NANCY F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE

MEMORANDUM AND ORDER

Pending before the Court in this intellectual property dispute are two motions to dismiss. The first motion is Defendants MMTC Texas, Inc.'s ("MMTC Texas) and Tesla Shen Mendez's ("T. Mendez") Motion to Dismiss and Supporting Authorities (the "12(b)(6) Motion") [Doc. # 13], wherein MMTC and T. Mendez argue that all claims alleged in Plaintiff Federation of State Massage Therapy Boards' Complaint [Doc. # 1] should be dismissed for failure to state a claim pursuant to rule 12(b)(6) of the Federal Rules of Civil Procedure. The second motion is Defendants Jorge Mendez's ("J. Mendez") and Mendez Master Training Center, Inc.'s ("MMTC") Motion to Dismiss and Brief in Support (the "Jurisdiction Motion," and, together with the 12(b)(6) Motion, the "Dismissal Motions") [Doc. # 14]. In the Jurisdiction Motion, Defendants J. Mendez and MMTC contend that the Court lacks personal jurisdiction over them and, as a result, all claims in the Complaint against them should be dismissed. Plaintiff filed timely responses to the Dismissal Motions, to which Defendants filed a single reply. See Plaintiff's Opposition to Defendants MMTC Texas's and T. Mendez's Motion to Dismiss (the "12(b)(6) Response") [Doc. # 15]; Plaintiff's Opposition to Defendants J. Mendez's and MMTC's Motion to Dismiss (the "Jurisdiction Response") [Doc. # 16]; and Defendants' Response to Plaintiff's Opposition to Motion to Dismiss, with Supporting Authorities [Doc. # 17]. The Dismissal Motions are now ripe for decision. Having considered the parties' briefing, the applicable legal authorities, and all appropriate matters of record, the Court concludes that the Dismissal Motions should be denied, but that Plaintiff must file and amended complaint.

I. BACKGROUND

Plaintiff develops and administers the national licensing examination that assesses competence in massage and bodywork in the United States and its territories, known as the Massage & Bodywork Licensing Exam ("MBLEx"). According to Plaintiff, its MBLEx questions are protected by U.S. copyright law and are registered with the U.S. Copyright office. MBLEx results are used by licensing agencies throughout the United State, including in Texas, when evaluating applicants for licensure. These jurisdictions require applicants to obtain a passing result on the MBLEx to obtain a license to practice massage and bodywork.

The group of Defendants in this case is comprised of two corporate entities and several individuals. The corporate Defendants are MMTC and MMTC Texas. MMTC is a California corporation with its principal place of business in Torrance, California. MMTC Texas is a Texas corporation with its principal place of business in Houston, Texas. Plaintiff alleges in the Complaint that MMTC has "business operations in Texas" at the same address as MMTC Texas. Individual Defendants T. Mendez and J. Mendez are residents of Texas and California, respectively, and are each alleged to be the "owner and operator" of both MMTC and MMTC Texas.

The core of Plaintiff's Complaint is that Defendants T. Mendez and J Mendez, through their businesses MMTC and MMTC Texas and with the assistance of the other named Defendants, have impermissibly obtained and reproduced MBLEx questions, including the answers thereto, and sold them to prospective MBLEx takers. As a result, Plaintiff argues that Defendants have undermined the integrity of the MBLEx itself and the massage and bodyworks licensing processes that rely on it. Plaintiff contends further than Defendants' publication of its confidential MBLEx questions has forced it to retire hundreds of questions from use in the examination and incur significant costs to develop new, uncompromised exam material.

II. ANALYSIS

A. Personal Jurisdiction

As a threshold issue, Defendants MMTC and J. Mendez have moved to dismiss the Complaint in its entirety on the grounds that they are not subject to personal jurisdiction in Texas. The Court addresses Defendants' jurisdictional arguments in turn.

1. Legal Standard for Personal Jurisdiction

Plaintiff has the burden of establishing that this Court has personal jurisdiction over each Defendant. See Int'l Energy Ventures Mgmt., LLC v. United Energy Group, Ltd., 800 F.3d 143, 151 (5th Cir. 2015). On a motion to dismiss, a plaintiff is required to present only a prima facie case for personal jurisdiction. Walk Haydel & Assoc., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 241 (5th Cir. 2008). Where, as here, the Court did not conduct a full evidentiary hearing, the Court will consider the evidence presented by the parties "to help it resolve the jurisdictional issue," but will "construe all disputed facts in Plaintiff's favor and consider them along with the undisputed facts." Id.

