KMLLC Media, LLC v. Telemetry, Inc. et al
Filing
63
MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 10/27/15. (kgra, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
KMLLC MEDIA, LLC,
Plaintiff,
v.
TELEMETRY, INC., et al.,
Defendants.
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M E M O R A N D U M
1:15cv432(JCC/JFA)
O P I N I O N
This matter is now before the Court on Defendants
Telemetry, Inc. and Telemetry, Ltd.’s Motion to Dismiss for lack
of personal jurisdiction [Dkt. 18] and Defendants’ Motion to
Dismiss for failure to state a claim. [Dkt. 19] For the
following reasons, the Court grants the motion to dismiss for
lack of personal jurisdiction and dismisses the case without
prejudice.
Because the Court concludes that it lacks personal
jurisdiction over Defendant, a threshold issue, the Court need
not address Defendant’s alternative arguments for dismissal.
Williams v. Romarm S.A., --- F. Supp. 3d ---, No. TDC-14-3124,
2015 WL 4475160, *2 (D. Md. July 20, 2015).
I. Background
Plaintiff KMLLC Media, LLC, formerly known as Knowlera
Media, LLC (“Plaintiff” or “Knowlera”), is a limited liability
1
corporation organized under the laws of the Commonwealth of
Virginia, with its headquarters and principal place of business
in Great Falls, Virginia.
(Compl. [Dkt. 1] ¶ 5.)
Plaintiff
produced high-quality video content for distribution over the
Internet, and licensed its video content to third-party
publishers.
(Id.)
Defendant Telemetry, Inc. is a corporation
organized and existing under the laws of the State of New York
with its principal place of business in New York, New York
(“Telemetry US”).
(Id. at ¶ 6.)
Defendant Telemetry, Ltd. is a
corporation organized and existing under the laws of the United
Kingdom with its principal place of business in London, England
(“Telemetry UK”) (collectively “Defendants”).
(Id. at ¶ 7.)
After its inception in 2007, Plaintiff was one of the
first companies “to focus on creating professionally-produced,
purpose-driven lifestyle video content across a wide variety of
categories.”
(Compl. ¶ 12 (“The founders believed that pairing
its original video content with a web destination would create
an excellent resource for consumers and advertisers alike.”).)
In early 2008, Plaintiff launched the website
“www.monkeysee.com” -- a fictitious name Plaintiff had done
business under that was known by many business entities in the
online advertising industry -- and Plaintiff “achieved
substantial recognition in the marketplace.”
(Id. at ¶¶ 5, 13.)
Plaintiff licensed its video content and video widgets to more
2
than one hundred media companies, including BidMonitor.
¶ 34.)
(Id. at
Plaintiff also owned several Internet domain names that
incorporate the “MonkeySee” brand, which were licensed to
BidMonitor for use and operation.
(Id.)
On June 30, 2014, Defendants published a report
regarding Plaintiff’s involvement in a fraudulent Internet video
advertising scheme (the “Report”).
[Dkt. 1-1].)
(Compl. ¶¶ 18-19, Ex. A
Defendants disseminated the Report “to multiple
third parties, including without limitation, news media and
trade publications, with the knowledge and intent that the
contents of the Report would be widely published and
disseminated” over the Internet and in interstate commerce
throughout the United States.
(Id. at ¶¶ 20-21.)
The Report
was also disseminated to Plaintiff’s “customers, potential
customers, licensees, vendors, suppliers, peers, colleagues” and
other important industry individuals.
(Id. at ¶ 20.)
Defendants did this as a “promotional and advertising effort[]
to solicit new clients, including current and potential
advertisers doing business with Knowlera . . . .”
(Id. at ¶
21.)
Defendants provided a copy of the Report to media
outlets, including AdAge, a widely-read media source covering
the online advertising industry.
(Id. at ¶ 26.)
AdAge
published an article about the Report, entitled “Ad-Fraud
3
Operation Fools Detection Companies, Nets Millions,” which was
viewed and read by millions of readers worldwide, including
readers in the Commonwealth of Virginia.
[Dkt. 1-2].)
(Id. at ¶ 26, Ex. B.
The Report, and consequently, AdAge’s article,
allegedly published “blatantly false and defamatory statements
of and concerning Plaintiff Knowlera.”
(Id. at ¶ 27.)
In the
Complaint, Plaintiff identifies fifteen statements as false and
defamatory.
(Id. at ¶ 29.)
These statements were allegedly
false and defamatory because “they directly state or strongly
imply that Knowlera has committed and engaged in a pattern of
fraudulent, unethical, deceptive, dishonest, and possibly
criminal acts . . . .”
(Id. at ¶ 30.)
Specifically, Defendants
are alleged to have defamed Plaintiff by stating or implying
that Plaintiff intentionally defrauded advertisers, engaged in a
conspiracy to systemically defraud advertisers, and created a
sophisticated system of online fraud to deceive advertisers by
inflating the number of impressions and reaping millions of
dollars in revenues for advertisements that were never actually
seen or viewed by any individuals.
(Id.)
According to the Report, “it appears possible that a
company named BidMonitor, a third-party licensee of Knowlera’s
video content and certain domains, might have engaged in the
improper conduct alleged [above] and might have used its
relationship with Knowlera as a means to perpetrate these acts,
4
in violation of its agreement with Knowlera.”
(Compl. ¶ 33.)
On July 2, 2014, Plaintiff’s counsel contacted Defendants and
advised them of the false nature of the Report.
Ex. C [Dkt. 1-3].)
