Universal Grading Service et al v. EBay, Inc. et al
MEMORANDUM AND OPINION transferring case to Northern District of California. Ordered by Senior Judge Charles P. Sifton on 6/10/2009. Case transferred to the Northern District of California via ECF. ALL FILINGS ARE TO BE MADE IN THE TRANSFER COURT, DO NOT DOCKET TO THIS CASE. (Abdallah, Fida)
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------X Universal Grading Service, John Callandrello, Joseph Komito and Vadim Kirichenko, individually and on behalf of others similarly situated, Plaintiffs, - against eBay, Inc., American Numismatic Association, Professional Numismatists Guild, Inc., and Barry Stuppler & Company, LLC, Defendants. ----------------------------------------X SIFTON, Senior Judge. Plaintiffs Universal Grading Service ("USG"), John Callandrello, Joseph Komito and Vadim Kirichenko commenced this putative class action1 on August 29, 2008 against defendants eBay, Inc. ("eBay"), American Numismatic Association ("ANA"), Professional Numismatists Guild, Inc. ("PNG"), and Barry Stuppler 08-CV-3557 (CPS) MEMORANDUM OPINION AND ORDER
Plaintiffs describe two putative classes in their Second Amended Complaint ("SAC"). The first class includes "all companies and individuals who provide coin grading services on [sic] the market for coin auctions to the public at large and who have not been certified by eBay as `the authorized grading company' pursuant to eBay's Counterfeit Currency and Stamps policy and who are interested in pursuing this lawsuit." SAC ¶ 82. The class period is from January 2004 to the present. Id. ¶ 83. The second class includes "all U.S. based eBay account holders who utilized coin grading services to sell coins on eBay to the public at large which have not been certified by eBay as `the authorized grading companies' pursuant to eBay's Counterfeit Currency and Stamps policy and who, as a result, have not been able to list their coins on eBay as `certified' and who are interested in pursuing this lawsuit." Id. ¶ 92. The class period for the second class runs from the date on which eBay instituted its Counterfeit Currency and Stamps policy to the present. Id. ¶ 93.
-2& Company, LLC ("Stuppler Co.").2 Plaintiffs allege that
defendants committed antitrust violations of the Sherman Act, 15 U.S.C. §§ 1 and 2, and the Donnelly Act, N.Y. Gen. Bus. Law § 340, and assert New York common-law claims for civil conspiracy and trade libel. They seek damages, preliminary and permanent Presently
injunctive relief, and attorney's fees and costs.
before this Court are defendants' motions to dismiss plaintiffs' Second Amended Complaint ("SAC") pursuant to Rules 12(b)(2) (lack of personal jurisdiction), 12(b)(3) (improper venue), and 12(b)(6) (failure to state a claim) of the Federal Rules of Civil Procedure, and, in the alternative, to transfer venue pursuant to 28 U.S.C. § 1404(a), as well as plaintiffs' motion to strike certain documents and arguments from the record. For the reasons
set forth below, this action is transferred to the United States District Court for the Northern District of California. BACKGROUND The following facts are drawn from the SAC, as well as the parties' affidavits and exhibits filed in connection with this motion. For the purposes of this motion, the facts alleged in
the SAC are taken as true. Plaintiff UGS is a limited liability company organized and operating under the laws of New Jersey and maintaining its
To date, defendant Stuppler Co. has not entered an appearance in this
-3principal place of business there. the business of grading coins. Id. SAC ¶ 2. Plaintiff UGS is in
Plaintiff Callandrello is
the president of UGS, as well as a shareholder in the company. Id. ¶ 3; Declaration of John Callandrello dated April 24, 2009, at ¶ 2. Plaintiffs Komito and Kirichenko are individual coin
dealers residing in New Jersey and New York, respectively, who engage in the business of buying and selling coins in forums including, but not limited to, the Internet via defendant eBay. Id. ¶¶ 4-5. Defendant ANA is a federally chartered not-for-profit Internal Revenue Code § 501(c)(3) entity that acts as "the preeminent trade association in the numismatic hobby and the multi-billion dollar industry associated with the numismatic hobby." Id. ¶ 6. ANA's members are coin collectors, many of
whom are sellers of certified coins in online auction market. Id. ¶ 7. ANA's official grading service, to which "active ANA
members may submit coins for grading directly," is NGC, one of eBay's authorized graders. Id. ¶ 70. ANA maintains its
headquarters in Colorado, but has members throughout the United States and does business in New York. Id. ¶ 6. At all relevant
times, Barry S. Stuppler was a member of defendant ANA's Board of Governors, Chairman of the ANA's Consumer Protection Committee, and is currently the President of defendant ANA. Id.
-4Defendant PNG is a foreign corporation that "consists of coin dealers" and does business throughout the United States. Id. ¶¶ 9-11. PNG maintains a website at www.pngdealers.com, Id. ¶ 10. In
which is accessible to Internet users in New York.
addition, defendant PNG has about 20 coin dealers located in New York, which are listed on its website as PNG dealers. Id. ¶ 12.
These 20 coin dealers are all representatives or agents of PNG. Id. Defendant Stuppler Co., a company based in California, represents on its website that it facilitates coin sales and purchases, including via defendant eBay. Id. ¶¶ 15-16.
Defendant Stuppler Co. also sells certified coins on eBay and represents on its website that it has been an "eBay power seller" for over five years. Id. ¶ 16. Stuppler Co. is a member of
several grading services, as well as a member and/or director of defendant PNG and founder of the PNG "Internet rules committee." Id. ¶ 17. Defendant eBay is a foreign corporation that provides a forum for the purchase and sale of merchandise, including coins, over the Internet. Id. ¶ 18. At all relevant times, plaintiffs
UGS and Callandrello have graded coins that were bought and sold over eBay, or bought and sold coins on eBay as a substantial part of their business activities. Id. ¶ 18. There have been no
-5customer complaints about the authenticity of coins graded by plaintiff UGS and listed on eBay. Id. ¶ 24.
In 2001, defendant PNG formed a group known as the "Internet rules committee," which is composed of coin industry insiders including the following: Barry Stuppler, in his capacity as
then-ANA Governor and chairman of the ANA Consumer Protection Committee; Doug Winter, a PNG dealer; and R. Steven Ivy, a Principal of Heritage Solution, one of the largest coin auctioneers in the United States. Id. ¶ 25. According to
plaintiffs, from 2001-2004, a primary purpose of the "Internet rules committee" was "to interfere with and obstruct the ability" of smaller coin grading services, including plaintiff UGS, to participate in the then-burgeoning coin marketplace on eBay. To this end, the "Internet rules committee" formally and informally accused plaintiffs of selling counterfeit coins and otherwise engaging in fraudulent conduct. Id. Id.
In 2004, defendants ANA and eBay officially formed the "Coins Community Watch group" (the "CCW"), describing it as "a collaborative effort among a team of [h]obby experts, the ANA, and eBay for the purpose of combating misrepresented or fraudulent listings involving coins and other numismatic items." Id. ¶ 26; see also id. Ex. B at 1 (ANA Consumer Awareness publication dated April 2006 including citation). The industry
experts of which the CCW was composed included the same
-6individuals that made up the "Internet rules committee." ¶ 29. Id.
