IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS - AUSTIN DIVISION

FUNDSXPRESS FINANCIAL NETWORK,
INC.
Plaintiff,

V.

DIGITAL INSIGHT CORPORATION, ET AL.
Defendants.

REPLY MEMORANDUM IN SUPPORT OF DEFENDANT ERIC EDWARDS'S MOTION TO
DISMISS COMPLAINT PURSUANT TO F.R.C.P. RULE 12(b)(2)

TO THE HONORABLE SAM SPARKS, UNITED STATES DISTRICT JUDGE:

Defendant Eric Edwards hereby replies to plaintiff's opposition to his
motion to dismiss for lack of personal jurisdiction.

INTRODUCTION

Plaintiff has not demonstrated that this Court has personal
jurisdiction over defendant Eric Edwards. Contrary to the argument
made in Plaintiff's Opposition to Eric Edwards's Motion to Dismiss
("Opposition"), the fact that plaintiff is located and allegedly
suffered damage in Texas is not enough to establish jurisdiction in
Texas. Further, plaintiff's assertion that Edwards directed Gifford
Dunn to steal trade secrets from plaintiff's Texas-based computers is
not supported by the evidence. Accordingly, Edwards's motion should be
granted, and he should be dismissed from this case for lack of
personal jurisdiction.

ARGUMENT

To exercise personal jurisdiction over Edwards the Court must find
that plaintiff has established that Edwards engaged in conduct that
was purposefully directed or aimed at the state of Texas. Panda
Brandywine Corp. v. Potomac Electric Power Co., 253 F.3d 865, 869 (5th
Cir. 2001), citing Burger King Corp. v. Rudzewicz, 471 U.S. 462,
475-76 (1985). The so-called "effects" test set forth by the United
States Supreme Court in Calder v. Jones,465 U.S. 783, 789 (1984), does
not alleviate the purposeful direction requirement. "Calder's
'effects' test 'is not a substitute for a nonresident's minimum
contacts that demonstrate purposeful availment of the benefits of the
forum state."' Panda Brandywine, 253 F.3d at 869, citing Allred
v. Moore & Peterson, 117 F. 3d 278, 286 (5th Cir. 1997).

Indeed, following Calder, courts in the Fifth Circuit have made clear
that jurisdiction over a nonresident is not created merely because the
plaintiff is present in the forum state, and the effects of any tort
would be felt in that state. More is needed; some aspect of the
tortious conduct must take place in or be directed at the forum state
- in this case, Texas. Thus, in Calder, the defendants made
investigatory phone calls to California and more than 600,000 copies
of the allegedly defamatory article were distributed in
California. California was also the plaintiff's home and the center of
the entertainment industry in which she worked.

Distinguishing Calder, the Fifth Circuit in Wilson v. Belin, 20 F.3d
644 (5th Cir. 1994), found that out-of-state defendants who had made
allegedly defamatory statements about the plaintiff to a Texas
newspaper reporter (who was in Texas) were not subject to jurisdiction
in Texas. In so holding the court noted that Calder does not stand for
the proposition that jurisdiction exists where tortious effects are
felt. 20 F.3d at 648.

Similarly, in Allred v. Moore & Peterson, 117 F.3d 278 (5th
Cir. 1997), the Fifth Circuit refused to allow a Mississippi district
court to exercise personal jurisdiction in a malicious prosecution
action over lawyers from Texas and Louisiana. The court found that the
only Mississippi-directed conduct - sending the summons and complaint
and interrogatories to plaintiff in Mississippi - did not constitute
sufficient minimum contacts for the purpose of establishing specific
jurisdiction over the out-of-state defendants. Calder did not provide
for the creation of personal jurisdiction by the fact that the
allegedly malicious lawsuit was directed at the plaintiff who lived
and worked in Mississippi. "Consequences stemming from the actual tort
injury do not confer personal jurisdiction at the site or sites where
such consequences happen to occur." 117 F.3d at 282, (quoting Jobe
v. ATR Mktg., Inc., 87 F.3d 751, 753 (5th Cir. 1996)). Rather, the
Fifth Circuit explained, to establish specific jurisdiction under
Calder, the defendant's allegedly tortious conduct must be directed at
or undertaken in the forum state. "The key to Calder is that the
effects of an alleged intentional tort are to be assessed as part of
the analysis of the defendant's relevant contacts with the forum." 117
F.3d at 287 (quoting Wallace v. Herron, 778 F.2d 391, 395 (7th
Cir. 1985)).

Finally, in Management Insights, Inc. v. CIC Enterprises, Inc.,194
Supp.2d 520,526 (N.D. Tex. 2001), the court, applying the Calder
effects test, found that Texas did not have personal jurisdiction over
a non-resident who had slandered the plaintiff in a telephone call
with plaintiff's Tennessee customer, even though the plaintiff was
located in Texas and the tortious effects of such slander would be
felt in Texas. Because there was no evidence that the "slanderous
statements ever reached Texas," or were "purposefully directed at
Texas," dismissal of the non-resident defendant was
appropriate. Id. The court dismissed the precise argument raised by
plaintiff in this case - that under Calder, purposeful availment
existed where the non-resident defendant knew that the plaintiff was
located in the forum and the effects of its conduct would be felt in
the forum state. "[S]omething more than the mere fortuity of the
plaintiff's presence in the forum state was needed to justify
assertion of jurisdiction over the defendants." 194 F. Supp 2d at 526
(citing Bell Helicopter v. C & C Helicopter Sales, 2001
U.S. Dist. LEXIS 3724, *4 (N.D. Tex. 2001)

