Conning v. Halpern

          MEMORANDUM AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS

          ALLISON D. BURROUGHS ALLISON D. BURROUGHS U.S. DISTRICT JUDGE

         Plaintiff Andrew Scott Conning (“Conning”) brings claims against Defendants Jack Halpern (“Halpern”) and CJK Dictionary Institute (“CJKI”) for defamation (Count I), tortious interference with a business relationship (Count II), violation of Massachusetts General Laws Chapter 93A (“Chapter 93A”) (Count III), and enforcement of an arbitration award obtained through proceedings before the Japan Commercial Arbitration Association (“JCAA”) (Count IV). The parties have had a lengthy and less than fully amicable business relationship. The most recent chapter began in 2014 when Conning agreed to help CJKI develop applications to teach customers Chinese and Sino-Japanese characters. [ECF No. 1-2 at 14-37 (“Complaint” or “Compl.”) ¶¶ 16-17]. The relationship deteriorated, and Conning pursued arbitration against CJKI, which concluded on February 13, 2017 in an award of $50, 000 plus costs and interest to Conning. Compl. ¶¶ 18, 24-27. Conning claims that, after paying only part of the arbitration award, Halpern and CJKI engaged in coercive, defamatory, and unfair and deceptive conduct to damage his business relationships and dissuade him from pursuing the full amount due. Compl. ¶¶ 26, 43, 54-61.

         On September 28, 2018, Conning filed this lawsuit in Middlesex Superior Court. See Compl. at 23. Defendants removed the action, entered a special appearance, and now move to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). [ECF Nos. 1, 7, 8]. For the reasons explained below, the motion to dismiss is DENIED.

         I. BACKGROUND

         This summary draws from allegations in the Complaint and from attestations in the affidavits proffered by the parties. See A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016) (stating that plaintiffs bear the burden of establishing specific jurisdiction and it is “not enough . . . to ‘rely on unsupported allegations in [its] pleadings'” (citation omitted)).

         The plaintiff, Andrew Scott Conning is domiciled in Massachusetts, although he now temporarily resides in California. Compl. ¶ 1. Defendant CJKI is a Japanese corporation, and Defendant Jack Halpern resides in Japan. Compl. ¶¶ 2, 4; [ECF No. 8-1 (“Halpern Aff.”) ¶ 3]. CJKI specializes in Chinese, Japanese, and Korean lexicology (hence “CJK”) and develops dictionaries and associated applications that are hosted by third parties and may be downloaded from almost anywhere. Halpern Aff. ¶ 2.

         On April 10, 2014, Conning and CJKI entered into a consulting agreement (the “Consulting Agreement”). [ECF No. 17-1 (“Conning Aff.”) ¶ 7].^[1] Conning agreed to help edit CJKI's Chinese Learner's Dictionary, and CJKI agreed to collaborate on the development of an application to teach a course that Conning had developed on Chinese and Sino-Japanese characters. Compl. ¶ 17. Defendants initiated and conducted the negotiations that led to the Consulting Agreement through email and Skype communication with Conning, who they knew lived and would work from Massachusetts. Conning Aff. ¶¶ 6, 9. The Consulting Agreement provided that any dispute arising out of the agreement would be subject to binding arbitration before the JCAA. Compl. ¶¶ 18-19.

         Consistent with the parties' expectations, Conning performed his obligations under the Consulting Agreement in Massachusetts, and CJKI sent payment to Conning in Massachusetts. Conning Aff. ¶¶ 10-12. Defendants also sent hundreds of emails to Conning in Massachusetts, but neither Halpern nor any other representative for CJKI visited Massachusetts in connection with the parties' relationship, except for attorneys seeking to resolve the ensuing dispute. See Conning Aff. ¶¶ 19, 23.