An ANA publication describes CCW procedure as follows: (1)
CCW experts or members of the eBay community submit reports of potentially fraudulent or misrepresented listings to the CCW; (2) reports corroborated by two or more CCW experts are submitted to the ANA for further review; (3) the ANA verifies the claims and tries to resolve the issues with the sellers; (4) unresolved issues are referred to eBay for an appropriate remedy. at 2. Id. Ex. B
On August 30, 2004, defendant eBay conducted a workshop
entitled the "Coins Community Watch Program," in which it described the CCW program in a similar manner. Id. ¶¶ 27-28.
In 2006, defendant PNG, in conjunction with the Industry Council for Tangible Assets ("ICTA") and led by defendant Stuppler Co., commissioned a survey of rare coin authentication and grading services. Id. ¶ 30. The survey respondents were
asked for their professional opinions of 11 grading services based on 12 different, weighted criteria, such as grading and authentication accuracy. Id. The survey results were publicized
on defendant PNG's website, defendant ANA's website, defendant Stuppler Co.'s website, and elsewhere. Id. Smaller, more
economical coin grading services, like plaintiff UGS, were deliberately excluded from the survey by defendant PNG, whose members were aware that such exclusion would have an adverse economic effect on such companies and their dealers. Id. Small
-7coin grading services like plaintiff UGS were never referenced in the survey. Id. ¶ 31.
On September 17, 2007, defendant eBay, "in complicity with" defendants ANA and PNG, promulgated a new policy that created standards under which coins sold via eBay may be listed as "certified" coins (the "Policy"). Id. ¶ 33. The Policy was
enacted pursuant to defendant ANA's recommendations and was based on, among other things, the 2006 coin grading survey commissioned by defendant PNG and spearheaded by defendant Stuppler Co. ¶ 39. Id.
The Policy permits only coins that have been graded by one
of five "approved" grading services (referred to by plaintiffs as "NGC, NCS, PCGS, ICG, and ANACS") to be listed for sale on eBay as "certified" coins. Id. ¶ 34. In addition, under the Policy,
defendant eBay designated coins that were not graded by the "approved" grading services as "counterfeit." Id. ¶ 35.
Therefore, under the Policy, coins graded by plaintiff UGS and other small grading companies cannot be listed or sold on eBay as "certified" coins and are referred to as "counterfeit" by defendant eBay. Id. ¶ 36. According to plaintiffs, the policy
reflects input from "big" coin grading companies faced with the challenge of competing with smaller coin grading companies like plaintiff UGS. Id. ¶ 43. Plaintiffs also allege that the Policy
"arose from a history of prejudice and animosity on the part of Defendant ANA (led by Barry Stuppler and PNG (led by Barry
-8Stuppler and Ivy) against smaller grading services like Plaintiff UGS." Id. ¶ 51. On September 18, 2007, defendant ANA publicly announced the new Policy in a press release that was published and remains posted on its website. of press release). Id. ¶¶ 40, 47; see also id. Ex. F (copy
Defendant ANA prefaced the identification of
the grading services qualifying for the certified classification (which did not include plaintiff UGS) by defining consumer fraud as involving a seller's "desire, ability, and opportunity." Id.
Defendant ANA then stated that the new eBay/ANA/PNG Policy was an effort to "try to remove the opportunity" to commit consumer fraud. Id. The press release contains a link to the 2006
grading services survey, which does not elicit any opinion as to plaintiff UGS. Id. ¶ 48.
After the institution of the Policy, coin sellers like plaintiff Komito who utilized eBay to list coins not graded by "approved" grading services were notified directly by defendant eBay that their listed products had been "removed because [they] violated the eBay Counterfeit Currency and Stamps policy. . . . eBay does not permit the sale of currency that is improperly described, fraudulent or counterfeit." Id. ¶¶ 36, 44. The
subject line of defendant eBay's emails to these third-party dealers states: "eBay Listing Removed: Counterfeit Currency and Stamps." Id. ¶¶ 36, 41; see also id. Ex. D (copy of October 13,
-92007 email from defendant eBay to coin dealer who attempted to list a coin graded by plaintiff UGS bearing cited subject line). Bidders on removed listings are also notified of the listing's cancellation for violation of the Policy. Id. ¶¶ 44-45.
Plaintiff UGS's listings disclose that UGS is the grading entity for the advertized coin(s), and bidders on cancelled UGS listings are therefore on notice that the cancelled listings relate to coins graded by plaintiff UGS. Id. ¶ 49.
According to plaintiffs, the "certified" designation is critical in the market for numismatics. Id. ¶ 45. Plaintiffs
allege that the Policy has already caused defendant eBay's customers to assume that dealers who use plaintiff UGS's services trade in counterfeit coins, thereby harming plaintiffs by making it less likely that customers will purchase UGS-graded coins and less likely that dealers will send coins to UGS for certification for fear that their auctions will be cancelled. Id.; see also
id. Ex. E (eBay discussion thread dated October 10, 2007, in which one poster criticizes the policy because it "distorts [the] marketplace by implying that `everything' in the approved slabs3 is the truth and `nothing' in the non-approved slabs is true").
3 A "slab" is "an archival plastic holder used for encapsulating coins . . . issued by grading services for coins that can be graded and assigned a numeric value. The slab has the date, grade, mintmark, issuing service name and ID, quality and any special notes such as PL for `ProofLike.'" See Dictionary of Terms Used in Numismatics & Coin Collecting, available at http://www.coinresource.com/guide/dictionary2.htm (last visited Mar. 12, 2009).
- 10 Plaintiffs Komito and Kirichenko possess thousands of coins graded by plaintiff UGS and other "unauthorized" grading companies that cannot now be sold on eBay. Id. ¶ 46. Since
enactment of the Policy, plaintiff Komito has lost all of his United States customers and sustained a pecuniary loss of $300,000. Id. ¶¶ 186-87. In the same period, plaintiffs UGS and
Callandrello have suffered substantial pecuniary harm, lost valuable customers, and seen a general diminution in business. Id. ¶ 53. 180. Prior to defendant eBay's September 17, 2007 enactment of the "Policy," a previous policy was in place under which coin dealers trading coins graded by plaintiff UGS were favored sellers on eBay. Id. ¶ 52. Under the previous policy, plaintiff Their business reputations have also suffered. Id. ¶
UGS listed its coins on eBay without authenticity complaints or other incident for almost three years. Id. Over 5,000 of
plaintiff UGS's coins were listed on eBay by an individual named Paul Reine, and were not the subject of any customer complaints. Id. Mr. Reine had a 99.8% positive feedback rate with respect to Id.; see also id. Ex. G (copy of
UGS-graded coins sold on eBay.
Paul Reine's eBay feedback page). Plaintiffs allege that the eBay Policy "harms the competition in the relevant market -- the market for all online auctions of certified coins [in the United States]." Id.
- 11 ¶¶ 38, 67. According to plaintiffs, the market for online
auctions of certified coins is "virtually the only possible way for traders of certified coins to successfully introduce their product to public," and "eBay has a monopoly in the market for on-line auctions in the United States." Id. ¶¶ 68, 72.
