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Tarkett USA, Inc. v. Harnix Corp.

United States District Court, N.D. Ohio, Eastern Division

May 23, 2017

TARKETT USA, INC. Plaintiff,
HARNIX CORP., et al., Defendant.



         This matter is before the Court on Defendants' Harnix Corp. d/b/a Linron, J. Ron Harris and Linda Krienke (“Defendants”) Motion to Dismiss for Lack of Personal Jurisdiction and, in the Alternative, Motion to Transfer Venue. (ECF # 9). For the following reasons, the Court denies Defendants' Motion.

         Plaintiff Tarkett USA, Inc. (“Tarkett”) is located in Solon, Ohio and is a manufacturer, marketer and distributor of commercial and residential flooring products. Harnix Corp. d/b/a Linron (“Linron”) is a Texas based company that distributes, resells and acts as installation project manager of flooring materials, including products manufactured by Tarkett.

         According to Tarkett's Complaint, in 1996, Tarkett, through its predecessors Azrock Industries, Inc. and National Floor Products Company, Inc., entered into an Agreement with Defendants that involved the reselling of Tarkett products to Walmart. Under the Agreement, Defendants would manage the installation process of the Tarkett products. The Agreement contained a non-compete clause wherein Defendants agreed not to sell competing products to Walmart.

         Defendants also managed the removal of Tarkett products at Walmart stores wherein the old flooring was removed and returned to Tarkett for recycling and use in new Tarkett products. These include vinyl composite tile (“VCT”), which consists of approximately 30% recycled materials, reduce Tarkett costs and support Tarkett's sustainability initiatives.

         The relationship continued for nearly twenty years with an average of $14, 500, 000 of Tarkett products sold to Walmart through 2013. During this time the VCT product sold to Walmart was manufactured in Texas. In 2014, Tarkett moved its VCT production operation to Alabama. Initially, the VCT product produced at the Alabama facility did not meet Tarkett quality standards. In 2015, Defendants represented to Tarkett that Walmart refused to accept Tarkett VCT due to its poor quality. Tarkett later learned these representations were not true. In light of these representations, Tarkett, per amendment to the Agreement, allowed Defendants to source other products to Walmart until Tarkett resolved its Alabama production issues. After a few months the production issues were resolved, however, Defendants continued without explanation to complain about the VCT quality.

         Defendants refused to work with Tarkett. Thereafter, Tarkett established a set a performance metrics for its product which mirrored the product quality standards of its Texas produced VCT. Defendants agreed that if the Alabama-produced VCT met these metrics Defendants would resume sales of Tarkett products to Walmart. Despite meeting the performance metrics, Defendants refused to resume sales to Walmart of Tarkett products and instead sold competitor products to Walmart.

         In 2015, Tarkett and Defendants attempted to negotiate a new agreement to replace the 1996 Agreement. Defendants represented to Tarkett that Walmart now insisted on having more than one source of flooring products. Tarkett subsequently learned this was not true.

         On August 7, 2015, Defendants gave notice of termination of the 1996 Agreement. Tarkett acknowledged receipt of the notice and reminded Defendants of the prohibited activities clause, including the non-compete provision, that would remain in effect for one year. In spite of the contractual non-compete clause, Defendants have competed with Tarkett in violation of their obligations under the 1996 Agreement.

         Tarkett alleges Breach of Contract, Breach of Implied Contract and Intentional Misrepresentation against Defendants. Tarkett further alleges Tortious Interference with Business Relationships and Breach of Contract claims against a former employee.

         Defendants' Motion to Dismiss

         According to Defendants, the Court lacks Personal Jurisdiction over them because: they did not personally avail themselves of the privilege of doing business in the State of Ohio. The only contact with the State of Ohio is Tarkett's location there. For the first fifteen years of the parties' relationship Tarkett's predecessors were located in Texas until acquired by Tarkett. The only contacts with Ohio were due to Tarkett's relocating its headquarters there fifteen years into the relationship.

         Furthermore, none of conduct of which Tarkett complains occurred in the State of Ohio. Negotiations between Defendants and Walmart took place in Texas and Arkansas, therefore, any activity in violation of the non-compete clause occurred outside Ohio. Any violation of an implied contract to return old flooring for recycling occurred outside Ohio as returned product was sent to Alabama, not Ohio. Also, any alleged misrepresentations to Tarkett about Walmart occurred in Texas, not Ohio.

         Should the Court find it may exercise personal jurisdiction over Defendants, Defendants request that the Court transfer venue for the convenience of the parties. According to Defendants, the Southern District of Texas is the proper venue because the operative facts of Tarkett's claims occurred in Texas. All Defendants reside in Texas and Defendants' business is located in Texas. Any alleged improper solicitation of competing business occurred in Texas and all Defendants' sales information and communications are located in Texas. Walmart further returned defective product to Defendants in Texas. Costs of ...

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