TRANSACT TECHNOLOGIES, INC., v. FUTURELOGIC, INC.,
Civil No. 3:05cv0818 (PCD)
UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT
August 31, 2006
Defendant FutureLogic, Inc. (“FutureLogic”) moves to dismiss Plaintiff TransAct Technologies, Inc.’s (“TransAct”) Amended Complaint [Doc. No. 38] on the ground that this Court lacks personal jurisdiction over Defendant. For the reasons set forth herein, Defendant’s Motion to Dismiss [Doc. No. 45] is granted.
Also pending are Plaintiff’s Motion to Enjoin or Consolidate Related Proceedings Pending in the United States District Court for the Central District of California [Doc. No. 34] and the parties’ Joint Motion to Enlarge the Time to Complete Discovery and File Dispositive Motions and Joint Trial Memorandum [Doc. No. 57].
I. BACKGROUND
Plaintiff is a corporation incorporated in the State of Delaware with a principal place of business in Wallingford, Connecticut. (Am. Compl. ¶ 4.) Plaintiff designs, manufactures, and markets transaction-based printers and related products and services primarily to the point-of-sale and gaming industries. (Id.) Defendant is a corporation incorporated and maintaining a principal place of business in California. (Id. at ¶ 5.) Defendant develops transaction-based printers primarily in the gaming industry, and allegedly directly competed with Plaintiff, manufacturing
TransAct’s most important product in the gaming industry is its Epic 950TM thermal casino printer. (Id. at ¶ 8.) On December 20, 2002, Plaintiff filed an application with the U.S. Patent and Trademark Office (the “PTO”), seeking patent protection of technologies employed in the Epic 950TM printer. (Id. at ¶ 9.) On March 10, 2005, the PTO issued a Notice of Allowance to Plaintiff. (Id.)
On April 5, 2005, Defendant issued a press release entitled “FutureLogic Challenges TransAct Technologies Patent Allowance” (the “Press Release”). (Id. at ¶ 11.) The Press Release stated that Defendant was challenging the PTO’s allowance of Plaintiff’s patent application “on the basis of FutureLogic’s currently pending patent applications with the U.S. Patent and Trademark Office, which cover various features of FutureLogic’s GEN2 promotional printer.” (Id.) The Press Release further stated that Plaintiff “did not disclose FutureLogic’s pending patent applications or other related gaming technologies before obtaining an allowance of Transact’s patent application.” (Id.) Defendant featured the April 5, 2005 Press Release through a link on its internet website. (Id. at ¶ 12.) The Press Release was also further distributed on the internet by three independent publishers: Business Wire, The Washington Post, and Ascend Media Gaming Group (“Ascend”). (Id. at ¶¶ 12, 14.) Business Wire and The Washington Post displayed the Press Release on their respective websites. (Id. at ¶ 12.) Defendant allegedly paid Ascend to transmit emails over the internet with a link to the Press Release. (Id. at ¶ 14.) Plaintiff maintains that these emails “reach tens of thousands of recipients, and virtually all participants in the worldwide casino industry,” including those in Connecticut. (Id. at ¶ 14.)
In addition to the Press Release, Plaintiff claims that other actions by Defendant also injured its business and reputation. First, in October 2004, Defendant’s Chief Financial Officer allegedly told a financial analyst at Oppenheimer & Co. that Plaintiff’s Chief Executive Officer had been the subject of a restraining order and was forcibly removed from the premises of Plaintiff’s major customer. (Id. at ¶ 16.) Second, in November 2004, Defendant’s CFO allegedly represented to a gaming industry analyst at Cross Research that a large court judgment had been entered against Plaintiff, a representation Plaintiff maintains is false. (Id. at ¶ 17.) Finally, in December 2004, Defendant’s CFO allegedly made further “false and disparaging comments” about Plaintiff to Cross Research. (Id. at ¶ 18.)
