NAVSAV HOLDINGS LLC v. BEBER (2024)

ORDER GRANTING DEFENDANT UNICO GROUP, INC.’S MOTION TO DISMISS AND DENYING DEFENDANTS AUSTIN BEBER, JACQUELINE DAMON, AND CODY ROACH'S MOTION TO DISMISS

Before the Court is Defendant Unico Group, Inc. (“Unico”)’s Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction and 12(b)(3) Motion to Dismiss for Improper Venue and in the Alternative Motion to Transfer Venue [Dkt. 8; Dkt. 10] and Defendants Austin Beber, Jacqueline Damon, and Cody Roach (“Individual Defendants”)’s Motion to Dismiss [Dkt. 9]. For the following reasons, Unico's Motion is GRANTED and the Individual Defendants’ Motion is DENIED.

I. BACKGROUND

On April 14, 2022, NavSav Holdings, LLC (“NavSav”), a Texas company in the insurance industry, purchased certain assets and the business goodwill of Universal, Ltd. (“Universal”), a Nebraska company in the insurance industry. [Dkt. 2 at 4; Dkt. 16 at 8]. On April 18, 2022 the Individual Defendants, who worked for Universal, signed Employment Agreements with NavSav. [Dkt. 2 at 4]. NavSav and the Individual Defendants contest whether these agreements were signed before or after the Individual Defendants began working for NavSav. See [Dkt. 9 at 8; Dkt. 16 at 9]. NavSav contends that Austin Beber (“Mr. Beber”) and Cody Roach (“Mr. Roach”) negotiated a higher commission structure and that all of the Individual Defendants agreed to receive and not disclose NavSav's confidential information as part of the Employment Agreements. [Dkt. 2 at 4–5; Dkt. 16 at 9].

The Employment Agreements signed by the Individual Defendants contained non-compete and non-solicitation provisions. [Dkt. 2 at 4–5; Dkt. 16 at 9–10]. Crucially, the Employment Agreements also contained the following forum selection clause:

The parties consent to the exclusive jurisdiction and venue of District State Court located in Jefferson County, Texas in any action arising out of or relating to this Agreement. The parties waive any other venue to which either party might be entitled by domicile or otherwise and the parties agree that venue for any dispute related to this Agreement is mandatory in a District Court located in Jefferson County, Texas.

[Dkt. 2 at 1–4, 23–24; Dkt. 9 at 13].

On June 16, 2023, the Individual Defendants resigned. [Dkt. 2 at 6]. The Individual Defendants then began working for Unico. Id. For a variety of reasons, NavSav and the Individual Defendants became concerned about the impact of the non-compete and non-solicitation provisions and a flurry of litigation ensued. Id. at 6–8; [Dkt. 16 at 11–18]. On June 23, 2023, Mr. Beber filed suit against NavSav in Nebraska State Court seeking a declaration that the non-compete provision was unenforceable. [Dkt. 9 at 9; Dkt. 16 at 13]. On June 26, 2023, NavSav filed suit against the Individual Defendants in Texas State Court. [Dkt. 16 at 13]. Subsequently, Mr. Roach and Jacqueline Damon (“Ms. Damon”) also filed suit against NavSav in Nebraska State Court. Id. NavSav amended its Petition to add Unico as a party on July 7, 2023. Id. All of these actions were removed to federal court. Id. at 15; [Dkt. 1]. The underlying motions followed. [Dkt. 8; Dkt. 9; Dkt. 10].

On August 22, 2023, Judge Brian C. Buescher of the U.S. District Court for the District of Nebraska issued a preliminary injunction enjoining NavSav from enforcing the non-compete and non-solicitation provisions of the Employment Agreements and “making any further submissions, filings, or appearances” in this matter. [Dkt. 12-1; Dkt. 12-2].

Notwithstanding Judge Buescher's preliminary injunction, this Court ordered NavSav to respond to the underlying motions on August 28, 2023 and held a hearing on these motions on January 23, 2024.

II. LEGAL STANDARD

Rule 12(b)(2) of the Federal Rules of Civil Procedure authorizes a defendant to seek dismissal of a case for lack of personal jurisdiction. “A federal court sitting in diversity may assert jurisdiction if (1) the state's long-arm statute applies, as interpreted by the state's courts; and (2) if due process is satisfied under the fourteenth amendment to the United States Constitution.” Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008) (internal quotation marks omitted). “Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis.” Id. The federal due process analysis looks at whether the defendant “purposefully established minimum contacts in the forum State.” Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006) (citing Asahi Metal Ind. Co. v. Super. Ct. of Cal., Solano Cnty., 480 U.S. 102, 108–09 (1987)). “The court is to consider the existence of personal jurisdiction on the basis of the facts as they existed at the time the complaint was filed.” Diebold Election Sys., Inc. v. AI Tech., Inc., 562 F. Supp. 2d 866, 872 (E.D. Tex. 2008) (citing Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784, 787 n.1 (5th Cir. 1990)). Furthermore, in ruling “[o]n a motion to dismiss for lack of jurisdiction, uncontroverted allegations in the plaintiff's complaint must be taken as true.” Danziger & De Llano, L.L.P. v. Morgan Verkamp, L.L.C., 24 F.4th 491, 495 (5th Cir. 2022) (quoting Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990)).

Personal jurisdiction can be general or specific. General jurisdiction exists when a defendant's contacts with the forum state are “continuous and systematic.” Diebold, 562 F. Supp. 2d at 872 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984)). “[A] court may exercise general jurisdiction over any action brought against a defendant, regardless of whether the action is related to the forum contacts.” Seiferth, 472 F.3d at 271. Specific jurisdiction exists “in a suit arising out of or related to a defendant's contacts with the forum.” Id. (citing Helicopteros, 466 U.S. at 414 & n.8). It is the plaintiff's burden to establish personal jurisdiction by prima facie evidence.

