United States District Court, D. Massachusetts
Mueller Systems, LLC, Plaintiff, represented by Coby S.
Nixon, Taylor English Duma LLP, pro hac vice, Todd E. Jones,
Taylor, Busch, Slipakoff & Duma, LLP, pro hac vice,
Kristopher I. Moore, Robinson & Cole & Nuala E. Droney,
Robinson & Cole.
Teti, Defendant, represented by Donald W. Hawthorne, Axinn
Veltrop & Harkrider, LLP, pro hac vice, Felix J. Gilman,
Axinn Veltrop & Harkrider, LLP, pro hac vice & Joseph H.
Corporation, Defendant, represented by Donald W. Hawthorne,
Axinn Veltrop & Harkrider, LLP, pro hac vice, Felix J.
Gilman, Axinn Veltrop & Harkrider, LLP, pro hac vice & Joseph
H. Skerry, III.
MEMORANDUM & ORDER
NATHANIEL M. GORTON, District Judge.
Systems, LLC ("plaintiff" or "Mueller
Systems") brings this action against ITET Corporation
("ITET") and Robert Teti ("Teti")
(collectively "defendants") seeking a declaratory
judgment that plaintiff did not misappropriate
defendants' alleged trade secrets or confidential
information. At issue here is defendants' motion to
dismiss for lack of personal jurisdiction and pursuant to the
Court's discretion under the Declaratory Judgment Act.
Alternatively, defendants ask this Court to stay the
proceedings pending the outcome of related litigation in
Canada. For the reasons that follow, this motion to dismiss
will be allowed.
Systems is a limited liability company ("LLC")
organized under Delaware law with its principal place of
business in Middleboro, Massachusetts. Plaintiff does not
divulge the residency of the member (or members) of the LLC
but the Court presumes for the purpose of this memorandum and
order that such member or members are jurisdictionally
diverse from the defendants. Robert Teti is a resident of
Ontario, Canada and the President and sole owner of ITET
Corporation, an Ontario corporation.
2002, Teti began developing an electronic water valve system.
To facilitate development, Teti approached Mueller Canada
Ltd. ("Mueller Canada") and the parties executed a
confidentiality agreement in April, 2002. That agreement was
executed by Mueller Canada on behalf of Mueller Co. Ltd.
("Mueller Co.") and created a perpetual
confidentiality obligation for Mueller Canada, Mueller Co.
and their affiliates, including Mueller Water Products Inc.
("Mueller Water Products") and Mueller
International, LLC ("Mueller International")
(collectively "the Mueller entities"). The parties
worked for years to develop and test the valve, identifying
some issues with the design.
September, 2009, ITET and Mueller Canada on behalf of itself
and Mueller Co. entered a two-year Supply Agreement
("Agreement") for the ITET Digital Water System.
Under that Agreement, Mueller Canada received the exclusive
right to market the valve in North America in exchange for
development, testing and mass production expertise, which
were already being provided by Mueller. ITET retained
ownership of all intellectual property and patents related to
the valve. That Agreement expired in September, 2012 when
Mueller Canada allowed the Agreement to lapse.
2008, Mueller Technologies, LLC, acquired Arkion Systems Inc.
("Arkion") and changed its name to Mueller Systems.
That newly formed entity is an indirect subsidiary of Mueller
Water Products. In 2010, Mueller Systems began developing a
remotely controlled water valve based on technology
purportedly developed by Arkion. It began publicly
advertising that valve as the 420 RDM device in 2012. After
reviewing that technology and the patent Mueller acquired on
it, ITET and Teti filed suit in Canada alleging, inter alia,
misappropriation of confidential information and intellectual
property in the development of Mueller's 420 RDM device.
October, 2013, defendants brought an action in Canada against
the Mueller entities, claiming, inter alia, that those
entities as a common enterprise misused defendants'
confidential information and intellectual property and
thereby breached a duty owed based on the contractual
relationship between the parties ("the Canadian
Litigation"). In February, 2015, Mueller moved to amend
their answer by withdrawing the admission that Mueller
Systems was an unincorporated division of Mueller Water
Products. Mueller would not consent to adding Mueller Systems
to the Canadian Litigation on the grounds that they were
already party to a similar proceeding in the Eastern District
of Virginia. Mueller then filed a motion to dismiss in the
Canadian Litigation, claiming, inter alia, that Mueller
Systems was the sole developer of the 420 RDM device. In
July, 2015, the Ontario court denied Mueller's motion for
summary judgment and subsequently, Mueller Systems was added
as a party to the Canadian Litigation.
February, 2015, shortly before the Mueller entities amended
their answer in Canada, Mueller Systems and Mueller
International filed a complaint against defendants in the
Eastern District of Virginia ("the Virginia
Litigation"). Mueller sought a three part declaratory
judgment stating that Mueller Systems and Mueller
International were not infringing an ITET U.S. patent, that a
Mueller U.S. patent was not subject to a claim of joint
ownership by defendants, and that Mueller Systems and Mueller
International did not misappropriate defendants' trade
secrets or confidential information. During the early course
of that litigation, ITET and Teti agreed not to pursue their
two potential U.S. patent claims.
July, 2015, Mueller Systems filed the present action in the
District of Massachusetts against defendants seeking a
declaratory judgment that plaintiff did not misappropriate
defendants' confidential information or trade secrets.
One day later, Mueller Systems and Mueller International
voluntarily dismissed their suit in the Eastern District of
Virginia. In November, 2015, defendants filed a motion to
dismiss this action for lack of personal jurisdiction and
pursuant to the Court's discretion under the Declaratory
motion to dismiss for want of personal jurisdiction,
plaintiff bears the burden of showing that the Court has
authority to exercise jurisdiction over defendants. See Mass.
Sch. of Law at Andover, Inc. v. ABA, 142 F.3d 26,
33-34 (1st Cir. 1998). The Court must take facts alleged by
plaintiff as true and construe disputed facts favorably
towards plaintiff. See Ticketmaster-New York, Inc. v.
Alioto, 26 F.3d 201, 203 (1st Cir. 1994). Facts alleged
by defendants are relevant as long as they are not
contradicted by plaintiff. See ABA, 142 F.3d at 34.
diversity suit, this Court acts as "the functional
equivalent of a state court sitting in the forum state."
See Astro-Med, Inc. v. Nihon Kohden America, Inc.,
591 F.3d 1, 8 (1st Cir. 2009). As such, this Court must
determine whether (1) jurisdiction is permitted by the
Massachusetts long-arm statute and (2) the exercise of
jurisdiction coheres with the Due Process Clause of the
United States Constitution. Id.
Massachusetts long-arm statute, MASS. GEN. LAWS. ch. 223A, §
3, extends jurisdiction to the limits of the United States
Constitution. See Tatro v. Manor Care, Inc., 625
N.E.2d 549, 553 (Mass. 1994). Accordingly, this Court need
not further consider the statute's applicability and may
proceed to the due process question. See Daynard v. Ness,
Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42,
52 (1st Cir. 2002).
process demands a showing of general or specific jurisdiction
by plaintiff. See Negron-Torres v. Verizon Commc'n,
Inc., 478 F.3d 19, 24 (1st Cir. 2007). Plaintiffs must
demonstrate that defendants have made sufficient contacts
with the forum state to ...