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Payment Alliance International, Inc. v. Deaver

United States District Court, W.D. Kentucky, Louisville

February 1, 2018

PAYMENT ALLIANCE INTERNATIONAL, INC., PLAINTIFF
v.
CURTIS LEE DEAVER, DEFENDANT

          MEMORANDUM OPINION AND ORDER

          Thomas B. Russell, Senior Judge United States District Court

         This matter is before the Court on several motions. First is Plaintiff Payment Alliance International, Inc.'s (“PAI”) Motion for a Temporary Restraining Order, [R. 7]. Defendant Curtis Lee Deaver responded, [R. 14], and PAI replied, [R.15]. Second is Deaver's Motion to Dismiss for Lack of Personal Jurisdiction pursuant to Civil Rule of Procedure 12(b)(1), [R. 11]. Third, and in the alternative to the previous motion, is Deaver's Motion to Transfer the Case to the United States District Court, District of Minnesota, pursuant to 28 U.S.C. § 1404(a), [R. 12].[1]PAI responded, [R. 13], and the deadline for Deaver to reply has passed. This matter is now ripe for adjudication. For the reasons stated herein, PAI's Motion for a Temporary Restraining Order, [R. 7], is DENIED and Deaver's Motion to Dismiss, [R. 11], or in the alternative, Motion to Transfer, [R. 12], are both DENIED.

         BACKGROUND

         This case revolves around a contract between PAI and Deaver. PAI is a Delaware corporation with its principal place of business located in Louisville, Kentucky. [R. 6 at 1 (Verified Amended Complaint).] Its line of work is automated teller machines (“ATMs”)- specifically the “processing, operation, maintenance and sale” of ATMs. [Id.] Deaver is a resident of Minnesota and previously worked as a field service technician for PAI. [Id.; R. 14-1 at 3 (Deaver Affidavit).] Before working for PAI, Deaver worked in the same role and capacity for a different ATM company, Absolute ATM, Inc., from October 2004 to April 4, 2016. [Id. at 2.] In addition to maintaining the ATMs as a technician, Deaver also “vaulted” cash for four ATMs owned and operated by Absolute. [Id. at 3.] “Vaulting” cash means that the owner/operator of the ATM, Absolute, has entered an agreement with a third party, Deaver, in which the third party provides the cash in the ATM for a portion of the surcharge fee charged per transaction at the ATM. [Id. at 2; see R. 6-1 at 2 (VCA) (describing vault cash services as “to provide currency, and service and manage distribution of currency for the ATM locations . . ..”).]

         On April 4, 2016, PAI purchased and acquired Absolute, and hired Deaver as a W2 employee in the position of field service technician with an annual salary of $69, 000.00. [R. 6 at 3.] PAI describes the duties of this position as “repairing and installing ATMs for PAI customers.” [Id.] On or around April 26, 2016, Deaver executed a Vault Cash Agreement with PAI, in which Deaver agreed to “provide currency, load currency, and service and manage distribution of currency for the ATM locations covered by this agreement” in exchange for certain fees and charges to be paid by PAI. [R. 6-1 at 2-5.] Deaver claims that the VCA was presented to him as “a form document that could not be negotiated.” [R. 14-1 at 3.] PAI states that Deaver received approximately $83, 352.00 in shared revenue from PAI from between April 2016 and October 2017 as compensation for his work as an independent contractor under the VCA. [R. 6 at 4.]

         Material to the case at hand are two provisions contained within the VCA. First, is the forum selection clause:

F. Jurisdiction. Except as provided in the Dispute Resolution paragraph below, the Parties hereby irrevocably submit to the exclusive jurisdiction of any court of the Commonwealth of Kentucky sitting in Jefferson County, Kentucky in any action or proceeding arising out of or relating to this Agreement, and the Parties hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in any such court. The Parties hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Parties agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit of the judgment in any other manner provided by law.
G. Dispute Resolution. As provided above this Agreement shall be construed in accordance with Kentucky law without reference to conflicts principles and venue for any actions or arbitration pertaining to this Agreement shall be brought in a state or federal court of competent subject matter jurisdiction sitting in Jefferson County in the Commonwealth of Kentucky.

