KANSAS CITY – U.S. District Judge Beth Phillips of the Western District of Missouri has ruled that former franchisees of Service Team of Professionals Inc. are not subject to personal jurisdiction in Missouri because the requirements of the state's long arm statute and due process were not met in a suit filed earlier this year.
According to Phillips' May 2 order, Service Team of Professionals sued William C. Folks and others in federal court in Nevada claiming the defendants had breached terms of a settlement agreement that forbids former franchisees from using its service marks, as well as to refrain from divulging trade secrets, return certain materials and to cancel or abandon all fictitious names, service marks, advertising and business listings incorporating or related to the company's name or mark.
Service Team of Professionals is in the business of granting franchises to businesses that conduct cleaning and restoration services, the ruling states.
The court in Nevada ruled that defendants lacked minimum contacts with the state and dismissed the case in January, which led the company to bring "essentially the same" suit to the Western District of Missouri, the opinion states.
Phillips indicated she would defer taking any other action to allow Service Team Professionals an opportunity to indicate whether it would like the case transferred to the Middle District of Louisiana.
The ruling states that a franchise agreement between the parties contained a forum selection clause indicating Kansas City as proper venue, and the defendants argued that it did not "survive" the agreement's termination date effective January 2016 and that they do not have minimum contacts in Missouri to satisfy the due process clause.
“When the parties agreed to terminate their franchise agreement, they specified that - with one exception – none of the terms or conditions remained operative,” she wrote. “Therefore, the parties were no longer subject to the franchise agreement’s forum selection clause. Furthermore, defendants are not subject to personal jurisdiction in Missouri because the requirements of Missouri’s long arm statute and the due process clause have not been satisfied.”
Phillips indicated she would give the plaintiff until May 16 to decide whether it wants to transfer to the Middle District of Louisiana.