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Spigot, Inc. v. Hoggatt

United States District Court, M.D. Florida, Fort Myers Division

October 8, 2019

SPIGOT, INC., POLARITY TECHNOLOGIES LTD., and EIGHTPOINT TECHNOLOGIES LTD., Plaintiffs,
v.
JEREMY MATTHEW HOGGATT and MEDIAVO, INC., Defendants.

          ORDER

          NICHOLAS P. MIZELL, UNITED STATES MAGISTRATE JUDGE

         This is a trade-secret-infringement action between companies who compete nationally, if not worldwide, in the field of internet advertising, such as bringing consumers and advertisers together based on the consumers' use of internet search engines like Yahoo. In September 2016, a company in the Cayman Islands known as Eightpoint Technologies allegedly acquired certain trade secrets from a company in Kansas City, Missouri known as Adknowledge[1] pursuant to an asset purchase agreement. Eightpoint licenses these trade secrets to an affiliated company in Cyprus known as Polarity, and to an affiliated company in Florida known as Spigot. Eightpoint and its affiliates allege that, after Eightpoint purchased the purported trade secrets, Defendant Jeremy Matthew Hoggatt, a citizen of Missouri and then-employee of Kansas City-based Adknowledge, somehow “compiled” the trade secrets and then “absconded” with them in October 2017 to form Defendant Mediavo, another Kansas City-based company. Mediavo competes with Defendants by allegedly misusing the purported trade secrets, and allegedly engaging in improper coding practices by, among other things, distributing certain pieces of software, which work with internet consumers' browsers (such as Chrome, Explorer, Safari or Firefox), after programming them to interfere with similar internet-browser modules (known as “extensions”) distributed via the internet by Plaintiffs.

         Though Plaintiffs allege that Hoggatt is bound by a non-competition clause in the asset purchase agreement prohibiting misuse of the purported trade secrets, they do not seek to enforce it here. Instead, Plaintiffs apparently seek via their Complaint in this action the potentially extra-territorial application of Florida's trade secrets act and Florida's unfair trade practices act to recover at least $10 million in damages allegedly attributable to “Defendants' directly competing on the same keywords in Google's AdWords advertising platform, and other platforms.” (Doc. 5, p. 24).

         In December 2018, Defendants responded to the Complaint by moving to dismiss for lack of personal jurisdiction, to dismiss or transfer for improper venue, and to dismiss for failure to state a claim. (Doc. 16). The motion is supported by a detailed declaration from Hoggatt, founder and CEO of Mediavo, attesting, among other things, that “[w]hatever intellectual property Plaintiffs may have purchased from Adknowledge … was owned by Adknowledge in Kansas City, Missouri, ” and that if he had acquired any trade secrets from Adknowledge, he would have done so in Kansas City. (Doc. 16-1, p.5 ¶ 34).

         Duly acknowledging circuit precedent, Defendants suggested in their motion to dismiss that “the Court should order a brief round of jurisdictional discovery.” (Id., p.16). Unfortunately, for a variety of reasons, the round of jurisdictional discovery has been anything but brief. Instead, some ten months later, this matter is before the Court on:

• Defendants' Motion to Quash or, in the Alternative, for Entry of a Protective Order as to Plaintiffs' Third-Party Subpoenas (Doc. 57);
• Plaintiffs' Motion for Reconsideration of Magistrate's Order Denying in Part Their Motion to Compel Jurisdictional Discovery (Doc. 58);
• Plaintiffs' Emergency Motion to Compel Deposition Testimony of Jeremy Matthew Hoggatt in His Personal Capacity and as Mediavo Inc.'s Corporate Representative and Entry of Protective Order (Doc. 59); and,
• Plaintiffs' Motion for Leave to File a Supplemental Declaration to Clarify Defendants' Misrepresentations in their Opposition to Plaintiffs' Motion to Compel Depositions (Doc. 64).

         For the reasons set forth below, the motion to quash is granted, the motion for reconsideration is denied, the motion to compel depositions is granted in part and denied in part, and the motion for leave to file a supplemental declaration is denied as moot.