Personal jurisdiction, however, is a waivable right. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985). In fact, “there are a ‘variety of legal arrangements,’ ” including forum selection clauses, “by which a litigant may give ‘express or implied consent to the personal jurisdiction of the court.’ ” Id. (quoting Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982)). “Where such forum-selection provisions have been obtained through ‘freely negotiated’ agreements and are not ‘unreasonable and unjust,’ ․ their enforcement does not offend due process. Id. (citation omitted) (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)).

III. DISCUSSION

A. Defendant Unico Group, Inc.

1. General Personal Jurisdiction

The Court does not have general jurisdiction over Unico. As noted above, general jurisdiction permits courts to exercise jurisdiction over corporations whose “continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” Int'l Shoe Co. v. State of Wash., Off. of Unemployment Comp. & Placement, 326 U.S. 310, 318 (1945). “The ‘paradigm’ forums in which a corporate defendant is ‘at home,’ ․ are the corporation's place of incorporation and its principal place of business. BNSF Ry. Co. v. Tyrrell, 581 U.S. 402, 413 (2017) (quoting Daimler AG v. Bauman, 571 U.S. 117, 137 (2014)). A corporation's principal place of business is its “nerve center”—“the actual center of [a corporation's] direction, control, and coordination.” Hertz Corp. v. Friend, 559 U.S. 77, 92–93 (2010). This is generally a corporation's headquarters. Id.

Courts may also possess general jurisdiction where a corporate defendant's contacts with the forum are so “continuous and systematic” as to “render them essentially at home in the forum state.” BNSF Ry., 581 U.S. at 413. “Even though a corporation might operate ‘in many places,’ it cannot ‘be deemed at home in all of them’ because unpredictability would follow and jurisdictional rules are meant to ‘promote greater predictability.’ ” Frank v. P N K (Lakes Charles) L.L.C., 947 F.3d 331, 336–38 (5th Cir. 2020) (quoting Daimler, 571 U.S. at 137, 139 n.20). It is the “exceptional case” where a corporation's operations in a forum are so substantial and of such as nature as to render it at home that general jurisdiction exists there, even though it is not the corporation's state of incorporation or principal place of business. Id. at 338 (citing Daimler, 571 U.S. at 139 n.19). An inquiry focused entirely on the magnitude of a defendant's in-state contacts will not suffice to establish general jurisdiction via this exceptional-case doctrine. BNSF Ry., 581 U.S. at 414 (citing Daimler, 571 U.S. at 139 n.20). Instead, “an appraisal of a corporation's activities in their entirety, nationwide and worldwide” is necessary. Daimler, 571 U.S. at 139 n.20. “A corporation that operates in many places can scarcely be deemed at home in all of them.” Id.

An example of an “exceptional case” is Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952). In that case, the Supreme Court found general jurisdiction over a company that relocated its central headquarters from the Philippines to Ohio during World War II. See generally id. “Because Ohio then became ‘the center of the corporation's wartime activities,’ ․ suit was proper there.” BNSF Ry., 581 U.S. at 413 (citation omitted) (citing Perkins, 342 U.S. at 448). Given the high bar set by the Supreme Court, the Fifth Circuit has found that “[i]t is ․ incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.” Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014). Merely doing business in the state is not enough. See Daimler, 571 U.S. at 138 n.18. Instead, Courts must assess “the company's local activity not in isolation, but in the context of the company's overall activity.” Nunes v. NBCUniversal Media, LLC, 582 F. Supp. 3d 387, 396 (E.D. Tex. 2021).

Unico is a Nebraska corporation and its headquarters are located in Nebraska. [Dkt. 8 at 6–7]. Therefore, this Court cannot exercise general jurisdiction over Unico unless its contacts with Texas are so “continuous and systematic” as to “render them essentially at home” in Texas. BNSF Ry., 581 U.S. at 413. They are not. NavSav contends that this is one of those “exceptional cases” and that this Court should find general jurisdiction over Unico because “Unico maintains a registered agent” in Texas and “has customers and sells policies in Texas to Texas customers.” [Dkt. 16 at 22]. As Unico points out, however, the Fifth Circuit held that merely appointing an agent for process does not warrant general jurisdiction. Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 182 (5th Cir. 1992); see also Diagnostic Affiliates of Ne. Hous., LLC v. Aetna, Inc., 654 F. Supp. 3d 595, 604 (S.D. Tex. 2023). Additionally, the magnitude of Unico's business dealings in Texas is nowhere near sufficient to render Unico essentially at home in Texas. Where, as here, a corporate defendant's sales in a state account for merely 2.1 or 2.3% of revenue, the Fifth Circuit has found general jurisdiction lacking. See [Dkt. 8 at 8]; Johnston, 581 F.3d at 611–14 (finding that defendants with sales in Texas equivalent to 3% or less of their total revenues or global sales were not subject to general jurisdiction); Dalton v. R & W Marine, Inc., 897 F.2d 1359, 1362 (5th Cir. 1990) (holding that business dealings in a state resulting in 12.9% of a defendant's revenue were not sufficient to establish general jurisdiction). Moreover, Unico has no office, employees, real estate, property, deposits, bank account, or phone number in Texas. [Dkt. 8 at 7].

Accordingly, Unico is hardly “at home” in Texas and this Court cannot exercise general jurisdiction over Unico.

2. Specific Personal Jurisdiction

The Court also lacks specific jurisdiction over Unico. “Specific jurisdiction is proper when the plaintiff alleges a cause of action that grows out of or relates to a contact between the defendant and the forum state.” Nunes, 582 F. Supp. 3d at 397 (citing Helicopteros, 466 U.S. at 414 n.8). To exercise specific jurisdiction, the court must assess

(1) whether the defendant has ․ purposely directed its activities toward the forum state or purposely availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable.

