VAPOTHERM, INC., Plаintiff, Appellant, v. CLAYTON SANTIAGO, Defendant, Appellee, VERO BIOTECH, LLC, Defendant.
No. 21-1567
United States Court of Appeals For the First Circuit
June 28, 2022
Thompson, Howard, and Gelpí, Circuit Judges.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE [Hon. Steven J. McAuliffe, U.S. District Judge]
Michael S. Lewis, with whom Michael K. O‘Neil and Rath, Young and Pignatelli, P.C. were on brief, for appellant.
Brett Walker, with whom Jay Gregory and Gordon Rees Scully Mansukhani, LLP were on brief, for appellee.
I. Background
Santiago was employed by Vapotherm for approximately four years, beginning in January 2016 and ending in February 2020. Vapotherm is a publicly traded medical device manufacturing company. It is a Delaware corрoration with its principal place of business in New Hampshire. Santiago was employed primarily as an account manager for Vapotherm, and was specifically assigned to the territory within the State of Georgia.1 Throughout the entirety of his employment with Vapotherm and at all other relevant times, Santiago resided in Georgia. In February 2020, Santiago left Vapotherm to work for Vero, and continues to work there as a Regional Engagement Director.
Prior to beginning his employment with Vapotherm, Santiago signed a “Confidentiаlity, Non-Compete, and Assignment of Inventions Agreement” (“Agreement“). The Agreement included a choice-of-law clause for the State of Maryland but did not include a forum selection clause. Among other things, the Agreement contained a Non-Solicitation of Employees Clause, which prohibited Santiago from “solicit[ing] or encourag[ing] any employee of the Company to terminate his or her employment with the Company or to accept employment with any subsequent employer with whom Employee is affiliated in any way” throughоut his employment and for one year thereafter. The Agreement was signed by Santiago and John Landry, Vapotherm‘s Chief Financial Officer (“CFO“).
Vapotherm alleges in its complaint that Santiago violated the non-solicitation clause of the Agreement by encouraging three of its former employees to join him at Vero after he left Vapotherm. These three employees -- Benjamin Lonsway (“Lonsway“), Ryan Philpot (“Philpot“), and
During the course of his employment with Vapotherm, Santiago had limited contact with the State of New Hampshire, primarily arising from his communications with the company‘s headquarters in Exeter. Santiago testified in his deposition that during his four-year period of employment with Vapotherm, he visited New Hampshire five to seven times to attend corporate events, and in total spent approximately two weeks there. Santiago communicated with Vapotherm‘s customer service representative, located in New Hampshire, about once a month to proсess purchase orders and other paperwork. He also communicated infrequently with Vapotherm‘s technical support as well as its human resources department. The product which Santiago sold, the Precision Flow, was manufactured in New Hampshire. He was paid via direct deposit by Vapotherm, and stated in his deposition that he was unsure where Vapotherm‘s banks were located.
Apart from these contacts, Santiago‘s work for Vapotherm was primarily focused in the Southeast of the United States. During the hiring process, after being contacted by a recruiter, Santiago was interviewed in Atlanta, Georgia and Chicago, Illinois. Throughout his employment, his direct supervisors were located in Charleston, South Carolina. Santiago oversaw the company‘s operations and employees located in Georgia and Florida.
Vapotherm originally filed suit against both Vero4 and Santiago in the District of New Hampshire, alleging that Santiago had violated the Agreement‘s non-solicitation clause, and brought claims against him for breach of contract, intentional interference with cоntractual relations, and unjust enrichment, as well as requests for injunctive relief, specific performance, and a declaratory judgment that Santiago breached the Agreement. Following Santiago‘s challenge to personal jurisdiction over him, the district court ordered limited jurisdictional discovery.5 Upon conclusion thereof, the district court agreed with Santiago. This appeal followed.
A. Standard of Review
“When a court‘s personal jurisdiction over a defendant is contested, the plaintiff has the ultimate burden of showing by a preponderance of the evidence that jurisdiction exists.” Adams v. Adams, 601 F.3d 1, 4 (1st Cir. 2010) (citing Ealing Corp. v. Harrods Ltd., 790 F.2d 978, 979 & n.1 (1st Cir. 1986)). “Faced with a motion to dismiss for lack of personal jurisdiction, a district court ‘may choose from among several methods for determining whether the plaintiff has met [its] burden.‘” Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007) (alteration in original) (quoting Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50-51 (1st Cir. 2002)). Here, the district court applied the prima facie method, using the parties’ proffered evidence to determine whether personal jurisdiction over Santiago was proper. The parties engaged in limited discovery as to the jurisdictional issue. We review both the use of the prima facie method and the decision to grant the motion to dismiss de novo. Id.
