Florida’s 4th District Court of Appeal has issued an important decision on long-arm personal jurisdiction. Not surprisingly, the case arises out of a non-compete dispute. Let’s take a look.
Citrix is one of Fort Lauderdale’s 800lb gorillas. They are also a notorious bully when it comes to non-compete agreements. Citrix filed a non-compete lawsuit against seven former employees who went to work for another software company. All seven of the employees worked at Cisco’s Raleigh, North Carolina office. All seven are North Carolina residents. Their new company, Egntye, is a Delaware corporation with its principal place of business in California. The relevant employment agreements with Cisco provided for Florida choice of law and forum selection in the state or federal courts of Broward County. Those employment agreements also purported to waive any objections to litigation in Florida based on personal jurisdiction. So, Cisco sued the employees in Florida state court for Broward County.
The Defendants moved to dismiss the lawsuit based on lack of personal jurisdiction. The trial court denied that motion without a hearing, solely on the basis of pleadings, motions, and affidavits that had been filed. As the trial court saw it, Cisco had sufficiently alleged the Defendants committed tortious acts in Florida by misappropriating confidential information that is maintained on servers located in Florida. The trial court felt that was enough for personal jurisdiction. The 4th DCA disagreed.
First, the 4th DCA reaffirmed long-standing Florida law that a forum selection clause cannot serve as the sole basis for Florida to exercise personal jurisdiction over an objecting non-resident defendant. This is a point of law that many practitioners fail to understand. Just because a forum selection clause agrees to jurisdiction and purportedly waives objections based on personal jurisdiction does not automatically make it so. In other words, personal jurisdiction requires more than a forum selection clause in a contract. It requires minimum contacts.
The Defendants denied having any meaningful or routine contacts with Florida. They admitted to a few short, infrequent meetings in Florida, but otherwise denied any Florida connection. Naturally, Citrix argued that all of the employees reported to Florida supervisors and had extensive contact and interaction with the Florida office. The trial court resolved this dispute in favor of Citrix, essentially accepting all of Citrix’s allegations as true.
Per the 4th DCA, that was in error. First, Appellate Court noted the clear conflict in the parties’ affidavits. Second, the Appellate Court noted that the Defendants denied taking anything from Citrix’s Florida servers, thereby completely undercutting the Plaintiff’s alleged core basis for jurisdiction. The 4th went on to note that mere access to computer resources located within a state (e.g. physical servers) is not a valid, stand-alone basis for exercising personal jurisdiction and could potentially raise due process concerns. This is significant, because lots of plaintiffs attempt to use access to computers/servers located within Florida as a basis for jurisdiction.
The upshot: Given Citrix’s relatively flimsy allegations and conflicting versions of facts, the trial court needs to hold an evidentiary hearing on personal jurisdiction before going further. Reversed and remanded.
One final note: For jurisdictional purposes, Citrix is a Delaware and Florida company. The Defendants are all North Carolina citizens. Call me crazy, but I am never letting a case like this (i.e. non-compete case) stay in state court if I have a chance to remove it. The Defendants could have removed this case under diversity to the United States District Court for the Southern District of Florida. That’s what I would have done. I’ll take my chances in federal court any day.
The case is Ware v. Citrix Sys., Inc., No. 4D18-1372, 2018 WL 5830588 (Fla. Dist. Ct. App. Nov. 7, 2018)
Jonathan Pollard is the principal of Pollard PLLC, a law firm based in Fort Lauderdale, Florida. Pollard and his colleagues litigate a wide range of complex cases including non-compete, trade secret, trademark, antitrust, employment, whistleblower and personal injury matters. Pollard has appeared in or on the New York Times, the Wall Street Journal, the Guardian, Bloomberg, FundFire, PBS News Hour, Inc. Magazine and more. The firm’s office can be reached at 954-332-2380.