Fenn v. MLeads Enterprises, Inc.

• Decision Date: 12 November 2004
• Docket Number: No. 20030948-CA.,20030948-CA.
• Citation: 2004 UT App 412,103 P.3d 156
• Parties: Brittney FENN, on behalf of herself and all others similarly situated, Plaintiff and Appellant, v. MLEADS ENTERPRISES, INC.; and John Does I through X whose true names are unknown, Defendants and Appellees.
• Court: Utah Court of Appeals

103 P.3d 156

2004 UT App 412

Brittney FENN, on behalf of herself and all others similarly situated, Plaintiff and Appellant, v. MLEADS ENTERPRISES, INC.; and John Does I through X whose true names are unknown, Defendants and Appellees.

No. 20030948-CA.

Court of Appeals of Utah.

November 12, 2004.

Daniel Garriott, Denver C. Snuffer Jr., Nelson Snuffer Dahle & Poulsen, Sandy, and Jesse L. Riddle, Riddle & Associates PC, Draper, for Appellant.

Jill L. Dunyon, Snow Christensen & Martineau, Salt Lake City, Derek A. Newman and Venkat Balasubramani, Newman & Newman, Seattle, Washington, for Appellees.

Before Judges BENCH, JACKSON, and ORME.

OPINION

JACKSON, Judge:

¶ 1 The district court dismissed Plaintiff Brittney Fenn's claim for lack of personal jurisdiction; Fenn appeals. We vacate the dismissal and remand.

BACKGROUND

¶ 2 MLeads Enterprises, Inc. (MLeads), an Arizona corporation, contracted with a marketing agent to advertise MLeads's services to consumers. In August 2002, Fenn, a Utah resident, received one unsolicited email that advertised MLeads's services. MLeads did not know specifically that the agent would send an email to Fenn or to any Utah resident. The email did not include "ADV:" in the subject line. Fenn brought suit against MLeads pursuant to the Unsolicited Commercial and Sexually Explicit Email Act (the Email Statute). See Utah Code Ann. §§ 13-36-101 to -105 (Supp.2003) (repealed 2004). Fenn did not allege that she suffered any economic, physical, emotional, or dignitary damages.

¶ 3 We must decide whether the state can exercise personal jurisdiction over a defendant who caused one unsolicited commercial email to be sent to a resident of the state.¹ This issue is a matter of first impression in Utah and, as far as our research has revealed, in all of the United States. Accordingly, to aid understanding of the issue, we will describe the context in which this issue arose.

¶ 4 In 1994, companies began to market via unsolicited email. See Elizabeth A. Alongi, Note, Has the U.S. Canned Spam?, 46 Ariz. L.Rev. 263, 263 (2004). Since then, the rate at which companies use unsolicited email to advertise has grown exponentially. See id. By 2003, fifty-six percent "of all email traffic" was unsolicited commercial email. Id. It can be quite costly to Internet service providers and corporations to receive massive volumes of unsolicited email. See id. at 264.

¶ 5 In response to the growing problem, in 1999, Tennessee became the first state to require the characters "ADV:" in the subject lines of unsolicited commercial email. See Tenn.Code Ann. § 47-18-2501 (Supp.1999). Three years later, Utah codified the Email Statute. See Utah Code Ann. §§ 13-36-101 to -105 (repealed 2004). The Email Statute required that unsolicited commercial email include "ADV:" as the first four characters in the subject line. See id. § 13-36-103(1)(b)(i) (repealed 2004). The Email Statute allows for civil enforcement by permitting recipients to recover reasonable attorney fees and costs in addition to the lesser of $10 per email or $25,000 per day. See id. § 13-36-105(2) (repealed 2004).

¶ 6 By 2002, when the legislature passed the Email Statute, Utah became one of four states to have such legislation. See id.; Colo.Rev.Stat. § 6-2.5-103 (2000); Kan. Stat. Ann. § 50-6,107 (Supp.2003); Tenn.Code Ann. § 47-18-2501 (Supp.2003). Thus, Utah's requirement was unusual but not unique, and such requirements had existed for three years by the time that Fenn received the email in this case.

¶ 7 Despite the four states' laws, the problem of unsolicited email continued. In 2003 and 2004, twelve other states adopted legislation requiring "ADV:" in the subject line of unsolicited commercial email.² Finally, in 2003, Congress passed legislation regulating unsolicited commercial email. See 15 U.S.C. §§ 7701-7713 (Supp.2004). The federal law aims primarily at fraudulent or misleading email, rather than nonfraudulent, unsolicited email, as is at issue here. See id. The federal law does not require the "ADV:" text and preempts state statutes, such as the Email Statute. See id.

ISSUE AND STANDARD OF REVIEW

¶ 8 This case requires us to determine whether a Utah court has authority to exercise personal jurisdiction over a defendant whose only contact with the state was to employ an agent who sent one unsolicited commercial email to a resident of Utah. Because this pretrial jurisdictional decision was made on documentary evidence only, it presents only legal questions that are reviewed for correctness. See Starways, Inc. v. Curry, 1999 UT 50, ¶ 2, 980 P.2d 204

.