Id. at 398 (alteration in original); see also Libersat v. Sundance Energy, Inc., 978 F.3d 315, 318–19 (5th Cir. 2020). If a plaintiff successfully establishes the first two prongs, the burden shifts to the defendant to show that exercising jurisdiction would be unfair or unreasonable. Nunes, 582 F. Supp. 3d at 398 (citing Seiferth, 472 F.3d at 271).

“A defendant establishes minimum contacts with a state if ‘the defendant's conduct and connection with the forum state are such that it should reasonably anticipate being haled into court there.’ ” Id. (quoting Burger King, 471 U.S. at 474). “There must be some act whereby the defendant ‘purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.’ ” Id. (quoting Burger King, 471 U.S. at 475). The “ ‘purposeful availment’ requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts.” Burger King, 471 U.S. at 475 (first quoting Keeton v. Hustler Mag., Inc., 465 U.S. 770, 775 (1984), and then quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 299 (1980)). Notably, the requisite relationship between the defendant, the forum, and the litigation “must arise out of contacts that the ‘defendant himself’ creates with the forum.” Walden v. Fiore, 571 U.S. 277, 284 (2014) (quoting Burger King, 471 U.S. at 475). The “minimum contacts” inquiry cannot be satisfied using contacts between the plaintiff or third parties and the forum state. Id. (citing Helicopteros, 466 U.S. at 417).

NavSav argues that this Court has specific jurisdiction over Unico on the grounds that Unico (1) hired the Individual Defendants, (2) ignored the contracts between NavSav and the Individual Defendants, allowed the Individual Defendants to violate those contracts, and, thus, tortiously interfered with those contracts, and (3) accepted confidential information that was illegally obtained from its cloud located in Texas. [Dkt. 2 at 4; Dkt. 16 at 22]. Unico asserts that these contacts were either NavSav's and the Individual Defendants’—not Unico's or not purposefully directed at Texas. [Dkt. 8 at 8–11; Dkt. 17 at 4–6]. It also argues that any contacts it has with Texas are unrelated to NavSav's claims against it and, therefore, unable to support specific jurisdiction. [Dkt. 8 at 8–11; Dkt. 17 at 4–6].

The Court agrees with Unico. First, Unico, a Nebraska corporation, hired the Individual Defendants to work in Nebraska, not Texas, and the Individual Defendants do not work with Texas customers on Unico's behalf, so the Court is unclear as to how hiring the Individual Defendants constitutes a purposeful contact between Unico and Texas. See [Dkt. 9 at 8–9]; Nunes, 582 F. Supp. 3d at 398. Additionally, while the Individual Defendants may have worked for NavSav, a Texas company, before coming to Unico, this is hardly a contact between Unico and Texas, let alone a purposeful one. See [Dkt. 16 at 22]; Walden, 571 U.S. at 284.

Second, the existence of contracts between the Individual Defendants and NavSav is not a contact between Unico and Texas. See [Dkt. 2 at 4; Dkt. 17 at 5]; Walden, 571 U.S. at 284. With respect to NavSav's tortious interference allegation, the Fifth Circuit “has repeatedly held that ‘mere allegations of tortious interference with a forum resident's contractual rights are not sufficient to establish specific personal jurisdiction.’ ” Bluestone Partners, LLC v. Lifecycle Constr. Servs., LLC, 642 F. Supp. 3d 560, 566 (E.D. Tex. 2022) (first quoting Elevacity U.S., LLC v. Schweda, No. 4:22-CV-00042, 2022 WL 3704537, at *5 (E.D. Tex. Aug. 26, 2022), and then citing Panda Brandywine Corp. Potomac Elec. Power Co., 253 F.3d 865 (5th Cir. 2001)). Moreover, Unico's alleged tortious interference seemingly occurred in and was purposefully directed toward Nebraska—not Texas. See [Dkt. 2 at 4; Dkt. 17 at 5]; Walden, 571 U.S. at 284.

Third, Unico's alleged receipt of confidential information from a cloud based in Texas does not support specific jurisdiction. NavSav does not allege that Unico accessed confidential information, it alleges that the Individual Defendants did. See [Dkt. 16 at 21–22]. It also does not allege that Unico directed the Individual Defendants to access and take NavSav's confidential information. See id. Thus, this is once again not a contact of Unico's. See Walden, 571 U.S. at 284. Furthermore, even if this was a contact of Unico's, courts within the Fifth Circuit have held that electronically accessing information which happens to be located on a Texas server is not purposeful availment. See WorldVentures Holdings, LLC v. Mavie, No. 4:18CV393, 2018 WL 6523306, at *11 (E.D. Tex. Dec. 12, 2018); Ray v. Experian, No. 3:07-CV-1113-R, 2007 WL 4245459, at *3 (N.D. Tex. Nov. 30, 2007); Laughlin v. Perot, No. CA 3-95-CV-2577-R, 1997 WL 135676, at *6 (N.D. Tex. Mar. 12, 1997).¹

Finally, although Unico has some contacts with Texas, namely selling a small amount of property and casualty insurance to Texans, these contacts do not relate to the underlying suit. See [Dkt. 8 at 9]; Nunes, 582 F. Supp. 3d at 397.

The Court therefore cannot exercise specific jurisdiction over Unico.

3. Personal Jurisdiction by Consent

Although not explicitly raised by the parties,² the Court, for thoroughness, also finds that it does not have personal jurisdiction over Unico through the forum selection clauses in the Employment Agreements.

