Xmission, L.C. v. Fluent LLC

• Decision Date: 09 April 2020
• Docket Number: No. 18-4161,18-4161
• Citation: 955 F.3d 833
• Parties: XMISSION, L.C. a Utah company, Plaintiff - Appellant, v. FLUENT LLC, a New York limited liability company, Defendant - Appellee, and 9 Four One Media; Above All Offers; The Affiliati Network ; Agora Financial, Defendants.
• Court: U.S. Court of Appeals — Tenth Circuit

955 F.3d 833

XMISSION, L.C. a Utah company, Plaintiff - Appellant,

v.FLUENT LLC, a New York limited liability company, Defendant - Appellee,and9 Four One Media; Above All Offers; The Affiliati Network ; Agora Financial, Defendants.

No. 18-4161

United States Court of Appeals, Tenth Circuit.

FILED April 9, 2020

Dick J. Baldwin, Zimmerman Booher, Salt Lake City, Utah (Troy L. Booher, and Beth E. Kennedy, Zimmerman Booher, Salt Lake City, Utah, and Jordan K. Cameron, Durham Jones & Pinegar, P.C., Lehi, Utah, with him on the briefs), for Plaintiff-Appellant.

Derek A. Newman (Keith Scully, with him on the brief), Newman Du Wors LLP, Seattle, Washington, for Defendant-Appellee.

Before BRISCOE, EBEL, and HARTZ, Circuit Judges.

HARTZ, Circuit Judge.

Plaintiff XMission, L.C. appeals the ruling of the district court dismissing its claims against Fluent LLC for lack of personal jurisdiction over Fluent in Utah. On the record and arguments before us, we must affirm.

I. Background

The information about Fluent in the record is sparse. We have only XMission’s complaint; a declaration by Peter L. Ashdown, XMission’s president and chief technical officer, with exhibits; a declaration by Daniel J. Barsky, Fluent’s general counsel and chief compliance officer; and two Fluent filings with the Securities and Exchange Commission. We accept as true the well-pleaded ("that is, plausible, non-conclusory, and non-speculative") facts alleged in the complaint, Dudnikov v. Chalk & Vermilion Fine Arts, Inc. , 514 F.3d 1063, 1070 (10th Cir. 2008), unless they are controverted by sworn statements, see Shrader v. Biddinger , 633 F.3d 1235, 1248 (10th Cir. 2011). Perhaps XMission could have obtained through discovery some additional information to support jurisdiction; but it conducted no jurisdictional discovery in district court. At the hearing on Fluent’s motion to dismiss for lack of personal jurisdiction, counsel for XMission requested the opportunity to conduct discovery; but the district court rejected the request as untimely, and XMission has not challenged that ruling on appeal.

Fluent is a Delaware limited liability company with its principal place of business in New York. It describes its service as digital marketing; its business model apparently is based on supplying consumer data to businesses. The record contains screenshots from Fluent’s website taken on April 3, 2018. The website touts that "Fluent’s platform is rooted in first-party data collected in real-time on a perpetual basis to evolve how brands target and engage with consumers. We go beyond anonymous pixels and cookies and interact with real people in order to deliver scalable performance marketing programs." J.A., Vol. 1 at 172. It says that "Fluent interacts with millions of registered users across our network and captures six million survey responses from them daily." Id. at 173.

XMission is a Utah limited liability company with its principal place of business in Salt Lake City, Utah. As an internet service provider (ISP), it uses servers and other hardware that it owns and operates in Utah to provide internet access for its commercial and residential customers. It also provides email hosting and other internet-related services. Any email sent to a domain hosted by XMission will arrive on XMission’s email servers in Utah.

XMission’s complaint against Fluent is based on more than 10,000 emails sent from 2015 to early 2018 to more than 1,100 XMission customers in Utah through its servers, allegedly in violation of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), 15 U.S.C. §§ 7701 to 7713 ; 18 U.S.C. § 1037. The CAN-SPAM Act regulates commercial emails. It prohibits the use of false or misleading "transmission information," including deceptive subject headings and domain names, for any commercial email sent to a protected user, 15 U.S.C. § 7704(a)(1) ; and it requires the inclusion of "a valid physical postal address of the sender," id. § 7704(a)(5)(iii). The Act creates a cause of action for ISPs to enforce its provisions. See id. § 7706(g)(1). Statutory damages and attorney fees can be awarded to prevailing ISPs. See id. §§ 7706(g)(3)(A)–(D), (g)(4).