Plaintiffs allege that the policy harms competition in the relevant market "by prohibiting consumers and dealers from purchasing or dealing in certified coins graded by any coin grading service except for the ones listed in eBay's policy." Id. ¶¶ 37, 42. According to plaintiffs, defendants' conduct has
"reduced output in the market for online auctions of certified coins" and has "caused [an] increase in current and future prices for certified coins, to the detriment of customers, and [has] thereby reduced customer demand for certified coins." Id. ¶ 75.
In addition, it has "allowed five authorized graders to maintain market power (collectively to control virtually 100% share) in the market for the sale of certified coins." Id. ¶ 79. Absent
defendants' conduct, plaintiffs allege that they would be able to participate in the relevant market, which "would force the five authorized graders to improve their own cost structures and performance." Id. ¶ 76.
Plaintiffs commenced this action by filing their initial complaint on August 29, 2008. On February 6, 2009, defendants
ANA, PNG, and eBay moved to dismiss the First Amended Complaint
- 12 ("FAC"). On February 24, 2009, plaintiffs moved for leave to
amend the FAC, and on April 1, 2009, I granted leave to file the SAC and permitted the moving defendants to file additional letter briefs addressing the new allegations in the SAC. DISCUSSION I. Jurisdiction Of the defendants, only defendant PNG has moved to dismiss the claims against it for lack of personal jurisdiction.4 Because the defense of lack of personal jurisdiction is waived if not timely asserted, see Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinée, 456 U.S. 694, 704 (1983) (noting that unlike subject matter jurisdiction, the failure to raise personal jurisdiction is waived if not timely raised in an answer or responsive pleading), I need only determine whether I have personal jurisdiction over defendant PNG. A. Standard for Motion to Dismiss for Lack of Personal Jurisdiction "The requirement that federal courts have personal jurisdiction over the litigants before them arises from an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations." Arar v. Ashcroft, 532 F.3d 157,
173 (2d Cir. 2008) (quoting Burger King Corp. v. Rudzewicz, 471
None of the parties dispute that I have subject matter jurisdiction over this action, as it arises under the federal antitrust laws.
- 13 U.S. 462, 471-72 (1985)) (internal quotation marks omitted). In
opposing a motion to dismiss for lack of personal jurisdiction, "the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Kernan v. Kurz-Hastings, Inc.,
175 F.3d 236, 240 (2d Cir. 1999) (internal citation omitted). However, prior to discovery, the plaintiff need only make a prima facie showing of jurisdiction. See Jazini v. Nissan Motor Co.,
148 F.3d 181, 184 (2d Cir. 1998). "[A] prima facie showing of jurisdiction . . . means that plaintiff must plead facts which, if true, are sufficient in themselves to establish jurisdiction." Bellepointe, Inc. v.
Kohl's Dep't. Stores, Inc., 975 F.Supp. 562, 564 (S.D.N.Y. 1997). "Eventually, of course, the plaintiff must establish jurisdiction by a preponderance of the evidence, either at a pretrial evidentiary hearing or at trial. But until such a hearing is
held, a prima facie showing suffices, notwithstanding any controverting presentation by the moving party, to defeat the motion." Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 A court addressing a 12(b)(2) motion may
(2d Cir. 1981).
consider matters outside the pleadings, and the complaint and any affidavits are to be construed in the light most favorable to the plaintiff. 1997). PDK Labs v. Friedlander, 103 F.3d 1105, 1108 (2d Cir.
- 14 District courts resolving issues of personal jurisdiction engage in a two-part analysis. Bank Brussels Lambert v. Fiddler First,
Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999).
courts consider the application of state law, as "personal jurisdiction of a federal court over a non-resident defendant is governed by the law of the state in which the court sits[.]" Kronisch v. U.S., 150 F.3d 112, 130 (2d Cir. 1998) (citation omitted). Second, the court "must determine whether an exercise
of jurisdiction under these laws is consistent with federal due process requirements." Bank Brussels, 171 F.3d at 784 (citing
Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996)). Due process requires that an out-of-state
defendant have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v.
Wash., 326 U.S. 310, 316 (1945) (internal citation omitted). If the plaintiff fails to make the requisite showing, the court may dismiss the claims against the defendant(s) over which it lacks personal jurisdiction pursuant to Rule 12(b)(2). In
addition, the Second Circuit has held that a district court also has the "power to transfer venue even it if lacks personal jurisdiction over defendants," if the requirements of the governing statute, 28 U.S.C. § 1404(a), are met. Fort Knox
Music, Inc. v. Baptiste, 257 F.3d 108, 113 (2d Cir. 2001) (citing
- 15 Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962)). B. Whether Personal Jurisdiction Comports with State Law 1. Whether PNG "Transacted Business" in New York
Plaintiffs first allege that personal jurisdiction over defendant PNG exists because defendant PNG allegedly transacts business in New York, which is a ground under New York law for extending long-arm personal jurisdiction.5 A foreign domiciliary
like defendant PNG "transacts business" under § 302(a)(1) when it "`purposefully avails itself of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws.'" McKee Elec. Co. v. Rauland-Borg
Corp., 229 N.E.2d 604, 607 (N.Y. 1967) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Whether a defendant engaged
in purposeful activity within New York depends on the totality of the circumstances. See Sterling Nat'l Bank & Trust Co. v. A
Fidelity Mortgage Investors, 510 F.2d 870, 873 (2d Cir. 1975). single purposeful action directed at New York is sufficient, as
New York State's long-arm statute states, in pertinent part, that personal jurisdiction is permitted over a non-domiciliary who, in person or through an agent: (1) transacts any business within the state or contracts anywhere to supply goods or services in the state; or (2) commits a tortious act within the state . . . ; or (3) commits a tortious act without the state causing injury to person or property within the state . . . if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expect or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or (4) owns, uses or possesses any real property situated within the state. N.Y. C.P.L.R. 302(a).
- 16 long as it bears a substantial relationship to the cause of action. Bank Brussels, 171 F.3d at 787 (citing Parke-Bernet
Galleries, Inc. v. Franklyn, 256 N.E.2d 506, 507 (N.Y. 1970)). The defendant need not enter New York to be viewed as transacting business in the state. Kreutter v. McFadden Oil Corp., 522 However, a defendant's communication
N.E.2d 40, 43 (N.Y. 1988).
from another locale with a party in New York is generally not sufficient to establish personal jurisdiction. See Beacon
Enter., Inc. v. Menzies, 715 F.2d 757, 766 (2d Cir. 1983) (collecting cases); Slapshot Beverage Co. v. S. Packaging Mach., Inc., 980 F.Supp. 684, 687 (E.D.N.Y. 1997). Courts interpreting
§ 302(a)(1) have long held that there must be a close connection between the cause of action and the forum contacts allegedly maintained by the non-domiciliary. See, e.g., Beacon Enter., 715
F.2d at 763-64 (2d Cir. 1983) (there must be "substantial relationship" between transaction of business and instant cause of action). Plaintiffs argue that defendant PNG transacts business in New York through its website, www.pngdealers.com. "Depending on
their nature, a defendant's contacts with New York via the internet can provide a basis for jurisdiction under section 302(a)(1)." Knight-McConnell v. Cummins, No. 03 Civ. 5035, 2005
WL 1398590, at *2 (S.D.N.Y. June 13, 2005) (citation omitted). In assessing whether a defendant's online activities come within
- 17 the meaning of § 302(a)(1), courts examine "the nature and quality of commercial activity that [a defendant] conducts over the internet." Id. (quoting Zippo Mfg. Co. v. Zippo Dot Com, 952 The Knight-McConnell court
F.Supp. 1119, 1124 (W.D.Pa. 1997)).