Plaintiff filed the present action (“the Connecticut Action”) against Defendant in the Connecticut Superior Court on April 25, 2005. On May 23, 2005, Defendant removed the case to this Court and filed the present motion to dismiss for lack of personal jurisdiction on January 11, 2006. In the Amended Complaint, Plaintiff alleges false advertising (Count I), defamation (Counts II, III, and IV), tortious interference with contractual relations (Count V), tortious
II. DISCUSSION
Defendant argues that this Court lacks personal jurisdiction over it because Connecticut’s long-arm statute applicable to foreign corporations does not authorize exercising personal jurisdiction here. (Def.’s Mem. Mot. Dis. at 3-8.) Furthermore, Defendant contends that it does not have the constitutionally mandated minimum contacts necessary for this Court to exercise specific personal jurisdiction, even if the long-arm statute authorized such jurisdiction. (Id. at 8-14.) Plaintiff maintains that under both the relevant Connecticut long-arm statute,
A. Standard for Motion to Dismiss
When a defendant challenges personal jurisdiction in a motion to dismiss, the plaintiff bears the burden of proving that the court has jurisdiction over the defendant. See Amerbelle Corp. v. Hommel, 272 F. Supp. 2d 189, 192 (D. Conn. 2003); see also Metro. Life Ins. v. Robertson-Ceco Corp., 84 F.3d 560, 566-67 (2d Cir. 1996). When no discovery has been conducted, the plaintiff only needs to assert facts constituting a prima facie showing that the defendant’s conduct is sufficient for the court to exercise personal jurisdiction. Amerbelle, 272 F. Supp. 2d at 192-93 (internal quotations and citations omitted). In a motion to dismiss for lack of personal jurisdiction, all pleadings, affidavits, and allegations are construed “in the light most favorable to plaintiff and doubts are resolved in the plaintiff’s favor.” Whitaker v. Amer. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001).
In a diversity suit, a federal district court will resolve the question of personal jurisdiction over an out-of-state party by looking to the law of the forum state. Amerbelle, 272 F. Supp. 2d at 193 (citing Arrowsmith v. United Press Int’l, 320 F.2d 219, 231 (2d Cir. 1963)). In Connecticut, questions of personal jurisdiction are resolved using a two-step inquiry: first, the court must determine if the Connecticut long-arm statute reaches the foreign party; if so, the court must then decide if the exercise of jurisdiction meets the “minimum contacts” requirement, thus satisfying constitutional due process. See Amerbelle, 272 F. Supp. 2d at 193 (internal quotation and citations omitted); see also Bensmiller v. E.I. Dupont de Nemours & Co., 47 F.3d 79, 81 (2d Cir. 1995).1
Plaintiff claims
Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is transacting or has transacted business in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising . . . out of tortious conduct in this state, whether arising out of repeated activity or single acts, and whether arising out of misfeasance or nonfeasance.
C. The Allegedly Defamatory Press Releases Are Not an Adequate Basis for Personal Jurisdiction
Defendant correctly notes that courts construing § 33-929(f)(4) of the Connecticut long-arm statute have differentiated between the place where tortious conduct occurs, and the place where the effect or injury of the tort occurs. Amerbelle, 272 F. Supp. 2d at 194-95; Bross Utils. Serv. Corp. v. Aboubshait, 489 F. Supp. 1366, 1373 (D. Conn. 1980). In Amerbelle, this Court clearly held that “jurisdiction may be founded on § 33-929(f)(4) only if the tortious conduct occurred in Connecticut, regardless of whether the injury was felt in Connecticut.” Amerbelle, 272 F. Supp. 2d at 194.
Amerbelle’s holding was supported by a comparison of the Connecticut long-arm statute applicable to individuals (
Thus, the plain meaning of § 33-929(f)(4) dictates that any alleged tortious act must actually occur in Connecticut. “If the Legislature intended Connecticut’s long-arm statute to reach foreign corporations who commit torts outside of Connecticut, it would have expressly done so as it did with § 52-59b.” Amerbelle, 272 F. Supp. 2d at 195.
