Hy Cite Corp. v. Badbusinessbureau.Com, L.L.C.

• Decision Date: 08 January 2004
• Docket Number: No. 03-C-0421-C.,03-C-0421-C.
• Citation: 297 F.Supp.2d 1154
• Parties: HY CITE CORPORATION, Plaintiff, v. BADBUSINESSBUREAU.COM, L.L.C. d/b/a Badbusinessbureau.Com and/or Ripoffreport.com, Defendant.
• Court: U.S. District Court — Western District of Wisconsin

297 F.Supp.2d 1154

HY CITE CORPORATION, Plaintiff, v. BADBUSINESSBUREAU.COM, L.L.C. d/b/a Badbusinessbureau.Com and/or Ripoffreport.com, Defendant.

No. 03-C-0421-C.

United States District Court, W.D. Wisconsin.

January 8, 2004.

John C. Scheller, Michael Best & Freidrich, LLP, Madison, WI, for Plaintiff.

Sonali S. Srivastava, Lafollette, Godfrey & Kahn, Madison, WI, Maria Crimi Speth Jabur & Wilk, P.C., Phoenix, AZ, for Defendant.

ORDER

CRABB, Chief Judge.

Defendant badbusinessbureau.com owns and operates a website that displays consumer complaints against various businesses. In this civil action, plaintiff Hy Cite Corporation contends that by operating this website, defendant has engaged in unfair competition, false advertising, disparagement and trademark infringement in violation of state and federal law. Now before the court is defendant's motion to dismiss the case for lack of personal jurisdiction. Subject matter jurisdiction is present under 28 U.S.C. §§ 1331 and 1367.

I conclude that plaintiff has failed to show that defendant has sufficient contacts with Wisconsin to satisfy the personal jurisdiction requirements of the Fourteenth Amendment's due process clause. Accordingly, plaintiff's motion to dismiss for lack of personal jurisdiction will be granted.

For the sole purpose of deciding this motion, I find as facts the following material facts from the allegations in the complaint and the averments in the affidavits. See Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.2003) (court accepts all well-pleaded allegations in complaint as true, unless controverted by challenging party's affidavits; any conflicts concerning relevant facts are to be decided in favor of party asserting jurisdiction).

JURISDICTIONAL FACTS

Plaintiff Hy Cite Corporation is a Wisconsin corporation with a principal place of business in Madison, Wisconsin. Plaintiff markets and sells china and porcelain dinnerware, glass beverageware, cookware and related products under its Royal Prestige trademark.

Defendant badbusinessbureau.com is a limited liability company organized and existing under the laws of St. Kitts/Nevis, West Indies. Defendant does not own any assets in Wisconsin or have any offices or employees in the state. Defendant owns and operates a website, "The Rip-Off Report," located at http://www.badbusinessbureau.com. The website operates primarily as a forum for consumer complaints about various businesses. Consumers submit complaints, or "rip-off reports," about a product or service; defendant posts the complaints on its website. Consumers have submitted at least 61,000 complaints to defendant. Plaintiff's products have been the subject of 30 to 40 of these complaints.

Subjects of a consumer complaint may post a rebuttal. Defendant screens the rebuttals and charges a $25 fee to post more than four of them. No Wisconsin company has purchased a rebuttal. In addition to posting rebuttals, subjects of a complaint may enroll in defendant's "Corporate Customer Advocacy Program," which is advertised on its website.

Plaintiff contacted defendant on June 24, 2003, by e-mail to inquire about ways of resolving the consumer complaints posted on defendant's website. In a July 11, 2003 e-mail, defendant informed plaintiff of the advocacy program. After determining the number of complaints posted against plaintiff, defendant informed plaintiff that the cost of enrollment would consist of an initial $30,000 fee and an additional $20,000 at a later time. Plaintiff did not enroll in this program. No other Wisconsin company has enrolled.

Defendant's website serves several functions apart from the consumer complaint and rebuttal forum. First, any company may purchase ad space on defendant's website. No Wisconsin company has purchased any ad space. Second, defendant's website displays a link to purchase a book, Rip-Off Revenge Guide. One Wisconsin resident has purchased the book. Third, defendant solicits donations for the company on its website. Defendant does not recall whether the company has received any donations from Wisconsin. Fourth, defendant's website allows website viewers to enlist as volunteer "rip-off reporters." Finally, defendant offers to contact consumers who post rip-off reports if a class action suit is being considered against the company about which the consumer complained. Defendant has not organized any class action suits in Wisconsin.

