Fast Forward Academy, Llc v. Welker et alMOTION to dismiss for lack of jurisdiction or, in the Alternative, Motion to Dismiss for Improper VenueM.D. Fla.May 25, 201741855236;1 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION CASE NO.: 6:17-CV-783-ORL-41-TBS FAST FORWARD ACADEMY, LLC, a Florida limited liability company, Plaintiff, v. BRYCE WELKER, individually, CRUSH EMPIRE, LLC, a Wyoming limited liability company, CRUSHOFFERS, LLC, a Wyoming limited liability company; WELKER TEST PREP, LLC, a California limited liability company; and GRYFIN, LLC, a California limited liability company, Defendants. ______________________________________/ DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION OR, IN THE ALTERNATIVE, MOTION TO DISMISS FOR IMPROPER VENUE Defendants Bryce Welker (“Welker”), Crush Empire, LLC (“Crush Empire”), CrushOffers, LLC (“CrushOffers”), and Gryfin, LLC f/k/a Welker Test Prep, LLC1 (“Gryfin”) (collectively, “Defendants”) respectfully request the Court to dismiss each of them pursuant to FRCP Rule 12(b)(2) on grounds Defendants have insufficient contacts with Florida for this Court to exercise personal jurisdiction. Defendants also request the Court to dismiss this Action pursuant to FRCP Rule 12(3) on grounds Plaintiff’s chosen venue is improper even if the Court could exercise personal jurisdiction over Defendants. 1 Plaintiff mistakenly asserted claims against Welker Test Prep, LLC under the apparent belief it was a distinct legal entity from Gryfin, LLC. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 1 of 26 PageID 219 41855236;1 INTRODUCTION This case involves a dispute between a retailer of online test preparation courses, Plaintiff Fast Forward Academy, LLC (“Plaintiff” or “FFA”), and a website that ranks, compares, and reviews such courses, Crush Empire. Distilled to its essence, Plaintiff became frustrated when Crush Empire’s manager created a separate entity, Gryfin, to offer another alternative to Plaintiff’s online services (there are numerous competitors in the marketplace). Plaintiff and Crush Empire’s relationship deteriorated to the point where Plaintiff no longer wanted to pay commissions to Crush Empire for leads it generated for Plaintiff. This lawsuit ensued with Plaintiff alleging various defamation based claims arising out of Crush Empire’s reviews. Rather than simply suing the party who operates the websites, Crush Empire, Plaintiff dragged every conceivable person and entity into this lawsuit that had any possible connection to Crush Empire’s review websites (no matter how remote).2 In doing so, however, it dragged Gryfin and CrushOffers (who provides affiliate network services) into the Action despite the fact that there are no allegations against them and they have no relevant contacts with the forum state. Florida’s long-arm statute and due process prohibits the Court from exercising jurisdiction against Gryfin and CrushOffers. Turning to Crush Empire and its manager, Welker, neither defendant has any meaningful, relevant contacts with Florida. All of Crush Empire’s services provided under its now-terminated agreement with Plaintiff (which is not even at issue in this Action) occurred outside of Florida. Even if Plaintiff’s allegations were true-which 2 Presumably, Plaintiff chose Florida because it maintains an office there, although this fact was unbeknownst to Defendants. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 2 of 26 PageID 220 41855236;1 they are not-neither Crush Empire nor Welker took any relevant action in Florida or directed any action towards the state. The Court’s exercise of jurisdiction based on attenuated constitutionally insignificant contacts that are largely irrelevant to Plaintiff’s claims would be highly unforeseeable and violate Defendants’ due process rights. The Court should dismiss Defendants for lack of personal jurisdiction. And, in the event the Court determined jurisdiction was somehow proper, the Court should still dismiss the case on grounds venue is improper because a substantial part of the alleged events or omissions giving rise to Plaintiff’s claims did not arise in Florida let alone this District. FACTS The merits of Plaintiff’s “claims” will be addressed in due time and in the proper court. At this early juncture, the Court’s relevant inquiry is limited to Defendants’ individual contacts with Florida to determine whether the Court can exercise personal jurisdiction, and, if so, whether venue is proper. With that in mind, the relevant facts to the Court’s jurisdictional analysis are as follows: A. The Parties Plaintiff Fast Forward Academy, LLC (“Plaintiff” or “FFA”) is an Internet-based company that offers online test preparation courses used for accreditation in the fields of accounting. See Complaint, ¶16. FFA alleges it is organized under Florida’s laws and has its principal place of business in Orlando, Florida (although, Defendants were not specifically aware of these facts during the relevant timeframe). Complaint, ¶5; Bryce Welker Declaration (“Decl.”) ¶37, attached hereto as Exhibit "A". FFA’s website does not contain any information regarding where it maintains a physical presence. Id., ¶37. