IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS - AUSTIN DIVISION FUNDSXPRESS FINANCIAL NETWORK, Plaintiff, v. DIGITAL INSIGHT CORPORATION, ET AL. Defendants. DEFENDANT ERIC EDWARDS' MOTION TO DISMISS COMPLAINT PURSUANT TO F.R.C.P. RULE 12(b)(2) TO THE HONORABLE SAM SPARKS, UNITED STATES DISTRICT JUDGE: Eric Edwards, a defendant herein, moves the Court to dismiss this suit as against him, respectfully showing the following: INTRODUCTION This action should be dismissed as to defendant Eric Edwards as there is no basis for this Court to exercise personal jurisdiction over him. Edwards is currently employed by defendant Digital Insight Corporation ("DI"). Edwards does not and has never had personal contacts with the State of Texas. Among other things, Edwards has never resided in Texas, has never owned real property in Texas and has never maintained a bank account in Texas. Edwards has been to Texas three times, all within the last seven years. None of these visits were for personal matters, and each lasted for only one night. Thus, this Court does not have general jurisdiction over Edwards. The Court also does not have specific jurisdiction over Edwards since none of the wrongful acts attributed to Edwards in the Complaint -- misappropriation of plaintiff's alleged trade secrets and copyright infringement -- took place in Texas or were directed to Texas. Thus, the Complaint should be dismissed against Edwards. STATEMENT OF FACTS DI and plaintiff are competitors in the field of internet banking. Complaint at P8. They both provide internet banking and related services to financial institutions throughout the country. Id. In 2001, DI hired defendant Ronald Goffman, and non-party Steven Crain, both of whom who had been previously terminated by plaintiff. Complaint PP26, 28. In October 2001, DI hired another of plaintiff's former employees, non-party Gifford Dunn.[1] Complaint P29. Plaintiff alleges that its former employees -- Goffman, Crain and Dunn -- provided Edwards and DI with certain documents and information they received while employed by plaintiff. This conduct, plaintiff alleges, render Goffman, Edwards and DI liable for misappropriation of trade secrets (Count I), conversion (Count II), interference with contract (Count III), copyright infringement (Count IV) and unfair competition (Count V). With respect to defendant Edwards, the Complaint makes the following specific factual allegations: * Edwards engaged in employment discussions with Dunn and orally offered him a position as a DI sales representative. Complaint at P29. * After he was hired by DI, Dunn sent Edwards an e-mail, dated November 12, 2001, which contained a copy of plaintiff's pricing suite. Complaint at P33. * On November 14, 2001, Edwards, in a series of e-mails, asked Dunn to provide additional information about plaintiff's pricing discounts and bill pay product. Complaint at P33. * On December 3, 2001, Dunn e-mailed plaintiff's Dynamic Website Tutorial and Documentation ("Tutorial") to Edwards. Complaint at P33. * Edwards made plaintiff s pricing suite available to all DI employees via DI's Intranet site. Complaint at P34. * Edwards informed DI's executive management team that DI was securing trade secrets and other confidential information of plaintiff. Complaint P36. As discussed below, none of the forgoing conduct, to the extent it occurred, took place in Texas or was directed at Texas. Further, Edwards has had no other substantial contacts with Texas. Accordingly, Edwards should be dismissed from this action for lack of personal jurisdiction. ARGUMENT I. THE STANDARD FOR DETERMINING PERSONAL JURISDICTION A court determines the existence of personal jurisdiction over a nonresident defendant by examining the "(1) assertion of jurisdiction by the law of the forum;" and "(2) conformity of the law with the Constitution." St. Claire v. Ensurelink, 2002 U.S. Dist. Lexis 7052, *6 (N.D. Tex. 2002); Panda Brandywine Corp. v. Potomac Electric Power Co., 253 F.3d 865, 867 (5th Cir. 2001). A defendant is amenable to the personal jurisdiction of a federal court to the same extent that he or she would be amenable to the jurisdiction of a state court in the same forum. St. Claire, at *6. Thus, applying state law, this Court must first determine whether Texas, the forum state, could assert long-arm jurisdiction over Edwards. Id. Because the Texas long-arm statute confers jurisdiction