Stein v. Clarifai, Inc.

526 F.Supp.3d 339

Jordan STEIN, individually and on behalf of others similarly situated, Plaintiff,

v.CLARIFAI, INC., Defendant.

No. 20 C 1937

United States District Court, N.D. Illinois, Eastern Division.

Signed March 16, 2021

Keith James Keogh, Theodore Herbert Kuyper, Gregg M. Barbakoff, Keogh Law, Ltd., Chicago, IL, for Plaintiff.

Amy Yongmee Cho, Erika Anne Dirk, Melissa Anne Siebert, Shook, Hardy & Bacon LLP, Chicago, IL, for Defendant.

OPINION AND ORDER

SARA L. ELLIS, United States District Judge

After learning that Defendant Clarifai, Inc. ("Clarifai"), a technology company based in New York, collected photographs from her OKCupid profile and used her facial information for profit without her consent, Plaintiff Jordan Stein filed this putative class action against Clarifai. Stein alleges that Clarifai violated §§ 15(a), (b), and (c) of the Illinois Biometric Information Privacy Act ("BIPA"), 740 Ill. Comp. Stat. 14/1 et seq. She also brings a claim for unjust enrichment. Clarifai now moves the Court to dismiss the complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) or, in the alternative, for failure to state a claim under Rule 12(b)(6). Because Stein has not alleged sufficient contacts to show Clarifai directly targeted Illinois, the Court does not have jurisdiction over it and so dismisses Stein's complaint without prejudice.

BACKGROUND¹

Clarifai, a technology company incorporated in Delaware and based in New York, specializes in artificial intelligence. It created a face database (the "database") to develop and train algorithms used in its facial recognition technology. In doing so, Clarifai created thousands of unique face templates by scanning biometric information contained in photographs housed in the database and extracting the unique geometry of each face detected therein. Clarifai also provides pre-trained visual recognition models, including a demographic model, that can recognize certain attributes in an image. Since May 2018, Clarifai may have sold fifty-eight demographic models to two customers located in Illinois. These sales brought in approximately seven cents in revenue, as Clarifai bills its customers at a rate of $1.20 per $1,000 operations.

On July 13, 2019, the New York Times published an article that revealed that Clarifai built the database from OKCupid profile pictures. The article further revealed that Clarifai signed an agreement with a large social media company to use its users’ images for training facial recognition algorithms. According to OKCupid, Clarifai contacted it in 2014 in hopes of collaborating on artificial intelligence and facial recognition technology. Clarifai gained access to OKCupid users’ profile photographs from one of its investors, Corazon, a Chicago-based venture capital fund, and its principals, Sam Yagan and Max Krohn, who founded OKCupid. Krohn used his personal email account to provide the photographs to Clarifai's chief executive officer, Matthew Zeiler.²

In 2013, Stein, an Illinois resident, signed up for an account on OKCupid and uploaded roughly five digital photographs of herself to create her user profile; to date, Stein still uses the application. Because Stein's account was active at the time Clarifai obtained profile photographs to create its database, Clarifai has used Stein's profile photographs in its database. At no time did Clarifai inform Stein of the use of her photographs to collect, capture, receive, store, or use her facial information. Instead, Stein learned that Clarifai had gained access to her OKCupid profile photographs from the New York Times profile of Clarifai.

Clarifai asserts it has never developed a business relationship with OKCupid and has no knowledge of where OKCupid users are located. Zeiler states that Clarifai operates a globally accessible website, and while the website is accessible in Illinois, Clarifai does not target its website to residents in Illinois. Clarifai is not registered to do business in Illinois, has no offices or employees in Illinois, has never had property, employees or operations in Illinois, and does not maintain a place of business in Illinois. Zeiler indicates that Clarifai does not target its marketing, sales, or commercial activity towards Illinois, nor does it specifically develop or train facial recognition or artificial technology in Illinois.

