Seldon v. Magedson et al

Filing 4

FILING ERROR - DEFICIENT DOCKET ENTRY - MOTION to Dismiss. Document filed by Edward Magedson, Xcentric Ventures L.L.C.(Speth, Maria) Modified on 10/25/2011 (ldi).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PHILIP SELDON,
Plaintiff,
Case No: 11-CV-6218

v.
EDWARD MAGEDSON, XCENTRIC
VENTURES, LLC, and JOHN
OR JANE DOE,
Defendants.

MOTION TO DISMISS
Pursuant to Fed. R. Civ. P. 12(b)(1), 12(b)(2) and 12(b)(6), Defendants
EDWARD MAGEDSON (“Magedson”) and XCENTRIC VENTURES, LLC
(“Xcentric”; collectively “Defendants) respectfully move the Court for an order
dismissing this action for lack of personal jurisdiction, failure to state a claim upon
which relief may be granted, lack of subject matter jurisdiction, and for.
Each point is discussed fully herein.
I.

INTRODUCTION

This case involves seven separate claims.

In claims one through six,

Plaintiff PHILIP SELDON (“Plaintiff” or “Mr. Seldon”) seeks damages arising
from a series of allegedly defamatory posts on www.RipoffReport.com, which is
an Arizona-based website operated by Defendant Xcentric Ventures. The seventh

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cause of action is a simple breach of contract claim which generally alleges that,
among other things, Defendants promised to make the allegedly defamatory posts
“unsearchable”, and to provide five years worth of advertising to Plaintiff and as
consideration for that gesture, Defendants would receive “websites that [Plaintiff]
Philip Seldon was not using.” Compl. ¶ 52.
As explained herein, the Complaint should be dismissed for three separate
reasons.

First, the Complaint should be dismissed pursuant to Fed. R. Civ. P.

12(b)(2) because Defendants are not subject to personal jurisdiction in the state of
New York. Second, the claims are barred by the Communications Decency Act,
47 U.S.C. § 230(c)(1), and even assuming all of Plaintiff’s allegations are true,
each of these causes of action fail to state a claim upon which relief may be
granted. As such, the claims should be dismissed pursuant to Fed. R. Civ. P.
12(b)(6). Finally, separate and apart from this issue, the seventh cause of action is
barred by the statute of frauds and, assuming the first six claims for relief are
dismissed, this Court lacks subject matter jurisdiction over Plaintiff’s remaining
state-law breach of contract claim.
II.

ARGUMENT
A. Defendants Are Not Subject To Personal Jurisdiction In New
York

The Complaint should also be dismissed pursuant to Fed. R. Civ. P. 12(b)(2)
because under the facts alleged in the Complaint, Defendants Magedson and

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Xcentric are not subject to personal jurisdiction in New York. Because this is
apparently a diversity jurisdiction case, the applicable test for personal jurisdiction
New York state law is found in New York’s long-arm statutes, CPLR §§ 301 and
302(a). See DiStefano v. Carozzi North Am., Inc., 286 F.3d 81, 84 (2nd Cir. 2001);
Nat'l Union Fire Ins. Co. of Pittsburgh, PA. v. BP Amoco P.L.C., 319 F.Supp.2d
352, 357 (S.D.N.Y. 2004)). In addition, as plaintiff, Mr. Seldon has the burden of
showing that personal jurisdiction is proper here. See Penguin Group (USA), Inc.
v. Am. Buddha, 609 F.3d 30, 34 (2nd Cir. 2010).
As the Court is aware, CPLR § 301 provides for jurisdiction over a
defendant that is “engaged in such a continuous and systematic course of ‘doing
business’ in New York as to warrant a finding of its ‘presence’ in the state.”
Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2nd Cir. 1998). Here, nothing
in Mr. Seldon’s Complaint accuses Xcentric of engaging in any business in New
York, much less the “continuous and systematic” business required to establish
general jurisdiction under CPLR § 301, and as explained in the Declaration of
Edward Magedson attached hereto as Exhibit “A”, neither Xcentric nor Mr.
Magedson conduct any meaningful business in New York.

As such, general

jurisdiction is clearly lacking here.
The only other possible basis for personal jurisdiction is CPLR § 302 which
enumerates a variety of conduct including the following acts by a defendant:

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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, except as to a cause of action
for defamation of character arising from the act; or
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

3.

(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; or
4.

owns, uses or possesses any real property situated within the state.

