AMA Multimedia LLC v. Sagan Limited et al

Filing 171

ORDER - The renewed Motion to Dismiss based on forum non conveniens filed by Defendants Sagan Limited, Cyberweb Ltd., Netmedia Services Inc., and David Koonar (Doc. #154 ) is granted. The claims asserted against Defendant GLP 5, Inc. are dismissed for lack of personal jurisdiction (see Docs. #64 at 7-8, 126 at n.1). The Clerk shall terminate this action. Signed by Senior Judge David G Campbell on 10/24/18. (DXD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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AMA Multimedia LLC, a Nevada limited
liability company,

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Plaintiff,

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No. CV16-01269-PHX-DGC

ORDER

v.
Sagan Limited, a Republic of Seychelles
company, Cyberweb Ltd., a Barbados
company, and Netmedia Services Inc., a
Canadian company, individually and d/b/a
Porn.com; GLP 5, Inc., a Michigan
company d/b/a Trafficforce.com; and David
Koonar, an individual,
Defendants.

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Before the Court is Defendants’ renewed motion to dismiss based on forum non

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conveniens. Doc. 154. The motion is fully briefed, and oral argument has not been

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requested. For the reasons stated below, the motion will be granted.

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I.

Background.

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Plaintiff AMA Multimedia, LLC, a producer of pornographic material, asserts

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copyright infringement claims against several entities and one individual associated with

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Porn.com. Doc. 16. Porn.com is a video streaming website that generates revenue

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through paid memberships and advertising space. Id. ¶¶ 48-49, 57. AMA alleges that

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Defendants Sagan Limited, Cyberweb Ltd., Netmedia Services Inc., and David Koonar

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are owners or operators of Porn.com. Id. ¶¶ 2-8, 46. AMA further alleges that these

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Defendants own and operate Defendant GLP 5, Inc., an advertising broker doing business

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as Trafficforce.com. Id. ¶¶ 7, 47, 94-95.

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AMA distributes its pornographic material through DVD sales and various

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websites. Id. ¶ 28. Users of AMA websites must be paid members to view the material.

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Id. ¶¶ 29-30. AMA provides sample promotional videos to advertising affiliates and

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licenses certain material to other pornographic websites. Id. ¶ 30. Beginning in 2007,

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pursuant to an AMA affiliate program agreement, AMA provided certain promotional

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videos for Defendants to display on Porn.com for the purpose of directing traffic to

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AMA’s paid membership sites. Id. ¶ 63; see Doc. 157-1 at 19.

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In November 2015, AMA learned that Porn.com had displayed 64 of AMA’s

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copyrighted works, none of which was a promotional video provided by AMA pursuant

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to the affiliate program agreement. Doc. 16 ¶¶ 63, 78; see Doc. 1-1 at 1-9. AMA asserts

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that the works were uploaded onto Porn.com by Defendants, not third-party users as

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Defendants claim. Doc. 16 ¶¶ 78-92. AMA further asserts that in March 2016, other

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copyrighted works were displayed on Trafficforce advertising banners on Porn.com. Id.

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¶ 98; see Doc. 1-1 at 31-34. Claiming that the works were displayed on Porn.com

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without its approval or consent, AMA asserts various copyright infringement claims

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against all Defendants. Doc. 16 ¶¶ 82, 105-58.

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Defendants contend that they had the right to display the allegedly infringing

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material based on a licensing agreement between AMA and one of Defendants’ affiliates,

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GIM Corporation. This agreement – formally, the Content Partner Revenue Sharing

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Agreement (“CPRA”) – was entered into in September 2012 when AMA joined GIM’s

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Paidperview.com revenue sharing program. Doc. 27-3 at 25-34. The CPRA granted

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GIM a license to use content provided by AMA on websites whose advertisements are

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controlled by Trafficforce.com. Id. at 25 (CPRA §§ B, 1.1).

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Defendants moved to dismiss or stay this case based in part on the CPRA’s forum

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selection clause, which provides that “[a]ny legal action arising out of or relating to

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[the CPRA] must be instituted in a court located in Barbados[.]” Id. at 30 (CPRA

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§ 10.5); see Docs. 27-1 at 18, 42-1 at 18, 49-1 at 14-17, 70-1 at 11-17. The Court denied

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the stay request and deferred ruling on motions to dismiss pending jurisdictional

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discovery. Doc. 64. Following the discovery and additional briefing, the Court granted

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Defendants’ motions to dismiss on the basis of the forum selection clause. Doc. 126.

