199 F.3d 1343 (D.C. Cir. 2000), 99-7097, GTE New Media Serv. Corp. v. Bellsouth Corp.

Docket Nº:99-7097
Citation:199 F.3d 1343
Party Name:GTE New Media Services Incorporated, Appellee v. BellSouth Corporation, et al., Appellants
Case Date:January 11, 2000
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Page 1343

199 F.3d 1343 (D.C. Cir. 2000)

GTE New Media Services Incorporated, Appellee

v.

BellSouth Corporation, et al., Appellants

No. 99-7097

United States Court of Appeals, District of Columbia Circuit

January 11, 2000

Argued November 17, 1999

Page 1344

Appeal from the United States District Court for the District of Columbia, (No. 97cv02314)

Charles Rothfeld argued the cause for appellants. With him on the briefs were Richard J. Favretto, Andrew J. Morris and Miriam R. Nemetz.

Page 1345

Thomas A. Isaacson argued the cause for appellee. With him on the brief were Robert F. Ruyak and Alan M. Wiseman. Kenneth W. Brothers, Mark C. Hansen, Stephen A. Weisbrod and Glenn B. Manishin entered appearances.

Before: Edwards, Chief Judge, Sentelle and Randolph, Circuit Judges.

Opinion for the Court filed by Chief Judge Edwards.

Edwards, Chief Judge:

The matter at hand involves an interlocutory appeal brought pursuant to 28 U.S.C. § 1292(b). The issues presented are whether the District Court may assert personal jurisdiction over the defendants and whether venue is proper in the District of Columbia ("District") when the defendants' sole contact with this forum is the operation of Internet websites that are accessible to persons in the District. The District Court tentatively concluded that the quality and nature of the websites militated in favor of personal jurisdiction. The trial judge noted, however, that "[a]ll of the interactive website cases reviewed [by the District Court] involved defendants with at least some physical contact with the forum," whereas the defendants in this case have no physical contact with the forum. GTE New Media Servs., Inc. v. Ameritech Corp., Order Certifying for Interlocutory Appeal the Court's Ruling That Personal Jurisdiction Exists and Staying Proceedings at 3, reprinted in J.A. 218. Given the unusual circumstances of this case, the District Court determined that the questions of personal jurisdiction and venue should be certified for immediate review by this court.

The underlying action in this case rests on a complaint by GTE Media Services, Inc. ("GTE") against various defendants, including BellSouth Corp., BellSouth Enterprises, Inc., BellSouth Advertising & Publishing Corp., Intelligent Media Ventures, Inc., SBC Communications Inc., Pacific Telesis Group, Pacific Bell Interactive Media, US West, Inc., and US West Media Group, for alleged violations of Sections 1 and 2 of the Sherman Antitrust Act. GTE contends that the defendants engaged in a conspiracy with an illicit purpose to dominate the Internet business directories' market. The defendants, in turn, moved to dismiss the complaint for want of personal jurisdiction. The defendants argue that the mere ability of District residents to access the defendants' Internet Yellow Pages from locations within the city is insufficient to establish personal jurisdiction.

GTE contends that the action, tortious injury, and "persistent course of conduct" required under the District's long-arm statute are established, because the defendants have entered into an agreement outside of the District with a purpose of causing Internet users in the District to use the defendants' Internet links to pursue business leads in the District. In other words, GTE asserts that the alleged conspiracy was designed to cause Internet users who otherwise would have had access to GTE's links to be diverted to the defendants' links, which in turn resulted in more advertising revenue for the defendants. GTE argues, in the alternative, that Section 12 of the Clayton Act provides an independent basis for personal jurisdiction.

On the record at hand, we hold that the District Court erred in concluding that there is sufficient evidence here to support personal jurisdiction. And GTE's tortured interpretation of Section 12 of the Clayton Act cannot save the day. However, at this juncture of the case, GTE is still free to supplement the record through jurisdictional discovery. The case is hereby remanded to the District Court for further proceedings, including additional discovery and possible amendments to the complaint, should that be deemed warranted. We decline to pass upon the District Court's theory of jurisdiction, which is premised on the supposed existence of certain facts to

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show substantial effects, when we have no way of knowing whether there are indeed facts to support the asserted theory. And we reject GTE's theory of jurisdiction, which appears to rest on a view that mere accessibility to an Internet site in the District is enough of a foundation upon which to base personal jurisdiction.