characterized this inquiry as follows: Courts have identified a spectrum of potential website contacts with a forum state, ranging from "passive" websites, which merely display information and therefore are unlikely to support jurisdiction, to websites which clearly allow defendant to transact business in the forum state over the internet, and thus sustain jurisdiction. In the middle of the spectrum are interactive websites that allow the exchange of information between users in the forum state and the defendant, and which may be a basis for jurisdiction depending on the level and the nature of the exchange. When a case only involves online postings of information, rather than commercial transactions, it is unlikely that jurisdiction will be appropriate. . . . Instead, jurisdiction will lie only if the posting is intended to target or focus on internet users in the state where the cause of action is filed. Id. at *2-3 (internal citations and quotation marks omitted). In arguing that defendant PNG transacts business in New York via its website, plaintiffs rely on the following allegations: (1) PNG's website is accessible to every internet-connected computer in New York (and indeed, worldwide); (2) on its website, PNG lists approximately 20 PNG coin dealers based in New York; (3) on its website, PNG invites potential dealers to join it, specifically by inviting visitors to contact a PNG representative at PNG headquarters at a specific phone number and/or email address, and by providing a downloadable membership application; (4) PNG's website "allows its visitors to communicate with the
- 18 [sic] PNG's host computer"; and (5) on its website, PNG invites visitors to join PNG's email list. See SAC ¶¶ 10-14.
Even when viewed together in the light most favorable to plaintiffs, plaintiffs' allegations do not show that defendant PNG's website "clearly allow[s] defendant to transact business" in New York. Nor do the allegations show that defendant PNG's The only way in
website is more than minimally interactive.
which plaintiffs allege that website visitors may exchange information with defendant PNG online is by providing PNG with their email addresses, which allows them to receive PNG's newsletter. Other than permitting this modest interaction, PNG's
website merely informs visitors of how to contact PNG via telephone or postal mail. In addition, plaintiffs have alleged
no facts permitting an inference that PNG's website specifically targets New York residents. Under these circumstances, defendant
PNG's website activity does not rise to the level of transacting business in New York within the meaning of § 302(a)(1).6 Because
6 In support of its argument that PNG transacted business via its website, plaintiffs cite a number of cases in which courts determined that they had personal jurisdiction under § 302(a) based on a defendant's website. Several of these cases involve different subsections of § 302(a), however, such as the "tortious act" subsections, which have different requirements and standards for a finding of personal jurisdiction than the "transacting business" subsection at issue here and are therefore distinguishable. See, e.g., Starmedia Network, Inc. v. Star Media, Inc., No. 00 CIV 4647, 2001 WL 417118 (S.D.N.Y. Apr. 23, 2001) (finding that moderately interactive website implied that defendant had "used its website to attract and service business across the nation, including in New York," and that defendant therefore "should have reasonably expected that its [out-of-state tortious act] would have consequences in New York"). In addition, the websites considered in the cases cited by plaintiffs were generally more interactive and commercial in nature than the website at issue here, and thus are of limited guidance. See Hsin Ten Enter. USA, Inc. v. Clark Enter., 138 F.Supp.2d 449, 456 (S.D.N.Y.
- 19 I have determined that defendant PNG did not transact business in New York, I need not consider whether plaintiffs' claims arise out of an alleged business transaction. 2. Whether PNG's Alleged Tortious Act Confers Personal Jurisdiction
Alternatively, plaintiffs argue that this Court has personal jurisdiction over defendant PNG because it committed a tortious act outside New York that caused injury in New York. Section
302(a)(3) of New York's long-arm statute provides that the Court may exercise jurisdiction over a non-domiciliary who: commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce[.] N.Y. C.P.L.R. § 302(a)(3). Plaintiffs appear to argue that I may
exercise personal jurisdiction over defendant PNG under § 302(a)(3) because PNG committed the tort of defamation when it posted information on its website containing allegedly false and
2000) (holding that foreign defendant had transacted business in New York via its website, where its website "enable[d] the viewer to purchase [products] online, download an order form, download an application to become an `independent affiliate', and ask questions of an online representative"); Citigroup Inc. v. City Holding Co., 97 F.Supp.2d 549, 564 (S.D.N.Y. 2000) (finding that foreign defendant transacted business in New York where its website allowed New York customers to apply for loans on the Internet, electronically "chat" with an online representative, and e-mail questions to the defendant and receive a rapid response).
- 20 misleading statements about plaintiffs and their business, i.e., a description of the 2006 coin grader survey and its results. However, section 302(a)(3) expressly excludes defamation claims from its scope of application. See, e.g., Guardino v. Am. Sav. &
Loan Ass'n of Fla., 593 F.Supp. 691, 695 (E.D.N.Y. 1984) ("Section 302(a)(3) . . . explicitly excludes defamation of character from the tortious acts that are a basis for long arm jurisdiction."). Accordingly, plaintiffs have not shown that
§ 302(a)(3) confers personal jurisdiction over defendant PNG on this Court. As plaintiffs point out, however, an act of defamation occurring outside of New York may give rise to personal jurisdiction under § 302(a)(1) even though it is specifically excluded from § 302(a)(3). Courts have found personal
jurisdiction in cases where a defendant's out-of-state conduct involved defamatory statements projected into New York and causing injury in New York, but only where the conduct involved "much more contact with New York than the mere solicitation of New Yorkers as one aspect of producing the defamatory material." D'Amato v. Starr, No. CV-06-2429, 2007 WL 895787, at *1 (E.D.N.Y. Mar. 22, 2007). Rather, "personal jurisdiction over a
nondomiciliary defendant in a defamation action has been sustained under CPLR 302(a)(1) where the action arises out of a defendant's transaction of business in New York." Montgomery v.
