Malcomson v. Imvu ( 2019 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
SCOTT ALAN MALCOMSON, Plaintiff/Appellant,
v.
IMVU, INC., Defendant/Appellee.
No. 1 CA-CV 18-0596
FILED 5-30-2019
Appeal from the Superior Court in Maricopa County
No. CV2018-092198
The Honorable Christopher T. Whitten, Judge
AFFIRMED
COUNSEL
Scott Alan Malcomson, Mesa
Plaintiff/Appellant
Dickinson Wright PLLC, Phoenix
By Andrew J. Alvarado, J. Gregory Cahill
Counsel for Defendant/Appellee
MEMORANDUM DECISION
Judge Maria Elena Cruz delivered the decision of the Court, in which
Presiding Judge Jennifer B. Campbell and Judge James B. Morse Jr. joined.
MALCOMSON v. IMVU
Decision of the Court
C R U Z, Judge:
¶1 Scott Alan Malcomson appeals from the superior court’s
order dismissing his case for lack of personal jurisdiction. We affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Malcomson brought a complaint against IMVU, Inc. alleging
claims for defamation, breach of contract, and breach of the duty of good
faith and fair dealing. Malcomson alleged that the website FurAffinity is a
division of IMVU, headquartered in California. Malcomson also alleged
that FurAffinity violated its terms of service and code of conduct, engaged
in defamatory statements against him, and permanently terminated his
account.
¶3 IMVU moved to dismiss alleging that the superior court
lacked personal jurisdiction, among other issues. IMVU contended that all
of the traditional bases of personal jurisdiction did not exist. IMVU
attached an affidavit from its president, Kevin Henshaw, declaring that
IMVU is a Delaware corporation with its headquarters in California and
that it does not (1) own or lease any property in Arizona; (2) pay taxes in
Arizona; nor (3) have an office, employees, equipment, operations, bank
accounts, telephone numbers, or fax numbers in Arizona.
¶4 After oral argument, the superior court found it lacked
jurisdiction and granted IMVU’s motion. Malcomson appealed. We have
jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) section 12-
2101(A)(1).
DISCUSSION
¶5 The sole issue on appeal is whether the superior court had
personal jurisdiction over IMVU, which we review de novo. Beverage v.
Pullman & Comley, LLC, 232 Ariz. 414, 417, ¶ 10 (App. 2013), aff'd as modified,
234 Ariz. 1 (2014).
¶6 Arizona law permits “long-arm” exercise of personal
jurisdiction to the greatest extent allowable under the United States
Constitution. Ariz. R. Civ. P. 4.2(a); Planning Grp. of Scottsdale, L.L.C. v. Lake
Mathews Mineral Props., Ltd., 226 Ariz. 262, 265, ¶ 12 (2011). Personal
jurisdiction may be either general or specific. Id. at 265, ¶ 13. A state may
exercise general jurisdiction over non-residents whose activities in the state
are exceptionally systematic and continuous, or specific jurisdiction “over
a defendant who has sufficient contacts with the state to make the exercise
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MALCOMSON v. IMVU
Decision of the Court
of jurisdiction ‘reasonable and just’ with respect to that claim.” Beverage,
232 Ariz. at 417, ¶ 8; Wal-Mart Stores, Inc. v. LeMaire, 242 Ariz. 357, 361, ¶ 14
(App. 2017). Malcomson had the burden to show that Arizona could
exercise personal jurisdiction over IMVU. See, e.g., Maloof v. Raper Sales, Inc.,
113 Ariz. 485, 487 (1976); Arizona Tile, L.L.C. v. Berger, 223 Ariz. 491, 493, ¶ 8
(App. 2010).
I. General Jurisdiction
¶7 In his complaint, Malcomson alleged that IMVU “does
business in Maricopa County” and that “[t]he events, actions, or debts
subject of this Complaint occurred in Maricopa County.” IMVU disputed
Malcomson’s jurisdictional allegations and provided evidence that it does
not have substantial or continuous contacts with Arizona. Because IMVU
challenged personal jurisdiction, Malcomson “cannot merely rest on the
bare allegations in his complaint; he must present facts, by affidavit or
otherwise, supporting personal jurisdiction.” Armstrong v. Aramco Servs.
Co., 155 Ariz. 345, 348 (App. 1987).
¶8 In response to IMVU’s motion to dismiss, Malcomson argued
that IMVU’s contacts with Arizona are “substantial, continuous and
systematic” because FurAffinity profited financially from advertisements
placed near works of art uploaded to the website by artists.
¶9 A state has general jurisdiction over a foreign corporation
when the corporation’s “affiliations with the State are so ‘continuous and
systematic’ as to render [it] essentially at home in the forum State.” Wal-
Mart, 242 Ariz. at 361, ¶ 14. But general jurisdiction requires more than
continuous and systematic activity. Id. See also Daimler AG v. Bauman, 571
U.S. 117, 139 n.19 (2014) (general jurisdiction outside the state of
incorporation or forum state may be permissible in an “exceptional case”).
