Newsletter Sent to US Customers Insufficient to Establish Personal Jurisdiction
Addressing whether to exercise personal jurisdiction over defendants whose only tie to the forum was an allegedly infringing newsletter sent to 10 California residents, the US Court of Appeals for the Ninth Circuit upheld the district court’s dismissal of a copyright infringement action for lack of personal jurisdiction. Axiom Foods, Inc. v. Acerchem Int’l, Inc., Case No. 15-56450 (9th Cir., Nov. 1, 2017) (Smith, J).
Axiom Foods supplies organic and chemical-free products to customers in the food, beverage and nutraceutical industries. Acerchem International, based in Shanghai, China, is a wholesale manufacturer of health and nutritional products. Acerchem UK is a wholly owned subsidiary of Acerchem International that does not conduct business in the United States.
An Acerchem UK employee sent a newsletter that included Axiom’s “As Good as Whey” and “Non-GMO” logos to 343 email recipients. Axiom applied for and registered its copyrights for these logos with the US Copyright Office, and subsequently sued Acerchem International and Acerchem UK for copyright infringement. Following jurisdictional discovery, the district court granted Acerchem UK’s motion to dismiss for lack of personal jurisdiction. Axiom appealed.
On appeal, the Ninth Circuit relied on the “purposeful direction” or “effects,” assessing whether the defendant “(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Axiom easily satisfied the first prong by showing that Acerchem UK added the logos to the newsletter and sent it. However, Axiom was not able to satisfy the second requirement—whether the intentional act was expressly aimed at the forum state.
Axiom argued that its connections to California, and Acerchem UK’s knowledge of those connections and of Axiom’s ownership of the copyrights, were sufficient to show that Acerchem UK’s actions were expressly aimed at the forum state. Referencing Walden v. Fiore (2014), in which the Supreme Court of the United States clarified that the focus should be the defendant’s contacts with the forum, not the defendant’s knowledge of plaintiff’s connections to the forum, the Ninth Circuit explained that “while a theory of individualized targeting may remain relevant to the minimum contacts inquiry, it will not, on its own, support the exercise of specific jurisdiction, absent compliance with what Walden requires.”
Focusing on Acerchem UK’s contacts with the forum, the Ninth Circuit found that the newsletter “did not create a substantial connection with California.” Of the 343 email addresses that received the newsletter, 55 of the recipients had companies in California, and 14 of the recipients had locations within Los Angeles County. Acerchem UK’s evidence showed that only 10 recipients were physically located in California. Stressing that the focus should be on the defendant’s contact with the forum state itself, and not merely on the people who reside there, the Court found that Axiom’s evidence had no bearing on whether Acerchem UK had minimum contacts with California. Further, “any California contacts Acerchem UK created by sending a single newsletter to 55 recipients of unknown residence are too attenuated and isolated to support the exercise of jurisdiction” (internal citations omitted), and “the fact that 144 email addresses belong to Appellants’ actual or potential partners, customers, or suppliers [does not] compel a different result.”
The Ninth Circuit also declined to exercise jurisdiction over Acerchem UK pursuant to Fed. Rule of Civ. Pro. 4(k)(2), which allows a federal court to exercise personal jurisdiction when it is consistent with the US Constitution and laws and when the defendant is not subject to any state’s courts of general jurisdiction, finding that doing so would not comport with due process.