Will Co. v. Doe

1

WILL CO LTD., Plaintiff, v. DOES 1-20, FELLOW SHINE GROUP LIMITED, KAM KEUNG FUNG, Defendants.

No. 3:20-CV-5666-DGE

United States District Court, W.D. Washington, Tacoma

December 19, 2022

Noting Dated: January 6, 2023

REPORT AND RECOMMENDATION

David W. Christel, United States Magistrate Judge

This matter comes before the Court on “Defendants' Memorandum of Law in Support of Motion to Dismiss for Lack of Personal Jurisdiction.” Dkt. 23-1. The Court has reviewed the relevant record and finds Plaintiff has not sufficiently shown this Court has personal jurisdiction over Defendants. Therefore, the Court recommends the Motion to Dismiss (Dkt. 23) be granted and this case be closed.

I. Background

A. Procedural Background

On July 19, 2022, after considering the Motion to Dismiss, the Honorable Robert S. Lasnik found Plaintiff Will Co. Ltd. failed to establish personal jurisdiction. Dkt. 43.^[1]The Court took the Motion to Dismiss under advisement, provided Plaintiff with an opportunity to take jurisdictional discovery from Defendants Fellow Shine Group Limited (“FSG”) and Kam Keung Fung, and stated the Motion to Dismiss would be granted if Plaintiff failed to file a supplemental response. Id. at pp. 11-12. Plaintiff, after multiple extensions of time, filed a supplemental response to the Motion to Dismiss. Dkt. 61.

On August 17, 2022, the undersigned recommended the Motion to Dismiss be granted because the Court lacked personal jurisdiction over Defendants. Dkt. 65. While the Report and Recommendation was pending, the Ninth Circuit Court of Appeals issued its decision in Will Co., Ltd. v. Lee, 47 F.4th 917 (9th Cir. 2022) (“Lee”). Chief Judge David G. Estudillo, the District Judge assigned to this case, determined Lee may impact the precedent the undersigned relied on when issuing the Report and Recommendation. See Dkt. 72. Therefore, Chief Judge Estudillo declined to adopt the Report and Recommendation and referred the matter back to the undersigned “for further review in light of [Lee].” Id.

The parties provided argument on Lee in the Objections and Response to Objections. Dkts. 66, 68. On re-referral, the undersigned is considering only whether Lee impacts the precedent relied on in the Report and Recommendation. Therefore, the Court directed counsel for both Plaintiff and Defendants to meet and confer regarding whether additional briefing was necessary or whether the case is ready for a determination based on the arguments contained in the Objections and Response to Objections. Dkt. 73. The parties filed a Joint Status Report stating they agree that the briefing previously provided to the Court - specifically Plaintiff's Objections to the Report and Recommendation and Defendants' Response to Objections -sufficiently presents the parties' respective arguments and the Motion to Dismiss is ready for determination. Dkt. 74.

B. Factual Background^[2]

Plaintiff Will Co. Ltd., a Japanese limited liability company, manages a library of over 50,000 adult entertainment movies, which it offers to the public for viewing for a fee. Defendant FSG is a British Virgin Islands limited liability company that operates out of Taiwan, and Defendant Fung is a resident of Hong Kong. Plaintiff alleges Defendants jointly own and/or operate the website Avgle.com, which allows users to upload and view adult videos. Will Co. discovered its copyrighted works were being displayed on Avgle.com and filed this lawsuit seeking injunctive relief, damages, disgorgement of profits, and the costs of suit. Defendants have moved to dismiss all claims based on a lack of personal jurisdiction.^[3]

Defendant FSG hired a Hong Kong company, Awesapp Ltd., to provide general software development services related to the creation and maintenance of Avgle.com. Defendant Fung is a director of Awesapp and, working from Hong Kong, performed or oversaw almost every aspect of Avgle.com's development. Awesapp purchased the domain name Avgle.com and adapted an existing website template and source code to fit the new website's needs.^[4] It then took steps to make sure the website was universally accessible. Since its inception, Avgle.com has been hosted on servers in the Netherlands; all of the files that have been uploaded to and displayed on the website are stored on origin servers in that country. To increase access speeds, Awesapp entered into a relationship with Cloudflare, Inc., a U.S. company, to gain access to Cloudflare's content delivery network (“CDN”). A CDN is a network of servers that are strategically placed around the globe to bring content physically closer to the user and reduce delays. The network caches content in edge servers to facilitate transfers, take the load off of origin servers, and avoid bottlenecks in the network. According to its website, Cloudflare has servers in over 200 cities around the world, spanning over 100 countries. Awesapp uses histats.com to track website traffic and obtain visitor analytics.

