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Jurisdiction - Personal jurisdiction - Motion to dismiss - Transfer.

Byline: Mass. Lawyers Weekly Staff

Where defendant's sole connection to Massachusetts is a contractual relationship with the Massachusetts-based codefendant, but the litigation is not founded directly on that relationship, the case is transferred in lieu of dismissal to the federal court with jurisdiction over all parties where the case could properly have been brought in the first instance.

"Remaining before me following the filing of an amended complaint is the motion by Catalist to dismiss the complaint for lack of personal jurisdiction, or in the alternative, to transfer the case to the District of Columbia, and to dismiss for failure to state a claim.

"TargetSmart Holdings, LLC is a technology and consulting company that specializes in providing campaigns, candidates, and organizations with data and software to expand their audience base. It is a Delaware Limited Liability Company with its principle place of business in Washington, DC. TargetSmart Communications, LLC, is a wholly owned subsidiary of TargetSmart Holdings and is also a Delaware Limited Liability Company with its headquarters in Washington, DC. GHP is a Massachusetts Limited Liability Company headquartered in Boston. Catalist, LLC is a Delaware Limited Liability Company headquartered in Washington, DC.

"Catalist seeks to dismiss TargetSmart's complaint for lack of personal jurisdiction over it in the District of Massachusetts. Because Catalist is incorporated in Delaware and has its principal place of business in the District of Columbia, its contacts with Massachusetts are not 'so continuous and systematic as to render [it] essentially at home in [Massachusetts],' and allow this court to exercise general jurisdiction over it. Goodyear Dunlop Tires Operations S.A. v. Brown, 564 U.S. 915, 919, 131 S. Ct. 2846, 2851 (2011). Consequently, I may only exercise personal jurisdiction 13 over Catalist if its contacts with Massachusetts gave rise to the present claims and are sufficient to say that Catalist was 'present' in the state such that 'the maintained of [this] suit does not offend traditional notions of fair play and substantial justice.' International Shoe Co. v. Washington Office of Unemployment Compensation, 326 U.S. 310, 316 (1945). In making this determination, 'the plaintiff has the burden of showing that jurisdiction exists.' Ealing Corp. v. Harrods Ltd., 790 F.2d 978, 979 (1st Cir. 1986). In the absence of an evidentiary hearing, TargetSmart must 'make[ ] a prima facie showing of jurisdiction supported by specific facts alleged in the pleadings, affidavits, and exhibits.' Id. To meet this burden, TargetSmart must allege specific facts to 'satisfy two conditions: first, that the forum in which the federal district court sits has a long-arm statute that purports to grant jurisdiction over the defendant; and second, that the exercise of jurisdiction pursuant to that statute comports with the structure of the Constitution.' Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 144 (1st Cir. 1995); see also Knox v. MetalForming, Inc., --F.3d--, 2019 WL 364021 at *3 (1st Cir. Jan. 30, 2019) ('[T]he plaintiffs' burden is to proffer evidence sufficient to support findings of all facts essential to personal jurisdiction without relying on unsupported allegations.') (internal quotations omitted).

"Consequently, the exercise of jurisdiction is only proper if it is consistent with one of the 'enumerated eight specific grounds on which a nonresident defendant may be subjected to personal jurisdiction by a court of the Commonwealth. SCVNGR,Inc., 85 N.E.2d at 55. Under the statute, there are two possible avenues through which this court may exercise jurisdiction over Catalist. First, since GHP's transactions with TargetSmart took place, at least in part, in the Commonwealth and gave rise to this cause of action, I may exercise jurisdiction over Catalist if GHP is an agent of Catalist under Massachusetts law. See M.G.L. c. 223A 3(a). Second, I may exercise jurisdiction if Catalist's transactions with TargetSmart fall within the scope of the 'transacting any business' prong of the long-arm statute. M.G.L. c. 223A 3.

"Because it is headquartered in Boston, GHP certainly transacts business within the Commonwealth, and at least some part of TargetSmart's claims arise out of its transactions and meetings with GHP in the Commonwealth. As a result, jurisdiction over Catalist under the long-arm statute is proper if GHP was acting as Catalist's agent when transacting business with TargetSmart.

