United States District Court, District of Columbia
TARGETSMART HOLDINGS, LLC, and TARGETSMART COMMUNICATIONS, LLC, Plaintiffs,
GHP ADVISORS, LLC, d/b/a GOOD HARBOR PARTNERS, and CATALIST LLC, Defendants.
MEMORANDUM AND ORDER
DOUGLAS P. WOODLOCK UNITED STATES DISTRICT JUDGE
case arises out of an agreement between the Plaintiffs,
TargetSmart Holdings, LLC and TargetSmart Communications, LLC
(together, “TargetSmart”), and the Defendant, GHP
Advisors, LLC, doing business as Good Harbor Partners
(“GHP”), to explore opportunities for TargetSmart
to partner or merge with other companies engaged in similar
business. The arrangement with GHP, TargetSmart alleges, was
a scheme to induce TargetSmart to disclose confidential and
proprietary information to benefit its competitor, the
Defendant, Catalist, LLC (“Catalist”).
brought this action against GHP and Catalist under both
federal and state law for misappropriation of trade secrets,
unjust enrichment, and breach of contract.
before me following the filing of an amended complaint is the
motion [Dkt. No. 38] by Catalist to dismiss the complaint for
lack of personal jurisdiction, or in the alternative, to
transfer the case to the District of Columbia, and to dismiss
for failure to state a claim.
Holdings, LLC is a technology and consulting company that
specializes in providing campaigns, candidates, and
organizations with data and software to expand their audience
base. [Dkt. No. 36 at ¶ 11]. It is a Delaware Limited
Liability Company with its principle place of business in
Washington, DC. [Id. at ¶ 1]. TargetSmart
Communications, LLC, is a wholly owned subsidiary of
TargetSmart Holdings and is also a Delaware Limited Liability
Company with its headquarters in Washington, DC.
[Id. at ¶ 2].
a Massachusetts Limited Liability Company headquartered in
Boston. [Id. at ¶ 3].
LLC is a Delaware Limited Liability Company headquartered in
Washington, DC. [Id. at ¶ 4]. Like TargetSmart,
Catalist specializes in helping Democratic and progressive
candidates reach wider audiences. [See id. at 1,
Introduction Statement, ¶¶ 18, 35].
case can be said to have been brought pursuant to this
court's federal question jurisdiction, 28 U.S.C. §
1331, because TargetSmart's claim of violation of the
Federal Defend Trade Secrets Act appears to predominate.
[Dkt. No. 36 at ¶ 82]. Since the state law claims arise
out of the same set of factual circumstances, I may exercise
supplemental jurisdiction to hear those claims, even in the
absence of complete diversity of the parties. See
generally 28 U.S.C. § 1367.
reflected in the operative pleading, the Second Amended
Complaint, the facts are as follows.
The Agreement Between GHP and Catalist
November 3, 2017, GHP entered into an agreement with Catalist
to advise the company “in connection with the potential
acquisition of a specified, pre-identified target
company.” [Dkt. No. 36 at ¶ 13; Dkt. No. 39-1,
Exhibit 1, GHP Engagement Letter (hereinafter “Letter
Agreement”), at 2]. The “target company”
was TargetSmart, [Dkt. No. 36 at ¶ 14], and the
agreement provided that GHP would conduct due diligence of
the target company as “mutually determined to be
appropriate.” [Dkt. No. 39-1, Letter Agreement at 2,
§ 2(a)]. It also required GHP to keep Catalist
“informed of the activities undertaken by GHP . . . and
all performances of Services required of GHP” under the
terms of the Agreement. [Id. at 4, § 6].
Letter Agreement stated that GHP was not an employee or agent
of Catalist, and instead was working as an “independent
contractor.” [Id. at 4, § 6]. TargetSmart
alleges that Catalist entered into the agreement with GHP in
order to acquire its confidential business information, [Dkt.
No. 36 at ¶ 18], and that it directed, ratified, or
otherwise had a right to control GHP's interactions with
TargetSmart. [Id. at ¶ 20].
GHP Approaches TargetSmart
December 2017, GHP approached TargetSmart about a potential
“business opportunity.” [Id. at
¶¶ 21-24]. During the initial call on December 13,
2017, GHP represented to TargetSmart that it had been
retained by individual political donors who wanted to combine
TargetSmart and other companies to improve and streamline the
data infrastructure available to Democratic and progressive
candidates. [Id. at ¶ 24]. As a result of the
conversation, TargetSmart and GHP entered into a Mutual
Nondisclosure Agreement (“Mutual NDA”) to allow
the parties to exchange non-public, confidential, and
proprietary information. [Id. at ¶¶ 27-28;
see also Dkt. No. 39-2, Exhibit 2, Form
Nondisclosure Agreement from TargetSmart]. The Mutual NDA
prevented both parties from using or disclosing confidential
information without the other's prior written consent.
[Id. at ¶¶ 29-30]. In its amended motion
to dismiss, Catalist provided this court with a copy of a
form Nondisclosure agreement listing TargetSmart as one of
the parties. [Dkt. No. 39-2, Exhibit 2]. However, I observe
this copy of the NDA does not include the name or signature
of the other party to the agreement.
