MARK W. BENNETT, District Judge.
TABLE OF CONTENTS I. INTRODUCTION AND BACKGROUND ........................................910A. Procedural Background ...........................................910B. Factual Background ..............................................9111. Facts Drawn From Complaint .................................9112. Facts Related Solely To Personal Jurisdiction ...............911II. LEGAL ANALYSIS ......................................................912A. Rule 12(b)(2) Standards and Personal Jurisdiction ...............912B. Personal Jurisdiction Analysis ..................................915C. Federal Long-Arm Statute ........................................9191. Claim arises under federal law ..............................9202. No state with personal jurisdiction over defendants .........920
3. Due process .................................................920III. CONCLUSION .........................................................922
Nearly 75 years ago, H.G. Wells came close to predicting the advent of the Internet in his collection of essays, World Brain:
H.G. WELLS, WORLD BRAIN 60 (Doubleday, Doran & Co. 1938). Wells, however, did not foresee the legal challenges that the advent of the internet would present for courts considering personal jurisdiction and venue. Such a challenge is before me. Plaintiff, a producer of adult motion pictures, alleges that defendants, an individual residing in Gibraltar and a corporation headquartered in the Republic of Seychelles, 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, or, alternatively, the United States, to satisfy due process and permit the exercise of personal jurisdiction over them.
On August 17, 2011, plaintiff Fraserside IP L.L.C. ("Fraserside") filed a complaint against Sergej Letyagin, doing business as SunPorno.com ("SunPorno"), 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 February 7, 2012, Letyagin and SunPorno filed a Motion to Dismiss. In their motion, Letyagin and SunPorno contend that they are not subject to personal jurisdiction in Iowa and the Complaint must be dismissed pursuant to Federal Rule of Civil procedure 12(b)(2). On February 27, 2012, Fraserside filed a resistance to Letyagin and SunPorno's Motion to Dismiss. Fraserside argues that SunPorno'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 defendants' motion and permit it limited jurisdictional discovery. After obtaining an extension of time, Letyagin and
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 Complaint, documents attached to the Complaint, and public records.
Plaintiff Fraserside is a subsidiary of Private Media Group, Inc., a Nevada Corporation ("Private Media"). Private Media, Fraserside, and sibling companies, collectively, are commercially known as "Private." Private Media is a producer of adult motion pictures. Its adult films are distributed on a wide range of platforms, including mobile handsets in 45 countries, digital television in 24 countries, broadband internet, a South American cable channel, DVDs, and on demand and subscription based services on the Internet. Private has produced over 1,000 adult films and holds over 75 United States copyrights for its works.
Defendant Sergej Letyagin is the owner of defendant SunPorno. He resides in Gibraltar. SunPorno competes with Fraserside Holdings in the distribution and sale of adult audio-visual works through the Internet. SunPorno operates the website www.SunPorno.com. The website allows users the option of viewing adult films, downloading adult films, or viewing films in Hi-Definition.
Defendants have supplied affidavits in support of their request to dismiss the Complaint on the ground of lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). I have extracted
Letyagin is a full-time resident of Europe. He has never resided in, or visited, Iowa. He has never resided in, or visited, the United States. He does not maintain any servers in Iowa, does not advertise there, does not own any real estate in Iowa, and has never paid taxes in Iowa. He is the Director of Technology for Ideal Consult, Ltd. ("Ideal"). Ideal is headquartered in the Republic of Seychelles. Letyagin alleges that Ideal owns and operates the SunPorno website, and that he has never owned or run that website.
Ideal has no employees in Iowa, and has never maintained a server in Iowa. Ideal has never owned any real state in Iowa and has never paid taxes in Iowa. Ideal has never had a bank account in Iowa. Neither Ideal nor SunPorno are registered to do business in Iowa.
SunPorno does not offer any premium memberships. SunPorno has previously entered into affiliate agreements with other companies that provide adult video memberships to enter into affiliate agreements with them. None of these other companies were located in Iowa. Under these affiliate agreements, the affiliated company created what is known as a "white label site." In a white label site, the affiliated company puts SunPorno's logo on a site which the affiliated company creates, owns, and runs.
Ideal has no control over what ads are displayed on SunPorno.com. Ideal contracts with an advertising network company called ExoClick. ExoClick is headquartered in Spain. Ideal provides banner advertising space on its website to ExoClick. ExoClick then selects the advertisements that display when someone goes to the website. The SunPorno website also has "pop under" ads which appear in a separate browser window beneath the main browser window. These advertisements are provided by Ero-Advertising.com, a Netherlands advertising network company. Ideal permits Ero-Advertising to place ads in the "pop under" spaces on its SunPorno website. Ero-Advertising then sells advertising to its clients. The SunPorno website has nothing to do with those transactions or with what ads are displayed. ExoClick and Ero-Advertising gear their ads to the location of the user. Visitors in France are shown French ads while visitors in Germany are shown German ads. The advertisements are not for SunPorno but rather for customers of ExoClick and Ero-Advertising.