Recently, in Franlink Inc. v. BACE Services, Inc., the Fifth Circuit adopted the “closely-related doctrine,” which allows a non-signatory to be bound by a forum selection clause in certain circumstances. 50 F.4th 432, 441–42 (5th Cir. 2022). “For the doctrine to bind a non-signatory to a forum selection clause, first, ‘the party must be “closely related” to the dispute such that it becomes “foreseeable” that it will be bound.’ ” Id. at 441 (Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209 (7th Cir. 1993)). Courts should consider the following factors to determine whether a non-signatory is closely related: “(1) common ownership between the signatory and the non-signatory, (2) direct benefits obtained from the contract at issue, (3) knowledge of the agreement generally and (4) awareness of the forum selection clause particularly.” Id. at 442. This doctrine, however, “is context specific and is determined only after weighing the significance of the facts relevant to the particular case at hand.” Id. Indeed, the Fifth Circuit specified that there is not “a rigid test” to use when applying this doctrine. Id. Notwithstanding its adoption of the closely-related doctrine, the Fifth Circuit reiterated that “non-signatories should only have contractual provisions enforced against in them in ‘rare circumstances’ ” and that the doctrine should be narrowly applied. Id. at 442 n.8 (quoting Bridas S.A.P.I.C. v. Gov't of Turkm., 345 F.3d 347, 358 (5th Cir. 2003)).

Here, there is no common ownership between Unico and NavSav and Unico derived no direct benefits from the Employment Agreements between the Individual Defendants and NavSav. Even so, Unico's counsel stated at the hearing that Unico was aware of these contracts generally when it hired the Individual Defendants and NavSav asserts that Unico knew about the forum selection clauses specifically. [Dkt. 2 at 4, Dkt. 16 at 22]. Thus, two factors weigh against and two factors weigh in favor of application of the closely-related doctrine. See Franlink Inc., 50 F.4th 432, 441–42. Because one of the factors weighing against application—common ownership—was identified as a “key factor supporting application” in Franlink and because the doctrine should be narrowly and rarely applied, the Court declines to enforce the closely-related doctrine against Unico. See id. at 442 n.8, 443; see also Bluestone, 642 F. Supp. 3d at 566–67.

Accordingly, there is no basis for asserting personal jurisdiction against Unico and the Court grants Unico's motion to dismiss for lack of personal jurisdiction.³

B. Defendants Austin Beber, Jaqueline Damon, and Cody Roach

1. General Personal Jurisdiction

The Court cannot exercise general personal jurisdiction over the Individual Defendants.⁴ When the defendant is an individual, “the paradigm forum for the exercise of general jurisdiction is the individual's domicile.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011). “An individual's domicile is generally the state in which he lives and works, though courts also consider other factors, including ‘where the litigant exercises civil and political rights, pays taxes, owns real and personal property, has driver's and other licenses, maintains bank accounts, belongs to clubs and churches, has places of business or employment, and maintains a home for his family.’ ” Steller Restoration Servs., LLC v. James Christopher Courtney, 533 F. Supp. 3d 394, 413 (E.D. Tex. 2021) (quoting Coury v. Prot, 85 F.3d 244, 251 (5th Cir. 1996)).

Mr. Beber and Mr. Roach are domiciled in Nebraska and Ms. Damon is domiciled in Iowa. [Dkt. 9 at 5]. NavSav does not contest this. See generally [Dkt. 16]; [Dkt. 2 at 2–3] (stating that the Individual Defendants are residents of Nebraska). Therefore, because the Individual Defendants are not domiciled in Texas, the Court lacks general jurisdiction over the Individual Defendants.

2. Specific Personal Jurisdiction

The Court cannot exercise specific jurisdiction over the Individual Defendants because they lack sufficient minimum contacts with Texas. Although the Court incorporates by reference its discussion above regarding specific jurisdiction, it reiterates that “[s]pecific jurisdiction applies when a non-resident defendant ‘has purposefully directed [his] activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities.’ ” See Conn Appliances, Inc. v. Williams, 936 F.3d 345, 347 (5th Cir. 2019) (second alternation in original) (quoting Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522, 539–40 (5th Cir. 2019)); infra Section III.A.2.

NavSav argues that the Court possesses specific jurisdiction over the Individual Defendants because they entered into the Employment Agreements with NavSav, a Texas company; they were paid from Texas; they were managed out of and overseen by a human resources department located in Texas; and they accessed confidential information located on NavSav's Texas-based cloud. [Dkt. 16 at 10–11, 19–22]. The Individual Defendants assert that contracting with a Texas company and accessing a Texas-based cloud are not enough to confer specific jurisdiction. [Dkt. 9 at 11–12; Dkt. 19 at 3–4].

Courts have repeatedly held that solely entering a contract with a Texas entity is not sufficient for specific jurisdiction. Burger King, 471 U.S. at 478 (finding that a defendant's contract with an out-of-state party cannot establish the requisite minimum contacts on its own); Conn, 936 F.3d at 348 (holding that there was no specific jurisdiction over a defendant where the defendant's only contact with the forum was a contract with a Texas entity); Moncrief Oil Int'l v. OAO Gazprom, 481 F.3d 309, 312 (5th Cir. 2007) (stating that “merely contracting with a resident of Texas is not enough to establish minimum contacts” and that “a plaintiff's unilateral activities in Texas do not constitute minimum contacts where the defendant did not perform any of its obligations in Texas, the contract did not require performance in Texas, and the contract is centered outside of Texas”). Beyond there being a contract, courts must evaluate whether “prior negotiations,” “contemplated future consequences,” “the terms of the contract,” and “the parties’ actual course of dealing” support finding that the defendant purposefully established minimum contacts with the forum. Burger King, 471 U.S. at 479. Here, the Individual Defendants did not seek out contracts with a Texas entity—a Texas entity bought their previous employer and sought out contracts with them. [Dkt. 16 at 2–3, 8–9]. Although one party to the Employment Agreements—NavSav—was a Texas entity, the Employment Agreements were seemingly negotiated and signed in Nebraska and clearly called for performance in Nebraska. [Dkt. 2 at 2–5; Dkt. 9 at 11–12; Dkt. 16 at 8–10]. Additionally, the non-solicitation and non-compete provisions of the Employment Agreements only restrict the Individual Defendants’ conduct within Nebraska. [Dkt. 2 at 4–5]. Therefore, the Individual Defendants contracting with NavSav cannot alone support exercising specific jurisdiction over them.