- 21 Minarcin, 693 N.Y.S.2d 293, 295 (N.Y. App. Div. 1999). As previously discussed, plaintiffs have failed to show that defendant PNG transacts business in New York via its website. The posting of allegedly defamatory statements on a website, without more, is not a transaction of business within the meaning of § 302(a)(1). "When a case only involves online postings of
information, rather than commercial transactions, it is unlikely that jurisdiction will be appropriate." WL 1398590, at *2. Knight-McConnell, 2005
"The mere fact that the allegedly defamatory
postings may be viewed in New York is . . . insufficient to sustain a finding of jurisdiction." Best Van Lines v. Walker,
No. 03 Civ. 6585, 2004 WL 964009, at *5 (S.D.N.Y. May 5, 2004). Instead, "jurisdiction will lie only if the posting is intended to target or focus on internet users in the state where the cause of action is filed." Seldon v. Direct Response Techs., No. 03
Civ. 5381, 2004 WL 691222 at *4-5 (S.D.N.Y. Mar. 31, 2004). Here, plaintiffs have neither shown that the posting of the allegedly defamatory statements was closely related to a business transaction, nor that the posting was specifically targeted to New York residents. Accordingly, plaintiffs have not shown that
personal jurisdiction under § 302(a)(1) exists by virtue of defendant PNG's allegedly defamatory website postings. 3. Whether Personal Jurisdiction Comports with Due Process
Having determined that this Court does not have personal
- 22 jurisdiction over defendant PNG under New York law, I need not consider whether exercising such jurisdiction would comport with federal requirements of due process. However, for reasons stated
below, in lieu of dismissing plaintiffs' claims against defendant PNG for lack of personal jurisdiction, I exercise my discretion to transfer those claims to the Northern District of California. II. Venue Defendant eBay argues that plaintiffs' claims should be dismissed, or, in the alternative, transferred because they have brought suit in an improper venue. Specifically, defendant eBay
allegedly accepted by plaintiffs Callandrello and Komito7
There is no dispute that plaintiff UGS never became an eBay user, and thus never accepted the eBay User Agreement. In addition, in its reply papers, defendant eBay withdrew its motion to dismiss or transfer for improper venue with regard to plaintiff Kirichenko, on the grounds that plaintiff Kirichenko accepted eBay's user agreement in 2002, when the agreement did not contain a forum selection clause, and in order "to avoid a long drawn out pleading battle over whether Kirichenko is bound by the revisions to the User Agreement." See Def. eBay Reply (Venue) at 1 n.1. According to defendant eBay, plaintiff Callandrello has been a registered user of eBay's services since at least December 13, 2005, under the name "jerseyshorecoins." Second Mandella Decl. ¶ 4. The e-mail listed in connection with plaintiff Callandrello's account is firstname.lastname@example.org. Id. In addition, plaintiff Komito states that he has been "selling . . . coins on
- 23 contains a forum selection clause that applies to "any claim or controversy at law or equity that arises out of this Agreement or [eBay's] services (`Claims')" and provides that such claims "shall be resolved in accordance with one of the subsections below or as otherwise mutually agreed upon in writing by the parties." Id. ¶ 3; id. Ex. A (copy of 2003 User Agreement) ¶ 17.
The relevant subsections provide for arbitration, alternative dispute resolution, and litigation, further specifying that claims must be resolved "using the dispute resolution mechanism that is selected in accordance with this Section by the first party to file a Claim." Id. Ex. A ¶ 17. The subsection that
provides for litigation states that "any Claim may be adjudicated by a court of competent jurisdiction located in Santa Clara County, California or where the defendant is located (in [eBay's] case San Jose, California, and in [the user's] case [the user's] home address or principal place of business). [The user] and
eBay agree to submit to the personal jurisdiction of the courts located within the county of Santa Clara, California." Id.
Defendant eBay alleges that this version of the User Agreement was in force from May 25, 2003 until on or after December 12,
eBay for the past ten (10) years." Declaration of Jospeh Komito dated January 15, 2009 (attached as Exhibit K to the FAC) ("Komito Decl.") ¶ 2. According to defendant eBay, while eBay cannot find a record of plaintiff Komito having registered with eBay, plaintiff Komito could not have sold coins on eBay unless he had first registered with eBay and accepted the terms of the User Agreement in force at that time. Declaration of David Mandella dated February 4, 2009 ("First Mandella Decl.") ¶ 8.
- 24 2005. Id. ¶ 2.8 Based on the User Agreement, defendant eBay argues that when plaintiffs Callandrello and Komito elected to pursue their claims through litigation, they were obliged pursuant the User Agreement's dispute resolution provisions to file their claims in a court located in Santa Clara County, California. Accordingly,
defendant eBay argues that plaintiffs Callandrello and Komito's claims against it should be dismissed for improper venue pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure, or in the alternative, transferred to a court in Santa Clara County, California.9
The User Agreement has been subsequently amended. In its moving papers, defendant eBay submitted the copy of the User Agreement that was then in force, which states that it "became effective on August 13, 2008, for current users, and upon acceptance for new users. The previous amendment to this Agreement was effective for all users on July 9, 2007." First Mandella Decl. Ex. A (copy of then-current User Agreement). This Court's review reveals the User Agreement has been subsequently amended from the 2008 version initially submitted by defendant eBay. See "Your User Agreement," available at http://pages.ebay.com/help/policies/user-agreement.html? (last visited May 11, 2009). In its most recent submission, however, eBay alleges that "[e]very person who registered to user eBay's services on or after May 25, 2003 agreed to [the dispute resolution provisions contained in the 2003 User Agreement] or substantially identical provisions." Second Mandella Decl. ¶ 3. While at various times in its submissions, defendant eBay argues that the most recent version of the User Agreement should control, plaintiffs dispute this conclusion, and in its Reply, defendant eBay has relied on the 2003 version of the User Agreement in order "to avoid a long drawn out pleading battle over whether [plaintiffs are] bound by the revisions to the  User Agreement[.]" Def. eBay Reply (Venue) at 1 n.1. Given my conclusion below that the forum selection clause contained in the 2003 User Agreement is presumptively enforceable with regard to certain plaintiffs and all defendants, I need not determine whether the later versions of the User Agreement control here. The Second Circuit has declined to designate a single clause of Rule 12(b) under which a party must request dismissal of a suit based on a forum selection clause. See Asoma Corp. v. SK Shipping Co., Ltd., 467 F.3d 817, 822 (2d Cir. 2006) ("The Supreme Court has not specifically designated a single clause of Rule 12(b) as the proper procedural mechanism to request dismissal of a suit based upon a valid forum selection clause, nor have we.") (internal
- 25 A. Standard for Motion to Dismiss for Improper Venue Based on Forum Selection Clause On a Rule 12(b)(3) motion to dismiss for improper venue, the plaintiff bears the burden of making a prima facie case by alleging facts which, if true, would support the court's exercise of jurisdiction. While defendants bring their claim for
dismissal pursuant to a forum selection clause as a Rule 12(b)(3) motion, the Second Circuit "has adopted a clear framework for ruling on such claims regardless of the procedural mechanism utilized." Thibodeau v. Pinnacle FX Inv., No. 08-CV-1662, 2008
WL 4849957, at *3 (citing Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 822 (2d Cir. 2006). part analysis:  The first inquiry is whether the clause was reasonably communicated to the party resisting enforcement.  The second step requires us to classify the clause as mandatory or permissive, i.e., to decide whether the parties are required to bring any dispute to the designated forum or simply permitted to do so.  Part three asks whether the claims and parties involved in the suit are subject to the forum selection clause. If the forum clause was communicated to the resisting party, has mandatory force and covers the claims and parties involved in the dispute, it is presumptively enforceable.  The fourth, and final, step is to ascertain whether the resisting party has rebutted the presumption of enforceability by making a sufficiently strong showing that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.
quotation marks and citation omitted). However, courts in the Second Circuit routinely consider requests to enforce a forum selection clause via Rule 12(b)(3) motions to dismiss for improper venue. See, e.g., Phillips v. Audio Active, Ltd., 494 F.3d 378, 384 (2d Cir. 2007) (affirming dismissal of complaint pursuant to Rule 12(b)(3) based on forum selection clause).
