Opinion
21-P-909
11-09-2022
WERUVA INTERNATIONAL, INC. v. VETERINARY INFORMATION NETWORK, INC. & another.[1]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Weruva International, Inc. ("Weruva") filed an action seeking recovery for the harm it allegedly suffered when the defendants -- Veterinary Information Network ("VIN") and its employee Edie Lau -- published an article online about cat food that Weruva manufactures exclusively for the Australian market. The defendants moved to dismiss the amended complaint in its entirety for lack of personal jurisdiction or to dismiss one of the counts, alleging civil conspiracy, for failure to state a claim on which relief can be granted. A Superior Court judge allowed the motions to dismiss, agreeing with both grounds asserted in the motions, and denied Weruva's motion for jurisdictional discovery. Weruva appeals. We affirm the dismissal of the civil conspiracy claim and the allowance of Lau's motion to dismiss for lack of personal jurisdiction. We reverse the allowance of VIN's motion to dismiss for lack of personal jurisdiction and remand for further proceedings.
Background.
Weruva is a Massachusetts corporation with its principal place of business in Natick. It manufactures natural pet foods, including a cat food called "Best Feline Friends" (BFF). VIN is a California corporation with its principal place of business in California. It operates an online community and information service for veterinarians, and its content is available only to subscribing members. VIN has two employees who live in Massachusetts but does not have a Massachusetts office. Lau resides in Washington State and is the News Service Director of VIN News Service, a division of VIN.
In June 2017 VIN published an article titled "Low thiamine suspected in cat illnesses linked to BFF food" to its website. The article, which was also accessible from VIN News Service's Facebook page and Internet search engines, was authored by Lau and consists mostly of an interview with an Australian veterinarian who identified BFF as the cat food linked with pet illnesses and deaths in Australia. The article states that "Weruva International Inc. of Natick, Massachusetts, recalled its [BFF] brand of canned cat food in Australia . . . but reports of illnesses are ongoing."
In its amended complaint, Weruva alleged that the article contains false statements, which damaged Weruva's reputation and resulted in business losses, including lost sales in Massachusetts. Weruva further alleged that it contacted VIN and Lau, but they refused to correct or retract the false statements. Based on these allegations, Weruva raised claims of commercial disparagement, defamation, negligence, G. L. c. 93A violations, and civil conspiracy.
In allowing the motions to dismiss, the judge concluded that, although the defendants' contacts with Massachusetts were sufficient to satisfy the long-arm statute, G. L. c. 223A, § 3, the exercise of personal jurisdiction over the defendants would not comport with the requirements of due process. Specifically, the judge concluded that Weruva failed to establish the requirement of purposeful availment because "the alleged facts . . . do not suggest that the defendants aimed their conduct at Massachusetts such that they should have anticipated being haled into court here to answer for their conduct." Addressing Weruva's request for jurisdictional discovery, the judge found that the discovery sought -- such as VIN's sales data and membership numbers in Massachusetts -- "would not alter the purposeful availment analysis."
The defendants do not challenge the judge's ruling regarding the long-arm statute. But as they correctly observe, "the long-arm statute's reach is not coextensive with what due process allows." SCVNGR, Inc. v. Punchh, Inc., 478 Mass. 324, 330 n.9 (2017).
Discussion.
Where, as here, a judge allows a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, our review is de novo. See von Schonau-Riedweg v. Rothschild Bank AG, 95 Mass.App.Ct. 471, 484 (2019). We review the denial of a motion for pretrial discovery for abuse of discretion. See Bishop v. Klein, 380 Mass. 285, 288 (1980).
When personal jurisdiction has been challenged under Mass. R. Civ. P. 12 (b) (2), 365 Mass. 754 (1974), the plaintiff bears the burden of making "a prima facie showing of evidence that, if credited, would be sufficient to support findings of all facts essential to personal jurisdiction." Fern v. Immergut, 55 Mass.App.Ct. 577, 579 (2002). "Unless and until an evidentiary hearing is held, 'a prima facie showing suffices, notwithstanding any controverting presentation by the moving party, to defeat the motion.'" von Schonau-Riedweg, 95 Mass.App.Ct. at 483, quoting Cepeda v. Kass, 62 Mass.App.Ct. 732, 738 (2004). "In conducting the requisite analysis under the prima facie standard, we take specific facts affirmatively alleged by the plaintiff as true (whether or not disputed) and construe them in the light most congenial to the plaintiff's jurisdictional claim." Cepeda, supra.