[R. 6-1 at 8-9.] The second provision contested by the parties is the non-solicitation provision:

Non-Solicitation. IC agrees that it and any business entity in which it may have an interest as partner, trustee, director, officer, employee, shareholder, or member shall not:
1. During the initial term of this Agreement or any renewal term thereof, and for a period of Three (3) year[s] following the termination of this agreement, IC will not solicit any merchant under a direct processing contract with PAI during the term of this Agreement; Additionally, IC will not, in any way, interfere, or knowingly permit any corporate parent, subsidiary, other affiliate or successor-in-interest or any of its employees or agents to interfere in any way, with PAI's right or interests under any merchant produce or services agreement with any such direct processing merchant, or cause or attempt to cause any such direct processing merchant to obtain competing services from any person or entity other than PAI; or
2. Take any action intended to cause any PAI employee(s) to leave their employment with PAI or any PAI market partners to terminate or breach the terms of any agreement with PAI to which such market partner is a party during the initial term of his Agreement. or any renewal term thereof, and for a period of Two (2) year following termination of this Agreement; or
3. Take any action intended to cause any other market partners or independent contractors of PAI to terminate or breach the terms of any agreement with PAI to which such market partner or independent contractor is a party.
As used herein the term “solicit” shall mean to solicit, entice or otherwise contact a merchant for the purpose of selling Program products or services of the same or similar type which PAI holds and [sic] existing contract.

[R. 6-1 at 6.] On July 31, 2017, Deaver's employment with PAI ended.[2] Thereafter, PAI claims that Deaver violated the non-solicitation provision of the VCA by “intentionally solicit[ing] and entic[ing] customers of PAI to terminate their contractual and business relationships with PAI and transfer their business to Kahuna ATM.”[3] [R. 6 at 6.] More specifically, PAI alleges that Deaver contacted customers, such as Dur Dur Clothing and Downtown Market, enticed them to move their business to Kahuna ATM and/or Ultimate ATM, and filled out cancellation notices to be sent to PAI on their behalf. [Id.] Also, PAI claims that Deaver misappropriated PAI's confidential information involving potential customers, such as Southside MiniMarket and Mr. BBQ Express, in order to divert business to his mother's company, Ultimate ATM. [Id.] Deaver denies these allegations. [R. 14-1 at 5-6.]

         Out of concern that Deaver was soliciting customers, PAI filed a Motion for Temporary Restraining Order, (“TRO”), [R. 7], on December 13, 2017. In response to the Verified Amended Complaint, [R. 6], filed on December 13, 2107, Deaver filed a Motion to Dismiss for Lack of Jurisdiction, [R. 11], and a Motion to Transfer, [R. 12], on December 29, 2017. The Court will address these motions in turn.

         DISCUSSION

         I. Motion to Dismiss for Lack of Jurisdiction

         Pursuant to Federal Rule of Procedure 12(b)(1), Deaver moves to dismiss PAI's Amended Complaint for lack of personal jurisdiction. [R. 11-1 at 1.] First, Deaver argues that PAI has not established a prima facie case of personal jurisdiction under the applicable long-arm statute of Kentucky. [Id. at 5.] Secondly, Deaver claims that the forum selection clause contained in the VCA is unenforceable. [Id. at 8-10.] The Court will first address the enforceability of the forum selection clause, followed by the prima facie personal jurisdiction argument.

         A. The Forum Selection Clause

         “[T]he requirement that a court have personal jurisdiction over a party is a waivable right and there are a variety of legal arrangements whereby litigants may consent to the personal jurisdiction of a particular court system.” Preferred Capital, Inc. v. Assocs. in Urology, 453 F.3d 718, 721 (6th Cir. 2006) (citation omitted). Furthermore, “[t]he use of a forum selection clause is one way in which contracting parties may agree in advance to submit to the jurisdiction of a particular court.” Id. (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 11 (1972)); see also Lorenzana v. 2nd Story Software, Inc., No. 4:12-CV-00021-JHM, 2012 WL 2838645, at *5 (W.D. Ky. July 10, 2012) (holding that the Northern District of Iowa had personal jurisdiction once it found the forum selection clause to be enforceable) (McKinley, J.). Here, both parties signed a contract, the VCA, containing a forum selection clause stating that both parties “irrevocably submit to the exclusive jurisdiction of any court of the Commonwealth of Kentucky sitting in Jefferson County, Kentucky in any ...


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