MARK W. BENNETT, District Judge.
TABLE OF CONTENTS I. INTRODUCTION AND BACKGROUND .............................................1169A. Procedural Background ...............................................1169B. Factual Background ..................................................11691. Facts Drawn From Complaint ......................................11692. Facts Related Solely To Personal Jurisdiction ...................1170II. LEGAL ANALYSIS ..........................................................1171A. Rule 12(b)(2) Standards and Personal Jurisdiction ....................1171B. Personal Jurisdiction Analysis ......................................1173C. Federal Long-Arm Statute ............................................11771. Claim arises under federal law ..................................11782. No state with personal jurisdiction over defendants .............11783. Due process .....................................................1179D. Limited Jurisdictional Discovery ....................................1180III. CONCLUSION ..............................................................1181
Plaintiff, a producer of adult motion pictures, alleges that defendants, a Hungarian corporation and two Hungarian residents, have willfully violated plaintiff's copyright and trademarks by offering plaintiff's motion pictures on an Internet website they operate. However, the merits of plaintiff's claims are not presently before me. Rather, I must resolve, inter alia, whether plaintiff has made a prima facie showing that defendants have sufficient minimum contacts with Iowa to satisfy due process and permit the exercise of personal jurisdiction over them under Iowa's long-arm statute, or whether their contacts with the United States as a whole,
On August 30, 2011, plaintiff Fraserside IP L.L.C. ("Fraserside") filed an Amended Complaint against Netvertising Ltd., doing business as HardXXXTube.com, Richard Szeles, Laslo Racz, John Does and John Doe Companies, alleging the following causes of action: copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; contributory copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; vicarious copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; inducing copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; false designation of origin, in violation of 15 U.S.C. § 1125(a); and, dilution of trademark, in violation of 15 U.S.C. § 1125(c).
On June 16, 2012, Netvertising Ltd., Szeles and Racz (collectively, the "Netvertising defendants") filed a Motion to Dismiss. In their motion, the Netvertising defendants contend that they are not subject to personal jurisdiction in Iowa or under Federal Rule of Civil Procedure 4(k)(2) and the Complaint must be dismissed pursuant to Federal Rule of Civil procedure 12(b)(2). On June 30, 2012, Fraserside filed a resistance to the Netvertising defendants' Motion to Dismiss. Fraserside argues that Netvertising's internet activities establish a sufficient basis for specific personal jurisdiction under Iowa's long-arm statute. Fraserside, alternatively, argues that, even if it did not make a prima facie showing of personal jurisdiction under Iowa's long-arm statute, personal jurisdiction exists under the federal long-arm statute found in Federal Rule of Civil Procedure 4(k)(2). Fraserside also alternatively requests that I delay ruling on the Netvertising defendants' motion and permit it limited jurisdictional discovery. After obtaining an extension of time, the Netvertising defendants filed a timely reply brief on July 30, 2012.
On a motion to dismiss, I must assume all facts alleged in the Complaint are true, and must liberally construe those allegations. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The following factual background is drawn from the Amended Complaint, documents attached to the Amended Complaint, and public records.
Defendant Netvertising is the owner of HardXXXTube.com. Netvertising is a Hungarian entity with an address in Szentes, Hungary. HardXXXTube.com is a website and competes with Fraserside in the distribution and sale of adult audio-visual works through the Internet. HardXXXTube.com allows users to view Fraserside's copyrighted works. HardXXXTub.com sells advertising space on pages displaying Fraserside's copyrighted works. HardXXXTube.com uses Fraserside's copyrighted works to increase traffic to its website and drive advertising revenue. HardXXXTube.com sells premium memberships through another website, www.HardSexTube.com, and pays third parties to send traffic to its website.
The Netvertising defendants have supplied affidavits in support of their request to dismiss the Amended Complaint on the ground of lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). I have extracted the following facts, all uncontroverted, from those affidavits which relate to the Netvertising defendants' contacts with the State of Iowa.
Szeles is a resident of Hungary and a shareholder in Netvertising. Szeles has never visited Iowa. He has never been a resident of Iowa or the United States. He has never had an office, employees, or a telephone number in Iowa or the United States. He has never had an agent for service of process in Iowa or the United States. He does not advertise in Iowa or the United States, and has never maintained servers in Iowa or the United States. He has never paid taxes in Iowa or the United States. Szeles visited the United States once, for one week, on a personal holiday.
