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AMA Multimedia LLC v. Sagan Limited

United States District Court, D. Arizona

January 26, 2017

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

          ORDER

          David G. Campbell United States District Judge

         Plaintiff AMA Multimedia, LLC, a producer of pornographic material, asserts copyright infringement claims against several entities and one individual associated with the website Porn.com. Defendants include Sagan, Limited; Cyberweb Limited; Netmedia Services, Inc.; GLP 5, Inc.; and David Koonar. There are several motions pending. Defendants GLP, Netmedia, Cyberweb, and Koonar move to dismiss for lack of personal jurisdiction. Docs. 27, 49, 70. In the alternative, each Defendant moves to dismiss on the basis of forum non conveniens, or to stay these proceedings pending resolution of an action in Barbados. Id. Also pending are motions for leave to conduct jurisdictional discovery (Doc. 65), for leave to file a sur-reply (Doc. 77), for default (Doc. 82), and to strike a response (Doc. 84). 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).

         Now that jurisdictional discovery has been finished and briefing is complete, the Court concludes that the forum selection clause is conclusive. Courts generally enforce such clauses, and AMA has failed to make the showing necessary to defeat the forum selection clause in this case. The Court therefore will dismiss this action under the doctrine of forum non conveniens for all Defendants other than GLP.[1]

         I. Background.

         A. Case history.

         Porn.com 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 owners or operators of Porn.com. Id., ¶¶ 2-3, 46-47. In September 2012, AMA joined Porn.com's content partnership program by entering into a content partner revenue sharing agreement (“CPRA”) with GIM Corporation. Doc. 33 at 6; see also Doc. 52 at 2. AMA agreed to the CPRA by completing an automated process at PaidPerView.com. Id. 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 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 Porn.com had displayed 64 of AMA's copyrighted works over 110 separate Porn.com 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. 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, “Porn.com Entities”) filed a complaint against AMA in the Supreme Court of Barbados. Doc. 27-3 at 17-23. AMA filed this action the next day, April 28, 2016. Doc. 1. The Court has previously considered motions to dismiss from Defendants GLP, Netmedia, and Sagan. Docs. 27, 42. On October 6, 2016, the Court denied Defendants' motion to stay, but granted AMA leave to conduct supplemental jurisdictional discovery, holding the motions to dismiss in abeyance pending the discovery's completion. Doc. 64. In the same order, the Court noted that Defendants Netmedia and GLP argued for dismissal on the basis of the forum selection clause for the first time in their reply brief. Id. at n.1. The Court ordered the parties to address the forum selection clause issue in the briefing yet to come, instructed that Defendants Netmedia, GLP, and Sagan should not file additional motions to dismiss on the basis of the forum selection, and stated that “[w]hen the Court addresses the issue after completion of the Koonar [and Cyberweb] briefing, it will resolve the issue for the entire case.” Id.[2]

         B. Additional facts from jurisdictional discovery.[3]

         Following completion of supplemental jurisdictional discovery, AMA asserts the following facts. Porn.com is a website, not a separate corporation. It has no officers, directors, or independent corporate books or financial records.

         Defendant Koonar is the common and guiding force behind all Porn.com entities. Koonar is the only known beneficiary of an Ontario, Canada family trust. That trust is the sole shareholder of both 1614985 Ontario, Inc. (“161”) and Imagination Capital, Inc. Koonar is president and sole director of 161. 161 owns GIM Corp. in full and owns 50% of Cyberweb. AMA alleges that Cyberweb is nothing more than one person - Kristen Richardson - living in Barbados and working out of his personal residence to hold records for websites owned by his childhood friend, David Koonar. Cyberweb does not have a physical office or pay any employees other than Richardson.

         Koonar is also the founder of Imagination Capital, Inc. Imagination is the owner of Netmedia. Koonar is both president and a director of Netmedia. All accounting for Cyberweb is done by Netmedia in Canada. Additionally, all technical aspects and day-to-day operation of Porn.com is done by Netmedia.

         Cyberweb entered into a technical service agreement with GIM to facilitate operation of the Porn.com, and in turn GIM subcontracts with Netmedia. Koonar also formed GIM, a Barbados corporation. Koonar is the president, director, and sole employee of GIM. GIM has no other employees, nor a physical location for business. GIM has a technical service agreement with Netmedia to perform all day-to-day functions of Porn.com. Defendants aver that Porn.com is one of thousands of websites Netmedia manages as a subcontractor for GIM.

         AMA asserts that Sagan is a shell corporation used to help shield the owners of Porn.com. Sagan, a Seychelles corporation, is listed as an owner/operator of Porn.com by both Porn.com's terms of service and a form filed with the U.S. Copyright Office. The Court has already ruled it is subject to jurisdiction here. See Doc. 69.

         II. Forum Non Conveniens.

         The CPRA's forum selection clause provides that “[a]ny legal action arising out of or relating to this Agreement must be instituted in a court located in Barbados.” Doc. 27-3 at 30 (CPRA § 10.5). Defendants argue that the clause requires that this action be dismissed for improper venue under Federal Rule Civil Procedure 12(b)(3). Doc. 49 at 15; Doc. 70-1 at 11. AMA opposes Defendants' motion, arguing that: (1) the forum selection clause does not apply in this litigation because AMA's claims of copyright infringement do not arise out of or relate to the CPRA, (2) Defendants are not parties to the CPRA and cannot invoke its forum selection clause, and (3) the clause is unenforceable. Docs. 68, 89.

         A. Legal standard.

         Courts generally enforce forum selection clauses. The Supreme Court has instructed that such clauses are presumptively valid and should not be set aside unless the party challenging the clause shows that enforcement would be unreasonable and unjust, or that the clause is invalid for reasons such as fraud or overreaching. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 14 (1972). Indeed, courts decline to enforce forum selection clauses “[o]nly under extraordinary circumstances unrelated to the convenience of the parties.” Atl. Marine Constr. Co. v. U.S. Dist. Court, 134 S.Ct. 568, 581 (2013).

         A motion to dismiss based on a forum selection clause is treated as an improper venue motion under Rule 12(b)(3). Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). In ruling on a 12(b)(3) motion, the pleadings are not accepted as true and the Court may consider other evidence. Id. Interpretation and enforcement of forum selection clauses are matters of federal law. Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 513 (9th Cir. 1988).

         B. Application of the forum selection clause to AMA's copyright claims.

         AMA argues that the forum selection clause in the CPRA does not apply in this case because its claims involve only copyright law, not contractual issues related to the CPRA. Docs. 68, 89. Defendants argue that the forum selection clause applies for three reasons: (1) the language of the clause is broad and covers all aspects of the parties' relationship, (2) § 7.1 of the CPRA governs AMA's claims, and (3) the allegedly infringing conduct was authorized by the CPRA. Doc. 70-1 at 12-17; Doc. 49-1 at 14-17.

         The Court must look to the language of the clause to determine its scope. After considering the language, the Court will look to relevant case law to determine the effect of the language. In determining the construction and scope of a forum selection clause, the Court may also consider cases evaluating arbitration clauses because “an agreement to ...


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