Case 3:22-cv-00173-RLY-MJD Document 53 Filed 04/12/23 Page 1 of 11 PageID #: 323

UNITED STATES DISTRICT COURT

MADDENCO INC., )
)
Plaintiff, )
)
v. ) No. 3:22-cv-00173-RLY-MPB
)
JAMES REED, DRU DARBY, HG )
AUTOTECH LLC, )
)
Defendants. )

ENTRY GRANTING DEFENDANT AUTOTECH'S MOTION TO DISMISS

Plaintiff, MaddenCo Inc., develops and supports software for tire dealers and truck

stop service centers and owns a copyright for a software system called the "Tire Dealer

System." MaddenCo alleges Defendant HG AutoTech LLC stole the Tire Dealer System

when it developed its own tire management system with the help of two former remote

MaddenCo employees: Defendants James Reed and Dru Darby. To that end, MaddenCo

brings claims for breach of a confidentiality agreement and breach of fiduciary duties

against Reed and Darby, tortious interference with the confidentiality agreement by

AutoTech, and copyright infringement, false advertising, and unfair competition by all

Defendants. However, AutoTech has no connection to Indiana and moves to dismiss for

lack of personal jurisdiction.1 (See Filing No. 36). The court GRANTS that motion.

While AutoTech also moves to dismiss for a failure to state a claim and for improper

1
Both Reed and Darby have also moved to dismiss for a lack of personal jurisdiction. Those
motions remain under advisement.
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venue, the court does not reach these issues because it finds it lacks personal jurisdiction

over AutoTech.

I. Background

MaddenCo is an Indiana corporation that "spent years developing its proprietary

software system[,]" the "Tire Dealer System," that it copyrighted on August 26, 2022.

(Filing No. 2, Compl. ¶¶ 1, 9). MaddenCo created this system with the help of two

former employees: James Reed and Dru Darby. (Id. ¶¶ 10–11). As employees, Reed and

Darby entered confidentiality agreements with MaddenCo and also assigned their rights

and titles to any ideas or inventions they created as employees of MaddenCo. (Id. ¶¶ 13–

14).

Despite being employees of MaddenCo, both Reed and Darby worked remotely in

states other than Indiana, beginning in 2020, due to the COVID-19 pandemic. (See Filing

No. 31-2, Darby Decl. ¶¶ 5–6; see also Filing No. 18-1, Reed Decl. ¶¶ 5–7). In the late

spring and summer of 2021, both Reed and Darby left their positions at MaddenCo and

began working for AutoTech. (Darby Decl. ¶¶ 8, 13; Reed Decl. ¶¶ 8, 13). MaddenCo

alleges Reed and Darby took the Tire Dealer System with them and helped AutoTech

create an infringing computer application, which AutoTech then marketed to its

customers. (Compl ¶¶ 17–20).

AutoTech is a limited liability corporation organized in Louisiana, with members

in Arizona, Louisiana, and Tennessee. (Filing No. 36-1, Broderick Decl. ¶¶ 1–3). Its

only physical office is in Louisiana, and it has no business or customers in, or revenue

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from, Indiana. (Id. ¶¶ 4, 10–12, 16). Nor does AutoTech engage in online marketing that

might reach Indiana consumers. (Id. ¶ 13).

II. Legal Standard

"A complaint need not include facts alleging personal jurisdiction. However, once

the defendant moves to dismiss the complaint under Federal Rule of Civil Procedure

12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating

the existence of jurisdiction." Purdue Rsch. Found. v. Sanofi-Synthelabo, S.A., 338 F.3d

773, 782 (7th Cir. 2003). The court reads "the complaint liberally, in its entirety, and

with every inference drawn in favor" of the plaintiff to determine if the plaintiff has

shown a prima facie case for personal jurisdiction. Cent. States, Se. & Sw. Areas Pension

Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 877–78 (7th Cir. 2006). "[O]nce the

defendant has submitted affidavits or other evidence in opposition to the exercise of

jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence

supporting the exercise of jurisdiction." Purdue Rsch., 338 F.3d at 783.