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 3 of 26 PageID 221 41855236;1 Defendant Crush Empire is a Wyoming limited liability company with its principal place of business in San Diego, California. Id., ¶3. It does not maintain a physical presence in any other states. Id. Crush Empire owns and operates various online review websites that blog, rank, review, and compare online test preparation courses offered by third parties such as FFA. Id., ¶9. Crush Empire’s review websites also contain links to third party’s websites where online courses are offered for sale. Id., ¶10. Like most review websites, Crush Empire earns a commission from merchants if a lead it generates converts into a sale on the merchant’s site. Id., ¶11; see Complaint ¶23- 24. Except for a downloadable study guide that accounts for less than 1% of Crush Empire’s revenues, Crush Empire does not personally sell any products or services on its websites or elsewhere. Id., ¶12. Crush Empire does not engage in any marketing that is targeted at Florida. Id., ¶13. Defendant CrushOffers is a Wyoming limited liability company with its principal place of business in San Diego, California. Id., ¶4. It does not maintain a physical presence in any other states. Id. CrushOffers operates an affiliate network service. Id., ¶14. In very simple terms, an affiliate network service gives websites the ability to host a URL link on their site that, when clicked by a potential customer, tracks the user’s actions on the landing page URL through the use of cookies. Id., ¶15. If the lead converts to a sale, the online merchant will pay the website that hosted the link a commission. Id., ¶16. For their link hosting and tracking services, the affiliate network service will receive a small portion of the total amount earned by the website that generated the lead. Id., ¶17. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 4 of 26 PageID 222 41855236;1 CrushOffers does not own or operate any review websites, nor does it post online reviews or content relating to any third party’s services. Id., ¶18. CrushOffers does not engage in any marketing that is targeted at Florida. Id., ¶19. Plaintiff solicited CrushOffers’ business because it was looking for an affiliate network provider to host and track links on several websites, including those owned by Crush Empire. Id., ¶20. Since its inception, CrushOffers has provided services to only two businesses (including Plaintiff) in Florida. Id., ¶21. Its sales attributable to Florida are less than 10% of its total sales. Id., ¶22. Gryfin is a California limited liability company with its principal place of business in San Diego, California. Id., ¶5. It does not maintain a physical presence in any other states. Id. Like FFA, it is an Internet retailer of online test preparation courses for the various fields of accounting. Id., ¶24. Gryfin does not own or operate any review websites, nor does it post online reviews or content relating to any third party’s services. Id., ¶27. Gryfin does not engage in any marketing that is targeted at Florida. Id., ¶28. Since its inception, it has enrolled only two Florida students in its courses, which accounts for less than 1% of its total sales. Id., ¶29. Gryfin has never engaged in any business with FFA. Id., ¶30. Defendant Welker has been a citizen of California since 2015. Id., ¶6. Prior to that, he was permanently living in Thailand for several years after moving from California. Id. Beyond a vacation to Florida roughly ten years ago, he has otherwise not had a physical presence in the state. Id., ¶7. Welker serves as Crush Empire and CrushOffers’ respective presidents. Id., ¶¶3-4. He is also Gryfin’s managing member. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 5 of 26 PageID 223 41855236;1 Id., ¶5. On behalf of Crush Empire, Welker blogs about and reviews various online preparation courses. Id., ¶9. Welker has never solicited business from Plaintiff either personally or on behalf of any other Defendant. Id., ¶8. B. Crush Empire and CrushOffers’ Respective Business Relationships with Plaintiff In 2014, Plaintiff stopped internally tracking websites that hosted its affiliate links. Id., ¶32. Plaintiff solicited CrushOffers to track the links hosted on Crush Empire’s review sites that linked to Plaintiff’s site. Id., ¶33. CrushOffers and Plaintiff entered into a written affiliate network service agreement, whereby Plaintiff agreed to compensate CrushOffers for tracking links that were hosted on several “affiliate” websites (including Crush Empire’s review websites, among others). Id., ¶34 & Ex.A. Plaintiff also agreed to pay Crush Empire affiliate commissions for leads it generated that converted to sales, although this agreement was much more informal and never reduced to a final writing. Id., ¶36. Solely on behalf of Crush Empire and CrushOffers, Welker negotiated with Plaintiff exclusively through email and phone calls. Id., ¶37. The business relationship soured in early 2017, when Gryfin began Internet retailing its online test preparation services. Id., ¶38.3 Unhappy that Gryfin was competing with Plaintiff and that Crush Empire gave Gryfin a favorable review on its review websites, Plaintiff ended its commission agreement with Crush Empire and terminated its affiliate network agreement with CrushOffers. Id., ¶39. 3 Gryfin’s courses are currently licensed from a third party provider. Id., ¶25. Thus, while the company is relatively new, its services are time tested and have assisted countless students through numerous testing cycles over the last fourteen years. Id., ¶26. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 6 of 26 PageID 224 41855236;1 C. Plaintiff’s Allegations Plaintiff’s claims all arise from the following core operative allegations: Plaintiff alleges that Welker, on behalf of the purported “Welker Review Websites” (i.e., Crush Empire) failed to disclose his interest in Gryfin on the review websites; made allegedly false statements on the review websites; engaged in SEO that was allegedly deceptive to drive traffic to the review websites; and made allegedly false statements on the review websites regarding the quality of Plaintiff’s online courses.4 E.g., Complaint, ¶¶1 (“Welker posts ‘reviews’”); 20 (“Welker purportedly reviews courses”), 84 (“Welker states . . .”); 86(a), (b), (c), & (d); 88; 89 (a), (b), (c), & (d); 116 (Count 1 based on allegedly false/misleading statements); 124-25 (Count II based on allegedly disparaging statements about Plaintiff’s products and allegedly wrongful SEO practices; 137-40 (Count III based on allegedly deceptive statements and SEO practices, and failure to disclose common ownership); 150 (Count IV based on alleged defamatory statements regarding the quality of Plaintiff’s services); 162 & 171 (Counts V and VI based on the foregoing conduct incorporated in the counts by reference). The Complaint does not specifically allege that CrushOffers or Gryfin engaged in any wrongful conduct. Apparently, Plaintiff believes that they are somehow liable for the purported claims because of their common connection to Welker, but Plaintiff fails to allege any facts that would provide grounds for liability. 