Racz is also a resident of Hungary. He is the director of Netvertising. Racz has never visited Iowa or the United States. He has never been a resident of Iowa or the United States. He has never had an office, employees, or a telephone number in Iowa or the United States. Racz has never had an agent for service of process in Iowa or the United States. He does not advertise in Iowa or the United States, and has never maintained servers in Iowa or the United States. He has never paid taxes in Iowa or the United States.
Netvertising owns and operates the HardXXXTube.com website. Netvertising has never had an office, employees, or a telephone number in Iowa or the United States. It has never had an agent for service of process in Iowa or the United States. Netvertising does not advertise in Iowa or the United States, and has never maintained servers in Iowa or the United States. It has never paid taxes in Iowa or the United States.
In considering the Netvertising defendants' motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), Fraserside's Amended Complaint "must state sufficient facts ... to support a reasonable inference that [each defendant] may be subjected to jurisdiction in the forum state." Steinbuch v. Cutler, 518 F.3d 580, 585 (8th Cir.2008). "`Once jurisdiction ha[s] been controverted or denied, [plaintiffs] ha[ve] the burden of proving such facts.'" Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir.2004) (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir.1974)); see Viasystems, Inc. v. EBM-Papst St. George GmbH & Co., K.G., 646 F.3d 589, 592 (8th Cir.2011). Fraserside need not, however, establish jurisdiction by a preponderance of the evidence until an evidentiary hearing is held, or until trial. Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991). Where, as here, "`the district court does not hold a hearing and instead relies on pleadings and affidavits,... the court must look at the facts in the light most favorable to the nonmoving party, and resolve all factual conflicts in favor of that party.'" Pangaea, Inc. v. Flying Burrito L.L.C., 647 F.3d 741, 745 (8th Cir.2011)(quoting Dakota Indus., Inc., 946 F.2d at 1387); Johnson v. Arden, 614 F.3d 785, 793-94 (8th Cir.2010)("`If the District Court does not hold a hearing and instead relies on pleadings and affidavits, then we must look at the facts in the light most favorable to the nonmoving party and resolve all factual conflicts in favor of that party.'")(quoting Epps v. Stewart Information Serv. Corp., 327 F.3d 642, 646-47 (8th Cir.2003)); Romak USA, Inc. v. Rich, 384 F.3d 979, 983-84 (8th Cir.2004)(noting that a court "must view the evidence in the light most favorable to [plaintiffs] and resolve factual conflicts in its favor."). For Fraserside to survive the Netvertising defendants' motion to dismiss under Rule 12(b)(2) for lack of personal jurisdiction, Fraserside "`need only make a prima facie showing of jurisdiction,' and may do so by affidavits, exhibits, or other evidence." Romak USA, Inc., 384 F.3d at 983 (quoting Epps, 327 F.3d at 647); accord K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591 (8th Cir.2011); see Viasystems, Inc., 646 F.3d at 592; Pangaea, Inc., 647 F.3d at 745.
I "may assume jurisdiction over a foreign defendant only to the extent permitted by the forum state's long-arm statute and by the Due Process Clause of
"The Due Process Clause requires `minimum contacts' between the nonresident defendant and the forum state before the court may exercise jurisdiction over the defendant." Coen v. Coen, 509 F.3d 900, 905 (8th Cir.2007) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). The Eighth Circuit Court of Appeals has explained sufficient minimum contacts as follows:
Id. (citations omitted); see K-V Pharm. Co., 648 F.3d at 592; Wells Dairy, Inc. v.
The Eighth Circuit Court of Appeals has further instructed that:
Stanton v. St. Jude Med., Inc., 340 F.3d 690, 693-94 (8th Cir.2003) (citations omitted).
