Opinion
No. 3-03-CV-2372-M.
September 15, 2004
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Defendants have filed a motion to dismiss for lack of personal jurisdiction, for improper venue, and for failure to state a claim upon which relief can be granted. For the reasons stated herein, this case should be dismissed without prejudice for lack of personal jurisdiction.
I.
This is a declaratory judgment action brought by Plaintiff Compana, L.L.C., a Nevada limited liability company based in Texas, against Defendants Mike Emke and Emke Associates, both of whom reside in California. (Plf. Orig. Compl. at 1, ¶¶ 2-4). As part of its business, plaintiff registers generic domain names for Internet users. ( Id. at 2-3, ¶¶ 8-9). On January 19, 2003, plaintiff acquired the domain name "servers.com," which previously was registered to defendants. ( Id. at 3, ¶ 9; see also Def. Resp. at 12-14). Thereafter, defendants and their attorney "wrote numerous cease and desist letters and placed several telephone calls" accusing plaintiff of trademark infringement, cybersquatting, extortion, and conversion. (Plf. Orig. Compl. at 4, ¶ 11). By this suit, plaintiff seeks a declaration that it has not engaged in any unlawful conduct with respect to the "servers.com" domain name. ( See id. at 4-7, ¶¶ 13-39).
Plaintiff acknowledges that defendants registered the "servers.com" domain name in September 2001 for a period of one year, but claims they made no attempt to renew this registration until after it had expired. (Plf. Resp. at 2-3). Defendants blame Network Solutions, Inc. for "arbitrarily or mistakenly" deleting the domain name from the public registry. ( See Def. Br. at 1-2, 12-14).
Defendants now move to dismiss this case for lack of personal jurisdiction, for improper venue, and for failure to state a claim upon which relief can be granted. The motion has been fully briefed by the parties and is ripe for determination.
II.
The assumption of personal jurisdiction in a case arising under federal law involves a two-step inquiry. First, absent a controlling federal statute, the defendant must be amenable to service of process under the forum state's long-arm statute. Mink v. AAAA Development LLC, 190 F.3d 333, 335 (5th Cir. 1999); Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993). Second, the exercise of jurisdiction must comport with due process. Mink, 190 F.3d at 335; Ham, 4 F.3d at 415. The Texas Supreme Court has determined that the state's long-arm statute reaches as far as the federal constitutional requirements of due process permit. Irving v. Owens-Corning Fiberglass Corp., 864 F.2d 383, 385 (5th Cir.), cert. denied, 110 S.Ct. 83 (1989); see also Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 200 (Tex. 1985). Accordingly, the court need only address the due process prong of the inquiry.
Plaintiff argues that this prong of the jurisdictional analysis is governed by Fed.R.Civ.P. 4(k)(2) because subject matter jurisdiction is based, in part, on the Anti-Cybersquatting Consumer Protection Act. ( See Plf. Resp. at 4). The court notes at the outset that plaintiff makes no claim under the federal cybersquatting statute. Moreover, the long-arm provisions of Rule 4(k)(2) apply only in "limited circumstances" where a defendant is not subject to suit in the court of any state and the defendant's contacts with the nation as a whole suffice to satisfy the applicable constitutional requirements. See United States v. Swiss American Bank, 191 F.3d 30, 38-42 (1st Cir. 1999) (discussing framework for analyzing Rule 4(k)(2) cases). Because both defendants are subject to general jurisdiction in California, Rule 4(k)(2) is not applicable.
Due process for jurisdictional purposes consists of two elements. First, the defendant must have sufficient "minimum contacts" with the forum state. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945); Wilson v. Belin, 20 F.3d 644, 647 (5th Cir.), cert. denied, 115 S.Ct. 322 (1994). These "minimum contacts" may be analyzed in terms of specific or general jurisdiction. Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984); Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 418 (5th Cir. 1993). Specific jurisdiction exists when the contacts with the forum state arise from, or are directly related to, the cause of action. Wilson, 20 F.3d at 647. General jurisdiction is proper when the defendant has other "continuous and systematic" contacts with the forum unrelated to the pending litigation. Id.