OPINION

A. General Principles

On a motion to dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2), the burden of proof rests on the party asserting jurisdiction. Hyatt International Corp. v. Coco, 302 F.3d 707, 713 (7th Cir.2002). Unless the court holds an evidentiary hearing, a party meets this burden by making a prima facie showing that personal jurisdiction exists. Id.

A federal court has personal jurisdiction over a non-consenting, nonresident defendant to the extent authorized by the law of the state in which that court sits. Giotis v. Apollo of the Ozarks, Inc., 800 F.2d 660, 664 (7th Cir.1986). This rule applies in diversity and federal question cases, unless the federal statute at issue permits nationwide service or the defendant is not subject to personal jurisdiction in any state in the United States. Fed.R.Civ.P. 4(k); Janmark, Inc. v. Reidy, 132 F.3d 1200, 1201-02 (7th Cir.1997); see also Bird v. Parsons, 289 F.3d 865, 871 (6th Cir.2002). Neither of the exceptions apply to this case. Nationwide service of process is not authorized under any of the statutes at issue in this case. Defendant admits that it could be sued in Arizona because it maintains a distribution center in that state.

Generally, Wisconsin courts require plaintiffs to satisfy the requirements of the state's long-arm statute, Wis. Stat. § 801.05, as well as the due process clause of the United States Constitution. Logan Productions, Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir.1996). Both parties appear to assume that the Wisconsin long-arm statute extends as far as due process. As a result, they have focused almost entirely on the requirements of the Constitution. The parties' assumption may be erroneous. In a number of recent decisions, courts in Wisconsin have analyzed the requirements of § 801.05 separately from the requirements of due process. See, e.g., Kopke v. A. Hartrodt S.R.L., 2001 WI 99, ¶ 8, 245 Wis.2d 396, 629 N.W.2d 662; Bushelman v. Bushelman, 2001 WI App 124, ¶ 7, 246 Wis.2d 317, 629 N.W.2d 795. However, because I conclude that plaintiff has failed to meet the constitutional requirements for jurisdiction, it is unnecessary to decide whether plaintiff has met the requirements of Wis. Stat. § 801.05. See Steel Warehouse of Wisconsin, Inc. v. Leach, 154 F.3d 712, 714 (7th Cir.1998).

Due process requires that a nonresident defendant have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). The contacts between the defendant and the forum state may not be "random, isolated, or fortuitous." Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984). Instead, "the sufficiency of the contacts is measured by the defendant's purposeful acts." NUCOR Corp. v. Aceros Y Maquilas de Occidente, S.A. de C.V., 28 F.3d 572, 580 (7th Cir. 1994). The minimum contacts with the forum state must be the result of the defendant's purposefully availing itself of the privilege of conducting business in the forum state, thereby invoking the protections and benefits of the forum state's law. Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); International Medical Group, Inc. v. American Arbitration Ass'n, Inc., 312 F.3d 833, 846 (7th Cir.2002). The minimum contacts requirement serves two objectives: "[i]t protects against the burdens of litigation in a distant or inconvenient forum" unless the defendant's contacts make it just to force him or her to defend there, and "it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

Depending on the nature of the contacts, a court may exercise general or specific jurisdiction. When the defendant's contacts with the state are sufficiently continuous, systematic and general, the court may exercise jurisdiction over the defendant in any suit based on any controversy. International Medical Group, 312 F.3d at 846. When a defendant's contacts with the state are more limited, but are related to or give rise to the specific controversy in issue, a court may exercise specific jurisdiction over the defendant with respect to that controversy. Logan Productions, 103 F.3d at 52. Because the implications are far greater, the constitutional standard for general jurisdiction is considerably more stringent than the standard for specific jurisdiction. Purdue Research Foundation, 338 F.3d at 787.

B. Personal Jurisdiction and the Internet

Almost fifty years ago, the United State Supreme Court noted that federal courts should be sensitive to changes in technology, communication and transportation when conducting a personal jurisdiction analysis. Hanson, 357 U.S. at 250-51, 78 S.Ct. 1228. These constant changes demand a flexible constitutional standard that can evolve alongside society. Id. at 251, 78 S.Ct. 1228 (citing Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565, and International Shoe, 326 U.S. 310, 66 S.Ct. 154). Nevertheless, the Court has rejected a view that technological advances will lead to "the eventual demise of all restrictions on the personal jurisdiction of state courts."...