This framework consists of a four-
- 26 Phillips v. Audio Active, Ltd., 494 F.3d 378, 383-84 (2d Cir. 2007) (internal quotation marks and citations omitted). The
moving party must provide evidence sufficient to satisfy the first three factors and establish that the forum selection clause is presumptively enforceable. Thibodeau, 2008 WL 4849957, at *3.
The burden then shifts to the non-moving party to make a strong showing that overcomes the presumption of enforceability. *4. In considering a 12(b)(3) motion, courts may review materials outside of the pleadings. See Jockey Int'l, Inc. v. Id. at
M/V "Leverkusen Express", 217 F.Supp.2d 447, 450-51 (S.D.N.Y. 2002); J.B. Harris, Inc. v. Razei Bar Indus., Ltd., 37 F.Supp.2d 186, 189 (E.D.N.Y. 1998). When analyzing plaintiff's preliminary
prima facie showing, the facts must be viewed in the light most favorable to the plaintiff. New Moon Shipping Co., Ltd. v. MAN B "A disputed fact
& W Diesel AG, 121 F.3d 24, 29 (2d Cir. 1997).
may be resolved in a manner adverse to the plaintiff only after an evidentiary hearing." Id. (citing CutCo Indus. v. Naughton, The determination of whether
806 F.2d 361, 365 (2d Cir. 1986)).
an evidentiary hearing is necessary is within the sound discretion of the district court. Stair v. Calhoun, No.
07-CV-03906, 2009 WL 792189, at *5 (E.D.N.Y. Mar. 23, 2009) (citing Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1139 (9th Cir. 2004)).
- 27 B. Whether Venue is Proper In order to make out their prima facie case that venue is proper, plaintiffs Callandrello and Komito must allege facts
sufficient to show that the forum selection clause does not require dismissal of their claims against defendant eBay. I
consider the four factors relevant to this determination in turn below. 1. Reasonable Communication
The legal effect of a forum selection clause depends upon "whether its existence was reasonably communicated to the plaintiff." Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 9 (2d "A forum selection clause stated
Cir. 1995) (citations omitted).
in clear and unambiguous language . . . is considered reasonably communicated to the plaintiff in determining its enforceability." Novak v. Tucows, Inc., No. 06-CV-1909, 2007 WL 922306, at *7 (E.D.N.Y. Mar. 26, 2007) (quoting Vitricon, Inc. v. Midwest Elastomers, Inc., 148 F.Supp.2d 245, 247 (E.D.N.Y. 2001)). Plaintiffs contend that the forum selection clause at issue here was not "reasonably communicated" to them on two principal grounds. First, plaintiffs argue that the clause was not
reasonably communicated to them because they had an inadequate opportunity to review it when they accepted the User Agreement in force at the time they became eBay users by checking a box on the online eBay registration form. Second, plaintiffs argue that the
- 28 forum selection clause was not reasonably communicated to them because it is ambiguous. Because a clause cannot be "reasonably
communicated" if it is ambiguous, I consider plaintiff's second argument first. Plaintiffs argue that the forum selection clause at issue here is ambiguous because, according to them, it may be interpreted to preclude federal jurisdiction, and plaintiffs here have unquestionably brought claims arising under federal law. As
set forth above, the 2003 User Agreement provides that "any Claim may be adjudicated by a court of competent jurisdiction located in Santa Clara County, California or where the defendant is located[.]" The federal district into which Santa Clara County Although that
falls is the Northern District of California.
district's headquarters are located in San Francisco, the court also hears cases in its courtroom in San Jose, which is located within Santa Clara County.10 Plaintiff argues that because "the
Northern District of California also includes other counties apart from Santa Clara, the forum selection clause excludes the jurisdiction of the Federal Court and obligates Plaintiffs whose claims arose out of violations of federal laws to bring their action in state court[.]" Pl.'s Mem. In Opp. (Venue) at 11.
Plaintiff cites no caselaw in support of this improbable
See http://www.cand.uscourts.gov/ (click on "FAQs" and "Jurisdiction Map") (last visited on May 12, 2009).
- 29 argument, and I find that it is without merit. While it is true
that the forum selection clause does not specify whether claims may be brought in federal or state court, it clearly states that they may be brought in Santa Clara County, which in this case is also "where the defendant is located," and a federal district court sits in Santa Clara County. The fact that a forum
selection clause allows for claims to be brought in federal or state courts within a specific locale does not necessarily render the clause ambiguous. See Mooney-Kelly v. Islands Pub. Co., No.
01 CIV. 4448, 2002 WL 109533, at *3 (S.D.N.Y. Jan. 28, 2002) (in an agreement containing a mandatory forum selection clause providing for sole jurisdiction in Santa Barbara, California, "[t]he fact that the provision does not specify federal or state court does not make it invalid, but rather allows suit to be brought in either court.").11 In this case, the forum selection
clause is only susceptible of the interpretation that claims against eBay may be brought in any court of competent jurisdiction in Santa Clara County, and therefore, in either state or federal court. C.f. City of N.Y. v. Pullman Inc., 477
The caselaw cited by plaintiffs in support of their argument is inapposite. In ORI, Inc. v. Lanewala, No. 99-2402, 1999 WL 1423068 (D. Kan. Nov. 30, 1999), the court considered a forum selection clause that, on its face, referred to a municipal court that plainly was without jurisdiction to decide the case. In another case cited by plaintiffs, BP Marine Am. v. Geostar Shipping Co. N.V., Civ. A. No. 94-2118, 1995 WL 131056 (E.D. La. Mar. 22, 1995), the court considered a forum selection clause that appeared to designate a forum that does not exist. Neither set of circumstances is present here.