III. Discussion

Personal jurisdiction is the measure of the court's "power over the defendant's

person," and a court cannot render judgment against a non-consenting defendant unless

that defendant has "certain minimum contacts" with the forum state such that the suit

"does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945). Personal jurisdiction "represents a restriction on

judicial power . . . as a matter of individual liberty." Ins. Corp. of Ireland v. Compagnie

des Bauxites de Guinee, 456 U.S. 694, 702 (1982). But because personal jurisdiction is a

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waivable personal privilege, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985),

courts must only dismiss a case for lack of personal jurisdiction on a proper motion from

the defendant, RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1277–80 (7th Cir. 1997)

(dismissing following a proper motion is required without personal jurisdiction).

In federal-question jurisdiction cases, "a federal court has personal jurisdiction

over the defendant if either federal law or the law of the state in which the court sits

authorizes service of process to that defendant." Mobile Anesthesiologists Chi., LLC v.

Anesthesia Assocs. of Hous. Metroplex, P.A., 623 F.3d 440, 443 (7th Cir. 2010). Because

the applicable federal laws—the various Copyright Acts—do not contain a nationwide

service of process provision, the court looks to state law to determine whether the court

can effectuate service consistent with the due process clause. See 17 U.S.C. § 501 (no

nationwide service provision); see also Fed. R. Civ. P. 4(k)(1) (explaining "[s]erving a

summons . . . establishes personal jurisdiction over a defendant: (A) who is subject to the

jurisdiction of a court of general jurisdiction in the state where the district court is

located" or "(C) when authorized by a federal statute"); see also Miss. Publ'g Corp. v.

Murphree, 326 U.S. 438, 444–445 (1946) ("[S]ervice of summons is the procedure by

which a court having venue and jurisdiction of the subject matter of the suit asserts

jurisdiction over the person of the party served.").

While analysis of state law normally requires discussing state statutory and

constitutional law, Indiana allows courts to exercise personal jurisdiction to the full

extent permitted by the Federal Due Process Clause. Ind. Trial Rule 4.4(a) (allowing

jurisdiction "on any basis not inconsistent with the Constitution of this state or the United

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States"); LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 967 (Ind. 2006) (explaining Trial

Rule 4.4(A) "reduce[s] [the] analysis of personal jurisdiction to the issue of whether the

exercise of personal jurisdiction is consistent with the Federal Due Process Clause").

"Thus, the statutory question merges with the constitutional one[.]" N. Grain Mktg., LLC

v. Greving, 743 F.3d 487, 492 (7th Cir. 2014).

The Federal Constitution allows personal jurisdiction to be either general or

specific. Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021).

General jurisdiction allows exercising personal jurisdiction where an entity is "essentially

at home" in the forum. Kipp. v. Ski Enter. Corp. of Wisc., 783 F.3d 695, 697 (7th Cir.

2015). Specific jurisdiction requires the plaintiff's claim to arise out of the defendant's

contacts with the forum state. Mobile Anesthesiologists, 623 F.3d at 444.

The parties agree general jurisdiction is not present here. Thus, to make out its

case for personal jurisdiction, MaddenCo must show AutoTech (1) purposefully availed

itself of the privilege of conducting business in Indiana or purposefully directed its

activities at Indiana; (2) AutoTech's contacts with Indiana gave rise to MaddenCo's

claim; and (3) exercising jurisdiction comports with traditional notions of fair play and

substantial justice. Tamburo v. Dworkin, 601 F.3d 693, 702 (7th Cir. 2010). The

ultimate touchstone, however, is whether the defendant's contacts with the forum ensure

the defendant will not be surprised at being haled into court there. World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980). In other words, "random,

isolated, or fortuitous" contacts are insufficient. Keeton v. Hustler Mag., Inc., 465 U.S.

770, 774 (1984).

