Colt Studio, Inc. v. Badpuppy Enterprise

• Decision Date: 05 November 1999
• Docket Number: No. CV-99-3990LGB (AJWX).,CV-99-3990LGB (AJWX).
• Parties: COLT STUDIO, INC., a California corporation, Plaintiff, v. BADPUPPY ENTERPRISE, William Pinyon, Steven A. Wojcik, and Does 1-10, inclusive, Defendants.
• Court: U.S. District Court — Central District of California

Page 1104

75 F.Supp.2d 1104

COLT STUDIO, INC., a California corporation, Plaintiff, v. BADPUPPY ENTERPRISE, William Pinyon, Steven A. Wojcik, and Does 1-10, inclusive, Defendants.

No. CV-99-3990LGB (AJWX).

United States District Court, C.D. California.

November 5, 1999.

COPYRIGHT MATERIAL OMITTED

Hal L. Bodner, Hal L. Bodner Law Offices, Los Angeles, CA, Plaintiff.

Marc P. Ossinsky, Winter Park, FL, Bruce K. McMahon, Leonard S. Levy, Encino, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

BAIRD, District Judge.

I. INTRODUCTION

This case arises from the alleged use of plaintiff's copyrighted photographs of male nudes by defendants Badpuppy, its President Pinyon, and its Director Wojcik (collectively "defendants") on Badpuppy's Internet site. Defendants moved for dismissal claiming that this Court did not have personal jurisdiction over any of the named defendants. Furthermore, the defendants moved for an order dismissing the action for improper venue. Finally, and in the alternative, defendants moved for an order to transfer the action for convenience. For the following reasons, this Court grants the motion in part and denies it in part.

II. FACTUAL AND PROCEDURAL BACKGROUND

Colt is a California company that creates, publishes, and distributes artistic photographic images to the general public for profit. See Pl.'s First Am.Compl. at 3. Defendants are the operators of the website with the domain name "badpuppy.com." See Pinyon Decl. at 2. Badpuppy generates revenues through the sale of membership subscriptions. See id. at 2. In exchange for a $10 monthly fee, membership in Badpuppy allows the subscriber to access "member-only" areas on the website. See id. Out of Badpuppy's 17,000 worldwide subscribers, 2,100 are California residents. See id. Defendant Pinyon has been President and Director of Badpuppy since its inception in 1995 until the present date. See id. at 1. Defendant Wojcik has been the Secretary, Treasurer, and Director of Badpuppy since its inception in 1995 until the present date. See Wojcik Decl. at 1. At issue in this case is Colt's allegation that defendants have continually violated Colt's Trademark and Copyrights by publishing Colt's works on defendants' website.

Colt further alleges that defendants breached a contract which resulted from a settlement between the parties. Allegedly, Badpuppy had agreed to pay $2,500 to Colt and to remove infringing photos from its website for past violations of Colt's copyrights. Colt alleges that defendants have breached this agreement by not removing the images from the website.

The operative complaint alleges claims for: (1) Copyright Infringement; (2) Intentional Copyright Infringement; (3) Federal Unfair Competition; (4) Federal Trademark Dilution; (5) State Statutory Unfair Competition; (6) State Common Law Unfair Competition; (7) State Trademark Dilution; (8) Breach of Contract; and (9) RICO.

On July 20, 1999, defendants Badpuppy, Wojcik, and Pinyon moved for dismissal claiming that the Court does not have personal jurisdiction over any of the named defendants. Furthermore, the defendants moved for an order dismissing the action for improper venue. Finally, and in the alternative, defendants moved for an order to transfer the action for convenience. The Court took these motions under submission and found that the parties had not submitted sufficient evidence for the Court to make a determination as to personal jurisdiction. As such, the Court ordered the parties to conduct limited discovery so as to provide the Court with such evidence. See September 8, 1999 Order. On September 14, 1999, defendants filed declarations of two of the individual defendants and asked the Court to vacate its previous order if the two aforementioned declarations were sufficient to permit the Court to make a determination as to personal jurisdiction. On October 12, 1999, the Court vacated its September 8, 1999 order by minute order and again took the motions under submission.¹