Similarly, the Individual Defendants being paid and managed from Texas does not satisfy the minimum contacts requirement because that conduct was undertaken by NavSav—not the Individual Defendants. See Walden, 571 U.S. at 284 (stating that the minimum contacts inquiry cannot be satisfied through the plaintiff's contacts with the forum state).

This leaves the Individual Defendants’ alleged access to confidential information on NavSav's Texas-based cloud as a possible basis for specific jurisdiction. NavSav first asserts that “[p]rior to their leaving NavSav, at least one (1) of the employees downloaded loss runs of customers, which is confidential information contained and housed within the Texas based software managing the cloud.” [Dkt. 16 at 11]. NavSav latter asserts “that the three (3) employees took trade secrets and confidential information in the form of customer contact information from cloud based management systems in Texas.” Id. at 21. In support of its position that this conduct satisfies the minimum contacts inquiry, NavSav points the Court toward MacDermid, Inc. v. Deiter, 702 F.3d 725 (2d Cir. 2012) and Fintech Fund, F.L.P. v. Horne, 836 F. App'x 215 (5th Cir. 2020). [Dkt. 16 at 20; Dkt. 26 at 2]. These cases, however, are factually distinct and do not support exercising specific jurisdiction over the Individual Defendants.

For example, in MacDermid, the court found specific jurisdiction over a defendant who used her work email to transmit her employer's confidential information to her personal email. 702 F.3d at 727, 730. Accessing the confidential information and sending the email both required the defendant to access her employer's Connecticut-based computer servers. Id. at 727. Notably, the defendant was informed that her employer's servers were located in Connecticut as a condition of her employment. Id. In holding that specific jurisdiction existed, the court differentiated between defendants like her who knew about the location of the servers and “[m]ost Internet users [who], perhaps, have no idea of the location of the servers through which they send their emails” Id. at 730. Indeed, the court specifically stated that the defendant “purposefully availed herself of the privilege of conducting activities within Connecticut because she was aware ‘of the centralization and housing of the companies’ e-mail system and the storage of confidential, proprietary information and trade secrets’ in Waterbury, Connecticut.” Id. (emphasis added).

Compellingly, WorldVentures Holdings, LLC v. Mavie adopts MacDermid’s reasoning. See 2018 WL 6523306, at *11. That court, however, found no specific jurisdiction over a defendant who accessed a server located in Texas because the defendant lacked knowledge about the server being located in Texas. Id.; see also Rhapsody Sols., LLC v. Cryogenic Vessel Alts., Inc., No. H-12-1168, 2013 WL 820589, at *5 (S.D. Tex. Mar. 5, 2013) (finding sufficient minimum contacts where the defendant “regularly logged onto, accessed, and used” software that the defendant knew was located on a server in Texas); Ray, 2007 WL 4245459, at *3; Laughlin, 1997 WL 135676, at *6.

Here, NavSav has not alleged that the Individual Defendants were aware that NavSav's cloud was located in Texas. See generally [Dkt. 2; Dkt. 16]. Accordingly, MacDermid does not support finding that the Individual Defendants purposefully availed themselves of Texas by allegedly accessing NavSav's cloud.

Fintech is likewise factually distinct. See 836 F. App'x at 220–21. In Fintech, the Fifth Circuit held that a defendant's calls and emails containing fraudulent statements to a Texas company's representative when said representative was in Texas constituted purposeful availment of Texas. Id. The court stated that it was irrelevant that the defendant did not know that the representative was in Texas because he “directed his allegedly tortious conduct at Texas, and he directed it at a Texas entity that he knew was a Texas entity.” Id. at 221. To the Court, allegedly accessing information in a Texas entity's cloud that happens to be located in Texas is a far cry from making calls and emails to a known Texas entity's representative who happens to be located in Texas. See id.; [Dkt. 16 at 11, 21]. Calling and emailing another person is markedly different from accessing a cloud, especially given that a cloud frequently will not be located in the same forum as the company. See WorldVentures, 2018 WL 6523306, at *11 (noting that “[c]ompanies frequently house servers outside of their principal place of business”); NTE LLC v. Kenny Constr. Co., No. 1:14-cv-09558, 2015 WL 6407532, at *4 (N.D. Ill. Oct. 21, 2015) (stating that “the nature of cloud-based computing is such that servers are not necessarily in the same physical location as the company”). Additionally, in Fintech, the defendant seemingly made and sent multiple calls and emails and it was clear that the defendant had actually made those communications. See 836 F. App'x at 220–21. Here, however, one or more of the Individual Defendants—the record does not clearly specify which—allegedly accessed the cloud on a single occasion. [Dkt. 16 at 11, 21]. The Court is not confident that this rises to the level of a minimum contact and, in any case, cannot even properly attribute the contact to one or all of the Individual Defendants. As other cases within the Fifth Circuit are more on point and Fintech is non-precedential, the Court declines to apply Fintech here.

Accordingly, the Court cannot exercise specific jurisdiction over the Individual Defendants. Personal jurisdiction over the Individual Defendants thus depends on the validity of the forum selection clauses in the Employment Agreements.

3. Personal Jurisdiction by Consent

Although the Court finds that the forum selection clauses signed by the Individual Defendants are enforceable, it lacks consent jurisdiction over the Individual Defendants because the forum selection clauses only waive personal jurisdiction objections against a Texas state court.