¶ 9 The Email Statute has been superceded by federal law, see 15 U.S.C. §§ 7701-7713 (Supp.2004), and repealed by the Utah legislature, see Utah Repeal of Unsolicited Commercial or Sexually Explicit Email Act, ch. 278, § 1, 2004 Utah Laws 278. However, during the time in which the statute was in effect, the lower court announced its decision. We review the trial court's decision in light of the statutory scheme in effect at the time, i.e., while the Email Statute was in effect. See State v. Webster, 2001 UT App 238, ¶¶ 1, 41, 32 P.3d 976

; Barber v. Farmers Ins. Exch., 751 P.2d 248, 249 (Utah Ct.App.1988).

ANALYSIS

¶ 10 To exercise jurisdiction, (i) a Utah statute must permit the court to exercise jurisdiction, and (ii) the exercise of jurisdiction must "`comport[ ] with due process requirements of the Fourteenth Amendment.'" Lee v. Frank's Garage & Used Cars, Inc., 2004 UT App 260, ¶ 7, 97 P.3d 717 (quoting In re W.A., 2002 UT 127, ¶ 14, 63 P.3d 607, cert. denied, 538 U.S. 1035, 123 S.Ct. 2092, 155 L.Ed.2d 1065 (2003)).

I. Statutory Requirement

¶ 11 Fenn argues that the Email Statute itself impliedly confers jurisdiction because it creates a cause of action. However, even assuming that Fenn preserved and adequately briefed this point, the Utah Supreme Court recently foreclosed this argument: "Liability and jurisdiction are independent.... [The statute] speaks to liability only and does not purport to grant personal jurisdiction. Nothing in the statutory language indicates that the legislature intended to do so." MFS Series Trust III v. Grainger, 2004 UT 61, ¶ 21, 96 P.3d 927 (quotations and citation omitted). Thus, to convey jurisdiction, a statute must do more than merely create a cause of action.

¶ 12 Fenn alternately argues that the state's long-arm statute, Utah Code section 78-27-24 (1998), confers personal jurisdiction over MLeads. The long-arm statute provides:

Any person ... whether or not a citizen or resident of this state, who in person or through an agent does any of the following enumerated acts, submits himself ... to the jurisdiction of the courts of this state as to any claim arising out of or related to:

(1) the transaction of any business within this state; ...

(3) the causing of any injury within this state whether tortious or by breach of warranty[.]

Utah Code Ann. § 78-27-24(1),(3) (1998). Subsection (1) applies to this situation because advertising in the state qualifies as the "transaction of any business within this state."³ Id. § 78-27-24(1). In any event, "[t]he Utah long-arm statute `must be extended to the fullest extent allowed by due process of law.'" Starways, 1999 UT 50 at ¶ 7, 980 P.2d 204 (quoting Synergetics v. Marathon Ranching Co. Ltd., 701 P.2d 1106, 1110 (Utah 1985)); see also Utah Code Ann. § 78-27-22 (1969). Hence, whether the long-arm statute provides jurisdiction in this case depends only upon whether due process permits the exercise.

II. Due Process

¶ 13 A court can exercise two forms of personal jurisdiction: (i) general and (ii) specific. See Phone Directories Co., Inc. v. Henderson, 2000 UT 64, ¶ 11, 8 P.3d 256

. The plaintiff bears the burden of establishing personal jurisdiction over the defendant. See Neways, Inc. v. McCausland, 950 P.2d 420, 422 (Utah 1997). Fenn does not allege that Utah could exercise general personal jurisdiction over MLeads. Thus, we consider only whether Fenn established that the court could exercise specific personal jurisdiction.

¶ 14 A democratic government must exercise its powers against only those who have in some way assented to the governmental power, such as by pursuing the benefits available in the forum. Accordingly, due process requires that the defendant have "minimum contacts" with the forum jurisdiction " such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" MFS Series Trust, 2004 UT 61 at ¶¶ 9,10, 96 P.3d 927 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)).

¶ 15 Courts previously have articulated the framework of personal jurisdiction analysis in several ways. Compare Starways, Inc. v. Curry, 1999 UT 50, ¶¶ 8, 11, 980 P.2d 204,

with Parry v. Ernst Home Ctr. Corp., 779 P.2d 659, 661-62 (Utah 1989). Most recently, Utah has applied a four-part analysis to the due process inquiry. See, e.g., MFS Series Trust, 2004 UT 61 at ¶ 10, 96 P.3d 927. Despite the differences in the organization and structure, this four-part analysis makes fundamentally the same queries as the other analyses.

¶ 16 First, the court considers if the defendant "`purposefully availed itself of the privilege of conducting activities within the forum state.'" Id. (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)) (other citation and alteration omitted). Second, the court considers whether the claim arose out of the defendant's Utah activity. See id. (citing Neways, Inc. v. McCausland, 950 P.2d 420, 423 (Utah 1997)). Third, the court considers if the defendant "should [have been able to] reasonably anticipate being haled into court" in Utah. Id. (citing Synergetics, 701 P.2d at 1110) (other citation omitted). Finally, the court considers the state's interest and "fairness" to the parties. Id.

A. Purposeful Availment

¶ 17 Under the first prong, a state may exercise...