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AMA Multimedia LLC v. Sagan Ltd.

United States District Court, D. Arizona

October 6, 2016

AMA Multimedia LLC, Plaintiff,
Sagan Limited, et al., Defendants.


         Plaintiff AMA Multimedia, LLC, a producer of pornographic material, asserts copyright infringement claims against several entities and one individual associated with the website Sagan, Limited; Cyberweb, LTD; Netmedia Services, Inc.; GLP 5, Inc.; and David Koonar. Defendants GLP and Netmedia - a Michigan corporation and Canadian company, respectively - move to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or, in the alternative, to stay these proceedings pending resolution of an action currently before the Supreme Court of Barbados. Doc. 27. The parties' request for oral argument is denied because the issues have been fully briefed and oral argument will not aid in the Court's decision. See Fed. R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). The Court will deny the stay request and hold the motion to dismiss in abeyance until limited jurisdictional discovery and supplemental briefing are completed.[1]

         I. Background.
 is a video streaming website that generates revenue through its content partnership program and advertising banners. Doc. 16, ¶¶ 56-57. AMA asserts that Defendants Sagan, Cyberweb, Netmedia, and David Koonar are each owners and/or operators of and GLP. Id., ¶¶ 46-47. AMA also alleges that GLP is doing business as Traffic Force, an advertising and publishing network that provides end-user traffic to websites for profit. Doc. 16, ¶ 47. Defendants respond that Cyberweb is the owner/operator of Doc. 27-3 at 3, ¶15.

         In September 2012, AMA joined's Content Partnership Program by entering into a content partner revenue sharing agreement (“CPRA”) with GIM Corp. (“GIM”). Doc. 33 at 6; Doc. 27-3 at 17. AMA agreed to the CPRA by completing an automated process at Doc. 33 at 6. There was no direct contact between AMA and any of the Defendants. Id. The CPRA granted GIM a license to use content provided by AMA on websites whose advertisements are controlled by Traffic Force. Id. The CPRA dictated the manner and form in which AMA would provide content, and AMA granted GIM a license only for content provided under the CPRA. Id.

         In November 2015, AMA became aware that had displayed 64 of AMA's copyright registered works over 110 separate affiliated URLs. Doc. 16 at ¶ 78. In December 2015, AMA provided Defendants' counsel with a draft complaint and settlement offer regarding the alleged infringement. Doc. 33 at 2. According to AMA, over the next four months “Defendants provided a string of delays and misrepresentations about the matters and settlement negotiations.” Id. In April 2016, AMA presented Defendants with an amended complaint and a “deadline to choose between accepting a settlement offer or hav[ing] the case filed in U.S. District Court, for the District of Arizona.” Id. at 3. Defendants requested an extension until April 28, 2016 to consider the settlement offer, and AMA agreed. Id.

         On April 27, 2016, Cyberweb, Netmedia, Sagan, GLP, GIM, and David Koonar (collectively, “ Entities”) filed a complaint against AMA and Adam Silverman in the Supreme Court of Barbados. Doc. 27-3 at 17-23. The Entities sought (1) injunctive relief to restrain anticipatory breach of the CPRA, (2) a declaration that any disputes related to the CPRA are governed by Barbados law and must be adjudicated in Barbados, (3) a declaration that the Entities are entitled to rely on their rights under the CPRA, (4) a declaration that the Entities are entitled to publicize and distribute materials provided to them by AMA and Silverman, and (5) relief for prior breaches of the CPRA, including damages. Id. at 17-18.

         AMA filed this action the next day, April 28, 2016. Defendants Netmedia and GLP now move to dismiss the claims against them for lack of personal jurisdiction, or, in the alternative, to stay these proceedings pending completion of the Barbados action. Docs. 27, 44, 45.

         II. Personal Jurisdiction. A. Legal Standard.

         “When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction over the defendant.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). “Where, as here, the defendant's motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). “The plaintiff cannot ‘simply rest on the bare allegations of its complaint, ' but uncontroverted allegations in the complaint must be taken as true.” Id. (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). The Court may not assume the truth of allegations in a pleading that are contradicted by an affidavit, but factual disputes are resolved in Plaintiff's favor. Id.

         B. Personal Jurisdiction over Netmedia.

         AMA argues that Netmedia is subject to personal jurisdiction under Federal Rule of Civil Procedure 4(k)(2). Doc. 38 at 7-8. Rule 4(k)(2) provides that serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if (1) the claim arises under federal law, (2) “the defendant is not subject to jurisdiction in any state's courts of general jurisdiction, ” and (3) exercising jurisdiction is consistent with the United States Constitution. Fed.R.Civ.P. 4(k)(2).

         The first factor is satisfied in this case because AMA asserts claims of copyright infringement under federal law. The second factor is satisfied if the defendant “does not concede to jurisdiction in another state.” Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 461 (9th Cir. 2007) (citation omitted). Netmedia does not make this concession.

         Analysis under the third factor - the due process analysis - “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.” Id. at 462. The question, then, is whether Netmedia has sufficient minimum contacts with the United States so that maintenance of the suit here does not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). AMA does not allege that Netmedia's own contacts with the United States satisfy this requirement. AMA instead argues that's contacts with the United States can be imputed to Netmedia because Netmedia is an alter ego or agent of, and's contacts with the United States are sufficient to satisfy due process. Doc. 38 at 12.

         The Court can dispose of the agency argument easily. The Ninth Circuit once recognized an agency theory for personal jurisdiction, Doe v. Unocal Corp., 248 F.3d 915, 928 (9th Cir. 2001), but the Supreme Court rejected this theory, noting that it would “subject foreign corporations to general jurisdiction whenever they have an instate subsidiary or affiliate, ” Daimler AG v. Bauman, 134 S.Ct. 746, 760 (2014). The Court therefore will focus only on AMA's alter ego argument.

         1. Alter Ego Choice of Law.

         The parties do not address what law should govern the alter ego analysis. The parties primarily cite two cases from the Ninth Circuit, Doe v. Unocal Corp., 248 F.3d 915 (9th Cir. 2001), and Ranza v. Nike, 793 F.3d 1059 (9th Cir. 2015). Unocal looked mostly to California law, but also cited federal court decisions from New York, Illinois, Delaware, and Florida. See Unocal, 248 F.3d at 926-27. Ranza applies the alter ego standard set forth in Unocal. See Ranza, 793 F.3d at 1071, ...

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