The Individual Defendants argue that they did not consent to this Court's personal jurisdiction by signing the Employment Agreements because (1) Nebraska law applies and dictates that the forum selection clauses are unenforceable and (2) the Employment Agreements fail for lack of consideration. [Dkt. 9 at 13–27]. NavSav contests this, arguing that while Nebraska law may invalidate the non-compete and non-solicitation provisions, the forum selection clauses remain valid. [Dkt. 16 at 25–27]. NavSav also argues that there was sufficient consideration for the Employment Agreements and invokes the “first filed rule.” Id. at 19, 23–25. Because it is dispositive, the Court begins and ends its analysis by determining the enforceability of the forum selection clauses.

In the Fifth Circuit, determining whether a forum selection clause is enforceable requires a multi-step inquiry.⁵ See Dynamic CRM Recruiting Sols., L.L.C. v. UMA Education, Inc., 31 F.4th 914, 917–18 (5th Cir. 2022) (“Although the enforceability of a forum selection clause in a diversity case ․ is governed by federal law, the clause's interpretation is governed by the law of the forum state ․”); Weber v. PACT XPP Techs., AG, 811 F.3d 758, 768–75 (5th Cir. 2016); Haynsworth v. The Corporation, 121 F.3d 956, 962–63 (5th Cir. 1997). The Court must first decide whether the forum selection clause is mandatory or permissive. Weber, 811 F.3d at 768. A forum selection clause is mandatory when it “affirmatively requires that litigation arising from the contract be carried out in a given forum.” Id. A forum selection clause is merely permissive, however, if it only waives personal jurisdiction and venue objections when the litigation is brought in the specified forum. Id. Forum selection clauses are mandatory “only if [they] contain[ ] clear language specifying that litigation must occur in the specified forum.” Id. Notably, “language merely indicating that the courts of a particular place ‘shall have jurisdiction’ (or [something] similar) is insufficient to make [a forum selection clause] mandatory.” Id. When, as here, the substantive law that applies to a contract is contested, courts conduct a choice of law analysis to determine which substantive law governs the interpretation of the forum selection clause. Id. at 769–73. The Court will then use the appropriate substantive law to determine whether the forum selection clause is mandatory or permissive. Id.

If the forum selection clause is mandatory, the Court then determines whether the forum selection clause is enforceable. Id. at 770, 773–74. In the Fifth Circuit, federal law governs the enforceability of forum selection clauses in diversity cases. Fernandez v. Toddy, No. H-20-1137, 2020 WL 13861605, at *2 (S.D. Tex. Oct. 20, 2020) (citing Haynsworth, 121 F.3d at 962). Following Supreme Court precedents, the Fifth Circuit “applies a strong presumption in favor of the enforcement of mandatory [forum selection clauses].” Weber, 811 F.3d at 773. “The presumption of enforceability may be overcome, however, by a clear showing that the clause is ‘unreasonable’ under the circumstances.” Id. (quoting Haynsworth, 121 F.3d at 963). “Unreasonableness potentially exists where (1) the incorporation of the [forum selection clause] into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement ‘will for all practical purposes be deprived of his day in court’ because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the [forum selection clause] would contravene a strong public policy of the forum state.” Id. (quoting Haynesworth, 121 F.3d at 963). Notably, the party arguing against enforcement of a forum selection clause “bears a ‘heavy burden of proof.’ ” Haynsworth, 121 F.3d at 963 (quoting M/S Bremem, 407 U.S. U.S. at 17).

The Court notes that neither party identified or conducted this exact inquiry in their briefs. The Individual Defendants urged the Court to conduct a traditional choice-of-law analysis that failed to account for these being forum selection clauses and unnecessarily, in the Court's opinion, focused on Texas and Nebraska's differing treatment of non-complete and non-solicitation provisions. See [Dkt. 9 at 16–26]. NavSav, citing Cardoni v. Prosperity Bank, 805 F.3d 573 (5th Cir. 2015), asserted that the forum selection clauses should be analyzed separately from the non-complete and non-solicitation provisions, but did not point to the Weber inquiry or conduct any analysis to that effect. See [Dkt. 16 at 25–27]. Although more exact briefing from the parties would be ideal, the Court is satisfied that it has the information and argumentation it needs to conduct the Weber inquiry and, thus, moves forward.

a. Interpretation of the Forum Selection Clause

As outlined above, the Court must determine what substantive law applies so that it can assess whether these forum selection clauses are mandatory or permissive. When a federal court sits in diversity, it uses the forum state's choice-of-law rules to determine the applicable substantive law. See Weber, 811 F.3d at 770 (citing Klaxon Co. v. Stenter Elec. Mfg. Co., 313 U.S. 487, 496–97 (1941)). This is so even when there is a choice of law provision. Id. at 770–71. Because this action was brought in a Texas state court and removed to a Texas federal court on diversity grounds, the Court must use Texas choice-of-law rules, namely the Restatement (Second) of Conflict of Laws. See id. at 771 (citing Maxus Expl. Co. v. Moran Bros., 817 S.W.2d 50, 53 (Tex. 1991)); see also DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677–78 (Tex. 1990).

Section 187(2) of the Restatement (Second) of Conflict of Laws states the following:

(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or

(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

Restatement (Second) of Conflict of Laws § 187(2) (1971).

The Employment Agreements state that Texas law applies. [Dkt. 2 at 23]. Texas has a substantial relationship to the parties and the transaction because NavSav is a Texas company. See Restatement (Second) of Conflict of Laws § 187(2)(a); DeSantis, 793 S.W.2d at 678. Therefore, Texas law applies here unless the exception outlined in § 187(2)(b) is triggered. See Restatement (Second) of Conflict of Laws § 187(2)(b).

