Opinion
Case No. 19-cv-63097-SINGHAL/Valle
2020-02-25
FOR LIFE PRODUCTS, LLC, Plaintiff, v. RUST-OLEUM CORPORATION, Defendant.
Stephanie Vazquez, Robert Houpt Thornburg, Allen, Dyer, Doppelt, Gilchrist, P.A., Miami, FL, Matthew D. Zapadka, Pro Hac Vice, Terry L. Clark, Pro Hac Vice, Bass, Berry & Sims PLC, Washington, DC, R. Gregory Parker, Pro Hac Vice, Bass, Berry & Sims PLC, Nashville, TN, for Plaintiff. Oliver Alan Ruiz, Malloy & Malloy, P.L., Miami, FL, Anthony J. Monaco, Pro Hac Vice, Paul Stephen Fardy, Swanson, Martin & Bell, LLP, for Defendant.
Stephanie Vazquez, Robert Houpt Thornburg, Allen, Dyer, Doppelt, Gilchrist, P.A., Miami, FL, Matthew D. Zapadka, Pro Hac Vice, Terry L. Clark, Pro Hac Vice, Bass, Berry & Sims PLC, Washington, DC, R. Gregory Parker, Pro Hac Vice, Bass, Berry & Sims PLC, Nashville, TN, for Plaintiff.
Oliver Alan Ruiz, Malloy & Malloy, P.L., Miami, FL, Anthony J. Monaco, Pro Hac Vice, Paul Stephen Fardy, Swanson, Martin & Bell, LLP, for Defendant.
ORDER ON DEFENDANT'S MOTION TO DISMISS OR ALTERNATIVELY TO TRANSFER VENUE TO THE NORTHERN DISTRICT OF ILLINOIS
RAAG SINGHAL, UNITED STATES DISTRICT JUDGE
For Life Products, LLC ("For Life") sues Defendant Rust-Oleum Corporation ("Rust-Oleum") for breach of a covenant not to compete in a trademark license. The cause currently before the Court is Rust-Oleum's Motion to Dismiss or Alternatively to Transfer Venue to the Northern District of Illinois (DE [15] ). Rust-Oleum moves to dismiss the complaint for lack of subject-matter jurisdiction and lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(1), (2). In the alternative, it moves to transfer this action to the United States District Court for the Northern District of Illinois. See 28 U.S.C. § 1404. The Court has reviewed the motion, the response in opposition (DE [29] ), the reply in support (DE [32] ), the record, and the relevant case law, and is otherwise fully advised in the premises. This order follows.
I. BACKGROUND
In 2012, For Life and Rust-Oleum entered into a business venture, executing two operative contracts: a Confidentiality Agreement, executed on October 16, 2012, see Ex. 1 to Compl. (DE [1-1] ), and a License Agreement, executed on August 6, 2013, see License Agreement, Ex. 3 to Decl. of Neal Barry (DE [37-2] ). The Confidentiality Agreement afforded Rust-Oleum the opportunity to evaluate For Life's "REJUVENATE" product line. For one year, Rust-Oleum would be privy to confidential and proprietary information of For Life's products. See generally Ex. 1 to Compl. (DE [1-1] ). At the conclusion of the one-year term, Rust-Oleum was to return all proprietary information within ten days. Id. § 6. The Confidentiality Agreement also included post-agreement protections of up to five years. Id. § 7.
Before the year under the Confidentiality Agreement ran, on August 6, 2013, the parties entered into the License Agreement. Under the License Agreement, For Life could "co-brand" its "REJUVENATE" product line with Rust-Oleum's trademarks. See generally Ex. 2 to Compl. (DE [1-2] ). According to For Life, the intent was to expand the product's market into areas that "For Life believed Rust-Oleum did not and would not independently compete." Compl. ¶ 27 (DE [1] ). The License Agreement commenced on August 6, 2013, and self-expired on July 31, 2017. License Agreement § 3, Ex. 3 to Decl. of Neal Barry (DE [37-2] ). At issue here, it included a covenant not to compete that stated, in relevant part:
[Rust-Oleum] agrees that the term of this Agreement and for a period of not less than 3 years from the expiration or termination thereof, [Rust-Oleum] shall not, directly or indirectly, in conjunction with, through or for any person, firm, association, corporation, engage in the business of manufacturing, distributing, or selling cleaning or renewal products and other related household products which directly compete with the Rejuvenate product line; however existing Jomax products already being sold at wholesale and/or retail as of the execution date of this agreement are excluded from this condition ....
