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Ciolli v. Iravani

August 27, 2009

ANTHONY CIOLLI
v.
HEIDE IRAVANI, ET AL.



The opinion of the court was delivered by: Legrome D. Davis, J.

MEMORANDUM

Presently before the Court are Defendants Ross Chanin ("Chanin") and ReputationDefender Inc.'s ("ReputationDefender") Motion to Dismiss (Doc. Nos. 70-71), Plaintiff Anthony Ciolli's ("Ciolli") Memorandum of Law in Opposition thereto (Doc. No. 79), Defendants Chanin and ReputationDefender's Reply in further support thereof (Doc. No. 84), Defendant Mark Lemley's ("Lemley") Motion to Dismiss (Doc. No. 69), Plaintiff Ciolli's Memorandum of Law in Opposition thereto (Doc. No. 77), and Lemley's Reply in further support thereof (Doc. No. 86), Defendant Heide Iravani's ("Iravani") Motion to Dismiss (Doc. No. 72), and Plaintiff Ciolli's Memorandum of Law in Opposition thereto (Doc. No. 78). For the reasons that follow, the Motions are granted in part and denied in part.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

While attending law school from August 2004 to May 2007, Plaintiff Ciolli was involved in the administration of the AutoAdmit website, an internet discussion board for the exchange of information on institutions of higher education. Beginning in 2005, pseudonymous visitors to the AutoAdmit website began to post several sexually explicit messages about Brittan Heller ("Heller"), a female student at Yale Law School. In 2007, Iravani, another female student at Yale Law, was the subject of similar posts on AutoAdmit and was also listed on T14 Talent, a website designed to rate the attractiveness of women from the top fourteen law schools in the country.

When Heller and Iravani failed to cause the removal of these posts from the Internet, they hired ReputationDefender, a public relations agency specializing in online reputation management. Chanin, a director at ReputationDefender, handled some aspects of Heller and Iravani's matter. As part of its representation, ReputationDefender launched a campaign to clean up AutoAdmit and to clear the posts directed at Heller and Iravani. Heller and Iravani also retained Lemley of the law firm of Keker & Van Nest LLP ("Keker & Van Nest") and David Rosen ("Rosen") of the law firm of Rosen & Associates, P.C. ("Rosen & Associates"). On June 8, 2007, Heller and Iravani filed a lawsuit in the United States District Court for the District of Connecticut (the "Connecticut Litigation")*fn1 against Plaintiff and 28 pseudonymous individuals for harassing comments made about them in posts to the AutoAdmit and T14 Talent websites. Following an investigation into the identity of the pseudonymous posters, Heller and Iravani amended their complaint on November 8, 2007, removing Plaintiff and naming additional pseudonymous defendants.

Following his dismissal from the Connecticut Litigation, Plaintiff brought the instant action in the Court of Common Pleas of Philadelphia County on March 5, 2008. Defendants removed to this Court on June 3, 2008 on diversity grounds. The Complaint alleges wrongful initiation of civil proceedings and abuse of process claims against Heller, Iravani, Lemley, Keker & Van Nest, Rosen, and Rosen & Associates; libel, slander, publicity placing plaintiff in false light, and tortious interference with contractual relations against Heller, Iravani, Chanin, and ReputationDefender; and unauthorized use of name or likeness and publicity placing plaintiff in a false light against T14 Talent. (Compl. ¶¶ 156-218.) By Order dated February 23, 2009, we dismissed Heller as a defendant from the instant action because Plaintiff had not demonstrated good cause for his failure to serve her with the summons and complaint within the time allotted by Federal Rule of Civil Procedure 4(m) and by the multiple extensions granted by this Court. Also, the parties stipulated on May 15, 2009 that Plaintiff's claims for slander and abuse of process were dismissed without prejudice.