"`Minimum contacts must exist either at the time the cause of action arose, the time the suit was filed, or within a reasonable period of time immediately prior to the filing of the lawsuit.'" Johnson, 444 F.3d at 955-56 (quoting Pecoraro v. Sky Ranch For Boys, Inc., 340 F.3d 558, 562 (8th Cir.2003)). If the court determines that a defendant has the requisite "minimum contacts within the forum state, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with `fair play and substantial justice.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 90 L.Ed. 95 (1945)); see Luv N' Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 473 (5th Cir.2006) ("It remains for us to inquire whether the exercise of jurisdiction would offend traditional notions of fair play and substantial justice. When a plaintiff makes its prima facie case that the defendant has `minimum contacts' with the forum state, the burden of proof shifts to the defendant to show that the exercise of jurisdiction would be unreasonable." (citation and quotation omitted)). These other factors include:
Burger King Corp., 471 U.S. at 476-77, 105 S.Ct. 2174 (quoting World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. 559). "These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required." Id. at 477, 105 S.Ct. 2174. If, however, a defendant "seeks to defeat jurisdiction" when the defendant purposefully "directed his activities at forum residents" — i.e., when minimum contacts are clearly established — the defendant "must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Id.
Fraserside contends that the Netvertising defendants' contacts with Iowa are sufficient to establish specific jurisdiction over them.
In Lakin v. Prudential Sec., Inc., 348 F.3d 704, 710 (8th Cir.2003), the Eighth Circuit Court of Appeals adopted the "sliding scale" approach established by Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1124 (W.D.Pa.1997), to determine if website contacts provide a basis for specific jurisdiction. Lakin, 348 F.3d at 710 ("We agree with our sister circuits that the Zippo model is an appropriate approach in cases of specific jurisdiction —, i.e., ones in which we need only find `minimum contacts.'"). The "sliding scale" approach recognizes that "`the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of the commercial activity that the entity conducts over the Internet.'" Id. (quoting Zippo Mfg. Co., 952 F.Supp. at 1124). In Lakin, the Eighth Circuit Court of Appeals observed that:
Id. at 710-11 (quoting Zippo Mfg. Co., 952 F.Supp. at 1124).
Fraserside relies upon the Calder effects test formulated by the United
Johnson, 614 F.3d at 796 (quoting Lindgren v. GDT, 312 F.Supp.2d 1125, 1132 (S.D.Iowa 2004)); see Viasystems, Inc., 646 F.3d at 595 (quoting Johnson, 614 F.3d at 796). The Calder effects test "allows the assertion of personal jurisdiction over non-resident defendants whose acts `are performed for the very purpose of having their consequences felt in the forum state.'" Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1390-91 (8th Cir.1991) (quoting Brainerd v. Governors of Univ. of Alberta, 873 F.2d 1257, 1260 (9th Cir.1989)). Moreover, the Eighth Circuit Court of Appeals, unlike the Ninth Circuit Court of Appeals, construes the Calder effects test narrowly. See Johnson, 614 F.3d at 796-97 ("Additionally, even if the effect of Heineman's alleged statement was felt in Missouri, we have used the Calder test merely as an additional factor to consider when evaluating a defendant's relevant contacts with the forum state ... We therefore construe the Calder effects test narrowly, and hold that, absent additional contacts, mere effects in the forum state are insufficient to confer personal jurisdiction."); see also Furminator, Inc. v. Wahba, No. 4:10CV01941, 2011 WL 3847390, at *3 (E.D.Mo. Aug. 29, 2011) (noting that the Eighth Circuit Court of Appeals construes the Calder effects test narrowly); Oticon, Inc. v. Sebotek Hearing Sys., L.L.C., 865 F.Supp.2d 501, 519-20 (D.N.J.2011) (noting in Johnson, the Eighth Circuit Court of Appeals expressly clarified its position that it construes the Calder effects test narrowly); Express Scripts, Inc. v. Care Continuum Alliance, Inc., No. 410CV2235CDP, 2011 WL 2199967, at *4 (E.D.Mo. June 7, 2011) (observing that "[t]he Eighth Circuit has narrowly construed the Calder effects test ..."). Although I accept as true Fraserside's allegations that the Netvertising defendants intentionally infringed Fraserside's registered copyrights and trademarks, these allegations, alone, fail to demonstrate that the Netvertising defendants "uniquely or expressly aimed" their tortious acts at Iowa. Johnson, 614 F.3d at 796. At best, all Fraserside has established, for jurisdictional purposes, is that the Netvertising defendants intentionally continued to infringe Fraserside's copyrights and trademarks even after they were made aware of them by their continued operation of the HardXXXTube.com website. That alone is insufficient to establish the express-aiming prong of the Calder effects test. In Calder, the court reasoned that jurisdiction in California was proper where the publisher of an allegedly libelous newspaper article had its "largest circulation" in that state. Calder, 465 U.S. at 790, 104 S.Ct. 1482. Here, by contrast, Fraserside cannot point to a single user of the HardXXXTube.com website in Iowa.