In addition to his website development and maintenance tasks, Mr. Fung also oversaw Avgle.com's advertising program. Under his direction, FSG contracted with Tiger Media, Inc., d/b/a JuicyAds, a Canadian advertising broker. FSG makes pop-up space on Avgle.com available to JuicyAds, which in turn sells that space to companies or individuals wanting to advertise to Avgle.com users. JuicyAds contracts with the advertisers, negotiating the terms on which the pop-ups will be seen. FSG is not involved in those negotiations, but it surmises that some of the advertisers choose to specify the countries in which their advertisements will appear and/or the type of user at which their advertisements will be targeted. It is unclear whether FSG is paid a flat fee per advertisement or has a profit-sharing arrangement with JuicyAds, but it has earned approximately $300,000 from advertisements placed by JuicyAds. In addition, Avgle.com provides an avenue for direct advertisement inquiries which has, to date, resulted in two advertising agreements with Chinese companies.

II. Discussion

It is Plaintiff's burden to establish that this Court can properly exercise jurisdiction over Defendants' persons. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). Because the motion to dismiss will be decided on the written submissions of the parties rather than an evidentiary hearing, Plaintiff need only make a prima facie showing of jurisdictional facts to withstand dismissal. AMA Multimedia, LLC v. Wanat, 970 F.3d 1201 (9th Cir. 2020). This prima facie standard “is not toothless.” In re Boon Glob. Ltd., 923 F.3d 643, 650 (9th Cir. 2019). While the undisputed allegations of the complaint will be taken as true and conflicts in affidavits will be resolved in Plaintiff's favor, Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004), disputed allegations cannot establish jurisdiction, Boon Glob., 923 F.3d at 650. Rather, Plaintiff must come forward with evidence in support of the jurisdictional facts alleged.

Personal jurisdiction over an out-of-state defendant is proper where permitted by a long-arm statute and where the exercise of jurisdiction does not violate federal due process. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). As Judge Lasnik previously stated, the parties agree Plaintiff is asserting Defendants are subject to specific - not general - personal jurisdiction. See Dkt. 43; see also Dkt. 28 at 9. Therefore, Plaintiff's jurisdictional claim should be evaluated under the federal long-arm statute, Federal Rule of Civil Procedure 4(k)(2), which authorizes the exercise of personal jurisdiction where (1) the claim arises under federal law, (2) defendant is not subject to the personal jurisdiction of any state court, and (3) the court's exercise of jurisdiction over defendant comports with due process. Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 461 (9th Cir. 2007). At issue in this case is the third requirement.

Due process requires a defendant who is not present in the forum to have “certain minimum contacts” with the forum “such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (internal quotation marks omitted). “The due process analysis under Rule 4(k)(2) is nearly identical to traditional personal jurisdiction analysis with one significant difference: rather than considering contacts between [the defendant] and the forum state, we consider contacts with the nation as a whole.” Wartsila N. Am., 485 F.3d at 462. In the context of a copyright infringement claim, a defendant will have sufficient “minimum contacts” with the forum to warrant the exercise of jurisdiction if the defendant (1) “purposefully directed his activities” toward the United States, (2) the claim “arises out of or relates to the defendant's forum-related activities,” and (3) “the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.” AMA Multimedia, 970 F.3d at 1208 (internal citations omitted).

If the plaintiff establishes the first two factors, the defendant “‘must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable' in order to defeat personal jurisdiction.” Harris Rutsky & Co. Ins. Servs Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1132 (9th Cir. 2003) (quoting Burger King v. Rudzewicz, 471 U.S. 462, 477 (1985)). These considerations include the extent of the defendant's purposeful interjection into the forum, the burden on the defendant, conflict of sovereignty with the defendant's state, the forum state's interest, judicial efficiency, the importance of the forum to the...