Costar Realty Information, Inc. v. Meissner

• Decision Date: 16 March 2009
• Docket Number: Civil Action No. DKC-08-2766.
• Citation: 604 F.Supp.2d 757
• Parties: COSTAR REALTY INFORMATION, INC., et al. v. Robin MEISSNER.
• Court: U.S. District Court — District of Maryland

Page 757

604 F.Supp.2d 757

COSTAR REALTY INFORMATION, INC., et al. v. Robin MEISSNER.

Civil Action No. DKC-08-2766.

United States District Court, D. Maryland.

March 16, 2009.

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Shari Ross Lahlou, William J. Sauers, Crowell and Moring LLP, Washington, DC, for Costar Realty Information, Inc. and Costar Group, Inc.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for resolution in this action is a "Motion to Dismiss Improper Party and Motion to Dismiss for Lack of Personal Jurisdiction or, Alternatively, to Transfer Venue," filed by Defendant Robin Meissner. (Paper 6). The issues are fully briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, Defendant's motion will be denied.

I. Background

CoStar Realty Information and CoStar Group, Inc. ("Plaintiffs") are Delaware corporations with their principal places of business in Maryland. (Paper 1 ¶¶ 1, 2). Plaintiffs develop and maintain commercial real estate information databases. (Id. ¶ 10). Businesses, such as commercial real estate brokers, mortgage lenders, and investors, use Plaintiffs' databases for a variety of purposes, including matching buyers to properties, finding tenants, or researching brokers. (Id. ¶ 11).

With the exception of a very small amount of information Plaintiffs make available to the general public, only authorized users can access Plaintiffs' online databases. (Id. ¶ 12). Parties gain authorization by entering into a written License Agreement and subscribing to one or more of Plaintiffs' services. (Id.). The License Agreement limits the number of authorized users on each account. (Id. ¶ 13). After signing the agreement, each subscriber is assigned a unique user identification and password. (Id.). Each time a user logs in, the website displays a notice that advises "[b]y logging in you are agreeing to CoStar's terms of use," and "[a]ccess restricted to licensed users. Sharing of passwords is prohibited." (Id. ¶ 15).

Plaintiffs allege that on February 14, 2008, they suspended an Arizona company's access to the databases upon discovery that the company had been sharing its user name and password with Defendant Arffa. (Id. ¶ 24). After making this discovery, Plaintiffs contacted Defendant Arffa directly and advised him that his access was unauthorized and that he could not share another company's access to the databases. (Id. ¶ 25). On or about March 5, 2008, Defendant Meissner, an Arizona resident, contacted Plaintiffs seeking to license access to their CoStar COMPS® product. (Id. at 27). CoStar COMPS® was the same product Defendant Arffa had impermissibly accessed through the other account. (Id.). On March 11, 2008, Defendant Meissner signed a one-year License Agreement for access to CoStar COMPS® for a single person. (Id.) The License Agreement contained provisions stating that Defendant Meissner would not provide third parties with access to, or use of, Plaintiffs' databases, and that she would not share her unique customer identification and password with others. (Paper 6, Appx' B, CoStar Terms and Conditions ¶¶ 2, 17). Plaintiffs allege that almost immediately after Defendant Meissner entered into the agreement, Defendant Arffa, who is not her employee or agent, began to access Plaintiffs' database using Defendant Meissner's account. (Paper 1 ¶ 28).

On October 21, 2008, Plaintiffs filed a six count complaint alleging (1) breach of contract by Defendant Meissner; (2) breach of contract by Defendant Arffa; (3) direct copyright infringement by Defendant Arffa; (4) contributory and vicarious copyright infringement by Defendant Meissner; (5) fraud by Defendants Arffa and Meissner; and (6) violation of 18 U.S.C. § 1030 by Defendant Arffa. Defendant Meissner moved to dismiss Plaintiffs' complaint pursuant to Federal Rules of Civil Procedure 12(b)(2), (3), and (7), arguing that she is an improper party to the suit, her contacts with Maryland are insufficient to subject her to personal jurisdiction in Maryland, and venue in Maryland is improper. Alternatively, Defendant Meissner argues that pursuant to 28 U.S.C. § 1404(a), this case should be transferred to the United States District Court for the District of Arizona, Phoenix Division. On January 16, 2009, Plaintiffs' motion voluntarily to dismiss claims against Defendant Arffa was granted.

