United States District Court, D. South Dakota, Southern Division
ORDER GRANTING MOTION TO DISMISS AS TO KELYN
E. SCHREIER UNITED STATES DISTRICT JUDGE.
Sterling Computers Corp., filed this action for injunctive
relief and damages caused by the alleged tortious conduct of
defendants, Billie Jo Fling and Kelyn Technologies, L.L.C.
Docket 1. Kelyn now moves to dismiss for lack of personal
jurisdiction under Federal Rule of Civil Procedure 12(b)(2).
Docket 18. For the following reasons, the court grants
Kelyn's motion to dismiss.
is a corporation incorporated in California with its
principal place of business in North Sioux City, Union
County, South Dakota. Docket 1 ¶ 1. It provides
information technology services to the federal government,
state and local governments, and other clients. Id.
¶ 9. Sterling holds “strategic
relationships” with federal agencies and “over 1,
800 manufacturers of IT hardware, software, and
solutions.” Id. ¶ 11. It uses Salesforce,
a sales contact and pipeline database, to manage its client
contact information, notes and information on bids it has
submitted, and current bids. Id. ¶ 18. The
information contained in the Salesforce database holds great
economic value for Sterling. Id. ¶ 23. The
names of clients and bid information, if obtained by
competitors, could allow those competitors to engage in
unfair competition by undercutting Sterling's bids.
Id. ¶ 25. Finally, the information contains
sensitive information about United States's military
projects. Id. ¶ 26. Sterling's federal
government customers entrust it to keep this information
secure and confidential. Id. Sterling closely guards
the proprietary information held in its Salesforce database
and takes steps to protect it from disclosure. See
Id. ¶¶ 27, 28, 30, 34.
Jo Fling, non-moving defendant, began working for Sterling in
April of 2011 as an account manager. Id. ¶ 36.
Fling received and signed a noncompetition and non-disclosure
agreement with Sterling as part of her employment.
Id. ¶¶ 38-39, 42-43, 44, 45. Sterling
alleges that as a salesperson, Fling had access to
Sterling's Salesforce database and the confidential
information it contained. Id. ¶ 46. She worked
closely with numerous federal government clients and thus had
access to those clients' confidential information in the
Salesforce database. Id. ¶ 47. On or around
November 20, 2018, Fling quit her position with Sterling.
Id. ¶ 50.
around January of 2019, Fling began working at Kelyn.
Id. ¶ 54. Kelyn is a limited liability company
incorporated in Colorado with its principal place of business
in Parker, Colorado, and is Sterling's competitor.
Id. ¶¶ 3, 54. On or around May 22, 2019,
Sterling learned that Fling was “rendering sales
services for Sterling customers with whom she had actual
contact while employed by Sterling[.]” Id.
¶ 55. Sterling alleges that Fling “is using
Sterling's confidential information to improperly solicit
Sterling customers with whom she had actual contact while
employed with Sterling[.]” Id. ¶ 56.
Sterling also alleges that “Kelyn was aware when it
hired Fling that Fling's former employer was Sterling,
and that she possessed valuable information regarding
Sterling customers that could be used to Kelyn's
benefit.” Id. ¶ 58. Kelyn referenced
specific accounts Fling oversaw at Sterling on its website.
Id. ¶¶ 58-59.
around May 30, 2019, after it learned about Fling's
alleged use of its confidential information, Sterling
reminded Fling of her obligations under Sterling's
employee handbook and non-compete agreement. Id.
¶ 60. It also informed Kelyn of “Fling's and
Kelyn's obligations to not interfere with Fling's
agreements with Sterling and to not improperly use
Sterling's confidential information.” Id.
¶ 61. Kelyn responded on June 24, 2019. Id.
¶ 63. According to Sterling, Kelyn received, and
continues to receive, “a benefit from Fling's
improper solicitation and rendering sales services for
Sterling customers with whom Fling had actual contact while
employed at Sterling.” Id. ¶ 64.
filed suit against Kelyn and Fling on August 6, 2019.