Assuming, arguendo, Fraserside could demonstrate that the Netvertising defendants' actions were aimed at Iowa and that the consequences of their actions were felt in Iowa, the Calder effects test is "merely an additional factor to consider when evaluating a defendant's relevant contacts with the forum state." Johnson, 614 F.3d at 796-97. I must also consider the five factors developed by the Eighth Circuit Court of Appeals in determining whether a nonresident defendant has sufficient minimum contacts with the forum state to exercise personal jurisdiction over it. As discussed above, I must consider: (1) the nature and quality of the contacts with the forum state; (2) the quantity of the contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing its residents a forum; and (5) the convenience of the parties. See K-V
Fraserside, alternatively, argues that, even if it did not make a prima facie showing of personal jurisdiction under Iowa's long-arm statute, personal jurisdiction exists under the federal long-arm statute found in Federal Rule of Civil Procedure 4(k)(2).
FED.R.CIV.P. 4(k)(2) advisory committee notes to 1993 amendment. Specifically, Rule 4(k)(2) permits a court to exercise personal jurisdiction over a defendant if: (1) the plaintiff's claim arises under federal law; (2) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (3) the exercise of jurisdiction comports with due process. See Synthes (U.S.A.) v. G.M. Dos Reis Jr., 563 F.3d 1285, 1293-94 (Fed.Cir.2009); see also World Tanker Carriers Corp. v. M/V Ya Mawlaya, 99 F.3d 717, 720 (5th Cir. 1996); see also Oldfield, 558 F.3d at 1218-19.
Fraserside brings six claims, all of which arise under federal law: copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; contributory copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; vicarious copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; inducing copyright infringement, in violation of 17 U.S.C. §§ 106 and 501 et seq.; false designation of origin, in violation of 15 U.S.C. § 1125(a); and, dilution of trademark, in violation of 15 U.S.C. § 1125(c). Since Fraserside has pled copyright and trademark claims, it is uncontested that those claims satisfy the first requirement of Rule 4(k)(2).
The second requirement of Rule 4(k)(2) requires that the Netvertising defendants not be subject to personal jurisdiction in any state. The Netvertising defendants argue that Fraserside has failed to prove that they are not subject to jurisdiction anywhere in the United States. However, rather than requiring the plaintiff to meet the onerous burden of proving that a defendant is not subject to personal
ISI Int'l, Inc. v. Borden Ladner Gervais L.L.P., 256 F.3d 548, 552 (7th Cir.2001) (citations omitted); see Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1415 (Fed.Cir.2009); Holland Am. Line, Inc. v. Wartsila N.A., 485 F.3d 450, 461 (9th Cir. 2007); Mwani v. bin Laden, 417 F.3d 1, 11 (D.C.Cir.2005); Adams v. Unione Mediterranea Di Sicurta, 364 F.3d 646, 651 (5th Cir.2004). Because a majority of the federal courts of appeals have adopted this approach, I presume that the Eighth Circuit Court of Appeals would also follow it. The Netvertising defendants have not met their burden here and named another state where this lawsuit could proceed. Indeed, to the contrary, the Netvertising defendants argue that they are not subject to personal jurisdiction anywhere in the United States. Given this argument, Rule 4(k)(2)'s second requirement is satisfied here.
The third prong of Rule 4(k)(2) requires that the exercise of jurisdiction comport with due process. Synthes, 563 F.3d at 1293-94; M/V Ya Mawlaya, 99 F.3d at 720. The due process analysis under Rule 4(k)(2) is nearly identical to the traditional personal jurisdiction analysis, the only difference lies in that the forum under analysis shifts from Iowa to the United States as a whole. See Synthes, 563 F.3d at 1295; Oldfield, 558 F.3d at 1220; Holland Am. Line, Inc., 485 F.3d at 463 (citing Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1159 (9th Cir.2006)). The minimum-contacts test for specific jurisdiction has the following three requirements:
Fraser v. Smith, 594 F.3d 842, 851 (11th Cir.2010); see Synthes, 563 F.3d at 1295 (outlining three factor test for specific jurisdiction which considers whether (1) the defendants have purposefully directed their activities at residents of the United States; (2) whether the claim arises out of or relates to the defendants' activities with the forum; and (3) whether the assertion of personal jurisdiction over the defendants would be fair and reasonable).
