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SCVNGR, Inc. v. Punchh, Inc.

Supreme Judicial Court of Massachusetts, Suffolk

November 8, 2017

SCVNGR, INC.[1]
v.
PUNCHH, INC.

          Heard: September 6, 2017.

         Civil action commenced in the Superior Court Department on February 19, 2016. A motion to dismiss was heard by Mitchell H. Kaplan, J.

         The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

          Brian C. Carroll for the plaintiff.

          Jeffrey J. Pyle for the defendant.

          Present: Gants, C.J., Lenk, Gaziano, Budd, Cypher, & Kafker, JJ.

          LENK, J.

         Plaintiff SCVNGR, Inc., doing business as LevelUp (LevelUp), is a Massachusetts-based company that develops software applications for restaurants. Punchh, Inc. (Punchh), is a California-based company that develops competing applications. LevelUp filed a complaint in the Superior Court against Punchh alleging that, in 2015 and 2016, Punchh repeatedly made knowingly false statements about LevelUp to LevelUp's clients and potential clients, causing it harm. Punchh appeared specially, moving under Mass. R. Civ. P. 12 (b) (2), 365 Mass. 754 (1974), to dismiss the complaint on the grounds that it had insufficient contacts with Massachusetts to permit the exercise of personal jurisdiction. Focusing upon whether it would comport with due process to hale Punchh into a Massachusetts court, the parties disputed the proper application of two United States Supreme Court cases that partially define the constitutional parameters guiding the exercise of personal jurisdiction over a nonresident defendant.[2]

         Concluding that the constitutional analysis resolved the jurisdictional question in Punchh's favor, a Superior Court judge allowed Punchh's motion to dismiss. The judge noted that, because of the parties' focus on due process, he had not determined whether the Massachusetts long-arm statute would permit the exercise of personal jurisdiction over Punchh. LevelUp appealed, and we transferred the case to this court on our own motion.

         Prior to exercising personal jurisdiction over a nonresident defendant, a judge must determine that doing so comports with both the forum's long-arm statute and the requirements of the United States Constitution. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 290 (1980). Because the long-arm statute imposes specific constraints on the exercise of personal jurisdiction that are not coextensive with the parameters of due process, and in order to avoid unnecessary consideration of constitutional questions, a determination under the long-arm statute is to precede consideration of the constitutional question. See, e.g., Morrill v. Tong, 390 Mass. 120, 133 (1983). See also Beeler v. Downey, 387 Mass. 609, 613 n.4 (1982) (recognizing "duty to avoid unnecessary decisions of serious constitutional issues"). Because the requisite statutory analysis did not occur, we remand the matter to the Superior Court for further proceedings.

         1. Background.[3]

         a. Factual history.

         LevelUp is a Delaware corporation headquartered in Massachusetts, and designs and markets applications (apps) that run on customers' cellular telephones. LevelUp's apps enable customers to earn and redeem rewards at restaurants, and to make purchases, by scanning a code on their cellular telephones at the point of sale. These apps are designed to help restaurants both engage with their customers and gather information about customer behavior. As of 2016, all but four of LevelUp's ninety employees were based in Massachusetts.

         Punchh is a Delaware corporation with its principal place of business in California; it also provides apps to restaurants. Punchh's clients include businesses that, while headquartered outside Massachusetts, own restaurants in the Commonwealth. LevelUp asserts that Punchh regularly markets its apps within Massachusetts and to businesses operating restaurants here, and derives substantial revenue from the use of its apps in Massachusetts.[4] Punchh has not directly contradicted LevelUp's claims concerning such contacts with Massachusetts. Punchh maintains, however, that it is not registered to do business in ...


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