Verizon Trademark Services LLC et al v. The Producers, Inc. et al
Filing
173
ORDER granting 83 directNIC, Ltd.'s Motion to Dismiss. Signed by Judge Virginia M. Hernandez Covington on 8/18/2011. (KAK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
VERIZON TRADEMARK SERVICES, LLC
and VERIZON LICENCING COMPANY,
INC.,
Plaintiffs,
vs.
Case No. 8:10-cv-665-T-33EAJ
THE PRODUCERS, INC.; INTERCOSMOS
MEDIA GROUP, INC. d/b/a DirectNIC.
com; DIRECTNIC, LTD; DOMAIN
CONTENDER, LLC; SIGMUND J. SOLARES;
MICHAEL H. GARDNER; NOAH S. LIESKE;
and DOES 1-10,
Defendants.
/
ORDER
This matter comes before the Court pursuant to directNIC,
Ltd.’s Motion to Dismiss the Amended Complaint for Lack of
Personal Jurisdiction (Doc. # 83), filed on October 28, 2010.
Verizon Trademark Services, LLC and Verizon Licencing Company,
Inc. (collectively, “Verizon”) filed a Response in Opposition
to the Motion on November 12, 2010. (Doc. # 97). directNIC,
Ltd. filed a Reply Memorandum on February 3, 2011. (Doc. #
128).
Also, with leave of Court, Verizon filed a sealed
supplemental filing. Various declarations are also before the
Court.
For
the
reasons
that
follow,
the
Court
grants
directNIC, Ltd.’s Motion to Dismiss.
I.
Background
Verizon initiated this action against directNIC, Ltd.,
among other defendants, on March 19, 2010, and filed an
amended complaint, with leave of Court, on October 7, 2010.
(Doc. # 68).
Verizon, a Delaware entity with its principal
place of business in Arlington, Virginia, alleges that the
defendants violated the Lanham Act, 15 U.S.C. § 1125(d), by
cybersquatting.
Essentially,
Verizon
contends
that
the
defendants have violated Verizon’s trademark and service mark
rights by the registration of, trafficking in, and use of
Verizon-related Internet second-level domain names without
Verizon’s authorization. (Doc. # 68).
directNIC,
Ltd.,
a
Cayman
Islands
company
with
its
principal place of business in Grand Cayman, Cayman Islands,
seeks to be dismissed from this action on the basis of lack of
personal jurisdiction.
II. Legal Standard
A court must dismiss an action against a defendant over
which it has no personal jurisdiction.
Smith v. Trans-
Siberian Orchestra, 689 F. Supp. 2d 1310, 1312 (M.D. Fla.
2010)(citing Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209,
1214 n.6 (11th Cir. 1999)). Whether the court has personal
jurisdiction over a defendant is governed by a two-part
analysis.
Cable/Home Commc’n Corp. v. Network Prod., Inc.,
902 F.2d 829, 855 (11th Cir. 1990).
First, the court must determine whether the plaintiff has
alleged facts sufficient to subject the defendant to Florida's
-2-
long-arm statute.
Future Tech. Today, Inc. v. OSF Healthcare
Sys., 218 F.3d 1247, 1249 (11th Cir. 2000).
“When a federal
court uses a state long-arm statute, because the extent of the
statute is governed by state law, the federal court is
required to construe it as would the state’s supreme court.”
Lockard v. Equifax, Inc., 163 F.3d 1259, 1265 (11th Cir.
1998).
Second, once the court has determined that the long-arm
statute is satisfied, the court must determine whether the
exercise of jurisdiction over the defendant comports with the
Constitution's requirements of due process and traditional
notions of fair play and substantial justice.
Inc.
v.
Century
Arts,
94
F.3d
623,
626
Sculptchair,
(11th
Cir.
1996)(quoting Int'l Shoe Co. v. Wash., 326 U.S. 310, 316
(1945)). In assessing personal jurisdiction, each defendant’s
contacts with the forum state must be weighed individually.
Calder v. Jones, 465 U.S. 783, 790 (1984).
III. Analysis
A.
Florida Long-Arm Statute
The burden-shifting scheme outlined in Walt Disney Co. v.
Nelson, 677 So. 2d 400 (Fla. 5th DCA 1996) applies in this
case:
The burden of demonstrating the applicability of §
48.193 may initially be met by pleading facts
-3-
within a jurisdictional basis contained in the
statute. If the plaintiff has pled a prima facie
case for jurisdiction, a simple motion to dismiss
for lack of jurisdiction must fail, as a motion to
dismiss without more, challenges only the facial
sufficiency of the jurisdictional pleading. If,
however, the defendant supplements the motion with
an affidavit contesting jurisdiction, then the
burden returns to the plaintiff who must, by
affidavit or other sworn statement, prove a
sufficient jurisdictional basis.
