Marx Industries, Inc. v. Chestnut Ridge Foam, Inc.
5:11-cv-00139
W.D.N.C.Oct 12, 2012Background
- Marx Industries is NC-incorporated with its principal place of business in Granite Falls, NC; CRF is a PA corporation based in Latrobe, PA.
- CRF sued IFP in PA for misappropriation of trade secrets related to foam-production equipment before this action.
- Marx purchased IFP’s equipment in 2011 due to IFP’s insolvency and entered a Confidential Agreement in which IFP claimed CRF held no trade secrets about the equipment.
- CRF sent cease-and-desist letters to Marx alleging potential misappropriation of CRF trade secrets; Marx responded with requests for clarification.
- Marx filed a NC declaratory judgment action in Caldwell County Superior Court seeking to determine if use of the equipment constituted misappropriation and alleging related unfair competition and tortious interference claims; CRF removed to federal court and moved to dismiss for lack of jurisdiction.
- The court conducted jurisdictional discovery and ultimately held there is specific personal jurisdiction over CRF in NC, and an actual controversy exists under the NC Declaratory Judgment Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over CRF | Marx asserts CRF’s NC contacts and letters establish minimum contacts | CRF argues insufficient NC presence for jurisdiction | Yes; court has specific jurisdiction over CRF in NC |
| Whether an actual controversy exists for declaratory relief | Marx seeks declaration to clarify rights related to equipment use | CRF contends no ongoing liability or controversy with Marx | Yes; actual controversy exists and declaratory relief is proper |
| Whether due process permits the exercise of jurisdiction given CRF’s NC contacts | Contacts and purposefully directed letters show availed privileges of NC | Alleged contacts are insufficient to establish jurisdiction | Yes; due process satisfied; jurisdiction reasonable |
Key Cases Cited
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment required; minimum contacts; reasonableness factors)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (minimum contacts; foreseeability of being haled into court)
- Shaffer v. Heitner, 433 U.S. 186 (1977) (relationship between defendant, forum, and litigation for jurisdiction)