This case is no different than Wilson, Allred and Management Insight,
and is distinguishable from Calder for the same reasons. Edwards's
allegedly wrongful conduct was not directed at Texas. As set forth in
Edwards's declaration, and not controverted by plaintiff, Edwards
corresponded via e-mail with Dunn, while Dunn was in Missouri and
Edwards was in Wisconsin. And, contrary to plaintiffs argument,
Edwards did not ask Dunn to "steal" information from plaintiff's
Texas-based computers. Dunn testified that Edwards did not ask him to
obtain any specific information from plaintiff:

   Q: Did Mr. Edwards ask you to provide that information [FundsXpress
      pricing sheet]?
   A: This specific information?
   Q: Yes.
   A: No.

Transcript of Proceedings dated February 25, 2002 at 8, ll. 14-18. [1]
Further, there is no evidence or allegation that Edwards was aware (as
plaintiff now argues) that Dunn had obtained the alleged trade secrets
from Texas, before sending them to Edwards. It was just as likely that
such materials were located on Dunn's computer in Missouri before he
ever formed the intent to transfer them to Edwards.

It is also clear from Dunn's testimony that he used his home computer -
located in Missouri - to send the alleged trade secrets to
Edwards. "Q: That e-mail is an e-mail from yourself at the office of
yourself at home, isn't it? A: Yes, sir." Indeed, while Dunn's
FundsXpress e-mail address was "gdunn@fundsXpress.com," [2] the e-mails
wherein Dunn sent alleged trade secrets to Edwards reflect that the
sending e-mail address was "gdunn@everestkc.net." See Plaintiff's
Exhibits 3 and 5. Thus, it is impossible for John Burns to say,
judging from these e-mails alone, whether the alleged trade secrets
were already residing on Dunn's home computer in Missouri when he sent
them to Edwards.

Even if Dunn did send the e-mails to Edwards in Wisconsin from
plaintiff's Texas computer system, that is not enough for this Court
to exercise jurisdiction over Edwards. Such conduct may amount to
purposeful availment by Dunn, but not by Edwards. Jurisdiction cannot
be established over a nonresident by virtue of the conduct of a third
party. Burger King Corp., 471 U.S. at 474 ("Personal jurisdiction may
not be exercised over a non-resident based upon unilateral conduct of
third parties.")

Jurisdiction also is not established by the fact that Edwards might
have foreseen that his conduct would cause injury to plaintiff in
Texas. "The foreseeability of causing injury in Texas" is not "a
'sufficient benchmark' for specific jurisdiction." Panda
Brandywine, 253 F.3d at 869, quoting Burger King, 471 U.S. at 474.

Plaintiff's reliance on Wien Air Alaska v. Brandt,195 F.3d 208 (5th
Cir. 1999) and Janmark, Inc. v. Reidv, 132 F.3d 1200 (7th Cir. 1997),
is misplaced. Wien Air is factually distinguishable because there, the
non-resident defendant's limited contacts with the forum - letters and
telephone calls to the plaintiff in Texas - formed the basis for the
plaintiff's claims. And, Janmark embodies an interpretation of the
"effects" test that is not followed in the Fifth Circuit. The Janmark
court based its holding on its conclusion that under Calder, "the
state in which the victim of a tort suffers the injury may entertain a
suit against the accused tortfeasor." This is not the law in this
circuit. The Fifth Circuit has soundly rejected the notion that Calder
"stands for the proposition that whenever the effects of libel by a
nonresident are felt in the forum state, specific jurisdiction
exists." Wilson, 20 F.3d at 648. See also Panda Brandywine, 253 F.3d
at 870 (rejecting the argument that "a nonresident defendant would be
subject to jurisdiction in Texas for an intentional tort simply
because the plaintiffs complaint alleged injury in Texas to Texas
residents.") and Management Insights~ Inc., 194 F. Supp 2d at 526
("[S]omething more than the mere fortuity of the plaintiff's presence
in the forum state was needed to justify assertion of jurisdiction
over the defendants.").

CONCLUSION

This Court cannot exercise personal jurisdiction over Edwards. His
conduct, as it relates to the allegations against him in this action
was not directed at the state of Texas. Accordingly, defendant Edwards
respectfully requests that the Court grant his motion and dismiss him
from this action for lack of personal jurisdiction.

[1] The Dunn transcript is attached to plaintiff's Opposition as
Exhibit 2.

[2] See attached excerpts from the deposition of Gifford Dunn.

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

John W. Cotton
Aaron C. Gundzik
COTTON & GUNDZIK LLP
725 South Figueroa Street, 34th Floor
Los Angeles,California 90017
(213) 312-1330
(213) 623-6699 fax

ATTORNEYS FOR DEFENDANTS DIGITAL INSIGHT CORPORATION, ERIC EDWARDS,
RONALD GOFFMAN, JOHN DORMAN, VINCENT BRENNAN AND STEPHEN CRAIN

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 26th day of July, 2002:

R. James George, Jr.
Nanneska N. Hazel
George & Donaldson, L.L.P.
114 West 7th Street, Suite 1100
Austin, Texas 78701
(512) 499-0094 fax
Barry K. Bishop