4 Plaintiff either forgets the fundamental principal that limited liability companies are separate and distinct from their owners or it purposefully creates ambiguity in its allegation by stating that “Defendants” engaged in all of the foregoing conduct. A careful reading of the Complaint, however, shows that only the above conduct is attributable to Crush Empire and Welker as its agent. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 7 of 26 PageID 225 41855236;1 ARGUMENT I. The Court lacks Personal Jurisdiction over Defendants A federal district court in Florida may exercise personal jurisdiction over a nonresident defendant to the same extent that a Florida court may, so long as the exercise is consistent with federal due process requirements. See Fed.R.Civ.P. 4(e)(1), (h), and (k); Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626-27 (11th Cir.1996). Thus, this Court must engage in a two-part analysis to determine whether exercising personal jurisdiction is proper: the Court must first determine whether Florida’s long-arm statute provides a basis for personal jurisdiction. Sculptchair, Inc., 94 F.3d 626-27. If so, the Court must then determine “whether sufficient minimum contacts exist between the defendants and the forum state so as to satisfy ‘traditional notions of fair play and substantial justice’ under the Due Process Clause of the Fourteenth Amendment.” Id. (quoting International Shoe v. Washington, 326 U.S. 310, 316 (1945)). A plaintiff seeking to subject a nonresident to jurisdiction within Florida must do more than merely allege facts to show a possibility of jurisdiction. Jet Charter Serv., Inc. v. Koeck, 907 F.2d 1110, 1112 (11th Cir. 1990). When jurisdiction is challenged, as here, the burden shifts to the Plaintiff to prove jurisdiction by affidavits, testimony, or documents. Id. Therefore, it is Plaintiff's burden to establish that Florida’s long-arm statute permits the exercise of jurisdiction and that doing so does not violate Defendants’ right to due process. A. CrushOffers and Gryfin are not Subject to Jurisdiction under Florida’s Long-Arm Statute Florida’s long-arm statute is to be strictly construed. Sculptchair, Inc., 94 F.3d at 627. In relevant part, it provides that a nonresident defendant subjects himself to the Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 8 of 26 PageID 226 41855236;1 specific jurisdiction of Florida courts for a cause of action relating to or arising from the following acts: “[o]perating, conducting, engaging in, or carrying on a business . . . in [Florida] or having an office or agency [within the] state,” Fla. Stat. Ann. § 48.193(1)(a)(1); or “[c]ommitting a tortious act within the state,” Fla. Stat. Ann. § 48.193(1)(a)(2). Nonresidents may also be subject to general jurisdiction under the long- arm statute. Fla. Sta. Ann. § 48.193(2). Defendants CrushOffers and Gryfin have not performed any “acts” under Florida’s long-arm statute that would authorize the Court to exercise jurisdiction even if it were constitutional to do so. 1. CrushOffers and Gryfin are not Conducting Business in Florida. In order to establish that a defendant was conducting business in the state, the Defendant’s activities must be collectively considered and “show a general course of business activity in the state for pecuniary benefit.” Dinsmore v. Martin Blumenthal Assocs., Inc., 314 So.2d 561, 564 (Fla. 1975) (emphasis added). Relevant factors to this analysis include the presence and operation of an office in Florida, the possession of a license to do business in Florida, the number of Florida clients served, and the percentage of overall revenue gleaned from Florida. Horizon Aggressive Growth, L.P. v. Rothstein- Kass, P.A., 421 F.3d 1162, 1167 (11th Cir. 2005). Horizon Aggressive Growth, L.P. is instructive. There, a California entity, Kass, performed an audit of a Florida company’s business, Horizon. Id. at 1164-65. Kass accessed Horizon’s books and records through the Internet and regularly communicated with Horizon’s officials in Florida via telephone, fax, e-mail, and regular mail. Id. The 11th Circuit Court of Appeals noted that Kass rendered services for the benefit of a Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 9 of 26 PageID 227 41855236;1 Florida citizen, but that alone was insufficient to be “conducting business” within the meaning of the long-arm statute. Id. The court also noted that Kass had only six clients in Florida who accounted for, at most, less than five percent of Kass’ gross revenue. Id. Finally, the court expressly rejected Horizon’s argument that, in this digital age, Kass’s computer-based services allowed it to perform “as if it was in Florida.” Id. The court emphasized that territorial boundaries remain relevant to jurisdictional inquiries. Id. Ultimately, the court ruled Kass was not “doing business” in Florida because it “physically performed all its work from its California offices.” Id. at 1168. Like Horizon Aggressive Growth, L.P., neither CrushOffers nor Gryfin has any presence in Florida: their offices are exclusively located in California. Naturally, neither has a Florida business license. Neither CrushOffers nor Gryfin perform any marketing targeted at Florida. To the extent CrushOffers provided affiliate network services for Plaintiff, it exclusively rendered those services via the Internet from its California office. Plaintiff was CrushOffers’ second client in Florida, and the revenue it derived from Florida was