(Id. at ¶ 39,
Plaintiff also made multiple telephone
calls, but claim that Defendants have never responded to the
attempted contact.
(Id.)
Accordingly, Plaintiff filed the
instant suit against Defendants alleging three counts: (1)
defamation by Telemetry US; (2) defamation by Telemetry UK; and
(3) violation of the Lanham Act, 15 U.S.C. § 1125(a), by all
Defendants.
(Id. at ¶¶ 49-62.)
Plaintiff seeks compensatory
and punitive damages, equitable relief, and fees.
(Id. at 21.)
In response to the Complaint, Defendants filed a
motion to dismiss for lack of personal jurisdiction pursuant to
Rule 12(b)(2) and a motion to dismiss for failure to state a
claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure with a memorandum in support [Dkt. 20].
In support of
their motion to dismiss for lack of personal jurisdiction,
foreign corporations Telemetry US and Telemetry UK argue that
they are not “at home” in Virginia and that Plaintiff’s claims
do not arise out of any of Defendants’ activities in Virginia.
(Defs.’ Mem. at 8-15.)1
Knowlera filed an opposition to the
motions [Dkt. 22], to which Defendants replied [Dkt. 23].
1
The
For citation purposes, the Court uses the pagination assigned
by CM/ECF in the parties’ briefs.
5
Court heard oral argument of counsel on June 25, 2015.
The
Court ordered limited jurisdictional discovery on June 25, 2015.
[Dkt. 25]
Discovery was completed and the Court heard
supplemental oral argument of counsel on October 15, 2015.
Accordingly, the motions are ripe for disposition.
II. Legal Standard
A defendant can raise lack of personal jurisdiction as
a defense in a pre-answer motion.
See Fed. R. Civ. P. 12(b)(2).
The plaintiff bears the burden of proving to the court the
existence of personal jurisdiction over the defendant by a
preponderance of the evidence.
New Wellington Fin. Corp. v.
Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005)
(citation omitted).
If there are disputed factual questions as
to the existence of jurisdiction, the court may hold a separate
evidentiary hearing, or may defer ruling pending the production
of relevant evidence at trial.
See Combs v. Baker, 886 F.2d
673, 676 (4th Cir. 1989); see also Long v. Chevron Corp., No.
4:11cv47, 2011 WL 3903066, at *3 (E.D. Va. Sept. 2, 2011).
This
motion comes before the court after a period of jurisdictional
discovery, and “[w]hen the parties, as here, have conducted
jurisdictional discovery, it is the plaintiff’s burden to
establish personal jurisdiction by a preponderance of the
evidence.”
Bright Imperial Ltd. v. RT Mediasolutions, S.R.O.,
No. 11-cv-935, 2012 U.S. Dist. LEXIS 70000, at *9(E.D. Va. May
6
18, 2012)(citing Combs v. Baker, 866 F.2d 673, 676 (4th Cir.
1989)).
III. Analysis
Federal courts exercise personal jurisdiction in the
manner provided by state law.
New Wellington, 416 F.3d at 294.
The determination of whether the Court can assert personal
jurisdiction over a nonresident defendant involves two steps:
(1) whether the state’s long arm statute authorizes the exercise
of jurisdiction; and (2) if so, whether the exercise of
jurisdiction comports with due process requirements under the
Fourteenth Amendment.
People Exp. Airlines, Inc. v. 200 Kelsey
Assocs., LLC, 922 F. Supp. 2d 536, 542 (E.D. Va. 2013) (quoting
Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334
F.3d 390, 397 (4th Cir. 2003)).
In Virginia, “[i]t is manifest
that the purpose of Virginia’s long arm statute is to assert
jurisdiction over nonresidents who engage in some purposeful
activity in this State to the extent permissible under the due
process clause.”
Peninsula Cruise, Inc. v. New River Yacht
Sales, Inc., 512 S.E.2d 560, 562 (Va. 1999).
Because Virginia’s
long arm statute is intended to extend personal jurisdiction to
the outer limits of due process, the constitutional and
statutory inquiries merge.
Id.; see also Consulting Eng’rs
Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009).
7
There are two types of personal jurisdiction that meet
the requirements of due process: specific and general.
Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 473-74 (1985); CFA Inst.
v. Inst. of Chartered Fin. Analysts of India, 551 F.3d 285, 292
n.15 (4th Cir. 2009).
In both instances, a nonresident
defendant must have sufficient “minimum contacts” with the forum
state such that “the maintenance of the suit does not offend
traditional notions of fair play and substantial justice.”
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
Since
the Supreme Court’s “canonical opinion in [International Shoe] .
. . specific jurisdiction has become the centerpiece of modern
jurisdiction theory, while general jurisdiction has played a
reduced role.”
Daimler AG v. Bauman, 134 S. Ct. 746, 754-55
(2014) (“[S]pecific jurisdiction will come into sharper relief
and form a considerably more significant part of the scene.”)
(quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.
Ct. 2846, 2853-54 (2011)).
Regardless, general and specific
jurisdiction each satisfies the constitutional requirements of
due process, and each is discussed in turn.
Ultimately, the Court finds that it cannot assert
personal jurisdiction over Defendants under a theory of general
jurisdiction.
Specific jurisdiction is a much closer question,
but ultimately Plaintiff fails to establish by a preponderance
of the evidence that Defendants are subject to specific personal
8
jurisdiction in Virginia.
Accordingly, the Court grants
Defendants’ motion and dismisses the case for lack of personal
jurisdiction.
