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Franklin Covey Co. v. Commercial Metals Co.

United States District Court, D. Utah

August 15, 2017

FRANKLIN COVEY CO., Plaintiff,
v.
COMMERCIAL METALS COMPANY, Defendant.

          MEMORANDUM DECISION AND ORDER

          CLARK WADDOUPS UNITED STATES DISTRICT JUDGE.

         Before the court is Defendant Commercial M s Company's Motion to Dismiss, in which Commercial M s asserts that this court lacks personal jurisdiction over it and that the District of Utah is not the proper venue for this action. (Dkt. No. 8.) Because Plaintiff Franklin Covey does not allege the court has general personal jurisdiction and there are no facts in the record that would support such a conclusion, the court addresses only whether specific personal jurisdiction exists. (Dkt. Nos. 2 ¶¶ 5-7 & 15 p. 10.) Having considered the arguments set forth in the briefs and during a hearing on August 10, 2017, the court determines that Franklin Covey has not met its burden of proving a prima facie case of personal jurisdiction and DISMISSES this action for lack of jurisdiction.

         Background

         Franklin Covey, a Utah corporation with its principal place of business in Salt Lake City, Utah, brings this action for copyright infringement under 28 U.S.C. § 1338(a) and 17 U.S.C. § 501. (Dkt. No. 2 ¶¶ 1 & 3.) In its complaint, Franklin Covey alleges that Commercial M s, a Delaware corporation with its principal place of business in Texas, used Franklin Covey's copyright-protected content in employee training sessions without authorization to do so. (Id. ¶¶ 4 & 40.) The following factual allegations are based upon the complaint and declarations submitted by the parties. The court accepts them as true only for the purposes of this motion.

         Commercial M s is a global m manufacturing, recycling, and trading company that makes steel beams for construction. (Dkt. No. 8, p. 7-8.) It is headquartered in, and all of its high level management is located in, Irving, Texas. (Dkt. No. 8-1 ¶ 4.) Commercial M s has 7, 871 employees in twenty-six states. (Id. ¶¶ 6 & 8.) And it has an international presence. (Id. ¶ 8.) In Utah, Commercial M s has one location and seventeen employees. (Id. ¶¶ 5-7.) The Utah employees make up 0.2% of Commercial M s's United States work force. (Id.) Commercial M s occasionally provides training seminars for its employees in various locations across the United States. (Dkt. No. 8, p. 8.) During those seminars, employees attend lectures and use corresponding workbooks. (Id.) Franklin Covey alleges that Commercial M s's employees are instructed in management and “prioritization” strategies. (Dkt. No. 2 ¶¶ 43-46.)

         Franklin Covey is a global, public company that helps organizations and individuals enhance performance in the categories of leadership, execution, productivity, trust, sales performance, customer loyalty, and education. (Dkt. No. 2 ¶ 9.) It has copyrighted several products aimed at teaching its clients in these areas, including The 5 Choices: The Path to Extraordinary Productivity and associated training materials, The Time Matrix model, The 7 Habits of Highly Effective People and other related products, and The 4 Disciplines of Execution. (Dkt. No. 2 ¶¶ 18-19, 26, 33-37, 39.)

         Brian Thompson is the Manager of Learning and Development for Commercial M s. (Dkt. No. 15-1 ¶ 6.) Prior to joining Commercial M s, Mr. Thompson worked for a different company where, in approximately 2013, he had occasion to meet Peter Montgomery, who is the Client Partner for Franklin Covey. (Id. ¶¶ 2 & 7.) At that time the two men worked together, and Mr. Thompson purchased Franklin Covey's products for his then-employer. (Id. ¶¶ 8-9.) During their past interactions, Mr. Montgomery communicated that Franklin Covey is located in Utah. (Id. ¶ 10.) On July 15, 2016, after Mr. Thompson had begun working for Commercial M s, the two men met at its office in Irving, Texas to discuss Commercial M s purchasing Franklin Covey's services. (Id. ¶ 12.) Mr. Thompson informed Mr. Montgomery that Commercial M s did not need Franklin Covey's services or products because it had a workbook of its own. (Id. ¶¶ 13-15.) According to Mr. Montgomery, Mr. Thompson showed him a workbook, entitled “Essentials of Management, ” that contained materials related to Franklin Covey's products. (Id. ¶ 15.) He also asserts that Mr. Thompson had copies of Franklin Covey's products on his shelf. (Id. ¶ 15.) Mr. Thompson reported to Mr. Montgomery that the materials were used in employee training seminars. (Id. ¶¶ 13-14, 19.) Based on this encounter Mr. Montgomery notified Mr. Thompson on July 22, 2016, that he believed the materials infringed Franklin Covey's copyrights and that Commercial M s needed a license to use them; Mr. Thompson denied this. (Id. ¶¶ 20-22.)

