Opinion
No. CV-04-389-HU.
September 23, 2004
FINDINGS AND RECOMMENDATION
This is an action brought pursuant to the court's diversity jurisdiction for libel, invasion of privacy, and intentional infliction of emotional distress. Plaintiffs seek money damages and injunctive relief.
Plaintiff Casey Tallon is a resident of Oregon; Tallon Kustom Equipment LLC is a Limited Liability Company licensed and authorized to do business in the state of Oregon. Defendants Kathy Gammons and Jerry Thigpen aka Jerry Pigpen are residents of Tennessee, doing business as Gobster Mirage and www.Hacksaw.com.
Factual and Procedural Background
Plaintiffs are in the business of manufacturing customized motorcycle parts, primarily for Triumph motorcycles. They conduct most of their marketing through the Internet by means of a website called www.tallonkustom.com. Ninety-eight percent of their orders are generated by this means. On June 5, 2003, defendant Gammons registered a website under the domain name tallonkustoms.com, a domain name virtually identical to the plaintiffs' domain name except for the addition of the letter "s" (Gammon's web page). The registration address for Gammon's web page is that of defendant Thigpen.
Plaintiffs allege that Casey Tallon and Thigpen had had previous dealings in August 2002, when Thigpen asked, without success, to be a dealer for the motorcycle parts that plaintiffs manufactured. Plaintiffs allege that thereafter, Thigpen "engaged in a campaign to destroy Plaintiffs' business through the utilization" of Gammon's web page and other means, including: 1) posting defamatory statements about plaintiffs on Gammon's web page, including photographs of parts supposedly manufactured by plaintiffs that are defective, along with allegedly false comments and photographs described as "Tallon Kustoms' Complaint Department;" 2) transferring copyrighted photographs from plaintiffs' web page to defendants' website; 3) posting messages on "message boards" over the Internet with various names, posing as disgruntled customers of plaintiffs and purporting to carry on group discussions, when in fact all of the IP addresses for the customers in the group are identical; 4) making defamatory and obscene statements about plaintiffs on these message boards; and 5) publishing these defamatory statements through various names such as "Cat," Hacksaw.com, and Gobster.com.
Defendants move under Rule 12(b)(2) of the Federal Rules of Civil Procedure to dismiss the action for lack of personal jurisdiction and to dismiss for improper venue. Defendants also move to strike certain assertions made in plaintiffs' memorandum in opposition to the motion to dismiss. I recommend that the motions to dismiss for lack of personal jurisdiction, and for improper venue, and to strike be denied, and that the motion to dismiss for improper venue be granted with leave to replead.
Standards
The plaintiff bears the burden of establishing personal jurisdiction by a preponderance of the evidence. KVOS Inc. v. Assoc. Press, 299 U.S. 269, 278 (1936); Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). A two-part showing is required: (1) the forum state must have an applicable long-arm statute; and (2) the assertion of jurisdiction must comport with the constitutional requirements of due process. Fireman's Fund Ins. Co. v. National Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996). Oregon's long arm statute, Oregon Rule of Civil Procedure 4L, extends personal jurisdiction to the extent permitted by federal due process. Gray Co. v. Firstenberg Mach. Co., 913 F.2d 758, 760 (9th Cir. 1990). "Thus, the analysis collapses into a single framework and the court proceeds under federal due process standards." Millennium Enterprises v. Millennium Music, LP, 33 F. Supp.2d 907, 909 (D. Or. 1999).
When the district court receives only written submissions, and makes its jurisdictional decision on the basis of pleadings and affidavits, the plaintiff need only make a prima facie showing of jurisdiction to avoid the defendant's motion to dismiss. Omeluk v. Langsten Slip Batbyggeri A/S, 52 F.3d 267, 268 (9th Cir. 1995); Data Disk, Inc. v. Systems Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). In determining whether the plaintiff has met this burden, uncontroverted allegations in the complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in plaintiff's favor. AT T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996); see also Dole Food Co. v. Watts, 303 F.3d 1104, 1107 (9th Cir. 2002) (in context of a Rule 12(b)(2) motion for lack of personal jurisdiction, court is to take as true the allegations of the nonmoving party and resolve all factual disputes in its favor).
Due process requires minimum contacts between the defendant and the forum state such that the exercise of personal jurisdiction does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. State of Washington, 326 U.S. 310 (1945); Fireman's Fund, 103 F.3d at 893. However, the nature and quality of contacts necessary to support jurisdiction depends upon the type of jurisdiction asserted. Fireman's Fund, 103 F.3d at 893.