In spite of the distinction drawn in Amerbelle, Plaintiff maintains that the tort of defamation specifically includes the resulting injury and therefore, Defendant’s actions constitute “tortious conduct in the state.”2 (Pl.’s Opp. Mot. Dis. at 3 n.2, 4, and 5.) Plaintiff’s position is that Amerbelle’s holding is not contrary to its contention, then, because Amerbelle instructs courts to inquire only as to the place where the tort occurred, and the tort of defamation occurs
Indeed, this Court’s decision in Amerbelle was based upon a claim against a foreign corporation for tortious interference with contract, and not defamation. 272 F. Supp. 2d at 194. However, as Plaintiff itself argues in opposition to Defendant’s Motion to Dismiss, tortious interference with contract also includes the resulting injury as an element of the tort. (Pl.’s Opp. Mot. Dis. at 3 n.2, 5 n.4 (citing Appleton, 757 A.2d at 1063).) Therefore, Amerbelle’s clear distinction between a foreign corporation’s tortious conduct in Connecticut (which supports personal jurisdiction) and mere injury felt in Connecticut (which does not support jurisdiction) is applicable to a claim of defamation, also. Plaintiff does not suggest any contrary authority in this jurisdiction which suggests that defamation changes this distinction.4 The injury is a part of the
The Second Circuit, interpreting § 33-929(f)(4), rejected an argument similar to Plaintiff’s contention on statutory grounds. Gen’l Star Indemnity Co. v. Anheuser-Busch Cos., Inc., No. 99-7004, 1999 U.S. App. LEXIS 29673 (2d Cir. Nov. 8, 1999) (summary order). In Gen’l Star, the plaintiff argued that jurisdiction was proper because the conduct at issue “was targeted at a Connecticut company that necessarily felt the sting of the defendants’ actions in its home state.” 1999 U.S. App. LEXIS 29673, at *4. The court noted that accepting plaintiff’s argument “would obliterate the longstanding distinction between long-arm statutes that reach tortious conduct in a given state and those that reach conduct which causes tortious injury in the state by action outside the state.” Id. (internal citations omitted); see also On-Line Techs., 141 F. Supp. 2d at 264 (refusing personal jurisdiction based upon § 33-929(f)(4) over a corporate defendant, where the plaintiff argued that because the consequences of defendant’s acts impacted plaintiff in Connecticut, this constituted “tortious conduct” under the long-arm statute).
Accordingly, allegedly defamatory statements that originate out of state, but are affirmatively distributed in Connecticut or expressly and directly aimed at Connecticut, may support a finding of personal jurisdiction. See Buckley v. N.Y. Post Corp., 373 F.2d 175, 178-79 (2d Cir. 1967) (holding that defendant’s distribution in Connecticut of 2,000 copies of allegedly defamatory statements about plaintiff is tortious conduct in Connecticut, even though the statements were written in New York); Braunstein v. Hayes & Thynne, Nos. CV 91 0117928, CV 91 0118235, 1993 WL 55277, at *2 (Conn. Super. Ct. Feb. 16, 1993) (finding personal jurisdiction over a foreign corporation based upon the Connecticut long-arm statute because the allegedly libelous letters, although originating in Colorado, were sent directly to Connecticut by the defendant and “published” there).
Plaintiff alleges that circulation of the allegedly defamatory Press Release throughout the nation (including Connecticut) by third parties, and Defendant’s posting the Press Release on its website, constitutes tortious acts in Connecticut by Defendant. (Pl.’s Opp. Mot. Dis. at 3-5.) Plaintiff argues that Defendant “clearly intended that its statements reach Connecticut, among other places, because the parties compete for business in this state.” (Id. at 4.)
1. Distribution In The Forum State By Independent Publishers Is Not “Conduct In The State” By The Author
Defendant issued the allegedly defamatory Press Release to third parties The Washington Post, Business Wire, and Ascend. It appears that The Washington Post and Business Wire obtained the Press Release by accessing Defendant’s internet website. (Am. Compl. ¶ 28.) Defendant allegedly paid Ascend to transmit an email containing a link to Defendant’s Press Release. (Id. at ¶¶ 14, 28.) Ascend then transmitted that email to “tens of thousands of recipients, and virtually all participants in the worldwide casino industry, including in the State of Connecticut.” (Id. at ¶ 14.) Therefore, Defendant widely disseminated the Press Release throughout the United States, including Connecticut, via third parties. The Court, however, finds these allegations are insufficient to show Defendant’s actions were expressly directed at Connecticut. The mere fact that Plaintiff felt the brunt of the injury in Connecticut does not establish that Defendant expressly targeted Connecticut, as required by the long-arm statute.