III. PERSONAL JURISDICTION

Rule 12(b)(2) of the Federal Rules of Civil Procedure provides that a court may dismiss a motion for "lack of jurisdiction over the person." Fed.R.Civ.P 12(b)(2). Although the defendant is the moving party in a motion to dismiss, plaintiff is the party that invoked the court's jurisdiction. Therefore, plaintiff bears the burden of proof on the necessary jurisdictional facts, such as the existence of "minimum contacts" between defendants and the forum state. See Flynt Distrib. Co., Inc. v. Harvey, 734 F.2d 1389, 1392 (9th Cir.1984). When defendant's motion to dismiss is made as its initial response, plaintiff only needs to make a prima facie showing that personal jurisdiction exists. See Data Disc., Inc. v. Sys. Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). In this context, a "prima facie" showing means that plaintiffs has produced admissible evidence which, if believed, would be sufficient to establish the existence of personal jurisdiction. See WNS, Inc. v. Farrow, 884 F.2d 200, 203-04 (5th Cir.1989).

A. TRADITIONAL PERSONAL JURISDICTION ANALYSIS

California Code of Civil Procedure, Section 410.10 grants "[a] court of this state ... jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States." Cal.Civ.Proc.Code § 410.10 (West 1998). The effect of this statute is to allow state courts, as well as federal courts, to exercise personal jurisdiction on any basis allowable under the State and United States Constitutions. See Rocke v. Canadian Auto. Sport Club, 660 F.2d 395, 398 (9th Cir.1981).

Absent one of the traditional bases for jurisdiction — in-state presence, domicile, or consent — the Constitution requires that the defendant have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The purpose of the minimum contacts requirement is to protect the defendant against the burdens of litigating in a distant or inconvenient forum, and to ensure that states do not reach out beyond the limits of their sovereignty imposed by their status in a federal system. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

If a defendant is domiciled in the forum state, or its activities there are "substantial, continuous and systematic," a federal court may exercise jurisdiction as to any cause of action, even if unrelated to the defendant's activities within the state. See Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 445, 72 S.Ct. 413, 96 L.Ed. 485 (1952). This form of personal jurisdiction is known as general jurisdiction. See id. However, even if a nonresident defendant's contacts with the forum state are not sufficiently "continuous and systematic" for general jurisdiction, it may still be subject to jurisdiction on claims related to its activities or contacts there. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477-78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). This form of personal jurisdiction is known as limited jurisdiction. See id. The Ninth Circuit applies a three part test to determine if a defendant's activities are sufficiently related to the forum state to establish limited personal jurisdiction:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or results from the defendant's forum-related activities; and

(3) exercise of jurisdiction must be reasonable.

Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir. 1995).

B. PERSONAL JURISDICTION OVER THE INTERNET

The Courts have not had many opportunities to address the issue of personal jurisdiction as it relates to what is now commonly called e-commerce.² However, this Court's review of the available cases reveals that the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of the commercial activity that an entity conducts over the Internet. See Zippo Manufacturing Company v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1124 (E.D.Pa.1997). In that respect, the dilemma this Court faces today is not much different that the dilemma courts faced 50 years ago when the application of a then rigid personal jurisdiction standard was at odds with what was then considered a recent trend in the way companies did business: interstate commerce. See Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); International Shoe Co., 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. Muck like the courts did in the 1940's and 1950's, the courts today have evaluated personal jurisdiction problems associated with e-commerce by using a sliding scale approach. On one end are cases where the defendants' activities are passive, and merely exemplify the use of the Internet as a global bulletin board. See Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir.1997) (holding that personal jurisdiction was improper as to a defendant who had no contact with the forum other than maintaining a web page accessible to anyone over the Internet); Bensusan Restaurant Corp. v. King, 937 F.Supp. 295 (S.D.N.Y.1996), aff'd, 126 F.3d 25 (2d Cir.1997) (holding that personal jurisdiction was improper as to a defendant who merely posted information on its Web page). On the other end are cases where the interaction between the defendant and the foreign state resembles a more traditional business transaction. See Compu-Serve, Inc. v....