A. General Jurisdiction
“When a State exercises personal jurisdiction over a
defendant in a suit not arising out of or related to the
defendant’s contacts with the forum, the State has been said to
be exercising ‘general jurisdiction’ over the defendant.”
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 n.9 (1984) (citation omitted).
“[O]nly a limited set of
affiliations with a forum will render a defendant amendable to
all-purpose [or general] jurisdiction there.”
Ct. at 760.
Daimler, 134 S.
A defendant must have “continuous and systematic”
affiliations with the State “as to render [it] essentially at
home in the forum State.”
Goodyear, 131 S. Ct. at 2851 (citing
International Shoe, 326 U.S. at 317).
Absent exceptional
circumstances, the defendant is only subject to the general
jurisdiction of the forum state if it is the defendant’s
domicile.
Daimler, 134 S. Ct. at 760 (“[T]he paradigm forum for
the exercise of general jurisdiction is the individual’s
domicile; for a corporation, it is an equivalent place, one in
which the corporation is fairly regarded as at home.”) (quoting
Goodyear, 131 S. Ct. at 2853-54 (citing Brilmayer et al., A
General Look at General Jurisdiction, 66 Texas L. Rev. 721, 728
9
(1988)); see also Walden v. Fiore, 134 S. Ct. 1115, 1121 n.6
(2014) (stating general jurisdiction “permits a court to assert
jurisdiction over a defendant based on a forum connection
unrelated to the underlying suit (e.g., domicile).”).
Thus, for
the Court to assert general jurisdiction, the defendant must
have continuous and systemic contacts with the forum state so as
to not offend due process requirements.
Goodyear, 131 S. Ct. at
2851.
Here, it is undisputed that Telemetry US is domiciled
in New York, and that Telemetry UK is domiciled in London,
England; both locations are the place of incorporation and
principal place of business for each corporation.
(Defs.’ Mem.
Ex. 1 [Dkt. 20-1] Carncross Decl. ¶ 2, Ex. 2 [Dkt. 20-2] Frith
Decl. ¶ 2.)
Neither Telemetry US nor Telemetry UK is registered
to transact business in the Commonwealth of Virginia.
(Carncross Decl. ¶ 3; Frith Decl. ¶ 3.)
Telemetry US and
Telemetry UK do not have offices, officers, employees, or agents
in Virginia.
(Carncross Decl. ¶ 4; Frith Decl. ¶ 4.)
Telemetry
US and Telemetry UK do not own or rent property in Virginia, nor
do they pay taxes in Virginia or maintain bank accounts there.
(Carncross Decl. ¶ 5; Frith Decl. ¶ 5.)
In the face of these
undisputed facts, Plaintiff nonetheless asserts the Court has
general jurisdiction over Defendants due to their “continuous
and systematic” contacts in Virginia by “regularly contracting
10
with and performing services for Virginia-based companies and
companies with substantial offices in Virginia.”
at 3.)
(Pl.’s Opp’n
Specifically, Plaintiff argues that general jurisdiction
over Defendants is proper because four “current and former
account managers [oversaw] the Mars, Inc. account for Telemetry”
and because Telemetry UK filed eight patent applications with
the U.S. Patent and Trademark Office located in Alexandria,
Virginia.
(Id. at 4.)
These allegations are insufficient “as
to render [Defendants] essentially at home in [Virginia].”
Goodyear, 131 S. Ct. at 2851 (citing International Shoe, 326
U.S. at 317). Therefore, general jurisdiction is improper here.
General jurisdiction has long been understood as
proper only in “instances in which the continuous corporate
operations within a state [are] so substantial and of such a
nature as to justify suit against it on causes of action arising
from dealings entirely distinct from those activities.”
Goodyear, 131 S. Ct. at 2853 (quoting International Shoe, 326
U.S. at 318).
The Supreme Court has recently clarified that
“only a limited set of affiliations with a forum will render a
defendant amenable to all-purpose jurisdiction there.”
134 S. Ct. at 760.
Daimler,
Thus, “the paradigm forum for the exercise
of general jurisdiction . . . for a corporation . . . is an
equivalent place [to the individual’s domicile], one in which
the corporation is fairly regarded as at home.”
11
Goodyear, 131
S. Ct. at 2853-54 (citation omitted).
This comports with the
Supreme Court’s recognition of the relatively recent trend in
the extirpation of asserting personal jurisdiction on the basis
of general jurisdiction in favor of specific jurisdiction.
See,
e.g., Daimler, 134 S. Ct. at 758 (“As this Court has
increasingly trained on the ‘relationship among the defendant,
the forum, and the litigation,’ i.e., specific jurisdiction,
general jurisdiction has come to occupy a less dominant place in
the contemporary scheme.”) (citation and footnotes omitted);
Goodyear, 131 S. Ct. at 2854 (citing Twitchell, The Myth of
General Jurisdiction, 101 Harv. L. Rev. 610, 628 (1988) (in the
wake of International Shoe, “specific jurisdiction has become
the centerpiece of modern jurisdiction theory, while general
jurisdiction plays a reduced role.”)).
Here, it is untenable to claim that Defendants are “at
home” or domiciled in Virginia.
In short, Telemetry US is
domiciled in New York and Telemetry UK is domiciled in England.
And even if the Court assumes2 that various Telemetry employees
2
The Court finds that general jurisdiction is improper even if
it assumes that Telemetry employees serviced accounts for a
corporation in Virginia, when it appears that this assertion is
questionable as a matter of fact. (See Defs.’ Reply Ex. 1 Frith
Decl. II [Dkt. 23-1] ¶¶ 3-10 (“Mars, Inc. is not, and has not
been, a client of Telemetry US or Telemetry [UK] . . . .
