David T. SHAHEEN, Plaintiff, v. Charles J. SMITH, et al., Defendants.
Civil Action No.: 12–1168 (RC)
United States District Court, District of Columbia.
November 13, 2013
RUDOLPH CONTRERAS, United States District Judge
Re Document Nos.: 9, 12
MEMORANDUM OPINION
DENYING PLAINTIFF‘S MOTION FOR DEFAULT JUDGMENT FOR LACK OF PERSONAL JURISDICTION; DENYING PLAINTIFF‘S REQUEST FOR JURISDICTIONAL DISCOVERY, AND GRANTING PLAINTIFF‘S MOTION FOR TRANSFER OF VENUE
I. INTRODUCTION
This action arises out of the plaintiff‘s allegations against the defendants for copyright infringement. The plaintiff, Mr. David T. Shaheen, owns a copyright for a written article titled Going Public by Direct Filing vs. Reverse Merger. The plaintiff alleges that the defendants, Charles J. Smith and his company, “How2GoPublic.com,” altered the article and posted it online without the plaintiff‘s permission. The plaintiff moved for Default Judgment and this Court entered an Order, instructing the plaintiff to Show Cause why the Court should not dismiss this case for lack of personal jurisdiction.
After examining the plaintiff‘s allegations regarding the defendants’ contacts in the District of Columbia, the Court finds that it does not have personal jurisdiction over the defendants. The Court also finds that jurisdictional discovery is not warranted. However, in the interests of justice, the Court will transfer the case to the District Court for the District of Nevada.
II. FACTUAL BACKGROUND
On July 17, 2012, the plaintiff filed a complaint against the defendants alleging copyright infringement. Compl. ¶ 1, ECF No. 1. On September 5, 2012, the defendants were served in Nevada. See Aff. of
III. LEGAL STANDARD
The plaintiff bears the burden of establishing that this Court has personal jurisdiction over the defendants. See FC Inv. Grp. LC v. IFX Mkts., Ltd., 529 F.3d 1087, 1091 (D.C.Cir.2008). Although factual discrepancies in the record must be resolved in favor of the plaintiff, a court need not accept the plaintiff‘s “conclusory statements” or “bare allegations” regarding the defendant‘s actions in a selected forum. See GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1349 (D.C.Cir.2000).
“To establish personal jurisdiction over a non-resident, a court must engage in a two-part inquiry: A court must first examine whether jurisdiction is applicable under the state‘s long-arm statute and then determine whether a finding of jurisdiction satisfies the constitutional requirements of due process.” GTE New Media Servs. Inc., 199 F.3d at 1347. The District of Columbia long-arm statute provides that a District of Columbia court has personal jurisdiction over any person as to a claim for relief arising from the person‘s
(1) transacting any business in the District of Columbia; (2) contracting to supply services in the District of Columbia; (3) causing tortious injury in the District of Columbia by an act or omission in the District of Columbia; (4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia....
Next, Due Process requires a plaintiff to demonstrate “minimum contacts’ between the defendant and the forum state such that ‘the maintenance of the suit does not offend traditional notions of fair play and substantial justice.‘” GTE New Media Servs. Inc., 199 F.3d at 1347 (quoting Int‘l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). These minimum contacts must be grounded in “some act by which the defendant purposefully avails
IV. ANALYSIS
Applying the District‘s long-arm statute, the plaintiff claims that §§ 13-423(a)(1)-(4) authorize personal jurisdiction over the defendants. This Court will address the plaintiff‘s claims in the order in which they were raised.
A. Personal Jurisdiction
1. The Court Does Not Have Personal Jurisdiction under D.C. Code § 13-423(a)(3)
The plaintiff first argues that because the defendants’ acts of copyright infringement constitute an intentional tort1 that originated in and caused the plaintiff harm in the District of Columbia, this Court therefore has jurisdiction over the defendants. Under
tortious injury in the District of Columbia by an act or omission in the District of Columbia.” This provision “requires that both act and injury occur in the District of Columbia.” Helmer v. Doletskaya, 393 F.3d 201, 208 (D.C.Cir.2004). See also Moncrief v. Lexington Herald-Leader Co., 807 F.2d 217, 221 (D.C.Cir.1986) (“the District of Columbia has chosen to distinguish between the act of the defendant and the injury it causes“).