         Based on his interactions with Mr. Thompson and knowledge of how Franklin Covey's products work, Mr. Montgomery states in a declaration to the court that he “believe[s]” Commercial M s's employees attend seminars where they receive copies of the workbooks and are instructed on how to use the concepts. (Id. ¶¶ 23-28.) He further believes that Commercial M s “instructed and expected its employees to apply, implement, and exploit the training materials.” (Id. ¶ 32.) This is at least in part because of his understanding that Franklin Covey's materials are only valuable to organizations using them if they are implemented beyond the training sessions. (Id. ¶ 31.) Mr. Montgomery offers no further foundation to support that he has personal knowledge of the facts he asserts.

         Mr. Thompson declares that the materials Mr. Montgomery saw were created in Texas and that no seminars ever occurred in Utah; Franklin Covey does not dispute these facts. (Dkt. No. 8-1, ¶¶ 10-11.) At least two supervisors based in Commercial M s's Utah location attended training seminars in Arizona. (Id. ¶ 12; Dkt. No. 22-2 ¶¶ 8-9.) In his declaration attached to the reply brief in support of this motion, Mr. Thompson states that the Utah supervisors attended the seminar on September 21, 2016, and September 23, 2016, and that the seminar they attended used different materials than those Mr. Montgomery saw on July 15, 2016. (Dkt. No. 22-2 ¶¶ 9-10, 12.) Mr. Thompson also declares that Commercial M s never instructed its employees to use the training materials in their offices or to otherwise instruct their employees based on what they learned at the seminar, but that the employees “are free to do as they please with the training materials.” (Id. ¶¶ 14-18.)[1] Franklin Covey offers no supportable evidence to contradict Mr. Thompson's declarations.

         ANALYSIS

         I. Personal Jurisdiction

         On a motion to dismiss for lack of jurisdiction, “the plaintiff need only make a prima facie showing of personal jurisdiction to defeat the motion.” AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1057. Franklin Covey may satisfy its burden “by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant.” Emp'rs Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1159 (10th Cir. 2010) (citation and internal quotation marks omitted). And “[a]ll factual disputes are resolved in favor of the plaintiff[] when determining the sufficiency of this showing, ” Rusakiewicz v. Lowe, 556 F.3d 1095, 1100 (10th Cir. 2009), so long as the plaintiff's facts are “well-pled (that is, plausible, non-conclusory, and non-speculative), ” Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1069 (10th Cir. 2008).

         When considering whether personal jurisdiction is proper in a federal question case, federal courts “must determine (1) whether the applicable statute potentially confers jurisdiction by authorizing service of process on the defendant and (2) whether the exercise of jurisdiction comports with due process.” Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th Cir. 2000). Where the statute under which the plaintiff has sued does not provide for nationwide service of process, as is the case with the Copyright Act, the court looks to Federal Rule of Civil Procedure 4(k)(1), which governs service and instructs courts to “appl[y] the forum state's personal jurisdiction rules.'” Fort Knox Music Inc. v. Baptiste, 203 F.3d 193, 196 (2d Cir. 2000) (quoting PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d. Cir. 1997)); see also Daimler AG v. Bauman, 134 S.Ct. 746, 753 (2014) (“Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.”). The Utah legislature, in effort to “ensure maximum protection to citizens of this state, ” has said Utah's long-arm statute extends jurisdiction “to the fullest extent permitted by . . . due process.” Utah Code Ann. § 78B-3-201. Thus, the proper inquiry here is whether it would offend due process for the court to exercise jurisdiction over Commercial M s. See Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014) (applying the Nevada long-arm statute, which also reaches to the broadest extent of due process).

         Due process permits a court to exercise personal jurisdiction if the defendant has “certain minimum contacts . . . 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) (citations and internal quotation marks omitted). In other words, jurisdiction is proper where “defendant has ‘minimum contacts' with the forum state such ‘that he should reasonably anticipate being haled into court there.'” AST Sports Sci., 514 F.3d at 1057 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). Thus, the court must satisfy ...


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