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The Court found that the clause (1) applies to AMA’s copyright infringement claims

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because the dispute arises out of or relates to the CPRA, (2) is valid and enforceable, and

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(3) can be invoked by Koonar as an officer of GIM and by Cyberweb, Netmedia, and

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Sagan because they are affiliates of GIM which were assigned rights under the CPRA.

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Id. at 5-17. AMA appealed and the Ninth Circuit reversed, finding that the record did not

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support an assignment of GIM’s rights under the CPRA. Doc. 147-1 at 4. The case was

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remanded for further proceedings, including consideration of Defendants’ alternative

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arguments for enforcing the forum selection clause. Id. at 5.1

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At the Court’s direction, the parties filed supplemental briefs. Docs. 154, 157,

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161. Defendants argue that they have standing to enforce the forum selection clause as

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agents of GIM, third-party beneficiaries of the CPRA, implied licensees and assignees of

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rights under the CPRA, and closely related parties under Manetti-Farrow, Inc. v. Gucci

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America, Inc., 858 F.2d 509 (9th Cir. 1988). Doc. 154 at 10-20. AMA contends that

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these arguments lack merit because Defendants’ infringing conduct and operation of

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Porn.com have nothing to do with the CPRA or GIM. Doc. 157 at 9-21.

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The Court previously found that the CPRA’s forum selection clause applies to

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AMA’s copyright claims and otherwise is valid and enforceable. Doc. 126 at 5-11,

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14-17. These findings were not disturbed on appeal. See Doc. 147-1. Having considered

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the supplement briefs and relevant case law, the Court now finds that Defendants have

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standing to enforce the CPRA’s forum selection clause because they are closely related to

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the contractual relationship between AMA and GIM. The Court therefore will grant the

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renewed motion to dismiss. Given this ruling, the Court need not consider Defendants’

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The Court previously had dismissed the claims against GLP for lack of personal
jurisdiction. Docs. 64 at 7-8, 126 at 2 n.1. This ruling was not addressed on appeal.
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other arguments for enforcing the forum selection clause.

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II.

Legal Standard.

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Interpretation and enforcement of forum selection clauses are procedural issues to

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be decided under federal law. See Manetti-Farrow, 858 F.2d at 513; TAAG Linhas

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Aereas de Angola v. Transamerica Airlines, Inc., 915 F.2d 1351, 1353 (9th Cir. 1990).

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The Supreme Court has instructed that such clauses are presumptively valid and should

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not be set aside unless the party challenging the clause “clearly show[s] that enforcement

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would be unreasonable and unjust, or that the clause [is] invalid for reasons such as fraud

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or overreaching.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972). Courts

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decline to enforce forum selection clauses “[o]nly under extraordinary circumstances

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unrelated to the convenience of the parties[.]” Atl. Marine Constr. Co. v. U.S. Dist. Ct.

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for the W. Dist. of Tex., 571 U.S. 49, 61 (2013).

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A motion to dismiss based on a forum selection clause is treated as an improper

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venue motion under Federal Rule of Civil Procedure 12(b)(3). See Argueta v. Banco

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Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). In ruling on a Rule 12(b)(3) motion,

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the pleadings are not accepted as true and the court may consider other evidence. Id.

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The court must resolve all factual conflicts and draw all reasonable inferences in favor of

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the non-moving party. See Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1138 (9th

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Cir. 2004); Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 455 (9th Cir.

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2007).

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III.

Discussion.

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Ordinarily, a contractual right may not be invoked by one who is not a party to the

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agreement. See EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002). In Manetti-

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Farrow, however, the Ninth Circuit held that “a range of transaction participants, parties

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and non-parties,” can benefit from a forum selection clause where their alleged conduct is

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“closely related to the contractual relationship.” 858 F.2d at 514 n.5 (citations omitted).

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In Holland America Line, the Ninth Circuit similarly held that a forum selection clause

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applied to non-parties where their actions were “part of the larger contractual

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relationship” between the parties to the agreement.

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Manetti-Farrow, 858 F.2d at 514 n.5). The evidence in this case, even when construed in

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AMA’s favor, shows that Defendants are so closely related to the contractual relationship

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between AMA and GIM that they have standing to invoke the CPRA’s forum selection

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clause.

485 F.3d at 456 & n.2 (citing

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AMA itself alleges that “Defendants Sagan Limited, Cyberweb Ltd., Netmedia

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Services, Inc., and David Koonar are each owners and/or operators of Porn.com and/or

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are doing business as Porn.com.” Doc. 16 ¶ 46. When AMA became a member of

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GIM’s Paidperview.com program in order to post videos on Porn.com, GIM necessarily

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involved Defendants in the CPRA. Porn.com is owned by Cyberweb and Sagan, not

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GIM. Docs. 67 at 2, 157 at 3-4. Cyberweb entered into an agreement with GIM to

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facilitate the operation of Porn.com, and GIM in turn subcontracted with Netmedia

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because GIM does not have the technical capacity to operate Porn.com or administer the

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Paidperview.com program. Docs. 117 at 8, 132 at 10. All technical aspects and day-to-

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day operation of both Porn.com and Paidperview.com is performed by Netmedia.