to the limits of the federal constitution, the court need only concern itself with the federal due process inquiry. Id. Due process requires the satisfaction of two elements to exercise personal jurisdiction over a nonresident: (1) the nonresident must have some minimum contact with the forum which results from an affirmative act on his or her part; and (2) it must be fair and reasonable to require the nonresident to defend the suit in the forum state. St Claire, at *7; Panda Brandywine, 253 F.3d at 867. The due process clause ensures that persons have "fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign." Id. Minimum contacts can be established either through contacts sufficient to assert general jurisdiction or contacts sufficient to assert specific jurisdiction. Panda Brandywine, 253 F.3d at 867. The plaintiff has the burden of proving that the exercise of personal jurisdiction is appropriate. Id. II. EDWARDS IS NOT SUBJECT TO GENERAL JURISDICTION IN TEXAS BECAUSE THE LIMITED CONTACTS HE HAS HAD WITH TEXAS ARE NOT CONTINUOUS OR SYSTEMATIC General jurisdiction may be found when a claim is unrelated to the nonresident's contacts with the forum but where those contacts are "continuous and systematic." St Claire, at *8. The minimum contacts analysis requires a showing of substantial activities in the forum state. Id. at *9; Canyon Creek Communications Corp. v. Communication Cable Co., 2002 U.S. Dist. LEXIS 4168, *9 (2002) (no general jurisdiction because "Defendants' previous two or three contacts with a sales office in Texas, along with one phone call related to [a] sale hardly constitute continuous and systematic general business contacts.") In National Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 774 (1995), the court held that the defendant's tenuous contacts did not constitute the systematic and continuous contacts with Texas necessary for general jurisdiction. There, the only contacts the defendant had with Texas were mailings of national newsletters and notices of acceptance of dues to a member company in Texas and the attendance of one of its officials at a meeting in Texas. These limited contacts were insufficient to establish general jurisdiction. The court was persuaded by the defendant's showing that it: (1) was not and never has been a resident of Texas; (2) did not maintain a registered agent for service in Texas; (3) never maintained a place of business in Texas; (4) did not have employees or agents in Texas; (5) never maintained an office, mailing address, or telephone number in Texas; (6) never owned any assets in Texas; (7) never paid any taxes in Texas; (8) never maintained a bank account in Texas; (9) never owned, leased, rented, or controlled any real or personal property in Texas; (10) never purchased personal property in Texas or from a Texas business, citizen, or resident; (11) never entered into a contract with any Texas business, citizen, or resident; and (12) never held an official meeting in Texas. Id. at 772-73. Like the defendant in National Indus. Sand Assoc., Edwards does not have systematic and continuous contacts with Texas. He has never been a resident of Texas; rather, he is a resident of Wisconsin. Edwards Aff. at P2.[2] He has never been employed in Texas; he is employed by DI in Wisconsin. Edwards Aff. at P3. He has never maintained an office, mailing address, or telephone number in Texas. Edwards Aff. at P3. He has never owned any assets in Texas. Edwards Aff. at P4. He has never paid any income taxes in Texas. Edwards Aff. at P5. He has never maintained a bank account in Texas. Edwards Aff. at P6. He has never owned, leased, rented, or controlled any real or personal property located in Texas. Edwards Aff. at P7. He has never voted in a Texas election. Edwards Aff. at P8. The limited contacts that Edwards has had with Texas are not sufficient to support the exercise of general jurisdiction over him. The only contact that Edwards has had with Texas is that he has been physically present there three times, for one night each. Edwards Aff. at P9. In 1995, he was in Dallas for one night while on business for his former employer. Edwards Aff. at P9. In November or December of 2001 and in early 2002, he was in Houston for one night each time to meet with a partner of DI. Edwards Aff. at P9. None of these meetings had anything to do with plaintiff. Edwards Aff at P9. In addition. none of the actions