Hezi Torati,
Plaintiff, v Trenice Simpson, Defendant.
|
502696/12
Plaintiff Attorney:Adam M Levy, Esq
Defendants Attorney: Maria Crimi Speth, Esq.
Yvonne Lewis, J.
Nonparty Xcentric Ventures, LLC, dba ripoffreport.com ("Xcentric"), has moved
this Court for an order quashing the Court's November 12, 2013 Order or, in the
alternative, to modify the Order by deleting Section (vi) thereof. Xcentric moves (1) to
quash on the grounds that the Court lacked personal jurisdiction; and (2) on the basis that
Xcentric is neither a party to this matter nor a nonparty that may be subject to an
injunction, as determined by CPLR 6301 and New York common law. The plaintiff
cross-moves (1) to hold Xcentric in contempt of Court for not complying with the
November 12 Order; and (2) for discovery on the issue of jurisdiction.
Xcentric operates Ripoff Report or www.ripoffreport.com, a website which
provides a forum for consumers to post about their experiences with local businesses.
Reports, comments, and rebuttals are posted for free.Xcentric monitors the content for
obscenity, vulgarity, threats or similar prohibited content but does not determine the
veracity of the statements.XCentric offers businesses and individuals that receive
negative reports, for various fees, the opportunity to enroll in the Corporate Advocacy
Program, where Xcentric [*2]follows up with the parties
to resolve their issues.
Defendant, Trenice Simpson ("Simpson") posted a report on Xcentric's
Ripoff Report website making allegedly defamatory statements against plaintiff, Hezi
Torati. On November 12, 2013, this Court issued a default order declaring that Simpson
committed libel per se by publishing defamatory statements on Xcentric's
website. Section (vi) of the Order enjoined Simpson and Xcentric from continuing to
publish defamatory statements on Ripoff Report. The plaintiff duly served Xcentric with
the November 12 Order on December 10 and December 19, 2013. Xcentric did not
remove the statements at issue from Ripoff Report. Shortly after, on December 23, 2013,
Xcentric filed a Motion to Vacate the November 12, 2013 Order, contending they were
not under the jurisdiction of the court and that pursuant to CPLR 6301 and New York
common law, Xcentric, as neither a party nor a nonparty, is not subject to the injunction.
The plaintiff subsequently filed a memorandum of law in opposition to Xcentric's motion
to vacate and filed a cross-motion against Xcentric. Xcentric filed a reply. Finally, on
March 5, 2014, the plaintiff filed a memorandum of law in support of their
Cross-Motion.
Xcentric contends that it is not subject to the jurisdiction of this Court under
New York's long-arm statute or, in the alternative, that Xcentric has immunity under the
Communications Decency Act. The plaintiff asserts that the November 12 Order is
binding and that jurisdiction does exist because of Xcentric's ties to New York. In the
alternative, the plaintiff requests further discovery on the issue of jurisdiction.
Under New York law, there are two bases for In personam
jurisdiction over an out-of-state defendant' These are general jurisdiction pursuant to
CPLR 301 and long-arm jurisdiction pursuant to CPLR 302. Based on the foregoing
facts, Xcentric claims that the court has no general jurisdiction pursuant to CPLR 301
nor personal jurisdiction pursuant to CPLR 302(a).
Xcentric reports in a sworn affidavit from Adam Kunz, an executive at
Xcentric Ventures, LLC, that Xcentric is an Arizona limited liability company with a sole
place of business in Arizona that has no assets, offices, property, bank accounts, or
employees in New York, nor does it have any agents or conduct business in New York.
Xcentric does not have a mailing address, telephone line, or post office box in New
York, neither does it pay New York income or property taxes Xcentric does business in
Phoenix, Arizona, and its agents, and assets are all located in Arizona Xcentric asserts a
lack of personal jurisdiction because there are not enough ties to New York for New
York's long-arm statute to take effect. Further, argues Xcentric, section 302(a)(2) is
inapplicable to defamation claims, as at issue here.
The court must first look to general jurisdiction pursuant to CPLR 301. A
foreign corporation is subject to general jurisdiction in New York if it has "engaged in
such a continuous and systematic course of doing business' [in New York] that a finding
of its presence' in this jurisdiction is warranted" (Landoil Res. Corp v. Alexander
& Alexander Servs. Inc., 77 NY2d 28, 33, 565 NE2D 488, 490 [1990].) New
York courts focus on the following five factors in determining whether a party does
business in the state: (1) whether the company has an office in New York; (2) whether it
solicits business in New York; (3) whether it has any bank accounts or other property in
New York; (4) whether it has a phone listing in New York; and (5) whether it has
individuals permanently located in New York to promote its interests (See, e.g.,
Seldon v. Direct Response Techs. Inc., 2004 WL 691222, at *4 [SD NY Mar. 31,
2004].)The "[solicitation of business alone will not justify a finding of corporate
presence in New York " on a foreign [*3]corporation
(Laufer v. Ostrow, 55 NY2d 305, 310, 449 NYS2d 456, 459[1982]; accord
Citigroup Inc. v. City Holding Co., 97 FSupp2d 549, 569 [SD NY 2000].) "The
exercise of personal jurisdiction is proper only if the solicitation is both substantial and
continuous, and the defendant engages in other activities of substance in the state"
(See Seldon v. Magedson, 2012 WL 4475274 [SD NY July 10, 2012] citing
Citigroup, 97 FSupp2d at 569 (quoting Landoil Res. Corp v. Alexander &
Alexander Servs. Inc., 918 F2d 1039, 1043-44 [2d Cir. 1990]).) Further, Courts have
found that the "mere existence of a website does not show that a defendant is directing its
business activities towards every forum where the website is visible" (McBee v.
