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Zoobuh, Inc. v. Savicom, Inc.

United States District Court, D. Utah

March 8, 2019

ZOOBUH, INC., a Utah corporation, Plaintiff,
v.
SAVICOM, INC., dba MINDSHARE DESIGN, a California Entity [TERMINATED; DG INTERNATIONAL, a foreign entity; DG INTERNATIONAL LIMITED, LLC, a Delaware entity; Sylvia van Baekel, an individual, Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR DEFAULT JUDGMENT

          JILL N. PARRISH UNITED STATES DISTRICT COURT JUDGE

         This matter is before the court on the Motion for Default Judgment (ECF No. 49) against defendant DG International (“DG International”) filed by Plaintiff ZooBuh, Inc. (“ZooBuh”) pursuant to Fed.R.Civ.P. 55(b)(2). ZooBuh seeks statutory damages and treble damages against DG International for its alleged violations of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), 15 U.S.C. § 7701 et seq. After reviewing the motion for Default Judgment, the court issued an order requesting that ZooBuh submit additional briefing on the issue of damages. ZooBuh thereafter filed its Supplemental Brief Regarding Statutory Damages Calculation (“Supplemental Brief”, ECF No. 71).[1] The court now rules on ZooBuh's motion.

         BACKGROUND

         ZooBuh is a Utah corporation with its principal place of business in Utah County, Utah. ZooBuh provides email services to its customers, and it owns all of the servers, routers, and switches on its network. Every ZooBuh email account is registered, hosted, and serviced through ZooBuh's hardware.

         DG International is a foreign company located in Basseterre, St. Kitts. DG International contracted with DG International Limited, LLC (“DGI LLC”), a Delaware limited liability company, to send emails to persons on DG International's customer lists. The customer list at issue in this case contained email addresses for persons who had supposedly registered for the dating website xdating.com. DGI LLC used the platform of Savicom, Inc., dba Mindshare Design (“Mindshare”)[2] to send email advertisements to the email addresses associated with the xdating.com customer list.[3]

         Zoobuh alleges that it and its customers have received thousands of email advertisements for xdating.com. All of these emails arrived on Zoobuh's email servers, which are located in Utah. The emails contain links to a registration page for xdating.com. Many of the emails contain misleading information: they purport to identify people registered on xdating.com, but in reality the people identified in the emails do not exist and are not users of xdating.com. Rather, the emails are sent from “virtual cupids”: fake users created by DGI LLC and/or DG International who communicate with users in the same way actual users would. As xdating.com's terms and conditions explain:

THIS SITE USES FANTASY PROFILES CALLED “ONLINE FLIRT®” In order to enhance your amusement experience, to stimulate you and others to use our Services more extensively, and to generally sprinkle some sparkle and excitement into the Services of XDATING.COM, we may post fictitious profiles, generate or respond to communications by means of automated programs or scripts that simulate or attempt to stimulate your intercommunication with another real human being (though none really exists and any dialog is generated by programming) . . . .

         Many of the emails at issue are tailored to the recipient's location, in this case, Utah. Some of the emails state, “Hey there [username], these are few [sic] members we've selected for you near Salt Lake City.” The emails identify supposed members of xdating.com living in Salt Lake City, Ogden, Sandy, West Jordan, Cedar Valley, West Valley City, Provo, Midvale, Spanish Form, Orem, and Murray-all cities in Utah. But the members identified whose usernames range from “bigbootylicious” to “sassyhottie37, ” appear to be virtual cupids only. Many images are reused with different usernames and ages.

         According to ZooBuh, neither it nor its customers elected to receive email advertisements for xdating.com. Rather, ZooBuh believes that its customers are being opted-in to receive emails from xdating.com when, in actuality, the customers are attempting to unsubscribe from xdating.com's email list. Specifically, ZooBuh has an auto-unsubscribe feature that does not distinguish between unsubscribe links and marketing links. As such, the auto-unsubscribe “follows all links.” This, according to ZooBuh, has inadvertently resulted in ZooBuh customers being added to the xdating.com customer list.

         ZooBuh alleges that all of the emails at issue violate at least one or more provisions of CAN-SPAM. ZooBuh alleges that it has suffered harms to its business, including financial harm, lost time, and server crashes. ZooBuh regularly receives customer complaints concerning spam email, and some customers have stopped using ZooBuh because of the spam emails.