that Plaintiff has alleged against Edwards occurred in Texas. Edwards has not taken any actions on behalf of DI in Texas other than the two meetings in Dallas and Houston, which were unrelated to Plaintiff or the facts alleged in the Complaint. When Edwards had employment discussions with Dunn and orally offered him a position as a DI sales representative, Edwards was in Wisconsin and Dunn was in Kansas City, Missouri. Edwards Aff. at P10. When Dunn sent Plaintiff's pricing suite and Tutorial to Edwards, Edwards was in Wisconsin and Dunn was in Missouri. Edwards Aff. at P10. Any e-mails that Edwards sent to Dunn regarding Plaintiff's pricing were sent while he was in Wisconsin and Dunn was in Missouri. Edwards Aff. at P10. DI's executive management team is located in California and any e-mails that Edwards would have sent to them regarding Plaintiff would have been sent while he was in Wisconsin and they were in California. Edwards Aff. at P11. At the relevant time, DI's intranet site was located and maintained in Georgia. Edwards Aff. at P11. Thus, Edwards has not engaged in the systematic and continuous activity in Texas that is required for general jurisdiction. III. EDWARDS IS NOT SUBJECT TO SPECIFIC JURISDICTION IN TEXAS BECAUSE THE ACTIONS THAT PLAINTIFF CLAIMS EDWARDS ENGAGED IN DID NOT OCCUR IN TEXAS AND WERE NOT DIRECTED AT TEXAS Specific jurisdiction exists when a nonresident defendant has "purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities." Panda Brandywine Corp. v. Potomac Electric Power Co., 253 F.3d 865 (5th Cir. 2001). Specific jurisdiction is not created simply because a plaintiff resides in and was injured in Texas. Id. at 870. In this action, there is no specific jurisdiction over Edwards. None of the acts that Plaintiff alleges he committed occurred in, or were purposefully directed at, Texas. In Panda Brandywine Corp., the Fifth Circuit found that the plaintiff's allegations did not support specific jurisdiction over the defendant. One of the plaintiffs was located in Texas and sold electricity under a contract to defendant, a utility incorporated in Virginia and District of Columbia. To finance the plant's operations, plaintiffs entered into certain financing agreements. When defendant decided to divest its interests in the long-term power purchase agreement, plaintiffs sued alleging that the defendant had intentionally interfered with the plaintiffs' financing agreements. The plaintiff argued that specific jurisdiction in Texas was appropriate because the defendant knew its action would intentionally cause harm to the plaintiffs in Texas. The court found that the plaintiffs' allegations were insufficient to establish specific jurisdiction because there were no facts suggesting that defendant purposefully availed itself of the privilege of conducting activities in Texas and invoked the benefits and protections of Texas's laws when it acted to divest its interests in the purchase agreement. While plaintiffs' allegations seemed to suggest that defendant purposefully directed its actions toward them, the district court had correctly held that such allegations were insufficient because the financing agreements were not governed by Texas law, were not to be performed in Texas, and had no relation to Texas other than the fortuity that plaintiffs resided there. Id. at 869. The court also found that if it were to accept plaintiff's arguments, a nonresident defendant would be subject to jurisdiction in Texas for an intentional tort simply because the plaintiff's complaint alleged injury in Texas to Texas residents regardless of the defendant's contacts. Such a result would completely vitiate the constitutional requirement of minimum contacts and purposeful availment. Id. at 870. In Mink v. AAAA Development LLC, 190 F.3d 333 (5th Cir. 1999), the Fifth Circuit also declined to exercise specific jurisdiction. In Mink, the plaintiff had created and patented a computer program. In his suit, the plaintiff alleged that the defendants had conspired to copy plaintiff's computer program in violation of federal copyright and patent laws. The Fifth Circuit affirmed the district court's decision to dismiss for lack of personal jurisdiction because the plaintiff had not established any contacts with the state of Texas that were directly related to the causes of action, as required for specific jurisdiction. Id. at 336. Similarly, there are