42 Ventures, LLC v. Rend

• Decision Date: 23 October 2020
• Docket Number: Case No. 20-cv-00228-DKW-WRP
• Parties: 42 VENTURES, LLC, Plaintiff, v. PATRICK REND aka IVAN PETROVIC, PATRICK PETROV, VINIT MAV, HE SHAN, HOSAM AZZAM, FAHD ALI and DOES 1-10, Defendants.
• Court: U.S. District Court — District of Hawaii

42 VENTURES, LLC, Plaintiff, v. PATRICK REND aka IVAN PETROVIC, PATRICK PETROV,VINIT MAV, HE SHAN, HOSAM AZZAM, FAHD ALI and DOES 1-10, Defendants.

Case No. 20-cv-00228-DKW-WRP

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAI'I

October 23, 2020

ORDER OVERULING PLAINTIFF'S OBJECTIONS AND ADOPTING THE MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATIONS

Plaintiff claims Defendants infringed its trademark and otherwise harmed it through unfair competition in violation of the Lanham Act. After a stipulated settlement ended suit against Patrick Rend aka Ivan Petrovic and Patrick Petrov, default was entered against Vinit Mav, He Shan, Hosam Azzam, and Fahd Ali ("Defendants"). Upon Plaintiff's motion for default judgment, the assigned magistrate judge found this Court lacked personal jurisdiction over the remaining Defendants and recommended dismissal of this action. For the reasons set forth below, the Court ADOPTS the magistrate judge's findings and recommendations, and OVERRULES Plaintiff's objections that urge the contrary. Plaintiff's motion for default judgment is DENIED, and the action is DISMISSED.

RELEVANT BACKGROUND

The relevant and undisputed factual and procedural background of this case is set forth in the magistrate judge's Findings and Recommendations ("F&R") and will not be repeated here. See Dkt. No. 27 at 2. Upon a motion for default judgment, Dkt. No. 25, the F&R found the Court has subject matter jurisdiction over the action but lacks personal jurisdiction over the remaining Defendants. Id. at 4-13. Specifically, the F&R addressed the Court's personal jurisdiction over Defendants, all non-U.S. citizens living abroad, pursuant to Federal Rule of Civil Procedure 4(k)(2), the so-called federal long-arm statute. Id. Finding that a federal claim was advanced, and that Defendants were not subject to general jurisdiction in any state, the F&R focused on whether exercising personal jurisdiction over Defendants comports with due process. Id. The F&R found it did not because the facts did not support a conclusion that Defendants purposefully directed their activity at the United States. Id. at 12. Accordingly, the F&R recommended the denial of Plaintiff's motion for default judgment and the dismissal of this case against the remaining Defendants. Id. at 13.

On October 8, 2020, Plaintiff objected to the F&R. Dkt. No. 28. Plaintiff argues that there is sufficient evidence to conclude Defendants purposefully directed their activities at the United States and that the F&R's finding to the contrary was erroneous. Dkt. No. 28-1 at 16-25. Plaintiff further argues thatDefendants expressly consented to jurisdiction in the United States when they entered into contracts containing choice of venue clauses with United States-based web- and application-service providers and implicitly consented by invoking the protections of U.S. copyright law. Id. at 16-18.¹

This order follows.

LEGAL STANDARD

This Court reviews objections to the magistrate judge's findings and recommendations de novo. See 28 U.S.C. § 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673, (1980); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.2003) (en banc). The F&R and, thus, Plaintiff's objections are limited to whether this Court has personal jurisdiction over Defendants and, if not, whether the Court should dismiss the action.

Plaintiff bears the burden of establishing that jurisdiction is proper. Marvix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). To establish personal jurisdiction based on written materials, rather than an evidentiary hearing, Plaintiff "need only make a prima facie showing of jurisdictional facts to withstand dismissal." AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1207 (9th Cir. 2020). However, this standard is not "toothless." Id.Plaintiff must provide more than "bare allegations" to support finding personal jurisdiction over Defendants. Id. (citing In re Boon Glob. Ltd., 923 F.3d 643, 650 (9th Cir. 2019)).

Plaintiff argues jurisdiction over Defendants is proper under Federal Rule of Civil Procedure 4(k)(2), known as the federal long-arm statute.² Dkt. No. 8 at 2-3. This rule permits jurisdiction where three requirements are met:

First, the claim against the defendant must arise under federal law. Second, the defendant must not be subject to the personal jurisdiction of any state court of general jurisdiction. Third, the federal court's exercise of personal jurisdiction must comport with due process.

Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1159 (9th Cir. 2006) (citations omitted). The Due Process analysis under Rule 4(k)(2) is different from traditional personal jurisdiction analysis in only one respect: instead of "considering contacts between [defendants] and the forum state, [the Court] consider[s] contacts with the nation as a whole." Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 462 (9th Cir. 2007).

"[T]o determine whether a nonresident defendant has such 'minimum contacts' with the forum to warrant the court's exercise of specific jurisdiction, the following requirements must be met:

1. the defendant must either purposefully direct his activities toward the forum or purposefully avail himself of the privileges of conducting activities in the forum;

2. the claim must be one which arises out of or relates to the defendant's forum-related activities; and

3. the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable."

Wanat, 970 F.3d at 1208 (citing Axiom Foods, Inc. v. Acerchem Int'l, Inc., 874 F.3d 1064, 1068 (9th Cir. 2017) (internal quotation marks omitted)). "If any of the three requirements are not satisfied, jurisdiction in the forum would deprive the defendant of due process of law." Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir. 1995). Plaintiff bears the burden of satisfying the first two prongs. Wanat, 970 F.3d at 1208 (citing Axiom, 874 F.3d at 1068).

Under the first prong, because Plaintiff's trademark infringement and unfair competition claims "sound in tort," the Court applies the "purposeful direction analysis and ask[s] whether [Defendants] ha[ve] purposefully directed activities at the United States." Id. (citations omitted). Where the allegedly tortious activity occurred outside the forum but had an effect in the forum, the Court applies an "effects test" based on Calder v. Jones, 465 U.S. 783 (1984). See Mavrix, 647 F.3d 1228-29 (applying effects test in copyright infringement case); PanavisionInt'l, L.P. v. Toeppen, 141 F.3d 1316, 1321-22 (9th Cir. 1998) (applying test in trademark dilution case). This test requires showing: (1) the defendant committed an intentional act; (2) the act was aimed at the forum state; and (3) the act caused harm the defendant knew was likely in the forum state. Wanat, 970 F.3d at 1209 (citing Mavrix, 647 F.3d at 1228).

DISCUSSION

The Court agrees, see Dkt. No. 27 at 4, there is no dispute that Plaintiff's claims arise under federal law and that Defendants are not subject to the personal jurisdiction of any state court of general jurisdiction. See Dkt. No. 8 at 1-2 ("Plaintiff brings this action for infringement of a federally registered trademark . . . and for unfair competition" in violation of the Lanham Act (15 U.S.C. §§ 1114(1), 1125(a)); id. at 6-7 (alleging Defendant Mav is a citizen of and resides in India, Defendant Shan is a citizen of and resides in China, Defendant Azzam resides in Egypt, and Defendant Ali resides in India). The only issue then is whether this Court's exercise of personal jurisdiction over Defendants "comport[s] with due process." See Pebble Beach, 453 F.3d at 1159. As the F&R properly concluded, it does not.

I. Purposeful Direction of Activities

A. Intentional Acts

There can be no dispute Defendants' acts as alleged were intentional. "For purposes of jurisdiction, a defendant acts with 'an intent to perform an actual physical act in the real world, rather than an intent to accomplish a result or consequence of that act.'" Wanat, 970 F.3d at 1209 (quoting Schwarzenegger, 374 F.3d at 806). Here, Plaintiff alleges that Defendants operated video-streaming and/or download websites and/or applications. Dkt. No. 8 at 9-13.³ Operating a website is an intentional act. See, e.g., Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128-29 (9th Cir. 2010); Pebble Beach, 453 F.3d at 1156 (finding act intentional where trademark infringement claim related to website's name). As such, the Court finds Defendants committed intentional acts.

B. Where Defendants Directed Their Activity

It is on this element that Plaintiff stumbles. Defendants' alleged activities—posting United States-produced content to their sites and applications, contracting with United States-based web- and application-service providers, collecting user data and using user and location data to target content and advertisements, andemploying a United States-based payment provider—are insufficient to demonstrate Defendants "purposefully directed" their activity at the United States.

i. Framework to determine whether Defendants purposefully directed activity at the United States

Defendants operate websites and applications that are accessed worldwide. See Dkt. No. 28-1 at 23. The question then is "whether tortious conduct of a[n internationally] accessible website is expressly aimed at any, or all, of the forums in which the website can be viewed." Marvix, 647 F.3d at 1229 (emphasis added). Where the website is passive—i.e., does not directly engage in financial transactions with those who access it—to show the website's activity was "expressly aimed" at the forum, there must be a showing of "something more," i.e., "conduct directly targeting the forum." Id. A website with an international viewership may be said to target the forum if it "appeals to, and profits from an audience in a particular [forum]." Id. at 1231. Foreseeing that one's website "would...