Opinion
CIVIL NO. SA-98-CA-1080-EP.
March 16, 1999.
ORDER
On this date the Court considered Defendant Aqua Bailers, Inc.'s ("Aqua Bailers") motion to dismiss, or in the alternative, to transfer venue, filed February 3, 1999, and all of the responses and replies submitted to the Court. On this date the Court also considered Defendant Michael Carlton's ("Canton") Adoption of Motion to Transfer Venue, filed March 8, 1999. On this date the Court further considered Defendant Aqua Bailers' motion for reconsideration of motion to dismiss, or in the alternative, motion to transfer venue, filed February 9, 1999, and the plaintiff's response, filed February 24, 1999 in the above-styled and numbered cause. After careful consideration, the Court is of the opinion that the Defendants' motions should be denied.
BACKGROUND
The plaintiff, Voss Products, Inc. ("Voss Products"), which is a Texas corporation, alleges that it developed manufacturing processes, customer information, pricing parameters, and other matters that are its trade secrets. Voss Products further alleges that, due to their close familial relationship and the trust and confidence arising therefrom, its sole shareholder, Gene Voss, disclosed trade secrets to his cousin, Defendant Carlton, while Carlton was visiting him in Texas. Plaintiff then alleges that, in a betrayal of the trust reposed in him, defendant Carlton went on to become the founder of a Tennessee company, Aqua Bailers, that competes with his cousin's enterprise. Based on these facts, Voss Products alleges causes of action for theft of trade secrets, misappropriation, actual and constructive fraud, and violation of the Texas Theft Liability Act.
PERSONAL JURISDICTION
A court must conduct a two-step analysis to establish personal jurisdiction in a diversity case. First, the court must determine that nonresident defendants can be served under the law of the forum state. Second, the court must examine whether the grant of jurisdiction under state law comports with the due process clause of the fourteenth amendment. Stuart v. Spademan, 772 F.2d 1185, 1189 (5th Cir. 1985). In Texas, federal courts must only examine the second step because the Texas long arm statute extends as far as constitutionally permissible. See U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 762 (Tex. 1977),cert. denied 434 U.S. 1063, 98 S.Ct. 1235 (1978); Stuart, 772 F.2d at 1189.
Due process analysis for personal jurisdiction also requires a two-step analysis. As the Fifth Circuit stated in Stuart:
(a) the nonresident must have some minimum contact with the forum which results from an affirmative act on his part; (b) it must be fair and reasonable to require the nonresident to defend the suit in the forum state.Id. To be amenable to suit in a forum, the nonresident defendant must have purposely conducted activities in the state which invoke the benefits and protections of the forum state's laws. The contacts with the state must put the defendant on notice "that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567 (1980).
Minium contacts analysis takes two forms. Jurisdiction can be specific or general. Specific jurisdiction focuses the minimum contacts analysis on the relationship between the defendant, the forum, and the litigation. A court has specific jurisdiction when a cause of action arises out of a defendant's contact with the forum. In such cases, a single act can support jurisdiction. Bearry v. Beech Aircraft Corporation, 818 F.2d 370, 374 (5th cir. 1987). When the cause of action is not predicated on the defendant's contacts with the forum, the court may exercise general jurisdiction. Unlike specific jurisdiction, general jurisdiction requires more than one contact. General jurisdiction requires a set of continuous and systematic contacts between the defendant and the forum state. Id. Given the nature of general jurisdiction, corporations have a right to structure their affairs to avoid the general jurisdiction of a state's courts. Id. at 375-76.
When a defendant challenges personal jurisdiction, the plaintiff bears the burden of proof on the issue. D.J. Investments v. Metzeler Motorcycle Tire Agent Gregg. Inc., 754 F.2d 542, 545 (5th Cir. 1985). However, The plaintiff does not need to prove personal jurisdiction by a preponderance of the evidence. The plaintiff need only establish a prima facie case for personal jurisdiction. Furthermore, the Court must accept uncontroverted allegations in the plaintiff's complaint as true and all factual disputes in the parties' affidavits must be resolved in favor of the plaintiff.Id. at 545-46.
ANALYSIS — PERSONAL JURISDICTION
First, the Court notes that it will examine all of the motions that the parties have filed in this Court; even though the Court has already ruled on Defendant Aqua Bailers' motion to transfer venue, the Court will re-examine the motion in light of the new motions submitted to it.
This Court clearly has personal jurisdiction over Defendant Aqua Bailers. In December 1998, Aqua Bailers filed its motion to dismiss, motion to transfer venue and first amended answer to plaintiff's original petition. Aqua Bailers waived any defense based on lack of personal jurisdiction by filing motions under Rule 12(b)(3) and Rule 12(b)(6) that were not joined with a motion to dismiss for lack of jurisdiction under Rule 12(b)(2). Under Federal Rule of Civil Procedure 12(g), "[i]f a party makes a motion under (Rule 12) but omits therefrom any defense or objection then available to the party which this rule permits to be raised by motion, the party shall not thereafter make a motion based on the defense or objection so omitted . . ." Moreover, Rule 12(h)(1) states that "(a) defense of lack of jurisdiction over the person (or) improper venue . . . is waived . . .(A) if omitted from a motion in the circumstance described in subdivision (g), or (B) if it is neither made by motion under this rule nor included in a responsive pleading or an amendment thereof . . . ."