N.Y. CPLR § 302(a) (McKinney 2010).
As explained in Mr. Magedson’s Declaration and considering the actual
allegations of Mr. Seldon’s Complaint, none of the subsections of CPLR § 302(a)
apply here. Section 302(a)(1) does not apply because this action does not arise out
of any business transacted within the State of New York; “To establish personal
jurisdiction under section 302(a)(1), two requirements must be met: (1) The
defendant must have transacted business within the state; and (2) the claim asserted
must arise from that business activity.” Sole Resort, S.A. de C.V. v. Allure Resorts
Mgmt. LLC, 450 F.3d 100, 103 (2nd Cir. 2006). Both of these elements are lacking
here because rather than transacting any business in New York, the facts of this
case show that Mr. Seldon contacted Mr. Magedson in Arizona to inquire about
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how he might be able to resolve the allegedly defamatory posts on the Ripoff
Report website.
Even assuming an agreement was made during these discussions (which Mr.
Magedson denies), the alleged agreement would not be sufficient to establish
personal jurisdiction over Defendants in New York under CPLR § 302(a)(1).
When considering this issue, Courts focus primarily on the following factors:
(i) whether the defendant has an on-going contractual relationship
with a New York corporation; (ii) whether the contract was negotiated
or executed in New York and whether, after executing a contract with
a New York business, the defendant has visited New York for the
purpose of meeting with parties to the contract regarding the
relationship; (iii) what the choice-of-law clause is in any such contract; and (iv) whether the contract requires [the defendant] to send
notices and payments into the forum state or subjects them to
supervision by [a] corporation in the forum state.
Sunward Elec., Inc. v. McDonald, 362 F.3d 17, 22–23 (2nd Cir. 2004) (quoting
Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 29 (2nd Cir.
1996)).

Another important factor is whether the contract is to be performed in

New York. See Cooper, Robertson & Partners, L.L.P. v. Vail, 143 F.Supp.2d 367,
371 (S.D.N.Y. 2001) (stating that “[i]n determining jurisdiction, the place of
performance is more critical than the place of the execution of a contract”)
(emphasis added). No single factor is dispositive. Rather, a finding of personal
jurisdiction must be based upon the totality of the circumstances. See Agency Rent
A Car, 98 F.3d at 29.

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Here, none of these factors weigh in favor of jurisdiction in New York. The
Complaint does not allege that Defendants have any ongoing contractual
relationship with any New York corporation, nor does the Complaint arise from
any type of ongoing relationship. The Complaint does not allege that Defendants
went to New York to meet with Mr. Seldon, nor does it allege that the contract was
executed in New York. Finally, the alleged contract did not require Defendants to
supply any goods or services in New York; on the contrary, the only actions to be
performed (i.e., making the allegedly defamatory postings unsearchable on
Xcentric’s website) would have taken place in Arizona, not New York.
Under these circumstances, personal jurisdiction cannot be based on CPLR §
302(a)(1); “[C]ourts seem generally loath to uphold jurisdiction under the
‘transaction in New York’ prong of CPLR 302(a)(1) if the contract at issue was
negotiated solely by mail, telephone, and fax without any New York presence by
the defendant.” Worldwide Futgol Associates, Inc. v. Event Entertainment, Inc.,
983 F.Supp. 173, 177 (E.D.N.Y. 1997); United Computer Capital Corp. v. Secure
Prods., L.P., 218 F.Supp.2d 273, 278 (N.D.N.Y. 2002) (finding “Where a
plaintiff's cause of action is based upon a contract, negotiation of the contractual
terms by phone, fax or mail with the New York party is generally insufficient to
support a finding of the transaction of business in New York.”) (emphasis added).
This finding is further supported by the fact that Mr. Seldon initiated the contacts
with Defendants; “The fact that the Plaintiff initiated the contact between the
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parties weighs against asserting personal jurisdiction over the Defendants.”
Skrodzki v. Marcello, ___ F.Supp.2d ___, 2011 WL 3792418, *8 (E.D.N.Y. Aug.
19, 2011) (citing Mortgage Fund. Corp. v. Boyer Lake Pointe, LC, 379 F.Supp.2d
282, 287 (E.D.N.Y. 2005)).
Similarly, personal jurisdiction cannot be established under either CPLR §§
302(a)(2) or 302(a)(3) because neither of these sections apply in defamation cases.
See Gary Null & Assoc., Inc. v. Phillips, 29 Misc.3d 245, 248, 906 N.Y.S.2d 449,
451 (N.Y.Sup. 2010) (explaining, “Defamation actions are expressly exempted
from CPLR 302(a)(2) and (3), so the only provision at issue in this case is CPLR
302(a)(1), which requires defendant Phillips to transact business within the state,
and the defamation claim to arise from his transaction of that business.”) Finally,
personal jurisdiction cannot be based on CPLR § 302(a)(4) because Defendants do
not own, use, or possess any real property in New York. See Magedson Dec. ¶ ¶
10, 11.
Under each of these factors, it is apparent that personal jurisdiction in New
York would be improper.

