Dangaard v. Instagram, LLC

District Court, N.D. California·Decided July 31, 2023·No. 3:22-cv-01101·Unknown

Opinion

NORTHERN DISTRICT OF CALIFORNIA

and JENNIFER ALLBAUGH, No. C 22-01101 WHA Plaintiffs,

v.

ORDER RE FENIX DEFENDANTS’ INSTAGRAM, LLC, FACEBOOK FRCP 12(B)(2) MOTION TO DISMISS OPERATIONS, LLC, FENIX INTERNET AND RELATED MOTIONS TO SEAL LLC, FENIX INTERNATIONAL LTD., RADVINSKY, and JOHN DOES 1–10, Defendants.

This diversity and putative class action concerns claims of unfair competition and tortious interference with contracts and business relationships. A prior order held defendants’ motion to dismiss under FRCP 12(b)(2) in abeyance pending jurisdictional discovery (Dkt. No. 65). A period of supplemental jurisdictional discovery was then permitted (Dkt. No. 159). With the granted window for jurisdictional discovery now closed, defendants’ motion to dismiss under FRCP 12(b)(2) is GRANTED. Our prior order laid out the facts underlying this action in detail (Dkt. No. 101). In short, plaintiffs Dawn Dangaard, Kelly Gilbert, and Jennifer Allbaugh are adult entertainment content they create, including the website “OnlyFans.” Defendants Fenix International Limited, Fenix Internet LLC, and Leonid Radvinsky (collectively, “Fenix defendants”) own and operate OnlyFans. Defendant Meta Platforms, Inc., owns and operates defendants Instagram, LLC, and Facebook, LLC (collectively, “Meta defendants”). John Does One through Ten were employees of Meta defendants when the claims arose. Plaintiffs allege that defendants conspired in an anticompetitive scheme to boost the popularity of OnlyFans. In addition to OnlyFans, plaintiffs utilize other websites that compete with OnlyFans. The alleged scheme involved Meta defendants reducing web traffic to those OnlyFans competitors, in part by suppressing the online visibility of those who do not exclusively use OnlyFans. This involved blacklisting users such as plaintiffs that utilize competitor websites from Meta defendants’ social media platforms. Plaintiffs allege that Fenix defendants paid Meta defendants to demote or delete plaintiffs’ accounts and posts on Instagram and Facebook, and to label them terrorists such that they were blacklisted from other social media platforms. As such, plaintiffs assert claims of unfair competition and tortious interference with plaintiffs’ contracts and business relationships (with competitors of OnlyFans), as the scheme increased OnlyFans’ revenue while reducing plaintiffs’ overall viewership and revenue. Our prior order denied both Meta and Fenix defendants’ FRCP 12(b)(6) motions to dismiss. Fenix defendants’ FRCP 12(b)(2) motion, however, was held in abeyance pending jurisdictional discovery. That jurisdictional discovery window closed on January 31, 2023 (Dkt. No. 65). A round of supplemental briefing on jurisdiction followed. At the jurisdictional hearing on March 29, 2023, plaintiffs’ counsel produced new evidence that purported to show FedPayments Manager printouts reflecting wire transfers facilitating bribery. Plaintiffs’ counsel had also filed a document the day before the hearing purporting to show evidence of an internal Meta investigation regarding the alleged scheme. Because these developments potentially weighed on plaintiffs’ jurisdictional theory, another two months was given to depose various witnesses and allow a full investigation (Dkt. No. 143). That discovery period that it may verify the purported FedPayments Manager printouts of bribe wire transfers (Dkt. No. 159). A further round of supplemental briefing ensued. Significantly, plaintiffs have recently noticed withdrawal of the paragraphs in their operative complaint and the original whistleblower evidence that relate to bribery by Fenix defendants (Dkt. No. 172). With jurisdictional discovery finally closed, this order follows full briefing and oral argument. To set the scene, only specific personal jurisdiction is at issue here, as plaintiffs do not assert general jurisdiction. The latter refers to the ability of a court to exercise jurisdiction outright, including when claims for relief are otherwise untethered to a defendant’s relationship with the forum. The former by contrast exists when a suit arises out of or is related to the defendant’s contacts with the forum. See Bristol-Myers Squibb Co. v. Superior Ct., 582 U.S. 255, 261–62, (2017). This order assesses the sufficiency of plaintiffs’ asserted basis for jurisdiction: specific personal jurisdiction. In determining whether specific jurisdiction exists over a nonresident defendant, our inquiry “focuses on ‘the relationship among the defendant, the forum, and the litigation.’” Walden v. Fiore, 571 U.S. 277, 283–84 (2014) (quoting Keeton v. Hustler Magazine, Inc., 465 U. S. 770, 775 (1984)). FRCP 4(k)(2), the federal long-arm statute, is inapplicable here because there are no federal claims. See Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 461 (9th Cir. 2007). Because no federal statute otherwise authorizes personal jurisdiction, California law determines personal jurisdiction in this action, and California’s long-arm statute “is coextensive with federal due process requirements.” See Mavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). For a court to exercise specific jurisdiction over a nonresident defendant, three requirements must be met: (1) the defendant must either “purposefully direct his activities” toward the forum or “purposefully avail[] himself of the privileges of conducting activities in the forum”; (2) “the claim must be one which arises out of or relates to the defendant’s forum-related activities”; and (3) “the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.” Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)). The burden is on plaintiff to satisfy the first two prongs of the test. If plaintiff is able to do so, the burden then shifts to defendant to “present a compelling case” that exercising jurisdiction would be unreasonable. Id. at 1068–69 (citations omitted). The first prong contains two distinct concepts: availment and direction. The former usually applies to suits sounding in contract, while the latter applies most readily to suits sounding in tort, such as the instant action. See Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (citations omitted). “In tort cases, we typically inquire whether a defendant ‘purposefully direct[s] his activities’ at the forum state, applying an ‘effects’ test that focuses on the forum in which the defendant’s actions were felt, whether or not the actions themselves occurred within the forum.” Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1206 (9th Cir. 2006); see also Freestream Aircraft (Berm.) Ltd. v. Aero Law Grp., 905 F.3d 597, 606 (9th Cir. 2018) (clarifying application of effects test “when dealing with out-of-forum tortfeasors”). This effects test, based on Calder v. Jo

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