- 30 F.Supp. 438 (S.D.N.Y. 1979) (finding that where clause selected "New York courts" as the forum, the term "New York courts" was susceptible of meaning both federal and state courts located in New York or of meaning only New York State courts, and because more than one interpretation of the clause was plausible, the clause was ambiguous). Accordingly, because the forum selection
clause at issue here is only susceptible of one interpretation, I conclude that it is clear and unambiguous. Turning to plaintiffs' second argument, according to which the fact that plaintiffs Callandrello and Komito checked a box in an online registration form affirming acceptance of a User Agreement does not mean that a forum selection clause contained in that Agreement was "reasonably communicated" to them, plaintiffs rely principally on Comb v. PayPal, Inc., 218 F.Supp.2d 1165 (N.D. Cal. 2002). However, the Comb court did
- 31 of the agreement in effect at that time -- was "sufficient to demonstrate that [plaintiffs] entered into agreements with Paypal." Comb, 218 F.Supp.2d at 1172. Indeed, plaintiffs
Callandrello and Komito do not appear to dispute that they accepted the applicable eBay User Agreement when they signed up for eBay.12 Rather, they rely on Comb for the proposition that
the forum selection clause contained in the User Agreement was not "reasonably communicated" to them, a concept not discussed by the Comb court. Other courts in this Circuit have held that a clear and unambiguous forum selection clause is "reasonably communicated" to a plaintiff where the plaintiff is required to assent to an online user agreement, such as defendant eBay's, which contains the clause. See, e.g., Novak, 2007 WL 922306, at *7-9 (finding
that the forum selection clause in an online agreement was reasonably communicated to the plaintiff where the plaintiff was required to "click-through" his assent to the agreement containing the forum selection clause); Person v. Google, 456 F.Supp.2d 488, 493 (S.D.N.Y. 2006) (enforcing an online forum
Plaintiffs do vigorously protest the fact that defendant eBay "failed to present any proof that Plaintiff Komito accepted the agreement and/or is Defendant eBay's customer," contending that for this reason, defendant eBay "did not fulfill its burden of showing that the agreement was reasonably communicated to Plaintiff Komito." Pl.'s Mem. In Opp. (Venue) at 18. However, the SAC contains allegations that plaintiff Komito became an eBay user at some point before 2005, SAC ¶¶ 4, 186, and plaintiff Komito himself alleges that he has sold coins on eBay for the past ten years. Komito Decl. ¶ 2. There is no dispute that those who become eBay users check a box affirming acceptance of the eBay User Agreement in force at the time.
- 32 selection clause where the evidence demonstrated that "every customer must click on a box acknowledging that they agree to the terms and conditions of Defendant's contract," and thus, "Plaintiff's very existence as an AdWords customer is evidence that he agreed to the 2003 form contract proffered by Defendant."); Novak v. Overture Servs., Inc., 309 F.Supp.2d 446, 451 (E.D.N.Y. 2004) (enforcing the forum selection clause contained in an online agreement where the plaintiff was required to click a button indicating acceptance in order to proceed and, therefore, had a reasonable opportunity to review the "Terms and Conditions of User for Google Groups"). Accordingly, because
there is no dispute that persons or entities desiring to become eBay users are required to assent to the User Agreement in force at the time, and because plaintiff Callandrello alleges that he became an eBay user, see SAC at ¶ 18, and does not dispute eBay's allegation that he became an eBay user in 2005, when the 2003 User Agreement was in force, I conclude without need of an evidentiary hearing that the forum selection clause contained in the 2003 User Agreement was reasonably communicated to plaintiff Callandrello. As further set forth below, however, I conclude
that defendant eBay has not met its burden of showing that the clause was reasonably communicated to plaintiff Komito, as defendant eBay has not shown that plaintiff Komito became an eBay user at a time when the 2003 User Agreement was in force.
- 33 2. Mandatory or Permissive Nature of Clause
Forum selection clause language must be mandatory to be enforced. John Boutari & Son, Wines & Spirits, S.A. v. Attiki "A
Importers & Distrib., Inc., 22 F.3d 51, 52-53 (2d Cir. 1994). forum selection clause is viewed as mandatory when it confers exclusive jurisdiction on the designated forum or incorporates obligatory venue language."
Phillips v. Audio Active Ltd., 494
F.3d 378, 386 (2d Cir. 2007) (citing Boutari, 22 F.3d 51 at 5253). Here, the forum selection clause provides that "any Claim
may be adjudicated by a court of competent jurisdiction located in Santa Clara County, California or where the defendant is located (in [eBay's] case San Jose, California, and in [the user's] case [the user's] home address or principal place of business)." Were this the only relevant provision found in the
User Agreement, the use of the permissive word "may" would cause me to find that the parties merely agreed upon a potential situs for suit as opposed to designating an exclusive forum for litigation. See, e.g. Boutari, 22 F.3d at 52-53 (finding that
"[w]hen only jurisdiction is specified the clause will generally not be enforced without some further language indicating the parties' intent to make jurisdiction exclusive, [unless] mandatory venue language is employed") (internal quotation omitted)); Blanco v. Banco Indus. de Venezuela, S.A., 997 F.2d 974, 979 (2d Cir. 1993) (noting that the language "may be
- 34 brought" in a forum selection clause is permissive in nature). However, because the inquiry into the permissive or mandatory nature of a forum selection clause "is one of contract interpretation," Phillips, 494 F.3d at 386, I must consider the specific clause at issue here in light of its overall context in the User Agreement. The forum selection clause relating to litigation is found in the second subsection of Paragraph 17 of the User Agreement, which is captioned "Resolution of Disputes." Immediately before
its three subsections, Paragraph 17 provides that disputes "shall be resolved in accordance with one of the subsections below or as otherwise mutually agreed upon in writing by the parties." term "shall" connotes a mandatory nature, and therefore, Paragraph 17 can only reasonably be interpreted as requiring that qualifying disputes be resolved in a manner comporting with one of its three subsections. HongKong and Shanghai Banking Corp. The
Ltd. v. Suveyke, 392 F.Supp.2d 489, 492 (S.D.N.Y. 1987) ("the use of the word `shall' is a clear indication of mandatory, rather than permissive language"). permissive language. The subsections are each phrased in
The first subsection provides that the user
or eBay "may elect to resolve the dispute through binding arbitration . . . where no in-person appearance is required," where "the total amount of the award sought is less than $10,000," which is not the case here. The second subsection,
- 35 which is at issue here, provides that claims "may be adjudicated by a court . . . located in Santa Clara County, California." The
third subsection provides as follows: "Alternatively, eBay will consider use of other alternative forms of dispute resolution, such as binding arbitration to be held in Santa Clara County, California, or another location mutually agreed upon by the parties." See Second Mandella Decl. Ex. A ¶ 17.
The fact that the three subsections of Paragraph 17 are phrased in permissive language does not, in this case, render the forum selection clause itself permissive in nature. While it is
true that the clause, standing alone, appears only to confer jurisdiction on Santa Clara County courts without rendering that jurisdiction exclusive, "further language" exists in the User Agreement that provides evidence of the parties' intent to make the specified jurisdiction exclusive. 52-53. See Boutari, 22 F.3d at
Because Paragraph 17 mandates that disputes "shall be
resolved in accordance with one of [its] subsections," the paragraph is most reasonably construed as an exclusive list of the options for dispute resolution available to the parties. Pursuant to that list, a complaining party must either (1) elect to resolve a dispute through arbitration not requiring in-person appearances (if the dispute involves a claim for less than $10,000), or it may (2) bring suit in a court located in Santa Clara County, California, or where the defendant is located, or
- 36 it may (3) discuss the use of alternative forms of dispute resolution with the opposing party. The User Agreement does not Reading
permit a complaining party to do anything else.
Paragraph 17 as a whole, it is impossible to conclude that a complaining party may commence litigation in a court not located in either Santa Clara County or "where the defendant is located," and yet still comply with Paragraph 17's mandate that disputes be resolved in accordance with its subsections. Accordingly, I find
that the forum selection clause at issue here is mandatory in nature.13 3. Whether Forum Selection Clause is Controlling
The third requirement of a presumptively enforceable forum selection clause is that "the claims and parties involved in the suit [must be] subject to the forum selection clause." Salis v.
