Astro-Med, Inc. v. Nihon Kohden America, Inc.
Not provided in the case text (2009)
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Rule of Law:
An out-of-state defendant is subject to specific personal jurisdiction for a tortious interference claim when it knowingly hires an employee in a manner that will cause a breach of the employee's contract with a forum-state company, as such conduct purposefully avails the defendant of the forum and the resulting injury occurs within that forum.
Facts:
- In October 2002, Astro-Med, a Rhode Island corporation, hired Kevin Plant.
- Plant signed an Employee Agreement containing non-competition and non-disclosure clauses, which designated Rhode Island law and jurisdiction for disputes.
- Astro-Med provided Plant with extensive training and access to confidential information and trade secrets.
- Plant was later promoted to District Sales Manager and relocated to Florida to work for Astro-Med.
- In 2006, Nihon Kohden, a California-based competitor, began recruiting Plant to work in the same Florida territory.
- Before extending an offer, Nihon Kohden reviewed Plant's Employee Agreement with Astro-Med and was advised by its counsel of the legal risks involved in hiring him.
- Knowing of the non-competition agreement and the potential for a breach, Nihon Kohden hired Plant to sell its competing products in the same territory he had covered for Astro-Med.
Procedural Posture:
- Astro-Med filed suit against Kevin Plant in Rhode Island state court.
- Plant removed the case to the U.S. District Court for the District of Rhode Island, asserting diversity jurisdiction.
- Astro-Med amended its complaint to add Nihon Kohden as a defendant, alleging tortious interference with contract and misappropriation of trade secrets.
- Nihon Kohden filed a motion to dismiss for lack of personal jurisdiction, which the district court denied.
- Nihon Kohden also moved to dismiss for improper venue or, in the alternative, to transfer the case, which the district court denied.
- After a trial, a jury returned a verdict in favor of Astro-Med against both Plant and Nihon Kohden.
- The district court entered a final judgment including damages, exemplary damages, and attorney's fees.
- Nihon Kohden and Plant, as appellants, appealed the judgment to the U.S. Court of Appeals for the First Circuit.
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Issue:
Does a federal court in Rhode Island have specific personal jurisdiction over a California-based corporation that intentionally interfered with a Rhode Island employment contract by hiring a Florida-based employee, when the defendant's actions took place outside of Rhode Island but the resulting injury was felt within the state?
Opinions:
Majority - Woodcock, District Judge
Yes. A federal court in Rhode Island has specific personal jurisdiction over the defendant because its intentional, out-of-state conduct was aimed at a Rhode Island company and caused a foreseeable injury within the state. The court applied a three-part test for specific jurisdiction. First, the claim was related to the defendant's forum-state activities because Nihon Kohden's conduct caused the breach of a Rhode Island contract, injuring the Rhode Island-based plaintiff. Second, Nihon Kohden purposefully availed itself of Rhode Island's laws by proceeding to hire Plant despite knowing the Employee Agreement's specific connections to Rhode Island, making litigation there foreseeable. Third, exercising jurisdiction was reasonable under the 'gestalt factors,' as it was more efficient to adjudicate all related claims in one forum, especially since the co-defendant employee had already consented to jurisdiction in Rhode Island.
Concurring - Howard, Circuit Judge
Yes. Although the conclusion is correct, it creates tension with circuit precedent that typically requires a defendant's own conduct, not just the resulting injury, to occur within the forum state. In this specific case of an economic tort, however, the approach is justifiable because the tort of interference was not complete until Astro-Med suffered the economic injury in Rhode Island. Given that Nihon Kohden knew it was interfering with a Rhode Island employment relationship and the purposeful availment and reasonableness prongs are easily met, jurisdiction is appropriate, but the case is a close call under existing precedent.
Concurring - Lipez, Circuit Judge
Yes. This case highlights an analytical flaw in the circuit's precedent, which wrongly confines the 'Calder effects test' to the purposeful availment prong. Specific jurisdiction can be based solely on the in-forum effects of out-of-forum conduct. Those effects must be considered for relatedness; otherwise, jurisdiction is foreclosed illogically. The effects test should enlarge the concept of in-forum contacts for both relatedness and purposeful availment, and there should be no need to create a special category for economic torts to reach the correct result.
Analysis:
This case solidifies that, in the First Circuit, intentionally causing a contractual breach and economic injury within a forum state can establish specific personal jurisdiction, even if the defendant's actions occurred entirely elsewhere. It underscores that foreseeability of being sued is high when a defendant is aware of a contract's forum-selection and choice-of-law clauses. The concurring opinions reveal a significant internal debate within the circuit about the proper application of the 'effects test' from Calder v. Jones, suggesting that the framework for analyzing jurisdiction based on out-of-state conduct causing in-state harm may evolve in future cases.