Aqua Bailers claims that it filed a special appearance in state court, and they therefore did not waive its defense of personal jurisdiction in federal court. It is true that if we were in state court, the fact that Aqua Bailers filed a special appearance preserves its defense in state court. However, in federal court the defendant must have asserted this defense in its answer or by joining it with its Rule 12(b)(3) and 12(b)(6) motions. See Golden v. Cox Furniture Mfg. Co., Inc., 683 F.2d 115, 118-19 (5th Cir. 1982); Arkwright Mut. Ins. Co. v. Scottsdale Ins. Co., 874 F. Supp. 601, 604 (S.D.N.Y. 1995). As the federal court noted inTolliver v. Edison, "[a] defendant's `special appearance' is a form of pleading abolished decades ago in the federal courts. A defendant's `special appearance' neither waives nor asserts, in compliance with Rule 12(h), his jurisdictional and venue objections. No. G88 51 CA1, 1988 WL 508719, *2 (W.D.Mich. June 24, 1988).
Aqua Bailers has waived its defense of lack of personal jurisdiction. However, even if Aqua Bailers had not waived this defense, the Court clearly has specific personal jurisdiction over Aqua Bailers. Plaintiff Voss Products is located in San Antonio, and its alleged injury and losses have occurred there. Further, the tort in question occurred in part in San Antonio, when Carlton allegedly acquired information about Voss Products' business, and continued when he returned to Tennessee and went into business in competition with Voss Products. Essentially, Voss Products alleges that its trade secrets were used to found Aqua Bailers and to allow it to sell products in competition with Voss Products. Aqua Bailers admits that it ships products to Texas. Aqua Bailers' admitted, sales of products in Texas and the injury/damages sustained by Voss Products in this state clearly support the exercise of personal jurisdiction over Aqua Bailers. See Union Carbide Corp. v. UGI Corp., 731 F.2d 1186 (5th Cir. 1984); see also Vault Corporation v. Quaid Software Limited, 775 F.2d 638 (5th Cir. 1985) (conducting .3% of sales in forum state satisfied minimum contacts).
ANALYSIS — VENUE
Defendant Aqua Bailers also moves this Court to dismiss this case for improper venue, or to transfer this case for improper venue, pursuant to 28 U.S.C. § 1406(a).
Section 1406(a) provides:
The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.
This defense was waived because no motion for dismissal based on improper venue was included in Aqua Bailers' Motion to Dismiss, Motion to Transfer Venue, and First Amended Answer. In that pleading, Aqua Bailers only sought transfer of the case to Tennessee. As discussed above, the filing of Aqua Bailers' prior motions under Rule 12(b) precludes the filing of the motion now at issue. Furthermore, the Western District of Texas is a proper venue for the reasons discussed above.
Aqua Bailers also argues that this case should be transferred to the Northern District of California pursuant to 28 U.S.C. § 1404(a), which provides that "[f]or the convenience of the 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." Defendant Carlton also joins this motion to transfer venue. The purpose of this statute is to prevent the waste of time, energy, and money and to protect litigants, witnesses, and the public against unnecessary inconvenience and expense. Van Dusen v. Barrack, 376 U.S. 612, 616, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); Stabler v. New York Times Co., 569 F. Supp. 1131, 1137 (S.D.Tex. 1983). Under § 1404(a), the movant has the burden of demonstrating that a change of venue is warranted.Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir. 1966); Stabler v. New York Times Co., 569 F. Supp. at 1137. To prevail, the moving party must show that the balance of convenience and justice weighs heavily in favor of the transfer. Acrotube, Inc. v. J.K. Fin. Group. Inc., 653 F. Supp. 470, 477 (N.D.Ga. 1987). Therefore, when assessing the merits of a § 1404(a) motion, a court must determine if a transfer would make it substantially more convenient for the parties to litigate the case. Id.
The decision to transfer a pending case is committed to the sound discretion of the district court. Van Dusen v. Barrack, 376 U.S. at 616, 84 S.Ct. at 809; Parsons v. Chesapeake Ohio Ry., Co., 375 U.S. 71, 74, 84 S.Ct. 185, 187, 11 L.Ed.2d 137 (1963). The criteria weighed by a court in deciding a § 1404(a) motion include:
(1) the convenience of the parties; (2) the convenience of material witnesses; (3) the availability of process to compel the presence of unwilling witnesses (4) the cost of obtaining the presence of witnesses; (5) the relative ease of access to sources of proof; (6) calendar congestion; (7) where the events in issue took place; and (8) the interests of justice in general.St. Cyr v. Greyhound Lines, Inc., 486 F. Supp. 724, 727 (E.D.N Y 1980); Goodman v. Schmalz, 80 F.R.D. 296, 300-01 (E.D.N.Y. 1978).
In the instant case, a review of the relevant factors indicates that a transfer is not warranted. Aqua Bailers and Carlton claim that all of their witnesses and evidence are located in Tennessee. While this may be true, the same applies to Voss products with regard to Texas — all of its witnesses and evidence are located in Texas. Aqua Bailers and Carlton also claim that it would be very burdensome for Carlton to travel to Texas to defend this lawsuit. However, it would be just as burdensome for the Texas resident, Gene Voss, sole shareholder of Voss products, to travel to Tennessee. Therefore, the defendants' motions to transfer venue must be denied.
Accordingly, it is hereby ORDERER that Defendant Aqua Bailers' motion to dismiss, or in the alternative, to transfer venue is DENIED.
It is FURTHER ORDERED that Defendant Aqua Bailers' motion for reconsideration is DENIED.
It is FURTHER ORDERED that Defendant Michael Carlton's Adoption of motion to transfer venue is DENIED.