Am. Export Lines, 566 F.Supp.2d 216, 221 (S.D.N.Y. 2008) (citing Phillips, 494 F.3d at 383). Plaintiffs argue that neither their
claims nor they themselves, nor defendants ANA and Stuppler Co.,14 are subject to the forum selection clause at stake here.
I note that subsequent revisions to the User Agreement make clear that the exclusive forum for litigation is Santa Clara County, California, lending support to my conclusion that the parties also intended the 2003 version of the Agreement to provide for an exclusive forum for litigation. See First Mandella Decl. Ex. A at 5 (copy of 2008 User Agreement specifying that disputes "must be resolved by a court located in Santa Clara County, California, except as otherwise agreed by the parties or as described in the Arbitration Option paragraph below"). Plaintiffs also assert that defendant PNG is not bound by the forum selection clause, nor is it entitled to enforce it. In light of my determination that I lack personal jurisdiction over defendant PNG, I need not consider this assertion.
- 37 i. Whether Plaintiffs' Claims Fall Within the Scope of the Forum Selection Clause
The terms of the User Agreement provide that its dispute resolution provisions, including the forum selection clause relating to litigation, apply to "any claim or controversy at law or equity that arises out of this Agreement or [eBay's] services." While defendant eBay appears to concede that
plaintiffs' antitrust and trade libel claims do not arise out of the User Agreement, they argue, and plaintiffs dispute, that those claims arise out of eBay's services. I agree with
defendant eBay and find that plaintiffs' claims arise out of eBay's services. The Second Circuit has endorsed an expansive reading of the scope of forum selection clauses, in keeping with the public policy favoring their use. See Russbeer Intern. LLC v. OAO
Baltika Brewing Co., No. 07-CV-1212, 2008 WL 905044 (E.D.N.Y. Mar. 31, 2008) ("The Second Circuit has consistently held that forum selection clauses are to be interpreted broadly and are not restricted to pure breaches of the contracts containing the clauses."); Roby v. Corp. of Lloyds, 996 F.2d. 1353, 1361 (2d Cir. 1993), cert. denied, 510 U.S. 945 (1993) (acknowledging the "strong public policy in favor of forum selection and arbitration clauses" and holding that forum selection clauses encompassing claims "relating to" and "in connection with" investors' contracts covered investors' securities and RICO claims).
- 38 Accordingly, I will construe the term "services" broadly, as opposed to the narrow construction plaintiffs suggest.15 Bearing this in mind, I note that the crux of plaintiffs' complaint against all of the defendants is that defendants either participated in or actually instituted a policy that only permits coins graded by one of five "approved" grading services to be listed for sale on eBay as "certified" coins. In other words,
plaintiffs' claims flow from their dissatisfaction with a change in the conditions under which eBay provides auction listing services to its users. This dissatisfaction underlies both
plaintiffs' antitrust claims (which allege that defendants conspired together to restrain trade by enacting the Policy) and plaintiffs' trade libel claims (which allege that press releases written about or emails sent in accordance with the Policy defamed them). Under these circumstances, one can only find that Accordingly,
plaintiffs' claims arise out of eBay's services.16
Although the term "services" is not defined in the User Agreement, plaintiffs argue that it should be interpreted to mean only those services referred to in the User Agreement. Even if I were to accept this argument, plaintiffs themselves interpret the "services" described in the User Agreement to be "providing the space for auctions' listings and charging fees for it." Pl.'s Mem. In Opp. (Venue) at 14. Given my conclusion below that plaintiffs' antitrust and trade libel claims arise out of a change in the conditions under which eBay provides space for auction listings to its users, even if I were to credit plaintiffs' construction, I would still conclude that plaintiffs' claims arise out of eBay's services.
16 The cases cited by plaintiffs in opposition to this argument are misplaced, as they do not concern forum selection clauses encompassing claims arising out of a defendant's "services." Bank of Am. Corp. v. Braga Lemgruber, 385 F.Supp.2d 200, 235-37 (S.D.N.Y. Jan. 5, 2005) (considering scope of forum selection clause covering "any action `seeking to enforce any provision of, or based on any right arising out of, this Agreement'"); Phillips, 494 F.3d at 382, 389-92 (considering scope of forum selection clause
- 39 I conclude that plaintiffs' claims fall within the scope of the forum selection clause. ii. Whether The Parties are Bound By the Forum Selection Clause
Given that plaintiffs do not dispute eBay's allegation that plaintiff Callandrello became an eBay user in 2005, together with my conclusion that becoming a user at that time necessarily implies that the mandatory forum selection clause in the 2003 User Agreement was reasonably communicated to the putative user, and that the new user was required to accept the 2003 User Agreement before being permitted to access eBay, there is no question that plaintiff Callandrello is bound by the forum selection clause. The situation of the other individual Ebay has withdrawn its
plaintiffs, however, is different.
improper venue motion with regard to plaintiff Kirinchencko on the grounds that plaintiff Kirichenko accepted eBay's user agreement in 2002, when the agreement did not contain a forum selection clause. Similarly, although eBay has produced no
record of when plaintiff Komito signed up for eBay, it has not disputed plaintiff Komito's assertion that he has been selling coins on eBay for the past ten years. Komito Decl. ¶ 2. If this
is true, then plaintiff Komito, like plaintiff Kirinchenko, accepted a version of eBay's user agreement that did not contain
applying to "any legal proceedings that may arise out of [the agreement]").
- 40 a forum selection clause. Accordingly, while I conclude that
plaintiff Callandrello is bound by the forum selection clause in the 2003 User Agreement, I do not conclude that plaintiffs Komito and Kirinchenko are bound by the clause.17 There is no dispute that corporate plaintiff UGS never assented to any version of eBay's user agreement. The parties
dispute, however, whether plaintiff UGS should nevertheless be bound by the forum selection clause in the 2003 User Agreement. Courts in this district and others have held that "a range of transaction participants, parties and non-parties, should benefit from and be subject to forum selection clauses." Nanopierce
Techs., Inc. v. Southridge Capital Mgmt. LLC, No. 02 Civ. 0767, 2003 WL 22882137, at *5 (S.D.N.Y. Dec. 4, 2003) (quoting Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n.5 (9th Cir. 1988)). "In order to bind a non-party to a forum
selection clause, the party must be `closely related' to the dispute such that it becomes `foreseeable' that it will be bound." Id. (quoting Lipcon v. Underwriters at Lloyd's, London,
148 F.3d 1285, 1299 (11th Cir. 1998) (quoting Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209 (7th Cir. 1993) (quoting Manetti-Farrow, 858 F.2d at 514 n.5 (9th Cir. 1988)); see also
Because they parties have not fully addressed the question of whether the individual plaintiffs are bound by subsequent revisions to eBay's user agreement, and for reasons stated elsewhere in this opinion, I need not determine whether plaintiffs Komito and Kirinchenko are bound by the forum selection clause that has appeared in revisions to the user agreement since 2003.
- 41 Direct Mail Prod. Servs. Ltd. v. MBNA Cor
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