[Various Mars Affiliates] were previously clients of Telemetry
US . . . . None of the work performed by Telemetry US and/or
Telemetry UK on the Mars Affiliates’ account was performed in
Virginia, and none of the individuals that Telemetry US and/or
12
previously managed accounts for a Virginia corporation, this
does not constitute “continuous corporate operations within a
state [that are] so substantial and of such a nature as to
justify suit against it” under a theory of general jurisdiction.
Goodyear, 131 S. Ct. at 2853 (quoting International Shoe, 326
U.S. at 318).
Similarly, Plaintiff does not cite, and this
Court cannot find, any legal support for the proposition that
the filing of a patent application with the U.S. Patent and
Trademark Office in Alexandria, Virginia constitutes a proper
basis for general jurisdiction.
Indeed, such a holding would
necessarily subject any patent or trademark applicant to the
general jurisdiction of this Court, even if it had no other
connection to Virginia.
The due process clause does not allow
such an unreasonable result.
Fundamentally, the requisite “continuous and
systematic” affiliation with the forum state is “comparable to a
domestic enterprise in that State.”
n.11.
Daimler, 134 S. Ct. at 758
The facts regarding Defendants’ business operations fall
far short of this lofty standard.
Accordingly, the Court cannot
assert personal jurisdiction over Defendants under a theory of
general jurisdiction.
B. Specific Jurisdiction
Telemetry UK dealt with at the Mars Affiliates was located in
Virginia.”).)
13
Asserting personal jurisdiction over Defendants under
a theory of specific jurisdiction would also be inappropriate in
this case.
To determine whether the Court can assert specific
jurisdiction over the defendant, the Court asks: “(1) the extent
to which the defendant has purposefully availed itself of the
privilege of conducting activities in the state; (2) whether the
plaintiffs’ claims arise out of those activities directed at the
state; and (3) whether the exercise of personal jurisdiction
would be constitutionally ‘reasonable.’”
Carefirst of Maryland,
Inc., 334 F.3d at 397 (citing ALS Scan, Inc. v. Digital Serv.
Consultants, Inc., 293 F.3d 707, 711-12 (4th Cir. 2002), cert.
denied, 537 U.S. 1105 (2003); Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984)); see also
Intercarrier Commc’ns LLC v. WhatsApp Inc., No. 3:12-cv-776-JAG,
2013 WL 5230631, at *3 (E.D. Va. Sept. 13, 2013).
Ultimately,
Plaintiff cannot point to evidence of actions by Defendants
which were purposefully directed towards Virginia and gave rise
to Plaintiff’s claims.
The evidence put forward by Plaintiff
shows only activities which were either directed at other states
and gave rise to their cause of action, or directed at Virginia
but did not give rise to Plaintiff’s cause of action.
Defendants’ contacts with Virginia are therefore not of the
quality or quantity which would support the exercise of personal
jurisdiction in this action.
14
Plaintiff argues that Defendants have subjected
themselves to specific personal jurisdiction in several ways.
Plaintiff repeats its contention that Defendants’ dissemination
of its Report on Knowlera to AdAge and several of Defendants’
clients evidences a desire to harm Knowlera and that these
allegedly intentional harms to Telemetry, “in the estimation of
Virginia companies and residents plainly connects Telemetry’s
conduct to Virginia.” (Pl.’s Supp. Opp’n [Dkt. 51] at 14.)
Plaintiff also argues that discovery has uncovered four ways in
which Defendants have purposely directed harmful business
activities towards Virginia, giving rise to Plaintiff’s cause of
action.
First, Plaintiff argues that Defendants are subject to
personal jurisdiction here because they contacted Knowlera
online and by phone while “conducting their investigation to
gather information for the Report.” (Pl.’s Supp. Opp’n At 9, Ex.
14 [Dkt. 51-14].).
Second, Plaintiff points to Defendants’
email of the Report to “Trace Rutland, the North America Media
Buying Director at Mars, Inc. … [which] has its principal place
of business in McLean, Virginia” as evidence of purposeful
activity directed towards Virginia.
(Id. at 10, Ex. 6 [Dkt. 51-
6], 7 [Dkt. 51-7], 9 [Dkt. 51-9], 10 [Dkt. 51-10], and 11 [Dkt.
51-11].) Third, Plaintiff makes the same argument about
Defendants’ use of the AdGen article in an email to “Julie
Fleisher, Kraft’s Senior Director of Data, Content, and Media,
15
in an effort to schedule a marketing meeting and explore ways
‘to collaborate together.’” (Id. at 11, Ex. 12 [Dkt. 51-12] 13
[Dkt. 51-13].)
Fourth and finally, Plaintiff argues for
specific personal jurisdiction arising from Defendants’ use of
the report in a March 26, 2015 acquisition pitch to the Virginia
corporation ComScore.
(Id., Ex. 2 [Dkt. 51-2], 5 [Dkt. 51-5],
22 [Dkt. 51-22], 23 [Dkt. 51-23].)
The Court will deal with
each of Plaintiff’s arguments in turn, but ultimately none of
its proposed theories of specific jurisdiction are persuasive.
The Court first addresses Plaintiff’s argument that
Defendants are subject to personal jurisdiction in Virginia
because they “knew their Report and the Article would cause harm
to Knowlera in Virginia [because Knowlera is located in
Virginia]– but simply did not care.” (Pl.’s Supp. Opp’n at 12).