¶10 In Wal-Mart, we held that Wal-Mart, who at the time operated
127 retail locations, 4 distribution centers, employed 33,910 people, spent
$1.5 billion with suppliers, collected $270.3 million in state sales taxes, and
paid $91.5 million in state taxes, was not subject to general personal
jurisdiction in Arizona because there is nothing “exceptional” about its
activities that would give rise to general jurisdiction. 242 Ariz. at 362-63,
¶¶ 20, 26.
¶11 The allegation of general jurisdiction here is more tenuous
than in Wal-Mart. Unlike Wal-Mart, IMVU does not have retail locations,
distribution centers, or pay taxes in Arizona. There is nothing
“exceptional” about IMVU’s website that subjects it to general personal
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MALCOMSON v. IMVU
Decision of the Court
jurisdiction in Arizona. Id. Arizona does not have general jurisdiction over
IMVU.
II. Specific Jurisdiction
¶12 We next analyze whether Arizona may exercise specific
personal jurisdiction over IMVU. A foreign corporation is subject to
personal jurisdiction in Arizona if: (1) it purposefully availed itself of the
privilege of conducting business in Arizona; (2) the claim asserted “arises
out of or relates to” IMVU’s contact with Arizona; and (3) “the exercise of
jurisdiction is reasonable.” Williams v. Lakeview Co., 199 Ariz. 1, 3, ¶ 7 (2000).
¶13 We first examine whether IMVU has purposefully availed
itself to jurisdiction in Arizona. This requirement ensures that IMVU will
not be haled into Arizona “as a result of ‘random,’ ‘fortuitous,’ or
‘attenuated’ contacts.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985). The requisite contacts cannot “be established through the unilateral
activities of the plaintiff; they must instead arise from the defendant’s
‘purposeful’ conduct.” Planning Grp., 226 Ariz. at 266, ¶ 16 (citations
omitted); Batton v. Tenn. Farmers Mut. Ins. Co., 153 Ariz. 268, 272 (1987)
(“[S]tate jurisdiction over foreign defendants is impermissible unless the
defendant, not the plaintiff, has purposefully directed its activities at the
forum state.”).
¶14 In Smith & Wesson, the plaintiff alleged that the defendant was
a California corporation with its principal place of business in California
and that “[t]hrough its website, [defendant] conducts business throughout
the United States, including in Arizona.” Smith & Wesson Corp. v. The
Wuster, 243 Ariz. 355, 360, ¶ 20 (App. 2017). We held there was no personal
jurisdiction because, “accepting as true the allegation regarding
[defendant’s] website does not evidence purposeful conduct directed at
Arizona.” Id. (citing Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 415 (9th
Cir. 1997)) (holding personal jurisdiction over non-resident defendant was
improper when defendant “[had] no contacts with Arizona other than
maintaining a home page that [was] accessible to Arizonans, and everyone
else, over the Internet”).1
1 In his opening brief, Malcomson alleges that the court, relying on
Cybersell, classified FurAffinity as a “passive website.” After review of the
transcript and the orders, the superior court never classified the website as
either “passive” or “interactive.” In fact, after IMVU noted Cybersell’s
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MALCOMSON v. IMVU
Decision of the Court
¶15 However, in Planning Grp., we determined that sending a
copy of a due diligence report, along with a series of directed telephone
calls, e-mails, faxes, and letters to an Arizona plaintiff was sufficient to
establish purposeful contacts for jurisdictional purposes. 226 Ariz. at 268-
69, ¶¶ 26, 31.
¶16 Here Malcomson did not allege, and there is no evidence that,
IMVU directed any reports, telephone calls, e-mails, faxes, or letters
towards him in Arizona.2 In fact, at oral argument, Malcomson admitted
that IMVU did not “specifically target Arizona, they simply do this as a
service for all persons who use the website and engage with them in their
terms of service as parties to those terms of service.” Malcomson confirmed
that IMVU was not singling out their contacts in Arizona “in any way
different than they would anyone in any other state.”
¶17 Relying on Smith & Wesson and Cybersell, the superior court
properly concluded it lacked personal jurisdiction. We agree. IMVU did
not purposefully avail itself to Arizona jurisdiction simply by operating a
website that Arizonans could access, especially when Arizonans were not
using the website disproportionally and were not singled out for
solicitation. Smith & Wesson, 243 Ariz. at 359-60, ¶¶ 19-22.
CONCLUSION
¶18 For the foregoing reasons, we affirm the superior court’s
dismissal of Malcomson’s complaint for lack of jurisdiction.
AMY M. WOOD • Clerk of the Court
FILED: AA
analysis distinguishing passive from interactive websites, the court noted
that it was concerned with whether the website disproportionally reached
into Arizona.
2 IMVU did respond to an e-mail sent by Malcomson with the subject
heading of “LEGAL NOTICE: CEASE & DESIST (Breaches of Covenant in
Support of Terrorist Activities)” alleging that FurAffinity violated its Terms
of Service and Code of Conduct.
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