extremely limited. Gryfin exclusively provides online test preparation services. Students can access and benefit from Gryfin’s services in Florida via the Internet, but all the services are provided from Gryfin’s California office. Since its inception, it has only had two clients in Florida and its revenue from those clients is di minimis-less than 1% of its overall sales. CrushOffers and Gryfin’s relevant territorial boundaries must be respected in light of their Internet business models when examining where the companies’ services actually Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 10 of 26 PageID 228 41855236;1 originate. Id. at 1167-68. Their online services and limited interaction with Florida residents who are not specifically targeted does not amount to a general course of business within the state. Accordingly, neither CrushOffers or Gryfin are conducting business within the meaning of Florida’s long-arm statute. 2. CrushOffers and Gryfin are not Subject to General Jurisdiction in Florida. Plaintiff’s complaint alleges CrushOffers and Gryfin are subject to general jurisdiction in Florida, and it makes the conclusory allegation that both companies “have systematic and continuous contacts” with the state. Based on this wholly unsupported allegation, Plaintiff claims Florida’s long-arm statute authorizes it to exercise jurisdiction in the state on any matters whatsoever. See Complaint, ¶14 (citing Fla. Sta. Ann. § 48.193(2)). Florida cases have found ‘continuous systematic business contacts’ to confer general jurisdiction where a nonresident defendant's activities are extensive and pervasive, in that a significant portion of the defendant's business operations or revenue derived from established commercial relationships in the state. Such contacts have also been found where the defendant continuously solicits and procures substantial sales in Florida. Trustees of Columbia Univ. In City of N.Y. v. Ocean World, S.A., 12 So. 3d 788, 793 (Fla. Dist. Ct. App. 2009). CrushOffers and Gryfin’s isolated contacts with Florida are not even sufficient to support specific jurisdiction let alone general jurisdiction. To reiterate: neither company has a physical presence in Florida, targets Florida’s residents online or otherwise, derives any meaningful revenue from the State, or even performs any services within the State. The Companies do not have “systematic and continuous contacts” with the state such that the Court can exercise general jurisdiction under Florida’s long-arm statute. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 11 of 26 PageID 229 41855236;1 3. CrushOffers and Gryfin did not Allegedly Commit a Tortious Act Within Florida Plaintiff alleges CrushOffers and Gryfin allegedly committed a tortious act within the state such that the Court may exercise jurisdiction under Fla. Stat. Ann. § 48.193(1)(a)(2). Complaint, ¶14. A careful review of the allegations, however, reveals that Plaintiff has not even alleged CrushOffers or Gryfin have specifically engaged in any purported wrongful conduct at all. In an apparent attempt to obfuscate which specific Defendant did each alleged act in the Complaint, Plaintiff simply lumps all four Defendants together and generally alleges they all engaged in the purportedly wrongful conduct. For example, Plaintiff’s claim for a purported violation of the Lanham Act is exclusively based on the allegation that “Defendants have made false and/or misleading statements on their various websites, expressly and implicitly conveying that their reviews are independent and unbiased.” Complaint, ¶116 (emphasis added). Earlier in the Complaint, however, Plaintiff lists each website it believes posted the allegedly false and/or misleading statements-none of the listed sites include sites owned or operated by CrushOffers or Gryfin. Complaint, ¶1. Nor could Plaintiff truthfully make any such allegations. CrushOffers operates an affiliate network service and Gryfin offers online test preparation services. Neither company-on their website or on any other websites-post any third party reviews. After parsing Plaintiff’s allegations, it is clear Plaintiff merely alleges that Defendant Welker and Crush Empire are the only two Defendants who have Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 12 of 26 PageID 230 41855236;1 published any of the alleged statements that are at issue. See, e.g., Complaint, ¶¶1 (“Welker posts ‘reviews’ on his various websites . . . .”), 3, 20. Plaintiff’s claim under Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”) makes similar ambiguous allegations concerning the independent nature of Defendants’ purported reviews, but it also contains allegations that Defendants have failed to disclose their affiliate relationships with the makers of products which it purportedly reviews; have allegedly failed to sufficiently disclose the common ownership between the “review” sites and Gryfin; and have allegedly engaged in search engine marketing (“SEM”) or search engine optimization (“SEO”) using Plaintiff’s marks “in order to propagate their [purportedly] wrongful . . . reviews.” Complaint, ¶140. As discussed above, CrushOffers and Gryfin do not own or operate review websites, and they do not review competitor’s products on third party’s review websites. Further, they have not engaged in any SEO or SEM using Plaintiff’s marks. Welker Decl., ¶¶23,31. Finally, Plaintiff asserts claims for defamation, disparagement, and trade libel, all of which turn on ambiguous allegations that Defendants allegedly “posted defamatory statements concerning the quality of Plaintiff’s business and products” while reviewing such products online. CrushOffers and Gryfin will not belabor the point further: neither entity reviews any third party’s services on any of the review websites at issue in this Action or on their own websites. Thus, while vague and often internally inconsistent, Plaintiff’s own Complaint fails to specifically