In considering defendant's motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), Fraserside's Complaint "must state sufficient facts ... to support a reasonable inference that [each defendant]
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 Constitution." Dakota Indus., Inc. v. Ever Best Ltd., 28 F.3d 910, 915 (8th Cir. 1994); accord K-V Pharm. Co., 648 F.3d at 592 ("Personal jurisdiction in a diversity case exists `only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause.'")(quoting Dever, 380 F.3d at 1073 (internal quotation marks omitted)). Iowa's long-arm statute "expands Iowa's jurisdictional reach to the widest due process parameters allowed by the United States Constitution."
"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. Food Movers Int'l, Inc., 607 F.3d 515, 518 (8th Cir.2010); Steinbuch, 518 F.3d at 585-86; Johnson v. Woodcock, 444 F.3d 953, 956 (8th Cir.2006); Epps v. Stewart Information. Servis. Corp., 327 F.3d 642, 648 (8th Cir.2003); Guinness Import Co. v. Mark VII Distributors, Inc., 153 F.3d 607, 613 (8th Cir.1998); Aylward v. Fleet Bank, 122 F.3d 616, 618 (8th Cir.1997); Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir.1996).
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
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 defendants' contacts with Iowa are sufficient to establish specific jurisdiction over them.
Id. at 710-11 (quoting Zippo Mfg. Co., 952 F.Supp. at 1124).
Fraserside relies upon the Calder effects test formulated by the United States Supreme Court in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) and cites the decision in CYBERsitter, L.L.C. v. People's Republic of China, 805 F.Supp.2d 958, 968-974 (C.D.Cal.2011), in which the district court applied the Ninth Circuit Court of Appeals's expansive interpretation of Calder to conclude that it had specific jurisdiction over defendant Chinese companies. The Calder effects test provides that:
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
Assuming, arguendo, Fraserside could demonstrate that 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 Pharm. Co., 648 F.3d at 592; Wells Dairy, Inc., 607 F.3d at 518 Steinbuch, 518 F.3d at 585-86; Johnson, 444 F.3d at 956. Of these factors, "the first three factors are of primary importance, and the last two are `secondary factors.'" Stanton v. St. Jude Med., Inc., 340 F.3d 690, 694 (8th Cir.2003) (quoting Austad Co. v. Pennie & Edmonds, 823 F.2d 223, 226 (8th Cir.1987)). After considering these five factors, I conclude that Fraserside has not demonstrated that either defendant has sufficient minimum contacts with Iowa to justify exercising personal jurisdiction over them. Both defendants have a notable complete absence of contacts with the State of Iowa. Letyagin is a full-time resident of Europe. He has never resided in, or visited, Iowa. He does not maintain any servers in Iowa, does not advertise there, does not own any real estate in Iowa, and has never paid taxes in Iowa. SunPorno is a subsidiary of Ideal. SunPorno has no employees in Iowa, and has never maintained a server in Iowa. SunPorno has never owned any realestate in Iowa and has never paid taxes in Iowa. SunPorno has never had a bank account in Iowa. Thus, the nature and quality of defendants' contacts with Iowa; the quantity of defendants' contacts with Iowa; and, the relation of the cause of action to their contacts, all decidedly weigh against exercising personal jurisdiction over them. While Iowa has an interest in providing a local forum in which its resident corporations may litigate claims against non-residents, Iowa's "interest in providing its residents with a forum cannot make up for the absence of minimum contacts." Digi-Tel Holdings, Inc. v. Proteq Telecomms.(PTE), Ltd., 89 F.3d 519, 525 (8th Cir. 1996). Additionally, the convenience of the parties is, at best, neutral given Fraserside's limited presence in Iowa and the unique burdens placed upon defendants having to defend themselves in a foreign legal system. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 114, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (observing that "[t]he unique burdens placed upon one who must defend oneself in a foreign legal system should have significant
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 the Rule 4(k)(2) requires that defendants not be subject to personal jurisdiction in any state. Rather than requiring the plaintiff to meet the onerous burden of proving that a defendant is not subject to personal jurisdiction, most circuits have adopted the following approach:
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.
Defendants argue that Fraserside names Kansas and Ohio as states where defendants might be subject to personal jurisdiction. See Defendants' Reply Br. at 3. Defendants conclude from this that Rule 4(k)(2) does not provide a basis for personal jurisdiction over them. See Touchcom, Inc., 574 F.3d at 1415 (noting that "the purposes of Rule 4(k)(2) are best achieved when the defendant is afforded the opportunity to avoid the application of the rule when it designates a suitable forum in which the plaintiff could have brought suit."). Defendants' legal sleight of hand fails, however, because defendants, themselves, do not concede that they are subject to personal jurisdiction in either Kansas or Ohio. Rather, defendants argue that they are not subject to personal jurisdiction in any state. 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
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 relate 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 defendants have the following contacts with the United States:
Plaintiff's Br. at 9, 21, and 23. Defendants deny these factual allegations but do not offer contradictory evidence. While these allegations might support specific jurisdiction over defendants, Fraserside has not provided me with an adequate evidentiary basis to accept them.
Presumably conclusive information regarding Letyagin's relationship to SunPorno and SunPorno's 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 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.
SunPorno webpage at 1; Plaintiff's Ex. P.
FED.R.CIV.P. 4(k)(2).