         CJKI did not hold up its end of the Consulting Agreement, and on December 21, 2015, Conning requested arbitration before the JCAA. Compl. ¶ 18. On March 1, 2016, the arbitrator ruled that CJKI had violated its explicit and implicit obligations to Conning and had inappropriately withheld compensation from Conning to force him to amend the Consulting Agreement. Compl. ¶¶ 20-21. Conning was awarded $50, 000 and the costs of arbitration. Compl. ¶¶ 24-25. Although CJKI paid a substantial portion of the award and costs in 2017, CJKI still owes a balance of more than $30, 000. Compl. ¶¶ 26-29.

         Following the arbitral award, Defendants pressured Conning to abandon his right to the full amount due by making false statements to Kodansha International and Kodansha USA, Inc. (together “Kodansha”), who were to publish and distribute his book: The Kodansha Kanji Learner's Course: A Step-by-Step Guide to Mastering 2300 Characters. Compl. ¶ 31; Conning Aff. ¶ 25. Specifically, Halpern told Kodansha that Conning's book made unauthorized use of CJKI's proprietary data and that Conning no longer had permission to use a foreword that Halpern had written for the book. Compl. ¶¶ 31-42. Conning maintains that he did not misuse any proprietary data and that Halpern had willingly provided the foreword. Compl. ¶¶ 35-36. The Kodansha employees who received these statements included Kodansha Marketing Director Laura Shatzkin, who Conning attests has visited Massachusetts. Conning Aff. ¶ 28. The statements harmed Conning's reputation in Massachusetts and caused Kodansha to forgo the opportunity to publish and distribute his book, resulting in a loss of royalties. Conning Aff. ¶¶ 25, 27-29.

         Defendants referenced their purported sway over Kodansha in emails to Conning in Massachusetts that were intended to pressure him to settle for less than the arbitral award. For example, Halpern wrote in one May 2018 email that if Conning accepted his proposal to resolve their dispute, he would tell the Kodansha officials who were “very unhappy with the copyright issue.” Conning Aff. Ex. 12.^[2] Conning has not identified any communications sent to Massachusetts that were themselves defamatory or that damaged Plaintiff's relationship with Kodansha or any other potential business partners.

         Aside from its relationship with Conning, Defendants' contacts with Massachusetts have been limited. CJKI licensed certain of its works (i.e. foreign language dictionaries) to Massachusetts persons other than Conning on two occasions, ^[3] and Halpern has traveled to Massachusetts twice. Halpern Aff. ¶ 9. In addition to these targeted contacts, CJKI uploads products to third-party venders, who may then sell the products in Massachusetts. Halpern Aff. ¶ 2. CJKI and Halpern make no efforts to specifically market their products in Massachusetts, and they do not own property in the Commonwealth. Halpern Aff. ¶¶ 2, 4.

         II. STANDARD OF REVIEW

         Plaintiffs bear the burden of establishing that specific jurisdiction exists over each Defendant. A Corp., 812 F.3d at 58 (citing Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008)). When a district court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, the “prima facie” standard governs its determination. United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001). Under the prima facie standard, plaintiffs must proffer “evidence which, if credited, is sufficient to support findings of all facts essential to personal jurisdiction.” A Corp., 812 F.3d at 58 (quoting Prairie Eye Ctr., 530 F.3d at 26). “[P]laintiffs may not rely on unsupported allegations in their pleadings, ” and are instead “obliged to adduce evidence of specific facts.” Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 134 (1st Cir. 2006) (first quoting Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992), then quoting Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145 (1st Cir. 1995)). The Court takes as true whatever properly documented facts a plaintiff proffers, construes those facts in the light most favorable to the plaintiff, and considers facts put forward by the defendants to the extent they are uncontradicted. See Prairie Eye Ctr., 530 F.3d at 26; Platten, 437 F.3d at 134.

         III. JURISDICTION

         The Due Process Clause of the Fourteenth Amendment allows state courts to exercise jurisdiction over a nonresident only where the exercise of jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citations omitted). “To establish personal jurisdiction in a diversity case, a plaintiff must satisfy both the forum state's long-arm statute and the Due Process Clause of the Fourteenth Amendment.” C.W. Downer & Co. v. ...