Id. at 402 (internal citations omitted); see also Future Tech.
Today, Inc., 218 F.3d at 1249. When the plaintiff’s complaint
and
supporting
evidence
conflict
with
the
defendant’s
affidavits, the Court must construe all reasonable inferences
in favor of the plaintiff.
Madara v. Hall, 916 F.2d 1510,
1514 (11th Cir. 1990); Meier ex rel. Meier v. Sun Int’l
Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002).
In the amended complaint, Verizon alleges that personal
jurisdiction over directNIC, Ltd. exists because it “conducted
systematic and continuous business with Florida acting as part
of
a
consolidated
group
of
companies
that
operate
the
registrar business that uses the domain name directNIC.com.
This consolidated group of companies has an office located in
Tampa, Florida.” (Doc. # 68 at ¶ 14).
Verizon contends that
the Court has both general and specific jurisdiction over
directNIC, Ltd.
directNIC, Ltd. has challenged Verizon’s jurisdictional
allegations by filing declarations. Thus, the burden has been
-4-
shifted back to Verizon to prove a sufficient jurisdictional
basis.
1.
directNIC,
directNIC, Ltd.’s Evidence
Ltd.’s
Chief
Technical
Officer,
Macallum, submitted two declarations in this action.
James
In his
first declaration, filed October 28, 2010, Macallum provided
the following testimony, which bears on personal jurisdiction:
(1) directNIC, Ltd.’s office is located in Grand Cayman; (2)
directNIC, Ltd.’s computer servers are located in the Cayman
Islands and Toronto, Canada.
directNIC, Ltd. maintains no
computer servers in the State of Florida; (3) directNIC, Ltd.
“does not now, and never has had, any employees or agents
located in the State of Florida;” (4) directNIC, Ltd. has no
property located in the State of Florida; (5) directNIC, Ltd.
does not maintain an office on the State of Florida; (6)
directNIC, Ltd. has never purchased or sold goods in Florida,
engaged in or solicited business in Florida, or advertised in
Florida; (7) directNIC, Ltd. does not pay taxes in the State
of Florida; (8) directNIC, Ltd. has never maintained a lawsuit
in Florida and has never availed itself of the benefits or
protections of the laws of Florida; (9) directNIC, Ltd. has no
Florida mortgages; and (10) directNIC, Ltd. has not and does
not operate, conduct, engage in or carry on business within
the State of Florida. (Doc. # 85).
-5-
Macallum filed a supplemental declaration on February 3,
2011, in which he provided the following statements concerning
directNIC, Ltd.: (1) directNIC, Ltd. “maintains separate daily
operations and operates under a trade and business license
issued by the Cayman authorities to carry on its business of
providing domain name registration services;” (2) directNIC,
Ltd. contracts with its customers under its registered name
for all domain name registration transactions; (3) directNIC,
Ltd. is adequately capitalized and observes all required
corporate formalities from its principal place of business in
the Cayman Islands; (4) directNIC, Ltd. maintains separate
business departments, bank accounts, and corporate records
from
the
other
named
defendants
in
this
case;
and
(5)
“Throughout the time of directNIC, Ltd. providing domain name
registration
service[s],
an
aggregate
total
million domain names were registered.
of
over
1.5
From this total,
Plaintiffs allege that 2 were sold to the Florida Residents
(e.g. Defendants Solares, Gardner, and Lieske), which equates
to
0.000133
percent
of
directNIC,
Ltd.’s
overall
registrations.” (Doc. # 130).
2.
Verizon’s Evidence
Just as the Court allowed directNIC, Ltd. to tender two
rounds of evidentiary support for its jurisdictional position,
the Court has allowed Verizon two bites at the proverbial
-6-
apple.
Verizon’s initial submission, the declaration of its
attorney, Anne F. Bradley, Esq. and supporting exhibits (Doc.
# 98), is not helpful to the Court.1
However, Verizon’s second submission, filed under seal,
contains
some
pertinent
information.
Therein,
Verizon
provides the Court with evidence that directNIC, Ltd. hired
KeyPath LLC, a Delaware company with its principal place of
business in Tampa, Florida, to perform the following services
for directNIC, Ltd.: programming, general administrative,
customer service, marketing, software development, strategic
planning,
accounting,
finance,
legal,
bookkeeping, and many other services.
human
resources,
The contract states
that it is to be construed in accordance with Florida law.