Neither party disputes the district court‘s use of the prima facie method to resolve the motion to dismiss for lack of personal jurisdiction. However, Vapotherm argues that the district court applied the incorrect standard by weighing evidence, making findings of fact, and ignoring its evidentiary proffers in support of personal jurisdiction over Santiago. Vapotherm alleges that the district court should have construed its evidence “in the light most congenial to [its] jurisdictional claim.” Mass. Sch. of L. at Andover, Inc. v. Am. Bar Ass‘n, 142 F.3d 26, 34 (1st Cir. 1998). Vapotherm further adduces that crediting Santiago‘s version of the events is the only way the district court could have reached its conclusion.
The prima facie approach does not require that we “credit conclusory allegations or draw farfetched inferences.” Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994). Instead, “[t]he prima facie showing of personal jurisdiction must be based on evidence of specific facts set forth in the record.” Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992) (citing Kowalski v. Doherty, Wallace, Pillsbury & Murphy, 787 F.2d 7, 9 (1st Cir. 1986)). “Although the burden of proof is light, [the plaintiff] may not rely on the mere allegations of its complaint, but must point to specific fаcts in the record that support those allegations.” Jet Wine & Spirits, Inc. v. Bacardi & Co., 298 F.3d 1, 8 (1st Cir. 2002) (citing Daynard, 290 F.3d at 51). Vapotherm “must go beyond the pleadings and make affirmative proof.” Boit, 967 F.2d at 675 (quoting Chlebda v. H.E. Fortna & Bro., 609 F.2d 1022, 1024 (1st Cir. 1979)).
The district court correctly applied the prima facie standard in its decision. The majority of Vapotherm‘s arguments on this point seem to concern the district court‘s ultimate conclusion as to the motion to dismiss rather than its method of reaching that conclusion. Specifically, Vapotherm relied primarily on Santiago‘s deposition testimony and its complaint to establish important jurisdictional matters, such as where Santiago was paid from and where his employment contract was executed, rather than providing affirmative proof and developing specific record facts to support its argument on these points. As we shall discuss henceforth, the district court properly considered the limited evidence Vapotherm proffered in ruling on the motion to dismiss.
B. Personal Jurisdiction
The district court found that there were insufficient minimum contacts to exercise
In a case such as this one, the federal court sitting in diversity must determine whether the defendant‘s contacts with the state satisfy both the state‘s long-arm statute as well as the Due Process Clause of the Fourteenth Amendment. Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir. 1995). New Hampshire‘s long-arm statute permits jurisdiction over a defendant who “transacts any business within [New Hampshire]” or “commits a tortious act within [New Hampshire].”
In any event, New Hampshire‘s long-arm statute has been interpreted to allow jurisdiction over out-of-state defendants such as Santiago “to the full extent that the statutory language and due process will allow.” Sawtelle, 70 F.3d at 1388 (quoting Phelps v. Kingston, 536 A.2d 740, 742 (N.H. 1987)). Therefore, we direct our attention to whether exercising personal jurisdiction over Santiago in New Hampshire satisfies the constitutional requirements under the Due Process Clause of the Fourteenth Amendment. Id.
To exercise personal jurisdiction over a nonresident defendant, the defendant must “have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.‘” Int‘l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). A plaintiff attempting to establish specific personal jurisdiction over an out-of-state defendant must demonstrate that:
(1) [its] claim directly arises out of or relates to the defendant‘s forum-state activities; (2) the defendant‘s contacts with the forum state represent a purposeful availment of the privilege of conducting activities in that state, thus invoking the benefits and protections of that state‘s laws and rendering the defendant‘s involuntary presence in that state‘s courts foreseeable; and (3) the exercise of jurisdiction is ultimately reasonable.
Scottsdale Cap. Advisors Corp. v. The Deal, LLC, 887 F.3d 17, 20 (1st Cir. 2018) (citing A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 59 (1st Cir. 2016)). Considering the above-named requirements for specific personal jurisdiction in its discussion, focusing primarily on the first two, the district court found that Vapotherm failed to establish sufficient facts to support the inference that personal jurisdiction over Santiago in New Hampshire would be constitutional. We discuss the three requirements seriatim.
1. Relatedness
First, we consider whether Vapotherm has offered evidence establishing that its claims “directly arise[] out of or relate[] to the defendant‘s forum-state activities.” Id.
Vapotherm‘s claims sound in both contract and tort so we consider relatedness for both types of cases in turn.