The Second Circuit has held that the distribution of allegedly defamatory materials in the forum state by an independent publisher does not constitute tortious conduct in the forum state by the author of those materials. See Chaiken v. VV Publ. Corp., 119 F.3d 1018, 1026, 1031 (2d Cir. 1997). In Chaiken, the court analyzed whether the authors’ actions could be called conduct “in” Massachusetts and held that they could not. Id. The authors wrote their allegedly
The statutory support for the court’s holding in Chaiken applies equally well in this case.5 In Chaiken, the Second Circuit refused to conclude that defendant’s actions constituted an act committed “in” Massachusetts to satisfy the long-arm statute. Id. at 1026. Holding otherwise would have “rendered” the section of the long-arm statute which confers “jurisdiction over a defendant causing tortious injury in the state by an act outside the state, if certain conditions are met, a nullity.” Id. (internal quotations and citations omitted) (emphasis added). In the instant case, Defendant’s actions are analogous to those of the authors in Chaiken, and the Court cannot conclude that under the Connecticut corporate long-arm statute, such conduct is committed “in” Connecticut. To decide otherwise would essentially allow jurisdiction over a foreign corporation in situations where such jurisdiction would not be proper, based on Chaiken, over non-resident
The caselaw cited by Plaintiff to support the proposition that personal jurisdiction is proper where defamatory statements originate outside of a forum state but are distributed inside that state is distinguishable from the instant case. Though the alleged defamatory statements at issue in Buckley originated out of state, the defendant was the publisher of those statements and not merely the author.6 373 F.2d at 177-80. Similarly, the defendant was the publisher of the statements at issue in Keeton. 465 U.S. at 772. Personal jurisdiction over the publisher defendants in Buckley and Keeton was permissible, since the relevant conduct in the forum state was their affirmative distribution of the allegedly defamatory articles through regular and substantial sales of newspapers or magazines in the state. See Buckley, 373 F.2d at 178 (allowing personal jurisdiction based on § 33-929(f)(4) over a publisher who engaged in “conduct” in the forum state because “it would seem hard to deny that distributing two thousand copies of a libel about a resident in Connecticut is ‘tortious conduct in this state,’ under any ordinary meaning of those words”); Keeton, 465 U.S. at 772-73 (holding that publisher’s sale of 10,000 to 15,000 copies of the magazine in the state satisfied constitutional requirements for personal jurisdiction).
Because the defendants in the cases cited by Plaintiff affirmatively distributed the allegedly defamatory statements within the forum state, their conduct is distinguishable from the conduct of Defendant in this case. Accord Chaiken, 119 F.3d at 1026 (finding that cases such as Buckley were distinguishable, because the defendants in such cases “affirmatively distributed information in the state that sought to exercise jurisdiction,” while the Chaiken defendants simply authored the allegedly defamatory articles out of state). Defendant did not write the Press Release in Connecticut, and did not contract with any publishers in Connecticut to disseminate the statement. (Def.’s Mem. Mot. Dis. at 2-3.) Instead, Defendant intended for the Press Release
Nevertheless, Plaintiff argues that Defendant targeted Connecticut because Defendant knew that the statements would be read there and would injure the Plaintiff there. (Pl.’s Opp. Mot. Dis. at 4.) As outlined supra, however, mere knowledge that alleged defamatory statements will be read in the forum state and cause injury there is not sufficient to support personal jurisdiction, unless the Defendant has affirmatively distributed the statements to Connecticut. Evidence that the Press Release was eventually made available to viewers in Connecticut by third party distributors may subject the distributors to jurisdiction in that state, but it does not subject Defendant to jurisdiction there.8 Defendant’s actions in writing the allegedly defamatory Press Release and making it available for dissemination by third parties does not constitute conduct “directly and expressly targeted” at Connecticut, Gen’l Star, 1999 U.S. App. LEXIS 29673, at *3-4, and therefore personal jurisdiction is not proper based upon these actions.
