Sefton v. Jew, CIV.No. A-00-CA-473JN.

• Court: United States District Courts. 5th Circuit. Western District of Texas
• Writing for the Court: Nowlin
• Citation: 201 F.Supp.2d 730
• Parties: David SEFTON v. Matthew JEW; Interactive Classifieds Network Corporation, Individually and DBA Http://www.pictureview.com.
• Decision Date: 24 April 2001
• Docket Number: CIV.No. A-00-CA-473JN.

201 F.Supp.2d 730 David SEFTON
v.
Matthew JEW; Interactive Classifieds Network Corporation, Individually and DBA Http://www.pictureview.com. CIV.No. A-00-CA-473JN. United States District Court, W.D. Texas, Austin Division. April 24, 2001.

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Kent M. Leediker, Austin, TX, Dan Krocker, Houston, TX, for plaintiff.

Christopher L. Graff, Skjerven Morrill MacPherson, L.L.P., Austin, TX, Kirk N. Sullivan, Foley & Lardner, Los Angeles, CA, for defendants.

ORDER

NOWLIN, Chief Judge.

Before the Court are Plaintiff's Second Amended Complaint (Clerk's Doc. No. 18) filed 5 January 2001;¹ Plaintiff's Response in Opposition to Defendants' Motion to Dismiss Complaint (Clerk's Doc. No. 17) filed 5 January 2001;² Defendants' Motion to Dismiss Second Amended Complaint (Clerk's Doc. No. 20) filed 26 January 2001; Plaintiff's First Amended Response to Defendants' Motion to Dismiss Second Amended Complaint (Clerk's Doc. No. 23) filed 5 February 2001; and Defendants' Reply Brief in Support of Defendants' Motion to Dismiss Second Amended Complaint (Clerk's Doc. No. 24) filed 13 February 2001. Having considered the Motion, Responses, Reply, the entire case file and applicable law, the Court enters the following order GRANTING IN PART and DENYING IN PART Defendant's Motion to Dismiss Second Amended Complaint.

I. Background

This case involves an intellectual property dispute between two Internet website owners who offer sexually-oriented photographs on their websites to subscribers for

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monthly fees. Plaintiff, David Sefton, is a photographer in Austin, Texas, who owns and operates the adult website, www.texascollegegirls.com. On 24 June 1997, Plaintiff received a copyright registration from the United States Copyright Office (Registration Number VAu 407-976) for a collection of photographs entitled, "Key West Babes, Spring Break 1997." Similarly, Plaintiff's copyright application for his collection of photographic digital images entitled, "College Girls of Austin Texas," has been pending at the United States Copyright Office since 6 June 1997. Plaintiff claims that on or about 14 July 1997, and on subsequent dates thereafter, Defendants, Interactive Classifieds Network Corporation ("ICNC") and Matthew Jew, the company's CEO and President, published Plaintiff's copyrighted photographic images and other intangible property on their adult website without his permission. Plaintiff has filed a three-count complaint against Defendants for copyright infringement under 17 U.S.C. § 501(a), unfair competition, and conversion.

Defendant ICNC is a California corporation located in San Francisco. ICNC offers a "PictureView" service that is accessible on the company's website at www.pictureview.com. PictureView is an application that organizes and indexes photographic files and text posted to Usenet newsgroups, and it is through this service that Defendants allegedly published Plaintiff's intellectual property without his permission.³ The PictureView service searches the Usenet for postings containing photographic files, stores these photographic files and the text accompanying them in ICNC's servers, and inserts the photographic files and text into a graphical interface on ICNC's website, making them viewable directly on-line at www.pictureview.com.

Consumers must subscribe to PictureView to gain access to the entire PictureView archive and they may do so on ICNC's website. Once the subscriber provides credit card and billing information to ICNC, the subscriber's service is automatically renewed by ICNC after each billing cycle until the subscriber cancels membership. Paying members must type in a user name and password each time they enter the website to view ICNC's entire PictureView archive. At the time the complaint was filed, ICNC had approximately 695 Texas subscribers.

