Judge Robinson denies motion to dismiss for lack of personal jurisidiction, without prejudice to renew following jurisdictional discovery

Judge Robinson recently considered defendant Daxtra Technologies Limited’s (“Daxtra UK”)’ motion to dismiss plaintiff’s complaint for lack of personal jurisdiction. Kenexa Brassring, Inc. v. Akken, Inc., et al., C.A. No. 12-660-SLR (D. Del. June 25, 2013). Daxtra UK is a Scottish company with places of business in the United Kingdom. Id. at 2. Defendant Daxtra Technologies Inc. (“Daxtra US”) is a Delaware corporation and a subsidiary of Daxtra UK formed “for the purpose of marketing and selling software and providing support in the United States.” Id.

To establish personal jurisdiction, the Court must determine whether there exists a basis for jurisdiction under Delaware’s long arm statute, 10 Del C. sec. 3104(c)(1)-(4), and if so, whether the the defendant “purposefully availed” itself of the forum state such that it should reasonably anticipate being sued there. Id. at 4.

First, Kenexa argued that personal jurisdiction was appropriate “through direct contacts between Daxtra UK and the United States, including Delaware. Id. at 5. Kenexa pointed to the sale of a potentially infringing product in the United States that had been licensed to a U.S. company. Id. Judge Robinson found that this ground was not sufficient because it was unclear whether Kenexa would accuse that product of infringing the patents-in-suit. Id. Next, Kenexa asserted that personal jurisdiction was appropriate because Daxtra UK used its website to solicit job applicants in the U.S. Id. at 5-6. Judge Robinson rejected this ground because “Kenexa ha[d] not indicated any particular instance in which a U.S. applicant interacted with the website[.] Id. at 6.

Second, Kenexa argued that personal jurisdiction existed over Daxtra UK through contacts of its subsidiary, Daxtra US, pursuant to agency theory. Id. “Under agency theory, the court may attribute the actions of a subsidiary company to its parent where the subsidiary acts on the parent’s behalf or at the parent’s direction.” Id. at 6-7 (quotations omitted). Four factors are relevant to the court’s determination:

(1) the extent of overlap of officers and directors; (2) methods of
financing; (3) the division of responsibility for day-to-day management; and (4) the
process by which each corporation obtains its business.

Id. at 7 (quotations omitted).

Daxtra UK conceded that the officers and directors of Daxtra UK and Daxtra US overlapped completely. Id. Daxtra UK argued, however, that there was no overlap regarding the financing of the entities, and Judge Robinson found that Kenexa had not alleged otherwise, with reasonable particularity. Id. at 7-8. Regarding the third factor, Kenexa argued that Daxtra UK’s CTO was assigned to Daxtra US, which was “indicative of his playing a larger role in the day-to-day management” of Daxtra US. Id. at 8. Daxtra UK responded that the CTO’s re-assignment was temporary so that he could help “make sales calls and grow the business in the United States[.]” Id. Regarding the last factor, the court found that at least some of Daxtra US’s business was obtained from Daxtra UK. Id. at 8-9.

In light of the foregoing, Judge Robinson concluded that “plaintiff ha[d] presented factual allegations that suggeste[d] with reasonable particularity the possible existence of the requisite contacts between Daxtra UK and Delaware.” Id. at 9. Therefore, the Court permitted Kenexa to take jurisdictional discovery and denied Daxtra UK’s motion, without prejudice to renew one month after the close of such discovery. Id. at 9-10.

Kenexa Brassring, Inc. v. Akken, Inc., et al., C.A. No. 12-660-SLR (D. Del. June 25, 2013) by YCSTBlog

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