The specific jurisdiction inquiry has always focused on “the
relationship among the defendant, the forum, and the
litigation.”
Walden, 134 S. Ct. at 1121 (“For a State to
exercise jurisdiction consistent with due process, the
defendant’s suit-related conduct must create a substantial
connection with the forum State.”) (citations omitted).
Even
though the plaintiff has the burden of proving personal
jurisdiction, the specific jurisdiction analysis is defendantcentric.
See Walden, 134 S. Ct. at 1122, 1125 (“But the
plaintiff cannot be the only link between the defendant and the
16
forum . . . . The proper question is not where the plaintiff
experienced a particular injury or effect but whether the
defendant’s conduct connects him to the forum in a meaningful
way.”).
Asserting personal jurisdiction over Defendants under a
theory of specific jurisdiction simply because Defendant is
alleged to have intentionally harmed the Plaintiff, and the
Plaintiff is at home in the forum state would “impermissibly
allow[] a plaintiff’s contacts with the defendant and forum to
drive the jurisdictional analysis.”
Id. at 1125.
Plaintiff’s
efforts to establish the sufficient minimum contacts necessary
between Defendants and Virginia are fruitless in the face of the
Supreme Court’s precedent in Walden.
Plaintiff contends that this Court has personal
jurisdiction over Defendants because:
(1) Defendants knowingly and intentionally
targeted the Plaintiff when the Defendants
published and disseminated the false and
defamatory statements, of and concerning
Plaintiff, specifically naming the Plaintiff
in Defendants’ defamatory Report annexed
hereto, with the intent to cause harm and
damage to Plaintiff’s reputation in the
Commonwealth of Virginia;
(2) Defendants, upon information and belief,
knowingly and intentionally published the
false and defamatory statements within the
Commonwealth of Virginia, resulting in harm
and
damage
to
Plaintiff
within
the
Commonwealth of Virginia; and
(3) Defendants knowingly
published
the
false
17
and intentionally
and
defamatory
statements
outside
the
Commonwealth
of
Virginia, with the knowledge and intent that
the statements would result in harm and
damage to Plaintiff within the Commonwealth
of Virginia.
(Compl. ¶ 9.)
“Such reasoning improperly attributes a
plaintiff’s forum connections to the defendant and makes those
connections ‘decisive’ in the jurisdictional analysis.”
134 S. Ct. at 1125.
Walden,
The Supreme Court’s decision in Walden
controls this outcome and the Court’s analysis.
In Walden, The Supreme Court emphasized that the
specific jurisdiction inquiry focuses “on the relationship among
the defendant, the forum, and the litigation,” and that there, a
DEA agent located in Georgia lacked the “minimum contacts” with
Nevada that are a prerequisite to the exercise of jurisdiction
over him because no part of his conduct occurred in Nevada, he
formed no jurisdictionally relevant contacts in Nevada, and the
mere injury to a forum resident was not a sufficient connection
to the forum.
Id., at 1121-26 (citations omitted).
Here, just
as in Walden, Plaintiff’s argument is focused on the alleged
harm that it suffered as a result of Defendants’ alleged
defamatory act.
(See Pl.’s Opp’n at 8 (“Knowlera, a company
that was located and injured in Virginia, should not have to go
to New York and/or the United Kingdom to seek redress from
companies that knowingly caused them injury in Virginia.”).)
This is not the proper focus of the Court’s jurisdictional
18
inquiry.
See Walden, 134 S. Ct. at 1125 (“Calder made clear
that mere injury to a forum resident is not a sufficient
connection to the forum.
Regardless of where a plaintiff lives
or works, an injury is jurisdictionally relevant only insofar as
it shows that the defendant has formed a contact with the forum
State.”) (emphasis added).
Because Defendants have not formed
substantial contacts with the Commonwealth of Virginia, the
Court cannot assert personal jurisdiction over them on this
basis.
In arguing that Defendants should be subject to
specific jurisdiction for their disclosure of the Report to
AdAge, who then subsequently disseminated their resulting
Article to Virginia readers, Plaintiff relies heavily on the
Supreme Court’s decision in Calder v. Jones,3 but the facts of
this case are distinguishable.
In Calder, the plaintiff brought
libel claims in California state court against a reporter and
editor who worked for the National Enquirer at its headquarters
in Florida.
465 U.S. 783 (1984).
The claims were brought based
on an article written in Florida and published nationally, with
a California circulation of roughly 600,000.
The Supreme Court
held that the California state court could properly assert
personal jurisdiction over the defendants after “examin[ing] the
3
Plaintiff also relies on the three-factor test from ALS Scan,
which is discussed, supra.
19
various contacts the defendants had created with California (and
not just with the plaintiff) by writing the allegedly libelous
story.”
Walden, 134 S. Ct. at 1123 (discussing Calder).
Specifically, the Court found the Florida defendants
had created “ample” contacts with the forum state of California.
The defendants relied on phone calls to
“California sources” for the information in
their article; they wrote the story about
the plaintiff’s activities in California;
they
caused
reputational
injury
in
California by writing an allegedly libelous
article that was widely circulated in the
State; and the “brunt” of that injury was
suffered by the plaintiff in that State.
Walden, 134 S. Ct. at 1123 (citing Calder, 465 U.S. at 788-89
(“In sum, California [wa]s the focal point of both the story and
the harm suffered.”)).
The Supreme Court’s recent analysis in
Walden, which greatly considered and relied on its precedent
from Calder, counsels against asserting jurisdiction over
Defendants here.