For breach of contract claims, “we ask whether the defendant‘s activity in thе forum state was ‘instrumental either in the
Nonetheless, looking closely at the matter, Santiago‘s activity in New Hampshire was not instrumental in the formation of the contract nor its breach. It remains unclear where exactly the contract was executed. Vapotherm alleges that the contract was executed in New Hampshire when CFO John Landry signed it there, relying on (1) the signature of Landry on Santiago‘s employment contract and (2) Santiago‘s deposition testimony that he “believed” that the CFO worked out of Exeter, New Hampshire, but that he was “not 100% sure on that” and that “for all [he] kn[e]w,” he might have worked from home. Neither party, however, disputes that Santiago did not sign the contract in New Hampshire. As the district court correctly found, this does not support a finding of relatedness to New Hampshire in the formation of the employment contract. See Adams, 601 F.3d at 6 (“This is not a case in which the specific terms of a contract were ‘formalized and entered into’ in the forum state.” (quoting Adelson, 510 F.3d at 49)); see also Boit, 967 F.2d at 674, 678, 680 (affirming a dismissal for lack specific personal jurisdiction under the prima facie standard where “[plaintiffs‘] allegation that [defendant] sold [a] hot air gun to [a codefendant with ties to the forum state] directly [was] the cornerstone of their contention that [it] should have ‘reasonably anticipated being haled’ into court in [the forum state]” but “the record no more support[ed] [that] inference . . . than it d[id] an inference thаt [defendant] sold to another company without knowledge that it might sell to [the codefendant]“). Moreover, Santiago was not “subject to ‘substantial control and ongoing connection to [the forum state] in the performance of this contract.‘” Adams, 601 F.3d at 6 (alteration in original) (quoting Phillips v. Prairie Eye Ctr., 530 F.3d 22, 27 (1st Cir. 2008)). Although he contacted Vapotherm‘s New Hampshire headquarters for general administrative matters, he was not subject to substantial control there -- his direct supervisors were located in South Carolina, and their supervisor was based in Chicago.
As to whether Santiago‘s activities in New Hаmpshire were instrumental to the contract‘s breach, Vapotherm fares no better. None of the three employees that Santiago allegedly solicited worked in New Hampshire, and none of the conversations that would constitute solicitation are alleged to have taken place in New Hampshire. As the district court correctly held, Vapotherm has proffered no evidence which links Santiago‘s solicitation of Lonsway, Philpot, and Wong to New Hampshire.6
With regards to the tort claim of intentional interference with contract relations, Vapotherm argues that it properly established jurisdiction by showing that Santiago‘s acts of soliciting employees caused injury within New Hampshire by financially harming a New Hampshire-based company “even if the injury [was] the result of acts outside the state.” See N. Laminate Sales, Inc. v. Davis, 403 F.3d 14, 24 (1st Cir. 2005) (quoting Hugel v. McNell, 886 F.2d 1, 3 (1st Cir. 1989)). As discussed supra, this seemingly satisfies New Hampshire‘s long-arm statute. Hоwever, the exercise of personal jurisdiction over Santiago must still comport with the requirements under the Due Process Clause of the Constitution. See id. (“[H]aving satisfied the requirements of the New Hampshire long-arm statute, our inquiry now turns to the question of whether the exercise of jurisdiction over [the defendant] in New Hampshire violates the Federal Constitution.“).
To determine relatedness for tort claims under the requirements of the Due Process Clause, we “must probe the causal nexus between the defendant‘s contacts and the plaintiff‘s cаuse of action.” Phillips Exeter Acad., 196 F.3d at 289. Again we consider, specifically in regards to the tort claim, whether the tort claim “arise[s] out of or relate[s] to the defendant‘s contacts with the forum.” Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1026 (2021) (emphasis omitted) (quoting Bristol-Myers Squibb Co. v. Superior Ct. of Cal., 137 S. Ct. 1773, 1780 (2017)). Vapotherm alleges that the district court incorrectly applied the standard for relatedness, as articulated by the Supreme Court in Ford Motor Co., by requiring Vapotherm to demonstrate that
Even considering the test set forth in Ford, Vapotherm relies too heavily on the fact that Santiago‘s alleged solicitation of Lonsway, Philpot, and Wong led to injury in the forum state as the primary basis for relatedness of the tort claim.7 The cases establish that in-state injury alone is not sufficient under the Due Process Clause to prove relatedness for tort claims. See Phillips Exeter Acad., 196 F.3d at 291 (Noting “[a]s to Exeter‘s tort claim” that “the receipt of payment was merely an in-forum effect of an extra-forum breach and, therefore, inadequate to support a finding of relatedness“); Mass. Sch. of L., 142 F.3d at 36 (“We have wrestled before with this issue of whether the in-
forum effects of extra-forum activities suffice to constitute minimum contacts and have found in the negative.“); Walden, 571 U.S. at 289-90 (“[M]ere injury to a forum resident is not a sufficient connection to the forum. Regardless of where a plaintiff lives or works, an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum state.“); cf. Sawtelle, 70 F.3d at 1390-91 (finding weak relatedness when “the gravamеn of the [plaintiff‘s] claim is that they suffered in New Hampshire the ‘effects’ of the defendants’ negligence committed elsewhere“); Ford, 141 S. Ct. at 1032 (concluding that plaintiffs’ allegations that “they suffered in-state injury because of defective products that [the company] extensively promoted, sold and serviced in [the forum states]” met the relatedness prong). The actions which form the basis of the tort claim, Santiago‘s alleged solicitation of Lonsway, Philpot, and Wong, do not arise out of or relate to Santiago‘s contacts with New Hampshire. Instead, the three employees are connected to Santiago through their contacts in Florida and Georgia where they all worked throughout the duration of their employment with Vapotherm.
