United States District Court, E.D. Arkansas, Pine Bluff Division
OPINION AND ORDER
LEON HOLMES UNITED STATES DISTRICT JUDGE
Connection, LLC, is an Arkansas company that entered into a
business relationship with Ground Connection Technologies,
LLC, which is a Texas company. The relationship centered on
developing and selling Krinner products to the Texas
Department of Transportation. Ground Connection alleges that
it had an exclusive distribution agreement with Krinner
Schraubfundamente. Dennis Seal and Vincent Hazen were members
of Ground Connection Technologies. The plaintiff alleges that
Seal and Hazen secretly formed Ground Connect, LLC, a Texas
company, in order to steal the business Ground Connection and
Ground Connection Technologies worked to obtain. The
complaint alleges causes of action for civil conspiracy,
tortious interference with a business expectancy and
relationship, fraud, unlawful and unfair competition, unjust
enrichment, and an unpaid debt. The defendants argue that
this Court does not have specific jurisdiction over them and
have moved to dismiss the complaint. See Fed. R.
Civ. P. 12(b)(2). Alternatively, the defendants argue that
this Court should abstain from exercising jurisdiction
because a related action is pending in Texas state court. For
the following reasons, the motion to dismiss is denied.
defendant challenges personal jurisdiction, the plaintiff
bears the burden of establishing its existence. Falkirk
Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 373
(8th Cir. 1990). The burden is minimal and requires only that
a plaintiff make a prima facie showing of jurisdiction to
defeat a 12(b)(2) motion to dismiss. Epps v. Stewart
Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir. 2003).
This means that a plaintiff must state sufficient facts to
support a reasonable inference that defendants may be
subjected to jurisdiction in the forum state. Dever v.
Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir.
2004). In ruling on the defendants' motion to dismiss,
this Court is not limited to consideration of the pleadings
alone but can test the plaintiffs' prima facie showing by
affidavits and exhibits presented with the motion and in
opposition of the motion. See id.
following statement of facts is taken from the pleadings,
affidavits, and exhibits before the Court. These facts are
construed in the light most favorable to the plaintiffs and
all factual conflicts are resolved in favor of them.
Epps, 327 F.3d at 647.
described in the complaint, Ground Connection was the
exclusive distributor of Krinner ground screws and other
Krinner products. Document #12 ¶31. Ground Connection
had its eye on the Texas Department of Transportation as a
customer for the Krinner ground screws. Id.
¶¶32-33. In 2011, Ground Connection met with Dennis
Seal and others in Pine Bluff, Arkansas, to discuss the
business opportunity of selling screws to the Texas
Department of Transportation. Id. ¶10. These
discussions continued into 2012, and Seal and others formed
Ground Connection Technologies in June 2012. Id.
¶¶12-13, 32. After Ground Connection Technologies
was formed, the parties agreed that Ground Connection would
be the vendor of Krinner products and Ground Connection
Technologies would be the marketing entity. Id.
¶38. Together, these companies worked to develop and
market a ground screw for use by the Texas Department of
Transportation. Id. ¶¶10, 33-38.
the Texas Department of Transportation would buy the screws,
Ground Connection needed to become an approved vendor and the
screw needed to go through Texas Transportation Institute
testing. Id. ¶33. The Federal Highway
Administration also needed to approve the screw. Id.
Ground Connection spent thousands of dollars on this project,
enlisting the assistance of structural and field engineers as
well as developing expensive testing equipment needed for the
approval process. Id. ¶¶33-34, 37.
the scenes, though, Ground Connection says that Seal and
Hazen conspired to cut Ground Connection out of the
distribution chain. Id. ¶¶40-41. In August
2013, Seal and Hazen formed a new company in Texas-Ground
Connect, LLC-but did not disclose this to Ground Connection.
Id. ¶41. Ground Connect sought, and obtained,
an exclusive distributorship agreement with Krinner and began
efforts to win the Texas Department of Transportation
business. Id. ¶¶40-41. In May 2016, the
Texas Department of Transportation approved screw purchases
from Seal and Hazen's Ground Connect business and not
Ground Connection. Id. ¶42. Even after this,
Seal and Hazen continued communicating with Ground Connection
under the pretenses of the original business plan and did not
disclose their independent scheming. Id.
Texas Department of Transportation later placed a small order
with Ground Connection. Id. ¶44. Ground
Connection was able to fulfill this order with existing
inventory. Id. When another larger order was placed,
however, Ground Connection attempted to order screws from
Krinner. Id. Krinner has not responded to Ground
Connection's order, and Seal and Hazen's Ground
Connect filed suit in a Texas state court alleging tortious
interference. Id. That suit is also seeking a
declaration on the exclusive distributorship agreements both
parties have with Krinner. Id.
complaint alleges that between December 2012 and March 2016,
Seal visited Arkansas on more than a few occasions for
business-related reasons. Id. ¶¶15-16, 20.
He came to Pine Bluff to discuss the business opportunity, to
transport screws to Texas, and to pick up testing equipment.
