Lancaster v. Your Story Incorporated

          ORDER

          HONORABLE JENNIFER G. ZIPPS UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendants' Motion to Dismiss for Lack of Personal Jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. 8.) The motion has been fully briefed. Having fully considered the matter, the Court will grant the motion as to Defendant Katherine Daniels. The Court will deny the motion as to Defendants Your Story, Inc., and Donna Zucker.

         BACKGROUND AND FACTUAL ALLEGATIONS

         The factual allegations pertinent to personal jurisdiction are as follows. Plaintiffs Pamela Lancaster and Thomas Frank reside and conduct business in Pima County, Arizona. (Doc. 1, ¶ 1.) Lancaster is an internationally recognized sound healing specialist, life coach, and licensed body therapist. (Id. at ¶ 11.) Frank is a naturopathic physician and shaman who integrates master-level massage and acupuncture with ceremonial practices for restorative wellness. (Id.) Plaintiffs provide their services to guests at Miraval Arizona Resort and Spa, in Tucson, Arizona (the Resort) both by individual treatment and regularly-scheduled retreats. (Id.)

         Plaintiffs' relationship with the Resort is that of independent contractor. (Id. at ¶ 12.) Plaintiffs' business success depends primarily on the marketing of their retreats and services through the Resort website, from their reputation as practitioners, and from client or patient referrals. (Id. at ¶ 13.)

         In 2014, Plaintiffs decided that having a book would be an effective means of engaging with and educating existing and prospective clients or patients. (Id. at ¶ 14.) Having become aware sometime between February and June of 2014 that Donna Zucker was a writer, Plaintiffs contacted Zucker to write a book about their practice. (Doc 13-1, ¶¶ 5-8.) Zucker is a resident of New York and her business, Your Story Inc., is a corporation created under the laws of New York. (Doc. 1, ¶ 2; Doc. 8, p. 2.)

         On August 28, 2014, Plaintiffs and Zucker entered into three agreements: a three page “Your Story, Inc. Contract, ” a two-page “Contract for Book Outline Scope of Services, ” and a two-page “Book Proposal.” (Doc. 1, ¶ 15.) Under the terms of the Contract, Zucker would deliver a book outline and a manuscript to Plaintiffs by February 15, 2015. (Id. at ¶ 16; Doc. 1-2, Ex. A, p. 5.) The Contract specified: “all ideas, plans, improvements, or inventions (the ‘Materials') developed by [Zucker] shall, subject to payment as provided herein, belong to [Plaintiffs].” (Doc. 1, ¶ 17; Doc. 1-2, Ex. A, p. 3.) For their part, Plaintiffs agreed to pay Zucker for reasonable expenses and specifically, Zucker's travel expenses “including flight and lodging from White Plains, NY to Tucson, AZ for the purpose of Conducting Interviews; Attending “Awakening the Divine Self” at Miraval Resort & Spa, January 2-6, 2015.” (Doc. 1-2, Ex. A; p. 2.) The Contract provided signature lines for acceptance for each Plaintiff and for “Donna Zucker, President, Your Story, Inc.” (Id., Ex. A.) The parties agreed that New York law would govern the Contract. (Doc. 1, ¶ 6; Doc. 1-2, p. 4; Doc. 8, p. 2.)

         Zucker presented Plaintiffs with the first draft of the Manuscript in mid-February 2015. (Doc. 1, ¶ 18). Plaintiffs rejected the draft as unsatisfactory. (Doc. 1, ¶ 19.) Plaintiffs subsequently provided Zucker with additional materials and in-person coaching. (Doc. 1, ¶ 20.) Plaintiffs also hosted Zucker at one of Plaintiffs' four-day intensive immersion retreats at the Resort. (Doc. 1, ¶ 21.)

         Zucker completed and delivered a final product of the Manuscript in August 2015. (Doc. 1, ¶ 20-22.) The Manuscript included a story recounting Zucker's personal experiences that came to be known as “Ana's Story.” (Doc. 1, ¶ 23.) Believing Zucker's work to be completed, on August 15, 2015, Plaintiffs paid Zucker the sum of $17, 500 in full and final payment for the Manuscript. (Doc. 1, ¶ 24.)