In
addition,
Verizon
has
supplied
the
Court
with
testimony that directNIC, Ltd. has at least one bank account
in Florida, and KeyPath has access to that bank account and
uses the bank account to pay directNIC, Ltd.’s bills.
3. Specific Jurisdiction
Verizon
jurisdiction
contends
over
that
this
directNIC,
Court
Ltd.
has
pursuant
specific
to
§
48.193(1)(a),(d) of Florida’s long-arm statute, which reads:
1
Attorney Bradley’s initial declaration is little more
than her summarization of various internet searches that she
performed regarding the defendants’ collective activities.
-7-
(1) Any person . . . who . . . does any of the acts
enumerated in this subsection thereby submits
himself . . . to the jurisdiction of the courts of
this state for any cause of action arising from the
doing of any of the following acts:
(a) Operating, conducting, engaging in, or carrying
on a business or business venture in this state or
having an office or agency in this state.
. . . .
(d) Contracting to insure any person, property, or
risk located within this state at the time of
contracting.
Fla. Stat. § 48.193(1)(a),(d). Specific jurisdiction, whether
based on operating a business in Florida, contracting to
insure risks in Florida, or any of the other specific items
enumerated
in
§
48.193(1)(a)
requires
“some
direct
affiliation, nexus, or substantial connection between the
cause of action and the defendant’s activities within the
state.”
Venezia Amos, LLC v. Favret, Case No. 3:07-cv-146-
MCR, 2008 U.S. Dist. LEXIS 10452, at *16
2008).
(N.D. Fla. Feb. 12,
That is, a court may exercise specific jurisdiction
over a non-resident defendant only when the plaintiff’s cause
of action arises from or is directly related to a defendant’s
contacts with the forum state. Stubbs v. Wyndham Nassau
Resort, 447 F.3d 1357, 1360 (11th Cir. 2006).
a.
Contracting to Insure Risks in Florida
Verizon argues that the Court has specific jurisdiction
over directNIC, Ltd. because directNIC, Ltd. entered into a
written contract with KeyPath to insure both property and
-8-
risks located in Florida.
Specifically, Verizon indicates
that sections 2.1(c) and 4.2(e) of the contract, which follow,
are agreements to insure:
[directNIC, Ltd.] hereby expressly and irrevocably
agrees to defend, indemnify and hold KP free and
harmless at all times from and against any and all
losses, costs, damages, claims, expenses (including
reasonable attorneys’ fees and costs at all
tribunal levels), suits, demands, judgments, or
otherwise relating to or in any way associated with
the performance or nonperformance of [directNIC,
Ltd.’s] duties and efforts hereunder, including,
without limitation, with respect to any acts,
omissions, negligence and/or misrepresentations,
regardless or their kind or nature, as a legal
representative or a certified public accountant.
. . .
Any additional expenses incurred by KP or any
affiliates thereof in performing the Services
hereunder shall be reimbursed to KP by [directNIC,
Ltd.] not later than ten (10) business days after
delivery of written notice of such additional
expenses by KP to directNIC, Ltd. Such expenses
shall include, but shall not be limited to . . .
The cost of any equipment, supplies, tools and/or
materials used while performing any part of the
Service including, but not limited to, freight,
labeling and documentation, storage and packing
charges, VAT, excise, and other taxes, tariffs, and
other
government
charges,
insurance,
import
licenses, permits, and labor and handling.
The Court has read the contract carefully and determines
that the contract in question does not support a finding that
directNIC,
Ltd.
has
contracted
“to
insure
any
person,
property, or risk located within this state [of Florida] at
the time of contracting.”
Fla. Stat. § 48.193(1)(d). The
contract language that Verizon points to can be described as
-9-
boilerplate language in which directNIC, Ltd. agrees to defend
and indemnify KeyPath in the event of a lawsuit.
This
language is incidental to the main purpose of the contract.
The contract in question is one in which KeyPath agrees to
perform certain services for directNIC, Ltd., including but
not limited to advertising, customer relations, bookkeeping,
and management in exchange for compensation.
The contract is
not an insurance contract.
In addition, Verizon’s reference to language in which
directNIC, Ltd. agrees to reimburse KeyPath for equipment,
supplies, and the cost of insurance does not amount to a
“contract to insure.”
Therefore, the Court declines to
exercise personal jurisdiction over directNIC, Ltd. on that
basis that directNIC, Ltd. contracted to insure risks in
Florida.
b.
Carrying on a Business in Florida
Next, Verizon argues that directNIC, Ltd. is subject to
specific jurisdiction under the long-arm statute because it,
personally or through its agent, KeyPath, is “[o]perating,
conducting, engaging in, or carrying on a business or business
venture in this state.”
Fla. Stat. § 48.193(1)(a).
