Rotblut v. Terrapinn, Inc.
N15C-12-024 AML
| Del. Super. Ct. | Sep 30, 2016Background
- Plaintiffs: Jeffrey Rotblut (NY citizen) and UBO Propriety Trading, LLC (Delaware LLC); Defendant Terrapinn, Inc. is Delaware; Terrapinn Holdings, Ltd. (Holdings) is U.K.-incorporated; Lewis C. Wilkins authored the challenged article and lived outside Delaware.
- At issue: a December 17, 2013 blog post on terrapinn.com authored by Wilkins stating Rotblut’s firm once lost $40 million in ~20 minutes (attributed to Rotblut but referring to another panelist), which plaintiffs allege harmed fundraising and business.
- Plaintiffs sued Terrapinn, Holdings, and Wilkins for defamation; Terrapinn (the Delaware operating company) is undisputedly subject to jurisdiction; Holdings and Wilkins moved to dismiss for lack of personal jurisdiction.
- Plaintiffs invoked Delaware’s long-arm statute, 10 Del. C. § 3104(c)(3) (tortious injury caused by an act or omission in Delaware) and § 3104(c)(4) (general/jurisdictional contacts: regularly does or solicits business, persistent course of conduct, or derives substantial revenue from Delaware).
- Holdings submitted an affidavit denying involvement in the article, stating it is a passive holding company not authorized or operating in Delaware; Wilkins submitted an affidavit showing residence and activities outside Delaware.
- Court considered whether website hosting/ownership or authoring the article sufficed to establish specific or general jurisdiction over Holdings and Wilkins and concluded plaintiffs failed to make the required specific showing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Holdings is subject to specific jurisdiction under § 3104(c)(3) | Holdings caused tortious injury in Delaware by publishing the defamatory article on a website copyrighted/hosted by Holdings | Holdings is a non-operating holding company that did not act in Delaware or participate in publication; mere website accessibility is insufficient | No — plaintiff failed to show the tortious act or omission occurred in Delaware; website copyright/hosting alone insufficient |
| Whether Holdings is subject to general jurisdiction under § 3104(c)(4) | Holdings regularly solicits business in Delaware via its website and targets Delaware residents | Holdings does not do business, hold assets, pay taxes, or maintain offices in Delaware; passive website access is insufficient | No — plaintiffs produced no evidence Holdings regularly does business or derives substantial revenue from Delaware |
| Whether Wilkins is subject to specific jurisdiction under § 3104(c)(3) | Wilkins authored the article for a Delaware company (Terrapinn), causing injury in Delaware | Wilkins wrote and published the article outside Delaware; plaintiff must show Wilkins acted in Delaware | No — plaintiffs did not show Wilkins was physically present or acted in Delaware when the article was written/published |
| Whether Wilkins is subject to general jurisdiction under § 3104(c)(4) | Wilkins had been a freelance blogger for Terrapinn since 2011, allegedly deriving revenue connected to Delaware activities | Wilkins resides outside Delaware, has no Delaware business presence, and any salary from Terrapinn does not tie him to Delaware; tracing salary to Delaware customers is infeasible | No — plaintiffs failed to show Wilkins regularly does business in Delaware or derives substantial revenue from Delaware |
Key Cases Cited
- LaNuova D & B, S.p.A. v. Bowe Co., Inc., 513 A.2d 764 (Del. 1986) (framework for long-arm statute analysis and two-step jurisdictional inquiry)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (minimum contacts and purposeful availment principles)
- World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (foreseeability alone insufficient for jurisdiction)
- Walden v. Fiore, 134 S. Ct. 1115 (U.S. 2014) (plaintiff cannot be the only link between defendant and forum; defendant's contacts must create the connection)
- Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997) (website interactivity test informing purposeful availment analysis)
- Hartsel v. Vanguard Group, Inc., 38 A.3d 1254 (Del. 2012) (limits on using employee salary or employer's Delaware contacts to establish personal jurisdiction over individual employee)
- Sternberg v. O'Neil, 550 A.2d 1105 (Del. 1988) (separate assessment of parent and subsidiary contacts for jurisdictional purposes)
- Hercules Inc. v. Leu Trust & Banking Ltd., 611 A.2d 476 (Del. 1992) (long-arm statute construed broadly but still subject to due process limits)