Courts in Texas may exercise personal jurisdiction over a nonresident if "(1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction is consistent with federal and state constitutional due-process guarantees." DeJoria v. Maghreb Petroleum Expl., S.A., 804 F.3d 373, 388 (5th Cir. 2015) (citing Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex. 2013)). In Texas, the long-arm statute extends to the limits of federal constitutional due process. See Companion Prop. & Cas. Ins. Co. v. Palermo, 723 F.3d 557, 559 (5th Cir. 2013).

Jurisdiction may be general or specific. Where a defendant has "continuous and systematic general business contacts" with the forum state, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984), the court may exercise "general" jurisdiction over any action brought against that defendant. Id. at 414 n.9. Where contacts are less pervasive, the court may still exercise "specific" jurisdiction "in a suit arising out of or related to the defendant's contacts with the forum." Id. at 414 n.8. Plaintiff does not assert that the Court has general personal jurisdiction over MMTC or J. Mendez. Therefore, this case presents only the question of specific jurisdiction.

"Asserting personal jurisdiction comports with due process when (1) the nonresident defendant has minimum contacts with the forum state, and (2) asserting jurisdiction complies with traditional notions of fair play and substantial justice." DeJoria, 804 F.3d at 388 (citing Moncrief, 414 S.W.3d at 150). A defendant establishes minimum contacts with a state when he purposefully avails himself "of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Id. (citations omitted). "In addition to minimum contacts, due process requires the exercise of personal jurisdiction to comply with traditional notions of fair play and substantial justice." Id. (quoting Moncrief, 414 S.W.3d at 154).

2. Personal Jurisdiction over MMTC

MMTC argues that as a California corporation, it lacks the requisite contacts with Texas to be subject to jurisdiction in this Court. MMTC contends further that to the extent it has any contacts with Texas, those contacts are not sufficiently related to the claims in this lawsuit to warrant the Court's exercise of personal jurisdiction over it. The Court is not persuaded by these assertions.

In its Complaint, Plaintiff alleges that MMTC has business operations in Texas at the same address as MMTC Texas. Complaint [Doc. # 1], ¶¶ 5-6 at ECF 2. Plaintiff further alleges that MMTC has employees or agents in Texas. See id. ¶ 7 at ECF 2-3 (alleging that Defendant T. Mendez, a Texas resident, is an "owner, operator, and director" of MMTC); id. ¶ 12 at ECF 3 (alleging that "John Doe" Defendants are agents or employees of MMTC, and that some of those individuals are believed to be residents of Texas). According to the Complaint, Defendant T. Mendez and the "John Doe" Defendants have participated in providing Defendants' purportedly illicit MBLEx-preparation services at a "school" located in Houston, Texas. See id. ¶ 18 at ECF 5 ("Defendants regularly advertise the sale of MBLEx questions and other fraudulent services, offering to help customers obtain state massage and bodywork licenses in Texas and elsewhere within a mere ten days. Their MBLEx-preparation services are available online and through the mail, as well as in person at their "schools" located in Houston, Texas, and various cities in California."). There is also an allegation that another agent of MMTC, Defendant Sun, has on at least one occasion attempted to direct a prospective "student" to MMTC's offerings in Texas. See id. ¶ 53 at ECF 15 ("Defendant Sun told the investigator that Defendants were currently offering live MBLEx preparation classes in Houston and Los Angeles . . . . She also explained that Defendants' classroom building in Houston offers living accommodations for an additional fee.").

Although Defendants challenge the veracity of Plaintiff's allegations with respect to MMTC and its agents, Defendants failed to produce any competent evidence in connection with the Jurisdiction Motion that discredits Plaintiff's assertions that MMTC intentionally conducts business in the state of Texas. For example, Plaintiffs have not produced an affidavit from T. Mendez or any another corporate representative of MMTC averring that MMTC has no operations or employees in the state of Texas. Absent such evidence, at this early stage of this case the Court is bound to accept as true the well-pled allegations in Plaintiff's Complaint. Accepting those allegations as true, the Court concludes that Plaintiff has made a prima facie showing that MMTC itself conducts business, including offering MBLEx-preparation services, in the state of Texas and has promoted its Texas-based operations to potential customers. Consequently, Plaintiff has shown that MMTC has "purposefully availed" itself of the privilege of conducting activities in Texas and has constitutionally sufficient minimum contacts with the state for purposes of the Court's personal jurisdiction analysis.