For the foregoing reasons, we agree with the district court that the evidence for relatedness on both the contract and tort claims is threadbare at best and insufficient to establish personal jurisdiction.
2. Purposeful Availment
Though we have determined relatedness is not met and therefore need not examine at length the other two jurisdictional requirements, we take this opportunity to briefly explain that purposeful availment also has not been demonstrated here. “The two key focal points of this concept are voluntariness and foreseeability.” Adelson, 510 F.3d at 50. For voluntariness,
Vapotherm contends that Santiago purposefully availеd himself of New Hampshire law by entering into a contract there and maintaining an employment relationship with a New Hampshire company for four years. Vapotherm also makes much of the fact that Santiago interfered with the employment contracts of Lonsway, Philpot, and Wong, all of which were governed by New Hampshire law. Vapotherm fails to establish, however, that Santiago was aware of the choice-of-law clauses within the three employees’ contracts. See Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 10 (1st Cir. 2009) (finding purposeful availment when the dеfendant was “fully aware of the . . . Employee Agreement, including its [choice-of-law and forum-selection] provisions“). Indeed, Santiago‘s own employment contract had a choice-of-law clause for Maryland, further indicating a lack of notice that he would be haled into New Hampshire to defend himself. See Adams, 601 F.3d at 8 (declining to find purposeful availment when contract‘s governing law was non-forum state); Burger King Corp., 471 U.S. at 482 (finding purposeful availment based on a forum state choice-of-law provision combined with defendant‘s relationship to the stаte).
Santiago‘s connections with New Hampshire differ significantly from those of the defendant in Adelson, where the court held that being haled into the forum state was both voluntary and foreseeable. 510 F.3d at 50-51. In Adelson, we relied on the fact that the out-of-state defendant had sought out employment in the forum state, formalized and executed his employment agreement there, his business card indicated his relationship to the forum state, and all of his financials were processed through that state. Id. at 50. Here, Santiago was recruited to Vapotherm rather than sеeking it out, was interviewed in Georgia and Illinois, formalized his portion of the employment agreement in Georgia, contacted New Hampshire primarily for technical and customer support, and only traveled there for company-wide corporate events. As Santiago indicated in his deposition, “[T]he majority of our business, the activities, the focus, the customers, 99-plus percent of everything that we do is in the accounts . . . So all of the focus is in your territories,” and his accounts were located in the Southeast of the Unitеd States, specifically Florida and Georgia. Based on these facts, the district court properly found that Santiago did not avail himself “of the privilege of conducting activities in [New Hampshire], thereby invoking the benefits and protections of [its] laws and making [his] involuntary presence before the state‘s courts foreseeable.” United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir. 1992).
3. Reasonableness
The final requirement needed to exercise personal jurisdiction over a defendant is that such exercise must be fair and reasonable. Cossart, 804 F.3d at 22 (citing C.W. Downer & Co., 771 F.3d at 69). Vapotherm asserts that exercising jurisdiction over Santiаgo is reasonable because New Hampshire has a strong interest in protecting its corporate residents and Santiago
As we explicated supra, Vapotherm did not make a prima facie showing as to either relatedness or purposeful availment. Therefore, we need not reach the reasonableness analysis. See Sawtelle, 70 F.3d at 1394 (“Moreover, we note that a failure to demonstrate the necessary minimum contacts eliminates the need еven to reach the issue of reasonableness“); Adams, 601 F.3d at 8 (“We hold that [the plaintiff] has not demonstrated . . . sufficient purposeful availment to allow for the exercise of jurisdiction. Thus, we need not proceed to consider the reasonableness prong of the analysis.“).
III. Conclusion
For the foregoing reasons, the judgment of the district court is
AFFIRMED.