The World in U.S. Courts: Summer and Fall 2016 - Personal Jurisdiction/Forum Non Conveniens/ Foreign Sovereign Immunity Act (FSIA)
Mueller Systems, located in Massachusetts and organized under Delaware law, sued Robert Teti, a resident of Canada and sole owner of ITET Corporation, an Ontario corporation. The parties previously collaborated to develop an electronic water valve system. Mueller received an exclusive right to market the valve, while Teti retained ownership of the intellectual property and patents related to the valve. Upon the lapse of the agreement in September 2012, Mueller developed a remotely controlled water valve and in October 2013 Teti filed suit against Mueller entities in Canada alleging, inter alia, misappropriation of confidential information and intellectual property. In July 2015, Mueller filed this case seeking a declaratory judgment that it did not misappropriate Teti’s confidential information or trade secrets.
The District Court in Massachusetts first determined that no general personal jurisdiction existed because Teti is a Canadian citizen and ITET a Canadian corporation that operates principally in Canada that, despite having four meetings with Mueller in Massachusetts, could not be deemed “at home” in the state.
Next, the Court determined that there were sufficient minimum contacts to invoke specific jurisdiction by considering three factors: the relation between the present suit and the defendants’ contact with the forum, the defendants’ “purposeful availment” of Massachusetts law, and the reasonableness of requiring the Canadian entities to defend themselves in a Massachusetts court.
Regarding relatedness, the Court found that the misappropriation of trade secrets and confidential information at issue allegedly arose from forum based meetings between the parties. Second, the court found that Teti and ITET purposefully availed themselves of the forum by meeting voluntarily to develop the water valve system, in the process putting themselves in the position of looking to Massachusetts law to protect their interests. Finally, the court determined that the reasonableness inquiry’s “Gestalt Factors” did not clearly weigh in favor or against jurisdiction: The burden on Canadian defendants attendant to litigation in the U.S. was not great; however, Massachusetts does not have a clear interest in resolving a dispute between a Canadian citizen and corporation and a Delaware corporation, and the Court’s intervention would not provide effective or efficient relief because key evidence and witnesses were outside of the forum and there is a mirror-image suit in Canada. Despite these equivocal facts, the Court was satisfied that plaintiff established Teti had sufficient minimum contacts for exercising personal jurisdiction.
[Editor’s note: Despite finding that it had personal jurisdiction over the Canadian defendants, the Court ultimately elected to exercise its discretion in this matter involving a declaratory judgment not to hear the case.]