allege that CrushOffers or Gryfin engaged in any of the alleged conduct, and, in reality, neither company has made any statements or reviews that are Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 13 of 26 PageID 231 41855236;1 allegedly at issue in this Action. They have not committed an “act” let alone a tortious act within the State. In sum, neither CrushOffers nor Gryfin has engaged in any act that would subject them to jurisdiction under any provision of Florida’s long-arm statute. As a result, they must be dismissed. B. Defendants do not have Sufficient Contacts with Florida for the Court to Constitutionally Exercise Personal Jurisdiction. As to the second part of the Court’s two-part analysis, a defendant must be dismissed for lack of personal jurisdiction if asserting jurisdiction would violate the defendant’s right to due process. Licciardello v. Lovelady, 544 F.3d 1280, 1284 (11th Cir. 2008). This analysis requires the Court examine whether a nonresident has sufficient contacts with the forum state, and, if so, whether the exercise of jurisdiction would “offend traditional notions of fair play and substantial justice.” Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 630-31 (11th Cir. 1996). 1. Minimum Contacts. Minimum contacts involve three criteria: First, the contacts must be related to the plaintiff's cause of action or have given rise to it. Second, the contacts must involve some purposeful availment of the privilege of conducting activities within the forum, thereby invoking the benefits and protections of its laws. Finally, the defendant's contacts within the forum state must be such that she should reasonably anticipate being haled into court there. Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 631 (11th Cir. 1996). a. Welker & Crush Empire’s Contacts are not Sufficient Plaintiff’s claims are based on the core operative allegations that Welker, in his individual capacity and as an owner and agent of Crush Empire, failed to disclose his alleged common ownership of Gryfin on Crush Empire’s sites; used allegedly deceptive Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 14 of 26 PageID 232 41855236;1 SEO and SEM to improve rankings for Crush Empire’s review website, and that he allegedly made certain defamatory remarks concerning Plaintiff’s services on the review websites. Beyond these alleged “contacts” with Florida that purportedly give rise to the claims, Welker does not have any contacts with Florida that are even remotely related to Plaintiff’s causes of action. Likewise, Crush Empire does not have any contacts with Florida: it does not maintain a physical presence there let alone even do business there. As a result, the jurisdictional analysis necessarily turns on whether operating a review website in California that has earned limited commissions and allegedly has some negative impact on a Florida business confers Florida courts with personal jurisdiction. Under the facts of this case, the answer must be no as holding otherwise would subject a passive website to jurisdiction in not just Florida, but in every state, despite the fact that the website operator did not purposefully avail himself in any one particular foreign state. This makes claims in foreign states highly unforeseeable, which, in turn, precludes the exercise of jurisdiction. When examining Internet contacts, Florida’s courts have applied the sliding scale test articulated in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa. 1997), although the 11th Circuit has not directly adopted the test. (Pathman v. Grey Flannel Auctions, Inc., 741 F. Supp. 2d 1318, 1325 (S.D. Fla. 2010) (citing Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1212, n.26 (11th Cir. 2009)). Under Zippo’s sliding scale test, the Court must look at the nature of the website and the commercial Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 15 of 26 PageID 233 41855236;1 activity actually being conducted over the website to determine whether personal jurisdiction can be constitutionally exercised. Zippo Mfg. Co., 952 F.Supp at 1124. At one end of the spectrum are websites that clearly do business over the Internet by engaging in knowing and repeated transactions with residents of a foreign jurisdiction. Such activities may result in personal jurisdiction over a nonresident owner of a website. Id. On the other end, where a defendant simply posts information on a passive website, which is accessible in foreign jurisdictions by interested users, there are no grounds for personal jurisdiction. Id. Crush Empire’s review websites are entirely passive from the user’s perspective. The sites contain reviews of test preparation courses and blogs about reviews and successful test taking strategies. Consumers cannot directly enter into contracts with Crush Empire, as users can only purchase study courses directly from the merchants offering them on their own, independent websites after clicking links on Crush Empire’s sites. In other words, the review websites at issue here merely make information available to individuals who are interested in purchasing online study materials, and the websites provide links to third party retailers who ultimately sell online test preparation services to consumers. Thus, to the extent persons in Florida may be able to review the content on Crush Empire’s website then link to a third party retailer to make a purchase, it cannot be said that Crush Empire’s content amounts to purposeful availment of the privilege of conducting activities within Florida. While Crush Empire earns commissions from leads it generates that convert to sales on a merchant’s third party’s sites, this arrangement does not make the sites Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 16 of 26 PageID 234 41855236;1 interactive or otherwise allow users browsing the web to engage in transactions with Crush Empire. Therefore, the contractual relationship vis-à-vis Crush Empire and merchants