GHP's request, and in anticipation of a meeting on
December 21, 2017 in Boston, TargetSmart sent GHP a
memorandum which included confidential and proprietary
information about its data, products, services, platforms,
and software, as well as information about its finances and
possible growth opportunities. [Dkt. No. 36 at ¶¶
31-32]. The memorandum stated that the information was
protected by the Mutual NDA. [Id. at ¶ 32].
December 21st meeting, GHP again told TargetSmart that it
represented wealthy donors, and indicated that its clients
were interested in combining TargetSmart and Catalist, its
competitor. [Id. at ¶¶ 33-35]. TargetSmart
informed GHP that it would only consider a merger if the
funders acquired both companies, if TargetSmart remained in
control, and if the Catalist leadership team was not part of
the management of the combined entity. [Id. at
¶ 35]. GHP then indicated that it would like to proceed
with the necessary due diligence for such a transaction and
sought more information from TargetSmart about its book of
business, its relationships with third parties, its vendor
agreements, and its financial information. [Id. at
January 3, 2018, TargetSmart told GHP that it was
uncomfortable with the request and asked for GHP to provide a
rough approximation of the proposed purchase price for its
“political business” in exchange for access to
TargetSmart's financials. [Id. at ¶¶
37-39]. For its part, TargetSmart ultimately provided further
information to GHP, including information about its
financials. [Id. at ¶ 40].
Information Is Acquired by Third Parties
February 8, 2018, TargetSmart learned that a writer with ties
to the CEO of Catalist was contacting TargetSmart's
employees and asking for information about its relationships
with particular clients. [Dkt. No. 36 at ¶ 41].
TargetSmart contacted GHP about the inquiries, and GHP
represented that the inquires were not part of its due
diligence and that “they would be ‘shocked'
if Catalist was behind the writer's inquiries.”
[Id. at ¶ 44]. TargetSmart also contacted a
member of the Board of Directors for Catalist, who promised
that the inquiries would stop. [Id. at ¶ 45].
February 21, 2018, TargetSmart discovered that a third-party
source had told its client that “Catalist was in the
process of buying TargetSmart.” [Id. at ¶
46]. It reported the leak to GHP, which reassured TargetSmart
that it took the confidentiality of its clients very
seriously. [Id. at ¶ 47].
The Transaction Falls Through
March 14, 2018, TargetSmart met with GHP and Catalist in the
District of Columbia to discuss the proposed transaction.
[Dkt. No. 36 at ¶¶ 49-51]. During the meeting,
Catalist indicated that it was not under an NDA and offered
to leave the room while TargetSmart discussed the NDA with
GHP. [Id. at ¶ 51]. At that meeting, GHP told
TargetSmart that it had not raised enough money to fund the
acquisition, but also indicated that GHP had shared
information about TargetSmart with at least two
representatives of Catalist and that one of Catalist's
funders had broken the Mutual NDA. [Id. at
April 10, 2018, TargetSmart, taking the position that GHP had
violated the Mutual NDA, sought several assurances from GHP.
[Id. at ¶ 59]. GHP responded on April 13,
denying that it had breached the NDA but admitting that it
had shared information with two individuals at Catalist.
[Id. at ¶ 60]. GHP also attached a letter that
purported to show that Catalist was under an NDA with
TargetSmart. [Id. at ¶ 61].
alleges that GHP altered the Mutual NDA by including
signatures from individuals at Catalist, though Catalist
itself never signed or received copies of the NDA.
[Id. at ¶ 61]. TargetSmart further alleges
”Catalist knew or should have known that TargetSmart
did not request that Catalist or any of its representatives
sign an NDA.” [Dkt. No. 28; Dkt. No. 36 at ¶ 61].
April 13, 2018, TargetSmart contacted Catalist to assert that
Catalist was using TargetSmart's proprietary information
without consent. [Id. at ¶ 65]. Catalist
responded on April 19, 2018, certifying that it received
proprietary information from GHP, that GHP never shared or
distributed the information to other investors, and that it
had destroyed the information. [Id. at ¶
67-71]. It did not make the same representations about its
CEO. [Id. at ¶ 68]. Despite this denial,
TargetSmart alleges that Catalist continues to use
TargetSmart's proprietary information to take clients
away from it. [Id. at ¶¶ 79-81].
filed suit against both GHP and Catalist on June 28, 2018.
[Dkt. No. 1]. In its original complaint, TargetSmart alleged
that the agreement between GHP and Catalist, and their
subsequent negotiations with TargetSmart, violated the
Federal Defend Trade Secrets Act, 18 U.S.C. § 1836.
[Dkt. No. 1 at ¶ 67]. It also alleged that the
Defendants had misappropriated trade secrets, violating both
the Massachusetts Trade Secrets Act, the Massachusetts Unfair
and Deceptive Practices Act, and Massachusetts common law,
[Id. at ¶¶ 77-91, 128-133], and were
liable for damages for unjust enrichment under Massachusetts
common law. [Id. at ¶¶ 115-121].
