E. Coast Test Prep LLC v. Allnurses.com, Inc.

• Decision Date: 19 August 2020
• Docket Number: No. 18-3197,18-3197
• Citation: 971 F.3d 747
• Parties: EAST COAST TEST PREP LLC, doing business as Achieve Test Prep; Mark Olynyk Plaintiffs - Appellants v. ALLNURSES.COM, INC. ; David R. Smits, as Administrator of the Estate of Brian Short; Lisa Dukes; Jennifer Moeller; Uhura Russ; ABC Companies 1-10; John Does, 1-10 Defendants - Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

971 F.3d 747

EAST COAST TEST PREP LLC, doing business as Achieve Test Prep; Mark Olynyk Plaintiffs - Appellants

v.ALLNURSES.COM, INC. ; David R. Smits, as Administrator of the Estate of Brian Short; Lisa Dukes; Jennifer Moeller; Uhura Russ; ABC Companies 1-10; John Does, 1-10 Defendants - Appellees

No. 18-3197

United States Court of Appeals, Eighth Circuit.

Submitted: October 17, 2019

Filed: August 19, 2020

Thomas M. Beito, Robert August Lengeling, Beito & Lengeling, Minneapolis, MN, Charles S. Kramer, Riezman & Berger, Saint Louis, MO, Richard L. Ravin, Hartman & Winnicki, Ridgewood, NJ, for Plaintiffs - Appellants

James J. Kretsch, Jr., John D. Reddall, Kretsch Law Firm, Lakeville, MN, Keith John Miller, Justin Taylor Quinn, Robinson Miller, Newark, NJ, for Defendants - Appellees Allnurses.com, Inc., David R. Smits, Lisa Dukes

Jennifer Moeller, Pro Se

Seth J. Leventhal, Leventhal, PLLC, Minneapolis, MN, for Defendant - Appellee Uhura Russ

Before COLLOTON, WOLLMAN, and KELLY, Circuit Judges.

WOLLMAN, Circuit Judge.

East Coast Test Prep LLC (Test Prep), sells test-preparation services to individuals seeking nursing degrees. Allnurses.com, Inc. (Allnurses), operates a website for nurses and nursing students that allows registered users to open discussion threads, post comments, and "like" other users’ comments. After certain unfavorable comments were posted about Test Prep, the company and Mark Olynyk, its owner, filed suit against several defendants, including Allnurses, its founder Brian Short, and user Uhura Russ.¹ As relevant here, Test Prep alleged claims sounding in defamation, contract, and fraud, as well as other theories of liability asserting that Allnurses had induced users to post negative comments. The district court² granted Allnurses's motion for judgment on the pleadings and dismissed the suit against Russ for lack of personal jurisdiction.

Test Prep argues that the district court erred in concluding that the Communications Decency Act precluded its trade libel claim against Allnurses for comments posted by third parties on Allnurses.com. Test Prep also challenges the district court's determination that the complaint's factual allegations did not plausibly state claims related to breach of contract and fraud, as well as the district court's alternative decision to grant summary judgment on the fraud-based claims. Test Prep argues that Russ had waived any objection to personal jurisdiction and that the case against her should thus have been transferred, not dismissed. We affirm.

I. Background

Allnurses describes its website as "the collective voice of the nursing community, supporting the profession by providing a place where nurses can network, share and learn from their peers." To participate in the online discussion, users must register with Allnurses. The registration page states, "Your participation implies full acceptance with our Terms of Service." The terms of service provide that Allnurses "promote[s] the idea of lively debate," but that users "are not allowed to post libelous information." The terms of service also warn that any illegal or inappropriate posts "will be taken down immediately."

Allnurses reserves the right to delete or close problematic threads, to edit or remove posts, and to disable the account of any user for failing to comply with the terms or for "any reason deemed appropriate by the administration for the safety and good of the community."

An Allnurses.com user opened a thread entitled "Achieve Test Prep.... anyone?" on the Excelsior College online nursing forum in February 2013. Excelsior College offers nursing degree programs and allows its students to earn credit by examination. Like Test Prep, Excelsior College offers test-preparation programs to help students prepare for exams.

Several users posted comments on the "Achieve Test Prep.... anyone?" thread, which Lisa Dukes moderated.³ The comments discussed the advantages and disadvantages of using Test Prep's services in conjunction with Excelsior College's registered nursing program. Two sets of comments remain at issue in this case: that Test Prep's services were redundant or obsolete and that Test Prep was under federal investigation.

