JAMES H. PAYNE, District Judge.
Now before the Court are the Motion to Dismiss of Defendants IM Solutions, LLC and LeadingResponse [Doc. No. 31], Plaintiff's Response to that motion [Doc. No. 51], and IM Solutions, LLC's and LeadingResponse's Reply Brief in Support of Their Motion to Dismiss [Doc. No. 57]. For the reasons set forth below, Defendants' motion is GRANTED.
According to the Complaint filed on June 3, 2014, Plaintiffs are lawyers and their respective law firms. Plaintiff Anthony Allen is a resident of Muskogee, Oklahoma and practices as a member of the firm of Allen & Wisner, LLC, an Oklahoma limited liability company that has its principal office in Muskogee, Oklahoma. Plaintiff James E. Blount, IV is a resident of Shelby County, Tennessee and practices as a member of the firm of Blount Law Firm, PLLC, a Tennessee limited liability company that has its principal office in Collierville, Tennessee. Blount alleges that he owns the internet domain names "901lawyers.com" and "901lawyers.net;" Allen alleges that his firm's website was hosted under the domain name "oklahomaslawfirm.com" until April 2013, and after that date under the domain name "allenwisner.com." Plaintiffs allege they own common law trademarks to their respective individual and law firm names and to their website domain names. Plaintiffs allege that their individual and firm names and their respective websites are inherently distinctive marks and are marks that have acquired secondary meaning. The Complaint is filed as a putative class action on behalf of all persons in the United States who provide professional legal services
Defendant IM Solutions, LLC ("IMS") is alleged to be a Nevada limited liability company with its principal place of business in Dallas, Texas.
Plaintiffs allege that IMS and RME (along with other Defendants) engaged in unfair competition in violation of Lanham Act § 43(a), 15 U.S.C. § 1125(a), committed deceptive trade practices that violate Okla. Stat. tit. 78, §§ 51 et seq., tortiously interfered with Plaintiffs' prospective economic advantage protected by common law, and engaged in a civil conspiracy with the other defendants. IMS and RME allegedly did so by causing "pop-up" advertisements to appear on Plaintiffs' websites through which legal services would be solicited for lawyers (but not Plaintiffs) who bought client leads from Defendants. These so-called Lead-Buying Lawyers would pay Defendants for leads to prospective clients looking for legal services. Plaintiffs allege that IMS engages or affiliates with companies that use adware or malware browser plug-ins on the computers of millions of consumers without their authorization or knowledge. When a consumer browses the website of a lawyer who is not one of Defendants' Lead-Buying Lawyers, such as Plaintiffs, these plugins cause a form to "pop up" on the consumer's computer screen. The pop-up invites the consumer to provide contact information without indicating that the form is not associated with the website which the consumer is viewing. If the consumer fills in the pop-up form, IMS immediately routes the contact information to Defendant Reed Elsevier, which them promptly calls the consumer and connects the consumer to a representative of the LexisNexis LawyerLocator service, which informs the consumer that he or she will be referred to one of Defendants' Lead-Buying Lawyers. Plaintiff allege that IMS is paid by Lead-Buying Lawyers for each prospect, and IMS in turn pays Reed Elsevier on a per-lead basis.
Plaintiffs allege that Defendants' use of pop-up ads to solicit consumers who are browsing the websites of Plaintiffs and similarly-situated lawyers serves unlawfully to confuse the consumers regarding the
Defendants aver in both the O'Sullivan Declaration and in the DallAcqua Declaration that RME is merely a holding company that has no employees and no business operations, and that RME has no connection to Oklahoma in any way. Defendants aver in the O'Sullivan Declaration and in a Supplemental Declaration by O'Sullivan attached to Defendants' Reply Brief that IMS uses the internet to generate client leads for law firms and advocacy groups, but that IMS does not generate leads by placing or causing others to place pop-up ads on individual computers. IMS avers that it does not download adware or malware to computer users' browsers, and it has not authorized or directed any third person or entity to do so. IMS denies that the pop-ups copied in Plaintiffs' Complaint were authorized or directed by IMS. According to O'Sullivan, over 90% of the leads obtained by IMS are from websites maintained by IMS; less than 10% are leads purchased from other lead generators, and IMS is not involved in the generation of those other leads.
