Costar Realty Information, Inc. v. Field

Decision Date31 March 2009
Docket NumberCivil Action No. AW-08-00663.
Citation612 F.Supp.2d 660
PartiesCOSTAR REALTY INFORMATION, INC., et al., Plaintiffs, v. Mark FIELD d/b/a Alliance Valuation Group, et al., Defendants.
CourtU.S. District Court — District of Maryland

Shari Ross Lahlou, Sanya Sarich, William J. Sauers, Crowell and Moring LLP, Washington, DC, for Plaintiffs.

R. Wayne Pierce, The Pierce Law Firm LLC, Annapolis, MD, Gary A. Woodfield, James Elwood Armstrong, IV, Simeon D. Brier, Edwards Angell Palmer And Dodge LLP, West Palm Beach, FL, Mary Olga Lovett, Pamela Anne Ferguson, Greenberg Traurig LLP, Houston, TX, Steven M. Schneebaum, Greenberg Traurig LLP, Washington, DC, R. Wayne Pierce, The Pierce Law Firm LLC, Annapolis, MD, for Defendants.



Plaintiffs, CoStar Realty Information, Inc., and CoStar Group, Inc., ("CoStar") bring this action against Defendants, Lawson Valuation Group, Inc., ("Lawson") and Russ A. Gressett ("Gressett") alleging violations of both state and federal law in connection with the alleged impermissible use of CoStar's website by Defendants Lawson and Gressett (collectively "Defendants"). Currently pending before the Court are Defendants' Motion to Dismiss for Lack of Personal Jurisdiction and for Failure to State a Claim, or, in the alternative, Motion to Transfer Venue, as well as a Motion for a More Definite Statement. (Paper Nos. 30 & 32) The Court has reviewed the entire record, as well as the pleadings and exhibits, if any, with respect to the instant motions. The issues have been fully briefed, and a hearing was held on February 27, 2009. See Local Rule 105.6 (D.Md.2008). For the reasons stated more fully below, the Court will grant Defendants' Motion to Dismiss the Civil RICO claim, and deny Defendants' Motion to Dismiss for Lack of Personal Jurisdiction and Failure to State a Claim, Motion to Transfer Venue, and Motion for a More Definite Statement.


CoStar is a national commercial real estate information services provider, incorporated in Delaware with its principal place of business in Bethesda, Maryland. (Compl. ¶¶ 1, 14.) Defendant, Mark Field D/B/A Alliance Valuation Group ("Alliance"), who is not a party to the motions at issue, is a California resident doing business in California. (Id. at ¶ 3.) Lawson is a Florida corporation that performs real property valuations and appraisals. (Id. at ¶ 4.) Gressett is a Texas resident doing business as TGC Realty Counselors, with a principal place of business in Texas. (Compl. ¶ 5; Gressett Aff. ¶¶ 2-3.) The following facts give rise to this lawsuit.

CoStar owns a database with photos of real property around the country, as well as other information, to enable individuals and businesses involved in the real estate business to do things such as, but not limited to, find property for sale, find available space for tenants, and research brokers. (Compl. ¶ 15.) A very limited amount of CoStar's database is accessible to the public at no cost. (Id. at ¶ 16.) In most instances, CoStar licenses the information on its database to authorized users for a subscription fee. (See id. at ¶¶ 16, 21.) Customers interested in CoStar's database may become authorized users by entering into an online agreement through the Terms of Use provision on CoStar's website or entering into a written agreement and subscribing to one or more of CoStar's information services. (Id. at ¶ 17.) Authorized users of CoStar's database are given a user identification number ("User ID") and a passcode to access the website. (Compl. ¶ 18.) An authorized user must enter a valid user ID and passcode at the "Subscriber Login Area" to gain authorized access to CoStar's database. (Id.) The method to become an authorized user of the website and a warning against unauthorized use appears each time a user accesses the database. (Id. at ¶ 19.) Specifically, the "Subscriber Login Area" states that by logging in to the database, the user agrees to CoStar's Terms of Use. A link to the Terms of Use is provided and states that access is restricted to authorized users, and the sharing of passcodes is prohibited. (Id. at ¶ 19.) The first time an authorized user accesses the database, a pop-up screen containing CoStar's Terms of Use provision which states the legal obligations of users, appears. (Compl. ¶ 24.) The authorized user must scroll through and affirmatively accept the Terms of Use the first time they use CoStar's database, as well as at periodic intervals after the initial use. (Id. at ¶ 19.) The Terms of Use provision states that: (1) portions of the website are only available to those who have purchased a subscription and have agreed to either a license agreement or the Terms of Use; (2) by accessing or using the site, the user agrees to the Terms of Use and agrees to be bound to a legally binding contract; and (3) by accessing or using the site, the user confirms that he has the authority to assent to the terms of the contract. (Id. at ¶¶ 20-21.) The Terms of Use also warns unauthorized users against using the site if they lack the authority to be bound by the agreement, and contains a forum selection clause that provides that the user consents to the jurisdiction of federal and state courts located in the State of Maryland for any action to enforce the Terms of Use provision. (Id. at ¶¶ 20, 24.)

