UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
Civil Action No. 93-542 (MTB)
JOSEPH MONTORO d/b/a IMAGINE THAT,
Plaintiff,
VS.
PENN WELL PUBLISHING COMPANY,
et al,
Defendants.
This matter having come before the court upon the timely filing of an objection by defendant Ron Scott, Inc., a Texas Corporation ("RSI"), to the Report and Recommendation ("R&R") of the Honorable Stanley R. Chesler, U.S.M.J., regarding RSI's motion dismiss the complaint for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(3); and the court having considered the submissions of the parties without oral argument; and it appearing that the R&R, filed July 26, 1993, recommended that defendant RSI's motion to dismiss the Complaint for lack of personal jurisdiction be denied; and it appearing that Joseph Montoro, an individual doing buisness as Imagine That ("plaintiff") is a resident of New Jersey; and
it appearing that on February 5, 1993 plaintiff filed this action against, inter alia, RSI alleging tortious interference with contractual relations, tortious interference with prospective economic advantage, violations of 15 U.S.C. S 1 et sea. (the Sherman Antitrust Act), and violations of N.J.S.A. s 56:9-1 et sea. (the New Jersey Antitrust Act); and
it appearing that plaintiff is in the business of marketing computer software under the name "Safekey"1; and
it appearing that plaintiff entered into various agreements with defendants Penn Well Publishing Company, a Massachusetts company ("Penn Well"), and Imagetech Publications, Inc., a Maine corporation ("Imagetech"), pursuant to which these defendants would run advertisements for plaintiff in their respective periodicals; and
it appearing that the reason f or RSI's inclusion in this action was one letter sent by RSI from Texas to the president of Penn Wells' publication, Computer Graphics World, in Massachusetts complaining about plaintiff's product and Computer Graphics World's inclusion of plaintiff's advertisements in its publication,2 and RSI's "communicat[ion] with publications other than Computer Graphics World for the purposes of having such Publications terminate acceptance and insertion of Imagine That advertising (complaint at 54); and
it appearing that plaintiff alleges that other sellers and licensees of computer software, including AT&T, also communicated with Computer Graphics World and other publications for the purpose of having such publications terminate acceptances and insertion of Imagine That advertising (Complaint at 50, 55); and
it appearing that as a result of pressure from various advertisers, including defendants AT&T and RSI, defendant publications allegedly breached their advertising contracts with Imagine That;3 and
it being the opinion of this court that a federal district court may exercise personal jurisdiction over a forum nonresident to the extent authorized by the law of the forum state; Provident Nat. Bank v. California Federal Say. & Loan Assoc., 819 F.2d 434, 436 (3rd Cir. 1987); Fed.R.Civ.P. 4(e); and
it being the opinion of this court that the courts of New Jersey allow service upon a non—resident to the full limits permitted by the due process clause of the Constitution;Charles Gendler & Co. v. Telecom Equipment Corp. 102 N.J. 460, 469 (1986); see N.J. Court Rule 4:4—4; and
it being the opinion of this court that the United States Constitution, under the due process clause, requires that a non resident defendant have certain minimum contacts with the forum state so 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, 320 (1945) (quoting Milliken v. Meyer, 311 U.S. 457 (1940)); and
it being the opinion of this court that the plaintiff bears the bu rden of establishing the propriety of jurisdiction over a non—resident defendant; Gehlina v. St. George's School of Medicine. Ltd., 773 F.2d 539, 542 (3rd Cir. 1985); through sworn affidavits or other competent evidence; North Penn Gas Co. v. Comma Natural Gas Corp., 897 F.2d 687, 689 (3rd Cir), cert. Denied, 111 S.Ct. 113 (1990); see Carteret Savings v. Shushan, 954 F.2d 141 (3rd Cir. 1992); and
it being the opinion of this court that to demonstrate the propriety of jurisdiction over a non—resident defendant the plaintiff must demonstrate the existence of either specific jurisdiction or general jurisdiction over the defendant; Provident Nat. Bank, supra; and
it being the opinion of this court that general jurisdiction over RSI does not exist in this court f or the reasons stated in Magistrate Judge Chesler's report (R&R p. 7-12); and
it being the opinion of this court that the facts of this case do not support this court's exercise of specific jurisdiction under the "effects test" articulated by the United States Supreme Court in Calder v. Jones, 465 U.S. 783 (l984)4; and it being the opinion of this court that personal jurisdiction does not exist over defendant RSI; and
it being the opinion of this court, therefore, that the Report and Recommendation should not be adopted;
IT IS on this 13th day of September , 1993 hereby ORDERED that defendant RSI's motion to dismiss the complaint for lack of personal jurisdiction is granted.