If a non-resident defendant has sufficient minimum contacts with the forum state, the court then must consider whether the exercise of personal jurisdiction would "offend traditional notions of fair play and substantial justice." Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 114, 107 S.Ct. 1026, 1033, 94 L.Ed.2d 92 (1987); Wilson, 20 F.3d at 647. This inquiry focuses on several factors, including: (1) the burden on the non-resident defendant; (2) the interests of the forum state; (3) the interest of the plaintiff in securing relief; (4) the interest of the judicial system in obtaining the most efficient resolution of controversies; and (5) the shared interests of the several states in furthering fundamental substantive social policies. Asahi Metal, 107 S.Ct. at 1033; Bearry v. Beech Aircraft Corp., 818 F.2d 370, 377 (5th Cir. 1987).
The plaintiff has the burden to establish a prima facie case of personal jurisdiction over a non-resident defendant. Kelvin Services, Inc. v. Lexington State Bank, 46 F.3d 13, 14 (5th Cir. 1995). The court can make this determination without an evidentiary hearing based on the complaint, affidavits, and information obtained during discovery. Colwell Realty Investments, Inc. v. Triple T Inns of Arizona, Inc., 785 F.2d 1330, 1333 (5th Cir. 1986). The jurisdictional allegations set forth in the complaint must be taken as true and any conflicts in the evidence must be resolved in favor of the plaintiff. Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990).
III.
Plaintiff tacitly concedes that defendants do not have the type of "continuous and systematic" contacts with Texas necessary to establish general jurisdiction. Rather, plaintiff argues that the exercise of specific jurisdiction is proper because defendants, through their attorney, sent numerous e-mails and placed several telephone phone calls to plaintiff threatening to sue for trademark infringement, cybersquatting, extortion, and conversion. ( See Plf. Resp. at 6-7). Plaintiff further maintains that this court has jurisdiction over defendants pursuant to Tex. Civ. Prac. Rem. Code Ann. § 17.003. ( Id. at 7-8). The court will address each argument in turn.
A.
A federal court may assume specific jurisdiction over a non-resident defendant who "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Electrosource, Inc. v. Horizon Battery Technologies, Ltd., 176 F.3d 867, 871 (5th Cir. 1999), quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958). The purposeful availment requirement "ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts, or of the 'unilateral activity of another party or a third person.'" Id. at 871-72, quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). The contacts with the forum state must be such that "it is foreseeable that the defendant 'should reasonably anticipate being haled into court there.'" Id. at 872, quoting World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). In making this determination, the court may consider: (1) the quality, nature, and extent of defendant's activities in the forum state; (2) the foreseeability of consequences within the forum from activities outside the state; and (3) the relationship between the cause of action and the defendant's contacts. Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026, 1028 (5th Cir. 1983), cert. denied, 104 S.Ct. 2180 (1984), quoting Prejean v. Sonatrach, Inc., 652 F.2d 1260, 1268 (5th Cir. 1981).
B.
The court initially observes that plaintiff has failed to offer any evidence to support its claim that defendants sent numerous e-mails and placed several telephone calls threatening litigation. Thus, the court must look to the jurisdictional allegations of plaintiff's complaint. In an attempt to establish personal jurisdiction over defendants, plaintiff alleges only that Emke Associates "has engaged in business in the State of Texas through numerous contacts, correspondence, and an attempt to contract with Plaintiff through his attorney." (Plf. Compl. at 1-2, ¶ 4). Plaintiff further states that "[b]eginning in August 2003 and continuing through this filing, Defendants, through their attorney, wrote numerous cease and desist letters and placed several phone calls to Plaintiff alleging that Plaintiff engaged in trademark infringement, cybersquatting, extortion, and conversion." ( Id. at 4, ¶ 11). Such conclusory assertions, unsupported by any facts, do not support the exercise of personal jurisdiction over a non-resident defendant. See Dever v. Hentzen Coatings, Inc., ___ F.3d ___, 2004 WL 1872710 at *3 (8th Cir. Aug. 23, 2004).
