Verizon Online Services, Inc. v. Ralsky, No. CIV.A. 01-432-A.

• Court: United States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
• Writing for the Court: Lee
• Citation: 203 F.Supp.2d 601
• Parties: VERIZON ONLINE SERVICES, INC. Plaintiff, v. Alan RALSKY, et al., Defendants.
• Decision Date: 06 June 2002
• Docket Number: No. CIV.A. 01-432-A.

203 F.Supp.2d 601 VERIZON ONLINE SERVICES, INC. Plaintiff,
v.
Alan RALSKY, et al., Defendants. No. CIV.A. 01-432-A. United States District Court, E.D. Virginia. Alexandria Division. June 6, 2002.

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COPYRIGHT MATERIAL OMITTED

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Jon Linden Praed, Internet Law Group, Arlington, VA, for Plaintiff or Petitioner.

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Erik Anderson Cox, Esquire, John Francis Hundley, Esquire, Washington, D.C., for Defendant or Respondent.

MEMORANDUM OPINION

LEE, District Judge.

THIS MATTER is before the Court on Defendants Alan Ralsky, Lance McDonald, and corporate Defendant Additional Benefits, LLC's ("Defendants") Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, or in the alternative Motion to Transfer Venue to the Eastern District of Michigan. Plaintiff Verizon Online Services, Inc. ("Verizon") has brought an action against Defendants based on their alleged transmission of millions of unsolicited bulk e-mail ("UBE" or "spam") to Verizon's subscribers through Verizon's proprietary on-line network. Seven of Verizon's Virginia e-mail servers that processed the deluge of spam allegedly sent by Defendants are located in Virginia. Verizon contends that Defendants' alleged transmissions overwhelmed Verizon's servers causing delays in the processing of legitimate e-mails and leading to consumer complaints.

The issue presented is whether Defendants' transmission of millions of UBE to Verizon's subscribers through Verizon's servers in Virginia constitutes sufficient minimum contacts to satisfy the demands of the Due Process Clause of the Fourteenth Amendment of the Constitution. For the reasons discussed below, the Court finds that it does. Crediting the allegations in Verizon's Amended Complaint, Defendants deliberately transmitted millions of UBE to and through Verizon's e-mail servers in Virginia. In doing so, Defendants solicited business from Verizon's subscribers for pecuniary gain, while at the same time trespassing on Verizon's proprietary network causing harm to its servers located in Virginia.

Defendants knew or should have known that such trespass violated Verizon's public anti-UBE policy and that the brunt of the harm caused by their allegedly tortious conduct would fall on Verizon's servers. Allowing Defendants to escape personal jurisdiction in a forum they have exploited for pecuniary gain while causing a tort to a Virginia resident would constitute a manifest unfairness to the rights of Verizon and the interests of Virginia. Defendants cannot bombard with impunity a Virginia Internet Service Provider ("ISP"), consuming server capacity and deluging the ISP's customers with spam, and then avoid jurisdiction by asserting ignorance of where the UBE was going or the harm such spam would cause the ISP's servers and its customers. Defendants knew or should have known that their UBE was harming Verizon and that Verizon would bring suit against them where Defendants' spam caused Verizon the greatest injury. When a business directs UBE advertising of its products to a Virginia ISP and causes a tort within Virginia, the business tortfeasor is purposefully availing itself of the laws of Virginia and thereby subjects itself to long-arm jurisdiction in Virginia within the contours of the Constitution.

The Court also finds that venue is proper in the Eastern District of Virginia under 28 U.S.C. § 1391(b)(2). A fair reading of Verizon's Amended Complaint indicates that the heart of this lawsuit deals with millions of e-mails that were sent to and through Verizon's e-mail servers, seven of which are in Virginia. Therefore, a substantial part of the events and property harmed involved in Verizon's claims occurred in Virginia. Similarly, Defendants have failed to show that this case should be transferred to the Eastern District of Michigan under 28 U.S.C. § 1404(a). Verizon is a Virginia resident, the majority of its employee-witnesses and documents relevant

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to this action are in Virginia, and the tortious conduct complained of occurred in Virginia. Accordingly, Defendants' Motion to Dismiss for lack of personal jurisdiction and improper venue is DENIED. Further, Defendants' alternative motion to transfer venue is DENIED as well.

I. BACKGROUND

Each new development in communications technology brings new challenges to applying the principles of personal jurisdiction. As the Supreme Court and others have frequently noted, "the confluence of the `increasing nationalization of commerce' and `modern transportation and communication'" carries with it a "resulting relaxation of the limits that the Due Process Clause imposes on courts' jurisdiction." CompuServe Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir.1996)(quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). Such is the case here, where the question presented concerns the use of the Internet to send large volumes of commercial transmissions that cause tortious injury in the Commonwealth of Virginia.