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AutoTech LLC has no contacts with Indiana. It has no members in Indiana, and

its only office is in Denham Springs, Louisiana. (Broderick Decl. ¶¶ 3–4). AutoTech has

no customers in Indiana and does not solicit customers in Indiana. (Id. ¶¶ 10–11). It has

no physical presence in Indiana and does not engage in online marketing that could reach

Indiana consumers. (Id. at ¶¶ 12–13). There is also no financial connection to Indiana:

none of AutoTech's revenue comes from Indiana, it does not have an Indiana bank

account, and it has never paid taxes to Indiana. (Id. at ¶¶ 14–17). Without a relationship

to the forum, the exercise of personal jurisdiction is improper.

MaddenCo advances two theories for why personal jurisdiction is proper despite

the lack of contacts between AutoTech and Indiana. First, because the effects of

AutoTech's Louisiana conduct—developing the allegedly infringing management

system—were felt in Indiana, the lack of contacts does not prohibit the exercise of

jurisdiction. Second, two of AutoTech's employees, Reed and Darby, are agents of

AutoTech and had sufficient contacts with Indiana to permit the exercise of jurisdiction.

Both theories misconstrue the relevant law.

A. Effects Test

MaddenCo's first theory—that the effects of an action being felt in a forum are

alone sufficient to trigger personal jurisdiction in that forum—is squarely foreclosed by

Seventh Circuit precedent.

In Ariel Investments, LLC v. Ariel Capital Advisors LLC, the Seventh Circuit held

an Illinois district court did not have personal jurisdiction over a Florida company alleged

to have infringed on an Illinois company's trademarks. 881 F.3d 520 (7th Cir. 2018).

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There, the Florida firm had no jurisdictionally relevant contacts with Illinois, and the

Illinois firm argued that the effects of the trademark infringement were felt in Illinois by

the Illinois firm. Id. at 523. The Seventh Circuit rejected that argument. "If trademark

infringement happened," the Seventh Circuit reasoned, "that wrong occurred in Florida,

or perhaps some other state where people who wanted to do business with Ariel

Investments ended up dealing with Ariel Capital because of the similar names." Id. Put

differently, "[k]nowing about a potential for harm in a particular state is not the same as

acting in that state—and it takes the latter to permit personal jurisdiction." Id. at 522

(emphasis added). Thus, despite the effect of the trademark infringement in Illinois,

because the Florida firm did not through its own actions "form the necessary connection

with the forum state, . . . it [was] easy to describe the relation between [the forum] and

Ariel Capital: none." Id. at 522.

So too here. Assuming AutoTech did infringe on MaddenCo's copyright, that

wrong occurred in Louisiana where AutoTech developed the software. Or perhaps it

occurred in some state where a customer purchased the infringing computer application.

It did not occur in Indiana.

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The same is true for MaddenCo's other claims against AutoTech: if AutoTech

tortiously interfered with Reed and Darby's contracts, it did so outside Indiana.2 See

Monco v. Zoltek Corp., 342 F. Supp. 3d 829, 833–35 (N.D. Ill. 2018) (explaining

statements made in Missouri that tortiously caused a third-party to terminate a business

relationship in Illinois did not establish personal jurisdiction in Illinois because the

tortious conduct did not occur in the forum). And if AutoTech engaged in false

advertising by passing off the computer application as its own, it did so outside Indiana.

AutoTech has no clients or presence in Indiana, and none of the wrongs occurred there.

"That resolves this litigation." Id.

B. Agency Theory of Jurisdiction

MaddenCo's agency theory of jurisdiction is equally unavailing. To be sure, it is

axiomatic that "[t]he acts of an agent in a forum subject the principal to the personal

jurisdiction of that forum state." Sabovcik v. Castillo, No. 2:08-cv-279RM, 2009 WL

1285889, at *2 (N.D. Ind. May 5, 2009) (citing IDS Life Ins. v. SunAmerica Life Ins., 136

F.3d 537, 541 (7th Cir. 1998)). Even though Reed and Darby are currently agents of

AutoTech and had Indiana contacts, N. Ind. Pub. Serv. Co. v. Bloom, 846 N.E.2d 175,

