Gen Ads, LLC v. Breitbart

• Decision Date: 05 June 2006
• Docket Number: No. C06-137 JLR.,C06-137 JLR.
• Citation: 435 F.Supp.2d 1116
• Parties: GEN ADS, LLC, et al., Plaintiffs, v. Andrew BREITBART, et al., Defendants.
• Court: U.S. District Court — Western District of Washington

435 F.Supp.2d 1116

GEN ADS, LLC, et al., Plaintiffs, v. Andrew BREITBART, et al., Defendants.

No. C06-137 JLR.

United States District Court, W.D. Washington, at Seattle.

June 5, 2006.

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Derek Alan Newman, Roger M. Townsend, Newman & Newman, Seattle, WA, for Plaintiffs.

Laurence G. Solov, Ryan J. Larsen, Katten Muchin Rosenman, Los Angeles, CA, Donald Stewart Cohen, Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim, Seattle, WA, John Richard Creatura, Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim, Tacoma, WA, for Defendants.

ORDER

ROBART, District Judge.

I. INTRODUCTION

This matter comes before the court on a motion to dismiss from Defendants Andrew Brietbart, Susannah Breitbart, and their marital community (collectively, "the Moving Defendants") for lack of personal jurisdiction (Dkt.# 14). The court has considered the parties' briefing and accompanying declarations and finds the matter appropriate for disposition on the papers and without oral argument. For the reasons stated below, the court GRANTS in part and DENIES in part the motion to dismiss.

II. BACKGROUND

California resident Andrew Breitbart is a principal of Breitbart.com, LLC ("Breitbart.com," f/k/a Breitbart.com, Inc.), which owns and operates a website (www.breitbart.com) that attracts significant Internet traffic from the popular online news source, "The Drudge Report." Seeing great revenue potential based on the number of visitors to the website, in September 2005, three parties to the present litigation contracted to form an internet advertising firm, Plaintiff Gen Ads, LLC ("Gen Ads"). The three signatories to the contract ("the LLC Agreement") included: Plaintiffs Cartmell Holdings, LLC ("Cartmell") and Hillstrom Equities, LLC ("Hillstrom"), and Defendant Breitbart Holdings, Inc. ("Breitbart Holdings"). In early November 2005, the newly formed Gen Ads entered into an exclusive advertising services agreement ("Advertising Agreement") with Breitbart.com, whereby Gen Ads agreed to arrange for all advertising on the website. Both the LLC Agreement and the Advertising Agreement contain forum selection clauses designating Washington as the proper forum for any dispute arising out of the respective agreements.

Mr. Breitbart signed the LLC Agreement on behalf of Breitbart Holdings and the Advertising Agreement on behalf of Breitbart.com. Today, Mr. Breitbart is the CEO and President of Breitbart Holdings. Defs.' Mot at 5. At the time he signed the LLC Agreement, however, Breitbart Holdings had not incorporated under such name; rather Mr. Breitbart was affiliated with Breitbart.com, Inc. In any event, some months after Gen Ads formed, Mr. Breitbart filed a certificate of amendment changing the name of Breitbart.com, Inc. to Breitbart Holdings. Plaintiffs characterize Mr. Breitbart's signature on the LLC Agreement as an act on behalf of a non-existent entity (thus, triggering personally liability), while the Moving Defendants consider Breitbart Holdings to have undergone nothing more than an innocuous name change.

Sometime during negotiation and execution of the LLC Agreement, Breitbart.com entered into an agreement with third-party news source, Reuters, to post links to Reuters' stories from the Breitbart.com website. According to Plaintiffs, Mr. Breitbart entered into negotiations with Reuters to generate this "advertising" revenue at the same time he was arranging for Gen Ads' right to exclusive advertising.

Gen Ads, Cartmell, and Hillstrom filed suit against Breitbart.com, Breitbart Holdings, and Mr. and Mrs. Breitbart and their marital community. As to Mr. Breitbart, Plaintiffs allege that he violated the Advertising Agreement, breached his fiduciary duty, and committed fraud. Plaintiffs also claim that Mr. Breitbart has used Gen Ads' copyrighted code in placing advertisements on the Breitbart.com website. Plaintiffs contend that Mr. Breitbart engaged in such acts for the benefit of his marital community, and thereby name Mr. and Mrs. Breitbart and their marital community as Defendants in this action. The Moving Defendants now seek dismissal of the action against them for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) ("Rule 12(b)(2)"). The non-Moving Defendants, Breitbart.com and Breitbart Holdings, do not contest personal jurisdiction for the purposes of this lawsuit.