With respect to its contacts with Oklahoma, IMS avers that none of its computer servers is located in Oklahoma. IMS's websites are accessible through the internet anywhere in the world. IMS does not have any Oklahoma-specific advertisements or websites. IMS has two law firm customers based in Oklahoma. One of the firms purchases approximately 200 social security disability and automobile accident leads per month; the other firm purchases approximately 60 leads a month related to automobile accidents and other areas of the law. Together, the two Oklahoma law firms generate approximately 0.8% of IMS's total revenue. IMS does not sell any product or service to individuals in Oklahoma, through its websites or otherwise. It does not have any offices or employees in Oklahoma, does not have any Oklahoma bank accounts, and does not own any real or personal property in Oklahoma. Representatives of IMS do not regularly travel to Oklahoma, and their limited travel to this state has been to one of the law firms that purchases leads IMS has generated through its websites.
In their Reply, Plaintiffs challenge the credibility of O'Sullivan, primarily on the ground that in his relatively short tenure as an officer of IMS he could not have personal knowledge of the facts contained in his Declaration.
The purpose of allowing a jurisdictional challenge such as the one raised here is to protect a defendant who has no meaningful contact with a state from being forced to litigate in an unfamiliar and potentially unfair forum. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1096 (10th Cir.1998); Outdoor Channel, Inc. v. Performance One Media, LLC, 826 F.Supp.2d 1271, 1278 (N.D.Okla.2011). The plaintiff bears the burden of establishing personal jurisdiction, but where, as here, the issue is raised early on in litigation, based on pleadings and affidavits, that burden can be met by a prima facie showing. Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir.2011); Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1069-70 (10th Cir.2008).
To establish personal jurisdiction over Defendants, Plaintiff must show that jurisdiction is proper under the laws of the forum state and that the exercise of jurisdiction would not offend due process. Fireman's Fund Ins. Co. v. Thyssen Min. Const., 703 F.3d 488, 492 (10th Cir.2012) (citing Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir.2000)); Monge v. RG Petro-Machinery (Group) Co., Ltd., 701 F.3d 598, 613 (10th Cir.2012) (same); Outdoor Channel at 1278 (same). Where, as in Oklahoma, the state long-arm statute supports personal jurisdiction to the full extent constitutionally permitted, due process principles govern the inquiry. To exercise personal jurisdiction in harmony with due process, Defendants must have "minimum contacts" with the forum state, such that having to defend a lawsuit there would not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Such contacts may give rise to personal jurisdiction over a non-resident defendant either generally, for any lawsuit, or specifically, solely for lawsuits arising out of particular forum-related activities. Shrader at 1239.
General jurisdiction is based on an out-of-state defendant's continuous and systematic contacts with the forum state, and does not require that the claim be related to those contacts. Specific jurisdiction, on the other hand, is premised on something of a quid pro quo. In exchange for benefitting from some purposive conduct directed at the forum state, a party is deemed to consent to the exercise of jurisdiction for claims related to those contacts. Id.; Dudnikov at 1078.
The Supreme Court recently assayed the scope of general and specific jurisdiction, and the differences between them. Daimler, AG v. Bauman, 571 U.S. ___, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. ___, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). In Daimler, the Court observed that "[s]ince International Shoe, `specific jurisdiction has become the centerpiece of modern jurisdiction theory, while general jurisdiction has played a reduced role.'" 134 S.Ct. at 755 (quoting Goodyear, 131 S.Ct. at 2854). Both Daimler and Goodyear make clear that a court does not have general jurisdiction over out-of-state (or foreign) business organizations unless "their affiliations with the State are so `continuous and systematic' as to render them essentially at home in the forum State." Daimler at 754; Goodyear at 2851. "`For an individual, the paradigm forum is the individual's domicile; for a corporation, it is the equivalent place, one in which the corporation is fairly regarded as at home.' With respect to a corporation, the place of incorporation and principal place of business are `paradig[m]. . . bases for general jurisdiction.' Those affiliations have the virtue of being unique—that is, each ordinarily indicates only one place—as well as easily ascertainable." Daimler at 760 (quoting Goodyear at 2853-54) (other internal citations omitted).
