• April 28, 2017

Fair Isaac Corporation (“FICO”) is a Delaware corporation with its HQ now in California (and, before that, with its HQ in Minneapolis (2004-2013)).

Callcredit Information Group Limited is an English company with its headquarters in the United Kingdom and offices in Japan, Lithuania, China, and Dubai.

Michael Gordon left FICO to become Callcredit’s CEO and, allegedly, misappropriated FICO confidential and proprietary information and allegedly did other things that violated his obligations to FICO. So FICO sued Callcredit and Michael Gordon in Minnesota. Mr. Gordon, in his agreements with FICO, had agreed that he could and would be subject to jurisdiction in Minnesota in the event of litigation.

In response to FICO’s complaint, Callcredit filed a motion to dismiss for lack of personal jurisdiction. The Hennepin County district court (Judge Daniel H. Mabley) denied Callcredit’s motion to dismiss, concluding that, even though it was not a party to the FICO/Gordon agreements that specified Minnesota as a forum for litigation, Callcredit had consented to personal jurisdiction in Minnesota pursuant to the “closely related” doctrine.

The Minnesota Court of Appeals agreed with Judge Mabley. Callcredit, represented by the litigation powerhouse, Kirkland & Ellis, sought and has been granted Minnesota Supreme Court review.

The district court and the Minnesota Court of Appeals relied on FLS Transportation, a 2009 Court of Appeals case in which the court held, “A nonparty to a forum-selection clause may consent to its terms if the party is so ‘closely related’ to the dispute that it becomes foreseeable that the party will be bound.”

Callcredit, on the other hand, argued that this “foreseeability” component violates British law. Under British law, apparently, “The British rule is clear: only signatories to a contract may be held to its provisions” (see linked opinion at p. 8).

This argument strikes us as a little odd. When a multinational foreign company poaches an American executive with knowledge of the executive’s misappropriation of his past employer’s intellectual property, and is sued in a U.S. court, is the U.S. court bound to apply foreign law or can it apply its own?

Minnesota Litigator has often voiced its doubts and misgivings about U.S. law as to personal jurisdiction. And if the Minnesota Supreme Court flips Minnesota Court of Appeals Judge Peter Reyes’ opinion (joined by Judge Stauber, Schellhas, dissenting), it will add still more grist to our opposition to an antiquated doctrine.

When a multinational like Callcredit hires away an executive to make the executive its CEO, it does so  understanding and recognizing (1) the location of the executive’s former employer, (2) the executive’s contractual obligations to his previous employer and (3) that risk that the maneuver might trigger a lawsuit.

In our view, it is unimaginable and untenable to suggest that it “offends traditional notions of fair play and substantial justice” to require a multinational corporation to defend a lawsuit in Minnesota that arises out of the corporation’s poaching of another multinational corporation’s executive, who was a party to an agreement agreeing that any disputes related to his work could be resolved in Minnesota. (Incidentally, Callcredit had been working closely with FICO since 2001, which was based in Minneapolis in 2005, when FICO hired Mr. Gordon.)

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