         DG International was served March 29, 2018. See ECF No. 44. DG International did not file an answer or otherwise respond, and the clerk of court subsequently issued a certificate of default as to DG International. ECF No. 48. ZooBuh originally sought a judgment in the amount of $15, 705.400 against DG International for an alleged 84, 024 violations of 15 U.S.C. § 7704(a)(1) and for an alleged 73, 030 violations of 15 U.S.C. § 7704(a)(1)(A) pursuant to 15 U.S.C. § 7704(g)(3). After ZooBuh filed its motion for default judgment, on June 8, 2018, the court dismissed ZooBuh's second cause of action seeking damages for violations of 15 U.S.C. § 7704(a)(1)(A). The court then requested supplemental briefing on how to calculate statutory damages under 15 U.S.C. § 7706(g). On August 17, 2018, Zoobuh filed its Supplemental Memorandum wherein it claims $12, 603, 600.00 in damages for the 84, 024 alleged violations of 15 U.S.C. § 7704(a)(1).[4]

         ANALYSIS

         ZooBuh moves the court pursuant to Fed.R.Civ.P. 55(b)(2) to enter a default judgment against DG International for its violations 15 U.S.C. § 7704(a)(1). ZooBuh has obtained a default certificate against DG International as required by DUCivR 55-1(a). The court now must address first whether it has jurisdiction[5] over this case and second whether ZooBuh is entitled to the relief it seeks.

         A. Personal Jurisdiction

         The court has subject matter jurisdiction over the case under 15 U.S.C. § 1331 (federal question doctrine) and 15 U.S.C. § 7706(g)(1) (authorizing original jurisdiction), but the court must still address whether it may exercise personal jurisdiction over DG International before it may enter a default judgment against it.

         ZooBuh alleges that the court has personal jurisdiction over all the defendants “because each of them has purposefully availed themselves of the privileges of conducting commercial activity in the forum state.” Am. Compl. ¶ 7. ZooBuh alleges that there is personal jurisdiction over DG International specifically because it “transacts or has transacted business in this district sufficient to subject it to the jurisdiction of this Court.” Id. at ¶ 4. What is more, ZooBuh alleges that “the exercise of jurisdiction is reasonable since Defendants should have known that they would be subject to the jurisdiction and laws of the forum state when they sent, or had commercial emails sent to customers of an email service provider located in Utah.” Id. at ¶ 7.

         Although the court has already held that it may exercise personal jurisdiction over DGI LLC, DG International is a separate foreign entity whose contacts with the state of Utah were not addressed in the court's Memorandum Decision and Order granting in part and denying in part Sauvicom and DGI LLC's Motion to Dismiss (“Order on Motion to Dismiss”), ECF No. 50. But the analysis is essentially the same because DG International is alleged to have acted concurrently with DGI LLC in sending the infringing emails. The court therefore incorporates the Order on the Motion to Dismiss herein, but briefly addresses the issues as applied to DG International. See Or. Mot. Dismiss at 4-17.

         The CAN-SPAM does not provide for nationwide service of process, so Rule 4(k)(1)(A) instructs this court to apply the law of the state in which the court sits. Zoobuh, Inc. v. Williams, No. 2:13-CV-791-TS, 2014 WL 7261786, at *2 (D. Utah Dec. 18, 2014) (applying Utah's long-arm statute to analyze personal jurisdiction because CAN-SPAM does not authorize nationwide service of process). Consequently, Utah law governs personal jurisdiction in this case. See id. Utah's long-arm statute extends jurisdiction over defendants “to the fullest extent permitted by the due process clause of the Fourteenth Amendment.” Utah Code Ann. § 78B-3-201(3). As such, the personal jurisdiction analysis in this case involves a single inquiry: whether the exercise of jurisdiction over the defendant comports with the due process clause. See Old Republic Ins. Co. v. Cont'l Motors, Inc., 877 F.3d 895, 903 (10th Cir. 2017) (holding that personal jurisdiction analysis required a single due process inquiry because Colorado's long-arm statute extends jurisdiction to the Constitution's full extent). Under the due process clause, a court may exercise jurisdiction over a defendant so long as: (1) the defendant purposefully established “minimum contacts” with the forum state, and (2) the assertion of personal jurisdiction comports with fair play and substantial justice. Id. A defendant's contacts, depending on their quality and quantity, may give rise to either general or specific jurisdiction. Id.

         1. General Jurisdiction

         A court may exercise general jurisdiction when an entity's contacts with the forum state are “so ‘continuous and systematic' as to render [it] essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)). A corporation is considered “at home” in its place of incorporation and its principal place of business. Id. at 924. But this is a “high burden” and one that ZooBuh has failed to meet. See Or. Mot. Dismiss at 6-7 (quoting Benton v. Cameco Corp., 375 F.3d 1070, 1081 (10th Cir. 2004)).

         2. Specific Jurisdiction

         In the absence of general jurisdiction, the court may exercise specific jurisdiction over the defendant if due process will be satisfied. This requires analyzing the due process factors of 1) “whether the plaintiff has shown that the defendant has minimum contacts” with the forum and 2) whether “the defendant has presented a ‘compelling case'” that the exercise of jurisdiction does not comport with fair play ...


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