By Order dated March 31, 2009, this Court denied without prejudice Motions to Dismiss brought by Defendants Chanin, ReputationDefender, Lemley, and Iravani so that Plaintiff could conduct jurisdictional discovery. Jurisdictional discovery was completed on April 30, 2009. Now, Defendants Chanin and ReputationDefender renew their Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction as well as Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted;

Defendant Lemley renews his Motion to Dismiss pursuant to Rule 12(b)(2); and Defendant Iravani renews her Motion to Dismiss pursuant to Rule 12(b)(6) as well as Rule 12(b)(2).

II. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 12(b), a party may assert several defenses by motion before filing a responsive pleading. One such defense is the lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). A motion to dismiss for lack of personal jurisdiction "is inherently a matter which requires resolution of factual issues outside the pleadings." Time Share Vacation Club v. Atl. Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984). "When a defendant raises the defense of the court's lack of personal jurisdiction, the burden falls upon the plaintiff to come forward with sufficient facts to establish that jurisdiction is proper." Mellon Bank PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992). To meet this burden, the plaintiff must establish "with reasonable particularity sufficient contacts between the defendant and the forum state to support jurisdiction." Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987). The plaintiff must establish these "jurisdictional facts through sworn affidavits or other competent evidence." Time Share Vacation Club, 735 F.2d at 66 n.9. "Although the plaintiff bears the burden of demonstrating the facts that establish personal jurisdiction," the court must construe any disputed facts in the light most favorable to the plaintiff. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002) (citations omitted).

A complaint may also be dismissed for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When evaluating a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), we must accept as true all factual allegations set forth in the complaint. See Malia v. Gen. Elec. Co., 23 F.3d 828, 830 (3d Cir. 1994). However, "[f]actual allegations must be enough to raise a right to relief above the speculative level," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), and a court "need not credit a complaint's 'bald assertions' or 'legal conclusions,'" Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (internal quotation marks omitted). In other words, "'stating . . . a claim requires a complaint with enough factual matter (taken as true) to suggest' the required element." Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556) (ellipses in original). Therefore, a claim may be dismissed when the facts alleged and the reasonable inferences drawn therefrom are legally insufficient to support the relief sought. See Pennsylvania ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 179-80 (3d Cir. 1988). The court may look to the allegations made in the complaint, the exhibits attached to the complaint, and any documents whose authenticity no party questions and whose contents are alleged in the complaint. Pryor v. Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 560 (3d Cir. 2002). Documents attached to a defendant's Rule 12(b)(6) motion to dismiss may only be considered if they are referred to in the plaintiff's complaint and if they are central to the plaintiff's claims. Id.

III. DISCUSSION

A. Personal Jurisdiction

Whether personal jurisdiction may be exercised over a defendant is a question of law. Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir. 1996).

There are two distinct theories under which personal jurisdiction may be exercised-general jurisdiction and specific jurisdiction. "When a state has general jurisdiction over a party, that party can be haled into court in that state 'regardless of whether the subject matter of the cause of action has any connection to the forum.'" Pennzoil Prods. Co. v. Colelli & Assocs., Inc., 149 F.3d 197, 200 (3d Cir. 1998) (quoting Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992)). Specific jurisdiction, on the other hand, "is present only if the plaintiff's cause of action arises out of a defendant's forum-related activities such that the defendant 'should reasonably anticipate being haled into court' in that forum." Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).

"Under Federal Rule of Civil Procedure 4(e), a district court may assert personal jurisdiction 'over non-resident defendants to the extent permissible under the law of the state where the district court sits.'" Id. (quoting Pennzoil Prods., 149 F.3d at 200). Because Pennsylvania's long-arm statute, 42 Pa. Cons. Stat. Ann. § 5322(b), authorizes Pennsylvania courts "to exercise personal jurisdiction over nonresident defendants to the constitutional limits of the due process clause of the fourteenth amendment," see Remick, 238 F.3d at 255 (quoting Farino, 960 F.2d at 1221), we "look to federal constitutional doctrine to determine [a defendant's] susceptibility to personal jurisdiction in Pennsylvania," Vetrotex, 75 F.3d at 150. "Due process requires that the defendant have 'minimum contacts' in the forum state." Remick, 238 F.3d at 255 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). These minimum contacts "must have a basis in 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Id. (quoting Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 109 (1987)). In addition to calling for minimum contacts, due process also requires that "the exercise of jurisdiction comport with 'traditional notions of fair play and substantial justice.'" Id. (quoting Int'l Shoe, 326 U.S. at 316).