"Here, there is no indication that the Letter Agreement between GHP and Catalyst that formed the basis of their contractual relationship empowered GHP to act as Catalyst's agent.

"There is also no allegation in the complaint that Catalist made any representations to TargetSmart that GHP was acting as its agent.

"Since the record before me does not support the proposition GHP is an agent of Catalist under Massachusetts law, GHP's contacts with Massachusetts cannot form the basis for the exercise of jurisdiction as to Catalist under the Massachusetts long-arm statute.

"Catalist may alternatively be held to have submitted to jurisdiction in this Court under the Long Arm Statute if the cause of action arose from its 'transacting business in this commonwealth.' M.G.L. c. 223A 3(a).

"Here, at least a part of TargetSmart's claims against Catalist were based on, and arose as a result of, Catalist's relationship with GHP, embodied in the Letter Agreement.

"Consequently, the Massachusetts long-arm statute permits this Court's exercise of personal jurisdiction over Catalist.

"TargetSmart must still show that 'the exercise of jurisdiction pursuant to that statute comports with the structure of the Constitution.' Foster-Miller, Inc., 46 F.3d at 144. In other words, it must show that Catalist has sufficient minimum contacts with the state to allow for the exercise of personal jurisdiction consistent with due process. International Shoe, 326 U.S. at 316.

"In the absence of a formal agreement establishing an agency relationship between Catalist and GHP or some other contractual agreement establishing a similar formal association between the two, I conclude I cannot impute GHP's contacts with Massachusetts to Catalist. A review of the Letter Agreement does not demonstrate that the two defendants contemplated Catalist exercising the kind of formal control or influence that would be needed to render their relationship akin to a joint venture, partnership, or other agency relationship. TargetSmart cannot, therefore, rely on GHP's contacts with Massachusetts to show that Massachusetts has personal jurisdiction over Catalist.

"This court may only exercise personal jurisdiction over Catalist, then, if Catalist has sufficient contacts with Massachusetts to render the exercise of jurisdiction reasonable.

"The only contact that Catalist clearly had with the Commonwealth of Massachusetts was its relationship with GHP. But it is difficult to say that this litigation is 'founded directly on' that relationship and the Letter Agreement, even if they together provide context and explanation for how Catalist was able to access TargetSmart's trade secrets. See Weinberg, 891 F. Supp. 2d at 244. This is especially true since GHP is not an agent of Catalist, and Catalist did not retain enough control over GHP for this contractual relationship to support Catalist's relationship to the forum state.

"Even if the litigation was 'founded directly on' the Letter Agreement and the relationship between Catalist and GHP, the record does not demonstrate that Catalist purposefully availed itself 'of the privilege of doing business' in Massachusetts.

"Finally, the First Circuit directs me to consider the Gestalt factors, which include: 1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies. Foster-Miller, Inc., 46 F.3d at 150.

"The three factors set forth in Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138 (1st Cir. 1995), all indicate that the exercise of personal jurisdiction as to Catalist by this court would be improper under the Due Process Clause. Lacking personal jurisdiction over the entire dispute, but bearing in mind the need for judicial efficiency and seeking the prompt resolution of the matter in its entirety, I turn to consider the question whether to transfer the case to the District of Columbia, rather than dismiss it.

"Even though this court does not have jurisdiction to hear and adjudicate the claims at issue in this case against Catalist, I may still order the case to be transferred, rather than dismissed outright, if the case could properly have been brought in the putative transferee court here, the District of Columbia. Because I find that the District of Columbia has both subject matter and personal jurisdiction over the pending matter and all the parties, I will transfer the case to the District of Columbia, rather than dismissing it."

TargetSmart Holdings, LLC, et al. v. GHP Advisors, LLC, et al. (Lawyers Weekly No. 02-088-19) (45 pages) (Woodlock, J.)(Civil Action No. 18-11365-DPW) (Feb. 6, 2019).

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Title Annotation:TargetSmart Holdings, LLC v. GHP Advisors, LLC, U.S. District Court for the District of Massachusetts
Publication:Massachusetts Lawyers Weekly
Date:Feb 13, 2019
Words:1483
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