Delaware Business Litigation Report

District Court Dismisses Breach of Contract and Misappropriation of Trade Secrets Action for Lack of Personal Jurisdiction

Childcraft Education Corp. v. Alice's Home, et al., C.A. No. 05-461 (GMS) (D. Del. May 22, 2006). Plaintiff filed complaint alleging breach of contract, miappropriation of trade secrets and unjust enrichment claims. Defendants moved to dismiss the action for lack of personal jurisdiction. Plaintiff Childcraft Education Corp. ("Childcraft"), a New York corporation with its principal place of business in Pennsylvania, sells educational supplies. Defendant Alice's Home, an Ohio sole proprietorship, also sells educational supplies, and is owned entirely by defendant William Wedd, who is a resident of Ohio. Alice's Home granted plaintiff an exclusive license to sell one of its educational products, known as Model A116. The parties negotiated and executed the licensing agreement in Ohio. The licensing agreement contains a Delaware choice-of-law provision and a forum selection clause providing that the parties agree to submit to personal jurisdiction in the Delaware courts. In May 2005, Alice's Home brought an action against Childcraft in the state court of Ohio alleging, among other things, that Childcraft misappropriated Alice's Home's trade secrets. In July 2005, Childcraft filed a complaint against Alice's Home in Delaware, alleging that Alice's Home violated the licensing agreement by selling Model A116, despite Childraft's exclusive license to do so Alice's Home moved to dismiss the Delaware action based on lack of personal jurisdiction. The District Court first held that notwithstanding the choice-of-law provision in the licensing agreement, Ohio law applied, because the only relationship that the parties had with Delaware was the presence of the choice-of-law and forum selection clauses in the licensing agreement, and that relationship was too attenuated to be material. The court then concluded that the forum selection clause was invalid as unreasonable under Ohio law, and dismissed the Delaware action for lack of personal jurisdition. Share