like FFA, who offer commissions, must necessarily be analyzed under a “contract contacts” framework rather than “Internet contacts.” As a threshold matter, Plaintiff’s claims do not arise out of Crush Empire’s alleged contract contacts with Florida so using them as a basis for specific jurisdiction would be improper. However, even if its contract contacts were relevant, the purported contacts still would not support jurisdiction. It is well settled that having a contractual relationship between a nonresident defendant and a Florida resident is not itself sufficient to meet the requirements of due process. Burger King v. Rudzewicz, 471 U.S. 462, 472 (1985). Courts focus on the substance of the transaction including the parties’ prior negotiations, contemplated future consequences, the term of the contract, and the actual course of deadlines. Id. at 491. Where a nonresident defendant deliberately reaches out beyond his home state to negotiate a long-term agreement with a business located in a foreign state, and the parties’ agreement has a substantial connection with that foreign state, the defendant may be subject to jurisdiction there. Id. If the connection with the foreign state is attenuated, jurisdiction is not proper. Id. Here, Crush Empire did not solicit any business from Plaintiff. Crush Empire and Plaintiff’s negotiations occurred almost exclusively via email as Welker was living in Thailand at the time. Once Crush Empire accepted Plaintiff’s unsolicited offer, Crush Empire’s performance of publishing links on its website that linked to Plaintiff’s website Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 17 of 26 PageID 235 41855236;1 occurred completely outside of Florida. There was no term set by the contracting parties, and nothing suggests that the parties considered any future consequences in Florida. As a result, Crush Empire did not purposefully avail itself of the privilege of conducting activities in Florida. Its attenuated connection to the state is not sufficient to satisfy due process, even if Plaintiff’s claims directly arose out of the commission agreement, which they do not. And, perhaps most importantly, being haled into court in Florida for claims that do not arise out of the commission agreement is highly unforeseeable. Crush Empire’s alleged contract contacts are not sufficient to support the exercise of jurisdiction in Florida. Given that there are insufficient Internet or contract contacts with Florida to allow the Court to exercise jurisdiction, Plaintiff will undoubtedly argue jurisdiction is proper because Welker’s purported reviews on Crush Empire’s sites allegedly amounted to intentional torts. Thus, it is also necessary to analyze whether the purported statements may give rise to jurisdiction in Florida. The 11th Circuit applies the “effects test” set forth in Calder v. Jones, 465 U.S. 783, 790 (1984) in the context of internet based communications that are allegedly tortious. See Licciardello v. Lovelady, 544 F.3d 1280, 1287-88 (11th Cir. 2008). Under Calder, an intentional tort must be expressly aimed at a specific individual in the forum, whose effects were suffered in the forum. Id. As the court noted in Licciardello, however, when a plaintiff is a corporation whose injury is not suffered in a particular geographic location due to its Internet presence as an individual’s harm would be, a strict application of the effects test would result in an unsuitable result. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 18 of 26 PageID 236 41855236;1 Licciardello v. Lovelady, 544 F.3d 1280, 1287, Fn.7 (11th Cir. 2008) (citing Conseco, Inc. v. Hickerson, 698 N.E.2d 816, 819 (Ind.App.1998)). Neither Crush Empire nor Welker were aware that Plaintiff was a Florida entity, as their entire relationship was almost entirely Internet-based. Indeed, nothing on Plaintiff’s website even indicates where its headquarters or any other offices are located. In every practical sense, Plaintiff, like Crush Empire, is an Internet-based company. To that end, neither Welker nor Crush Empire specifically targeted Plaintiff in Florida. Assuming, arguendo, Plaintiff suffered harm-which Defendants dispute on grounds no intentional torts occurred in the first place, and, even if one had, there have been no damages-its purported injury would not be isolated to any particular geographic region. Plaintiff’s hypothetical harm would have been suffered in each and every state in the nation because it exclusively sells goods to consumers via its commerce enabled website. It follows that even if an intentional tort occurred, which it did not, Crush Empire and Welker’s purported actions do not satisfy Calder’s effects test as articulated in Licciardello. And as a natural result, it is highly unforeseeable that Crush Empire or Welker could be haled into Florida for actions that allegedly stemmed from California, were not targeted specifically at Florida, and where the purported damages would have been suffered in every single state in the nation because Plaintiff’s business is exclusively Internet-based. Accordingly, Crush Empire and Welker’s purported contacts with Florida are not sufficient to confer the Court with personal jurisdiction over them. b. CrushOffers does not have any Relevant Contacts CrushOffers’ only conceivable contact is that it provided affiliate network services to two Florida clients (including FFA) that accounted for less than 10% of its Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 19 of 26 PageID 237 41855236;1 overall sales. CrushOffers and FFA also entered into a written affiliate network agreement on May 21, 2014. Plaintiff’s claims are unrelated to CrushOffers’ affiliate network services or the agreement between it and CrushOffers.5 And, even if the existence of a contract that was terminated before Plaintiff’s claims even arose could be a relevant jurisdictional contact, an analysis of those contractual “contacts” shows that