In Future Tech. Today, Inc., 218 F.3d at 1249, the court
remarked, “In order to establish a defendant is ‘carrying on
business’ for purposes of the long-arm statute, the activities
-10-
of the defendant must be considered collectively and show a
general course of business activity in the state for pecuniary
benefit.” (citing Fla. Stat. § 48.193(1)(a)).
It is axiomatic that a corporation “is an artificial
entity that can act only through agents.” Palazzo v. Gulf Oil
Corp., 764 F.2d 1381, 1385 (11th Cir. 1985).
This Court must
determine whether KeyPath (or any other entity) was directNIC,
Ltd.’s agent and whether it can be said that directNIC, Ltd.
is subject to personal jurisdiction in Florida due to such
agent’s activities in Florida.
Verizon argues that directNIC, Ltd. engaged in business
dealings in Florida through KeyPath.
However, the Court is
not convinced that KeyPath is directNIC, Ltd.’s “agent.”
Macallum, directNIC, Ltd.’s Chief Technical Officer, stated in
his declaration: “directNIC, Ltd. does not now, and never has
had, any employees or agents located in the State of Florida.”
(Doc. # 85 at ¶ 10). Further, in the contract between KeyPath
and directNIC, Ltd., KeyPath is classified as an “independent
contractor.”
Underscoring that point, the parties agree in
the contract:
[directNIC, Ltd.] and KP each acknowledge and agree
that the relationship between them is that of
independent contractor, that neither party shall
have any authority to represent or bind the other,
and that neither party shall hold itself out or
have any authority as agent of the other for any
purpose whatsoever. Nothing herein shall be
-11-
construed as creating an agency, joint venture,
employer--employee or other type of relationship,
other than that of independent contractor, between
[directNIC, Ltd.] and KP.
Neither KP nor any
affiliate thereof shall have the authority to
conclude contracts on behalf of [directNIC, Ltd.],
or otherwise to bind [directNIC, Ltd.] in any
manner whatsoever . . .
In its sealed memorandum, Verizon argues that the Court
should look beyond the terms of the contract to find an agency
relationship.
However, Florida case law requires specific
facts to support a finding of agency, and those facts are
neither alleged nor evidenced here.
In Rogers v. Omni
Solution, Inc., Case No. 10-cv-21588, 2011 U.S. Dist. LEXIS
24178, at *8, (S.D. Fla. Mar. 9, 2011), the court explained
that
to
demonstrate
an
actual
agency
relationship,
“a
plaintiff must allege (1) that the principal acknowledges that
the reputed agent was acting as its agent; (2) that the
reputed agent accepts that undertaking; and (3) that the
principal
exerts
control
over
the
agent’s
day-to-day
activities during the course of the agency relationship.”
(citing Ocana v. Ford Motor Co., 992 So. 2d 319, 326 (Fla. 3d
DCA 2008)); see also Jones v. City of Hialeah, 368 So. 2d 398,
400 (Fla. 3d DCA 1979)(the test of agency is fact-specific and
determined, among other things, by the amount of control and
direction
the
principal
exerts
over
the
conduct
of
the
purported agent); Goldschmidt v. Holman, 571 So. 2d 422, 424
n.5 (Fla. 1990)(enumerating the elements of actual agency).
-12-
In addition, to successfully allege an apparent agency,
a plaintiff must demonstrate: “(1) a representation by the
purported principal; (2) reliance on that representation by a
third party; and (3) a change in position by the third party
in reliance on the representation.” Ocana, 992 So. 2d at 326.
Apparent
agency
arises
when
the
principal
creates
the
appearance of an agency relationship: “[a]pparent authority
does not arise from the subjective understanding of the person
dealing with the purported agent, nor from appearances created
by the purported agent himself.” Id. (internal quotation marks
and citation omitted).
Verizon does not allege facts establishing either actual
or apparent agency.
In addition, the parties’ contract
expressing their intent not to create an agency relationship
is persuasive. As an independent contractor, KeyPath performs
various duties in Florida, such as accounts payable and
bookkeeping functions.
In addition, KayPath pays directNIC,
Ltd.’s bills from directNIC, Ltd.’s Florida bank account.
However, these functions, without more, do not amount to an
agency and do not constitute evidence that directNIC, Ltd. is
carrying on a business venture in Florida through KeyPath as
its agent.
Thus, the Court will evaluate directNIC, Ltd.’s actions,
separate and apart from KeyPath, to determine whether it is
-13-
carrying on a business in Florida.
