Court Opinion

ID: 74394
Source: CourtListenerOpinion
Date Created: 2010-04-26 08:46:37+00
Date Added: 2024-06-11T12:14:14.579216
License: Public Domain

[PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT                  FILED
                                                          U.S. COURT OF APPEALS
                                                            ELEVENTH CIRCUIT
                                                                MAR 28 2000
                                 No. 99-10565
                                                             THOMAS K. KAHN
                                                                  CLERK

                    D. C. Docket No. 99-00024-1-CV-WBH

ROBERT EUGENE LAMB, individually,
JAMES MORRIS LOFTON, individually,
ROBERT C. LEE, individually,
WILLIAM GORDON BAILEY, individually,

                                                       Plaintiffs-Appellants,
                                    versus

TURBINE DESIGNS, INC., a Florida corporation

                                                       Defendant-Appellee.

                  Appeal from the United States District Court
                     for the Northern District of Georgia

                               (March 28, 2000)

Before ANDERSON, Chief Judge, WILSON, Circuit Judge, and HILL, Senior Circuit
Judge.

HILL, Senior Circuit Judge:
      Robert Eugene Lamb, James Morris Lofton, Robert C. Lee, and William

Gordon Bailey, non-residents of Georgia, brought this action in the United States

District Court for the Northern District of Georgia claiming that Turbine Design, Inc.,

also a non-resident of Georgia, violated the Florida Uniform Trade Secrets Act and

the Georgia Trade Secrets Act, as well as a variety of other state statutory and

common law duties, by misappropriating proprietary flight and engineering data and

then improperly disclosing this information in an application filed with the Federal

Aviation Administration in Atlanta, Georgia. The district court held that it had no

jurisdiction over Turbine Design, Inc. and dismissed the case. Plaintiffs brought this

appeal.

      This diversity case presents the following question of law: is a non-resident

subject to personal jurisdiction under the Georgia long-arm statute when he

improperly discloses another non-resident’s trade secret to a federal agency at its

Georgia office? We certify this question to the Georgia Supreme Court because there

is no controlling Georgia authority.

                                          I.

      Plaintiffs are the former shareholders of Phoenix Corporation (Phoenix), a

Mississippi corporation, which was involved in the development of a modification to

the Beechcraft King Air aircraft.       Phoenix applied to the Federal Aviation

                                          2
Administration (FAA) for approval of this modification. While the application was

pending, Megaflight, Inc. (Megaflight) purchased all the stock of Phoenix from the

plaintiffs. Some time later, the FAA advised Megaflight that the Phoenix design

modifications were deficient. Megaflight hired Turbine Design, Inc. (TDI) to correct

the problems. Subsequently, TDI submitted its own application to the FAA for a

design modification for the Beechcraft King Air aircraft.       As required by law, it

submitted the application to the FAA’s office in Atlanta, Georgia. Plaintiffs then filed

the present action in the northern district of Georgia.1

      TDI moved to dismiss this action, asserting that the Georgia federal court had

no jurisdiction over it. TDI pointed out that it is a Florida corporation; it is not

authorized to do business in Georgia, does no business in Georgia, has no employees

nor offices in Georgia, and does not have a registered agent for service

of process in Georgia.

      1
        Actually there was a proliferation of litigation at this point. Megaflight had
sued plaintiffs in a Florida court alleging that they misrepresented the design
modification as well as the assets owned by Phoenix when they sold it to Megaflight.
Plaintiffs countersued alleging that Megaflight and others had misappropriated the
Phoenix technical data and had failed to pay for plaintiff’s stock in Phoenix. Since
jurisdiction in Georgia will, of necessity, require a tort to have been committed there,
it appears that ultimately the determination of the jurisdictional issue will depend upon
the ownership of the design modification at the time it was disclosed to the FAA. This
determination will also resolve all of the issues pending in the Florida court.
                                           3
      The plaintiffs conceded that TDI's only contact with Georgia was the

submission of its application to the FAA’s Atlanta, Georgia office, but argued that this

contact was sufficient. Plaintiffs' theory is that TDI’s disclosure of the Phoenix

proprietary modification in its application to the FAA constituted a tort under the

Georgia Trade Secrets Act, O.C.G.A. Section 10-1-761 (2)(B), and that this tort

occurred in Atlanta, Georgia where TDI submitted the application. If so, the Georgia

long-arm statute would appear to permit the district court to assert jurisdiction over

TDI. See O.C.G.A. § 9-10-91(2) (Georgia court may exercise personal jurisdiction

over a non-resident who commits a tortious act within the state). See also Morris v.

SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988) (district court sitting in diversity may

exercise personal jurisdiction to the extent authorized by the law of the state in which

it sits). Furthermore, Georgia’s assertion of personal jurisdiction over a non-resident

who commits a tort in Georgia would not offend the Constitution. Burger King Corp.

v. Rudzewicz, 471 U.S. 462, 447-78 (1985): Helicopteros Nacionales de Colombia,

S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984) (defendant who commits a tort in a

particular state should reasonably expect to be subject to jurisdiction in that state, and

exercise of personal jurisdiction under these circumstances does not violate due

process).   In order to resolve the issue of personal jurisdiction raised by the

circumstances of this case, we must determine whether TDI’s disclosure to the FAA

                                            4
in Georgia of plaintiffs’ trade secret constituted the sort of tort contemplated by

Section 9-10-91(2) of the Georgia long-arm statute.2

                                             II.

       The Georgia Trade Secrets Act defines misappropriation of a trade secret – a

tort – as:

       Disclosure or use of a trade secret of another without express or implied
       consent by a person who:

       (i)    Used improper means to acquire knowledge of a trade secret;

       (ii)   At the time of the disclosure or use, knew or had reason to know
              that knowledge of the trade secret was:

       2
         The district court did not decide this issue. Instead, it held that the tort, if any,
in this case was committed in Florida where TDI is located and the trade secrets were
"purloined." This may well be true, but plaintiffs contend that TDI committed a
seperate tort when it disclosed those trade secrets in Georgia. We are also
unpersuaded by the district court’s alternative holding that, in any event, the
“government contacts” defense would apply in this case to relieve TDI of liability for
any tort it may have committed by virtue of its application to the FAA. See
Klinghoffer v. S.N.C. Achille Lauro ed Altri-Gestione Motonave, 937 F.2d 444 (2d
Cir. 1991). We agree with plaintiffs that this defense is unavailable where the
defendant’s contact perpetrates a fraud upon the government, which, under the
allegations of the complaint, TDI intended to do by misappropriating their trade
secrets and representing itself to the FAA as entitled to the design modification
permit. See Nichols v. G.D. Searle & Co., 783 F. Supp. 233, 242 (D. Md. 1992)
(constitution does not protect false statements nor intentional lie); Naartex Consulting
Corp. v. Watt, 722 F.2d 779, 786-87 (D.C. Cir. 1983) (“A different case might be
presented had Naartex made credible and specific allegations in the district court that
the companies had used the proceedings as an instrumentality of the alleged fraud”).
                                              5
                       (I)   Derived from or through a person who
                             had utilized improper means to acquire
                             it;
                       (II) Acquired under circumstances giving
                             rise to a duty to maintain its secrecy or
                             limit its use; or
                       (III) Derived from or through a person who
                             owed a duty to the person seeking relief
                             to maintain its secrecy or limit its use;
                             or

       (iii)   Before a material change in position, knew or had reason to know that
               it was a trade secret and the knowledge of it had been acquired by
               accident or mistake.

O.C.G.A. Section 10-1-761 (2)(B).

       For the purposes of this motion, we assume the allegations of the complaint to

be true. Delong Equipment Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845

(11th Cir. 1988). Plaintiffs allege that TDI's "disclosure and tender of the trade secrets

to the FAA in Atlanta, Georgia for use in evaluating [TDI's] application is a violation

of the [Act.]" Furthermore, they contend that the "presence of these trade secrets in

the State of Georgia beyond the control of plaintiffs creates the potential for further

and possibly unknown injury to plaintiffs in the State of Georgia, for which relief is

needed in the courts of this State." These allegations appear to state a claim under the

Georgia Trade Secrets Act. If so, TDI has committed a tort in Georgia and is subject

to its jurisdiction.