Though the District of Columbia Circuit has not yet ruled on where a tortious injury occurs in a copyright infringement case, at least one District of Columbia court has adopted the Second Circuit‘s logic in Penguin Group (USA) Inc. v. Am. Buddha, 640 F.3d 497, 500-501 (2d Cir. 2011). In that case, the court held, after certifying the question to the New York Court of Appeals, that under the New York long-arm statute, the situs of the injury in an online copyright infringement case is the location, or residence, of the copyright holder. Id. See also Nu Image, Inc. v. Does 1-23, 799 F.Supp.2d 34, 38-39 (D.D.C.2011) (finding the reasoning of Am. Buddha to “tip[] the balance in favor of identifying the situs of the injury as the location of the copyright holder,” and finding that under that test, the location of the injury was in California, where the copyright holder resided). Here, the plaintiff has alleged that his injury occurred in the District of Columbia, because that is where he is located. See Resp. at 6. The copyright at issue in this case is registered under David Shaheen‘s name, and under his work address in Washington, D.C. See Compl., Ex. G., ECF No. 1-1.
As this court has noted, “[i]n cases involving the posting of infringing material on an Internet web site, courts have held that the tort occurs where the web site is created and/or maintained, usually where the server supporting the web site is located, not where the Internet web site can be seen, because that would be literally anywhere the Internet can be accessed.” Kline v. Williams, No. Civ. A. 05-01102 (HHK), 2006 WL 758459, at *4 (D.D.C. Mar. 23, 2006) (quoting Citigroup Inc. v. City Holding Co., 97 F.Supp.2d 549, 567 (S.D.N.Y. 2000)). Here, although the plaintiff alleges that the defendant maintains a technical contact for its website in the Washington, D.C. metropolitan area (Herndon, VA), nothing in the plaintiff‘s Response or Complaint demonstrates that the defendants’ website was created, is maintained, or has its servers in Washington, D.C.3 See Resp. at 3. Rather, the defendant‘s web-site is registered under a Nevada address, lists an administrative contact located in Oregon, and lists a technical contact with a Virginia address. See Resp., Ex. 5 at 2, ECF No. 11-5. Mere access to the defendants’ website from the District is insufficient to establish that the tortious “act” occurred in the District. See, e.g., GTE New Media Servs. Inc., 199 F.3d at 1346 (“[M]ere accessibility to an Internet site in the District is [not] enough of a foundation upon which to base personal jurisdiction.“). Because the plaintiff has not demonstrated that both act and injury occurred in Washington, D.C., this Court cannot find that personal jurisdiction is proper under § 13-423(a)(3).
The plaintiff argues that personal jurisdiction is also proper under § 13-423(a)(3) because the defendants are subject to the terms and conditions of the plaintiff‘s law firm‘s website, www.burkreedy.com, which designate the District of Columbia as the proper venue for any and all actions between the user of the website and Burk & Reedy. See Resp. at 1-2, 6; Ex. 2 at 2, ECF Nos. 11, 11–2 (“you agree that personal jurisdiction and venue for any and all actions shall be exclusively in the District of Columbia ... and you hereby specifically waive any objections pertaining to personal jurisdiction or venue in any actions between you and Burk & Reedy LLP.“) (emphasis added). This argument, sounding in forum-selec-
tion,4
2. The Court Does Not Have Personal Jurisdiction under D.C.Code § 13-423(a)(4)
The plaintiff next claims that personal jurisdiction is proper under § 13-423(a)(4) because the defendants “caused tortious injury in the District of Columbia”6 where defendants “regularly do[] or solicit[] business, engage[] in any other persistent course of conduct, and/or derive[] substantial revenue from goods used or consumed, or services rendered.” See Resp. at 7.
