On Tuesday, the Southern District of Ohio issued an opinion regarding the case brought by Snap Medical Industries against Focus Health Group, Inc., ruling on a motion to dismiss for lack of personal jurisdiction regarding employee Beth Cross’s involvement with the case. With the resolution of this motion, the case moves on to full discovery regarding the claims of tortious interference, unfair competition under state and federal law, deceptive trade practices, and unjust enrichment.
The case focuses on a nonexclusive sales distribution agreement between Snap Medical Industries LLC and Focus Health Group. Defendant McBee, on behalf of Focus, submitted a request to permit a licensing agreement, which was proposed to create a direct competitor for the Snap product, purportedly in order to create bidding wars for the product. According to the complaint, “McBee demonstrated how the licensed product could be used by Focus to ‘play a pricing game’ with its major wholesalers and government contracts. Although (plaintiff) Ms. Stamps indicated that Snap may have some level of general interest in a licensing agreement, it had no interest in playing a ‘pricing game,’ and was instead more interested in continuing with the promotion and sale of Snap’s products under the then-current Agreement.” The denial of the request marked the beginning of a downturn in the business relationship, the complaint said. Defendant Cross’s involvement in the case regards direct marketing of the competing product in Ohio, including direct emails to a distributor and a business trip to encourage the relationship.
While acknowledging that she did make the emails and the business trip, Cross moved that there was lack of personal jurisdiction under two theories: first, that the contacts were insufficient to establish a direct availing of the laws and resources of Ohio, and second, that the contacts represented professional, not personal contacts. Regarding the first theory, the court noted that there was a continuing pattern of communication and presence in Ohio that was directly related to theory of the counts in the suit, which directly provided the necessary contacts under the Ohio long-arm statute. Regarding the second theory, the court noted that there is no exception or requirement that the contacts in the state be personal rather than professional in nature, and in fact, the professional nature of these contacts made them even more relevant to the determination of the jurisdiction.
Plaintiffs Stamps and Snap are represented by Arnold & Clifford LLP. Defendants Focus Health Group, Inc., Fred McBee, and Beth Cross are represented by Kravitz, Brown & Dortch LLC.