no facts in this case suggesting that Edwards' conduct, as alleged in the complaint occurred in, or was directed at Texas, such that specific jurisdiction is appropriate. As discussed previously, the only limited contacts with Texas that Edwards has had were three one-night trips that had nothing to do with Plaintiff. Edwards Aff. at PP2-9. Moreover, in its Complaint, Plaintiff has not alleged that the actions that it claims Edwards engaged in occurred in or were directed at Texas, and the evidence establishes no Texas connection between Edwards' alleged conduct and the state of Texas. Edwards Aff. at PP10-11. CONCLUSION This Court does not have general or specific personal jurisdiction over Edwards. Edwards did not have systematic and continuous contacts with Texas. Other than three one-night business trips to Texas over the last 7 years that had nothing to do with Plaintiff, he has had no contacts with Texas. In addition, none of the actions that Plaintiff alleges Edwards took occurred in Texas and Plaintiff does not allege otherwise. Accordingly, Edwards should be dismissed from this action for lack of personal jurisdiction. [1] Plaintiff previously sued Gifford Dunn in Kansas City, where he resides. Complaint at P34. That action was settled. [2] The Affidavit of Eric Edwards in Support of His Motion to Dismiss ("Edwards Aff.") is filed concurrently herewith. Respectfully submitted, CLARK, THOMAS & WINTERS, A Professional Corporation By: BARRY K. BISHOP State Bar No. 02346000 P. O. Box 1148 Austin, Texas 78767-1148 (512) 472-8800 (512) 474-1129 fax ATTORNEYS FOR DEFENDANTS DIGITAL INSIGHT CORPORATION, ERIC EDWARDS AND RONALD GOFFMAN CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has been served on all counsel of record via ( ) hand-delivery, (*)facsimile and/or ( ) certified mail, return receipt requested, on this 6th day of June, 2002: Peter Nolan Winstead Sechrest & Minick, P.C. 100 Congress Avenue, Suite 800 Austin, Texas 78701 (512) 370-2850 fax Barry K. Bishop AFFIDAVIT OF ERIC EDWARDS IN SUPPORT OF HIS MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION I, Eric Edwards, state: 1. The following facts are true of my own personal knowledge. If called upon to do so, I could and would competently testify to these facts. I am a defendant in this action. I am currently employed as a Vice President of Sales for defendant Digital Insight Corporation ("DI"). 2. I am not and have never been a resident of Texas. Rather, I am a resident of Wisconsin. 3. I am not and have never been employed in Texas. For the last several years, 1 have worked from my home in Wisconsin. l have never maintained an office, mailing address, or telephone number in Texas. 4. I have never owned any assets in Texas. 5. I have never paid any income or property taxes in Texas. 6. I have never maintained a bank account in Texas. 7. I have never owned, leased, rented, or controlled any real or personal property located in Texas. 8. I have never voted in a Texas election. 9. I have had very limited contacts with Texas. In 1994 or 1995, I was in Dallas, Texas for one night while on business for my former employer. In November or December of 2001 and in early 2002, I was in Houston, Texas for one night each time to meet with a partner of DI. None of these meetings had anything to do with FundsXpress Financial Networks Inc. ("Plaintiff"). 10. I have not taken any actions on behalf of DI in Texas other than the two meetings in Houston. When I engaged in employment discussions with Gifford A. Dunn ("Dunn") and orally offered him a position as a DI sales representative, I was in Wisconsin and Dunn was in Kansas City, Missouri, except for one in-person meeting in Iowa. When Dunn sent me Plaintiff's pricing suite in November 2001, and Tutorial in December 2001, I was in Wisconsin and Dunn was in Missouri. Any e-mails that 1 sent to Dunn regarding Plaintiff's pricing were sent while I was in Wisconsin and he was in Missouri. 11. DI's executive management team is located in California. Any e-mails that 1 would have sent to them concerning information received from Dunn about Plaintiff would have been sent while I was in Wisconsin, or elsewhere in the midwestern United States, and they were in California. 12. In 2001, DI's intranet site was housed and maintained at DI's offices in Norcross, Georgia. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on June 5, 2002. Eric Edwards