Violation of the Polish web site just isn’t a private jurisdiction within the US – AMA v Wanat
AMA Multimedia is suing Marcin Wanat, Maciej Madon and MW Media, a Poland-based partnership. AMA could only serve Wanat, so he is the only defendant in the lawsuit. He petitioned for release for lack of personal jurisdiction in the United States. The district court agreed. The ninth circle confirmed in 4 opinions of a 3-judge panel: one consensus opinion, two agreements (one from the author of the consensus – it is unusual for the author of the guiding opinion to write an opinion that agrees with him) and a dissent.
"EPorner" is an adult video site that has been uploaded by users. As the court describes, MW Media (the partnership) operates ePorner, and “(t) through MW Media, Wanat supported the operation of ePorner.” Wanat had registered “eprncdn.com” and “epornergay.com” as both users forwarded to ePorner via GoDaddy and Domains by Proxy (in Arizona). He has not registered the domain name ePorner.com.
Wanat has never been to the US or paid taxes here. In addition to registering the two domains above, Wanat has also entered into an agreement with Tiggee, a US-based company, for DNS services (which make it easier for US visitors to access the ePorner website). The content of the ePorner website was stored on Dutch servers. 19.21% of ePorner's visitors come from the USA. The United States is the largest market.
The jurisdiction analysis: The question before the court is whether Wanat's actions reflect "targeted direction" towards the United States or "targeted recourse" to the benefits of the forum. This is like a typical jurisdiction analysis that involves a defendant outside of the state, except that the analysis involves the United States as a whole, rather than examining whether the defendant's act is targeted at a particular state.
The court cited Calder v Jones (who set out the "effects test") and Mavrix Photo v Brand Techs (a relatively new application of the test). Mavrix included celebrity photos, and the defendant there ran a website that focused on "California's celebrity and entertainment industry." The plaintiff was not based in the state of California. The court highlighted the relationship between the content and the forum in general, ruling that the defendant's alleged exploitation of Mavrix's copyrighted material was "part of his exploitation of the California market for his own commercial gain." The court here differentiates Mavrix because nothing in ePorner's subject matter is necessarily targeted to the United States. While the complaint alleged that ePorner contained (allegedly violating) content from US-based producers and actors, that does not necessarily mean that ePorner is focused on exploiting the US market. The court finds that the content of the website is uploaded by users. While it is foreseeable that ePorner will attract a significant consumer base in the US, this is not enough for minimum contacts. The court also differentiates the case from Mavrix on the basis of the different "advertising structures" of the respective websites. In Mavrix, "California website hits drove ad revenue for the website's California advertiser." In contrast, ePorner only adjusts ads based on the user's locale. "Wanat does not control the ads displayed on the website."
The court says that the other contacts do not set an explicit destination either.
Use of Tiggee: The court also found that ePorner did not use Tiggee, one of the fastest DNS providers in the US, convincingly. The court says there is no evidence that Wanat chose Tiggee because it wanted to target the US market or generate more users in the US.
The Discovery Controversy and the Privacy Shield: The District Court denied AMA certain judicial discoveries on the grounds that the disclosure of certain personal data by ePorner in response to AMA's discovery requests could expose Wanat to criminal liability under the Polish Personal Data Protection Act of August 29, 1997. The District Court appointed a special court The Master and the parties gathered their own experts in Polish law to clarify the issue. The special master came to the conclusion that the safe harbor regulations of the PDP do not allow data transmission to the USA. According to the EU decision “Schrems”, the USA does not guarantee a level of data protection that corresponds to EU standards.
AMA argued that the conclusion of the Special Masters ignored the EU's "Privacy Shield Decision", which had been made since its invalidation, which allowed the transfer of data (based on "Standard Contractual Clauses") by companies in the EU to the USA. The court says AMA did not raise this issue in front of the special master. While the appeal perished in the ninth circuit, the EU passed the GDPR, which, according to the AMA, also legitimized the transmission of the requested information. As the court says these arguments were made out of time, the court refuses to consider either the Privacy Shield decision or the GDPR as a possible basis for Wanat to respond to the subpoena without being liable.
The court says there are no "exceptional circumstances" justifying the court's examination of these arguments, although they are not addressed below.
Assess the similarities between Ikuta and Nelson: Justices Ikuta and Nelson disagree on whether the district court can take further investigative steps or whether the case is dead given the court's jurisdiction decision. Judge Ikuta says, "This case is over." Judge Nelson says, "The door may remain slightly open to further investigative proceedings." In pre-trial detention, for example, the district court would like to allow AMA to amend its complaint or to deal with the effects of the GDPR or the Privacy Shield decision on the following jurisdiction decisions. Judge Nelson also points out that the district court could investigate whether MW Media and Madon Wanat's contacts could be attributed.
