Actian Corp. v. Green Shield Canada

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          SUSAN HIGHTOWER, UNITED STATES MAGISTRATE JUDGE.

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE.

         Before the Court is a Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, Under the Doctrine of Forum Non Conveniens, filed by Defendant Green Shield Canada on June 3, 2019 (Dkt. No. 15). Plaintiff Actian Corporation filed a Response (Dkt. No. 18)^[1] and Defendant filed a Reply (Dkt. No. 21). The District Court referred the above motions to the undersigned Magistrate Judge for Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1), Federal Rule of Civil Procedure 72, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas.

         I. BACKGROUND

         The parties do not dispute the underlying facts. Plaintiff Actian Corporation (“Actian”) is a Delaware Corporation with a principal place of business in California and an office in Texas. (Orig. Pet., Dkt. 1-2 ¶ 2). Defendant Green Shield Canada (“Green Shield”) is a Canadian company with a principal place of business in Ontario, Canada. (Orig. Pet., Dkt. 1-2 ¶ 3). Green Shield has no presence in the United States. (Rondinone Decl., Dkt. 15-1 ¶ 2). Green Shield is a not-for-profit benefits carrier incorporated under a Federal Act of the Parliament of Canada to provide drug, dental, extended healthcare, vision, hospital, and travel benefits to Canadian individuals and companies. (Id. ¶ 3). Its customers and offices are located exclusively in Canada. (Id.). It has no agent for service of process in the United States and was served in this action through the Hague Convention. (Id. ¶ 4; Orig. Pet, Dkt. 1-2 ¶ 3).

         Actian is the successor in interest to a series of companies that have licensed software to Green Shield for the past 17 years. (Orig. Pet., Dkt. 1-2 ¶ 2; Mot. Dismiss, Dkt. 15 ¶ 5). In 2002, Green Shield first licensed data integration software (“the Software”) from an Austin-based company called Pervasive Software (“Pervasive”). (Org. Pet., Dkt. 1-2, ¶¶ 6-9; Rondinone Decl., Dkt. 15-1 ¶ 5). Pervasive upgraded the Software periodically and licensed it to Green Shield under several different names, including Data Junction, Data Integrator, and DataConnect. (Id.; see also Bradberry Decl., Dkt. 18-1 ¶ 8). Green Shield paid an initial license fee of approximately $50, 000 in 2002, with subsequent annual license fees increasing from approximately $5, 000 to $15, 000. (See Rondinone Decl., Dkt. 15-1 ¶ 6). In 2013, Actian acquired Pervasive and continued to provide maintenance and support services from Austin. (Id. ¶ 6; Resp., Dkt. 18, at 3 n.2).^[2] Green Shield used the Software to enroll individuals in benefit plans and process their benefit claims. (Mot. Dismiss, Dkt. 15, at 5). The Software translates customer enrollment data into a format that Green Shield's internal systems can process. (Id. 5-6).

         The terms of all the licenses and services Green Shield purchased from Actian and its predecessors were set by end user license agreements (the “License Agreements”), which are governed by Texas law. (Mot. Dismiss, Dkt. 15, at 3; Resp., Dkt. 18, at 4).^[3] The License Agreements, however, contain no clauses designating a venue, consenting to jurisdiction in any venue, or setting a means of dispute resolution. (Mot. Dismiss, Dkt. 15-1, at 3).^[4]

         On September 28, 2018, Actian sent a letter to Green Shield advising that it had come to Actian's attention that Green Shield was using the Software “outside the scope of the software license agreement” by using the Software “to benefit third parties.” (Notice Letter, Dkt. 15-1, at 28 (citing License Agreement, § 2)). Actian proposed technology “upgrades” for a one-time cost of $900, 000 and $300, 000 annually. (Id. at 29). After Green Shield declined, Actian filed this action in Texas state court on April 10, 2019. (Orig. Pet, Dkt. 1-2, at 1). Green Shield timely removed to this Court. (Not. Removal, Dkt. 1). Green Shield now moves to dismiss this action for lack of personal jurisdiction under Rule 12(b)(2) or, in the alternative, under the doctrine of forum non conveniens. (Dkt. No. 15). The Court considers each in turn.

         II. PERSONAL JURISDICTION

         A. Legal Standard

         The Federal Rules of Civil Procedure allow a defendant to assert lack of personal jurisdiction as a defense to suit. Fed.R.Civ.P. 12(b)(2). On such a motion, “the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident.” Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). Where, as here, the Court rules on the motion without an evidentiary hearing, the plaintiff need only present a prima facie case that personal jurisdiction is proper. Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d 485, 488 (5th Cir. 2018). “Proof by a preponderance of the evidence is not required.” Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522, 539 (5th Cir. 2019) (quoting Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008) (internal citation omitted)).

         Courts may consider “not only the well-pleaded allegations of the complaint . . . but also factual showings made by way of depositions [and] affidavits.” Trois, 882 F.3d at 488 (quoting Simon v. United States, 644 F.2d 490, 497 (5th Cir. 1981)). “When a trial court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing . . . it must resolve any factual conflicts in favor of the plaintiff.” Lewis v. Fresne, 252 F.3d 352, 356 (5th Cir. 2001) (citing Stripling v. Jordan Prod. Co., 234 F.3d 863, 869 (5th Cir. 2000)). Nevertheless, a court “need not credit conclusory allegations, even if uncontroverted.” Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001) (per curiam).

         In a diversity case, a federal court has jurisdiction if “(1) the state's long-arm statute allows it; and (2) exercising jurisdiction would not violate the Due Process Clause of the Fourteenth Amendment.” Halliburton, 921 F.3d at 539 (quoting Cycles, Ltd. v. W.J. Digby, Inc., 889 F.2d 612, 616 (5th Cir. 1989) (internal quotation marks omitted)). “Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry reduces to only the federal due process analysis.” Id. (quoting Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008)).

         Federal due process requires a plaintiff to prove two things. Halliburton, 21 F.3d at 539. “First, the plaintiff must show that the non-resident defendant ‘purposely availed himself of the benefits and protections of the forum state by establishing minimum contacts with the state.'” Id. (quoting Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 243 (5th Cir. 2008) (internal citation omitted)). “Second, the plaintiff must show that the ‘exercise of jurisdiction . . . does not offend traditional notions of fair play and substantial justice.'” Id. Courts reach this second prong only “after establishing the defendant's minimum contacts with the forum state.” Id. at 544-45.

         “There are two types of ‘minimum contacts': those that give rise to specific personal jurisdiction and those that give rise to general personal jurisdiction.” Id. at 539 (quoting Lewis, 252 F.3d at 358). Because Actian asserts that Green Shield is subject to only this Court's specific jurisdiction, ...