In Horizon Aggressive
Growth, L.P. v. Rothstein-Kass, P.A., 421 F.3d 1162, 1167
(11th Cir. 2005), the Court listed some “relevant, but not
dispositive,” factors to consider when evaluating whether a
defendant is carrying on a business in Florida: (1) the
presence and operation of an office in Florida; (2) the
possession and maintenance of a license to do business in
Florida; (3) the number of Florida clients served; and (4) the
overall revenue gleaned from Florida clients.
In the present case, each of these factors militates
against Verizon.
Verizon alleged in the amended complaint
that directNIC, Ltd. has an office in Florida.
directNIC,
Ltd. responded by filing a sworn declaration stating that
directNIC, Ltd. does not have an office in Florida.
That
shifted the burden back to Verizon to persuade the Court that
directNIC, Ltd. does have such an office.
Verizon has failed
to do so. There is simply no evidence on file that directNIC,
Ltd. has an office in Florida.
In addition, the record lacks evidence that directNIC,
Ltd. possesses a Florida business license, and there is no
evidence on file tending to show that any revenues were
gleaned from Florida clients.
Verizon has not come forward
with evidence to contest Macallum’s declaration statement that
“[t]hroughout the time of directNIC, Ltd. providing domain
-14-
name registration service[s], an aggregate total of over 1.5
million domain names were registered.
From this total,
Plaintiffs allege that 2 were sold to the Florida Residents
(e.g. Defendants Solares, Gardner, and Lieske), which equates
to
0.000133
percent
of
directNIC,
Ltd.’s
overall
registrations.” (Doc. # 130).
In Florida, long-arm statutes are strictly construed,
see, e.g., Bank of Wessington v. Winters Gov’t Sec. Corp., 361
So. 2d 757, 759 (Fla. 4th DCA 1978), and the language of the
statute does not support a finding that directNIC, Ltd.,
directly or through an agent, carries on a business venture in
this state.
Thus, the Court concludes that directNIC, Ltd.
was not engaged in a business venture in Florida such that it
would support the exercise of specific personal jurisdiction
under Florida Statute § 48.193(1)(a).
4.
General Jurisdiction
General jurisdiction arises from a defendant’s contacts
with the forum that are not necessarily related to the cause
of action being litigated.
Consol. Dev. Corp. v. Sherritt,
Inc., 216 F.3d 1286, 1293 (11th Cir. 2000).
Florida’s long-
arm statute permits a court to exercise general jurisdiction
over a defendant “who is engaged in substantial and not
isolated activity within this state . . . whether or not the
-15-
claim
arises
from
that
activity.”
Florida
Statute
§
48.193(2).
The continuous and systematic contacts sufficient to
confer general jurisdiction present a “much higher threshold”
than
those
contacts
jurisdiction.
necessary
to
support
specific
Seabra v. Int’l Specialty Imp’s, Inc., 869 So.
2d 732, 734 (Fla. 4th DCA 2004); see also Croft v. Lewis, Case
No. 8:09-cv-1370-T-27AEP, 2010 U.S. Dist. LEXIS, at *9-10
(M.D. Fla. Apr. 1, 2010)(no general jurisdiction over a
foreign
corporation
in
trademark
case
even
considering
defendants’ website in combination with 6% of gross worldwide
sales to Florida residents.)
The Court has not been supplied with evidence tending to
show that directNIC, Ltd. has engaged in continuous and
systematic contacts with Florida.
directNIC,
Ltd.’s
declaration
Verizon has not countered
statements
that
it
has
employees, property, or computer servers in Florida.
addition,
Verizon
declaration
Florida,
has
not
challenged
statements
that
it
has
engaged
in
or
has
never
directNIC,
never
sold
solicited
Florida, and has never paid taxes in Florida.
no
In
Ltd.’s
goods
in
business
in
The fact that
directNIC, Ltd. has a bank account in Florida does not carry
the day. Nor does the fact that directNIC, Ltd.’s contract
with KeyPath contain a provision stating that such contract is
-16-
governed by Florida law.
Thus, the Court does not find
general jurisdiction over directNIC, Ltd.
5.
Alter Ego and Mere Instrumentality
It is not contested that: (1) defendant The Producers,
Inc. is a Florida corporation; (2) defendants Michael Gardner,
Noah Lieske, and Sigmund Solares reside in Florida; and (3)
directNIC, Ltd. is a subsidiary of The Producers, Inc.
As a general principle, personal jurisdiction over a
Florida parent corporation (such as The Producers, Inc.) will
not equate to personal jurisdiction over a foreign subsidiary
(such as directNIC, Ltd.). See Hobbs v. Don Mealey Chevrolet,
Inc., 642 So. 2d 1149, 1155-56 (Fla. 5th DCA 1994).