Id. § 2(a).
On August 2, 2017, Rust-Oleum's vice president sent a letter to For Life's president memorializing the License Agreement's active expiration. Ex. 3 to Decl. of Joseph A. McDonnell (DE [5-1] ). Per its terms, the additional three-year period in the covenant not to compete was now triggered and would run on July 31, 2020.
For Life filed this action on December 16, 2019, alleging that, "within the last two months," Rust-Oleum "is directly or indirectly manufacturing or distributing cleaning and renewal products, other than JOMAX, that compete with For Life's REJUVENATE product line, and has been throughout the term of the License Agreement." Mot. 6 (DE [5] ). Among these alleged breaches, For Life claims that Rust-Oleum "is distributing identical wood floor renewal products and repair markers under its VARATHANE brand." Id. For Life brings two counts: breach of the covenant not to compete and breach of the covenant of good faith and fair dealing. It seeks actual damages plus "lost profits resulting from lost sales," and a permanent injunction. Compl. ¶¶ 2, 58 (DE [1] ). It has also filed a motion for a preliminary injunction (DE [5] ). Because Rust-Oleum has raised an issue of personal jurisdiction, the Court first addresses the propriety of a dismissal.
II. MOTION TO DISMISS
Rust-Oleum moves to dismiss for both lack of subject-matter jurisdiction and lack of personal jurisdiction. Mot. 4–13 (DE [15] ). On the issue 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." United Techs. Corp. v. Mazer , 556 F.3d 1260, 1274 (11th Cir. 2009). This is a question of Florida law and the Court must construe this inquiry as would the Florida Supreme Court or any of Florida's district courts of appeal. Id. Further, satisfaction of the long-arm statute is a threshold matter and the Court will end the analysis there if the plaintiff cannot satisfy this first step. Id. at 1274 n.15 ("Because we conclude, as discussed below, that [plaintiff] has failed to establish through its allegations or competent evidence that [defendant] is subject to personal jurisdiction under Florida's long-arm statute, we do not reach the due process inquiry.").
Because the Court finds no personal jurisdiction over Rust-Oleum, it need not address the issue of subject-matter jurisdiction. See Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp. , 549 U.S. 422, 435–36, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) ("In appropriate circumstances, ... a court may dismiss for lack of personal jurisdiction without first establishing subject-matter jurisdiction.").
Florida's long-arm statute provides several acts that submit persons to the jurisdiction of Florida courts. Fla. Stat. § 48.193. For Life contends that Rust-Oleum is subject to personal jurisdiction under subsection (1)(a) subparagraph 7: "Breaching a contract in this state by failing to perform acts required by the contract to be performed in this state." Fla. Stat. § 48.193(1)(a) 7. Rust-Oleum argues, and relies on case law supporting the contention, that this provision requires "a duty to perform an act in Florida. " Posner v. Essex Ins. Co. , 178 F.3d 1209, 1218 (11th Cir. 1999) (emphasis in original). In other words, "a contractual duty to tender performance to a Florida resident is not in itself sufficient to satisfy the statute." Id. Rust-Oleum's point is well taken.
