Cozy Kittens Cattery Llc. v. Arden, 09-2601.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation614 F.3d 785
Docket NumberNo. 09-2601.,09-2601.
PartiesSusan JOHNSON; Robert Johnson; Cozy Kittens Cattery LLC, Appellants, v. Elizabeth ARDEN, dba; Michelle Reitenger;, InMotion Hosting Inc.; Melanie Lowry; Kathleen Heineman, Appellees.
Decision Date04 August 2010

614 F.3d 785

Susan JOHNSON; Robert Johnson; Cozy Kittens Cattery LLC, Appellants,
Elizabeth ARDEN, dba; Michelle Reitenger;, InMotion Hosting Inc.; Melanie Lowry; Kathleen Heineman, Appellees.

No. 09-2601.

United States Court of Appeals,Eighth Circuit.

Submitted: Feb. 10, 2010.
Filed: Aug. 4, 2010.

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614 F.3d 787

David M. Duree, argued, O'Fallon, IL, for appellant.

Christopher Gonzalez, argued, Glendale, CA, Raymond E. Probst, on the brief, Kansas City, MO, for appellee InMotion Hosting.

Stacey R. Gilman, Kansas City, MO, on the brief, for appellee Kathleen Heineman.

Before RILEY, Chief Judge, 1 SMITH and SHEPHERD, Circuit Judges.

SMITH, Circuit Judge.

Susan and Robert Johnson filed a state civil suit making multiple claims against several defendants as a result of allegedly defamatory statements posted on an internet discussion board. The defendants removed the case to federal court. The original complaint included six defendants; however, the Johnsons located and served only InMotion Hosting, Inc. (“InMotion”), Melanie Lowry, and Kathleen Heineman.

The district court 2 dismissed the claims against InMotion with prejudice, finding that the Communications Decency Act (CDA) of 1996, 47 U.S.C. § 230(c)(1) and (e)(3) protects InMotion. The court dismissed the claims against Lowry and Heineman without prejudice, finding that Lowry and Heineman had insufficient contacts with the State of Missouri to be subjected to personal jurisdiction in Missouri. Finally, the district court set aside a state court default judgment against Lowry under Federal Rule of Civil Procedure 60(b). On appeal, the Johnsons argue that the district court erred in dismissing the claims against InMotion, Heineman, and Lowry and erred in setting aside the default judgment against Lowry. For the reasons stated below, we disagree and affirm.

I. Background

The Johnsons reside in Unionville, Missouri, where they own and operate the exotic cat breeding business known as the Cozy Kitten Cattery. The Cozy Kitten Cattery is a Missouri limited liability company formed in 2007. Its principal office and place of business is located in Missouri, and the Johnsons are its sole members. Around December 2004, the Johnsons obtained a registered federal trademark and service mark for “Cozy Kitten Cattery.” The Johnsons operate their cat breeding business under that trademark and licensed the use of that trademark and service mark to Cozy Kitten Cattery, LLC. The Johnsons advertise their business on the internet and

614 F.3d 788

have a website with the web address www. Cozy Kittens. com.

Someone posted several allegedly defamatory statements about the Cozy Kitten Cattery on the interactive website www. Complaints Board. com. In response, the Johnsons and Cozy Kittens Cattery filed suit against Elizabeth Arden d/b/a www. Complaints Board. com, Michelle Reitenger, www. Complaints Board. com, InMotion, Lowry, and Heineman in Putnam County, Missouri. Counts I, II and III allege that all six defendants conspired to use www. Complaints Board. com to post false statements about the Johnsons, including statements that the Johnsons kill cats, the Johnsons “rip off” cat breeders, the Johnsons steal kittens, the Johnsons' cats and kittens are infected, and the Johnsons are con artists. The Johnsons assert that they requested all defendants to remove the statements but that the statements were not removed for more than 48 hours. The Johnsons assert that they suffered lost sales of kittens and cats, lost revenue and lost goodwill and will continue to suffer damages because of the statements posted on the interactive website.

The Johnsons assert that InMotion, Lowry, and Heineman were all served with the Summons and Petition/Complaint, although all three dispute service. The Johnsons were unable to locate or serve defendants Elizabeth Arden d/b/a www. Complaints Board. com, Michelle Reitenger or www. Complaints Board. com.

Heineman, Lowry, and InMotion moved in district court to dismiss the action based on lack of personal jurisdiction and insufficient service of process. Heineman and InMotion also asserted improper venue as an additional ground for dismissal.