As such, because Mr. Seldon cannot satisfy the

threshold showing necessary to establish jurisdiction, it is not necessary for the
Court to consider whether due process would be offended here. See Mortgage
Fund. Corp., 379 F.Supp.2d at 288 (concluding, “Because personal jurisdiction
pursuant to the long-arm statute is not present, the Court need not assess whether a
jurisdictional finding in this matter would satisfy due process.”)
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B. Claims 1–6 Are Barred By 47 U.S.C. § 230(c)(1).
Assuming that the Court reaches the merits of this dispute, Mr. Seldon’s
claims should be dismissed because even assuming the allegations in the
Complaint are true, each of these claims are completely barred by the
Communications Decency Act, 47 U.S.C. § 230(c)(1). According to paragraph 8
of Mr. Seldon’s Complaint, several derogatory postings were created and
submitted to the Ripoff Report website by third parties. Mr. Seldon alleges that
these posts contain a variety of false and defamatory statements which give rise to
his claims against Defendants Xcentric and Magedson.
Nowhere in his Complaint does Mr. Seldon allege that any of the defamatory
posts were authored or written by Mr. Magedson or Xcentric. Instead, it appears
that Mr. Seldon seeks to impute liability to Mr. Magedson and Xcentric for
“publishing” these posts either “with knowledge that the defamatory material about
Philip Seldon on ripoffreport.com was false,” Compl. ¶ 8, or because “defendants
[Xcentric and Magedson] failed to take proper steps to ascertain their accuracy.”
Compl. ¶ 12. Even if true, these allegations are insufficient to state a claim upon
which relief may be granted because as the providers and operators of the Ripoff
Report website, Defendants Xcentric and Magedson are immune from liability
based on the “publication” of material posted on the site by a third party:
Whether Defendants are shielded from liability by the CDA is at the
heart of this case. The Court notes that this very issue has been
litigated by several district courts to date, where nearly identical
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allegations against Xcentric (and Magedson where applicable) based
on Ripoff Report postings have been barred under the CDA. The
Court also finds that the CDA applies to Defendants here.
Asia Economic Institute, LLC v. Xcentric Ventures, LLC, 2011 WL 2469822, *5
(C.D.Cal. 2011) (emphasis added) (citing GW Equity, LLC v. Xcentric Ventures,
LLC, 2009 WL 62173 (N.D.Tex. 2009) (finding Xcentric and Magedson entitled to
immunity under the CDA); Intellect Art Multimedia, Inc. v. Milewski, 2009 WL
2915273 (N.Y.Sup. 2009) (same); Whitney Info. Network Inc. v. Xcentric Ventures,
LLC, 2008 WL 450095 (M.D.Fla. 2008) (same); Global Royalties, Ltd. v. Xcentric
Ventures, LLC, 544 F.Supp.2d 929 (D.Ariz. 2008) (same); see also Herman v.
Xcentric Ventures, LLC, Case No. 1:10-cv-00398 (N.D.Ga. Feb. 12, 2011)
(recognizing, “Since the CDA was enacted in 1996, every state and federal court
that has considered the merits of a claim against the Ripoff Report has, without
exception, agreed that Xcentric and Magedson are entitled to immunity under the
CDA for statements posted by third-party users.”)
Although numerous courts, including at least one New York court, see
Intellect Art Multimedia, Inc. v. Milewski, 2009 WL 2915273 (N.Y.Sup. 2009),
have previously found Xcentric and Magedson are entitled to CDA immunity as
long as the allegedly defamatory material was posted by a third party (as alleged
here), it is worth nothing that the New York Court of Appeals recently addressed
and reaffirmed the broad scope of the CDA in Shiamili v. The Real Estate Group of
New York, Inc., 17 N.Y.3d 281, 2011 WL 2313818 (N.Y. June 14, 2011)
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(explaining, “A defendant is therefore immune from state law liability if (1) it is a
‘provider or user of an interactive computer service’; (2) the complaint seeks to
hold the defendant liable as a ‘publisher or speaker’; and (3) the action is based on
‘information provided by another information content provider.’”)
The first six claims in Mr. Seldon’s Complaint each attempt to impose
liability on Mr. Magedson and Xcentric for “publishing” material which was
created by a third party. Thus, the CDA’s immunity plainly renders those claims
subject to dismissal under Rule 12(b)(6). See Global Royalties, 544 F.Supp.2d at
933 (granting 12(b)(6) dismissal of claims against Magedson and Xcentric where
the material at issue was posted on the Ripoff Report website by a third party,
because: “Through the CDA, ‘Congress granted most Internet services immunity
from liability for publishing false or defamatory material so long as the
information

was

provided

by

another

party.’”)

