COA Finds Foreign Defendants' Contacts Insufficient to Establish Personal Jurisdiction

Today the Court of Appeals found that the following contacts were not sufficient to warrant the exercise of personal jurisdiction over a foreign corporation: the corporation's agent had an unrelated business meeting in NC, that agent participated in unrelated North Carolina litigation, and the corporation signed a settlement agreement in with unrelated NC parties that subjected it to continuing obligations to those parties. The case is Evonik Energy Services GMBH v. Ebinger.

Marik Blohm formerly worked for defendant ENVICA Kat GmbH, where he signed an employment agreement with that defendant that he “shall maintain the strictest secrecy about all operational and business matters and processes . . . which become known to him in his work and its surrounding circumstances both during the employment relationship and after its termination.” The contract was signed in Germany and was governed by German law. Blohm left the company, and later transferred ownership of some European Patent applications on which he is listed as a co-inventor to Evonik, a German corporation whose wholly-owned subsidiary Evonik Energy Services is a North Carolina company. ENVICA Kat notified Blohm that the patents contained information that came from his former employment, and that he had violated his employment agreement. Evonik sought a declaratory judgment that it was the lawful owner of the patent applications. Plaintiff appealed the trial court's ruling that it lacked personal jurisdiction over defendants.

The COA affirmed, holding that Defendants' contacts with North Carolina were not sufficient to establish personal jurisdiction. Defendant Frank Ebinger's participation as a third-party witness in unrelated North Carolina litigation, Ebinger's 2008 meeting in North Carolina related to that litigation, two letters from ENVICA Kat GmbH to Blohm, and Defendants' obligations under a settlement agreement in an unrelated matter were "sporadic rather than continuous" contacts, none of which shows Defendants "purposefully availing themselves of the privilege of conducting activities within the state" or "invoking the benefits and protections of its laws." The COA further concluded Defendants’ contacts were not the source of the present lawsuit - the source of Evonik’s lawsuit was the employment contract. Finally, the Court held that North Carolina has no interest in a case that involves a breach of contract under German law and matters of European and United States Patent law.