August 23, 2011
Consumer Reviews at "Local" Review Sites Don't Support Jurisdiction--Wilkerson v. RSL
By Eric Goldman
Wilkerson v. RSL Funding, LLC, 2011 WL 3516147 (Tex. App. Ct. Aug. 11, 2011)
It doesn't bring me a lot of joy to blog another Internet jurisdiction case, but the dispute's substantive issues are important enough to blog this case.
Wilkerson's daughter won the California lottery. RSL approached her to buy the future payouts for a lump sum. The daughter took RSL's deal, but things didn't go well. In response, her dad posted negative reviews of RSL at Yahoo Local and Yelp. In both cases, the review pages allegedly indicated RSL's location, and Wilkerson's reviews indicated he knew the company was located in Houston. He also tried to drum up interest in a class action suit. RSL sued in Texas state court, and Wilkerson interposed a jurisdictional defense.
The majority starts by wisely bypassing the Zippo test. For the number of times it's cited, the Zippo test is often unhelpful and unenlightening. Citing several cases, the majority says the Zippo test would apply to the review site operator but not an individual reviewer:
to the extent that the interactive features of Yahoo! and Yelp are the creations of the owners and operators of those websites, the interactive nature of a large-scale ubiquitous internet presence cannot be fully imputed to an individual user such as Wilkerson for the purpose of determining whether he established minimum contacts with Texas sufficient to justify exercising jurisdiction over him....Thus for purposes of analyzing personal jurisdiction over an individual in a case arising from his internet activity, we decline to reflexively apply the sliding-scale analysis of the interactivity of a commercial internet website to determine jurisdiction over the individual website user.
Amen. This year I added the Illinois v. Hemi 7th Circuit jurisdictional ruling, where the court expressly rejected the Zippo test. Perhaps we're seeing the leading edge of anti-Zippo trend. Personally, I wouldn't shed a tear if the Zippo test were retired--permanently.
The majority instead turns to the "purposeful availment" test. The majority cites the Calder v. Jones case and notes that it looked at the "effects" of the defendant's action, but it doesn't call its test the "Effects test," and I think that affects the result. A consumer reviewer doesn't avail itself of the laws of the state its target is located in, but it might intentionally cause tortious effects in the state. I think the majority mucked this distinction. For example, the majority says:
The evidence merely shows that he performed an internet search for RSL, and that he posted reviews and comments on two different websites where he found an opportunity to do so. Wilkerson made only one express reference to RSL's presence in Texas, stating in his Yahoo! review that phone calls made to offices other than RSL's Houston office are transferred to Houston.
For many courts, this would be enough to satisfy the Effects Test; but it's useless to a purposeful availment test. The dissent points out the problems with the majority's (non-)test.
The majority says that it can't impute the review sites' or review readers' actions against Wilkerson. So even if the review sites aggregate local content that's likely to be read by local readers, the court says it can ignore that. The majority also rejects a lot of RSL's evidence showing geographic intent, saying it wasn't properly authenticated. On that point, the majority says:
The present-day reality of the ever-evolving internet is that the content seen by any particular user is often customized by the website based on the geographic location of the person viewing the website, or the geographic location of the same person's computer servers, or other characteristics associated with the person visiting the webpage. Jurisdiction therefore may not be exercised over a nonresident user based on his use of a website based upon the mere evidence that the website incorporated Texas-related content of an unknown origin, particularly when that evidence only shows the website's content as viewed by a different user at a later time in a presumably different location.
I love this sentiment! Content views may be customized, and it is the responsibility of the plaintiff to address that possibility. I'm glad the majority is asking these kinds of questions. However, under the Effects Test, properly applied, none of this matters. If the plaintiff can show what readers in its local trading area saw, it can show what effect the content may have on those readers. As the dissent says:
Wilkerson's posts were made on websites that distribute reviews of local Houston businesses, specifically referred to RSL's Houston office and to specific employees in the Houston office, made factual statements that complained of RSL's Texas activities as a provider of financial services, and were directed to a medium that would be more likely to reach Texas readers than readers in other states, specifically including actual and potential customers of RSL and of other financial services providers in the Houston area. Furthermore, Texas was the focal point of Wilkerson's posts and of any harm suffered.
Although the majority's analysis is clearly off, it's hardly unprecedented that courts are denying jurisdiction over allegedly defamatory reviews. See the list below. I just wish we had a reliable jurisdictional test that reached that result so we could get there without doctrinal hashes.
I'm not sure where this ruling leaves RSL. Texas just enacted a new anti-SLAPP law with some teeth, so RSL may not want to be in Texas courts anyway. On the other hand, if RSL moves the lawsuit to California, it will run into California's strong anti-SLAPP law. RSL's business is risky enough; perhaps RSL shouldn't gamble any more with potential SLAPPs!
For an example of a more traditional ruling involving a more engaged campaign by the defendant, see Chambers v. Chambers, 2011 WL 3512140 (D. Md. Aug. 8, 2011):
Under the facts alleged, Defendants intentionally directed electronic activity into Maryland with the purpose of causing injury to a Maryland resident. See Silver v. Brown, 382 F. App'x 723, 729–730 (10th Cir. 2010) (holding that defendant's blog, set up in direct response to a business deal and accusing plaintiff of wrongdoing, constitutes an intentional act expressly aimed at the forum state with knowledge that the injury would be felt in that forum). They posted on websites, sent emails to Maryland residents, and created blogs that all contain information regarding a Maryland estate proceeding. Dennis Chambers intentionally sought out Maryland residents when making the alleged defamatory statements about Plaintiff in an effort to harm her reputation. Bonnie Chambers created “HonestChief?” to publicize the Orphans Court case and her disagreement with Plaintiff's handling of it, as evidenced by the blog's content and by the consistent posting of its URL on websites with notably large audiences. These activities go beyond merely “placing information on the Internet.” ALS Scan, 293 F.3d at 712. The manifested intent of Defendants' alleged conduct is to reach Maryland citizens—including Plaintiff--creating a cognizable cause of action in Maryland. See ALS Scan, 293 F.3d at 712. Under the alleged facts, Defendants must “reasonably anticipate being haled into court [here] to answer for the truth of [their] statements.” See Calder, 465 U.S. at 790. Accordingly, Defendants' motion to dismiss for lack of personal jurisdiction will be denied.
* Two Recent Social Media Defendants Avoid Personal Jurisdiction
* Web Host Gets Easy 47 USC 230 Win in Catfight--Johnson v. Arden
* Three Gripers Get Disadvantageous Jurisdictional Appellate Rulings in Defamation Cases
* Ripoff Report Sues Blogger, Loses on Jurisdictional Grounds--Xcentric Ventures v. Bird
* Defamation Lawsuit Against Blogger Dismissed on Jurisdictional Grounds--Fahmy v. Hogge
* Connecticut Blogger Not Subject to Texas Jurisdiction--Healix Infusion v. Helix Health
* Blog Defamation Lawsuit Lacks Jurisdiction--TrafficPower.com v. Seobook.com
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