Plaintiff asserts that there is general jurisdiction over ReputationDefender, specific jurisdiction over ReputationDefender, Chanin, Lemley, and Iravani, and both general and specific jurisdiction by imputation over Iravani. Defendants ReputationDefender, Chanin, Lemley, and Iravani challenge these assertions. In their respective motions to dismiss, Defendants argue that the extent of their contacts in Pennsylvania is insufficient to support personal jurisdiction in this case.

i. General Jurisdiction Over ReputationDefender

ReputationDefender describes itself as an "online reputation management solution company" that is incorporated in Delaware with its principal place of business in California. (Defs. Chanin & ReputationDefender's Mot. Dismiss, Ex. E ¶¶ 3-4.) ReputationDefender has no offices in Pennsylvania but has conducted $10,631.42 of business via internet sales with customers who list Pennsylvania as their place of residence. (Id. at Ex. E ¶¶ 5-7.) This business in Pennsylvania originated from approximately 100 different customers and constituted 0.7% of ReputationDefender's total business. (Id. at Ex. E ¶¶ 7, 9.) ReputationDefender admits to having hired eight Pennsylvania residents as part-time contractors who worked remotely over the internet but states that these contractors did not work on any AutoAdmit matter and that, by the time the Complaint in this matter was filed, these contractors were no longer associated with ReputationDefender. (Id. at Ex. E ¶ 11.) At the time of the filing of the Complaint, ReputationDefender also had two part-time contractors who listed Pennsylvania addresses while residing in California to attend Stanford University, but these contractors now list California addresses. (Id. at Ex. E ¶ 12.) According to ReputationDefender, its only contacts with Pennsylvania include Chanin's phone conversation with the University of Pennsylvania Law School's Dean of Students, some phone conversations with student reporters at the Daily Pennsylvanian, a few email and phone communications with Ciolli and Cohen, a visit to the part-time contractors in Pennsylvania lasting a few hours, and a television interview in Pittsburgh, Pennsylvania. (Id. at Ex. A ¶¶ 9-11, Ex. E ¶¶ 10-11, 19-21.)

General jurisdiction can be exercised over a corporation in Pennsylvania where the corporation is incorporated in Pennsylvania, consents to jurisdiction in Pennsylvania, or carries on a continuous and systematic part of its general business within Pennsylvania. 42 Pa. Cons. Stat. Ann. § 5301(a)(2). Because ReputationDefender has never been incorporated in Pennsylvania and has not consented to or waived personal jurisdiction, we need only determine whether ReputationDefender's contacts with Pennsylvania have been "continuous and systematic," Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984), a showing that requires "significantly more than mere minimum contacts," Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987). Indeed, the plaintiff must present "extensive and persuasive" facts demonstrating the defendant's connections with the forum state. Reliance Steel Prods. Co. v. Watson, Ess, Marshall & Enggas, 675 F.2d 587, 589 (3d Cir. 1982) (citations omitted). These connections should reflect the defendant's "purposeful and extensive availment," Provident Nat'l Bank, 819 F.2d at 437 (citing Gulentz v. Fosdick, 466 A.2d 1049 (Pa. Super. Ct. 1983)), such that the defendant could "reasonably anticipate being haled into court," World-Wide Volkswagen, 444 U.S. 286, 297 (1980).