Neither Daimler nor Goodyear held "that a corporation may be subject to general jurisdiction only in a forum where it is incorporated or has its principal place of business; [they] simply typed those places paradigm purpose forums. [However, a formulation that would allow] the exercise of general jurisdiction in every State in which a corporation `engages in a substantial, continuous, and systematic course of business' . . . is unacceptably grasping." Daimler at 760-761. "[T]he inquiry under Goodyear is not whether a foreign corporation's in-forum contacts can be said to be in some sense `continuous and systematic,' it is whether that corporation's `affiliations with the State are so `continuous and systematic' as to render [it] essentially at home in the forum State.'" Daimler at 761 (quoting Goodyear at 2851).
Applying Daimler and Goodyear to the facts of this case, it is clear that this
The same may be said for IMS. As a limited liability company organized under the laws of Nevada and having its principal place of business in Texas, it would be "at home" in those two states. IMS is, for jurisdiction purposes, also considered to be a citizen of the states where its members are incorporated and have their principal places of business.
Plaintiffs' argument that because IMS generates and sells hundreds of leads to Oklahoma lawyers each month its commercial activities in this state are "continuous and systematic" rather than "random, fortuitous, or attenuated" is unavailing. The fact that IMS has continuing business relationships with two Oklahoma law firms is not itself sufficient to confer general jurisdiction over IMS in an Oklahoma court. Outdoor Channel at 1296 (six ongoing contracts with Oklahoma entities not sufficient to confer general jurisdiction over Colorado-based entity) (citing Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)). Cf. Monge at 616-17, 620 (multiple sales of oil rigs, exchange of emails and a visit to Oklahoma by a representative, a website and phone numbers accessible in Oklahoma, and revenue from another Oklahoma customer insufficient to confer general jurisdiction over Chinese manufacturer); Shrader at 1243-44 (purchases by plaintiff and another Oklahoma resident of books and other materials from
And Daimler rejects the concept that a business organization is "at home" in a given state merely because it does significant business there. In Daimler, jurisdiction in a California federal court over Daimler, a German public stock company, was predicated on the California contacts of Mercedes-Benz USA, LLC ("MBUSA"), a Daimler subsidiary incorporated in Delaware with its principal place of business in New Jersey that distributes Mercedes-Benz vehicles to independent dealers throughout the United States, including California. The Court held that MBUSA (and therefore Daimler) was not "at home" in California despite MBUSA's "sizable" sales there, concluding that if "Daimler's California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every State in which MBUSA's sales are sizable." Daimler at 761. The Court described the exercise of general jurisdiction on that basis as "exorbitant" and inconsistent with principles of due process. Id. Plaintiffs' complaint alleges and their arguments opposing Defendants' motion to dismiss concede that IMS's alleged lead-generating activities are carried on throughout the United States. In the present case, even if IMS's lead generation and sales to Oklahoma lawyers could be described as "sizable," that is still insufficient to confer general jurisdiction over IMS in this state.
If this court is to exercise its jurisdiction over either RME or IMS, it may do so only if its jurisdiction is "specific." "Specific jurisdiction . . . depends on an affiliation between the forum and the underlying controversy, principally activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation. . . . In contrast to general, all-purpose jurisdiction, specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction." Goodyear at 2851 (internal quotations and citations omitted). As stated above, to exercise jurisdiction in harmony with due process principles, Defendants musts have "minimum contacts" with Oklahoma, such that defending a lawsuit here would not offend traditional notions of fair play and substantial justice. Int'l Shoe at 316, 66 S.Ct. 154; Shrader at 1239; Dudnikov at 1070; OMI Holdings at 1091.
The "minimum contacts" required by due process principles "for specific jurisdiction entails two distinct requirements: `first, the out-of-state defendant must have "purposefully directed" its activities at residents of the forum state, and second, that the plaintiff's injuries must "arise out of" defendant's forum-related activities.'" Shrader at 1239 (quoting Dudnikov at 1071). Accord: OMI Holdings at 1091; Outdoor Channel at 1280. As this court explained in Outdoor Channel at 1280:
However, "even if the `purposeful direction' and `arising out of' conditions for specific jurisdiction are met, that is not the end of the matter. `[The court] must still inquire whether the exercise of personal jurisdiction would offend traditional notions of fair play and substantial justice.'" Shrader at 1240 (quoting Dudnikov at 1080); OMI Holdings at 1091.