         I. The Scope of Jurisdictional Discovery

         Rule 26 of the Federal Rules of Civil Procedure governs the scope of discovery in civil cases. In pertinent part, the Rule states:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1). But jurisdictional discovery should be “narrowly tailored” to personal jurisdiction issues implicated by the motion to dismiss. See Segregated Portfolio 164 v. IS Agency, Inc., No. 8:13-cv-694-T-33TGW, 2013 WL 5744333, *6 (M.D. Fla. Oct. 23, 2013). Accordingly, “courts generally permit depositions confined to the issues raised in the motion to dismiss.” Id. at *5 (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)); see also Frontline Int'l, Inc. v. Edelcar, Inc., No. 6:10-cv-1351-Orl-31DAB, 2011 WL 13209612, *1 (M.D. Fla. Apr. 6, 2011) (jurisdictional-discovery deposition of defendant's corporate representative limited to a “narrow range of jurisdictional topics concerning minimum contacts.”).

         Having affirmatively alleged that neither Defendant is domiciled in Florida, Plaintiffs do not appear to contend that either Defendant is at home in Florida such that the exercise of general personal jurisdiction would be proper for any and all claims that might be asserted against them. So, Plaintiffs must demonstrate that the exercise of case-specific personal jurisdiction would be proper as to each Defendant. In other words, that the claims arise from actions of the Defendants directly and substantially connected with this state. See Walden v. Fiore, 571 U.S. 277, 290 (2014) (“The proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant's conduct connects him to the forum in a meaningful way.”).

         Hence, the salient inquiries at this stage of the matter would explore whether Defendants' allegedly unfair business practices and alleged misappropriation occurred within Florida. For instance, when and where did Hoggatt allegedly exercise improper dominion over the purported trade secrets and transfer them to Mediavo? And where did Mediavo's employees or service providers allegedly misuse trade secrets and allegedly engage in improper coding practices?

         Further, since Defendants argue, based on a professed lack of minimum contacts with Florida and the absence of their purposeful availment of its laws, that due process counsels against the exercise of personal jurisdiction even if Florida's long-arm statue may be satisfied, Plaintiffs may briefly examine Defendants' jurisdictional contentions. See Walden, 571 U.S. at 284 (2014) (“Due process limits on the State's adjudicative authority principally protect the liberty of the nonresident defendant - not the convenience of plaintiffs or third parties.”); see also Hanson v. Denckla, 357 U.S. 235, 253 (1958) (“…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.”).

         II. Defendants' Motion to Quash

         Following up on Defendants' suggestion that the parties should undertake a limited round of jurisdictional discovery to determine whether any purported trade secrets were acquired in either Florida or Missouri, and which of the three Plaintiffs acquired them (Doc. 16, pp. 17-18), the parties jointly requested leave to conduct “bi-lateral jurisdictional discovery with time and scope limits.” (Doc. 17, p.1). In particular, they sought leave to conduct discovery of each other over a four-month period. (Id., pp. 2-3). Granting such leave, the Court gave Plaintiffs up to and including April 17, 2019, to respond to Defendants' Motion to Dismiss. (Doc. 18). Thereafter, the parties further memorialized in their Case Management Report “that this initial phase of discovery” would focus on the personal-jurisdiction determination, and they agreed that their limited depositions and interrogatories of each other “during the jurisdictional discovery period” would not count against the standard discovery limits that would otherwise govern the merits phase of discovery. (Doc. 22, pp. 7, 9; see also Doc. 28, p. 2 § I.C. (“The parties may agree by stipulation on other limits on discovery.”)). Subsequently, the Court granted joint motions to extend the jurisdictional discovery period to May 31, 2019 (Doc. 35), and then to August 16, 2019 (Doc. 49).

         Contrary to this stipulated and Court-sanctioned bifurcation of discovery, by which the parties were to conduct discovery of each other concerning the personal-jurisdiction issues, Plaintiffs attempted in May and June of 2019 to obtain both merits and jurisdictional discovery from third parties by serving four subpoenas for documents on Adknowledge, Media.net, Bold Science Media, LLC, and Scott Reinke (Mediavo's former general counsel). Arguing that these third-party ...


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