First, Defendants’ suit-related conduct, i.e. the
creation and publication of the Report, did not “arise out of
contacts that the defendant [itself] create[d] with the forum
State.”
Walden, 134 S. Ct. at 1121-22.
First, there is no
allegation or evidence that the Report was created in Virginia.
The Court draws this conclusion based on the undisputed fact
that Defendants do not have employees, offices, or agents
located in Virginia.
It is more likely, although still
20
speculative, that the Report was created in New York or London,
the domiciles of each corporation.
Second, as discussed above,
Defendants did not directly distribute the Report to any
individual in the Commonwealth of Virginia.
(Carncross Decl. ¶
8; Frith Decl. ¶ 8.)
Instead, Plaintiff argues that Defendants distributed
the Report to AdAge, “a media entity focused on the advertising
industry,” that subsequently wrote an article about the Report
that was posted to its website, which is accessible by anyone
with an Internet connection.
(Jerro Decl. ¶¶ 9-11.)
AdAge is
“a widely read publication in the Northern Virginia area.”
(Id. at ¶ 9.)
“[H]undreds if not thousands of people in the
Northern Virginia area read AdAge’s Article,” including
representatives from AOL, Gannett, and comScore.
16.)
(Id. at ¶¶ 14-
But it remains undisputed that Telemetry US and Telemetry
UK, the named Defendants in this action, did not directly
distribute or publish the Report within the Commonwealth of
Virginia.
(Carncross Decl. ¶ 8; Frith Decl. ¶ 8.)
The fact
that AdAge, a non-party, posted an article on its website
regarding the Report does not somehow draw the named Defendants
within the personal jurisdiction of this Court.
Under the first prong of Walden, the Court looks only
at contacts “the defendant himself creates with the forum
State.”
Walden, 134 S. Ct. at 1122 (quotation marks omitted).
21
Here, quite simply, there are none, except for the fact that
Defendants authored the Report about Plaintiff, a Virginia-based
company.
“[H]owever significant the plaintiff’s contacts with
the forum may be, those contacts cannot be ‘decisive in
determining whether the defendant’s due process rights are
violated.’”
(1980)).
Id. (quoting Rush v. Savchuk, 444 U.S. 320, 332
Thus, Defendants’ actions here, in light of Walden,
counsel against this Court asserting personal jurisdiction over
Defendants under a theory of specific jurisdiction.
Second, Defendants have minimal contacts with
Virginia, the forum state itself.
See Walden, 134 S. Ct. at
1122(“[O]ur ‘minimum contacts’ analysis looks to the defendant’s
contacts with the forum State itself, not the defendant’s
contacts with persons who reside there.”).
In short, “the
plaintiff cannot be the only link between the defendant and the
forum.”
Id.
And here, Plaintiff is Defendants’ only relevant
link to Virginia.
Defendants wrote the Report, but there is no
evidence that Defendants circulated the Report in Virginia to
“deliberately exploi[t]” the market in Virginia or Plaintiff’s
business in Virginia.
Cf. id. (quoting Keeton v. Hustler
Magazine, Inc., 465 U.S. 770, 781 (1984)).
Instead, Defendants
distributed the Report to AdAge, an Internet-based advertising
magazine that wrote its own article about the Report and
22
published it on its website,4 which was then read by advertising
executives in Virginia.
This causal chain is too attenuated to
support the exercise of specific jurisdiction in this case
without violating Defendants’ due process rights.
See Walden,
134 S. Ct. at 1123 (“Due process requires that a defendant be
haled into court in a forum State based on his own affiliation
with the State, not based on the ‘random, fortuitous, or
attenuated’ contacts he makes by interacting with other person
affiliated with the State.”) (quoting Burger King, 471 U.S. at
475).
Plaintiff is correct that if its allegations are true,
the injury to Plaintiff’s reputation occurred in the
Commonwealth of Virginia; most notably, in the eyes of its
clients and the online-advertising industry of the forum State.
But that connection alone is not enough to assert personal
jurisdiction over Defendants.
Unlike Calder, the Report at
issue did not “have a Virginia focus.”
See Walden 134 S. Ct. at
1124 (“[T]he injury to the plaintiff’s reputation in the
estimation of the California public . . . combined with the
various facts that gave the article a California focus, sufficed
4
The Supreme Court has not yet answered the question regarding
“virtual contacts.” See Walden, 134 S. Ct. at 1125 n.9 (“[W]e
reiterate that the ‘minimum contacts’ inquiry principally
protects the liberty of the nonresident defendant, not the
interests of the plaintiff.”) (citations omitted). To the
extent the Fourth Circuit addressed this issue in ALS Scan, it
is discussed, infra.
23
to authorize the California court’s exercise of jurisdiction.”).
Aside from identifying Plaintiff’s location in Great Falls,
Virginia (see Compl. Ex. A at 3), the Report focused on “a
ghosting vehicle and its ability to convert one purchased low
level in banner online video advertising impression into
multiple saleable pre-roll impressions with faked results” using
highly technical, market-focused jargon.
(Compl. Ex. A.)
Stated differently, Plaintiff “would have experienced [the same
harm] wherever else they might have [been headquartered] and
found themselves [answering to clients]” who read the article.
Walden, 134 S. Ct. at 1125.
Virginia.
There is simply no focus on
Id. (“Unlike the broad publication of the forum-
focused story in Calder, the effects of [Defendants’] conduct on
[Plaintiff is] not connected to the forum State in a way that
makes those effects a proper basis for jurisdiction.”).