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Docs. 67 at 3, 117 at 3-4, 7. In short, AMA could not have posted its videos on Porn.com

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and benefited from the Paidperview.com program – the express purpose of the CPRA –

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without Defendants’ involvement.

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AMA’s assertion that Defendants are strangers to the CPRA is disproved by the

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record. Doc. 157 at 2. AMA notes that while the CPRA required GIM to develop and

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operate the websites featuring the AMA videos, Defendants – not GIM – own and

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operate Porn.com. Id. at 4-6, 13. AMA suggests that it had no knowledge or expectation

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that its videos would be posted on Porn.com pursuant to the CPRA, but this plainly is

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incorrect. The evidence shows that AMA entered into the CPRA for the specific purpose

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of having its videos displayed on Porn.com, not GIM-owned websites, and that AMA

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knew Porn.com was owned and operated by Cyberweb and Netmedia. Shortly before

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entering into the CPRA, AMA’s president, Adam Silverman, asked a colleague to check

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out “a submission prog[ram] for porn.com that also includes a payout for views,” and the

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colleague responded that he “was keen to get our videos on porn.com.” Doc. 38-3 at 6

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(emphasis added). Mr. Silverman stated in a declaration that “[i]n September 2012,

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AMA entered into a content partnership agreement with GIM for revenue sharing on

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content posted on Porn.com.” Doc. 33-2 ¶ 17 (emphasis added); see also Doc. 34-1 ¶ 22

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(“AMA previously entered into a [CPRA] for promotional materials to be posted on

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Porn.com. The [CPRA] is with GIM[.]”); Doc. 38-1 ¶ 22 (same). Mr. Silverman

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testified that “[w]hen AMA signed up for the [CPRA] for Porn.com, AMA

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representatives had direct contact with . . . Netmedia regarding initiating the program.”

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Doc. 38-1 ¶ 29 (emphasis added).

Further, when AMA had questions about user-

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uploaded videos under the Paidperview.com program, AMA communicated with

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representatives of Netmedia and Cyberweb. Doc. 83-1. Contrary to AMA’s assertion,

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the parties intended that AMA’s videos would be posted on Porn.com pursuant to the

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CPRA, and AMA knew that the site was not actually operated by GIM.

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Defendants Cyberweb, Netmedia, and Sagan are not only involved in the

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operation of Porn.com, they are, as AMA acknowledges, closely related entities. Indeed,

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AMA asserts that Koonar is the “common thread” among these entities and the “driving

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and guiding force behind Porn.com.” Doc. 117 at 8. Koonar is the president of the

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holding company that owns all of GIM and 50% of Cyberweb. Id. He is also the

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president of GIM and Netmedia. Id. Sagan is a Seychelles corporation and is listed as

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the owner-operator of Porn.com in Porn.com’s terms of service and a form filed with the

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U.S. Copyright Office. Docs. 16 ¶ 3, 38 at 3 n.1.

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In short, there can be no doubt that Defendants are all closely related to the

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contractual relationship created by the CPRA – the relationship under which AMA

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sought to have its materials displayed on Porn.com. Several cases in the Ninth Circuit

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have held that parties closely related to a contractual relationship may benefit from the

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contract’s forum selection clause. See Manetti-Farrow, 58 F.2d at 514 & n.5 (applying

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the forum selection clause in a dealership contract to the signatory defendants’ parent

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company, foreign affiliate, and individual directors where their alleged tortious conduct

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was closely related to the contractual relationship); Holland Am. Line, 485 F.3d at 456

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& n.2 (finding that a forum selection applied to the signatory defendant’s foreign

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affiliates because their alleged conduct was tied to the contract); see also TAAG, 915 F.2d

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at 1353 (“Transamerica Corporation and the individual defendants . . . do not object to

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being governed by the forum selection clause . . . . It is not unreasonable or unjust to

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enforce the clause even though some of them did not sign the agreement.” (citing

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Manetti-Farrow, 58 F.2d at 514 n.5)); In re Yahoo! Inc. Customer Data Sec. Breach

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Litig., No. 16-MD-02752-LHK, 2017 WL 3727318, at *51 (N.D. Cal. Aug. 30, 2017)