An
exception arises when the foreign subsidiary is merely the
alter ego or mere instrumentality of the Florida parent
corporation,
over
jurisdiction. Id.
which
the
Court
does
have
personal
Verizon asserts that this Court should
exercise jurisdiction over directNIC, Ltd. because it is
merely an alter ego or mere instrumentality of The Producers,
Inc. or of another Florida defendant in this case (i.e,
Gardner, Lieske, and Solares).
Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114,
1120-21 (Fla. 1984), governs this Court’s analysis.
the Court noted:
-17-
There,
The corporate veil will not be penetrated . . .
unless it is shown that the corporation was
organized or employed to mislead creditors or to
work a fraud upon them.
Every corporation is
organized as a business organization to create a
legal entity that can do business in its own right
and on its own credit as distinguished from the
credit and assets of its individual stockholders.
The mere fact that one or two individuals own and
control the stock structure of a corporation does
not lead inevitably to the conclusion that the
corporate entity is a fraud that is necessarily the
alter ego of its stockholders to the extent that
the debts of the corporation should be imposed upon
them personally. If this were the rule, it would
completely destroy the corporate entity as a method
of doing business and it would ignore the
historical
justification
for
the
corporate
enterprise system.
Id. (quoting Advertects, Inc. v. Sawyer Indus., Inc., 84 So.
2d 21, 23-24 (Fla. 1955)).
Thus, under Florida law, Verizon must allege both that
directNIC, Ltd. was used for an improper purpose and that
directNIC, Ltd. was an alter ego or mere instrumentality of
The Producers, Inc. or another Florida defendant. Along these
lines, the Eleventh Circuit has recognized that “Florida law
allows a party to pierce the corporate veil and hold a parent
corporation liable for its subsidiary’s actions if it can
demonstrate
first,
that
the
subsidiary
was
a
mere
instrumentality of the parent and that the parent engaged in
improper conduct through its organization or use of the
subsidiary.” Seb S.A. v. Sunbeam Corp., 148 F. App’x 774, 800
(11th
Cir.
2005)(internal
citations
-18-
and
quotation
marks
omitted).
When alter ego is alleged in an effort to satisfy
Florida’s long-arm statute, the Court, once again, engages in
a burden-shifting scheme. Bellairs v. Mohrmann, 716 So. 2d
320, 232 (Fla. 2d DCA 1998).
In an attempt to allege alter ego jurisdiction over
directNIC, Ltd., Verizon contends in the amended complaint,
“Plaintiffs are informed . . . that at all times material to
this action, each of the Defendants and the False Identities,
was
the
agent,
servant,
employee,
partner,
alter
ego,
subsidiary, or joint venturer of each of the other Defendants
and
False
Identities
and
that
the
acts
of
each
of
the
Defendants and each of the False Identities were in the scope
of such relationship.” (Doc. # 68 at ¶ 86).2
This Court is
not
the
convinced
that
Verizon
has
satisfied
pleading
requirements of Dania Jai-Alai, but will conduct its analysis
assuming that such elements have been articulated in the
amended complaint.
In
response
to
Verizon’s
alter
ego
allegations,
directNIC, Ltd. filed its present Motion to Dismiss and the
declarations of Macallum.
directNIC, Ltd. concedes that the
amended complaint alleges that directNIC, Ltd. was used for an
2
In the amended complaint, Verizon defines the “False
Identities” as “shell companies,” which follow: “NOLDC, Inc.,
Spiral Matrix, Kenyatech a/k/a Kentech, Speedy Web, Unused
Domains, and Belize WHOIS Service, LT.” (Doc. # 68 at ¶ 81).
-19-
improper purpose–-cyberquatting. However, directNIC, Ltd. has
provided the Court with uncontested declaration statements
tending to negate the allegation that directNIC, Ltd. was a
mere instrumentality or alter ego of any other entity or
individual. Macallum’s declaration indicates that directNIC,
Ltd. observes its corporate formalities (including keeping
corporate minutes and
passing resolutions) in the Cayman
Islands, maintains a separate bank account from the other
defendants
in
this
case,
maintains
separate
business
departments and corporate records from the other defendants in
this case, and is adequately capitalized. (Doc. # 130).
In
its
response
to
the
Motion
to
Dismiss,
Verizon
represents that the “Company Defendants” (including directNIC,
Ltd.) have (1) “directly registered domain names that are
confusingly similar to Plaintiffs’ trademarks which form the
basis for this lawsuit;” (2) “operate an office in Tampa,
Florida;” and (3) solicit domain name business in Florida
through a “highly interactive website.” (Doc. # 97 at 2).