The Court does not find that personal jurisdiction is proper under § 13-423(a)(4) for two reasons. First, the plaintiff has not produced any facts showing that the defendant solicits business, engages in any persistent course of conduct, and/or derives substantial revenue from any activity conducted in the District. The plaintiff‘s allegation that the defendants solicit business across the country and have clients in the District of Columbia “cannot be based solely on the ability of District residents to access the defendant‘s websites.” GTE New Media Servs. Inc., 199 F.3d at 1350. Moreover, “for a website to constitute a persistent course of conduct within the District of Columbia, it must meet a certain level of interactivity [with users in the District of Columbia].” See Bible Way Church of Our Lord Jesus Christ World Wide, Inc. v. Showell, 578 F.Supp.2d 164, 171 (D.D.C.2008). The
Second, the plaintiff‘s assertion that the defendants’ interactions with the SEC establish minimum contacts is subject to the government contacts principle. The modern-day government contacts principle was first articulated by the District of Columbia Court of Appeals in a case interpreting the reach of the District‘s new long-arm statute. See Envtl. Research Int‘l, Inc. v. Lockwood Greene Eng‘rs, Inc., 355 A.2d 808, 813 (D.C.1976). In that case, the court found that the basis for the government contacts principle was rooted “in the unique character of the District as the seat of national government and in the correlative need for unfettered access to federal departments and agencies for the entire national citizenry.” Id. It went on to hold that “contacting federal governmental agencies is not a basis for the assertion of in personam jurisdiction.” Id. The court based its holding on the Due Process Clause “minimum contacts” analysis, but in a footnote, indicated that the First Amendment might also provide a basis for the principle. See id. at 813 n. 11. Two years later, the District of Columbia Court of Appeals noted a tension in the rationale of Envtl. Research as to whether the gov-
ernment contacts principle might provide an exemption from personal jurisdiction where otherwise minimum contacts had been established. See Rose v. Silver, 394 A.2d 1368, 1373-74 (D.C.1978). The court answered that question, holding that in the context of the government contacts principle, “the First Amendment provides the only principled basis for exempting a foreign defendant from suit in the District of Columbia, when its contacts are covered by the long-arm statute and are sufficient to withstand a traditional due process attack.” Rose, 394 A.2d at 1374. The guidance from the Rose court suggests, then, that personal jurisdiction could be established if the government-contact communication was not protected by the First Amendment, and minimum contacts could be established.7
Since then, there has been some confusion in the lowers courts as to the precise limit of the doctrine. See, e.g., Naartex Consulting Corp. v. Watt, 722 F.2d 779, 786-87 (D.C.Cir.1983) (noting that since Rose, the “court has failed to clarify any possible conflict” and recognizing the “tension between Envtl. Research and Rose“); Hayes v. FM Broadcast Station WETT, 930 F.Supp.2d 145, 148 (D.D.C.2013) (explaining that “there may be complexities in the government contacts doctrine that are not captured by” the simple formulation articulated in Envtl. Research that a party‘s contacts with government agencies do not enter the jurisdictional calculus). The most recent District of Columbia Court of Appeals case to address the issue decided not to resolve the tension between the cases at all. Instead, the court noted that the Rose decision
The Companhia court further explained that “[c]ases in which the fraud exception applies should be rare indeed.” 35 A.3d at 1134. It went on to note that a defendant forfeits the protection of the government contacts exception where it “uses the government as an instrumentality of fraud ... and thereby causes unwarranted government action against [the plaintiff]....” See id. Accord Morgan v. Richmond School of Health and Technology, Inc., 857 F.Supp.2d 104, 109 (D.D.C. 2012) (explaining that the holding of Com-
panhia is very narrow, and applies only to cases where the defendant “fraudulently induced unwarranted government action against the plaintiff“). Here, the plaintiff has alleged that the defendant has been subject to SEC enforcement actions regarding fraudulent schemes and filings with the SEC. See Resp. at 2, Ex. 3, ECF No. 11-3. Such fraudulent filings, however, cannot provide a basis for personal jurisdiction in this case for two reasons. First, the fraudulent filings are not petitions that “caused unwarranted government action” against the plaintiff—no government agency took action against the plaintiff in this case as a result of the defendants’ prosecution by the SEC for fraudulent conduct. Therefore, the narrow exception to the government contacts principle articulated in Companhia is inapplicable here.