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(2) challenges the Court's jurisdiction over a party. Fed. R. Civ. P. 12(b)(2). When a defendant raises a Rule 12(b)(2) challenge, "the plaintiff bears the burden of demonstrating the existence of jurisdiction." Curry v. Revolution Labs., LLC , 949 F.3d 385, 392 (7th Cir. 2020) (citation omitted). If the Court rules on the Rule 12(b)(2) motion without an evidentiary hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. Id. at 392–93 ; N. Grain Mktg., LLC v. Greving , 743 F.3d 487, 491 (7th Cir. 2014). In resolving a Rule 12(b)(2) motion, the Court "accept[s] as true all well-pleaded facts alleged in the complaint," Felland v. Clifton , 682 F.3d 665, 672 (7th Cir. 2012), and "reads the complaint liberally with every inference drawn in favor of [the] plaintiff," GCIU-Emp. Ret. Fund v. Goldfarb Corp. , 565 F.3d 1018, 1020 n.1 (7th Cir. 2009). However, if the defendant submits "evidence opposing the district court's exercise of personal jurisdiction, the plaintiff must similarly submit affirmative evidence supporting the court's exercise of jurisdiction." Matlin v. Spin Master Corp. , 921 F.3d 701, 705 (7th Cir. 2019). The Court "accept[s] as true any facts contained in the defendant's affidavits that remain unrefuted by the plaintiff," GCIU-Emp. Ret. Fund , 565 F.3d at 1020 n.1, but resolves "any factual disputes in the [parties’] affidavits in favor of the plaintiff," Felland , 682 F.3d at 672.

ANALYSIS

Clarifai moves to dismiss Stein's claims against it for four reasons: first, that the complaint lacks allegations sufficient to assert personal jurisdiction over it under Rule 12(b)(2) ; second, if personal jurisdiction does exist, that BIPA does not have extraterritorial application; third, that applying BIPA to Clarifai violates the Dormant Commerce Clause; and finally, that Stein's unjust enrichment claim is duplicative of the BIPA claims. The Court need only address Clarifai's personal jurisdiction argument, as it is dispositive.

In diversity cases, the Court may exercise personal jurisdiction over a defendant only if personal jurisdiction would be proper in an Illinois court. Hyatt Int'l Corp. v. Coco , 302 F.3d 707, 713 (7th Cir. 2002). Illinois allows for personal jurisdiction to the full extent authorized by the Illinois and United States Constitutions. KM Enters., Inc. v. Glob. Traffic Techs., Inc. , 725 F.3d 718, 732 (7th Cir. 2013). Although there may be theoretical differences between the federal and Illinois constitutional standards, the Seventh Circuit has observed that "no Illinois case has provided a definitive explanation" of these differences. Matlin , 921 F.3d at 705. Moreover, both constitutional standards essentially focus on whether exercising jurisdiction over a defendant is fair and reasonable. See KM Enters. , 725 F.3d at 732. Thus, a single inquiry into whether the United States Constitution permits jurisdiction suffices. See, e.g. , Curry , 949 F.3d at 393 ; Illinois v. Hemi Grp. LLC , 622 F.3d 754, 756–57 (7th Cir. 2010) ; see also Wesly v. Nat'l Hemophilia Found. , 2020 IL App (3d) 170569, ¶ 16, 439 Ill.Dec. 481, 148 N.E.3d 221 ("[I]t is generally true that, when federal due process concerns regarding personal jurisdiction are satisfied, so are Illinois due process concerns." (alteration in original) (citation omitted)). Jurisdiction is proper under the Due Process Clause of the United States Constitution if the defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ " Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer , 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940) ). Minimum contacts exist where "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) ; Brook v. McCormley , 873 F.3d 549, 552 (7th Cir. 2017).

Personal jurisdiction comes in two forms: general and specific. uBID, Inc. v. GoDaddy Grp., Inc. , 623 F.3d 421, 425 (7th Cir. 2010). Stein does not contend that this Court has general jurisdiction over Clarifai so the Court limits its analysis accordingly. See Doc. 52 at 5. Specific jurisdiction exists "when the defendant purposefully directs its activities at the forum state and the alleged injury arises out of those activities." Mobile Anesthesiologists Chicago, LLC v. Anesthesia Assocs. of Houston Metroplex, P.A. , 623 F.3d 440, 444 (7th Cir. 2010). The Court looks to the "defendant's suit-related conduct" and its connection to the forum state; "a defendant's relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction." Walden v. Fiore , 571 U.S. 277, 283, 286, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) ; Philos Techs., Inc. v. Philos & D, Inc. , 802 F.3d 905, 915–16 (7th Cir. 2015). The Court considers "whether the conduct underlying the claims was purposely directed at the forum state," looking at whether Clarifai engaged in "(1) intentional conduct (or ‘intentional and allegedly tortious’ conduct); (2) expressly aimed at the forum state; (3) with the defendant's knowledge that the effects would be felt—that is, the plaintiff would be injured—in the forum state." Tamburo v. Dworkin , 601 F.3d 693, 702–03 (7th Cir. 2010).

Stein argues that Clarifai has sufficient minimum contacts with...