I. Background

The relevant facts are relatively simple. GTE alleges that in July 1997, five regional Bell operating companies (Ameritech Corp., Bell Atlantic, BellSouth, SBC Corp., US West) and their relevant subsidiaries conspired to capture, control, and dominate the Internet business directories' market. See GTE New Media Servs. Inc. v. Ameritech Corp., 97-CV-2314, Mem. Op. at 5-6, reprinted in Joint Appendix ("J.A.") 185-86. After the alleged conspirators held meetings in California, Colorado, Georgia, and Michigan, they agreed to provide jointly a coded map of the United States that would allow users of their Internet Yellow Pages to access particular states and particular businesses. Each of the regional Bell operating companies would provide exclusive service to a particular region, and the other companies apparently agreed not to compete with the designated exclusive server in its given region. The regions designated to each regional Bell operating company corresponded to the region to which the company provided telecommunications service. See id. at 5, reprinted in J.A. 185. The regional Bell operating companies' next step was to obtain exclusive links for their map on well-known Internet browser sites run by Netscape Communications Corp. ("Netscape") and Yahoo, Inc! ("Yahoo"), to ensure that users of these popular sites would be specifically directed to the operating companies' Internet Yellow Pages.

Before the alleged conspiracy, GTE had a non-exclusive contract with Netscape, pursuant to which Netscape offered a choice of Internet business directories on its site, including GTE's SuperPages. See id. at 7, reprinted in J.A. 187. When users accessed the "Yellow Pages" option on Netscape's toolbar, they had access to GTE's website. GTE asserts, however, that Netscape terminated this arrangement on July 18, 1997, by removing its links to GTE's SuperPages, including hyperlinks on Yahoo.

On October 6, 1997, GTE filed its complaint against the five regional Bell operating companies, Netscape, and Yahoo, claiming, among other things, violations of Sections 1 and 2 of the Sherman Antitrust Act. Several defendants (i.e., BellSouth, SBC Corp. and US West, excepting US West Dex, Inc.) moved to dismiss the complaint for lack of personal jurisdiction; two (i.e., BellSouth and SBC Corp.) also argued that venue was improper in the District of Columbia. On September 28, 1998, the District Court denied both motions to dismiss, finding that (1) the court had personal jurisdiction under section 13-423(a)(4) of the D.C. long-arm statute, because GTE had sufficiently alleged a tortious injury in the District caused by the defendants' acts outside of the District; and (2) because venue is proper under 28 U.S.C. § 1391 wherever a party is subject to personal jurisdiction, the finding of personal jurisdiction also resolved the venue question. On March 29, 1999, however, the District Court certified an order for interlocutory appeal and ordered a stay of proceedings. The District Court noted that, although it had found that the defendants operated an interactive website that supported a finding of personal jurisdiction,

the instant case differs from any other reported case ... in that it involves an interactive website with no other contacts with the District of Columbia. All of the interactive website cases reviewed by this court involved defendants with at least some physical contact with the forum. While this court has concluded that the quality and nature of the [operating companies'] website favors the exercise of personal jurisdiction in the District

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of Columbia, certainly a substantial ground for difference of opinion concerning the ruling exists.

GTE New Media Servs. Inc., Order Certifying for Interlocutory Appeal the Court's Ruling That Personal Jurisdiction Exists and Staying Proceedings at 3, reprinted in J.A. 218 (emphasis added). On April 8, 1999, the defendants filed a petition for permission to appeal. This court entered an order granting permission to appeal on May 28, 1999.

II. Discussion

A. The District of Columbia Long-Arm Statute and the Due Process Clause of the U.S. Constitution

To establish personal jurisdiction over a non-resident, a court must engage in a two-part inquiry: A court must first examine whether jurisdiction is applicable under the state's long-arm statute and then determine whether a finding of jurisdiction satisfies the constitutional requirements of due process. See United States v. Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995).

The District's long-arm statute provides, in relevant part, that:

[a] District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's (1) transacting any business in the District of Columbia; ... (4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he [i] regularly does or solicits business, [ii] engages in any other persistent course of conduct, or [iii] derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia.

D.C. Code Ann. § 13-423(a) (1981). A plaintiff seeking to establish jurisdiction over a non-resident under the...

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