Delica Co., 417 F3d 107, 124 [1st Cir. 2005]; see also Trintec Indus., Inc. v.
Pedre Promotional Prods., Inc., 395 F3d 1275, 1281 [Fed. Cir. 2005].)
According to the Kunz affidavit, XCentric does not have an office in New
York, does not solicit business in New York, has no bank accounts or other property in
New York, no phone listing in New York, and no individuals permanently located in
New York to promote its interests.Further, as already decided by courts in this
jurisdiction, general jurisdiction has been found to be improper. The Court noting noted
that "it is undisputed that Xcentric is not subject to general jurisdiction based on presence
or domicile in New York under CPLR 301 "Intellect Art Multimedia, Inc. v.
Milewski, 2009 WL 2915273, at *5 (Sup Ct. NY County 2009).Specific
Jurisdiction
Section 302(a) of the CPLR authorizes an exercise of jurisdiction over a
defendant when the cause of action arises out of their intentional contact with New York
(See Licci ex rel. Licci v. Lebanses Canadian Bank, SAL, 673 F.3d 50, 60 [2d
Cir. 2012].) There are four subparts to Section 302(a) that allow New York to confer
specific jurisdiction. Sections 302(a)(2) and (3) exclude defamation claims, therefore
jurisdiction cannot be conferred under those sections. Section 302(a)(4) requires
ownership of real property within the state in order to attach. Xcentric has provided
admissible evidence that it holds no property within the state, so Section 302(a)(4) is not
relevant. The court turns to the remaining section, Section 302(a)(1).
A New York court may exercise personal jurisdiction under Section
302(a)(1) over a foreign corporation who "transacts any business" or "contracts anywhere
to supply goods or services in the state" if the cause of action arose out of that transaction
(Deer Consumer Prods., Inc. v.
Little, 35 Misc 3d 374, 938 NYS2d 767 [Sup Ct. NY County 2012] (citing
Lebel v. Tello, 272 AD2d 103, 104, 707 NYS2d 426, 427 [1st Dep't 2000])). "...
to determine the existence of jurisdiction under Section 302(a)(1), a court must decide
(1) whether the defendant transacts any business' in New York and, if so, (2) whether
this cause of action aris[es] from' such business transaction" (Id.)
For the first prong, courts look to the "totality of the defendant's activity
within the state; to decide if it has transacted business in such a way that it constitutes
purposeful activity,' which is defined as some act by which the defendant purposefully
avails [itself] of the privilege of conducting activities within the forum State, thus
invoking the benefits and protections of its laws'" (A-1 Technology, Inc. v. Magedson
2011 WL 11076539 [NY Sup. 2011] citing McKee Electric Co. Inc. v.
Rauland-Borg Corp., 20 NY2d 377, 382 [1976].)
In defamation cases, the transaction of business test is construed much more
narrowly, effectively needing "something more than the distribution of the libelous
statement made within the state to establish long-arm jurisdiction over the person
distributing it" (Best Van Lines Inc. v. Walker, 490 F.3d 239, 248 [2nd [*4]Cir. 2007].) Federal district courts in New York have
"concluded that the posting of defamatory material on a website accessible in New York
does not, without more, constitute transact[ing] business' in New York for the purposes
of New York's long-arm statutes" (Id. at 250 [internal citations omitted].) In fact,
New York courts have rejected jurisdiction over Xcentric time and again (See, e.g.,
Seldon v. Magedson, 2012 Westlaw 4475274 [SD NY July 10, 2012], Intellect
Art Multimedia, Inc. v. Milewski, 2009 NY Slip Op 51912[U], 2009 WL 2915273
[Sup Ct. NY County 2009].)
Effectively, in order for a website to fall under the New York long-arm
statute, there must be something more than passive postings. There is no evidence before
the Court which suggests that Xcentric specifically directs its website towards New
Yorkers. In posting her allegedly defamatory statements, Simpson entered into an
exclusive irrevocable license with Xcentric. Nothing in the record demonstrates that
Xcentric did anything more than exist as a forum for Simpson to post her reviews. As
Xcentric did not actively direct its website towards New Yorkers, this court cannot claim
jurisdiction at this time. To grant jurisdiction in this case would initiate a precedent that
any New Yorker could, by using a website that does not purposefully direct its content
towards New Yorkers, has established the right to bring that website's ownership into
court into New York.
Accordingly, since the Court has no jurisdiction over Xcentric it cannot
consider the plaintiff's cross motion and the Court modifies its Order dated November
12, 2013 by deleting Section (vi) thereof.
This constitutes the decision and order of this Court.
ENTER
_______________________Hon. yvonne lewis, J.S.C.