District Court Finds Jurisdiction Over Fraud Claims but Not Related Tortious Interference and Breach of Fiduciary Duty Claims Against Foreign Defendants

The World in U.S. Courts: Winter 2015 - Personal Jurisdiction

Ahn v. Korea Advanced Institute of Science and Technology et al., U.S. District Court for the District of New Jersey, November 17, 2014

Plaintiff Daniel Ahn, a citizen of New Jersey, brought claims of tortious interference with contract, common law fraud, fraudulent inducement, and breach of fiduciary duty against KASIT, a South Korean University, and Nam Pyo Suh, its President. Ahn claimed defendants promised him that he would be made a Distinguished Professor at KAIST and the CEO of Mobile Harbor, Inc., a corporation created to execute the industrial aspects of a technology for loading/unloading shipping containers. Ahn claimed that defendants assured him that he would be entitled to 50% of the royalty and intellectual property rights for each and every patent application that he submitted, and that KAIST would ensure continued funding for Mobile Harbor, Inc.

The complaint alleged that KAIST underfunded Mobile Harbor, Inc., and refused to transfer intellectual property rights that were necessary for Ahn to execute a joint venture agreement involving Mobile Harbor Inc. and Coastal Mechanics, a Texas corporation. Defendants moved to dismiss for lack of personal jurisdiction.

The Court applied New Jersey’s long-arm statute, which permits personal jurisdiction to the fullest limits of the Due Process Clause of the U.S. Constitution. This requires a determination of whether (1) defendants made constitutionally sufficient minimum contacts with the New Jersey and (2) exercise of jurisdiction would comport with “traditional notions of fair play and substantial justice.”

The Court determined defendants had did not have “continuous and systematic” contacts with New Jersey to sufficient to confer general jurisdiction. It then examined whether defendants purposefully directed the activities causing the alleged injury to New Jersey, in order to determine specific jurisdiction over the claims.

The Court found that there were sufficient contacts to confer specific jurisdiction over defendants for Ahn’s two fraud claims, as Ahn was recruited for his position in New Jersey. The Court did not have jurisdiction over Ahn’s tortious interference and breach of fiduciary duty claims, as these did not arise out of the recruitment process or other contacts with New Jersey.

The Court determined that exercising jurisdiction over these claims comported with fair play and substantial justice. It explained that Suh, the principal defendant and witness, was located in Massachusetts, which was not so far from New Jersey as to cause Suh undue hardship in coming to New Jersey to testify at trial, and that New Jersey had an interest in protecting its citizens from fraudulent misrepresentations. The difference between Massachusetts and New Jersey for the purposes of KAIST was irrelevant as both are about equally distant from South Korea.

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