                                             6
      TDI argues that because they "completed the application for the [modification]

in Florida, "they committed no tort in Georgia." They do not, however, offer any

authority for this proposition. Nor do plaintiffs offer any authority for their contention

that the disclosure of misappropriated trade secrets to a federal agency which happens

to have an office for acceptance of applications in Georgia is the sort of tort

contemplated by the Georgia long-arm statue. We also have been unable to find any

Georgia case on point.

      The resolution of this issue is not self-evident. On the one hand, we have the

express language of the statute which appears to define the tort of misappropriation

to include the act committed by TDI in Georgia. Furthermore, on similar facts, but

in a case not involving the issue of long-arm jurisdiction, we have held that the

improper disclosure of a trade secret in an application to the FAA “clearly constituted

adverse use of [the plaintiff’s] property.” Avco Corp. v. Precision Air Parts, Inc., 676

F.2d 494, 498 (11th Cir. 1982).         Additionally, federal law permits the further

unauthorized disclosure of these trade secrets by the FAA, thereby bolstering

plaintiffs' theory that this disclosure constitutes a tort -- breach of statutory duty with

resulting injury. See Chevron Chemical Co. v. Costle, 641 F.2d 104 (3d Cir. 1980)

(a federal agency's subsequent intra-agency disclosure of trade secrets voluntarily

submitted not a tort under trade secrets act). See also Earthline Corp. v. Mauzy, 385

                                            7
N.E. 2d 928 (Ill. 1979)(state trade secret law did not prevent agency from disclosing

to another agency trade secrets voluntarily submitted under licensing requirements).

      If a tort has been committed in Georgia, then Georgia’s long-arm statute would

appear to permit even a non-resident plaintiff to use its long-arm statute to sue another

non-resident who commits a tort in Georgia. See Newman v. Fleming, 331 F. Supp.

973 (S. D. Ga. 1971). Further, specifically in trademark cases, the exercise of

personal jurisdiction over a foreign defendant has been upheld in a forum where the

defendant attempted to pass off the goods as his own. Topps Co., Inc., v. Gerril J.

Verburg Co., 961 F. Supp. 88, 90-91 (S.D.N.Y. 1977).

      On the other hand, it seems quite possible that a Georgia court might hold that

this is not the sort of act which triggers its long-arm statute. It is clear that Georgia

has almost no interest in this litigation, nor any stake in the outcome. No party is from

Georgia. The alleged tortious disclosure was to a federal, not a Georgia agency.

      We conclude that this issue of state law is both unsettled and pivotal to the

resolution of this case. We are reluctant to guess on an issue which so greatly impacts

on the basic jurisdiction of the Georgia courts. Accordingly, we respectfully certify

the to the Supreme Court of Georgia the following question:

             IN GEORGIA, IS A NON-RESIDENT SUBJECT TO
             PERSONAL JURISDICTION UNDER O.C.G.A. § 9-10-
             91(2) WHEN HE IMPROPERLY DISCLOSES

                                           8
             ANOTHER NON-RESIDENT’S TRADE SECRET TO A
             FEDERAL AGENCY AT ITS GEORGIA OFFICE?

      Our statement of the question is not meant in any way to limit or direct the

scope of inquiry by the Supreme Court of Georgia. On the contrary:

      [T]he particular phrasing used in the certified question is not to restrict
      the Supreme Court’s consideration of the problems involved and the
      issues as the Supreme Court perceives them to be in its analysis . . . .
      This latitude extends to the Supreme Court’s restatment of the issue or
      issues and the manner in which the answers are to be given. . . .

Martinez v. Rodriquez, 394 F.2d 156, 159 n.6 (5th Cir. 1968). The entire record in

this case, together with copies of the briefs of the parties, is transmitted herewith.

                                          III.

      We CERTIFY the state law question of whether a non-resident is subject to

personal jurisdiction under O.C.G.A. § 9-10-91(2) when he improperly discloses

another non-resident’s trade secret to a federal agency at its Georgia office. We

WITHHOLD any decision about the district court’s dismissal of the case for want of

personal jurisdiction. QUESTION CERTIFIED.

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