Id.; see Docket 1. Sterling alleged several
claims against Kelyn. Id. at ¶¶ 82-92,
93-102, 103-108, 109-116, 117-122, 123-127. It asserted that
personal jurisdiction over Kelyn exists in South Dakota under
Calder v. Jones, 465 U.S. 783 (1984), “because
[Kelyn] engaged in intentional and tortious conduct expressly
and/or uniquely aimed at Sterling, which is a South Dakota
corporation.” Docket 1 ¶ 7.
court granted limited jurisdictional discovery regarding
Kelyn's motion to dismiss. Docket 46. After completing
discovery, Sterling filed supplemental jurisdictional facts
detailing Kelyn's contacts with South Dakota that
Sterling alleges render Kelyn subject to personal
jurisdiction in the state. Docket 61. The supplemental facts
state that on March 20, 2018, Kevin Cronin, Kelyn's Vice
President of Sales, received Fling's resume and cover
letter from Mike Kuhn, a former Sterling employee.
Id. ¶ 1. Sterling alleges that the resume
contained its confidential information, including revenue
numbers and business opportunities attributable to Fling.
Id. ¶ 4. The facts do not state where Kuhn was
located when he sent Fling's resume to Kelyn. See
Id. ¶¶ 1, 4.
of 2018, Fling reached out to Cronin to ask whether Kelyn was
hiring. Id. ¶ 2. Cronin informed her that Kelyn
was not. Id. In October of 2018, Fling again
contacted Cronin. Id. ¶ 3. Cronin informed her
that Kelyn may have an open position in December.
Id. Fling's last day of employment with Sterling
was November 20, 2018. Docket 1 ¶ 50. Fling again
contacted Cronin in December of 2108 to ask about the
position. Docket 61 ¶ 5. Kelyn planned to have a
position open in January of 2019, so it began interviewing
and negotiating employment with Fling. Id. During
negotiations, Fling forwarded to Cronin her email
correspondence with Sterling about her covenant not to
compete. Id. ¶ 6. Cronin passed the information
along to others within Kelyn. Id. The jurisdictional
facts do not allege that Fling resided in South Dakota during
the negotiation process or that Kelyn reached out to her in
South Dakota or elsewhere. See Id. ¶¶
also alleges that Kelyn had “numerous” other
contacts with entities in South Dakota. Id.
¶¶ 11-40. These other contacts include a business
deal between Kelyn and a United States Geological Survey
(USGS) data center located near Sioux Falls. Id.
¶¶ 11-26. As a part of the business
relationship with the USGS data center, Kelyn sent around 180
emails to USGS employees in South Dakota and received around
the same number between 2012 and 2019. Id.
¶¶ 20-21. Cronin also traveled to Sioux Falls in
2013 and presented a three-hour proposal. Id. ¶
11. Kelyn received two direct orders from the USGS data
center, totaling around $6, 200. Id. ¶¶
15-16. Sterling does not allege that the present cause of
action relates to Kelyn's relationship with the USGS data
contacts with entities in South Dakota also include calls and
emails its employees made to Sterling's employees in
September of 2019. Id. ¶¶ 27-40. Sterling
and Kelyn jointly explored business opportunities, and Cronin
was introduced to a Sterling employee via email regarding a
request for a price quotation on one of Kelyn's products.
Id. ¶ 29. Kelyn prepared a quote for Sterling
for the product. Id. ¶ 30. The quote had
Fling's name on it. Id. Sterling does not allege
that the proposed joint business venture between Sterling and
Kelyn relates to the present cause of action.
review of a Rule 12(b)(2) motion to dismiss, facts are viewed
in the light most favorable to the plaintiff. K-V Pharm.
Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th
Cir. 2011) (citing Digi-Tel Holdings, Inc. v. Proteq
Telecomms. (PTE), Ltd., 89 F.3d 519, 522 (8th Cir.
1996)). The court may consider pleadings, affidavits, and
exhibits in support of or in opposition to the motion.
Id. In order to defeat a Rule 12(b)(2) motion based
solely on affidavits ...