TESCO Moves Confidentiality Case to Pennsylvania

  • To hear a lawsuit between parties, a court must have personal jurisdiction over a defendant. Personal jurisdiction requires “minimum contacts” between a defendant and a state such that the defendant “should reasonably anticipate being haled into court there.”
  • Electric meter company TESCO used a lack of minimum contacts with the state of Tennessee to have litigation with plaintiff Technology for Energy Corporation moved to a more convenient court in Pennsylvania.

One of the first questions a defendant often asks when they’ve been sued is this: can I get the case moved to a more favorable court? Each court may have different administrative rules, different law to be applied in the case, and judges with different backgrounds. In these differences, litigants and their counsel often seek to find an advantage by trying to move cases among the various courts.

One way to have a case moved – or even dismissed altogether – is to demonstrate that the court where the lawsuit was filed lacks personal jurisdiction over the defendant. Personal jurisdiction has been described as the “minimum contacts” necessary between a defendant and a state such that the defendant “should reasonably anticipate being haled into court there.” The notion is that a defendant should not have to litigate in a state where they’ve never been and never conducted business.

Personal jurisdiction can be established in a state where the defendant has such “continuous and systematic” ties that they are “at home” in the state. This is called general jurisdiction, and it means that a court in that state may handle just about any case brought against the defendant. Personal jurisdiction can also be established in a state where the events took place that gave rise to the lawsuit. This narrower circumstance is called specific jurisdiction.

Advent Design Corporation, which does business under the name “TESCO,” recently used these rules to have a case moved between courts. TESCO is based in Bristol, Pennsylvania, and provides electric meter testing equipment and accessories. TESCO was sued for inducing the breach of an employee contract by a Tennessee-based company called Technology for Energy Corporation. Technology for Energy designs and manufactures diagnostic equipment for the electrical power industry.

The lawsuit was brought in federal court in Knoxville, Tennessee, and alleged that TESCO had induced a former Technology for Energy employee to breach his confidentiality and non-compete agreements with the company when TESCO hired the employee to design new products. TESCO seems to have preferred that the case be litigated in Pennsylvania rather than in Tennessee, so it filed a motion to dismiss the case for lack of personal jurisdiction.

The Knoxville court agreed that it lacked personal jurisdiction over TESCO. Evaluating TESCO’s ties to the state of Tennessee using the framework described above, the Knoxville court first found that TESCO lacked any continuous and systematic ties to the state that would make it at home in Tennessee. The court therefore lacked general jurisdiction over TESCO.

Next, the Knoxville court evaluated whether the events involved in the litigation – TESCO’s alleged inducement of Technology for Energy’s former employee – took place in Tennessee. The court noted that TESCO does not sell any products in Tennessee, does not directly compete with Technology for Energy (such that Technology for Energy would be disadvantaged in Tennessee), and rarely even had employees in the state (usually traveling for industry conferences). The court found that there was no substantial connection between TESCO’s activities in Tennessee and the inducement claim, and therefore the court lacked specific jurisdiction over TESCO.

Upon finding that it lacked personal jurisdiction over TESCO, the Knoxville court transferred the case to the federal court in Eastern Pennsylvania. Since TESCO is located and operates extensively in Pennsylvania, the company is at home in the state and thus subject to general jurisdiction of Pennsylvania’s courts. The case will now be heard in the federal courthouse in Philadelphia, approximately 20 miles from TESCO’s headquarters.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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