Having determined that Plaintiff has carried its burden with respect to the "minimum contacts" prong of the jurisdiction inquiry, the Court turns to the question of whether Plaintiff's claims against MMTC arise out of or result from its contacts with Texas. Defendants do not address this element of the personal jurisdiction inquiry in their Jurisdiction Motion, but instead make the conclusory assertion in their Reply that MMTC's and J. Mendez's alleged contacts with Texas are "simply not continuous and systematic contacts required under Due Process to establish jurisdiction and [are] not sufficient to establish a nexus between the non-resident's contacts with the forum and the cause of action." Reply [Doc. # 17], at ECF 8. Defendants' contention is belied by various allegations in the Complaint. Plaintiff asserts five causes of action against all Defendants, including MMTC: (i) copyright infringement, (ii) contributory copyright infringement, (iii) trade secret misappropriation under state law, (iv) trade secret misappropriation under federal law, and (v) tortious interference with contract. At this juncture, each of these claims could be characterized fairly as arising out of or resulting from, at least in part, MMTC's provision of MBLEx-preparation services in Texas with the use of allegedly stolen or otherwise misappropriated test materials. For example, Plaintiff's copyright infringement claim allegedly results from, in part, MMTC's reproduction, directly or through its agents/employees, of copyrighted test questions in Houston, Texas. Similarly, Plaintiff's cause of action for tortious interference with contract allegedly arises out of MMTC's providing MBLEx test takers with actual test questions through its operations in Texas in violation of an alleged agreement between those test takers and Plaintiff. Therefore, Plaintiff also has carried its burden under the second prong of the Fifth's Circuit's personal jurisdiction analysis.

As Plaintiff has demonstrated that MMTC has constitutionally sufficient minimum contacts with Texas and that its claims against MMTC arise out of or result from those contacts, Defendants bear the burden of proof of showing that the exercise of jurisdiction over MMTC would not be fair and reasonable. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985). "[I]t is rare to say the assertion [of jurisdiction] is unfair after minimum contacts have been shown." McFadin v. Gerber, 587 F.3d 753, 759-60 (5th Cir. 2009). To determine whether the exercise of personal jurisdiction is fair and reasonable, a court must examine "(1) the burden on the nonresident defendant, (2) the forum state's interests, (3) the plaintiff's interest in securing relief, (4) the interest of the interstate judicial system in the efficient administration of justice, and (5) the shared interest of the several states in furthering fundamental social policies." Id. In the Jurisdiction Motion, Defendants argue it would "offend traditional notion [sic] of fair play and substantial justice if the Defendants are forced to defend a lawsuit in Texas court, where they have no connections with, and which will place an excessive burden and inconvenience on Defendants." MMTC Motion [Doc. # 14], ¶ 8 at ECF 6. Defendants also contend that "Plaintiff's general allegation does not justify [sic] forum state's interests or their interests in prosecuting this case against Defendants either since Defendants are not even involved in the subject matter of the lawsuit here in Texas." Id. The Court is not persuaded by any of these assertions.

As an initial matter, the Court's finding that MMTC has satisfactory minimum contacts with Texas defeats Defendants' claim that they have "no connection" to Texas. Defendants also have produced no evidence that it would meaningfully burden MMTC to appear in court in Texas. Even assuming they had made such a showing, that burden on MMTC would not outweigh Texas's strong interest in ensuring that those seeking to obtain massage or bodyworks licenses do not cheat on the MBLEx or Plaintiff's significant interest in ensuring the integrity of its national licensing examination. Although Defendants' baldly assert that they "are not even involved in the subject matter of the lawsuit here in Texas," they have not produced any evidence to that effect and the well-pled allegations in the Complaint, which the Court must presume to be true at this stage of the litigation, state otherwise. Defendants have failed to meet their burden by demonstrating that, despite their minimum contacts with Texas, it would be unfair or unreasonable for the Court to exercise personal jurisdiction over MMTC in this case. Accordingly, Defendants' motion to dismiss Defendant MMTC for lack of personal jurisdiction is denied.

3. Personal Jurisdiction over J. Mendez

Unlike MMTC, it does not appear that J. Mendez has any direct connection to Texas that is relevant to this case. While Plaintiff asserts numerous allegations of wrongdoing against J. Mendez, none of J. Mendez's alleged misconduct is alleged to have occurred in Texas. Moreover, J. Mendez submitted an affidavit in connection with the Jurisdiction Motion averring that he "has not conducted any business in Texas relating to the business operations of MMTC or MMTC Texas," and that he has "never come to Texas in any capacity relating to the business operations of MMTC schools." J. Mendez Affidavit [Doc. # 14], ¶¶ 3-4 at ECF 22-23. Despite the absence of any apparent direct ties between J. Mendez and the state of Texas, Plaintiff argues that the Court nevertheless may exercise personal jurisdiction over him because it "has established [J. Mendez]'s active involvement in [MMTC]'s operations, which included operations directed at Texas." Jurisdiction Response [Doc. # 16], at ECF 15. Said differently, Plaintiff appears to be asserting that MMTC is J. Mendez's "alter ego," meaning that MMTC's contacts with Texas can be attributed to J. Mendez for purposes of determining personal jurisdiction.

