Facebook, Inc. v. Doe

650 S.W.3d 748

FACEBOOK, INC., Appellant

v.Jane DOE, Appellee

NO. 14-19-00854-CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed April 12, 2022

Scott A. Brister, Austin, Kelly Spragins Sandill, Kathryn E. Boatman, Ashley M. Kahn, Reagan W. Simpson, Houston, April Lynn Farris, Houston, Harris County, Collin Joe Cox, Tracy LeRoy, Houston, Jeffrey Andrews, Russell Falconer, Dallas, Kristin A. Linsley, for Appellant Facebook, Inc.

Annie McAdams, Matthew Parmet, Michael T. Gallagher, Pamela McLemore, Houston, David Harris, Craig M. Sico, Jeffrey Richter, Corpus Christi, for Appellee.

Bridgette Begle, Houston, for Appellant Americas Inn.

Willie Ben Daw, III, Houston, for Appellant Texas Pearl Inc.

Michael Scott Barnard, for Appellant Larkin, James.

Panel consists of Chief Justice Christopher and Justices Spain and Poissant.

Margaret "Meg" Poissant, Justice

In this interlocutory appeal, appellant Facebook, Inc., ("Facebook") challenges the denial of its special appearance in appellee Jane Doe's ("Doe") lawsuit alleging that in 2012, after her abuser connected with her through Facebook, she became a victim of sex trafficking. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(7). In four issues that we address as two, Facebook argues the trial court erred when it denied Facebook's special appearance because (1) Texas does not have general jurisdiction over Facebook, and (2) Texas does not have specific jurisdiction over Facebook as to Doe's claim. Because we conclude that Doe established specific jurisdiction over Facebook in Texas, we affirm the trial court's denial of Facebook's special appearance.

I. BACKGROUND

Facebook is a social media company incorporated in Delaware with its principal place of business in California. Facebook has also been registered to do business in Texas as an online social-networking business since 2009.

On October 1, 2018, Doe filed a lawsuit against Facebook alleging negligence, gross negligence, and violations of Texas Civil Practice and Remedies Code § 98.002.¹ See id. § 98.002(a).² Facebook filed a special appearance challenging the trial court's personal jurisdiction and a Rule 91a motion seeking dismissal of all of Doe's claims. See Tex. R. Civ. P. 91a.1 ("Except in a case brought under the Family Code or a case governed by Chapter 14 of the Texas Civil Practice and Remedies Code, a party may move to dismiss a cause of action on the grounds that it has no basis in law or fact."). Doe amended her petition, adding claims for negligent undertaking and products liability, and filed responses to Facebook's special appearance and motion to dismiss.

The trial court denied Facebook's motion to dismiss on May 23, 2019, and denied Facebook's special appearance on October 7, 2019. On October 25, 2019, Facebook filed a notice of appeal seeking review of the denial of its special appearance. That same day, Facebook filed a petition for writ of mandamus in this court, seeking to compel the district judge to set aside the order denying Facebook's Rule 91a motion to dismiss.

This court denied Facebook's mandamus petition. See In re Facebook, Inc. , 607 S.W.3d 839, 839 (Tex. App.—Houston [14th Dist.] 2020, orig. proceeding) (per curiam). Facebook then filed petitions for writs of mandamus with the Supreme Court of Texas involving the underlying case and two other cases, one in the 334th District Court and another in the 151st District Court. Our court abated this special appearance appeal pending resolution of the supreme court proceedings. The supreme court granted Facebook's petitions in part and denied in part, directing the district court judges to dismiss Doe's claims for negligence, gross negligence, negligent undertaking, and products liability, but allowing her statutory human-trafficking claim to proceed. See In re Facebook, Inc. , 625 S.W.3d 80, 83, 98 (Tex. 2021) (orig. proceeding).³ We subsequently reinstated Facebook's appeal from the denial of its special appearance and are left to determine whether Texas has personal jurisdiction over Facebook regarding Doe's statutory human-trafficking claim. See Tex. Civ. Prac. & Rem. Code Ann. § 98.002(a).

A. DOE'S LIVE PLEADING

In her live pleading, Doe alleges that Facebook "has long viewed its company mission to connect people in order to create profit." Facebook "uses the detailed information it collects and buys on its users to direct users to persons they likely want to meet," thereby facilitating human trafficking by identifying potential targets like Doe and connecting traffickers with those individuals. Facebook also "uses algorithms to categorize users into micro-targetable groups" to enable marketers to reach people based on a variety of factors.