(quoting

Carafano

v.

Metrosplash.com, Inc., 339 F.3d 1119, 1122–23 (9th Cir. 2003); see also Coppage
v. U-Haul Inter., Inc., 2011 WL 519227 (S.D.N.Y. 2011) (granting 12(b)(6)
dismissal of claims based on CDA immunity); Gibson v. Craigslist, Inc., 2009 WL
1704355, (S.D.N.Y. 2009) (granting 12(b)(6) dismissal of claims based on CDA
immunity).
The Seventh cause of action, though based in contract, requests damages for
Defendants failure to remove the allegedly defamatory posts. Such a claim is also
barred by the CDA. See Barnes v. Yahoo!, Inc., 570 F.3d 1096 (9th Cir. 2009)
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(holding negligent undertaking claim arising from alleged promise to remove post
was barred by the CDA because: “the duty that Barnes claims Yahoo violated
derives from Yahoo's conduct as a publisher—the steps it allegedly took, but later
supposedly abandoned, to de-publish the offensive profiles. It is because such
conduct is publishing conduct that we have insisted that section 230 protects from
liability ‘any activity that can be boiled down to deciding whether to exclude
material that third parties seek to post online.’”) (quoting Fair Housing Council of
San Fernando Valley v. Roommates.Com, 521 F.3d 1157 (9th Cir. 2008)).
In other words, it is obvious that Mr. Seldon’s seventh cause of action is
based in large part on the violation of an alleged promise to make the derogatory
postings “unsearchable” (which essentially identical to the allegation in Barnes v.
Yahoo!).

Even assuming this allegation is true, the only damages Mr. Seldon

claims to have suffered would necessarily arise from the derogatory third party
comments themselves, not from the loss of money paid by Mr. Seldon to
Defendants (indeed, Mr. Seldon does not allege making any payment to
Defendants in consideration for their alleged agreement). This claim then, also
seeks to treat Defendants as a publisher and is barred by the CDA.
. . . .
. . . .
. . . .

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C. The Seventh Claim is Barred by The Statute of Frauds and If
The First Six Claims Are Dismissed, The Complaint Should Be
Dismissed For Lack of Subject Matter Jurisdiction
Mr. Seldon claims that there was an agreement between Defendants and
himself that required Defendants “to provide five years worth of advertising for
various companies with which Philip Seldon was affiliated.”
Every agreement, promise or undertaking is void, unless it or
some note or memorandum thereof be in writing, and subscribed by
the party to be charged therewith, or by his lawful agent, if such
agreement, promise or undertaking:
1. By its terms is not to be performed within one year from the
making thereof or the performance of which is not to be completed
before the end of a lifetime;

N.Y. Gen. Oblig. Law § 5-701 (McKinney)
“Clearly, termination of an agreement as a result of its breach is not
performance thereof within the meaning of the Statute of Frauds, and an oral
agreement which by its own terms must continue for more than a year unless
terminated by its breach is void.” D & N Boening, Inc. v. Kirsch Beverages, Inc.,
63 N.Y.2d 449, 457, 472 N.E.2d 992, 995 (1984)
Mr. Seldon claims in his complaint that Defendants agreed to five years
worth of advertising, which would make performance within one year impossible
absent a breach.

This purported agreement is barred by the statute of limitations.