Plaintiffs' claims in this case arise from the alleged internet-based activity by Defendants. The Tenth Circuit first addressed personal jurisdiction in the internet context in Shrader. The court said it was "untenable" to base personal jurisdiction on the accessibility of a website in a given state, because "the internet operates `in' every state regardless of where the user is physically located, potentially rendering the territorial limits of personal jurisdiction meaningless." Shrader at 1240. To avoid that untenable result, an internet user is subject to personal jurisdiction only if the user or website "intentionally direct[s] his/her/its activity or operation at the forum state rather than just having the activity or operation accessible there." Id. (citing ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir.2002)) (emphasis by court). Moreover, Shrader held that it is not enough for personal jurisdiction if the internet conduct on which the plaintiff's claim is based is merely targeted to a known resident of the forum; "the forum state itself must be the focal point of the tort." Id. at 1244 (quoting Dudnikov at 1074 n.9) (emphasis by court).
Applying these principles to the facts of this case, it is clear that this court does not have specific jurisdiction over either of Defendants. The personal jurisdiction issue in this case turns on the lack of "purposeful direction" of Defendants' alleged conduct. "In considering whether the defendants purposefully directed their activities toward [the forum state], `we must examine [both] the quantity and quality of [their forum] contacts.' OMI Holdings, 149 F.3d at 1092. One way to conduct this analysis in tort cases is to consider the `effects test' of Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), where purposeful direction is established if three showings are made: the defendant (a) commits `an intentional action'; (b) that is `expressly aimed at the forum state'; (c) with `knowledge that the brunt of the injury would be felt in the forum state.' Dudnikov, 514 F.3d at 1072; see Shrader, 633 F.3d at 1240-41; accord Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 451 (6th Cir.2012)." Grynberg v. Ivanhoe Energy, Inc., 490 Fed.Appx. 86, 96 (10th Cir.2012). With respect to content on the internet, "courts look to indications that a defendant deliberately directed its message at an audience in the forum state and intended harm to the plaintiff occurring primarily or particularly in the forum state." Shrader at 1241.
With respect to RME, the court does not have specific jurisdiction. RME is a holding company. DellAqua's uncontested declaration that RME has no employees and no business operations anywhere would negate (just as it did with respect to general jurisdiction) any suggestion that RME would be subject to specific jurisdiction here. The complaint does not identify any particular intentional act of RME, and certainly none expressly aimed at Oklahoma as the forum state.
Plaintiffs' complaint alleges that IMS "serves over 200 Lead-buying Lawyers across all 50 states." Compl. ¶ 41. IMS allegedly creates leads by "engag[ing] or affiliat[ing] with companies that display online advertisements by using adware or malware browser plug-ins surreptitiously downloaded to the computers of millions of consumers and activated without the consumers' authorization." Compl. ¶ 43. These browser plug-ins allegedly cause a form to pop-up on the consumer's computer screen when that consumer is browsing the web for a lawyer. Compl. ¶¶ 3, 43. The pop-up form invites the consumer to "Get legal advice" by filling in contact information which IMS allegedly routes to Defendant Reed Elsevier, which then promptly calls the consumer and connects the consumer to a representative of the LexisNexis LawyerLocator service, which informs the consumer that he or she will be referred to one of Defendants' Lead-Buying Lawyers. Compl. ¶¶ 3-4, 43-47. Plaintiffs allege that these pop-ups have appeared on top of their websites, Compl. ¶¶ 2, 33, 65, but (as part of their class allegations) Plaintiffs allege that the websites of "hundreds, if not thousands, of individuals and entities in the Unites States" offering legal services have been impacted. Compl. ¶ 78.
These allegations clearly describe alleged conduct intentionally targeted not to Oklahoma as a forum, or particularly to Plaintiffs in Oklahoma and Tennessee, but to millions of consumers throughout the United States. In due process terms applicable to a specific jurisdiction analysis, the allegedly "intentional conduct" of IMS is not "expressly aimed at the forum state"
Plaintiffs argue that this case is distinguishable from Shrader, but conceptually it is not. In Shrader, neither the operators of a web-based discussion forum (the Beann defendants), nor those posting an email message on the forum that was allegedly defamatory to the plaintiff (the Stewart defendants), nor the person who forwarded the email to another forum member (Biddinger) expressly directed their activities to Oklahoma. "On the contrary, Mr. Shrader's pleadings stressed the forum's non-local nature, repeatedly referring to the fact that it drew an audience from all over the world." Shrader at 1242. Plaintiffs' pleading in this case stresses that Defendants' alleged conduct of infecting consumers' computers with adware that causes a pop-up to appear when the consumer is browsing for legal services is directed to consumers throughout the United States. Defendant's conduct, even if intentional, is not allegedly targeted to Oklahoma generally or Plaintiffs particularly; it is allegedly "expressly directed" to millions of consumers throughout the country. Oklahoma is no more a state to which Defendants' conduct is allegedly directed than any other state. Cf. Outdoor Channel at 1281 ("[T]his court concludes that POM's transmission of ICTV programming to DirectTV and DISH Network, who then broadcast that signal to the entire United States, pursuant to contract, does not demonstrate that POM `purposefully directed its activities' at residents of Oklahoma."). Shrader makes clear that a "plaintiff's residence in the forum state, and hence suffering harm there, does not alone establish personal jurisdiction over a defendant who has not purposefully directed his activities at the state." Shrader at 1245.