1. Personal jurisdiction over VIN.
"'[T]he constitutional touchstone' of the determination whether an exercise of personal jurisdiction comports with due process 'remains whether the defendant purposefully established "minimum contacts" in the forum state.'" Tatro v. Manor Care, Inc., 416 Mass. 763, 772 (1994), quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). The minimum contacts analysis has three prongs: the defendant must have purposefully availed itself of the privilege of conducting activities in the forum; the claim must arise out of or relate to the defendant's contacts with the forum; and the exercise of jurisdiction must not offend "traditional notions of fair play and substantial justice." Bulldog Investors Gen. P'ship v. Secretary of the Commonwealth, 457 Mass. 210, 217 (2010), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
VIN relies solely on the first prong, purposeful availment, and argues that it requires a showing that a defendant's suit- related conduct specifically targeted the forum State. But the United States Supreme Court has made clear that targeting of a forum is not the only means of proving purposeful availment: "continuously and deliberately exploit[ing] the [forum] market" also suffices. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 (1984). To establish purposeful availment through this means, the plaintiff must show a "regular . . . flow" or "regular course" of sales in the forum State. J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 889 (2011) (Nicastro) (Breyer, J., concurring). See Plixer Int'l, Inc. v. Scrutinizer GmbH, 905 F.3d 1, 10 (1st Cir. 2018); Williams v. Romarm, S.A., 756 F.3d 777, 785 (D.C. Cir 2014) For example, in Keeton, supra, the Court held that a magazine publisher was subject to personal jurisdiction in a State where it regularly circulated magazines, reasoning that "[t]here is no unfairness in calling it to answer for the contents of that publication wherever a substantial number of copies are regularly sold and distributed" In contrast, a "single isolated sale" is insufficient to support jurisdiction Nicastro, supra at 888 (Breyer, J, concurring).
The Nicastro plurality would have held that targeting is required to establish purposeful availment. See Nicastro, 564 U.S. at 882. But "[w]hen a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds" (quotation and citation omitted). Marks v. United States, 430 U.S. 188, 193 (1977). Under this rule Justice Breyer's concurrence in Nicastro is controlling. See Plixer Int'l, Inc. v. Scrutinizer GmbH, 905 F.3d 1, 10 (1st Cir. 2018) .
Specifically in the Internet context, the Federal circuit courts have held that a regular flow or regular course of sales in the forum State is enough to establish purposeful availment. See, e.g., Chen v. U.S. Sports Acad., Inc., 956 F.3d 45, 59 (1st Cir. 2020); Plixer, 905 F.3d at 10; Williams, 756 F.3d at 785. Because of the omnipresent nature of Internet activity, "[t]he maintenance of a web site does not in and of itself subject the owner or operator to personal jurisdiction, even for actions relating to the site, simply because it can be accessed by residents of the forum." Shrader v. Biddinger, 633 F.3d 1235, 1241 (10th Cir. 2011). See Johnson v. Arden, 614 F.3d 785, 796 (8th Cir. 2010); Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 401 (4th Cir. 2003). But where there is evidence that a defendant used a website to conduct a "regular course of sale[s] in the [forum]," the exercise of jurisdiction may be proper. Chen, supra at 59-60, quoting Knox v. MetalForming Inc., 914 F.3d 685, 691 (1st Cir. 2019). See Plixer, supra (although record did not reveal what percentage of defendant's business came from forum market, purposeful availment shown by evidence that defendant used website to derive "not insubstantial income from that market").
Although there is no bright line establishing what constitutes a regular course of sales, see Plixer, 905 F.3d at 10-11, we think that the allegations here, if true, would suffice to make out a prima facie showing of purposeful availment. The amended complaint alleges that at least seventeen Massachusetts animal hospitals and veterinary clinics are VIN members and that members must pay an annual membership fee to access VIN's website, which includes VIN's portal, searchable database, news service, and online community. Attached to the amended complaint are printouts from the websites of those hospitals and clinics, identifying themselves as "part of the VIN family." Also attached is a printout from VIN's website listing its annual membership rates, which range from $810 for an individual membership to $2,310 for a five- person group practice membership.
Were these allegations undisputed, we would conclude that Weruva met its prima facie burden of showing purposeful availment based on VIN's regular course of sales in Massachusetts. See Cannonball Fund, Ltd. v. Dutchess Capital Mgmt., LLC, 84 Mass.App.Ct. 75, 97 (2013) (in determining whether plaintiff made prima facie showing, court "accept[ed] the factual allegations of the complaint as true" where defendant did "not dispute any factual allegation, and submitted no affidavit showing its lack of contacts with Massachusetts").