TargetSmart raised claims for breach of contract, breach of
the covenant of good faith and fair dealing, and fraudulent
misrepresentation by GHP, [Id. at ¶¶
92-107, 122-27], and for tortious interference with contract
by Catalist. [Id. at ¶¶ 108-114].
September 11, 2018, GHP filed an Answer, [Dkt. No. 12], and
Catalist filed its motion to dismiss for lack of jurisdiction
for failure to state a claim and on forum non
conveniens grounds. [Dkt. No. 15]. The same day,
Catalist filed a motion asking this court to admit its
counsel, Attorneys Adam S. Caldwell and Patrick J. Curran of
Davis Wright Tremaine LLP, pro hac vice. [Dkt. No.
14]. On September 17, 2018, TargetSmart filed an opposition
to the admission of Attorneys Caldwell and Curran pro hac
vice on the grounds that the law firm had a conflict of
interest and could not represent Catalist consistent with its
obligations under the Massachusetts Rules of Professional
Conduct. [Dkt. No. 19]. After a hearing, I rejected
TargetSmart's opposition to the proposed Catalist
counsel, and admitted Attorneys Caldwell and Curran pro
hac vice on December 10, 2018. [Dkt. No. 34].
on October 2, 2018, TargetSmart filed its First Amended
Complaint. [Dkt. No. 22]. Though the factual allegations in
the two complaints were substantially identical, in the First
Amended Complaint, TargetSmart dropped its claim for tortious
interference of contract against Catalist and instead added a
claim for defamation. [Dkt. No. 22 at ¶¶ 142-147].
October 16, 2018, GHP again submitted an Answer to the First
Amended Complaint, [Dkt. No. 26], and Catalist again
submitted a motion to dismiss for lack of jurisdiction and
failure to state a claim and a memorandum in support thereof.
[Dkt. No. 24; Dkt. No. 25]. On October 30, 2018, TargetSmart
filed its opposition to the motion to dismiss. [Dkt. No. 29].
October 25, 2018, a few days prior to filing its opposition,
TargetSmart filed another motion to amend its complaint, in
this instance to correct what was characterized as a
scrivener's error. [Dkt. No. 28]. The motion indicated
that Paragraph 61 of the First Amended Complaint mistakenly
referred to GHP, instead of Catalist, and sought to correct
that one word. [Id.]. Catalist filed an opposition
to this motion to amend on November 6, 2018. [Dkt. No. 31]. I
granted the motion on December 10, 2018, [Dkt. No. 34], and
TargetSmart filed the Second Amended Complaint on December
13, 2018. [Dkt. No. 36].
thereafter again responded with a motion to dismiss or, in
the alternative, to transfer, [Dkt. No. 38] on December 20,
2018. The memorandum in support of Catalist's suggested
transfer of the case to the District of Columbia, but
otherwise presented the same arguments regarding personal
jurisdiction and failure to state a claim as the motion filed
in October 2018. [See generally Dkt. No. 25; Dkt.
No. 39]. On January 4, 2019, GHP filed its opposition to
Catalist's motion to transfer, but took no position with
regard to personal jurisdiction or failure to state a claim.
[Dkt. No. 40]. TargetSmart submitted its opposition to the
motion to dismiss on January 11, 2019. [Dkt. No. 41].
January 23, 2019, I held a hearing on the present motion,
during which GHP for the first time indicated that it would
object to personal jurisdiction in the District of Columbia
if the case were to be transferred there in its entirety. It
had not raised this objection or argued that it would not be
subject to the jurisdiction of the District of Columbia in
its original opposition to the motion to transfer. [Dkt. No.
40]. TargetSmart indicated during the hearing that it would
not oppose a transfer of the case to the District of Columbia
if I found that personal jurisdiction over Catalist was
unavailable in the District of Massachusetts.
January 30, 2019, GHP filed a supplemental opposition, with
leave of the court, to Catalist's motion to dismiss. This
opposition indicated only that GHP “did not waive its
defenses under F.R.C.P. 12(b)(1), (2) and (6), ” but
offered nothing by way of factual assertion or legal argument
about personal jurisdiction in the District of Columbia.
[Dkt. No. 46 at 2]. On February 4, 2019, Catalist filed a
letter with the court indicating that its position had been
adequately briefed in its original memorandum, and that it
had nothing further to add. [Dkt. No. 48]. That same day,
TargetSmart also filed a response to GHP's Supplemental
Opposition, arguing that its case against GHP should not be
transferred to the District of Columbia because such a
transfer would further delay TargetSmart's ability to
adjudicate the merits of its underlying claim. [Dkt. No. 49
at 2]. Instead, TargetSmart argued that some kind of
coordination between the District of Massachusetts and the
District of Columbia should be fashioned for separate cases
against GHP (in Massachusetts) and Catalist (in the District
MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
Specific Jurisdiction Over Catalist
seeks to dismiss TargetSmart's complaint for lack of
personal jurisdiction over it in the District of
Massachusetts. [Dkt. No. 38]. Because Catalist is
incorporated in Delaware and has its principal place of
business in the District of Columbia, its contacts with
Massachusetts are not “so continuous and systematic as
to render [it] essentially at home in [Massachusetts],
” and allow this court to exercise ...