Alliance entered into two 11-user written license agreements with CoStar. (Compl. ¶ 11.) The first one in June 2002 and the other in November 2004. (Id. at ¶ 11.) The contract provided that Alliance would not provide third parties access to or use of CoStar's database, sub-license the use of the database, and, also, specifically provided that Alliance could not share its user ID or passcode without the express written consent of CoStar. (Id. at ¶ 26.) CoStar alleges that Alliance shared its user ID and passcode with Lawson and Gressett in violation of their contract; and as a result Lawson and Gressett continuously used CoStar's services, receiving Alliance's contractual benefit with CoStar, without CoStar's express authorization1. (Id. at ¶¶ 13, 27.) With respect to Gressett, CoStar specifically alleges that Gressett used CoStar's database without authorization from at least April 14, 2004 to February 14, 2008. (Ex. 2.) CoStar also maintains that on at least six occasions between January 2005 and October 2007, Gressett called CoStar in Maryland, representing himself as an employee of Alliance, in order to gain assistance or technical support from CoStar in order to access the database. (Ex. 4.) With respect to Lawson, CoStar states that Lawson used CoStar's database without authorization from March 11, 2004 to February 14, 2008, and' that Lawson also called CoStar in Maryland for technical support no less than five times from March 2004 to October 2007. (Paper 33, Ex. 3, 5.) CoStar alleges that Lawson and Gressett infringed the copyrights of at least sixty-seven photographs in its database compilations. (Compl. ¶¶ 52-53; Ex. A.)

CoStar filed its original complaint against the Defendants in this Court on March 13, 2008. On April 3, 2008, CoStar filed an eight Count Amended Complaint alleging (1) Breach of contract by Alliance; (2) Breach of contract by Lawson, Gressett, Gerald A. Teel Company, Inc., ("Gateel"), and Pathfinder Mortgage Corp. ("Pathfinder"), and 1-4 John Does ("Does")2; (3) Fraud by Alliance and Gressett; (4) Tortious interference with contract and prospective business relationship by Alliance; (5) Direct copyright infringement by Lawson, Gressett, Gateel, Pathfinder, and Does; (6) Contributory and vicarious copyright infringement by Alliance; (7) Violation by Lawson, Gressett, Gateel, Pathfinder and Does of 18 U.S.C. § 1030: Fraud and related activity in connection with computers; and (8) Civil RICO violations by all Defendants. In response, Gressett filed Motions to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2), (3), and (6) (challenging Counts Five, Seven, and Eight), and in the alternative, a Motion to Transfer Venue, and Lawson filed a Motion to Dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(6) (challenging Counts Five, Seven, and Eight), and 12(e), and in the alternative, a Motion to Transfer Venue.3 The facts underlying the claims against both Lawson and Gressett are the same. The Court will address the motions in the order outlined above, and where the motions overlap, the Court will address them simultaneously.

A. Personal Jurisdiction

The Defendants first challenge this Court's authority to assert personal jurisdiction on the basis that they lack sufficient connections with Maryland to satisfy the State's long-arm statute, or Due Process. CoStar, asserts that jurisdiction is proper over the Defendants based on both the forum selection clause located within the Terms of Use on its website and under the Maryland long-arm statute, consistent with Due Process. Specifically, CoStar argues that Lawson and Gressett have consented to jurisdiction in Maryland by accepting the Terms of Use on its website, and due to their continuous tortious conduct in Maryland for their private business purposes. Lawson and Gressett argue that presence and consent is lacking because neither of the Defendants have ever been to Maryland or done any business in Maryland, their actions in Maryland lack sufficient effects in Maryland, and the complaint fails to allege sufficient facts to support formation of a contract in Maryland.

1. Standard of Review for Rule 12(b)(2)

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), and the question of jurisdiction is resolved based only on the pleadings, the allegations in the...

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