XMission’s complaint alleges that Fluent violated the CAN-SPAM Act by sending or causing to be sent emails through XMission’s servers that (1) had generic "from names" and false or misleading domain and registration information in the header, (2) originated from domains registered with false information, and (3) failed to include the physical address of the sender. It claims that the offending emails resulted in over 5,200 customer complaints to XMission of spam.

The offending emails contain offers to consumers for rewards from major restaurants and retailers such as Chipotle, Starbucks, and Walmart. They appear as though they are being sent from the restaurants and retailers themselves. They instruct the recipient to follow a link to obtain the offered reward. By clicking the link, the recipient is taken to a Fluent-controlled data-gathering domain that prompts the recipient to enter personal information such as name, age and date of birth, gender, email address, social media activity, zip code, and street address. Fluent apparently collects and aggregates the consumer information and sells this personal data to others to assist them in developing targeted marketing campaigns. The record does not disclose whether the email recipients actually obtain any rewards from the named companies or whether Fluent is compensated in any way by those companies for these emails.

According to Barsky’s declaration, Fluent itself did not send the offending emails. He says that Fluent contracts with third parties, called "publishers," who distribute the emails. Each publisher has an "audience" of consumers. Fluent has no involvement with or control over the origination, approval, or delivery of the emails. It does not review the emails before they are sent, nor does it know the locations of the recipients nor decide who should receive the emails. Fluent instructs the publishers to send emails only to consumers who have agreed to receive them. The publishers are compensated by Fluent based on identified "triggering actions," such as when a consumer clicks on an emailed link, visits a designated website, or purchases the advertised product or service.

XMission presented no specific evidence contradicting Barsky’s account of Fluent’s involvement with the emails—it offered no evidence that Fluent itself delivered emails, had a business relationship with Utah publishers, or knew that any publishers were sending emails to Utahns. All it produced on the matter was Ashdown’s declaration that almost 13% of the offending emails were directed to email addresses containing a Utah domain name and some of the emails appeared to have originated from a publisher with a domain name registered in Utah.

Nor was there specific evidence of any other activity of Fluent connected to Utah. According to Barksy’s declaration:

• "Fluent has never been registered to do business in Utah."

• "Fluent has never had any offices of any kind in Utah."

• "Fluent has never employed any persons in Utah."

• "Fluent has never owned or leased any commercial property or property of any kind in Utah."

• "Fluent has never had any assets in the State of Utah."

• "Fluent has never had a telephone or telephone listing in Utah."

• "Fluent has never undertaken to market or advertise in Utah or to target or direct any internet marketing directly to Utah residents."

• "Fluent does not maintain any bank accounts in Utah."

• "Fluent does not have any members or managers that reside in Utah."

• "Fluent does not have regular sales personnel in Utah, nor does it recruit employees in Utah."

J.A., Vol. 1 at 54.¹

Barsky did state that less than .9% of Fluent’s revenue is earned from Utah customers. (XMission calculated from Fluent’s financial statements that this amounted to about $3 million in revenue from Utah during the roughly three-year period in which the offending emails were sent.) But there is no evidence that Fluent generated any of this revenue from the 10,000 offending emails sent through XMission servers in Utah. Indeed, although Fluent’s business model appears, at least in part, to involve selling the consumer data that it aggregates, XMission concedes that nothing in the record shows that Fluent sold the consumer data collected through the offending emails to Utah advertisers or to advertisers in other states. Nor is there any indication that anyone from Utah ever even opened one of these emails, clicked a link, and provided personal information to Fluent, or that Fluent had any knowledge of these emails or contact with XMission before XMission filed suit.

XMission filed suit against Fluent² in February 2018 in the United States District Court for the District of Utah. Fluent moved under Fed. R. Civ. P. 12(b)(2) to dismiss XMission’s claims for lack of personal jurisdiction. The district court granted the motion, holding that it lacked both general jurisdiction and specific jurisdiction over Fluent. We have jurisdiction to hear this appeal under 28 U.S.C. § 1291 and affirm.

II. Discussion

A. Standard of Review

We review de novo the district court’s dismissal for lack of personal jurisdiction. See Old Republic Ins. Co. v. Cont’l Motors, Inc. , 877 F.3d 895, 903 (10th Cir. 2017). The plaintiff has the burden of establishing personal jurisdiction. See OMI Holdings, Inc. v. Royal Ins. Co. of Can. , 149 F.3d 1086, 1091 (10th Cir. 1998). "Where, as in the present case, there has been no evidentiary hearing, and the motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written material, the plaintiff need only make a prima facie showing that jurisdiction exists." Wenz v. Memery Crystal , 55 F.3d 1503, 1505 (10th Cir. 1995). That is, the plaintiff may defeat a motion to dismiss by presenting evidence (either uncontested...