III. DISCUSSION

When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff must make a prima facie showing of personal jurisdiction to survive the motion. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128-29 (9th Cir.2003). The plaintiff must provide evidence that, if believed, would support the court's exercise of jurisdiction over the defendant. Id. at 1129. The court need not accept the plaintiffs bare allegations if the defendant controverts them with evidence. See AT & T Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir.1996). If both parties provide evidence supporting different versions of a fact, however, the court must resolve competing inferences in the plaintiffs favor. Harris Rutsky, 328 F.3d at 1129.¹

Where no applicable federal statute addresses the issue, a court's personal jurisdiction analysis begins with the "longarm" statute of the state in which the court sits. Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir.2002). Washington's long-arm statute extends the court's personal jurisdiction to the broadest reach that the United States Constitution permits. Shute v. Carnival Cruise Lines, 113 Wash.2d 763, 783 P.2d 78, 82 (1989). Therefore, this court determines whether exercising jurisdiction over the Moving Defendants comports with federal due process. Glencore Grain, 284 F.3d at 1123. Federal due process requires that nonresident defendants have sufficient minimum contacts with the forum state such that the exercise of jurisdiction will not offend "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

A court can exercise its power over a non-resident defendant (absent the defendant's consent) only if it has specific or general jurisdiction. Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1086 (9th Cir.2000). Where a defendant has "substantial" or "continuous and systematic" contacts with the forum state, it is subject to general jurisdiction, and can be haled into court on any action, even one unrelated to its contacts. Id. If a defendant is not subject to general jurisdiction, it may be subject to specific jurisdiction if the action upon which it is sued arises from its contacts within the forum state. Id.

The Ninth Circuit applies a three-part test to determine specific jurisdiction. Specific jurisdiction exists if (1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant's forum-related activities, and (3) the exercise of jurisdiction is reasonable. Id. at 1086. If the plaintiff meets his burden on the first two parts of the test, the burden shifts to the defendant to satisfy the third part by presenting a "compelling case" that the exercise of jurisdiction is unreasonable. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir.2004) (citation omitted).

A. Jurisdiction Over the Marital Community

At the outset, the court notes that although community property can be held liable for an obligation incurred by one spouse for the benefit of the community, the marital community is not a separate legal entity from the spouses. Cf. Bortle v. Osborne, 155 Wash. 585, 285 P. 425, 427 (1930) ("[W]e have never held that a partnership or a marital community is a legal person separate and apart from the members composing the partnership or community."). Under California law,² jurisdiction over one spouse binds the community assets. Cal. Fam.Code § 910 ("community estate is liable for debt incurred by either spouse regardless of whether one or both spouses are parties ... to a judgment for the debt."). Thus, it is unnecessary to discuss personal jurisdiction as it relates to the marital community; rather, the court assesses each spouse's contacts with the forum state.

B. Specific Jurisdiction Over Andrew Breitbart

Plaintiffs allege that Mr. Breitbart is a party to the contract, subject to the forum-selection clause, because he acted in his individual capacity by negotiating and signing a contract on behalf of a nonexistent corporate entity (Breitbart Holdings, prior to incorporation). Plaintiffs also allege that Mr. Breitbart breached his fiduciary duty to Gen Ads and made false representations in contract negotiations when, at the same time he negotiated with them, he held discussions with Reuters for advertising on the Breitbart.com website. The Moving Defendants contend that, although Mr. Breitbart signed the contracts on behalf of the two companies that share his name, he is not subject to this court's jurisdiction because he is not a party to the contracts and because he conducted his business inside and from California, not Washington.

Plaintiffs have succeeded in making out a prima facie case of specific jurisdiction over Mr. Breitbart. As to the first prong, the court is persuaded that Mr. Breitbart's conduct was such that he should have reasonably anticipated being haled into a Washington court. Mr. Breitbart personally negotiated and signed a contract with a Washington company (Cartmell) to form another Washington company (Gen Ads), disputes over which the contracting parties agreed would be governed by Washington law and litigated before a Washington tribunal. See Burger King v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1...