The Fifth Circuit recognizes an "alter ego" theory of personal jurisdiction. As the Circuit explained in Patin v. Thoroughbred Power Boats Inc.:

federal courts have consistently acknowledged that it is compatible with due process for a court to exercise personal jurisdiction over an individual or a corporation that would not ordinarily be subject to personal jurisdiction in that court when the individual or corporation is an alter ego or successor of a corporation that would be subject to personal jurisdiction in that court. The theory underlying these cases is that, because the two corporations (or the corporation and its individual alter ego) are the same entity, the jurisdictional contacts of one are the jurisdictional contacts of the other for the purposes of the International Shoe due process analysis.

In the Complaint, Plaintiff alleges that J. Mendez is the "owner and operator" of MMTC. J. Mendez is also alleged to have engaged in numerous acts, such as secretly recording MBLEx questions and operating a school that provides individuals with sham educational credentials, in furtherance of MMTC's business. In his affidavit, J. Mendez denies owning or managing "any of the corporate entities involved in the lawsuit, including [MMTC]", or ever being a "partner, shareholders, director, officer or employee of either MMTC or MMTC Texas." Mendez Affidavit [Doc. # 14], ¶¶ 3-4 at ECF 22-23. Plaintiff, however, presented evidence in its Jurisdiction Response that calls into question the veracity of these averments. Specifically, Plaintiff provided a copy of MMTC's most recent Statement of Information from the Secretary of State of the State of California, which lists J. Mendez as a director of MMTC. Declaration of Debra Persinger in Support of Plaintiff's Opposition to Defendants J. Mendez's and MMTC's Motion to Dismiss (the "Persinger Declaration") [Doc. # 16-2], Exhibit I at ECF 14.

Based on the current record, the Court concludes that Plaintiff has not carried its burden of making a prima facie showing that MMTC's jurisdictional contacts with Texas can be imputed to J. Mendez because MMTC is his "alter ego." Even assuming that J. Mendez is an owner and operator of MMTC, and even assuming that J. Mendez is actively involved in MMTC's business, the Complaint is devoid of allegations that would support a reasonable inference that there is a "unity" between J. Mendez and MMTC that would justify disregarding MMTC's presumptive status as a distinct entity. There are no allegations or other evidence that MMTC ignores corporate formalities, that J. Mendez's and MMTC's property are indistinguishable or that J. Mendez exercises an unacceptably high degree of control over MMTC. To the contrary, the Complaint alleges that at least one other individual, T. Mendez, also is an "owner, operator and director" of MMTC, Complaint [Doc. # 1], ¶ 7 at ECF 2, without making any effort to identify their relative levels of control and influence over the business. The allegations in the Complaint and the evidence in the Persinger Declaration, whether considered individually or collectively, fail to make a prima facie showing that J. Mendez and MMTC are "the same entity."

In the Jurisdiction Response, Plaintiff alternatively requests the opportunity to engage in jurisdictional discovery if the Court finds that it has not adequately established a prima facie case for personal jurisdiction over MMTC or J. Mendez. A district court has "broad discretion in all discovery matters," including those relating to jurisdiction, and "such discretion will not be disturbed ordinarily unless there are unusual circumstances showing a clear abuse." Paolino v. Argyll Equities, L.L.C., 401 F. Supp. 2d 712, 722 (W.D. Tex. 2005). To support a request for jurisdictional discovery, a plaintiff must first make "a preliminary showing of jurisdiction." Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429 (5th Cir. 2005). A preliminary showing does not require proof that personal jurisdiction exists, but "factual allegations that suggest with reasonable particularity the possible existence of the requisite contacts." Id. A plaintiff is not entitled to jurisdictional discovery when "the record shows that the requested discovery is not likely to produce the facts needed to withstand a Rule 12(b)(1) motion." Freeman v. United States, 556 F.3d 326, 342 (5th Cir.2009); see also Fielding, 415 F.3d at 429 ("If a plaintiff presents factual allegations that suggest with reasonable particularity the possible existence of the requisite contacts . . . the plaintiff's right to conduct jurisdictional discovery should be sustained.")