To determine whether the § 187(2)(b) exception applies, the Court must determine “[(1)] whether there is a state the law of which would apply under [§ 188 of the Restatement (Second) of Conflict of Laws] absent an effective choice of law by the parties, or in other words, whether a state has a more significant relationship with the parties and their transaction than the state they chose; [(2)] whether that state has a materially greater interest than the chosen state in deciding whether this [forum selection clause] should be enforced; and [(3)] whether that state's fundamental policy would be contravened by the application of the law of the chosen state in this case.” DeSantis, 793 S.W.2d at 678.

“Section 188 of the [Restatement (Second) of Conflict of Laws] provides that a contract is to be governed by the law of the state that ‘has the most significant relationship to the transaction and the parties.’ ” Id. To determine the state with the most significant relationship, courts look at (1) “the place of contracting”; (2) “the place of negotiation of the contract”; (3) “the place of performance”; (4) “the location of the subject matter of the contract”; and (5) “the domicil, residence, nationality, place of incorporation and place of business of the parties.” Restatement (Second) of Conflict of Laws § 188(2). Moreover, Section 196 of the Restatement (Second) of Conflict of Laws states that contracts for services are governed by the law of the state where the services are rendered. See id. § 196; DeSantis, 793 S.W.2d at 679 (noting that “[a]s a rule, [this] factor alone is conclusive in determining what state's law is to apply”).

Here, the Employment Agreements call for services to be performed in Nebraska. [Dkt. 9 at 7–9; Dkt. 16 at 8–12]. Additionally, to the extent the contract was negotiated, it was negotiated in Nebraska. [Dkt. 2 at 4; Dkt. 9 at 7–9]. The subject matter of the contract—employment in Nebraska—likewise points toward Nebraska. [Dkt. 2 at 4; Dkt. 9 at 7–9]. The Individual Defendants also live in either Nebraska or Iowa rather than Texas. [Dkt. 2 at 1–2; Dkt. 9 at 8]. NavSav is a Texas company, but does business in Nebraska. [Dkt. 2 at 4; Dkt. 9 at 11]. As the vast majority of these contacts, particularly the location of services rendered, point toward Nebraska, the Court finds that the relationship of the transaction and the parties to Nebraska is more significant than their relationship to Texas. See DeSantis, 793 S.W.2d at 678–79; Restatement (Second) of Conflicts of Law § 188.

Determining which state has a materially greater interest in deciding whether the forum selection clauses should be enforced is a closer question. Texas and Nebraska share an interest in protecting a company's right to use and enforce forum selection clauses and “in protecting the justifiable expectations of entities doing business in several states.” See DeSantis, 793 S.W.2d at 679. Nebraska alone, however, has an interest in ensuring its citizen defendants have access to a fair, neutral forum. And if we look at the contract more broadly, Nebraska has a greater interest in deciding employment and contract disputes that occur and affect commerce in Nebraska. Although a difficult determination in the context of a forum selection clause, Nebraska appears to have a materially greater interest than Texas in determining whether these clauses should be enforced.

The only remaining question in the choice-of-law inquiry is whether application of Texas law would contravene Nebraska's fundamental policy. As both Texas and Nebraska have similar approaches to contract interpretation, this question is easily answered in the negative. See B. Thomas & Co. v. Universal Warranty Corp., 3 F.4th 1032, 1036 (8th Cir. 2021) (stating that under Nebraska law, “[w]hen the terms of a contract are clear, a court may not resort to rules of construction, and the terms are to be accorded their plain and ordinary meaning as an ordinary or reasonable person would understand them” (quoting Bierman v. Benjamin, 943 N.W.2d 269, 274 (Neb. 2020))); Barnes v. Forest Hills Inv., Inc., 11 F. Supp. 2d 699, 704 (E.D. Tex. 1998) (providing that “[u]nder Texas law, the court must enforce the unambiguous language in a contract as written” and that “the applicable standard is ‘the objective intent’ evidenced by the language used, rather than the subjective intent of the parties” (quoting Clardy Mfg. Co. v. Marine Midland Bus. Loans Inc., 88 F.3d 347, 352 (5th Cir. 1996))). Accordingly, in keeping with the Employment Agreements’ choice-of-law provisions, Texas law can be used to interpret the forum selection clauses.⁶

The forum selection clauses state the following:

The parties consent to the exclusive jurisdiction and venue of District State Court located in Jefferson County, Texas in any action arising out of or relating to this Agreement. The parties waive any other venue to which either party might be entitled by domicile or otherwise and the parties agree that venue for any dispute related to this Agreement is mandatory in a District Court located in Jefferson County, Texas.

[Dkt. 2 at 24–25]. This language is not ambiguous and thus must be enforced according to its terms. Because these forum selection clauses “affirmatively require[ ] that litigation arising from the contract be carried out” in a state court in Texas, they are mandatory rather than permissive. See Weber, 811 F.3d at 768; [Dkt. 2 at 24–25].

b. Enforceability

Having determined that the forum selection clauses are mandatory, the Court now considers whether they are enforceable. Weber, 811 F.3d at 773. As outlined above, federal law governs the enforceability of forum selection clauses and there is a strong presumption of enforceability with respect to forum selection clauses. Id. (citing Haynsworth, 121 F.3d at 962–63); Fernandez, 2020 WL 13861605, at *2. To overcome this presumption, the Individual Defendants must show that the forum selection clauses are unreasonable in that “(1) the incorporation of the [forum selection clauses] into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement ‘will for all practical purposes be deprived of his day in court’ because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the [forum selection clause] would contravene a strong public policy of the forum state.” Weber, 811 F.3d at 773 (quoting Haynsworth, 131 F.3d at 963).

Although the Individual Defendants did not brief to this inquiry, they made arguments under Nebraska's Choice of Forum Act ⁷ regarding the inconvenience of Texas as a forum, conflict of law issues, and the imbalance in economic power that resulted in the Employment Agreements. [Dkt. 9 at 19–26]. The Court will consider those in determining whether the Individual Defendants have overcome the presumption. Regarding the inconvenience of Texas as a forum, the Court finds that this factor is neutral because any inconvenience or expense that the Individual Defendants experience litigating in Texas will be experienced by NavSav should it have to litigate in Nebraska.