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(“[T]he allegations in the [complaint] make clear that the negligence claim against Yahoo

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is ‘closely related’ to the contractual relationship between foreign users and Yahoo

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subsidiaries, and that the Court must evaluate and ‘interpret’ this contractual relationship

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to resolve Plaintiffs’ negligence claim. Therefore, applying Ninth Circuit precedent, the

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Court determines that Yahoo ‘should benefit from and be subject to the forum-selection

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clauses.’” (quoting TAAG, 915 F.2d at 1354)); Robeson v. Twin Rivers Unified Sch. Dist.,

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No. CIV. 2:14-2 WBS KJN, 2014 WL 1392922, at *3 (E.D. Cal. Apr. 9, 2014) (finding

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that the individual defendants’ conduct was closely related to the plaintiff’s employment

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pursuant to her contract with the school district where she alleged that all defendants

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conspired together); Dawson v. Cagle Cartoons, Inc., No. 2:13-CV-0610 KJM KJN,

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2013 WL 4829317, at *7 (E.D. Cal. Sept. 9, 2013) (finding that the defendant was closely

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related to the contractual relationship where the plaintiff alleged that he was part of the

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joint venture and common enterprise).

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The Court further finds that Defendant Koonar may avail himself of the forum

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selection clause. As noted, he is the president of GIM, Netmedia, and the holding

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company that owns all of GIM and 50% of Cyberweb. Doc. 117 at 8. “With one

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exception, every district court in our circuit that has considered whether to apply a forum-

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selection clause to a corporate officer . . . that was not part of the agreement . . . has

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enforced that forum-selection clause, provided the claims in the suit related to the

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contractual relationship.” Ultratech, Inc. v. Ensure NanoTech (Beijing), Inc., 108 F.

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Supp. 3d 816, 822 (N.D. Cal. 2015); see also Liberty City Church of Christ, Inc. v.

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Taylor, No. 5:12-CV-04392 EJD, 2013 WL 621792, at *2 (N.D. Cal. Feb. 15, 2013)

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(finding that any claims against a party employee relating to activities that occurred

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within the scope of his employment are subject to the employer’s forum selection clause).

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AMA contends that the range of transaction participants that may benefit from a

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forum selection clause under Manetti-Farrow is limited to third-party beneficiaries.

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Doc. 157 at 14. But AMA cites no legal authority to support this assertion, and the Ninth

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Circuit in Holland America applied the Manetti-Farrow doctrine without any mention of

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a third-party beneficiary status. 485 F.3d at 456. AMA asserts that in finding that a

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range of transaction participants should benefit from a forum selection clause, Manetti-

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Farrow cited a case involving third-party beneficiaries, Coastal Steel Corp. v. Tilghman

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Wheelabrator, Ltd., 709 F.2d 190 (3d Cir. 1983). Doc. 157 at 14. Manetti-Farrow

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actually quoted an Illinois district court case, Clinton v. Janger, 583 F. Supp. 284, 290

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(N.D. Ill. 1984), which in turn cited Coastal Steel. 858 F.2d at 514 n.5. Nothing in either

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of those cases, however, suggests that third-party beneficiaries are the only non-parties to

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the contract that may benefit from a forum selection clause. Coastal Steel held only that

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third-party beneficiary status is no basis for disregarding such a clause. 709 F.2d at 203.

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Clinton noted that the range of transaction participants encompasses third-party

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beneficiaries, but made clear that other non-parties to the contract may also enforce

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forum selection clauses.

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transaction participants, parties and non-parties, should benefit from and be subject to

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forum selection clauses. This is especially true where the non-party is a third party

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beneficiary of the disputed contract[.]” (citing Coastal Steel)).

583 F. Supp. at 290 (“[T]he cases hold that a range of

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In summary, the Court finds that Defendants have standing to enforce the CPRA’s

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forum selection clause. They are closely related to the contractual relationship between

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AMA and GIM, a relationship created for the purpose of posting AMA’s videos on

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Porn.com. The claims against Defendants Sagan, Cyberweb, Netmedia, and Koonar will,

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therefore, be dismissed for improper venue.

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IT IS ORDERED:

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1.

The renewed motion to dismiss based on forum non conveniens filed by

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Defendants Sagan Limited, Cyberweb Ltd., Netmedia Services Inc., and David Koonar

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(Doc. 154) is granted.

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2.

The claims asserted against Defendant GLP 5, Inc. are dismissed for lack of

personal jurisdiction (see Docs. 64 at 7-8, 126 at n.1).

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3.

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Dated this 24th day of October, 2018.

The Clerk shall terminate this action.

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