In this case, the Court holds that Plaintiff has made a "preliminary showing of jurisdiction" with respect to J. Mendez. The discrepancy between J. Mendez's conclusory averment that he has never had any role with MMTC and documentation filed with the Secretary of State for the State of California identifying him as a director of that entity raise important questions as to the true extent and nature of his relationship with MMTC. When considered together with the Complaint's allegations that he is an "owner and operator" of MMTC and has undertaken numerous actions for MMTC's benefit, Plaintiff has met its burden at this time to raise a reasonable inference that MMTC potentially is J. Mendez's alter ego for jurisdictional purposes. Consequently, Plaintiff has established "the possible existence of the requisite contacts" between J. Mendez and the state of Texas and is entitled to limited jurisdictional discovery on the subject of the relationship between J. Mendez and MMTC.

B. Failure To State A Claim

In addition to MMTC's and J. Mendez's personal jurisdiction arguments, each of the Defendants also seeks dismissal of the Complaint in its entirety pursuant to rule 12(b)(6) of the Federal Rules of Civil Procedure. Because the Court concludes that Plaintiff should be granted leave to amend its Complaint to address at least one claim that is deficient as currently pled but which deficiency may be curable, the Court denies without prejudice the Dismissal Motions to the extent they argue that Plaintiff has failed to state a claim upon which relief can be granted.

1. Legal Standard

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563 F.3d at 147. The complaint must, however, contain sufficient factual allegations, as opposed to legal conclusions, to state a claim for relief that is "plausible on its face." See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d 614, 617 (5th Cir. 2012). When there are well-pleaded factual allegations, a court should presume they are true, even if doubtful, and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. Additionally, regardless of how well-pleaded the factual allegations may be, they must demonstrate that the plaintiff is entitled to relief under a valid legal theory. See Neitzke v. Williams, 490 U.S. 319, 327 (1989); McCormick v. Stalder, 105 F.3d 1059, 1061 (5th Cir. 1997).

2. Breach of contract

In Count VI of the Complaint, Plaintiff asserts a claim for breach of contract against Defendants T. Mendez, J. Mendez and Sun. The gravamen of the claim is that each of those Defendants sat for the MBLEx, and in doing so, they entered into a contract with Plaintiff to preserve the confidentiality of the exam and its questions. Plaintiff alleges these Defendants breached that contract by recording, reproducing or otherwise failing to preserve the confidentiality of the test questions they were exposed to during their respective examinations. Plaintiff did not attach to the Complaint copies of any of the alleged contracts between it and Defendants. The Court thus cannot assess the viability of the breach of contract claim because there are several open issues, such as what state's law governs these contracts. Plaintiff, an Illinois corporation with its principal place of business in Kansas, initiated this litigation in Texas. Defendants accused of breach of contract are all California residents and it is unknown in what state they took the MBLEx. The alleged contracts in this case potentially are governed by any one of a multitude of different states' laws and the Court cannot assess the legal viability of this claim. Nevertheless, Plaintiff at this early stage in the litigation is entitled to leave to replead its claims.

Before filing an amended complaint, Plaintiff may plead only claims that "are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law" and have evidentiary support, or are likely to have such support after a reasonable opportunity for further investigation or discovery, in light of meritorious arguments raised in the Dismissal Motions. See FED. R. CIV. P. 11. Further, Plaintiff may name only defendants with potential liability under applicable substantive and procedural law and must make specific allegations against each Defendant separately to the extent possible. The Dismissal Motions, to the extent they assert that the Complaint fails to state a claim upon which relief can be granted, are denied without prejudice.

III. CONCLUSION

For the foregoing reasons, it is hereby

ORDERED that within thirty (30) days of the date of this Memorandum and Order, Plaintiff shall file an amended complaint in this case. Plaintiff shall include copies of the contracts germane to its breach of contract claim as attachments to the amended complaint. It is further

ORDERED that the 12(b)(6) Motion [Doc. # 13] is DENIED AS MOOT. It is further

ORDERED that the Jurisdiction Motion [Doc. # 14] is DENIED WITHOUT PREJUDICE as to the arguments pertaining to the Court's personal jurisdiction over Defendants MMTC and J. Mendez. Plaintiff is entitled to conduct limited jurisdictional discovery regarding the relationship between Defendants MMTC and J. Mendez as set forth in this Memorandum and Order. It is further

ORDERED that to the extent Defendants contend Plaintiff has failed to state a claim upon which relief can be granted, the Jurisdiction Motion [Doc. # 14] is DENIED AS MOOT.

SIGNED at Houston, Texas, this2 4thday of January, 2018.

/s/_________

NANCY F. ATLAS

SENIOR UNITED STATES DISTRICT JUDGE