In
addition, Verizon has pointed out some common ownership and
leadership
between
the
“Company
3
Defendants.”3
However,
The Producers, Inc. is currently the parent company of
directNIC, Ltd. (Doc. # 85 at ¶ 14).
The Producers, Inc.
formerly owned defendant Intercosmos Media Group (“IMG”).
(Doc. # 84 at ¶ 29-32). From 2001, to 2008, IMG listed the
domain name directnic.com and operated as an ICANN accredited
domain name registrar. (Doc. # 84 at 14-16). In January 2009,
IMG transferred its ICANN accreditation to directNIC, Ltd.
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Verizon has not come forward with any evidence to support its
allegation of mere instrumentality or alter ego with respect
to directNIC, Ltd.
As noted above, the fact that directNIC, Ltd. is a
subsidiary
of
a
Florida
company
does
not
equate
to
jurisdiction over directNIC, Ltd. Likewise, directNIC, Ltd.’s
affiliation with various Florida defendants does not lead to
an automatic finding of alter ego or mere instrumentality
jurisdiction
over
directNIC,
Ltd.
This
Court
will
not
consider the actions of other defendants in this case as the
actions of directNIC, Ltd. for the purposes of conducting a
jurisdictional analysis.
This Court is loathe to pierce the
corporate veil and will not do so unless the plaintiff has
satisfied the requirements enunciated in Dania Jai-Alai, 450
So. 2d at 1120-21.
(Doc. # 85 at ¶ 8). When directNIC, LLC was formed, it was a
wholly owned subsidiary of The Producers, Inc. (Doc. # 84 at
¶ 9). In 2007, ownership of directNIC, LLC was transferred to
IMG. Id.
Further, Domain Contender is a wholly owned
subsidiary of directNIC, LLC. Id. at ¶ 10-11). In addition,
Gardner, Lieske, and Solares are or were the officers,
directors, managing members or owners of IMG, directNIC, Ltd.,
directNIC, LLC, The Producers, Inc., and Domain Contender.
(Doc. # 97 at 4). However, personal jurisdiction over
directNIC, Ltd. is not established merely because directNIC,
Ltd. and another defendant, subject to personal jurisdiction,
shared officers and directors, had a unified goal, and
performed services for one another. See Gadea v. Star Cruises,
Ltd., 949 So. 2d 1143, 1146 (Fla. 3d DCA 2007).
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This Court has determined that the Florida long-arm
statute has not been satisfied. Nevertheless, this Court will
briefly
discuss
militate
salient
against
due
process
exercising
concerns
also
jurisdiction
personal
which
over
directNIC, Ltd.
B. Due Process
1. Minimum Contacts
In
the
amended
complaint,
Verizon
alleges
that
the
“Company Defendants” established sufficient minimum contacts
with Florida by operating a registrar business that sells
commercial
domain
name
registration
services
to
Florida
residents, including Gardner, Lieske, and Solares, through the
website at directnic.com. (Doc. # 68 at ¶ 80, 89, 90, 95, 97,
Exh. 11, 12, 16).
“This website, which is accessible in
Florida, allows Florida residents to create accounts, process
payments, manage domain name portfolios, and web hosting
configurations,
and
manage
technical
support
requests.
(Bradley Decl. ¶ 13).” (Doc. # 97 at 17).
In determining whether sufficient minimum contacts exist
with the state of Florida, the Court assesses whether the
defendant has purposefully availed itself of the privilege of
conducting activities in the forum state, thus invoking the
benefits and protections of its laws.
Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475 (1985). The purposeful availment
-22-
requirement ensures that a defendant will not be hauled into
a jurisdiction solely as a result of random, fortuitous, or
attenuated contacts, or of the unilateral activity of another
party or third person. Id.
In the Motion to Dismiss, directNIC, Ltd. argues that,
rather than “minium contacts,” it has “no contacts” with
Florida. (Doc. # 83 at 19).
In response to the Motion to
Dismiss, Verizon improperly lumps together certain defendants
under the title “the Company Defendants” and argues,
“As the
alter egos of TPI [The Producers, Inc.], and the Florida
Residents
[Gardner,
Liesks,
Defendants
[including
sufficient
contacts
and
directNIC,
with
Solares],
Ltd.]
Florida
to
jurisdiction.” (Doc. # 97 at 17).
arguments
on
the
existence
of
the
have
the
Company
established
support
personal
Verizon focuses its
offending
website:
directnic.com.
First,
the
Court
rejects
Verizon’s
attempt
to
lump
certain defendants together under the moniker “the Company
Defendants” in an effort to establish that the acts of one
corporate defendant constitute the acts of another corporate
defendant.