But we must also consider the affidavit submitted by VIN, which does dispute some of the amended complaint's allegations; in particular, as pertinent to purposeful availment, the affidavit avers it to be "false[]" that seventeen Massachusetts animal hospitals or veterinary clinics are VIN members because "institutions" cannot join VIN. This dispute does not necessarily defeat Weruva's prima facie case because, even if the allegation in the amended complaint is untrue, the affidavit does not otherwise "show[] [VIN's] lack of contacts with Massachusetts." Id. To the contrary, VIN admits in the affidavit that "a few of its members, less than [two percent], report that they live or work [in Massachusetts]." Because VIN did not provide its actual number of Massachusetts subscribers or total subscribers, however, the amount of revenue it derives from Massachusetts is unclear on this record.
In these circumstances we believe that the proper course of action is to remand for jurisdictional discovery, or for an evidentiary hearing or trial. See von Schonau-Riedweg, 95 Mass.App.Ct. at 491 &n.24 (remanding for evidentiary hearing or trial to determine facts relevant to personal jurisdiction and instructing that plaintiff be allowed to renew discovery request). The judge's denial of Weruva's motion for discovery was based on his accepting VIN's argument that purposeful availment requires specific targeting of the forum State. As we have explained, that is incorrect as a matter of law. Remand is therefore warranted.
2. Personal jurisdiction over Lau.
With respect to Lau, Weruva has failed to meet its prima facie burden of showing that the exercise of personal jurisdiction would comport with due process. An employee's contacts with the forum State "are not to be judged according to [the] employer's activities there." Calder v. Jones, 465 U.S. 783, 790 (1984). Rather, "[e]ach defendant's contact with the forum State must be assessed individually." Id. Contrary to the teachings of Calder, Weruva did not differentiate, either in its arguments below or in its brief on appeal, between Lau's and VIN's activities in Massachusetts. That VIN has a subscriber base in Massachusetts is not sufficient to assert jurisdiction over Lau. We must look to the allegations in the amended complaint relevant to Lau, which are that she is the News Service Director of VIN News, derives her income from authoring and publishing articles through VIN, has frequently reported on veterinary issues in Massachusetts using information gathered from Massachusetts sources, authored the article in question, and refused to correct or retract the allegedly false statements in the article. These allegations do not establish the minimum contacts with Massachusetts necessary to satisfy due process. Unlike in Calder, on which Weruva relies, Weruva offered no evidence that Lau's conduct was directed at the forum State. In Calder the Court held that the forum State (California) could exercise jurisdiction over two employees of a national magazine -- a reporter and the president/editor -- because the allegedly libelous article "concerned the California activities of a California resident" and "was drawn from California sources," "and the brunt of the harm . . . was suffered in California." Id. at 789-790. In other words California was "the focal point" of the article. Id. at 790. Here, in contrast, the article was drawn mainly from sources in Australia and none in Massachusetts, and it concerned a line of cat food that Weruva manufactured exclusively for the Australian market. Even accepting Weruva's allegation that it suffered harm in Massachusetts, "Calder made clear that mere injury to a forum resident is not a sufficient connection to the forum." Walden v. Fiore, 571 U.S. 277, 290 (2014).
Lau disputes this allegation, stating in her affidavit that she has "rarely" reported on veterinary issues in Massachusetts or gathered information from Massachusetts sources.
The magazine itself and its distributing company did not object to jurisdiction in California. See Calder, 465 U.S. At 785.
We are unpersuaded by Weruva's argument that it should be allowed alternatively to conduct discovery into the nature and extent of Lau's contacts with Massachusetts. Because Weruva did not make a colorable case for personal jurisdiction over Lau, the judge was within his discretion to deny discovery. See von Schonau-Riedweg, 95 Mass.App.Ct. at 491 n.24. See also United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 625-626 (1st Cir. 2001) (diligent plaintiff who has made "colorable claim for personal jurisdiction" may be entitled to discovery).
3. Civil conspiracy claim.
The judge also concluded that the allegations of the amended complaint did not plausibly suggest the existence of a civil conspiracy. We agree. The amended complaint contains only conclusory assertions that VIN and Lau acted in a joint and deliberate effort to disparage and defame Weruva. Conclusory assertions such as these are insufficient to withstand dismissal. See Iannacchino v. Ford Motor Co., 451 Mass. 623, 635-636 (2008).
Conclusion.
So much of the judgment allowing VIN's motion to dismiss for lack of personal jurisdiction is reversed. The remainder of the judgment is affirmed, and the matter is remanded for further proceedings consistent with this memorandum and order.
So ordered.
The panelists are listed in order of seniority.