2
A claim for tortious interference can create personal jurisdiction where the plaintiff alleges, or
submits evidence demonstrating, the defendant tortiously interfered by reaching into the forum
state, such as by meeting with an employee in the state and persuading them to breach a contract.
That is not MaddenCo's theory here: they make no allegations and submit no evidence showing
AutoTech had any contact with Reed and Darby prior to them becoming AutoTech employees.
See Purdue Rsch., 338 F.3d at 783 (plaintiff must "submit affirmative evidence supporting the
exercise of jurisdiction" where defendant has submitted affidavits opposing the exercise of
jurisdiction). The tortious interference claim is that AutoTech, presumably in Louisiana where it
employs Reed and Darby, convinced Reed and Darby to reveal hidden information that allowed
AutoTech to recreate the Tire Dealer System.
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187 (Ind. 2006) (explaining Indiana views employment as a "species of agency

relationship"), that does not create personal jurisdiction. The crux of MaddenCo's error is

the commonsense principle that a person cannot create personal jurisdiction over another

before the agency relationship was established. Because Reed and Darby's contacts with

Indiana predate their agency relationship with AutoTech, their Indiana contacts cannot

establish jurisdiction over AutoTech. Understanding why requires revisiting what

establishes personal jurisdiction in the first instance.

Returning to first principles: a defendant must have a sufficient connection with

the forum for the exercise of personal jurisdiction to be proper. Hanson v. Denkcla, 357

U.S. 235, 251 (1958) (explaining "[h]owever minimal the burden of defending in a

foreign tribunal, a defendant may not be called upon to do so unless he has had the

minimal contacts with that State") (internal quotation marks omitted). Importantly, "the

defendant's conduct . . . must form the necessary connection with the forum State," not

the conduct of the plaintiff, third-parties, or other defendants. Walden v. Fiore, 571 U.S.

277, 285 (2014). That means the court must individually assess the contacts initiated by

the specific defendant challenging personal jurisdiction. Rush v. Savchuk, 444 U.S. 320,

331–32 (1980); see also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S.

408, 417 (1984) (holding the "unilateral activity of another party or a third person is not

an appropriate consideration" in assessing personal jurisdiction).

At first blush this seems inconsistent with imputing any of an agent's contacts onto

a defendant corporation. However "[a] corporation can act only through its agents, and

their acts, when done within the scope of their authority, are attributable to the

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corporation." Hibschman Pontiac, Inc. v. Batchelor, 266 Ind. 310, 315 (1977).

Important is the limitation that only those acts "done within the scope of the[] [agent's]

authority" count as the corporation's actions. Id. at 315. Naturally then, only those

actions taken within the scope of the agent's authority matter for exercising personal

jurisdiction over a corporation because only those actions are the acts of the corporation.

See, e.g., Walden, 571 U.S. at 284 (explaining the actions of the defendant itself must be

sufficient to form the necessary connection with the state).

Here, MaddenCo makes no allegations that Reed and Darby had contacts with

Indiana once they became agents of AutoTech. (See Filing No. 47, Pl.'s Br. in Resp. at

2–3 (alleging Darby and Reed "copied and took possession of MaddenCo confidential

information" but not alleging they were employees of AutoTech at the time or were

contacting Indiana when they did so)). Nor are there allegations that AutoTech contacted

Reed and Darby prior to their employment with AutoTech while they were in Indiana—

the alleged tortious interference and copyright infringement occurred after Reed and

Darby left MaddenCo and Indiana. That current agents of AutoTech had prior contacts

with Indiana unrelated to their agency relationship with AutoTech is not relevant to

whether the court can exercise jurisdiction over AutoTech. Because the jurisdictionally

relevant facts—the contacts of Reed and Darby while they acted as employees for

AutoTech—indicate AutoTech had no contacts with Indiana, the court lacks personal

jurisdiction over AutoTech.

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IV. Conclusion

For the reasons discussed above, the court lacks personal jurisdiction over

AutoTech. Accordingly, AutoTech's Motion to Dismiss for Lack of Personal Jurisdiction

(Filing No. 36) is GRANTED. The claims against AutoTech are accordingly

DISMISSED without prejudice and the Clerk is ORDERED to STRIKE AutoTech

from the complaint.

IT IS SO ORDERED this 12th day of April 2023.

s/RLY

Distributed Electronically to Registered Counsels of Record.

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