United States District Court, D. Utah
MEMORANDUM DECISION AND PRELIMINARY INJUNCTION
KIMBALL, UNITED STATES DISTRICT JUDGE
matter is before the court on Defendant Click Sales,
Inc.'s Motion to Dismiss First Amended Complaint for Lack
of Personal Jurisdiction pursuant to Rule 12(b)(2) of the
Federal Rules of Civil Procedure and Plaintiff XMission
L.C.'s Renewed Motion for Preliminary Injunction pursuant
to Rule 65(a) of the Federal Rules of Civil Procedure. On
March 8, 2019, the court held a hearing on the motions. At
the hearing, Plaintiffs were represented by Jordan K. Cameron
and Defendant was represented by Tyler G. Newby and Brian E.
Lahti. The court took the motion under advisement. After
carefully considering the memoranda filed by the parties and
the law and facts relevant to the pending motion, the court
issues the following Memorandum Decision and Order.
is a Utah-based Internet Service Provider,
(“ISP”) founded in 1993, which has offered a
variety of Internet connectivity services throughout the
years. XMission owns all the hardware through which it offers
its services, and its hardware is located in Utah. XMission
has had to consistently upgrade its hardware to deal with
spam problems. Throughout the years, XMission has also
expended significant sums of money, bandwidth, technological
resources, and employee time and resources to deal with the
problems spam causes.
Sales is a Delaware corporation with its principal place of
business in Boise, Idaho. Click Sales does business as
ClickBank and operates an online marketplace and affiliate
marketing program. Because Click Sales does business as
ClickBank, the court will refer to Click Sales as ClickBank
throughout this order. ClickBank's online marketplace
allows third-parties to sell their products on the ClickBank
platform. ClickBank does not sell its own products on the
ClickBank website. By operating the ClickBank online
marketplace, Click Sales facilitates and processes purchases
between buyers visiting the website and the vendors offering
their products for sale on the ClickBank website. ClickBank
charges a fee for processing the transaction.
affiliate marketing program is designed to drive traffic to
websites promoting various ClickBank offers. Third-party
affiliates create accounts with ClickBank in order to promote
offers on ClickBank's website in exchange for commission
payments. ClickBank's website explains the process:
“1. You find a product to promote and create a
customized HopLink. 2. You promote the product online. 3. A
customer clicks on your HopLink, goes to the vendor's
website, and ends up purchasing the product from ClickBank.
3. You receive credit for promoting the sale. Your commission
is calculated based on the net sale price . . . and credited
to your account within two minutes of the sale.”
ClickBank “HopLink” is a link used to direct
traffic to ClickBank offers and to track the affiliates'
traffic for commission purposes. A HopLink can exist in two
forms: (1) an encrypted HopLink that does not identify the
vendor or affiliate to the public, or (2) a readable HopLink
that includes the vendor and affiliate names in the link.
ClickBank provides its affiliates with the tools to encrypt
HopLinks to ensure that the parties responsible for the
emails are hidden from the public. Some affiliates choose to
use encrypted HopLinks to prevent other third parties from
interfering with their HopLinks, which may affect the record
of their transactions and sale proceeds.
vendor selling its products on ClickBank's platform
determines what percentage of the product's sale price it
will share with the marketing affiliate for completed sales.
ClickBank processes the orders and distributes sale proceeds
to the vendor and the affiliate. ClickBank charges its own
service fee to the vendor for processing the sale, as it does
for sales completed without any affiliate promotion.
the ways ClickBank's affiliates transmit the HopLinks is
through emails. The affiliates deliver HopLinks to
prospective customers' in-boxes and drive traffic to
ClickBank offers hosted on various websites. The websites
identify ClickBank as the “retailer of products on this
site.” If a customer purchases a product, ClickBank
earns its fee and pays a commission to the affiliate who
transmitted the HopLink.
requires its affiliates and vendors to abide by
ClickBank's terms of service with respect to promotional
activity, including a requirement that the vendors and
affiliates comply with all federal and state laws and
regulations. In order to determine that its affiliates are
generating legitimate traffic to ClickBank's offers,
“ClickBank will withhold payment of any balance until
an account shows a minimum of 5 sales using at least two of
the following payment methods: American Express . . .
Discovery . . . MasterCard . . . Visa.”
2015 to date, XMission has received over 116, 000 commercial
emails on its Utah servers promoting ClickBank that have
contributed to a spam problem. Each of the emails contains
“HopLinks” through which ClickBank is identified
as the responsible party. XMission's Terms of Service
allow it to opt-out or unsubscribe from email traffic for its
customers. Given the enormous number of ClickBank emails,
XMission has used an automated system to attempt to click on
available unsubscribe links in each of the emails. But the
automated system has not appeared to have had any significant
effect. In a recent declaration from ClickBank's Chief
Technology Officer, it states that ClickBank does not have
any mechanism to unsubscribe email addresses.
claims that, with the exception of limited historical
promotions for digital products about how to use ClickBank,
ClickBank did not send emails promoting products listed on
the ClickBank marketplace. ClickBank also does not review or
approve of the emails its affiliates send in order to
generate commissions within the ClickBank affiliate marketing
has received 30, 800 customer reports of spam from its
customers in relation to the spam emails from ClickBank
affiliates and ClickBank. XMission received nearly 2, 000
customer reports of spam in June and July 2018, and nearly
60% of the ClickBank emails received on XMission's
servers in July 2018 generated customer reports of spam.
2018, XMission filed the present case against ClickBank
alleging that all of the ClickBank emails violate provisions
of the Controlling the Assault of Non-Solicited Pornography
and Marketing Act (“CAN-SPAM”), 15 U.S.C.
§§ 7701-7713. After XMission filed its original
motion for preliminary injunction, it stipulated to stay a
hearing on the motion based on ClickBank's representation
that it would mediate the matter. When it became clear to
XMission that ClickBank had changed its position on
mediation, XMission renewed its motion for preliminary
“personal jurisdiction is a prerequisite to granting
injunctive relief, ” the court will address
ClickBank's motion to dismiss first. National Union
Fire Ins. Co. v. Kozeny, 115 F.Supp.2d 1231, 1236 (D.
Colo. 2000) (citing Citizens Concerned for Separation of
Church and State v. City and County of Denver, 628 F.2d
1289, 1299 (10th Cir. 1980)).
Motion to Dismiss for Lack of Personal
to Rule 12(b)(2) of the Federal Rules of Civil Procedure,
ClickBank moves to dismiss XMission's Complaint for lack
of personal jurisdiction over ClickBank in Utah. XMission has
the burden of demonstrating that the court has jurisdiction
over ClickBank. Shrader v. Biddinger, 633 F.3d 1235,
1239 (10th Cir. 2011).
defeat a motion to dismiss, a plaintiff must make a prima
facie showing of personal jurisdiction. Old Republic Ins.
v. Cont'l Motors, Inc., 877 F.3d 895, 903 (10th Cir.
2017). The court accepts the well-pled allegations of the
plaintiff's complaint as true unless the defendant
contradicts those allegations in affidavits. Kennedy v.
Freeman, 919 F.2d 126, 128 (10th Cir. 1990). If the
parties submit conflicting affidavits, the court resolves any
factual disputes in the plaintiff's favor. Id.
In this case, the parties dispute whether the Declaration of
Peter Ashdown contains admissible evidence. But the evidence
provided in the Declaration is based on his personal
observations, and the court has ...