To meet his burden in establishing general personal jurisdiction, Plaintiff primarily relies on two of the contacts listed by ReputationDefender-the contractors from Pennsylvania hired by ReputationDefender and the business conducted by ReputationDefender in Pennsylvania. (Pl.'s Mem. Opp'n Defs. Chanin & ReputationDefender's Mot. Dismiss 3-4.) Plaintiff claims that, although ReputationDefender claims that it has only conducted $10,631.42 in business in Pennsylvania, this business was a part of ReputationDefender's regular course of dealing. (Id. at 3.) Similarly, he asserts that the Pennsylvania citizens who worked for ReputationDefender qualify as agents of the company who formed a continuous and systematic part of ReputationDefender's business. (Id. at 4.)

Plaintiff is correct to point out that the percentage of a defendant's business conducted in the forum state is not necessarily dispositive. Provident Nat'l Bank, 819 F.2d at 437-38. More important than the amount of business conducted in the state is the nature of defendant's business in the state, that is, whether the business dealings are central to the defendant's business and how frequently such dealings occur. Id. at 438. In this case, not only does ReputationDefender's business in Pennsylvania amount to a mere 0.7% of its total business, but the small amount of business conducted by ReputationDefender in Pennsylvania derives from internet sales involving only approximately 100 customers-amounting to less than 3% of ReputationDefender's total customers-over the course of several years. (Pl.'s Mem. Opp'n Defs. Chanin & ReputationDefender's Mot. Dismiss 2-4; Defs. Chanin & ReputationDefender's Mot. Dismiss, Ex. E ¶¶ 5-7.) These remotely performed limited sales are not sufficient for general personal jurisdiction. See Brown v. AST Sports Sci., Inc., No. 02-1682, 2002 WL 32345935, at *6, 8 (E.D. Pa. June 28, 2002) (finding that contacts including 958 direct internet sales in one year to Pennsylvania citizens amounting to 3.7% of the annual total orders was insufficient for general jurisdiction); Molnlycke Health Care AB v. Dumex Med. Surgical Prods. Ltd., 64 F. Supp. 2d 448, 451 (E.D. Pa. 1999) ("[T]he establishment of a website through which customers can order products does not, on its own, suffice to establish general jurisdiction."). There is no evidence that Pennsylvania sales were an essential part of ReputationDefender's business. Indeed, Plaintiff makes no allegations that ReputationDefender specifically targeted Pennsylvania on its website or in any marketing campaign, and the uncontested declaration by ReputationDefender Chief Executive Officer, Michael Fertik, establishes that no such purposeful advertisement was made. (Defs. Chanin & ReputationDefender's Mot. Dismiss, Ex. E ¶ 6.) Also, there is no evidence that ReputationDefender interacted with its few Pennsylvania customers on the kind of regular basis required for continuous and systematic contact. Plaintiff merely argues that the number of customers is "more than de minimis," (Pl.'s Mem. Opp'n Defs. Chanin & ReputationDefender's Mot. Dismiss 4), but this bare conclusion does not establish the extensive and purposeful availment necessary for general jurisdiction.

Similarly, the Pennsylvania citizens hired by ReputationDefender are not sufficient for the exercise of general personal jurisdiction. Regardless of whether the individuals retained by ReputationDefender were agents of the company or simply independent contractors, the temporary and remote nature of these contacts is not sufficiently continuous and systematic to confer personal jurisdiction for claims unrelated to the acts of these individuals in Pennsylvania. Two of the persons working for ReputationDefender listed Pennsylvania addresses on tax forms but worked in California while attending Stanford University. (Defs. Chanin & ReputationDefender's Mot. Dismiss, Ex. E ΒΆ 12.) While this retention created a very limited connection with Pennsylvania, it is insufficient to confer general jurisdiction. Moreover, this contact with Pennsylvania was terminated when these two individuals changed their addresses to California. (Id.) ReputationDefender did have eight others working remotely from Pennsylvania at one time. ...


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