Presumably, if the Report was intended for outside
consumption, it targeted the entire online advertising industry;
an industry that spans the Internet, not just Northern Virginia
(or wherever Plaintiff was domiciled).
The Report itself gives
no indication that it was targeted specifically for online
advertising agencies in Virginia, or Virginia companies doing
business with Plaintiff, or any companies doing business with
Plaintiff.
The “crux” of the Supreme Court’s jurisprudence in
this area remains “focused on the relationship among the
24
defendant, the forum, and the litigation,” and whether “the
defendant’s conduct connects him to the forum in a meaningful
way.”
Walden, 132 S. Ct. at 1123, 1125 (citations and internal
alterations omitted).
Because the Defendants have not created a
meaningful connection with Virginia, the Court cannot assert
personal jurisdiction over them under a theory of specific
jurisdiction either.
Id. at 1125 (stating the defendant’s
knowledge of a plaintiff’s strong ties to the forum state is
irrelevant, because such an approach “impermissibly allows a
plaintiff’s contacts with the defendant and forum to drive the
jurisdictional analysis.”).
Next, the Court addresses Plaintiff’s claim that
Defendants are subject to specific personal jurisdiction because
jurisdictional discovery has shown that Defendants reached out
to Virginia to contact Plaintiff while they were compiling their
report.
(Pl.’s Supp. Opp’n at 9, Ex. 14.) Specifically,
Plaintiff alleges that while Defendants were “conducting their
investigation to gather information for the Report, and
subsequently for the Article, Defendants deceptively registered
to become a Knowlera user, engaged in various email
communications with Knowlera, and spoke to Knowlera on the
phone.” (Id.)
Further, Plaintiff alleges that “Knowlera and
Defendants (using a pseudonym) did business together, as
Defendants used Knowlera’s services in April 2014 and June
25
2014.”
(Id., Ex. 16.)
Defendants admit that they have made one
phone call and sent one email to Knowlera “in connection with
the investigation that led to the Report.” (Defs.’ Supp. Mem.
[Dkt. 48] at 14 (citing Carncross Decl. [Dkt. 20-1] ¶ 7).)
Plaintiff’s Exhibit 14 confirms that Defendants did register an
account with Knowlera in June, 2014 under the fictitious name
“greatcookinginfo”.
(Pl.’s Supp. Opp’n at 9, Ex. 14.) Exhibit
16 likewise confirms that this account used some of Knowlera’s
services.
(Id., Ex. 16.)
However, these alleged contacts are
minimal in quantity, and are not of the quality which would
justify subjecting Defendants to specific jurisdiction for this
claim on their account.
The Fourth Circuit directly addressed the question of
specific jurisdiction allegedly stemming from electronic
contacts with the forum state in ALS Scan, Inc. v. Digital Serv.
Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002), which
modified the “traditional test” from Young v. New Haven
Advocate, 315 F.3d 256, 261 (4th Cir. 2002) to account for
advancements in technology.
A Court may “exercise judicial
power over a person outside of the State when that person (1)
directs electronic activity into the State, (2) with the
manifested intent of engaging in business or other interactions
within the State, and (3) that activity creates, in a person
within the State, a potential cause of action cognizable in the
26
State’s courts.”
ALS Scan, 293 F.3d at 714.
Here, Defendants’
contact with Knowlera in the course of their investigation is
electronic activity directed into Virginia with the manifested
intent of engaging in (extremely limited) business within the
State, but these activities have not created Plaintiff’s cause
of action in this case.
Plaintiff’s claims stem from the
alleged dissemination and publication of Defendants report, not
the mere fact of the Report’s existence.
(See Compl. ¶¶ 49-62).
Additionally, the registration of a dummy web-site, one e-mail,
one phone call, and a cursory sampling of Plaintiff’s services
for investigative purposes are not very substantive contacts.
Accordingly, the Court will give them little weight in
determining whether the Defendant has made sufficient voluntary
contacts in Virginia to allow the Court to exercise specific
personal jurisdiction over them.
See DeCusati v. Reiss Eng’g,
Inc., No. 15-cv-0204, 2015 U.S. Dist. LEXIS 998344, at *5 (E.D.
Va. July 30, 2015)(“Telephone calls, email and telex messages,
and letters do not form a basis for personal
jurisdiction.”)(citing DeSantis v. Hafnet Creations, 949 F.
Supp. 419, 424 at n.12 (E.D.Va. 1996)); See also Koch v. Local
438, United Autoworkers Union¸ 54 F. App’x 807 (6th Cir.
2002)(Holding that telephone calls by the plaintiff to the
defendant in the forum state and a subsequent letter to a third
party in another state were not a sufficient basis for personal
27
jurisdiction.).5
As the contacts between Defendants and
Plaintiff arising from Defendants’ investigation are both
cursory in quality and did not give rise to Plaintiff’s cause of
action, they are not sufficient to support an exercise of
specific jurisdiction by this Court over Defendants.
Plaintiff also argues that Defendants are subject to
specific personal jurisdiction here because discovery has shown
that Defendants sent the Report and the AdAge Article to two
executives employed by two separate Virginia corporations in an
attempt to “expand their business relationship” with those
corporations.
(Pl.’s Supp. Opp’n at 10-11.)
Defendants, on the
other hand, assert that the evidence in the record does not
establish that these executives represented Virginia
corporations; that Defendants did not believe nor should they
reasonably have known that these executives based in New Jersey
and Illinois, respectively, were employed by Virginia
corporations; and that in any event Defendants had no intention
to solicit business in Virginia or spread the Report or the
Article to the Commonwealth through its contact with these
executives.