The jurisdictional deficiency of Plaintiffs' complaint is not saved by their allegations of conspiracy among the defendants. Plaintiffs allege, in rather conclusory terms, that Defendants conspired with Defendants Reed Elsevier and Internet Brands "to perpetrate against Plaintiffs and the members of the general consuming public seeking legal counsel, for Defendants' own financial gain," the conduct alleged in the complaint. Compl. ¶122.
Moreover, even in an alleged conspiracy, minimum contacts with the forum must be met as to each defendant. Melea at 1070 ("Due process requires that [a non-resident co-conspirator] itself have minimum contacts" with the forum state.). For the reasons already discussed, Plaintiffs have failed to allege that these Defendants had sufficient minimum contacts with Oklahoma to support specific jurisdiction. Adding an allegation that Defendants conspired with others does not solve Plaintiffs' pleading dilemma.
As outlined at the beginning of the court's analysis, Plaintiffs must show both that jurisdiction is proper under the laws of the forum state and that the exercise of jurisdiction would not offend due process, that is, that forcing Defendants to defend a lawsuit there would not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Thus, even when sufficient minimum contacts exist, a court must determine whether the assertion of personal jurisdiction comports with due process. Dudnikov at 1080. This inquiry considers five factors:
Id. (brackets omitted). See also AST Sports Science, Inc. v. CLF Distribution Ltd., 514 F.3d 1054, 1061 (10th Cir.2008); TH Agriculture & Nutrition, LLC v. ACE European Group Ltd., 488 F.3d 1282, 1292 (10th Cir.2007); Trujillo v. Williams, 465 F.3d 1210, 1221 (10th Cir.2006); OMI Holdings at 1095; Outdoor Channel at 1290.
However, because this court has concluded that Defendants do not have sufficient "minimum contacts" with this forum to support the exercise of personal jurisdiction, it is unnecessary to analyze these five factors to determine whether the exercise of jurisdiction would "offend traditional notions of fair play and substantial
One final matter must be addressed. In responding to Defendants' motion, Plaintiffs seek leave to conduct jurisdictional discovery if the court relies on the O'Sullivan Declaration. Describing it as a "flimsy proffer," Plaintiffs argue that they would be prejudiced if the court rules on the motion in reliance on the Declaration without affording Plaintiffs the opportunity to conduct discovery concerning "Defendants' Oklahoma contacts in relation to its conduct regarding Pop-Ups appearing in Oklahoma." Doc. No. 51 at 25. The court has considered O'Sullivan's Declaration (as well as his Supplemental Declaration, along with the DallAcqua Declaration) only with respect to the forms of organization and places of business of RME and IMS, their relationship (as parent holding company and subsidiary limited liability company), and their lack of employees or physical assets in the state of Oklahoma. Plaintiffs do not appear to take issue with those facts stated in O'Sullivan's submissions. As the court's analysis above reflects, it has disregarded O'Sullivan's Declaration and Supplemental Declaration with respect to IMS's alleged role in the generation of the pop-ups about which Plaintiffs complain. The court has, instead, credited Plaintiffs' allegations in that regard. The court has nevertheless concluded that the facts, as alleged by Plaintiffs, do not support the exercise of personal jurisdiction, for the reasons the court has explained. It does not appear to the court that the jurisdictional discovery proposed by Plaintiffs would alter their allegations in a way that might significantly change the court's analysis. Accordingly, the court denies Plaintiff's request.
Based on the foregoing, Defendants' Motion to Dismiss Plaintiffs' Complaint for Lack of Personal Jurisdiction [Doc. No. 31], is