroker.com’s motion to dismiss. The order denied the motion both as to personal jurisdiction and as to the sufficiency of DCP’s three claims: breach of contract, anticipatory breach, and breach of the duty of good faith and fair dealing.