An Interesting Online Personal Jurisdiction Ruling (No, Really!)–Rotblut v. Terrapinn

Yes, I know “interesting personal jurisdiction case” is an oxymoron, but hear me out.

Jef Rotblut worked at UBO (he has apparently since changed employers) and claimed he “had an ‘excellent reputation and recognized expertise at developing risk[-]averse trading systems and quant strategies.'” Rotblut was based in New York. UBO was a Delaware LLC. “On December 3 and 4, 2013, Mr. Rotblut participated as a panelist in ‘The Trading Show New York 2013,’ hosted by Terrapinn.” Terrapinn was a Delaware company, with a holding company based in the UK. Terrapinn apparently retained a freelance blogger, Lewis C. Wilkins, to blog the conference. Wilkins was based in Illinois but later moved to DC.

On December 17, 2013, Terrapinn posted Wilkins’ blog post, entitled “Panel: ‘Making the trading life cycle more efficient–risk controls, procedures, and compliance’ at the Trading Show NYC 2013” (now a 404 link) to Terrapinn’s “Total Trading” blog. Wilkins’ post contained the line:

Because Jef Rotblut’s trading firm once lost $40 million in about 20 minutes, he highlighted the essential roles of mitigating risk through the software development and testing process.

Except..a different panelist mentioned that loss, not Rotblut. Oops. Rotblut alleges that “Plaintiffs’ ability to raise capital and ongoing discussions with potential investors came to a halt” because of the incorrect sentence.

In response, Rotblut and UBO sued Terrapinn, the holding company, and Wilkins for defamation in Delaware superior court. Wilkins and the holding company moved to dismiss for lack of personal jurisdiction. (Terrapinn was a Delaware company, so it didn’t contest jurisdiction). The court agrees, ruling solely on the terms of Delaware’s long-arm statute without reaching the Constitutional due process analysis. (Section 230 didn’t come up either but it seems like a potentially key defense for Terrapinn and its holding company). Read the opinion if you want the details, but I thought this passage was poignant:

The pending motions require this Court to probe questions of personal jurisdiction at perhaps their most theoretical. Courts across the country increasingly are confronted with cases challenging online conduct and must determine issues of personal jurisdiction over actors engaged in such conduct. These cases highlight the reality that the Internet, which increasingly forms an important part of our day-to-day interactions, exists outside of the state boundaries that define considerations of jurisdiction. The question posed in this case is this: where an allegedly defamatory article caused injury to a Delaware corporation, but the article was posted solely on a website with no connection to Delaware, while the author was outside Delaware, and without any other nexus between either the author, the website’s host, and Delaware, can jurisdiction be maintained against the author of the article and the host of the website? Under settled law in this jurisdiction, the answer is no.

The plaintiffs argue, persuasively, that this conclusion leads to an unfair and inefficient result, because it will require the plaintiffs to pursue multiple causes of actions in different jurisdictions, with the possibility of inconsistent results and the certainty of increased costs. Although that argument has pragmatic appeal, it cannot overcome the constitutional rigors of the question of jurisdiction.

Perhaps this case hits close to home because I have frequently reported on conferences on my blog. I usually include a prominent disclaimer that I’m not repeating speakers’ remarks verbatim, but the case highlights the risks of getting these recaps wrong!

Case citation: Rotblut v. Terrapinn, Inc., 2016 WL 5539884 (Del. Superior Ct. Sept. 30, 2016)