Verizon’s arguments aggregate a number of the
defendants together, and in this jurisdictional analysis, the
Court must assess the actions of each defendant separately,
especially because the Court has determined that Verizon’s
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alter ego theory is unsuccessful.
Second,
the
Court
determines
that
the
offending
interactive website, which Verizon collectively attributes to
directNIC, Ltd. and the other defendants in this case, does
not show that directNIC, Ltd. purposefully directed activity
at the forum state. Verizon relies upon Zippo Manufacturing
Co. v. Zippo DOT com, 952 F. Supp. 1119, 1124 (W.D. Penn.
1997).
That case, which is persuasive but not binding,
describes the spectrum of Internet business for the purpose of
conducting a jurisdictional analysis: “at one end of the
spectrum
are
situations
where
a
defendant
clearly
does
business over the Internet.
If the defendant enters into
contracts
a
with
residents
of
foreign
jurisdiction
that
involve the knowing and repeated transmission of computer
files over the Internet, personal jurisdiction is proper.” Id.
At the other end of the spectrum are defendants who have
“simply posted information on an Internet website which is
accessible to users in foreign jurisdictions.” Id.
Verizon contends that the interactive website in question
is at one end of the spectrum, and directNIC, Ltd. argues that
the website is at the other end of the spectrum.
In Zippo,
the district court was persuaded that the defendant’s conduct
over the Internet constituted purposeful availment into the
forum
state
because
the
defendant
-24-
“contracted
with
approximately 3,000 individuals and seven Internet access
providers in [the forum state].
transactions
has
been
the
The intended object of these
downloading
of
the
electronic
messages that form the basis of this suit.” Id. at 1126.
Recently reviewing a district court’s jurisdictional
determination, the Eleventh Circuit applied a common-sense
test concerning the presence of an interactive website and
ultimately
determined
that
the
district
court
erred
in
exercising specific personal jurisdiction over a foreign
defendant. Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d
1210, 1219-1224 (11th Cir. 2011).
In that case, the Eleventh
Circuit commented on the Zippo case but did not adopt its
sliding-scale framework for evaluating contacts with the forum
state through a website. Id. at 1219-1220.
As stated in Goforit Entm’t, LLC v. Digitalmedia.com
L.P., 513 F. Supp. 2d 1325, 1329 (M.D. Fla. 2007), “[T]he
Internet
does
not
provide
cause
to
abandon
traditional
principles guiding the personal jurisdiction analysis.”
Regardless of the presence of a website, this Court must
evaluate the defendant’s actions in relation to the forum
state and determine whether purposeful availment exists.
The
Internet activity in this case, even under Zippo, does not
establish minimum contacts with the forum state.
In Zippo,
the court found personal jurisdiction appropriate in light of
-25-
thousands of contracts in the forum state through the website.
In contrast, Verizon has not contested directNIC, Ltd.’s
declaration statement that: “Throughout the time of directNIC,
Ltd.
providing
aggregate
total
registered.
sold
to
the
domain
of
name
over
registration
1.5
million
service[s],
domain
names
an
were
From this total, Plaintiffs allege that 2 were
Florida
Residents
(e.g.
Defendants
Solares,
Gardner, and Lieske), which equates to 0.000133 percent of
directNIC, Ltd.’s overall registrations.” (Doc. # 130).
In
addition,
the
non-Internet
activity
alleged
(specifically, the presence of a bank account in Florida and
the existence of a contract with Florida company KeyPath
governed
under
Florida
law)
does
not
constitute
minimum
contacts with Florida.
2. Fair Play and Substantial Justice
Considerations of fair play and substantial justice also
weigh against finding personal jurisdiction over directNIC,
Ltd. The Court must balance the burdens on directNIC, Ltd. in
litigating in the forum state against various countervailing
considerations, which include (1) the interests of the forum
state; (2) the plaintiff’s interest in obtaining relief; (3)
judicial
economy;
and
(4)
social
policy.
World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980).
These considerations do not leave the Court with the
-26-
impression that Florida is the proper forum for the action.
Neither Plaintiff is from Florida, and the amended complaint
does not allege an injury to a Florida resident.
Thus, the
forum state has little, if any, interest in the prosecution of
this suit.
In addition, there are no public policy or
judicial economy concerns raised by the parties that favor
exercising personal jurisdiction over directNIC, Ltd.
Accordingly, it is hereby
ORDERED, ADJUDGED, and DECREED:
Directnic, LTD’s Motion to Dismiss the Amended Complaint
for Lack of Personal Jurisdiction (Doc. # 83) is GRANTED.
DONE and ORDERED in Chambers in Tampa, Florida, this 18th
day of August, 2011.
Copies:
All Counsel of Record
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