         Thereafter, Zucker sought to revoke Plaintiffs' use of Ana's Story and volunteered to re-write the manuscript to remove the story without any fee or cost to Plaintiffs. (Doc. 1, ¶ 25.) Plaintiffs accepted the offer. (Doc. 1, ¶ 26.) However, on April 14, 2016, after Zucker had failed to deliver an updated manuscript, Plaintiffs notified Zucker formally of the termination of their relationship. (Doc. 1, ¶ 27.) In May 2016, Plaintiffs received from Zucker a revised manuscript with Ana's Story removed. (Doc. 13-1, Thomas Frank Aff., ¶ 15.) According to Plaintiffs, by this point, they had incorporated their own contributions to the Manuscript and had incorporated the Manuscript into their course materials at the Resort. (Doc. 1, ¶ 29.) Some of these materials were published on the Resort's website to promote Plaintiffs' services. (Doc. 8, pp. 3-4.)

         Zucker and Your Story dispute that Plaintiffs paid all that was owed. (Doc. 8, p. 3.) Zucker asserts that Plaintiffs owe Zucker and Your Story approximately $75, 000 for the additional work and revisions requested by Plaintiffs, and that Plaintiffs have failed to pay despite Zucker's requests for payment. (Id.)

         Defendant Kathleen Daniels is an attorney licensed to practice in the state of New York. (Doc. 8, p. 2.) Daniels is copyright counsel to Zucker and Your Story. (Id.) On December 5, 2017, Daniels, on behalf of Zucker, sent a letter to Steven Rudnitsy, the President and Chief Executive Officer of the Resort, at the Resort's address in Tucson Arizona, threatening legal action in response to the Resort's use of the Manuscript. (Doc. 1., p. 30 and Ex. B.) The letter alleged that “publishing . . . excerpts of the Manuscript without authorization from” Zucker constituted “copyright infringement in violation of federal law.” (Doc. 1, ¶ 31, Ex. B.) The letter stated that although Plaintiffs had hired Zucker to write the Manuscript, copyright ownership in the Manuscript remained with Zucker until receipt of full payment from Plaintiffs, which had not yet occurred. (Doc. 1, ¶¶ 32, 46, 47, 57) According to Plaintiffs, after receiving Daniels's letter, the Resort suspended Plaintiffs' ability to continue offering its regular, immersive retreats, causing Plaintiffs to suffer damages. (Doc 1. ¶¶ 49, 58, 59.)

         On about February 5, 2018, it came to Defendant Zucker's attention that excerpts of the Manuscript were again or still being used on the Resort website to promote Lancaster and Frank's “Awakening the Divine Self” retreats. (Doc. 8, p. 4.) On March 7, 2018, Defendant Daniels sent an email demanding that the infringing excerpts be removed to David Moorhead, Chicago-based Vice President and Assistant General Counsel for Marketing and Intellectual Property for Hyatt Hotels Corporation, the Resort's parent company. (Doc. 8, p. 4; Doc. 8-1, Ex. B, ¶¶ 9, 11.) On March 16, 2018, Moorhead telephoned Daniels to inform her that the material had been taken down. (Doc. 8-1, Ex. B, ¶ 15.)

         On March 9, 2018, Plaintiffs filed the pending action. (Doc. 1.) Plaintiffs assert three claims against Zucker and Your Story: breach of contract (Count 1); tortious interference with contract (Count 2); and defamation per se (Count 4); and one claim -tortious interference with contract, against Daniels (Count 3). Plaintiffs further seek declaratory judgment in their favor for copyright ownership of the Manuscript.

         ANALYSIS

         A. Legal Standard for Specific Jurisdiction

         Arizona's long-arm statute permits courts to exercise personal jurisdiction over nonresident litigants to the maximum extent allowable by the United States Constitution. A. Uberti & C. v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995). A federal court may exercise personal jurisdiction over a defendant consistent with due process if the defendant has “certain minimum contacts” with the relevant forum “such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Plaintiffs do not argue that any Defendant's contacts are so substantial, continuous, and systematic that the Court may exercise general jurisdiction over them. (See Doc. 13.) Therefore, the Court need only decide whether it may exercise specific jurisdiction over each Defendant based on the relationship between the Defendant's forum contacts and the Plaintiffs' claims. See Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006).

         A district court may exercise specific jurisdiction over a defendant if: (1) the nonresident purposefully directs her activities or consummates some transaction with the forum or resident thereof; or performs some act by which she purposefully avails herself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction is reasonable. See, e.g., Picot v. Weston,780 F.3d 1206, 1211 (9th Cir. 2015). “The plaintiff bears the burden of satisfying the first two prongs of the test.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). In evaluating whether the plaintiff has met this burden, the Court takes as true uncontroverted allegations in the ...