exercising jurisdiction would violate due process. As noted above, the mere existence of a contractual relationship alone is not sufficient to meet the requirements of due process. Burger King v. Rudzewicz, 471 U.S. 462, 472 (1985). Turning to the substance of the transaction, Plaintiff reached out to CrushOffers and requested that it provide affiliated network services. The parties’ negotiation occurred almost exclusively via email, as Welker was living in Thailand at the time. CrushOffers’ performance occurred outside of Florida as well. And, perhaps most importantly, the parties agreed to a forum selection clause requiring any and all actions arising out of the dispute to be resolved in North Carolina.6 Id. at 481-82 (courts must give weight to forum selection clauses when considering whether a nonresident defendant purposefully availed himself to the forum state). Nothing under the circumstances suggested a focus on or future consequences in Florida. Beyond the mere incidental fact that Plaintiff-unbeknownst to CrushOffers- maintained an office in Florida for its Internet-based business, the contract has no 5 At most, FFA’s allegations regarding FFA’s termination of the agreement are merely an attempt to provide a purported motive behind why Crush Empire allegedly gave FFA’s online course an unfavorable review. 6 CrushOffers’ agreement inadvertently selected North Carolina because the state was listed in a prior agreement that CrushOffers used portions of as a template. Welker Decl. ¶¶34, Ex.A; 35. Had CrushOffers noticed the drafting error, the agreement would have selected California as the proper forum to hear any and all disputes. Welker Decl., ¶35. Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 20 of 26 PageID 238 41855236;1 connection to Florida. It follows that CrushOffers did not purposefully avail itself of the privilege of conducting activities in Florida and being haled into court there, even if the claims arose out of the contract, is highly unforeseeable. In sum, CrushOffers does not have any relevant contacts with Florida that can support jurisdiction, and, its isolated and unrelated contacts with Florida are not sufficient to allow the Court to exercise general jurisdiction. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984). c. Gryfin does not have any Relevant Contacts Plaintiff dragged Gryfin into this lawsuit because it was upset Crush Empire gave it favorable reviews, while not allegedly disclosing on its review sites the attenuated connection between Crush Empire and Gryfin. This purported failure, however, is not attributable to Gryfin. To the extent disclosure of the attenuated connection was required and not provided (which is not the case), the onus to do so would be on Crush Empire, who owns, operates, and posts reviews on its review websites - not on Gryfin, who is just one of many companies whose products are reviewed by Crush Empire. The Complaint contains no specific allegations attributing any allegedly wrongful conduct to Gryfin, and, more importantly, there would be no evidentiary support had Plaintiff made any. Simply put: Gryfin has no contacts in Florida that are related to Plaintiff’s claims. Specific jurisdiction is not appropriate. Gryfin’s only conceivable contacts with the state are that it operates a commerce-enabled website where students can access its online study materials. Its services are viewable anywhere there is an internet connection, including Florida. To date, less than 1% of its sales are attributable to Florida citizens. Plaintiff’s claims do Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 21 of 26 PageID 239 41855236;1 not arise out of Gryfin’s sales, however. They arise, among other things, out of Crush Empire’s alleged failure to disclose its attenuated connection Gryfin and Crush Empire’s reviews of Plaintiff’s products. As such, Gryfin’s isolated contacts with Florida are wholly insufficient to confer this Court with general jurisdiction over Plaintiff’s unrelated claims. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984). Gryfin has not purposefully availed itself of the privilege of conducting activities in Florida, and it is entirely unforeseeable that it could be haled into Court there to defend an action (arising out of a third party’s conduct) that is unrelated to the isolated interaction it has had with a di minimus amount of Florida residents over the Internet. 2. Fair Play and Substantial Justice. Even where a defendant has purposefully established constitutionally significant contacts within the forum state, jurisdiction must also be evaluated in light of several other factors to determine whether its exercise would comport with ‘fair play and substantial justice.’ These factors include the burden on the defendant of litigating in the forum, the forum's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief and the judicial system's interest in resolving the dispute. Where these factors do not militate against otherwise permitted jurisdiction, the Constitution is not offended by its exercise. Licciardello v. Lovelady, 544 F.3d 1280, 1284 (11th Cir. 2008) (citing International Shoe Co. v. State of Wash., 326 U.S. 310, 320 (1945) and World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)). Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 22 of 26 PageID 240 41855236;1 Welker and the entity Defendants, along with all relevant witnesses, except for Plaintiff, are located in California and will be required to travel to Florida for proceedings. While modern transportation has somewhat eased such a burden, the burden is still extremely high given that no Defendant has engaged in economic activity in Florida or has any other meaningful contacts with the state. All Defendants and related witnesses would be forced to travel across the entire country merely because Plaintiff believes litigating in Florida is most convenient for it. This factor is in favor of Defendants. Naturally, Florida has an interest in adjudicating disputes involving its citizens (natural persons or entities). But here, Plaintiff merely maintains an office presence within the state, while the commerce it engages in and likely the overwhelming majority of revenue it receives is derived from a collection of other states. Therefore, this factor does not weigh heavily for Plaintiff, if at all. Finally, Plaintiff’s interest in obtaining convenient and effective relief is not hindered by litigating in California. From a substantive and procedural standpoint, a district court in Florida offers no benefits over a district court in California. Accordingly, this factor also does not weigh towards Plaintiff. On the balance, the factors are in favor of the Court not exercising jurisdiction over Defendants. II. Venue is Not Proper in the Middle District of Florida When a defendant objects to venue, “[t]he plaintiff has the burden of showing that venue in the [selected] forum is proper.” Pinson v. Rumsfeld, 192 F. App’x 811, Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 23 of 26 PageID 241 41855236;1 817 (11th Cir. 2006). Plaintiff alleges venue is proper under 28 U.S.C. § 1391(b)(2) because a purported substantial amount of the events giving rise to its claims occurred and/or caused Plaintiff’s harm or injury in the Middle District of Florida. Complaint, ¶15. Plaintiff reads language into section 1391(b)(2) that does not exist, however. Relevant here, subsection (b)(2) merely provides that venue is proper where a substantial part of the events or omissions giving rise to the claim occurred. The statute is meant to protect defendants, and therefore the relevant inquiry is on the defendant’s activities, not the plaintiff’s. Jenkins Brick Co. v. Bremer, 321 F.3d 1366, 1371-72 (11th Cir. 2003). All of the Defendants’ alleged activities occurred outside of Florida: the alleged false statements and omissions on Crush Empire’s review websites necessarily would have occurred in California because that is where Crush Empire publishes its content. Likewise, the alleged online unfavorable reviews of Plaintiff’s Internet-based courses would have occurred in California. Defendants did not know Plaintiff would suffer any harm in Florida either, and Crush Empire has never targeted Florida when publishing content. All of the relevant acts occurred in California, not Florida. Even if the Court focused on where Plaintiff suffered harm, a substantial amount of its overall harm did not occur in Florida. Plaintiff offers its services nationwide via its website. If it lost online sales as it alleges, the majority of its damages would have occurred outside of Florida, especially when you consider the aggregate amount of foreign state consumers who, according to Plaintiff, allegedly did Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 24 of 26 PageID 242 41855236;1 not buy its online courses due to the alleged reviews. Thus, the sales it allegedly lost within the state is minimal, at best. Accordingly, a substantial amount of the alleged events giving rise to Plaintiff’s claims did not occur in the Middle District of Florida and venue is improper in this District. CONCLUSION For the reasons discussed above, the Court should grant Defendants’ Motion to Dismiss on grounds it lacks personal jurisdiction, or, in the alternative, on grounds venue is improper. CERTIFICATE OF COUNSEL The undersigned hereby certifies, pursuant to Local Rule 3.01(g), that on May 25, 2017, Thomas R. Yaegers conferred with counsel for the Plaintiff, Eric Boughman, in a good faith effort to resolve the issues raised by the instant motion, and certifies that Plaintiff's counsel opposes the relief sought by this motion. Dated this 25th day of May, 2017. /s/ David S. Wood David S. Wood Fla. Bar No. 289515 Thomas R. Yaegers, Esquire Florida Bar No. 0021351 Akerman LLP 420 S. Orange Avenue, Suite 1200 Post Office Box 231 Orlando, Florida 32802-0231 Tele: (407) 423-4000 Fax: (407) 843-6610 Email: david.wood@akerman.com and Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 25 of 26 PageID 243 41855236;1 H. Troy Romero, Esq. (admitted pro hac vice) Romero Park P.S. 16935 West Bernardo Drive, Suite 260 San Diego, CA 92127 Tele: (858) 592-0065 Fax: (425) 450-0728 Email: tromero@romeropark.com Attorneys for Defendants CERTIFICATE OF SERVICE WE HEREBY CERTIFY that on this 25th day of May, 2017, a true and correct copy of the foregoing was electronically filed with the Clerk of the Court by using the CM/ECF system which will send a notice of electronic filing to all counsel of record. /s/ David S. Wood David S. Wood Case 6:17-cv-00783-CEM-TBS Document 30 Filed 05/25/17 Page 26 of 26 PageID 244 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 1 of 17 PageID 245 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 2 of 17 PageID 246 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 3 of 17 PageID 247 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 4 of 17 PageID 248 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 5 of 17 PageID 249 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 6 of 17 PageID 250 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 7 of 17 PageID 251 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 8 of 17 PageID 252 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 9 of 17 PageID 253 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 10 of 17 PageID 254 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 11 of 17 PageID 255 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 12 of 17 PageID 256 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 13 of 17 PageID 257 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 14 of 17 PageID 258 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 15 of 17 PageID 259 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 16 of 17 PageID 260 Case 6:17-cv-00783-CEM-TBS Document 30-1 Filed 05/25/17 Page 17 of 17 PageID 261
