CT Court Has Jurisdiction Over Canadian Employee

The Second Circuit Court of Appeals has reversed a Connecticut federal court’s order dismissing for lack of personal jurisdiction a Connecticut corporation’s complaint for misappropriation of trade secrets by a Canadian employee of the plaintiff’s Canadian subsidiary. In MacDermid, Inc. v. Dieter (full text) MacDermid Chemicals, Inc claimed Dieter improperly forwarded confidential business information before her termination. The conduct occurred in Canada.  The jurisdictional wrinkle was that MacDermid maintained its data on servers in Waterbury, Connecticut. The suit was based on Connecticut’s trade secret statute and their state long arm statute.

At the district court level district court, Dieter noted that she did not work in the U.S. and that she had no reason to expect that a suit against her would be heard anywhere other than in Canada.  However, the 2nd Circuit Court of Appeal thought better of that argument.  In examining Connecticut’s long-arm statute the court found that, that a non-resident is subject to the state’s jurisdiction for lawsuits alleging misuse of “a computer, as defined . . . located within the state.” The statutory definition of the word “computer” includes “an electronic . . . device . . . that, pursuant to . . . human instruction . . . can automatically perform computer operations with . . . computer data and can communicate the results to another computer or to a person [or is a] connected or directly related device . . . that enables the computer to store, retrieve or communicate . . . computer data . . . to or from a person, another computer or another device.”  The Second Circuit concluded, “a computer server meets the Connecticut long-arm statute’s definition of computer.”  Dieter’s defense to jurisdiction – that she did nothing in the United States, no longer held any validity by the court’s precise reading of the statute.

According to the court, it was not critical that Dieter was “outside of Connecticut when she accessed the Waterbury servers. The statute requires only that the computer . . ., not the user, be located in Connecticut” (emphasis added). While recognizing that many internet users probably do not know the location of servers where emails are stored, Dieter, as an employee of the company for many years, was aware that the servers were in Connecticut.

As we read throughout the semester, we will find that many courts have a public interest in finding jurisdiction for cases where a local company or public interest is a factor.  Here is no different:  the court was defending a company with its principal place of business in Connecticut.  Public interest, “efficiency and social policies against computer-based theft are generally served by adjudication in the state from which computer files have been misappropriated.”  Therefore, they ruled, the Connecticut federal court could properly exercise jurisdiction.

Note that this decision, and others, clearly states that no matter where a defendant downloads misappropriated emails or files, he or she may be sued in a state with a similar statute, where the emails/files are stored on servers in the forum state.  And, as evidenced in MacDermid, Inc. v. Dieter, particularly if the plaintiff does business in that state and the defendant is alleged to have known the location of the servers.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s