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Micro Focus, Inc. v. American Express Co.

United States District Court, D. Maryland, Southern Division

May 27, 2015

MICRO FOCUS (US), INC., et al., Plaintiffs,
AMERICAN EXPRESS CO., et al., Defendants.


PAUL W. GRIMM, District Judge.

Plaintiffs Micro Focus (US), Inc. and Micro Focus IP Development Ltd. filed suit in this Court against Defendant American Express Company ("American Express"), "a New York corporation with its principal place of business in New York, " alleging that American Express "exceeded its rights by using the Micro Focus [copyrighted] software beyond what was permitted by American Express's license to use the Micro Focus software, ... in violation of 17 U.S.C. § 501." Compl. ¶¶ 3, 9, ECF No. 1. American Express moved to dismiss for lack of personal jurisdiction, ECF No. 9, in response to which Plaintiffs filed an opposition, ECF No. 17, an Amended Complaint, ECF No. 10, and a Motion for Leave to File a Second Amended Complaint, to which it attached a proposed second amended complaint ("Second Amended Complaint"), [1] ECF Nos. 16, 16-1. American Express opposed the proposed amendment, ECF No. 28, and filed a second motion to dismiss, ECF No. 19, insisting that neither the Amended Complaint nor the Second Amended Complaint establishes a basis for this Court to exercise personal jurisdiction over it.[2] Because it is in the interest of justice, I will allow Plaintiffs to amend. And, because Plaintiffs have alleged facts that may, but do not necessarily, establish this Court's personal jurisdiction over American Express, and they seek jurisdictional discovery, I will deny American Express's Second Motion to Dismiss without prejudice to renewal, following limited discovery on the issue of jurisdiction, should American Express still believe that this Court lacks jurisdiction over it.


Plaintiffs seek to amend their Amended Complaint "to add reference to the relevant portions of Maryland's Long Arm Statute" and "American Express's contacts with Maryland, " and "to add substantive allegations regarding American Express's activities that subject it to general personal jurisdiction in Maryland, " by "alleg[ing] that American Express purposefully avails itself of Maryland by doing business in the State directly and through its subsidiaries, " based on the 2013 American Express Company Annual Report. Pls.' Mot. ¶¶ 7-9. Whether to grant a motion for leave to amend is within this Court's discretion, Foman v. Davi s, 371 U.S. 178, 182 (1962), and "[t]he court should freely give leave [to amend] when justice so requires, " Fed.R.Civ.P. 15(a)(2). The Court only should deny leave to amend if amendment "would prejudice the opposing party, reward bad faith on the part of the moving party, or... amount to futility, " MTB Servs., Inc. v. Tuckman-Barbee Constr. Co., No. RDB-12-2109, 2013 WL 1819944, at *3 (D. Md. Apr. 30, 2013); Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006). Otherwise, "[i]f the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, " and the plaintiff moves to amend, the Court should grant the motion so that the plaintiff has the "opportunity to test his claim on the merits." Foman, 371 U.S. at 182. Here, American Express does not argue that it would be prejudiced by the proposed amendment, or that Plaintiffs act in bad faith. Rather, it opposes the amendment solely on the basis of futility. See Def.'s Opp'n 5-18. Specifically, American Express insists that "amendment would be futile" because "Plaintiffs face an insurmountable problem, " as "the gravamen of this dispute simply did not occur in Maryland, " and "American Express is not essentially at home' in this jurisdiction, " such that "Plaintiffs cannot allege facts supporting general jurisdiction over it." Def.'s Opp'n 1. As Plaintiffs do not dispute that the events giving rise to this litigation did not occur in Maryland, see Pls.' Opp'n 12, the issue is whether Plaintiffs can establish that American Express is subject to this Court's general jurisdiction. I will address this issue in my analysis of American Express's Second Motion to Dismiss.


When a defendant challenges this Court's personal jurisdiction under Fed.R.Civ.P. 12(b)(2), the jurisdictional question "is to be resolved by the judge, with the burden on the plaintiff ultimately to prove grounds for jurisdiction by a preponderance of the evidence.'" Fyfe Co., LLC v. Structural Grp., LLC, No. CCB-13-176, 2013 WL 2370497, at *2 (D. Md. May 30, 2012) (quoting Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003)). If the Court considers the operative complaint and the parties' briefings but does not conduct an evidentiary hearing, then "the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis in order to survive the jurisdictional challenge.'" In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997) (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)); see Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 276 (4th Cir. 2009)). This is the approach I will take. I "must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction.'" Fyfe Co., 2013 WL 2370497, at *2 (quoting Mylan Labs, Inc. v. Akzo, N.V., 2 F.3d 56, 62 (4th Cir. 1993) (citation and quotation marks omitted)); see Mitrano v. Hawes, 377 F.3d 402, 406 (4th Cir. 2004). Yet, I "need not credit conclusory allegations or draw farfetched inferences.'" Tharp v. Colao, No. WDQ-11-3202, 2012 WL 1999484, at *1 (D. Md. June 1, 2012) (quoting Masselli & Lane, PC v. Miller & Schuh, PA, No. 99-2440, 2000 WL 691100, at *1 (4th Cir. May 30, 2000)).

Federal district courts may exercise personal jurisdiction over a defendant who has been served or waived service if that defendant "is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located." Fed.R.Civ.P. 4(k)(1)(A). Thus, this Court, located in Maryland, "may exercise personal jurisdiction as to any cause of action over a person domiciled in, served with process in, organized under the laws of, or who maintains his principal place of business" in Maryland. Md. Code Ann., Cts. & Jud. Proc. § 6-102(a). Additionally, this Court may exercise personal jurisdiction over a corporate defendant that is neither served in Maryland nor organized under its laws and that does not maintain its principal place of business in Maryland, if its actions meet the criteria delineated in Cts. & Jud. Proc. § 6-103, Maryland's long-arm statute. Cts. & Jud. Proc. § 6-103(a); see Tawney v. AC & R Insulation Co., No. WDQ-13-1194, 2013 WL 5887625, at *2 (D. Md. Oct. 30, 2013); Metro. Reg'l Info. Sys., Inc. v. Am. Home Realty Network, Inc., 888 F.Supp.2d 691, 699 (D. Md. 2012). Maryland's statute provides:

(a) If jurisdiction over a person is based solely upon this section, he may be sued only on a cause of action arising from any act enumerated in this section.
(b) A court may exercise personal jurisdiction over a person, who directly or by an agent:
(1) Transacts any business or performs any character of work or service in the State;
(2) Contracts to supply goods, food, services, or manufactured products in the State;
(3) Causes tortious injury in the State by an act or omission in the State;
(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, ...

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