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Kaydon Corp. v. Geddings

April 27, 2010

KAYDON CORPORATION, PLAINTIFF,
v.
DANIEL GEDDINGS, DEFENDANT.



The opinion of the court was delivered by: Hon. Janet T. Neff

OPINION

Pending before the Court in this removed case is plaintiff's "Motion to Remand" (Dkt 14) and defendant's "Motion to Set Aside Default Judgment and Dismiss for Lack of Personal Jurisdiction" (Dkt 33). For the reasons discussed herein, the Court grants plaintiff's motion and remands this case to the state court from which it was removed. Accordingly, the Court declines to decide the merits of defendant's motion.

I. BACKGROUND

Plaintiff Kaydon Corporation is a Delaware corporation that designs and manufactures custom engineered products, including large bearings used in wind turbines (Compl. [Notice of Removal Exh. 1] ¶ 5). Defendant Daniel Geddings is an engineer. Defendant began working in plaintiff's South Carolina facility in June 2002 (id. ¶ 13). At the time of his hire, he signed a twelve-month Non-Compete Agreement and an Employee Patent and Confidential Information Agreement (id. ¶¶ 21-23). He worked as a "Process Engineer" for one year then as a "Manufacturing Engineer II/CNC Programmer" (id. ¶¶ 15-18). Plaintiff alleges defendant was privy to extensive knowledge about its manufacturing processes and the specifications and requirements of its customers (id. ¶ 20). Plaintiff alleges that from 2006-2008, it invested over $50 million and thousands of employee hours to develop and improve its large bearing manufacturing processes (id. ¶ 9).

On March 31, 2008, defendant resigned from his employment with plaintiff (Compl. ¶ 13). In May 2008, he moved to Texas where he began working for RBC Coastal Bearings ("RBC"), plaintiff's competitor, allegedly performing duties nearly identical to his duties for plaintiff (id. ¶¶ 25-27).

On April 15, 2008, plaintiff filed suit against defendant in the circuit court for Muskegon County, Michigan, alleging breach of contract (Count I) and misappropriation of trade secrets under Michigan's Uniform Trade Secrets Act, MICH. COMP. LAWS § 445.1910 et seq. (Count II). Plaintiff sought various forms of injunctive and monetary relief, including damages in an amount caused by defendant's unlawful breach of his contractual obligations, exemplary damages, costs, interest, and attorney fees. The Muskegon County Circuit Court issued a Temporary Restraining Order that same day and a preliminary injunction on April 29, 2008, ordering defendant to (1) immediately cease his employment with RBC until March 31, 2009; (2) immediately cease and refrain from contacting or soliciting plaintiff's customers; and (3) immediately cease and refrain from divulging trade secrets (Notice of Removal Exhs. 2-4). Defendant did not file an appearance or responsive pleading in the Muskegon County Circuit Court case.

On May 22, 2008, a clerk in the Muskegon County Circuit Court entered a default against defendant (Notice of Removal Exh. 5). Plaintiff filed a Motion to Enter a Default Judgment, which the Muskegon County Circuit Court heard on July 28, 2008. Defendant did not appear. At the hearing, plaintiff's counsel indicated his understanding that defendant was contesting the trial court's exercise of personal jurisdiction over him (Dkt 9-2 at 4-5). To account for that jurisdictional challenge, plaintiff sought to put proofs on the record in the form of testimony from Scott Hansen, plaintiff's Vice President of Engineering in Muskegon, testimony that the state court judge permitted.

In his testimony, Hansen described defendant's position with plaintiff and the contacts defendant had with the Muskegon, Michigan engineers during his employment. Defendant's purported contacts with the Muskegon engineers were the following: six business trips, an average of eight to ten telephone conversations per week, an average of two e-mails per week, and an average of one electronic material disposition order (MDO) per week (Dkt 9-2 at 9-10).

The Muskegon County Circuit Court made the following ruling from the bench: The Court adopts as its findings of fact the uncontroverted testimony of [Scott Hansen]. The Court finds that Mr. Geddings had sufficient contacts with the State of Michigan in the context of the subject matter of this lawsuit and the relationship of the parties that the Court does have in personam jurisdiction over the Defendant. Apparently, he's been served and failed to answer. A default was entered, and he was notified of the hearing for entry of this judgment today, and he's failed to appear. He's submitted nothing in writing that I am aware of in opposition. [Dkt 9-2 at 11]

The court entered a default judgment in plaintiff's favor, reciting the same provisions of the prior TRO and preliminary injunction that restrained defendant's employment and awarding plaintiff its attorney fees ($39,109.50) and costs ($4,335.79) (Notice of Removal Exh. 6-A). The default judgment was effective nunc pro tunc as of April 15, 2008.

In the fall of 2008, defendant made two unsuccessful attempts to undo the default judgment against him. First, defendant filed a Motion for Relief from Entry of Foreign Judgment in a South Carolina action that plaintiff pursued; however, the South Carolina action was eventually dismissed by the parties' stipulation in February 2009 (Notice of Removal Exh. 6-C; Notice of Removal Exh. 6 at 4, n. 2). Second, defendant and RBC filed suit against plaintiff in a Texas state court, seeking a declaratory judgment on defendant's rights under the employment agreements, the personal jurisdiction of the Muskegon County Circuit Court over him, and plaintiff's "interference" with RBC's ability to employ defendant (Notice of Removal Exh. 6-D). However, on February 18, 2009, the Texas court granted plaintiff's motion to enforce the default judgment (Notice of Removal Exhs. 6-E, 6-F).

On or about March 9, 2009, plaintiff filed in the Muskegon County Circuit Court a Motion to Re-Open Case, requesting an Order to Show Cause why defendant should not be held in contempt of court inasmuch as defendant has "directly and openly violated that Default Judgment by actively working for RBC CBS Coastal Bearings" (Notice of Removal Exh. 6). Plaintiff also moved for additional attorney fees of $51,104.60 incurred since July 21, 2008. Last, plaintiff moved for an extension of the injunctive period set forth in the default judgment "by a period of time equal to the time that defendant has violated the Non-Compete Agreement."

On March 20, 2009, before the Muskegon County Circuit Court decided the motion pending before it, defendant removed the case to this Court, filing a "Notice of Removal by Way of Special Appearance" and invoking this Court's diversity jurisdiction under 28 U.S.C. § 1332. On April 20, 2009, plaintiff served a Motion to Remand on defendant and filed a Certificate of Service in this Court reflecting the same (Dkt 7). On May 18, 2009, plaintiff filed the Motion to Remand in this Court (Dkt 14). Defendant filed a response in opposition to plaintiff's Motion to Remand (Dkt 16), and plaintiff filed a reply (Dkt 17).

Defendant proposed filing a motion for this Court to set aside the state court's default judgment for lack of personal jurisdiction and to similarly dismiss the matter at bar for lack of personal jurisdiction (Dkt 4). Following a Pre-Motion Conference on June 10, 2009, this Court issued a briefing schedule on the personal jurisdiction question, permitting the parties to brief the question in conjunction with this Court's review of the pending Motion to Remand. Defendant subsequently filed the instant "Motion to Set Aside State Court Default Judgment and ...


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