Second, the fraudulent filings have nothing to do with the plaintiff‘s underlying claim of copyright infringement—they pertain to fraudulent conduct related to other corporations not party to, or at issue in, this case. The D.C. long-arm statute only reaches a cause of action that arises from the defendant‘s jurisdictional ties to the District. See
Grp. LC v. IFX Mkts., Ltd., 479 F.Supp.2d 30, 39 (D.D.C.2007), aff‘d, 529 F.3d 1087 (D.C.Cir.2008) (“plaintiff‘s jurisdictional allegations must arise from the same conduct of which it complains“); Novak-Canzeri v. Saud, 864 F.Supp. 203, 206-207 (D.D.C.1994) (explaining that “[t]he claim itself must have arisen from the business transacted in the District or there is no jurisdiction” and finding no jurisdictional nexus between the plaintiff‘s underlying breach of contract claim where “there is no statement that the jurisdictional allegations set forth there necessarily relate to the same activity as the breach of contract allegations“); Berwyn Fuel, Inc. v. Hogan, 399 A.2d 79, 80 (D.C.1979) (finding no personal jurisdiction under § 13-423(b) where, even though the appellant made fuel deliveries to the District of Columbia, the tortious injury in that case did not arise from those deliveries to the District, but from an accident that occurred in Maryland). Here, the defendants’ jurisdictional ties to the District are fraudulent filings with the SEC related to the defendants’ other companies—not filings that give rise to the plaintiff‘s underlying copyright infringement claim. Therefore, even if the SEC enforcement actions based on the fraudulent filings could confer jurisdiction on the defendants, it would only be to the extent the tortious conduct arose from those filings, which in this case, it did not at all.
In addition to the SEC enforcement actions, the plaintiff has asserted that the defendants’ filings and other contacts with the SEC and FINRA, a nongovernmental organization that issues the defendants’ stock ticker symbols for their companies, establishes personal jurisdiction over the
defendants. See Resp. at 7. Such interactions are also insufficient to confer personal jurisdiction on the defendants. See Inv. Co. Inst. v. United States, 550 F.Supp. 1213, 1216-17 (D.D.C.1982). The defendants in Inv. Co. Inst. were banks who, like the defendants in the instant case, regularly interacted with the SEC and the National Association of Securities Dealers (“NASD“), FINRA‘s predecessor, and other governmental or quasi-governmental agencies through filings, correspondence, and other matters that would allow the banks to operate lawfully. 550 F.Supp. at 1217-18. Those were the only connections that the defendants had with the District of Columbia. This court concluded that it had no personal jurisdiction over those banks, because their dealings with the SEC, NASD, and other governmental or quasi-governmental agencies were their only contacts with the District of Columbia and fell within the federal government contacts principle. See id. The court also noted that despite the tension of Envtl. Research and Rose, “the fact that [the] activities [were] undertaken for ‘commercial’ purposes would not deprive them of [ ] First Amendment protection ... for the First Amendment protects ‘commercial’ speech and the right of petition as well as that undertaken for less mercenary reasons.” Id. at 1217. Thus, the defendants’ filings and correspondence with the SEC and FINRA fall within the government contacts principle, and this Court cannot establish personal jurisdiction over the defendants under § 13-423(a)(4).
More importantly, and as set forth above, even if the defendants’ contacts with the government were enough to constitute regular business in the District or a
3. The Court Does Not Have Personal Jurisdiction under D.C.Code § 13-423(a)(1)–(2)
The plaintiff next claims that personal jurisdiction is proper under § 13-423(a)(1)-(2) because the defendants “transact business in the District of Columbia” and/or “contract[] to supply services in the District of Columbia” by (1) regularly traveling to meet with FINRA and the SEC to file documents, (2) meeting with clients in the District, (3) advertising to and accepting clients from anywhere in the United States, including the District, and (4) serving as officers in a separate corporation that has substantial contacts with the District. See Resp. at 7-8.