In Olson v. Robbie , 141 So. 3d 636, 640 (Fla. 4th DCA 2014), the operative contract provided "[a]ll directors shall have access to and share among themselves information related to [various subsidiary companies]." Florida's Fourth District Court of Appeal held that this general language did not "explicitly require [defendant] to perform any act in Florida whatsoever. In fact, any such sharing of information could be performed by [the defendant] from any location at all, including either South Dakota, Minnesota, or Florida." Id. The Florida court, "strictly constru[ing]" the long-arm statute, reasoned that, because the contract did not "clearly require performance in Florida, [defendant's] alleged breach was not of an act that was ‘required by the contract to be performed in this state. " Id. (emphasis in original).
The Court finds Olson not only instructive, but highly comparable. Under section 48.193(1)(a) 7., Florida Statutes, the contract need not require performance exclusively and only in the State of Florida, but it must, at a minimum, expressly require performance within the state. See also Classic Lines, Inc. v. Nat'l Coach Corp. , 734 F. Supp. 471, 473 (S.D. Fla. 1990) ("[The contract] makes no reference to any acts to be performed in Florida ...."). The Court does not doubt or question For Life's assertion that performance of the non-compete was to be tendered in Florida. See Resp. in Opp'n 12 (DE [29] ). However, it is For Life's recasting the covenant that expressly requires performance here. The License Agreement itself makes no mention whatsoever of performance in Florida. Exactly like Olson , performance of the covenant not to compete could be performed in any location, including Florida. This geographically generalized provision is insufficient under Florida's long-arm statute to establish personal jurisdiction under section 48.193(1)(a) 7., Florida Statutes.
There are no other provisions of Florida's long-arm statute that could reasonably be the basis for a finding of personal jurisdiction. See Fla. Stat. § 48.193. Thus, For Life cannot rely on the License Agreement to establish personal jurisdiction in this district. However, before the Court determines that dismissal for lack of personal jurisdiction would be appropriate, the Court must address the motion to transfer.
III. MOTION TO TRANSFER VENUE
Ordinarily, "[a] court without personal jurisdiction is powerless to take further action." Posner , 178 F.3d at 1214 n.6. However, under the limited circumstance of a motion to transfer venue, a district court may do so despite not having jurisdiction. See Roofing & Sheet Metal Servs., Inc. v. La Quinta Motor Inns, Inc. , 689 F.2d 982, 992 n.16 (11th Cir. 1982) ("In this Circuit, a court lacking personal jurisdiction of the defendant may transfer the case under either § 1404(a) or § 1406(a)."); see also Goldlawr, Inc. v. Heiman , 369 U.S. 463, 466–67, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962) (holding that the language of 28 U.S.C. § 1406(a) is "amply broad enough" to empower a district court to transfer a case despite no personal jurisdiction over the defendant); Koehring Co. v. Hyde Constr. Co. , 324 F.2d 295, 297–98 (5th Cir. 1963) (applying Goldlawr 's rationale to transfers under 28 U.S.C. § 1404 ).
The transfer statute states: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought ...." 28 U.S.C. § 1404(a). Because this action could have initially been filed in the Northern District of Illinois, rather than dismissing the complaint, the Court finds that transferring is the appropriate and equitable remedy. The Middle District of Florida arrived at the same conclusion in Kindred Hospitals East, L.L.C. v. Buffalo Board of Education , 2017 WL 3622154, at *5 (M.D. Fla. Aug. 23, 2017) : "While the Court concludes that it may not exercise personal jurisdiction over Defendants, the appropriate remedy is to transfer this case to the Western District of New York rather than dismiss the complaint."
IV. CONCLUSION
For the foregoing reasons, while this Court lacks personal jurisdiction over Rust-Oleum, dismissal would not be appropriate given the pending motion to transfer venue. Therefore, it is hereby ORDERED AND ADJUDGED that Rust-Oleum's Motion (DE [15] ) is GRANTED to the extent that it seeks to transfer this action. It is FURTHER ORDERED that this case is TRANSFERRED to the United States District Court for the Northern District of Illinois. The Motion (DE [15] ) is otherwise denied. The Clerk of Court is directed to transfer this case and deny without prejudice all pending motions.
DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 25th day of February 2020.