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1. Safekey is designed to bypass the security blocks in some software. The benefit of Safekey is that it would allow licensees of software containing security blocks to bypass the blocks and therefore make copies of the computer program or use the program on different computers.
2. "By letter dated August 9, 1991, Mr. Ron Scott, on behalf of Defendant Ron Scott, wrote to Robert P. Holten, President of Computer Graphics World, complaining about Imagine That's ads for Safekey, accusing Imagine That of encouraging software users to engage in criminal activity, and suspending placing any further ads in Computer Graphics World until Ron Scott ‘can be assured that no further advertisements from [Imagine That] will be published' such ads being described by Ron Scott as dealing with products ‘designed to steal revenues from us or encourage our users to engage in criminal activity'." (Complaint at 48)
3. For example, the Complaint at paragraph 51 states: "By letter dated February 12, 1992, Holten of Penn Well's Computer Graphics World advised Imagine That that no further ads would be accepted or run noting that ‘The vendors who make products for which you offer the key to their lock continue to be very upset as well as other software vendors who object based on principle'." (Complaint at 51)
4. All parties agree that the determination of this motion turns on whether the Supreme Court's holding in Calder v. Jones, 465 U.S. 783 (1984), is applicable to the present facts. (R&R at 14; Defendant's written objection to R&R at 4; Plaintiff's opposition to written objection at 4).
In Calder, the Supreme Court endorsed a limited version of the "effects theory". The Court held that specific personal jurisdiction was properly exercised in California over Florida defendants who wrote and edited an allegedly defamatory article about a California resident. The article was published in a nationally circulated magazine which was widely read in California. The Court held that, although both the writing and the publishing of that article occurred outside the forum state, those acts damaged the plaintiff within the forum state and, thus, subjected the defendant to jurisdiction. The Court based its holding on the fact that "California ... [was] the focal point both of the story and of the harm suffered." Id. at 789.
However, the fact that the harm was felt in California was not enough to confer jurisdiction. The Court found that Calder intentionally aimed his tortious action at California and could, therefore, have "reasonably anticipate[d] being haled into court there." Id. at 790. (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)); see Hicklin Engineering, Inc. v. Aidco. Inc., 959 F.2d 738 (8th Cir. 1992).
Although the Court in Calder acknowledged the legitimacy of the effects test, it did so in language closely tied to the facts of that particular case. As this court has stated, "t is still an open question whether, after Calder, due process concerns will permit the use of the effects test in every tort action. It is also an open question whether the ‘effect' may be merely related to the plaintiff's cause of action or be the contact from which the plaintiff's cause of action arose." Educational Testing Service (ETS) v. Katzman, 631 F.Supp. 550, 563 (D.N.J.1986).
Furthermore, the test cannot be based solely on effects if jurisdiction is to meet constitutional standards. There must be an additional finding that the defendant purposefully availed himself of the forum state and could reasonably have foreseen that his action would cause harm in the forum state. World—Wide Volkswagen, supra, 444 U.S. at 297.
The actions of defendant RSI do not warrant application of the effects test. In Calder, the offending article clearly was the cause of any alleged harm. If the defendants had not written the particular article at issue, the plaintiff would not have suffered the alleged harm. Thus, it did not offend "traditional notions of fair play and substantial justice" to require the defendants to defend their actions where the plaintiff lived and suffered the harm caused by the alleged libel. International ShoeCo. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v.Mever, 311 U.s. 457, 463 (1940)).
In the present action, the connection between the defendant, the forum and the litigation is tenuous at best. As the plaintiff's complaint indicates, defendant RSI was not alleged to be the only entity who put pressure on the defendant publishers to discontinue the plaintiff's advertisements (See Complaint 1 50, 51, 55, 56, 59, 62 & 63); indeed, there is no way of knowing whether RSI's letter, as opposed to the entreaties of the other vendors, had any effect at all. Without the clear connection between the defendant and the harm alleged that was present in Calder, this court is unwilling to exercise jurisdiction. To do so would "abolish any meaningful limit on a court's jurisdiction" ETS v. Katzman, 631 F.Supp. at 565; and would be too great a departure from the principles espoused in World—Wide Volkswagen.