Id. In June 2013, Hazen came to Pine Bluff to meet
with investors of Ground Connection. Id. ¶17.
From 2011, when discussions first began between Ground
Connection and Seal and Hazen, through 2016, the complaint
alleges that Seal, Hazen, and other representatives of Ground
Connection Technologies had extensive communications with
defendants argue that defendants Seal, Hazen, and Ground
Connect lack sufficient contacts with Arkansas to warrant
this Court exercising personal jurisdiction over them. They
say that Ground Connect has no contacts with Arkansas and
that this is evidenced by Ground Connection's lack of
knowledge of its existence. All contacts that Seal and Hazen
had with Arkansas, defendants say, were on behalf of Ground
Connection Technologies. The defendants also say that
Hazen's single visit to Arkansas is insufficient to
establish personal jurisdiction. The defendants acknowledge
Seal's visits to Arkansas, but they say that these are
not contacts with the forum out of which the claims arise.
The defendants construe the claims as arising out of their
dealings with Krinner and the Texas Department of
Transportation, and according to them, Seal's contacts
with Arkansas are unrelated to those dealings. Ground
Connection argues that the facts alleged sufficiently
establish specific jurisdiction over each of the defendants.
reach of federal district courts is limited by both
subject-matter jurisdiction and personal jurisdiction.
See U.S. Const. art. III, § 2, cl. 1; 28 U.S.C.
§ 1330 et seq.; U.S. Const. amend. XIV;
Int'l Shoe Co. v. Washington, 326 U.S. 310, 316,
66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Courts conduct a
two-step analysis for personal jurisdiction, asking first
whether the exercise of personal jurisdiction is permitted by
the forum state's long-arm statute and second whether it
is permitted by the due process clause of the U.S.
Constitution. See Hutson v. Fehr Bros., 584 F.2d
833, 835 (8th Cir. 1978) (en banc). Arkansas's long-arm
statute is coextensive with the constitution. Ark. Code Ann.
§ 16-4-101; Davis v. St. John's Health Sys.,
Inc., 348 Ark. 17, 23, 71 S.W.3d 55, 58 (2002).
Accordingly, this Court need only determine whether the
exercise of jurisdiction over this defendant offends due
process. See Johnson v. Woodcock, 444 F.3d 953, 955
(8th Cir. 2006).
the due process clause, the exercise of personal jurisdiction
over a nonresident defendant is permissible if the defendant
has established minimum contacts with the forum state
“such that maintenance of the suit does not offend
traditional notions of fair play and substantial
justice.” Int'l Shoe Co., 326 U.S. at 316,
66 S.Ct. at 158 (quotation and citations omitted). The
defendant's conduct and connection with the forum state
must be such that he reasonably anticipates being haled into
court there. Burger King Corp. v. Rudzewicz, 471
U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). A
defendant should reasonably anticipate such summons when the
defendant “purposefully avails itself of the privilege
of conducting activities within the forum State, thus
invoking the benefits and protections of its laws.”
Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228,
1240, 2 L.Ed.2d 1283 (1958) (citation omitted).
a defendant's contacts with a forum state, the Eighth
Circuit has directed courts to consider the following five
factors: (1) the nature and quality of the contacts with the
forum state; (2) the quantity of the contacts; (3) the
relationship of the cause of action to the contacts; (4) the
interest of the forum state in providing a forum for its
residents; and (5) the convenience or inconvenience to the
parties. Aftanase v. Economy Baler Co., 343 F.2d
187, 197 (8th Cir. 1965). The first three factors are primary
factors. Id. The third factor distinguishes whether
jurisdiction is specific or general. Wessels, Arnold
& Henderson v. Nat'l Med. Waste, Inc., 65 F.3d
1427, 1432 n.4 (8th Cir. 1995). A forum exercises specific
jurisdiction over a defendant in causes of action arising
from or related to the defendant's contacts with the
forum state. See Helicopteros Nacionales de Colombia,
S.A. v. Hall, 466 U.S. 408, 414 n.8, 104 S.Ct. 1868,
1872 n.8, 80 L.Ed.2d 404 (1984). A forum exercises general
personal jurisdiction over a defendant in causes of action
not arising out of or related to the defendant's
contacts with the forum. Id. at n.9. Here, the
alleged contacts are related to the dispute that resulted in
this suit, and Ground Connection relies on specific
plaintiff alleges an intentional tort, as Ground Connection
does, the Eighth Circuit considers the Calder
effects test as an additional factor to the five listed
above. See Dakota Indus., Inc. v. Dakota Sportswear,
Inc., 946 F.2d 1384, 1391 (8th Cir. 1991). Under this
test, courts consider whether the nonresident defendant's
tortious acts (1) were intentional, (2) were aimed at the
forum state, and (3) caused harm, most of which was suffered
in the forum state and which the defendant knew would be felt
by the plaintiff in the forum state. Johnson v.
Arden, 614 F.3d 785, 796 (8th Cir. 2010). Jurisdiction
may be asserted over a nonresident defendant ...