2. Posting The Press Release On Defendant’s Passive Website Is Not “Conduct In The State” By The Defendant
Plaintiff also argues that Defendant’s actions in electronically distributing the allegedly defamatory Press Release satisfies the long-arm statute and constitutes conduct expressly targeted at Connecticut. (Pl.’s Opp. Mot. Dis. at 5-7.) However, as discussed supra, the dissemination of the Press Releases (electronically or in hard copy) by independent third parties here cannot satisfy the requirements of § 33-929(f)(4). Therefore, the only electronic “communication” that
This court’s decision in On-Line Technologies is instructive here, because it attempted to determine if a website, accessible by Connecticut residents, constituted “tortious conduct in this state” for the purposes of the long-arm statute. 141 F. Supp. 2d at 264-265. Although the specific tort was patent infringement in On-Line Technologies, for the purpose of long-arm jurisdiction the tort of patent infringement occurs where the offending act is committed. Id. at 264 (internal citations and quotations omitted). The decision thus considered if an offending act can be said to have occurred in Connecticut, where a website is the conduit for the alleged tortious conduct and it can be accessed nationwide. Likewise, in the instant case, the Court must evaluate if the Defendant acted in Connecticut when posting allegedly defamatory statements on its nationally-accessible website.9
The level of interactivity of the website determines whether web presence in a particular forum can constitute conduct “in” the state for the purposes of personal jurisdiction. On-Line Techs., 141 F. Supp. 2d at 265. In cases where a defendant “has only advertised on the Internet, and where another medium such as the telephone or mail is necessary to contact the seller,” the website is considered “passive” and personal jurisdiction usually is not proper. Id. Since the
Posting the allegedly defamatory Press Release on Defendant’s website does not constitute “tortious conduct” in Connecticut and the Court finds it insufficient to establish personal jurisdiction over Defendant. Plaintiff correctly notes that “the court must ask where the postings were circulated or distributed.” (Pl.’s Opp. Mot. Dis. at 6.) However, Defendant - like the defendant in On-Line Technologies - operated a website that “primarily involve[d] the exchange of information.” 141 F. Supp. 2d at 266. Defendant does not sell any products to Connecticut customers through its website. (Micalizzi Decl. at ¶¶ 8-10.) There is no evidence in the record that the Press Release or the website “was directed at Connecticut anymore than anyplace else in the nation.” Edberg v. Neogen Corp., 17 F. Supp. 2d 104, 114 (D. Conn. 1998) (citing E-Data Corp. v. Micropatent Corp., 989 F. Supp. 173, 177 (D. Conn. 1997)).
The only case Plaintiff cites to support its argument that the Defendant’s website is “conduct in the state” is TELCO Communications v. An Apple A Day, 977 F. Supp. 404, 407-08 (E.D. Va. 1997). The Virginia long-arm statute at issue in that case, however, extends as far as due process allows. Id. at 405. Therefore, the effects of defendant’s allegedly defamatory press releases, which solicited business in the forum state, were sufficient to support personal jurisdiction. Id. at 408. While the “effects test” may be relevant to the constitutional inquiry, it does not impact the statutory inquiry here. Since Defendant did not physically act in Connecticut by posting the Press Release on a Connecticut website, jurisdiction is only proper if Defendant expressly and directly targeted the forum state. However, Defendant’s passive website does not suffice for an “act in the forum state” and it does not demonstrate that Defendant expressly and
The Court also notes that Plaintiff’s claims for tortious interference with contractual relations and business expectancy (Counts V and VI) are based upon the Press Release and, as discussed supra, distribution of that Press Release by third parties and on Defendant’s website does not constitute tortious conduct in Connecticut. Plaintiff does not allege any other conduct in Connecticut giving rise to its claims for tortious interference with contractual relations and business expectancy. (Am. Compl. ¶¶ 39-48.) Furthermore, at least some of the conduct and resulting harm occurred in California at a trade show. (Id. at ¶ 15.)
In conclusion, the Connecticut long-arm statute cannot reach Defendant based upon Plaintiff’s claims for defamation in the April 2005 Press Release (Count II) because Defendant’s acts do not constitute tortious conduct in this state as required by § 33-929(f)(4). Similarly, such conduct also cannot support personal jurisdiction over Defendant for the tortious interference claims (Counts V and VI).
D. The Remaining Conduct Alleged By Plaintiff Is Not Sufficient To Establish Personal Jurisdiction Over Defendant
Lastly, Plaintiff argues that its claim for false advertising under the Lanham Act,
IV. CONCLUSION
The Court has considered Plaintiff’s arguments for asserting personal jurisdiction over Defendant based upon
Because this case is being dismissed for lack of jurisdiction, Plaintiff’s Motion to Enjoin or Consolidate Related Proceedings Pending in the United States District Court for the Central District of California [Doc. No. 34] is denied and the parties’ Joint Motion to Enlarge the Time to Complete Discovery and File Dispositive Motions and Joint Trial Memorandum [Doc. No. 57] is denied as moot.
SO ORDERED.
Dated at New Haven, Connecticut, August ___, 2006.
/s/__________________________
Peter C. Dorsey, U.S. District Judge
District of Connecticut