Plaintiff offers to provide all e-mails sent by defendants "[u]pon discovery or the Court's request." (Plf. Resp. at 6). However, it is not clear why copies of the e-mails or an affidavit detailing the contents of these communications were not submitted in an appendix to plaintiff's response.
Moreover, even if plaintiff were able to show that defendants threatened litigation through e-mails and phone calls, such contacts are insufficient to confer specific jurisdiction over defendants in this declaratory judgment action. See, e.g. Ham, 4 F.3d at 415 (contacts that non-resident defendant has with forum state must give rise to underlying dispute rather than merely provide an incentive to seek declaratory judgment); Silent Drive, Inc. v. Strong Industries, Inc., 326 F.3d 1194, 1202 (Fed. Cir. 2003) (letters sent to plaintiff in forum state implicitly threatening suit for patent infringement were insufficient to confer specific jurisdiction over defendant in declaratory judgment action); Cascade Corp. v. Hiab-Foco AB, 619 F.2d 36, 38 (9th Cir. 1980) (same). This lawsuit neither "arises from" nor is "related to" any cease-and-desist letters. Instead, plaintiff seeks declaratory relief with respect to its registration of the "servers.com" domain name. Without evidence or factual allegations suggesting that defendants "purposefully availed" themselves of the privilege of conducting activities in Texas, defendants are not subject to the jurisdiction of this court. See Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998) ("Principles of fair play and substantial justice afford [a party] sufficient latitude to inform others of its rights without subjecting itself to jurisdiction in a foreign forum.").
C.
Plaintiff also relies on Tex. Civ. Prac. Rem. Code Ann. § 17.003 to establish personal jurisdiction over defendants. This statute provides:
For the purpose of establishing title to property, settling a lien or encumbrance on property, or determining an estate, interest, lien, or encumbrance, a person who claims an interest in the property may sue another person who claims an adverse interest or a lien or encumbrance but resides outside this state, resides in an unknown place, or is a transient. The plaintiff is not required to have actual possession of the property.
TEX. CIV. PRAC. REM. CODE ANN. § 17.003 (Vernon 1997). Analogizing the claims asserted by defendants in their various communications to a title dispute over the "servers.com" domain name, plaintiff argues that defendants are subject to suit in Texas under section 17.003.
A similar argument was rejected by the Texas court of appeals in In re Estate of Judd, 8 S.W.3d 436 (Tex.App.-El Paso, 1999), overruled on other grounds by Tuscano v. Osterberg, 82 S.W.3d 457 (Tex.App.-El Paso, 2002). In that case, the executors of Donald Judd, a local artist, brought a declaratory judgment action against an out-of-state art gallery after the defendant sent several demand letters seeking the return of certain art work. The executor successfully argued to the trial court that personal jurisdiction over the non-resident defendant was proper under section 17.003. The court of appeals reversed. Relying on federal case law, including the Fifth Circuit's decision in Ham, the appellate court wrote:
There is no evidence that Appellant has any contact with the State of Texas other than the demand letters it sent to Appellee. The demand letters clearly did not give rise to the underlying dispute over who owns the art. Rather, the purported bailment arrangement that Appellant had with Mr. Donald Judd gave rise to the underlying dispute. Appellants have stated that the facts surrounding the bailment arrangement occurred wholly outside Texas. Indeed, there is nothing in the record to suggest otherwise. Although the demand letters prompted Appellee to file a declaratory judgment cause of action to settle the ownership issue, as set forth above, such is not sufficient to satisfy due process. Again, the focus of the minimum contacts analysis in declaratory judgment cases must remain on the facts which created the underlying dispute. Thus, the second element of the due process test is not met in this case.Judd, 8 S.W.3d at 444.
Like Judd, the e-mails and phone calls to plaintiff do not constitute sufficient "minimum contacts" to justify the exercise of personal jurisdiction over defendants in this declaratory judgment action. Consequently, this case must be dismissed.
The resolution of this jurisdictional issue pretermits consideration of defendants' motion to dismiss for improper venue and for failure to state a claim upon relief can be granted.