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Crawford & Company, Inc. v. Cunningham Lindsey U.S., Inc.

United States District Court, N.D. Georgia, Atlanta Division

November 15, 2017

CRAWFORD & COMPANY, INC., Plaintiff,
v.
CUNNINGHAM LINDSEY U.S., INC., et al., Defendants.

          OPINION AND ORDER

          THOMAS W. THRASH, JR., United States District Judge

         This is an action for, inter alia, misappropriation of trade secrets. It is before the Court on the Defendant Michael P. McKeown's Motion to Dismiss for Lack of Personal Jurisdiction [Doc. 17]. For the following reasons, McKeown's Motion to Dismiss [Doc. 17] is DENIED.

         I. Background

         The Plaintiff, Crawford & Company, Inc., is a Georgia corporation with its principal place of business in Atlanta, Georgia.[1] The corporate Defendant, Cunningham Lindsey U.S., Inc., is a Texas corporation with its principal place of business in Lewisville, Texas.[2] Both companies provide insurance claims management services. They are direct competitors in the marketplace.[3] The Defendant Michael P. McKeown is a resident of Pennsylvania.[4] He worked for Crawford out of its Mid-Atlantic office, located in Pennsylvania, from February 2016 through his June 2017 resignation, at which time he began working for Cunningham Lindsey.[5]

         While employed as a Regional Account Executive for Crawford, McKeown was responsible for sales in New Jersey, Pennsylvania, Delaware, Maryland, and Virginia. In that role, he called on existing and potential clients in his territory to develop new business and grow market share for Crawford.[6] By virtue of this position, McKeown had access to some of Crawford's confidential information and trade secrets, including detailed information about clients, pricing, and business strategies.[7]

         Because of his access to such information, Crawford required McKeown to sign a Confidentiality & Nonsolicitation Agreement.[8] In the Agreement, McKeown acknowledged the importance of Crawford's propriety information and agreed to respect and protect the confidentiality of that information.[9] In order to protect this information, Crawford adopted policies prohibiting the use of personal devices to store confidential information and the use of personal email to transmit work-related documents.[10] McKeown also agreed to not solicit any of Crawford's clients or employees should he leave Crawford at some point in the future.[11]

         On June 24, 2017, McKeown decided to leave Crawford and return to Cunningham Lindsey, where he had been previously employed.[12] While he was being recruited to return, he allegedly sent five emails to his personal account containing a total of 37 confidential and proprietary files.[13] McKeown has also allegedly solicited some of Crawford's clients to come over to Cunningham Lindsey.[14] Crawford eventually filed this action, alleging that inter alia McKeown violated his Agreement with Crawford and misappropriated its trade secrets. McKeown now moves to dismiss the action for lack of personal jurisdiction.

         II. Legal Standard

         “In the context of a motion to dismiss for lack of personal jurisdiction in which no evidentiary hearing is held, the plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, nonresident defendant.”[15] The facts presented in the plaintiff's complaint are taken as true to the extent they are uncontroverted.[16] “Where … the defendant challenges jurisdiction by submitting affidavit evidence in support of its position, the burden traditionally shifts back to the plaintiff to produce evidence supporting jurisdiction.”[17] If the plaintiff's complaint and supporting evidence conflict with the defendant's affidavits, the court must construe all reasonable inferences in favor of the plaintiff.[18]

         III. Discussion

         McKeown has moved to dismiss this action under Rule 12(b)(2) for lack of personal jurisdiction. “A federal court sitting in diversity undertakes a two-step inquiry in determining whether personal jurisdiction exists: the exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution.”[19]Both steps of the inquiry are often the same, as the long-arm statutes of many states are coextensive with procedural due process.[20]

         However, this is not the case in Georgia.[21] Georgia's long-arm statute “imposes independent obligations that a plaintiff must establish for the exercise of personal jurisdiction that are distinct from the demands of procedural due process.”[22] This means that sometimes Georgia's long-arm statute extends beyond, and is therefore limited by, procedural due process, while in other situations it is more restrictive.[23] As such, this Court must proceed through both steps of the personal jurisdiction analysis independently.

         A. Georgia's Long-arm Statute

         Georgia's long-arm statute permits jurisdiction where a defendant:

(1) Transacts any business within this state; . . . [or]
(3) Commits a tortious injury in this state caused by an act or omission outside this state if the tort-feasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state . . . .[24]

         as long as the plaintiff's cause of action “arises out of” that conduct.[25]

         The Plaintiff argues that jurisdiction over McKeown arises under the requirements of both subsection (1) and (3). Georgia courts have interpreted “transacts any business within the state” to mean that the “nonresident defendant has purposefully done some act or consummated some transaction in [Georgia]. . . .”[26]Although “Georgia courts have yet to fully explain the scope” of this language, it is clear that “a defendant need not physically enter the state.”[27] As a result, the Court must “examine all of a nonresident's tangible and intangible conduct and ask whether it can fairly be said that the nonresident has transacted any business within Georgia.”[28]In this case, although he was based in Pennsylvania, McKeown took a number of actions directed at Georgia in the context of his employment relationship with Crawford. Because Crawford is headquartered in Georgia, McKeown communicated frequently with Georgia-based Crawford employees.[29] McKeown also visited Georgia on work-related trips on two separate occasions.[30] McKeown can therefore be said to have transacted business within Georgia during the course of his employment relationship with Crawford. And because Crawford's causes of action necessarily arise from that relationship, this Court has personal jurisdiction under subsection (1) of the Georgia long-arm statute.[31]

         B. Due Process Clause

         The Constitution's Due Process Clause requires that in order for a court to have personal jurisdiction over a defendant, the defendant must have “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'”[32] These minimum contacts exist when “the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.”[33] A defendant's relationship with a forum state can lead to two types of jurisdiction: general and specific jurisdiction.[34] “A party is subject to general jurisdiction only when it has continuous and systematic contacts with the forum state.”[35] There is no dispute that McKeown did not have this level of contact with Georgia. Thus, to the extent this Court has personal jurisdiction over McKeown, it must be specific.

         Specific jurisdiction is based on affirmative answers to three questions:

(1) whether the plaintiff's claims “arise out of or relate to” at least one of the defendant's contacts with the forum; (2) whether the nonresident defendant “purposefully availed” himself of the privilege of conducting activities within the forum state, thus invoking the benefit of the forum state's laws; and (3) whether the exercise of personal ...

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