A. The Internet, Spam and ISPs.

The Internet, as we all know, has brought about a revolution in the way we work and communicate. Courts have addressed in detail the basic structure of this new medium and the Court will not belabor the basics of the Internet here. See, e.g., Reno v. American Civil Liberties Union, 521 U.S. 844, 849-853, 117 S.Ct. 2329, 138 L.Ed.2d 874 (1997) (discussing the history and fundamental architecture of the Internet). Suffice it to say that the Internet is a network of networks "that enables anyone with the right equipment and knowledge ... to operate an international business cheaply, and from a desktop." CompuServe, 89 F.3d at 1262. For the purposes of this opinion, however, a brief review of one particular facet of the Internet is appropriate — e-mail.

E-mail is essentially a method of communicating and doing business over the Internet. It "enables an individual to send an electronic message — generally akin to a note or letter — to another individual or to a group of addressees. The message is generally stored electronically, sometimes waiting for the recipient to check her `mailbox' and sometimes making its receipt known through some type of prompt." Reno, 521 U.S. at 851, 117 S.Ct. 2329. In addition to text, an e-mail can contain hyperlinks to Web sites located on the World Wide Web. The World Wide Web is a communications platform that allows Internet users to search for and retrieve information stored in remote computers connected to the Internet.

To send or receive e-mail to or from other Internet users, one must obtain Internet access through an ISP. See generally, Anne E. Hawley, Comment, Taking Spam Out of Your Cyberspace Diet: Common Law Applied to Bulk Unsolicited Advertising Via Electronic Mail, 66 UMKC L.REV. 381, 683 (1997)(discussion of e-mail basics). An ISP operates a computer communication service through a proprietary network. In addition to allowing access to the content available within its own network, an ISP provides its subscribers with a doorway to the Internet. Subscribers use the ISP's domain name, e.g., "verizon.net," together with their own personal identifier to form a distinctive e-mail mailing address, e.g., "tmarshall@verizon.net." The subscriber's e-mail address is used to send and receive e-mail from other Internet users throughout the world. An e-mail address does not contain any geographic designation, nor does it correspond to any geographic location. The ISP subscriber

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can retrieve her e-mail using any computer connected to the Internet from anywhere in the world.

However, e-mail transmitted to an ISP subscriber is processed and stored on the ISP's e-mail computer servers. The email server is located in a discrete geographic location. An e-mail server processes every e-mail that is addressed to the ISP's customer. In other words, once the e-mail is transmitted, it must first pass through the ISP's computer server to reach its ultimate destination — the subscriber's computer.

One of the most explosive commercial developments involving the use of e-mail over the Internet is spam, or unsolicited bulk e-mail ("UBE"). Spam is defined as "an unsolicited, often commercial, message transmitted through the Internet as a mass mailing to a large number of recipients." MICROSOFT ENCARTA COLLEGE DICTIONARY 1383 (2001).¹ Anyone who has ever operated an e-mail account is familiar with spam. Spam is the twenty first century version of junkmail and over the last few years has quickly become one of the most popular forms of advertising over the Internet, as well as one of the most bothersome. See Scot N. Graydon, Much Ado About Spam: Unsolicited Advertising, the Internet, and You, 32 ST. MARY'S L.J. 77, 81-82 (2000). UBE is particularly attractive to advertisers because of its minimal start up costs and the fact that the marginal cost of sending additional e-mail messages is practically zero. See Michael A. Fisher, The Right to Spam? Regulating Electronic Junk E-mail, 23 COLUM.-VLA J.L. & ARTS 357, 377 (2000).

Spam affects e-mail servers and thus the e-mail service to the consumer in several ways. Computer servers process and distribute e-mail transmitted between an ISP's subscribers and between an ISP's subscribers and other Internet users. The system must spend time and resources processing all e-mail, legitimate as well as spam. When an ISP's servers face an onslaught of large amounts of UBE, the deluge can overcome its computer servers and impair the e-mail delivery system for a substantial period of time. Spam makes up a substantial portion of all e-mail traffic, consuming massive amounts of network bandwidth, memory, storage space, and other resources. See David Sorkin, Technical and Legal Approaches to Unsolicited Electronic Mail, 35 U.S.F.L. REV. 325, 336 n. 48 (2001); See also Graydon, 32 ST. MARY'S L.J. at 83. Most ISPs have a stated policy against the transmission of UBE over their systems to...