II. Motion to Dismiss

A. Personal Jurisdiction

Defendant moved to dismiss Plaintiffs' complaint on the ground that her contact with Maryland, which consists of entering into a contract with a Maryland corporation, transmission of information over the Internet to servers located in Maryland, and accessing servers located in Maryland, is insufficient to subject her to personal jurisdiction. (Paper 6, at 4). Plaintiffs respond that forum selection clauses in both the License Agreement and the Terms of Use are binding and confer jurisdiction on this court, and that specific personal jurisdiction over Defendant is proper because she transacted business in Maryland and caused tortious injury in the state. (Paper 11, at 12).

1. Standard of Review

When a court's power to exercise personal jurisdiction over a nonresident defendant is challenged by a motion under Federal Rule of Civil Procedure 12(b)(2), "the jurisdictional question is to be resolved by the judge, with the burden on the plaintiff ultimately to prove grounds for jurisdiction by a preponderance of the evidence."¹ Carefirst of Maryland, Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir.2003)(citing Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir.1993)). If jurisdiction turns on disputed facts, the court may resolve the challenge after a separate evidentiary hearing, or may defer ruling pending receipt at trial of evidence relevant to the jurisdictional question. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). If the court chooses to rule without conducting an evidentiary hearing, relying solely on the basis of the complaint, affidavits and discovery materials, "the plaintiff need only make a prima facie showing of personal jurisdiction." Carefirst, 334 F.3d at 396; see also Mylan, 2 F.3d at 60; Combs, 886 F.2d at 676. In determining whether the plaintiff has proven a prima facie case of personal jurisdiction, the court "must draw all reasonable inferences arising from the proof, and resolve all factual disputes, in the plaintiffs favor." Mylan, 2 F.3d at 60; Carefirst, 334 F.3d at 396.

2. Forum Selection Clause

The forum selection clause in the Licensing Agreement provides, in pertinent part:

The federal and state courts located in the State of Maryland shall be the exclusive jurisdiction for any action brought against CoStar in connection with this Agreement or use of the Licensed Product. Licensee irrevocably consents to the jurisdiction of the federal and state courts located in the State of Maryland, or in any State where Licensee's Authorized Users are located, for any action brought against Licensee in connection with this Agreement or use of the Licensed Product.

(Paper 6, at 10). The forum selection clause in the Terms of Use provides in pertinent part:

The federal and state courts located in the State of Maryland shall be the exclusive jurisdiction for any action brought against CoStar in connection with these Terms of Use or use of the Product. You irrevocably consent to the jurisdiction of the federal and state courts located in the State of Maryland, and to the jurisdiction of the federal and state courts located in any State where you are located, for any action brought against you in connection with these Terms of Use or use of the Product.

(Paper 11, Ex. 1, Terms of Use, at 9). Defendant argues that the forum selection clauses included as part of both the Terms of Use and the Licensing Agreement were permissive, and therefore should be given little weight. (Paper 6, at 10). Plaintiffs argue that the clauses are binding and demonstrate Defendant's agreement to suit in Maryland. (Paper 11, at 10).

A forum selection clause can be a consent to personal jurisdiction, or at least a waiver of any objection, when invoked by the plaintiff:²

In the commercial context a forum selection clause, even one for arbitration, confers personal jurisdiction on the courts of the chosen forum. See Unionmutual Stock Life Ins. Co. of Am. v. Beneficial Life Ins. Co., 774 F.2d 524, 527 (1st Cir.1985).

Menorah Ins. Co., Ltd. v. INX Reinsurance Corp., 72 F.3d 218, 222 n. 6 (1st Cir.1995). Two decades ago, a judge of this court synthesized the basic approach:

The United States Supreme Court has held repeatedly that since the personal jurisdiction requirement is a waivable right, "express or implied consent to the jurisdiction of [a] court" is sufficient to satisfy the requirements of due process for assumption of jurisdiction over a nonresident defendant. Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 [102 S.Ct. 2099, 72 L.Ed.2d 492] (1982); see also Petrowski v. Hawkeye-Security, 350 U.S. 495, 496 [76 S.Ct. 490, 100 L.Ed. 639] (1956) ("respondent, by its stipulation, waived any right to assert lack of personal jurisdiction over it").

This same Court, however, has suggested that forum-selection clauses may not be binding upon a nonresident defendant if she or he has met the heavy burden of showing that its "enforcement would be unreasonable, unfair or unjust." [M/S] Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 [92 S.Ct. 1907, 32 L.Ed.2d 513] (1972); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n. 14 [105 S.Ct. 2174, 85 L.Ed.2d 528] (1985).

Toshin Prod. Co., Ltd. v. Woods, 1989 WL 87015, at *2 (D.Md. July 28, 1989).

Defendant argues that enforcement of the forum clause would be unreasonable because it would seriously be difficult and inconvenient for...