In August 2014, a user posted that Test Prep provided a valuable service, explaining that the classes were well structured and taught by experienced registered nurses. User JustBeachyNurse responded that Test Prep's services would be rendered redundant when Excelsior College began requiring students to take its test-preparation classes. User monkeyhq reiterated the sentiment, opining that third-party test-preparation services "for Excelsior Exams will be obsolete by July 1, 2015" and that paying for such services would be "a total waste of your investment." Dukes "liked" monkeyhq's post.

A Test Prep employee then posted that Test Prep would discontinue its test-preparation services for nursing, but would continue to offer services for general education courses. Other posts similarly indicated that Test Prep would no longer enroll students in its nursing test-preparation classes. The Test Prep employee later emailed the help desk, stating that she worked for Test Prep and asking if she could participate in the discussion, notwithstanding the terms of service's prohibition on promoting or advertising. An Allnurses moderator responded that the employee's participation was acceptable.

On September 12, 2014, Olynyk posted in the "Achieve Test Prep.... anyone?" thread under the username learning-is-good, sparking additional debate. Under the username LadyFree28, Russ posted that Test Prep was "being investigated by the federal government and is under a current lawsuit." Russ noted that "there are too many forums that have stated th[at] Achieve [Test Prep] ‘deceived’ them with their practices." Under the username duskyjewel, Jennifer Moeller also posted that Test Prep was under federal investigation. The thread was closed to new comments on September 16, 2014, because, according to an email from an administrator to Olynyk, it contained misleading information and several members had complained. In December 2014, another Test Prep employee registered as a user on Allnurses.com and posted a comment in a different thread. Her comment was removed, as were the identical comments she posted in the days that followed. Her account was later disabled.

Test Prep filed suit in New Jersey state court. Allnurses removed the case to federal district court and moved to dismiss for lack of personal jurisdiction. The case thereafter was transferred to the District of Minnesota and discovery commenced. Acting pro se , Russ repeatedly moved to dismiss the complaint. She also filed a counterclaim.

Test Prep moved to compel Allnurses to identify certain users, including JustBeachyNurse and monkeyhq, and to disclose certain IP addresses. The magistrate judge denied the motion, in part because the posts by JustBeachyNurse and monkeyhq were not defamatory. The district court affirmed the magistrate judge's order, agreeing that JustBeachyNurse's and monkeyhq's statements were not false assertions of fact, but rather expressed the opinion that a change in Excelsior College's policy would render Test Prep's services redundant or obsolete.

Test Prep eventually filed a third amended complaint, which Allnurses answered before moving for judgment on the pleadings. The district court determined that Test Prep had failed to allege facts sufficient to hold Allnurses accountable for the posts by JustBeachyNurse, monkeyhq, Russ, and Moeller. It thus dismissed the trade libel claim against Allnurses. It also dismissed the claims sounding in contract and fraud, determining that Test Prep had failed to allege facts sufficient to state plausible claims for relief. The district court alternatively granted summary judgment to Allnurses on the fraud claims. The remaining claims relevant on appeal were dismissed as nonactionable.

After representing herself for more than a year and filing multiple documents, Russ obtained pro bono legal representation in Minnesota. Her attorney moved to dismiss the case for lack of personal jurisdiction. The district court granted the motion and denied Test Prep's conditional cross-motion to transfer the case to the Eastern District of Pennsylvania, where Russ resides.

II. Judgment on the Pleadings in Favor of Allnurses

We review de novo a district court's grant of judgment on the pleadings under the same standard that governs a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 981 (8th Cir. 2008). We therefore consider whether Test Prep has pleaded "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of "entitlement to relief." ’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ).

A. Trade Libel Claim

Test Prep alleged in its trade libel claim that Allnurses had published false allegations about Test Prep's products, services, property, or business. "A plaintiff alleging trade libel must prove publication of a matter derogatory to the plaintiff's property or business, of a kind designed to prevent others from dealing with him or otherwise to interfere with plaintiff's relations with others." Patel v. Soriano, 369 N.J.Super. 192, 848 A.2d 803, 834 (N.J. Super. Ct. App. Div. 2004) ; see Wilson v. Dubois, 35 Minn. 471, 29 N.W. 68, 68 (1886) ("False and malicious statements, disparaging an article of property, when followed, as a natural, reasonable, and proximate result, by special damage to the owner, are actionable."). The published statements must be false. See Patel, 848 A.2d at 835 ; Wilson, 29 N.W. at 68....