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In addition, if the Court dismisses the first six claims in Mr. Seldon’s
Complaint under the CDA, the sole remaining cause of action—breach of
contract—should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1) because the
Complaint fails to establish the Court’s subject matter jurisdiction over that claim.
Although Mr. Seldon’s pro se Complaint does not allege the specific statutory
basis upon which federal subject matter jurisdiction is founded, because this case
involves no claim arising under federal law or otherwise presenting a federal
question, the only possible basis for jurisdiction would be diversity pursuant to 28
U.S.C. § 1332(a) which, of course, would require both diversity of citizenship
(which is present) and a plausible claim supporting a controversy in excess of
$75,000 (which is not present).
In this context, “A party invoking the jurisdiction of the federal court has the
burden of proving that it appears to a ‘reasonable probability’ that the claim is in
excess of the statutory jurisdictional amount.” Tongkook Am., Inc. v. Shipton
Sportswear Co., 14 F.3d 781, 784 (2nd Cir. 1994) (quoting Moore v. Betit, 511 F.2d
1004, 1006 (2nd Cir. 1975)). Even if this showing is made, it can be rebutted by
establishing that “to a legal certainty”, the amount recoverable does not meet the
jurisdictional threshold. Wolde–Meskel v. Vocational Instruction Project Cmty.
Servs., Inc., 166 F.3d 59, 63 (2nd Cir. 1999).
Here, Mr. Seldon demands $468,000 in damages for the Seventh cause of
action. However, he has failed to plead any causally related damages and he has
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pled no facts which would lead to a reasonable probability that the claim is for
more than $75,000. See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868
(2009) (stating that Rule 8 requires more than “the-defendant-unlawfully-harmedme accusation[s]” and “[a] pleading that offers labels and conclusions or a
formulaic recitation of the elements of a cause of action will not do”). “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 129 S.Ct. at 1949. Rather, “[a] claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.”
Id.
Because Mr. Seldon cannot, under the CDA, impose liability on Defendants
Magedson and Xcentric for failing to remove third party generated material, a
fortiori, he has pled no other harm that could possibly justify a damage award in
excess of the mandatory $75,000 threshold necessary to support diversity
jurisdiction under 28 U.S.C. § 1332(a). For these reasons, his seventh cause of
action should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1).
III.

CONCLUSION

For the reasons above, Defendants Xcentric and Magedson respectfully
move the Court for an order dismissing this action for lack of personal jurisdiction,
. . . .
. . . .
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for failure to state a claim upon which relief may be granted, and for lack of
subject matter jurisdiction.

Dated this 24th day of October 2011.

/s/ Maria Crimi Speth
Attorney for Defendant

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CERTIFICATE OF SERVICE
I hereby certify that on October 24, 2011 I electronically transmitted the
attached document to the Clerk’s Office using the CM/ECF System for filing, and
for transmittal of a Notice of Electronic Filing to the following:
Philip Seldon
500 E 77th Street
New York, NY 10162
Plaintiff Pro Se

And a courtesy copy of the foregoing delivered to:
HONORABLE MICHAEL H. DOLINGER
United States Magistrate Judge
United States District Court
500 Pearl St.
New York, NY 10007-1312

/s/ Debra Gower

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EXHIBIT A

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PHILIP SELDON,
Plaintiff,
Case No: 11-CV-6218

v.
EDWARD MAGEDSON, XCENTRIC
VENTURES, LLC, and JOHN
OR JANE DOE,
Defendants.

DECLARATION OF EDWARD MAGEDSON IN SUPPORT OF
DEFENDANTS’ MOTION TO DISMISS
Ed Magedson, being duly sworn deposes and says:
1.

My name is Ed Magedson. I am a resident of the State of Arizona, am over

the age of 18 years, and if called to testify in court or other proceeding, I could and would
give the following testimony which is based upon my own personal knowledge unless
otherwise stated.
2.

I am the manager of Defendant XCENTRIC VENTURES, L.L.C.,

(“Xcentric”) which is based in Tempe, Arizona. Xcentric operates a website known as
“The Rip-Off Report” which is located at www.ripoffreport.com and
www.badbusinessbureau.com (the “ROR Site”).
3.

I submit this affidavit in support of Xcentric’s motion to dismiss the

complaint in the above captioned action.
4.

The ROR Site content is comprised of individual “reports” or postings

created by users of the website. A consumer creates a report about a company’s business

practices and submits it to the ROR Site for posting. Other consumers or the company
that is the subject of the report can then comment on that report by posting a rebuttal.
5.

There is no cost to post or read reports or rebuttals.

6.

The ROR Site is a free resource available to the public and it assists the

investigations of government officials, the FBI, state and local, law enforcement,
attorneys general, and so forth. This website has been in operation since 1998 and we
currently receive millions of hits every week.
7.

I am personally familiar with the policies and the practices of Xcentric

Ventures, LLC.
8.

Xcentric is a limited liability company organized and existing under the

laws of Arizona.
9.

Xcentric’s place of business is in the State of Arizona.

10.

Xcentric does not own any assets in the State of New York, nor does it have

any offices or employees in New York.
11.

I do not own any real estate in New York.

12.

Xcentric does not do business with or within the State of New York.

13.

Xcentric has no customers in New York and does not advertise on behalf of

any New York companies.

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury under the laws of the
United States of America that the foregoing is true and correct.
EXECUTED ON: October 24, 2011.

Edward Magedson

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