Turning to the facts of this case, Fraserside alleges that the Netvertising defendants have the following contacts with the United States:
Plaintiff's Br. at 8-12, and 19.
Even if I assume, arguendo, that these allegations would support specific jurisdiction over the Netvertising defendants, Fraserside has not provided me with an adequate evidentiary basis to accept them.
Fraserside, alternatively contends that, even if it did not make a prima facie showing of personal jurisdiction, I should delay ruling on the Netvertising defendants' motion and permit Fraserside limited jurisdictional discovery. The Federal Rules of Civil Procedure provide for liberal discovery. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 34, 104 S.Ct. 2199, 81 L.Ed.2d 17 (1984) ("Liberal discovery is provided for the sole purpose of assisting in the preparation and trial, or the settlement, of litigated disputes."). Courts "have broad discretion in [their] resolution of discovery problems that arise in cases pending before [them]." In re Multi-Piece Rim Prods. Liab. Litig., 653 F.2d 671, 679 (D.C.Cir.1981). When a plaintiff offers only speculation or conclusory assertions about contacts with a forum state, a court is within its discretion in denying jurisdictional discovery. See Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., 646 F.3d 589, 598 (8th Cir.2011) (noting that "`[w]hen a plaintiff offers only speculation or conclusory assertions about contacts with a forum state, a court is within its discretion in denying jurisdictional discovery.'") (quoting Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1074 n. 1 (8th Cir.2004) (quoting in turn Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 402 (4th Cir.2003))); ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 716 n. 3 (4th Cir.2002) (affirming district court's refusal to allow plaintiff to engage in jurisdictional discovery where plaintiff's request was based on "conclusory assertions"); McLaughlin v. McPhail, 707 F.2d 800, 806 (4th Cir.1983) (holding that district court did not abuse its discretion in denying jurisdictional discovery where
Presumably conclusive information regarding the Netvertising defendants' contacts with the United States are available to Fraserside only through discovery. See Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 455 (3d Cir.2003) (noting that "any information regarding Step Two's intent vis-a-vis its Internet business and regarding other related contacts is known by Step Two, and can be learned by Toys only through discovery"). Because Fraserside has proffered facts that, if proven, would affect my exercise of jurisdiction over the Netvertising defendants, I grant Fraserside's request for jurisdictional discovery. To avoid potential disputes over the scope of Fraserside's discovery, I note that discovery under the Federal Rules of Civil Procedure is "`to be accorded a broad and liberal treatment.'" Credit Lyonnais, S.A. v. SGC Int'l, Inc., 160 F.3d 428, 430 (8th Cir. 1998) (quoting Hickman v. Taylor, 329 U.S. 495, 507, 67 S.Ct. 385, 91 L.Ed. 451 (1947)). This maxim applies equally when discovery is directed to personal jurisdiction. See Edmond v. United States Postal Serv. Gen. Counsel, 949 F.2d 415, 425 (D.C.Cir.1991); Naartex Consulting Corp. v. Watt, 722 F.2d 779, 788 (D.C.Cir.1983); Wyatt v. Kaplan, 686 F.2d 276, 283-84 (5th Cir. 1982) (Wisdom, J.). Accordingly, Fraserside's discovery may inquire into all areas that are reasonably likely to aid in resolution of the jurisdictional issue here. Such jurisdictional discovery must be completed
For the reasons previously discussed, defendants do not have sufficient "minimum contacts" with Iowa to permit jurisdiction under Iowa's long-arm statute. However, because I grant Fraserside's request for jurisdictional discovery, I need not determine, at this time, whether personal jurisdiction exists under the federal long-arm statute found in Federal Rule of Civil Procedure 4(k)(2). The Netvertising defendants' Motion to Dismiss for lack of personal jurisdiction is denied without prejudice.
FED.R.CIV.P. 4(k)(2).