Personal Jurisdiction Over Foreigner Who Accessed Server in Forum State

The Second Circuit Court of Appeals recently held that a Canadian defendant’s remote use of a computer located in Connecticut satisfied the jurisdictional requirements of both the Connecticut long-arm statute and due process.  MacDermid, Inc., a specialty chemical company, maintains its principal place of business in Waterbury, Connecticut.  Defendant Jackie Deiter lives near Toronto, Ontario, Canada and is a former employee of MacDermid’s Canadian subsidiary, MacDermid Chemical, Inc.  MacDermid alleged that prior to her termination, Deiter forwarded confidential and proprietary MacDermid files from her corporate email account to her personal email account, thereby misappropriating MacDermid’s trade secrets and obtaining unauthorized access to and misusing MacDermid’s computer system.  Deiter obtained and emailed the files by remotely accessing MacDermid’s Waterbury, Connecticut servers.

MacDermid sued Deiter in federal district court in Connecticut for state law violations, basing jurisdiction on diversity of citizenship and the Connecticut long-arm statute.  The district court judge granted Deiter’s Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, ruling that Deiter did not use a Connecticut computer when she sent email from the MacDermid computer at her home to her personal home computer.  The Second Circuit reversed the district court’s decision. 

Connecticut long-arm statute.  The Connecticut long-arm statute provides for personal jurisdiction over nonresident individuals who use a computer located within the state, among other acts which aren’t relevant here.  The definition of “computer” pursuant to the long-arm statute includes electronic devices that can, pursuant to human instruction, automatically perform computer operations, communicate the results to another computer or person or store, retrieve or communicate computer data.  The Second Circuit ruled that MacDermid’s Waterbury, Connecticut servers met the definition of “computer” under Connecticut’s long-arm statute.  “The statute requires only that the computer or network, not the user, be located in Connecticut” and “reaches persons outside the state who remotely access computers within the state.”  (Opinion pdf page 6).

Fourteen Amendment Due Process Clause

Generally, a court may exercise personal jurisdiction over a nonresident defendant only so long as there exist ‘minimum contacts’ between the defendant and the forum State.  The contacts must be such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.

(Opinion pdf page 7).

The Second Circuit applied the “purposeful availment” test to determine whether “minimum contacts” existed.  “It is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.”  (Opinion pdf page 8).

The defendant is not required to be physically present in the forum state.  The Second Circuit ruled that Deiter purposefully availed herself of the privilege of conducting activities within the state of Connecticut.  Deiter knew that MacDermid’s email system and the storage of its trade secrets, confidential and proprietary information were centralized in Waterbury, Connecticut, and used the Connecticut servers to retrieve and email confidential files.  Deiter also directed her allegedly tortious conduct towards MacDermid, a Connecticut corporation. 

Once the court has determined whether the defendant has sufficient minimum contacts, the court must then determine whether exercising personal jurisdiction is reasonable under the Due Process Clause.  The Second Circuit considers five factors:

A court must consider [1] the burden on the defendant, [2] the interests of the forum State, and [3] the plaintiff’s interest in obtaining relief.  It must also weigh in its determination [4] the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and [5] the shared interest of the several States in furthering fundamental substantive social policies.

(Opinion pdf page 9).

The Second Circuit ruled that these factors support exercising personal jurisdiction in this case.  The burden on Deiter to travel to Connecticut to defend this suit does not make exercising personal jurisdiction unreasonable.  “Both Connecticut and MacDermid have significant interests in resolving the matter in Connecticut.”  (Opinion pdf page 9).  Connecticut has an interest in the proper interpretation of its laws and most of the witnesses are located in Connecticut. 

Further, efficiency and social policies against computer-based theft are generally best served by adjudication in the state from which computer files have been misappropriated.  Accordingly, we conclude that jurisdiction is reasonable in this case.

(Opinion pdf page 10).

My takeaway from this case is that website owners whose servers are located in the same state as their principal place of business may want to consider putting notices on their websites about where their servers are located.  Depending upon the forum state’s long-arm statute, a website owner may be able to use that notice to establish jurisdiction over a nonresident defendant where the website owner’s principal place of business is located.

This case is MacDermid, Inc. v. Deiter, No. 11-5388-cv, Second Circuit Court of Appeals.

Leave a Reply

Your email address will not be published. Required fields are marked *