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SCVNGR, Inc. v. Punchh, Inc.

Superior Court of Massachusetts, Suffolk

September 17, 2018

SCVNGR, INC.
v.
PUNCHH, INC.

          SECOND MEMORANDUM OF DECISION AND ORDER ON DEFENDANT PUNCHH, INC.’S MOTION TO DISMISS FOLLOWING REMAND

          Mitchell H. Kaplan, Justice of the Superior Court

          The plaintiff, SCVNGR, Inc., doing business as LevelUp, filed this action against the defendant, Punchh, Inc., one of its competitors. LevelUp complains that Punchh engaged in a "campaign of [making] knowingly false statements to LevelUp restaurant clients and potential clients," to the effect that LevelUp does not respect the confidentiality of its restaurant clients’ customer data. Punchh filed a motion to dismiss LevelUp’s complaint on the grounds that the court lacked personal jurisdiction over it. After a period of jurisdictional discovery and supplemental briefing, the court allowed the motion in a Memorandum of Decision and Order on Defendant Punchh, Inc.’s Motion to Dismiss issued on July 22, 2016 (the Prior Decision) [33 Mass.L.Rptr. 518]. In the Prior Decision, informed by the United States Supreme Court’s instruction on this issue in Walden v. Fiore, 134 S.Ct. 1115 (2014) (Walden), this court held that Punchh did not have sufficient contacts with Massachusetts to satisfy the due process requirements of the United States Constitution. With respect to the Massachusetts Longarm Statute, G.L.c. 223A, § 3, the Prior Decision noted that "there was no evidence in the record before it that LevelUp’s claims arise out of Punchh’s transacting business in Massachusetts, and LevelUp has not pressed a contention that Punchh’s "persistent course of conduct" in Massachusetts is sufficient to establish general jurisdiction." See G.L.c. 223A, § 3(a) and(d). The court did not, however, address LevelUp’s contention that Longarm jurisdiction existed under § 3(c).

         LevelUp appealed and the Supreme Judicial Court (SJC) transferred the case to itself on its own motion. See SCVNGR, Inc. v. Punchh, Inc., 478 Mass. 324, 325 (2017) (SCVNGR). In SCVNGR, the SJC declined to review this court’s conclusion that Massachusetts courts could not assert personal jurisdiction over the claim asserted against Punchh consistent with due process limitations. Rather, it held that a Massachusetts court must "consider the longarm statute first, before approaching the constitutional question." Id. at 330. It remanded the case to this court to perform that analysis. Id. at 331.

         Following remand, LevelUp requested the opportunity to take additional jurisdictional discovery, which the court granted. Following an extended discovery period, the parties filed supplemental memoranda and supporting materials.[1] In consideration of those supplemental filings, as well as the initial rounds of briefing, the court finds that in addition to failing the substantial contacts test under Federal due process standards, the court also does not have jurisdiction under the Massachusetts Longarm statute.

         ADDITIONAL FACTS

          The factual allegations of the complaint and the additional jurisdictional facts developed through the first round of jurisdictional discovery are fully set out in the Original Decision and will not be repeated. The additional, relevant factual contentions that LevelUp has presented in its supplemental filings, assumed to be true for the purposes of this motion, are as follows.

         During the period relevant to the personal jurisdiction question-January 1, 2015 through February 16, 2016[2] -Punchh had contractual relationships with the following customers that operated restaurants in Massachusetts: Capriotti’s Sandwich Shop, Inc., Earl of Sandwich, Taste, Inc. d/b/a Vino Volo, Moe’s Southwest Grill, Noodles & Company, and Rita’s Italian Ice. However, Punchh did not yet receive any revenue attributable to Massachusetts from the latter three restaurants during this period. As to the first three Punchh customers, Capriotti’s and Taste had two locations in Massachusetts and the Earl of Sandwich one. Punchh’s customers paid Punchh a flat fee per restaurant regardless of the state in which their restaurants were located. In consequence, Punchh received some revenue that could be traced to its customers’ Massachusetts restaurants, although Punchh did not track revenue on a state by state basis and did not control the locations in which the customers established restaurants. The total revenue generated from these customers’ Massachusetts locations over the relevant period appears to be approximately $12, 000.[3]

         There is also evidence that, during this period, Punchh had some communications with Massachusetts based restaurant chains, but it appears to have been sporadic and unsuccessful.

         The further discovery did not identify any allegedly defamatory statement made to someone in Massachusetts or to an officer or agent of a Massachusetts based company, although there are allegations that a false statement was made to a firm that had some restaurant locations in Massachusetts.

         ANALYSIS

         As noted above, in the Prior Decision, the court concluded that only § 3(c) of the Longarm Statute appeared potentially applicable to the jurisdictional facts presented by LevelUp. See n.5. The court will, nonetheless, consider whether the requirements of § 3(a), (c) and (d) have been met, as LevelUp argues that the court has Longarm jurisdiction under those subsections.

         § 3(a)

         "A court may exercise personal jurisdiction over a person, who acts directly or by agent, as to a cause of action in law or equity arising from the person’s (a) transacting business in this commonwealth ..." LevelUp principally relies on Tatro v. Manor Care, Inc., 416 Mass. 763 (1994) (Tatro), in arguing that the claims asserted in this case arise out of business that Punchh transacted in Massachusetts. The court finds Tatro inapposite.

          In Tatro, the plaintiff suffered a personal injury as result of an accident that occurred in a hotel bathroom in Anaheim, California while she was attending a conference in the hotel. She alleged that the accident was the result of the defendant hotel’s negligence. The defendant was a Delaware corporation and did not have a place of business in Massachusetts or advertise directly there. It did however have contracts with a number of Massachusetts based corporations that held conferences in the hotel and had direct billing arrangements with the defendant. The SJC observed that "it is obvious that the defendant, which solicited and obtained meeting and convention business from at least ten Massachusetts businesses, and maintained telephone and mail contact with them, transacted business in the Commonwealth during the relevant period. We also think that the defendant’s acceptance of the plaintiff’s room reservation formed part of the defendant’s over-all purposeful solicitation of hotel business from residents of Massachusetts." Id. at 768. In ...


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