A. Kathleen Heineman

Heineman is a resident of the State of Colorado and has been since 1981. Heineman is a cat breeder and also works as an accountant. In both capacities, she works out of her home in Colorado. She maintains no offices in Missouri, owns no property in Missouri and does not pay taxes in Missouri. She also alleges that she does not own any domain name registrations and does not own or operate any website. However, the website, www. Boutique Kittens. com, and the related cat breeding and selling business are licensed by the State of Colorado to Heineman, and thus for the purpose of this appeal, we will assume that Heineman owns the website in question.

The Johnsons assert that Heineman sells cats and kittens throughout the United States, including the State of Missouri, while advertising on the internet using the web address www. Boutique Kittens. com. The Johnsons allege that Heineman advertises and sells cats and kittens under the name “Cozy Kittens and Cuddly Cats.”

Heineman had a limited business relationship with the Johnsons, which ended in March 2006. The Johnsons never employed Heineman or paid her a salary. She provided administrative assistance to the Johnsons from her home office in Colorado, including proofreading services and other miscellaneous work on an intermittent basis, such as helping them to acquire cats.

Between 2002 and 2006, the Johnsons contend that Heineman purchased about 16 cats for them from breeders throughout the United States. Heineman did not profit from the purchase of these cats. Some of these cats were shipped to Heineman in Colorado and then eventually shipped to Susan Johnson in Missouri; other cats were picked up from the sellers directly by the Johnsons or their relatives. In 2002, Heineman twice delivered cats to the Johnsons in Missouri. During the course of their relationship, the Johnsons

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contend that they shipped seven cats to Heineman and charged her only for their out-of-pocket expenses.

In the course of their relationship, Heineman also purchased advertising space from the Johnsons on www. Cozy Kittens. com for a fee of $100 per kitten advertised. The Johnsons' website then listed Heineman's email address as the contact email for persons interested in those cats. These advertisements were not targeted to Missouri residents, and Heineman did not place any cats or kittens or do any other business in Missouri. Heineman advertised approximately 50 cats in this manner. Heineman asserts that she has not posted or authorized anyone else to post anything about the Johnsons on www. Complaints Board. com or on any other website.

B. InMotion Hosting, Inc.

InMotion is a California corporation and maintains its principal place of business there. InMotion, as an internet service provider (ISP), only hosted the www. Complaints Board. com website. InMotion does not operate www. Complaints Board. com or create any of its content. InMotion does not monitor or control the content of its customer's websites, including www. Complaints Board. com.

The website www. Complaints Board. com is published worldwide on the internet. The website is interactive, permitting and encouraging individuals to post complaints about businesses and business owners. Individuals seeking to post complaints on the website are required to register with the website and provide identifying information, such as their name and email address.

C. Melanie Lowry

Lowry resides in California and does not own any property in Missouri, does not have any bank accounts or telephone listings in Missouri, has never paid taxes in Missouri, and has never transacted business in Missouri. Lowry asserts that she has never done business with the Johnsons, does not know them, and has only spoken to Susan Johnson one time on the telephone-a call initiated by Susan Johnson.

The Johnsons assert that Lowry's postings on www. Complaints Board. com included statements that Susan and Robert Johnson had sold a breeder cat without providing the papers, offered a refund but refused to pay it, stolen money from their customers, and fed their cats Tylenol, causing them to suffer horrible deaths and pre-death injuries.

The record contains one alleged posting by Lowry on www. Complaints Board. com. That alleged posting does not mention Missouri, and there is no other evidence in the record indicating that the focal point of this particular posting, or any of Lowry's other postings, was Missouri.

The Johnsons filed a state court complaint against Lowry, who they assert was properly served on July 17, 2008. Lowry did not respond or file a pleading. A Missouri default judgment was filed against Lowry on September 22, 2008. Lowry filed a motion to set aside the judgment on November 12, 2008.

D. Procedural History

The defendants removed the case to federal court based on diversity of citizenship. Heineman filed a motion to dismiss contending that she was not properly served and that the district court had improper venue and lacked personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The district court granted Heineman's motion for lack of personal jurisdiction. The Johnsons then filed a motion for an order of default against InMotion, which had not yet filed any pleadings

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in the district court. The district court denied the motion.

InMotion then filed its motion to dismiss under Rule 12(b), contending that it was not properly served, the district court did not have venue, the complaint failed to state a claim for relief, it had insufficient contacts with Missouri to be sued there, and Missouri was an inconvenient forum. InMotion did not raise the CDA as a defense. The district court raised the CDA sua sponte in its order...

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