Judge Gould's dissent: Judge Gould sees Wanat's US contacts as slightly sufficient to transfer jurisdiction. In his view, the decision jeopardizes the ability of the United States courts to hold foreign perpetrators accountable for their actions. Quoting Mavrix extensively, Judge Gould says the allegations point to the "direct conclusion" that the "United States public is an integral part of (ePorner's) business model and profitability." The ad and user base is sufficient, but ePorner's use of a US-based DNS company seals the deal.
Judge Gould notes that the majority finding is based in part on Walden v Fiore, a 2014 Supreme Court case in which the Court ruled that predictability alone was insufficient and that emphasis should be placed on the defendant's own contacts with the Forum state should be. He disagrees that Wanat's contacts under Walden are insufficient. First, the predictability of harm for the plaintiff does not relate to explicit aiming, but rather to the third pen (whether the defendant has caused damage that he knows is likely to be suffered on the forum). According to Walden, individualized targeting will not only determine responsibility, but it is a factor. Second, Walden means that while a plaintiff cannot rely on a plaintiff's contacts with the defendant and the forum to advance the jurisdiction analysis, a defendant's contacts with its users do not fall into this category. Here ePorner's contacts with users are independent of the plaintiff and show the use of the relevant market for commercial purposes, so that personal responsibility is appropriate.
This decision leads to the opposite result of a recent case of the Fourth Circuit, which is based on very similar facts: UMG Recordings v. Kurbanov. Kurbanov also included an offshore site that allegedly violated US copyright law and whose material was user-related in the US. As in this case, relevant domain names were registered through GoDaddy. The defendants also registered registered agents under the DMCA, and the websites used AWS. The court says these are sufficient to transfer jurisdiction to the non-resident defendant. The court examined jurisdiction over both the United States as a whole and the state of Virginia, and went along with the latter. Here is Eric's reaction to this case:
This looks like a slam dunk for defense. A globally available overseas website has done nothing to specifically look at Virginia other than being popular on the internet. The lower court judiciously dismissed the case for lack of personal jurisdiction. The fourth circuit reverses the case and rejects it for further examination.
Kurbanov requested an en banc replay, but it was denied late last month.
The multitude of opinions in the AMA case may pique the interest of other 9th Circle judges if AMA submits its inevitable request for a repeat. The direct conflict with Kurbanov should also be influential.
I found Judge Gould's position compelling. If Mavrix is still a good right, it's hard to argue that there is no personal jurisdiction under Mavrix. His extensive language quotations from Mavrix were particularly effective. Unfortunately, the 9th Circuit did not directly ask whether Walden v. Fiore who came to Mavrix left Mavrix intact, and that's a big question. The panel opinion should have dealt with this issue directly instead of turning it into a footnote. (The 9th Circle decision in Axiom Foods, a 2017 case that also includes a foreign defendant, discusses Mavrix and Fiore, following Fiore.)
The parties spend a lot of time worrying about geo-targeting and, more generally, whether the targeting of advertisements to the residents of the forum reflects targeted usage. Mavrix relied heavily on it, but the panel's decision in this case is more agnostic in terms of role alignment. I tend to agree with Judge Gould on this point too. The targeting is just anecdotal evidence that the company is trying to attract users from the forum. The real question is whether there are material users from the forum. In that regard, the fact that the defendant used the DNS service in this case, which is expressly sold as a service to make the site easier for US users to access, should have been more crucial.
The problem of detection is remarkable, but perhaps it is a sleeper. Unfortunately, it is not used for examination and the court takes it upon itself. It is a big deal for a court to allow a party to use a foreign privacy rule to block civil discoveries. It seemed like the district court put a ton of resources into analyzing this issue, including appointing a special master, but from a 10,000 foot perspective there was certainly a way for AMA to get the data it needed to discover the jurisdiction Needed, without forcing Wanat to disclose personal information about users? If the District Court has allowed Wanat to use the Polish Data Protection Act to completely block this discovery, it appears to be the wrong result for many reasons.
Case citation: AMA Multimedia, LLC v Wanat et al., No. 18-15051. (9th cir. 17th August 2020).
Related Posts: Running Geolocated Advertising Lends Personal Responsibility – UMG Recordings v. Kurbanov