(Defs.’ Supp. Mem. at 13.)
Ultimately, Plaintiff
fails to prove by a preponderance of the evidence that by
5
Plaintiff’s offered case of Alahverdian v. Nemelka, 2015 WL
5004886 (S.D.Ohio Aug. 24, 2015) is inapposite, as in that case
the defendant emailed the damaging communication itself directly
to the plaintiff as well as a number of other people within the
forum state.
28
sending the Report and the Article, respectively, to these two
executives Defendants have “purposefully availed [themselves] of
the privilege of conducting activities in [Virginia].” Carefirst
of Maryland, Inc., 334 F.3d at 397 (internal citations omitted).
In order to properly be subject to this Court’s
specific jurisdiction, “a defendant must ‘purposefully avail[]
itself of the privilege of conducting activities within the
forum state.’ . . . The Court cannot hale a defendant into its
jurisdiction because of ‘random, fortuitous, or attenuated
contacts’ or some ‘unilateral activity of another party or a
third person.’”
DeCusati, 2015 U.S. Dist. LEXIS 99834 at *5
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985)).
Here, Plaintiff fails to demonstrate by a
preponderance of the evidence that Defendants were “purposefully
availing” themselves of Virginia’s markets by contacting either
Trace Rutland or Julie Fleisher.
Plaintiff relies on Exhibit 7
to demonstrate that Ms. Rutland was employed at Mars Inc., a
Virginia corporation, when Defendants sent her their Report on
Knowlera.
[Dkt. 51-7].
However, Exhibit 7 itself, Ms.
Rutland’s “LinkedIn” page, identifies her as working in New
Jersey while she was employed by Mars.
Id.
On the basis of
this evidence then, It is more likely than not that Defendants
would have thought that by emailing Mars’ “North American Buying
Director” in New Jersey they were reaching out to their former
29
clients, Mars Chocolate North America, LLC, and its affiliates,
none of which are incorporated or headquartered in Virginia.
[Dkt. 51-7]; Defs.’ Supp. Mem. at 12-13.)
In fact, Plaintiff
has not demonstrated that Defendants actually conducted any
activities at all in Virginia any point in this interaction or
as a result of the emails with Ms. Rutland.
Therefore,
Plaintiff has failed to demonstrate by a preponderance of the
evidence that Defendants have purposefully availed [themselves]
of the privilege of conducting activities in [Virginia].”
Carefirst of Maryland, Inc., 334 F.3d at 397 (internal citations
omitted).
Accordingly, Defendants’ e-mails to Ms. Rutland
cannot support an exercise of specific jurisdiction by this
Court in this case.
Likewise, Plaintiff fails to prove by a preponderance
of the evidence that Defendants had even the slightest thought
of Virginia in mind when one of their employees in Chicago
forwarded the AdAge article to a Julie Fleisher, Kraft’s Senior
Director of Data, Content, and Media, also based out of Chicago.
(Pl.’s Supp. Opp’n at 11, Ex. 13 [Dkt. 51-13].)
As witn with
Ms. Rutland, Plaintiff fails to demonstrate that Defendants have
in fact conducted any activities in Virginia either in the
course of their interaction with Julie Fleisher or as a result
of it.
Therefore, for the same reasons stated above in the
discussion of the e-mails with Ms. Rutland, Defendants’ email
30
interactions with to Ms. Fleisher cannot support an exercise of
specific jurisdiction over Defendants by this Court in this
case.
Finally, Plaintiff argues that Defendants are subject
to specific jurisdiction because of Defendants’ representations
in a March 26, 2015 acquisition pitch to the Virginia
corporation ComScore regarding their report uncovering Knowlera
as perpetrator of an advertisement fraud.
11, Ex. 2, 5, 22, 23.)
(Pl.’s Supp. Opp’n at
This argument fails as Plaintiff’s cause
of action cannot possibly arise out of the Defendants’
representations to ComScore in a March 26, 2015 meeting.
(Defs.’ Supp. Mem. at 14.)
“When a court is exercising specific
jurisdiction over a defendant, arising out of or related to the
defendant’s contacts with the forum, the fair warning that due
process requires arises not at the time of the suit, but when
the events that gave rise to the suit occurred.”
Steel v.
United States, 813 F.2d 1545 (9th Cir. 1987)(citation and
internal quotation marks omitted); see also Stein v. Horwitz,
1999 U.S. App. LEXIS 21940, at *6 (4th Cir. Sept. 13,
1999)(citing Steel and stating that “[a]s to the due process
considerations, we assess [the] contacts with [the forum state]
at the time of the accident”).
Plaintiff alleges that the
losses caused by Defendants’ dissemination of the Report
occurred in 2014.
(See Compl. ¶ 17)(“Unfortunately, most of the
31
value that Knowlera had worked so hard to build over the course
of the last seven years was suddenly wiped out in the summer of
2014 due to Telemetry’s false and defamatory Report.”)
As
Defendants representations of March 26, 2015, occurred well
after Plaintiff’s alleged losses, Plaintiff’s claims cannot
plausibly arise from this contact with the forum state.
Therefore, this proposed basis for specific jurisdiction will
fail as well, and the Court accordingly will grant Defedants’
Motion to Dismiss for lack of Personal Jurisdiction.
IV. Conclusion
For the foregoing reasons, the Court grants
Defendants’ motion to dismiss for lack of personal jurisdiction,
rendering moot Defendants’ motion to dismiss for failure to
state a claim.
An appropriate Order shall issue.
October 27, 2015
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
32
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