Doe alleges, in conjunction with other allegations, that: Facebook is a social-networking business that provides social-networking services; Facebook targets customers and businesses in Texas; Facebook has millions of users in Texas on its platform; Facebook's social-media website allows users to create personalized webpages that contain information about themselves, including identifying information, photographs, videos, interests, recent activities, and links to content from other websites; Facebook collects data on its users’ activities through the website, including but not limited to information regarding contact and group associations, content that users post and interact with, and use of third party websites; Facebook accessed user information of Texas residents and provided that information to third party marketing companies; Facebook sells information collected by Texas residents to third party vendors; Facebook allows advertisers to use data gathered from Facebook's proprietary software to target specific customers and demographics; using proprietary algorithms, Facebook generates targeted recommendations for each user, promoting content, websites, advertisements, users, groups, and events that may appeal to a user based on their usage history; each Facebook user has a personalized experience on Facebook and no two users have the same exact experience; Facebook sends advertisements to Texas customers and advertises its services to Texas customers; Facebook derives substantial revenue from Texas; Facebook hires employees in Texas and targets potential employees in Texas, including but not limited to "managers, moderators, accountants, design specialist, IT support, lawyers, clerks, receptionists, financial advisors, insurance companies, sanitation engineers, purchasing agents, leasing agents, human resources specialists, and other employees who are integral to Facebook's operations throughout Texas and the United States"; one of the largest target segments for advertisers on Facebook is children between thirteen and seventeen years old; Doe was a Facebook user in Texas from the age of thirteen to seventeen years old; Facebook profits off advertisements directed towards minors in Texas on its platform; and "Facebook marketed its platform in Texas and actively sought out Texas as a marketplace for its platform (i.e. product)." Facebook did not deny any of these allegations in its special appearance.⁴

Doe alleged that she was "entrapped" into sex trafficking by a man that connected with her on Facebook's platform when she was fifteen years old. Doe's abuser had several friends in common with Doe and messaged her through Facebook's messaging systems. Doe alleged that Facebook knew of the dangers of sex trafficking and did not warn her of the dangers of sex trafficking on Facebook or of signs of sex traffickers on Facebook. Doe further alleged that her abuser's account contained "warning signs of human trafficking"; that the nature of the messages she received from her abuser contained "red flags" that Facebook should have recognized as grooming behavior; and that should have alerted Facebook that Doe was in danger. "To date, Facebook has taken no reasonable steps to mitigate the use of Facebook by sex traffickers or exploiters using its platform."

As to Doe's claim against Facebook for violating § 98.002, Doe's petition stated that she "incorporates each foregoing allegation." Doe further stated that "Facebook had a duty not to knowingly benefit from trafficking of persons" and that Facebook breached this duty "by knowingly facilitating the sex trafficking of Doe." Doe stated that Facebook facilitated the sex trafficking of Doe by:

a. Increasing profits by not using advertising space for public service announcements regarding the dangers of entrapment, grooming, and recruiting methods used by sex traffickers on Facebook;

b. Increasing profit margins due to lower operations cost of not implementing mandatory public service announcements for those who sign up for Facebook regarding the dangers of entrapment and grooming used by sex traffickers on Facebook;

c. Increasing profit margins due to lower operation costs by not having to hire human trafficking experts to coordinate Facebook's awareness campaign regarding the dangers of entrapment and grooming used by sex traffickers on Facebook;

d. Raising advertising fees by extending its "user base" to include sex traffickers by not engaging in a public service awareness campaign regarding the dangers of entrapment and grooming used by sex traffickers on Facebook;

e. Increasing profit margins due to lower operation cost by not implementing safeguards requiring verification of the identity of all users on Facebook;

f. Increasing profit margins as a result of continued customer loyalty and therefore increased "user" numbers used to extract higher advertiser fees by creating a breeding ground for sex traffickers to stalk and entrap victims[; and]

g. The "per user" profit gained from King Kid, which is estimated yearly by Facebook as the financial value of each Facebook user.

Doe stated that "Facebook has received financial benefits as a result of these acts and omissions by continuing to facilitate human trafficking and the sexual exploitation of minors."

B. FA...