Defendants have moved to dismiss the action under Rule 12(b)(2) of the Federal Rules of Civil Procedure, claiming that the Court does not have personal jurisdiction over ICNC or its CEO and President, Matthew Jew. Defendants argue that ICNC has no minimum contacts with this forum and that the mere availability of its Internet service in Texas is insufficient to establish jurisdiction over the corporation. Defendants further argue that Matthew Jew, a California resident, has no contacts with Texas, and that Plaintiff's allegations are insufficient to avoid the fiduciary shield doctrine that prevents this Court from assuming jurisdiction over Mr. Jew through ICNC.

Alternatively, Defendants request dismissal under Rule 12(b)(6) for failure to state a claim. First, Defendants argue

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that Plaintiff's state law claims of unfair trade practices and conversion are preempted by the federal Copyright Act. Second, Defendants argue that all of Plaintiff's claims, including the federal copyright claim, are deficiently plead and thus require dismissal.

II. Personal Jurisdiction

A. Legal Standards

When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the district court's jurisdiction over the defendant. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.1994). When, as in this case, the district court rules on the motion without an evidentiary hearing, the plaintiff may satisfy its burden by presenting a prima facie case for jurisdiction. Felch v. Transportes Lar-Mex SA De CV, 92 F.3d 320, 326 (5th Cir.1996). In deciding whether the plaintiff has made a prima facie case, uncontroverted allegations in the plaintiff's complaint must be taken as true and conflicts between the facts contained in the parties' affidavits must be resolved in the plaintiff's favor. Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir.1990).

A federal court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if 1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and 2) exercise of jurisdiction by the forum state is consistent with due process under the United States Constitution. See Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999). Because Texas's long-arm statute has been interpreted to extend to the limits of due process, the Court need only determine whether subjecting Defendants to suit in Texas would be consistent with the due process clause of the Fourteenth Amendment. See Electrosource, Inc. v. Horizon Battery Technologies, Ltd., 176 F.3d 867, 871 (5th Cir.1999); Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990).

The due process clause of the Fourteenth Amendment limits the power of a state to assert personal jurisdiction over a nonresident defendant. Its requirements are satisfied when 1) the nonresident defendant has purposefully availed himself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state; and 2) the exercise of jurisdiction over that defendant does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

The minimum contacts aspect of the due process analysis can be established through contacts giving rise to general jurisdiction or specific jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). A forum may assert general jurisdiction over a nonresident defendant if the defendant's contacts with the forum state are "continuous and systematic." Helicopteros, 466 U.S. at 414-15, 104 S.Ct. 1868. If a defendant's contacts with the forum state are not sufficient to support general jurisdiction, a defendant may be subject to specific jurisdiction. Specific jurisdiction is established if 1) the defendant purposefully directed his activities at the residents of the forum, and 2) the plaintiff's cause of action arises out of, or is related to, the defendant's contacts with the forum. Burger King, 471 U.S. at 472, 105 S.Ct. 2174.

The Fifth Circuit has adopted a "sliding scale" approach in determining when to exercise general jurisdiction over a defendant who operates an Internet website

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without other contacts with the forum state. Mink v. AAAA Development LLC, 190 F.3d 333, 336 (5th Cir.1999). Courts are to evaluate the "nature and quality of commercial activity that an entity conducts over the Internet" before exercising personal jurisdiction. Id. (citing Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1124 (W.D.Pa.1997)). Adopting the reasoning in Zippo, the Fifth Circuit has categorized Internet use into a spectrum of three areas. Id. At one end of the spectrum, there are situations where a defendant "clearly does business over the Internet by entering into contracts with residents of other states which `involve the knowing and repeated transmission of computer files over the Internet.'" Id. (citing Zippo, 952 F.Supp. at 1124). In this situation, personal jurisdiction is proper. Id. At the other end of the spectrum, "there are situations where a defendant establishes a passive website that merely advertises on the Internet." Id. Personal jurisdiction is not proper with passive websites. Id. In the middle of the spectrum, there are situations where a defendant's website allows users to exchange information with a host computer. Id. In this middle ground, courts must look to the level of interactivity and the commercial nature of the information on the website to determine whether the exercise of jurisdiction is proper. Id.

If minimum contacts are found to be present, the Court must then decide whether the exercise of jurisdiction comports with "traditional notions of fair play and...