General jurisdiction exists when a defendant is domiciled in the forum state or his activities there are "substantial" or "continuous and systematic." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984). For a business entity, the contacts must constitute the kind of continuous and systematic general business contacts that "approximate physical presence." Bancroft Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).
Defendant Thigpen has submitted an affidavit stating that he lives and works in Tennessee; that the "vast majority" of his business is conducted in Tennessee, that he "cannot recall" ever having conducted business or engaging in activity that resulted in a transaction in the state of Oregon or that involved his physically traveling to Oregon; and that he is unable to locate any record of having conducted business in Oregon. Affidavit of Jerry Thigpen p. 1. Defendant Gammon has submitted an unsigned, unnotarized affidavit to the same effect. Plaintiffs do not dispute these statements. It is, therefore, undisputed that the requirements for general jurisdiction are not met.
Specific jurisdiction refers to a situation in which the cause of action arises directly from a defendant's contacts with the forum state. Tech Heads, Inc. v. Desktop Service Center, Inc., 105 F. Supp.2d 1142, 1147 (D. Or. 2000). To be subject to specific jurisdiction:
(1) the nonresident defendant must purposefully direct his activities or consummate some transaction with the forum or residents thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protection of its laws;
(2) the claim must be one that arises out of or relates to the defendant's forum-related activities [and];
(3) the exercise of jurisdiction must comport with fair play and substantial justice; i.e. it must be reasonable.Ballard, 65 F.3d at 1498. Each of these elements must be satisfied.
Even if the first two requirements are met, in order to satisfy the due process clause, the exercise of personal jurisdiction must be reasonable. Panavision, 141 F.3d at 1322; Ziegler, 64 F.3d at 474-75. For jurisdiction to be reasonable, it must comport with "fair play and substantial justice." Burger King, 471 U.S. at 476.
Discussion
Motion to dismiss Purposeful availmentThe purposeful availment requirement is satisfied if the defendant "has taken deliberate action" toward the forum state.Panavision Intern., L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998); Ballard, 65 F.3d at 1498. However, the contacts must proximately result from actions by the defendant himself that create a substantial connection with the forum state. Glencore Grain v. Shivnath Rai Harnarain, 284 F.3d 1114, 1123 (9th Cir. 2002). It is not required that a defendant be physically present or have physical contacts with the forum, so long as his efforts are "purposefully directed" toward forum residents. Ballard, 65 F.3d at 1498. Application of the purposeful availment prong differs depending on whether the underlying claim is a tort or contract claim. Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995).
In a tort case such as the one at bar, jurisdiction may attach if the defendant's conduct is aimed at or has an effect in the forum state. See Calder v. Jones, 465 U.S. 783, 789-90 (1984) (holding that an intentional tort knowingly directed at a forum resident satisfies the minimum contacts test); see alsoPanavision, 141 F.3d at 1321, and Ziegler, 64 F.3d at 473. Under Calder, personal jurisdiction can be based upon: 1) intentional actions 2) expressly aimed at the forum state 3) causing harm, the brunt of which is suffered — and which the defendant knows is likely to be suffered — in the forum state. Panavision, 141 F.3d at 1321, quoting Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1486 (9th Cir. 1993).
Defendants argue that the "purposeful availment" requirement is not met here. They rely on Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997). In Cybersell, the court held that the allegedly infringing use of a service mark in a home page did not suffice for personal jurisdiction in the state where the holder of the mark had its principal place of business. The court concluded that the three Calder requirements were not met because defendant's web page was not aimed intentionally at Arizona, with the knowledge that harm was likely to be caused there to the plaintiff. Defendants argue that, as in Cybersell, Oregon was not the "focal point" of their website, because the information defendants posted to their website was "not directed solely at the plaintiffs, but was directed to warn others of the poor workmanship of the plaintiffs, and to further advise others of the plaintiffs' questionable business practices." Defendants' Memorandum, p. 8.
Plaintiffs argue that defendants' actions are purposefully directed toward themselves in Oregon because defendants have used a domain name almost identical to theirs and because defendants' actions are calculated to cause injury to the plaintiffs in the state of Oregon. Plaintiffs argue that this case is therefore factually closer to Panavision, where the defendant "engaged in a scheme to register Panavision's trademarks as his domain names for the purpose of extorting money from Panavision." 141 F.3d at 1322. The Panavision court concluded that the purposeful availment requirement was satisfied under the "effects test."Id.
I agree with plaintiffs. Defendants' website is clearly directed, not toward the public at large, but specifically toward plaintiffs and their customers and potential customers. Defendants intend for the alleged harm caused by their conduct to be suffered by the plaintiffs in Oregon; in fact, they admit as much, when they say that the purpose of their website was to advise the public of plaintiffs' "questionable business practices" and "poor workmanship." I conclude that the "purposeful availment" prong is satisfied.