The Individual Defendants’ arguments regarding issues posed by conflict of law issues are also unavailing. The forum selection clauses in question are separate from the choice of law provisions, so the Court is not convinced that this factor is particularly relevant here. See [Dkt. 2 at 23–24]. In any case, the Individual Defendants and NavSav seemingly agree that key portions of the Employment Agreements, namely the non-compete and non-solicitation provisions, will be governed by Nebraska law notwithstanding the choice of law provisions. See [Dkt. 9 at 17–19; Dkt. 16 at 26]. Thus, the Individual Defendants will not be unfairly deprived or prejudiced by Texas law such that the forum selection clauses are unreasonable. See Weber, 181 F.3d at 773.

The Court is also not swayed by the Individual Defendants’ arguments regarding the alleged lack of negotiation and the imbalance of economic power leading to the Employment Agreements generally. “Arguments that go to the validity of the contract as a whole do not prevent enforcement of [a forum selection clause]; instead, a party seeking to avoid enforcement must demonstrate that the [forum selection clause] is invalid rather than merely claim the contract is invalid.” Id. at 773. Indeed, “[f]raud and overreaching [allegations] must be specific to a forum selection clause in order to invalidate it.” Haynsworth, 121 F.3d at 963. Here, the Individual Defendants have made no specific arguments regarding the forum selection clause. See [Dkt. 9 at 26]. And even if they had, the Supreme Court specifically held that lack of negotiation and disparity in bargaining power were insufficient to render a forum selection clause unenforceable. Id. (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593–95 (1991)). This argument, therefore, does not support unreasonableness.

The Individual Defendants do not address whether enforcement of the forum selection clauses would contravene a strong public policy of the forum state (Texas), but the Court briefly considers this factor anyway. In Texas, forum selection clauses are also presumptively valid and enforceable. In re Laibe Corp., 307 S.W.3d 314, 316, 318 (Tex. 2010). As such, Texas's public policy would not be contravened by enforcing these forum selection clauses.

Accordingly, the Individual Defendants have failed to meet their “heavy burden” and the forum selection clauses are enforceable. See Haynsworth, 121 F.3d at 963. The Court, in turn, finds that Defendants consented to personal jurisdiction and venue in the “District State Court located in Jefferson County, Texas.” See [Dkt. 2 at 23–24]. This Court is not a District State Court, it is a United State District Court, meaning that it lacks personal jurisdiction over the Individual Defendants.⁸ See id.

Because the forum selection clause also waived removal to this Court and NavSav requested remand in its Response, the Court remands this case back to the state court rather than dismissing it.

IV. CONCLUSION

It is therefore ORDERED that Defendant Unico Group, Inc.’s Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction and 12(b)(3) Motion to Dismiss for Improper Venue and in the Alternative Motion to Transfer Venue [Dkt. 8; Dkt. 10] is GRANTED. Plaintiff NavSav Holdings, LLC's causes of action against Defendant Unico Group, Inc. are DISMISSED WITHOUT PREJUDICE.

It is further ORDERED that Defendants Austin Beber, Jacqueline Damon, and Cody Roach's Motion to Dismiss [Dkt. 9] is DENIED.

FOOTNOTES

1.   To the extent that NavSav cites Fintech Fund, F.L.P. v. Horne in support of specific jurisdiction over Unico, the Court agrees with Unico that Fintech is factually distinguishable because there is no indication of purposeful contact between Unico and NavSav, its Texas-based employees, or its Texas-based cloud. 836 F. App'x 215, 220–22 (5th Cir. 2020).

2.   In the context of discussing venue, NavSav, without support, states that “Unico should be bound by [the forum selection clause].” [Dkt. 16 at 25]. Unico, relying on In re Rolls Royce Corp., 775 F.3d 671, 679 (5th Cir. 2014), asserts that it cannot be bound by forum selection clauses because it is not a party to the Employment Agreements. [Dkt. 17 at 9].

3.   Because the Court grants Unico's motion to dismiss on personal jurisdiction grounds it need not consider Unico's venue-related arguments.

4.   NavSav seemingly makes no arguments that general jurisdiction exists as to the Individual Defendants, but the Court addresses general jurisdiction in order to be thorough. [Dkt. 16 at 19–22].

5.   Although this analysis most commonly occurs in the context of a motion to transfer, the Court finds that it also applies in the context of a motion to dismiss for lack of personal jurisdiction. See Fernandez v. Toddy, No. H-20-1137, 2020 WL 13861605, at *2–3 (S.D. Tex. Oct. 20, 2020).

6.   The Court notes that using Nebraska law to interpret the forum selection clause would lead to the same result.

7.   Nebraska Revised Statute § 25-414 provides the following:If the parties have agreed in writing that an action on a controversy may be brought in this state and the agreement provides the only basis for the exercise of jurisdiction, a court of this state will entertain the action if (a) the court has power under the law of this state to entertain the action; (b) this state is a reasonably convenient place for the trial of the action; (c) the agreement as to the place of the action was not obtained by misrepresentation, duress, the abuse of economic power, or other unconscionable means; and (d) the defendant, if within the state, was served as required by law of this state in the case of persons within the state or, if without the state, was served either personally or by certified mail directed to his last-known address.Neb. Rev. St. § 25-414(1). Because federal law applies to the enforceability of a forum selection clause, however, the Court need not consider this statute. See Fernandez, 2020 WL 13861605, at *2.

8.   Because the Court lacks personal jurisdiction it cannot weigh in on whether the Employment Agreements were adequately supported by consideration or whether the “first to file” rule impacts this case.

Michael J. Truncale, United States District Judge