The Court, again, disagrees. First, the defendants’ interaction with FINRA and the SEC is not enough to confer jurisdiction on them, as set forth above. See, e.g., Envtl. Research Int‘l, 355 A.2d at 813. Second, the plaintiff has not produced any facts that demonstrate how many—if any—clients the defendants have in Washington, D.C. Third, the plaintiff has not produced any evidence beyond the conclusory allegations that the defendants advertise and solicit business from the District of Columbia. Finally, the allegation that the defendants are “officers in corporations which are either based in the District of Columbia and/or have substantial contacts to the District of Columbia” is not supported by any facts on the record. See Resp. at 8. The only piece of evidence produced regarding any other corporation is a stock issuance record for the company “MyOtherCountryClub.com,” which is registered in Reno, Nevada and organized under the laws of Nevada. See Resp., Ex. 6, ECF No. 11-6. The only connection between that corporation and the District is that it filed a Registration Statement with the SEC. Again, such a filing is subject to the government contacts principle, and therefore not enough to confer personal jurisdiction on the defendants. And as set forth above, even if such interaction did suffice for purposes of minimum contacts, § 13-423(b) requires that the tortious act arise from those contacts, which in this case alleging copyright infringement, it did not. See Berwyn Fuel, Inc., 399 A.2d at 80.
Because the plaintiffs have not demonstrated that the defendants transact any business or contract to supply services in the District, such that “maintenance of the suit does not offend traditional notions of fair play and substantial justice,” this Court cannot find that personal jurisdiction is proper under § 13-423(a)(1)-(2). Int‘l Shoe Co., 326 U.S. at 316.
B. Jurisdictional Discovery
A plaintiff is entitled to jurisdictional discovery “if a party demonstrates that it can supplement its jurisdictional allegations through discovery.” GTE New Media Servs. Inc., 199 F.3d at 1351. And although discovery should be freely permitted, “mere conjecture or speculation” that discovery could lead to personal jurisdiction over the out-of-state defendants will be insufficient for a district court to permit discovery. FC Inv. Grp. LC, 529 F.3d at 1094. Therefore, a plaintiff must include some facts about what additional discovery could produce. See Cheyenne Arapaho Tribes of Okla. v. United States, 558 F.3d 592, 596 (D.C.Cir. 2009); Mwani v. bin Laden, 417 F.3d 1, 17 (D.C.Cir.2005). Finally, “it is inappropriate” to subject a defendant to discovery if the plaintiff does not make a “detailed showing” of how jurisdictional discovery would lead to new, relevant information. See Bible Way Church, 578 F.Supp.2d at 171.
The plaintiff has not demonstrated how jurisdictional discovery could supplement its allegations. The plaintiff has not included what type of discovery he will engage in, any facts of what he would gain from additional discovery, nor how additional discovery would be beneficial. See Resp. at 8; see also Cheyenne Arapaho Tribes of Okla., 558 F.3d at 596. The plaintiff only asserts that discovery should be “freely given,” but does not assert any other facts that establish that his request for discovery is more than a speculative fishing expedition. See id.; see also FC Inv. Grp. LC, 529 F.3d at 1094. Because the plaintiff has not indicated how discovery could provide new and relevant information that could supplement the plaintiff‘s existing jurisdictional claims, the Court declines to grant the plaintiff‘s request for jurisdictional discovery.
C. Venue Transfer
Even though a district court lacks personal jurisdiction over defendants, “the district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.”
Venue for this action is proper in “a judicial district where any defendant resides,” or “a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred,” or “if there is no district in which an action may otherwise be brought ... any judicial district in which any defendant is subject to the court‘s personal jurisdiction with respect to such action.”
V. CONCLUSION
For the foregoing reasons, this Court finds that it does not have personal jurisdiction over the defendants, that jurisdictional discovery is not warranted, and hereby transfers the case to the District Court for the District of Nevada.
An order consistent with this Memorandum Opinion is separately and contemporaneously issued.
RUDOLPH CONTRERAS
United States District Judge