"Arising out of" the claim
The second requirement for specific personal jurisdiction is that the claim asserted arise out of the defendant's forum related activities. Ziegler, 64 F.3d at 474. The test is whether the plaintiff "would not have been injured `but for' the defendant's . . . conduct directed toward [plaintiff]."Panavision, 141 F.3d at 1322; Ballard, 65 F.3d at 1500.
In Panavision, this element was satisfied where the defendant's domain name registration of Panavision's trademark had the effect of injuring Panavision in California, its home state and the capital of the movie industry. The facts of this case are similar. The stated purpose of defendants' website is to "warn" plaintiffs' customers, thereby persuading them not to do business with the plaintiffs — clearly, the effect of this conduct is injury to plaintiffs' business reputation in Oregon, plaintiffs' residence and place of business; but for the defendants' conduct, plaintiffs would not be injured. I conclude that the second requirement is met.
Reasonableness
When a defendant has purposefully directed activities at forum residents, he must present "a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Core-Vent, 11 F.3d at 1487.
The question of reasonableness requires consideration of seven factors: 1) the extent of a defendant's purposeful interjection; 2) the burden on the defendant in defending in the forum; 3) the extent of conflict with the sovereignty of the defendant's state; 4) the forum state's interest in adjudicating the dispute; 5) the most efficient judicial resolution of the controversy; 6) the importance of the forum to the plaintiff's interest in convenient and effective relief; and 7) the existence of an alternative forum. Burger King, 471 U.S. at 476-77. No one factor is dispositive; the court must balance all seven. Core-Vent, 11 F.3d at 1488; Panavision, 141 F.3d at 1323.
Defendants offer conclusory statements that the burden on them to defend this case in Oregon is substantial, and that the most efficient forum for judicial resolution of this dispute is Tennessee because the only witness in Oregon is plaintiff Casey Tallon. They also assert that if compelled to appear in oregon, they will be required to bring "over a dozen" witnesses from Tennessee to testify, including lay and expert witnesses. None of these statements is supported by any evidence. This does not constitute a "compelling case" that jurisdiction is unreasonable. I recommend that the motion to dismiss be denied.
Motion to dismiss for improper venue
A diversity action may be brought only in 1) a judicial district where any defendant resides, if all defendants reside in the same state; 2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or 3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
Plaintiffs allege that venue is proper under 28 U.S.C. § 1391(c), which provides for venue when the defendant is a corporation. However, defendants are individuals, not corporations. Plaintiffs have also alleged in their complaint that a "substantial part of the events giving rise to the claim occurred in the State of Oregon in that plaintiffs were defamed and injured in their personal and business reputation therein." In their response to the motion to dismiss, plaintiffs seem to have elected venue on the basis of this allegation, which tracks § 1391(a)(2), rather than on § 1391(c) as first alleged in the complaint. Plaintiffs' allegations that defendants' allegedly tortious actions were targeted at themselves and their business in Oregon, causing damage to them in Oregon, are sufficient to establish venue on the basis of § 1391(a)(2).
I recommend that the motion to dismiss for lack of proper venue be denied.
Motion to strike
Defendants move to strike assertions made in plaintiffs' memorandum in opposition to the motion to dismiss, on the ground that they are not supported by evidence in the form of affidavits. Several of these assertions are supported by legal authority, such as the descriptions of Internet domain names taken from Panavision. Some are not factual, but rather legal contentions. Some are mirror images of unsubstantiated statements made by the defendants, such as whether the witnesses in this case will come from Oregon or from Tennessee, or which party will be unduly burdened by litigating in the other's forum. The remainder are based on allegations made in the complaint and uncontroverted by the single signed, notarized affidavit submitted by the defendants. When, as here, the jurisdictional decision is based on written materials rather than testimony, the plaintiff need only make a prima facie showing of jurisdiction, and that showing can be made by uncontroverted allegations in the complaint, which are taken as true. I recommend that the motion to strike be denied.
Conclusion
I recommend that the defendants' motion to dismiss for lack of personal jurisdiction and improper venue (doc. # 7) be DENIED. I recommend that the defendants' motion to strike (doc. # 12) be DENIED.
Scheduling Order
The above Findings and Recommendation will be referred to a United States District Judge for review. Objections, if any, are due October 7, 2004. If no objections are filed, review of the Findings and Recommendation will go under advisement on that date. If objections are filed, a response to the objections is due October 21, 2004, and the review of the Findings and Recommendation will go under advisement on that date.