United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
VIRGINIA M. KENDALL, District Judge.
Plaintiff Scott Dolemba, on behalf of himself and a purported class, brought the instant Complaint alleging that Defendants Citizen Information Associates, LLC ("CIA"), Star Nine Ventures, Inc. ("SNV"), Kyle G. Prall, Ryan H. Russell, and John Does 1-10 violated the Illinois Consumer Fraud Act by committing Intimidation as defined in 720 ILCS 5/12-6. Dolemba further alleges that the Defendants violated the Racketeer Influenced and Corrupt Organizations Act ("RICO") by operating CIA through a pattern of violations of 720 ILCS 5/12-6. Specifically, Dolemba argues that the Defendants committed extortion when they published embarrassing information about his arrest on the Internet and then obtained "fees" for the removal of that information. SNV now moves to dismiss the complaint against it individually pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. SNV contends that it does not maintain the minimum contacts necessary to be pulled into a court located in Illinois. For the reasons stated, SNV's motion is granted.
This action seeks relief for the alleged conduct of the defendants in publishing the names and photographs of individuals who had involvement with a state's criminal judicial process on certain websites. The defendants allegedly listed information purporting to be a statement of the allegations brought against the individuals.
Dolemba is a resident and citizen of Cook County, Illinois. (Doc. 1, Complaint ¶ 9). Dolemba had a booking photo taken in Cook County. (Compl. ¶ 23). CIA publishes crime-related information about a number of states, including Illinois, through its websites. (Doc. 28, Declaration of Ryan Russell ¶ 9). At some point, Dolemba's photo was published on "bustedmugshots.com, " a website operated by CIA. (Compl. ¶s 11 and 24). CIA obtained this photo from law enforcement agencies in Illinois. ( Id. at ¶ 16). Dolemba's booking image was indexed by "google.com" and appeared when searching Dolemba's name on the Internet. ( Id. at ¶ 25).
CIA charges a monthly membership fee to individuals who want to view the booking photos displayed on "bustedmugshots.com." ( Id. at ¶ 27). The fee is paid through the website. ( Id. at ¶ 28). Further, individuals whose images are published on the website can remove their images pursuant to a "removal fee." ( Id. at ¶ 30). On September 12, 2013, Dolemba paid $98 on the website to secure the removal of his photo. ( Id. at ¶ 31). Dolemba alleges that he had no interest in completing a transaction through the website, but that he was compelled to in order to avoid embarrassment. ( Id. at 33).
SNV is a Texas corporation with its principal place of business, registered agent, and office located in Texas. ( Id. at ¶ 14). SNV provides search engine optimization consulting services and affiliate marketing programs to customers. (Russell Decl. ¶ 4). SNV does not have any customers in Illinois, but has done limited work for Illinois customers in the past. ( Id. ). SNV is not registered to do business in Illinois. ( Id. ). Dolemba alleges that SNV designed, created, and operates the websites at issue but SNV maintains that it plays no role in the publishing or maintenance of the websites. (Compl. ¶ 15; Russel Decl. at ¶ 9). SNV does, however, own an equity interest in CIA. ( Id. at ¶ 10). Specifically, SNV had a 76.29% ownership interest in CIA. (Doc. 46-1, Deposition of Ryan H. Russell P. 44). SNV shared office space with CIA for a period of time. (Russell Dep. P. 13). SNV set up the payment portal by which CIA received online payments. ( Id. at P. 32-33). SNV also paid expenses on behalf of CIA at points, but was reimbursed for those expenses. ( Id. at P. 46-47).
STANDARD OF REVIEW
When reviewing a motion to dismiss for lack of personal jurisdiction, the Court accepts all well-pleaded factual allegations in the complaint as true unless controverted by the defendant's affidavits. See Turncock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987), superseded on other grounds. The plaintiff bears the burden of establishing personal jurisdiction when the defendant challenges it. See Felland v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012). When affidavits submitted by the defendant create a factual dispute, all disputed facts are construed in the plaintiff's favor. See Northern Grain Marketing, LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). Where, as here, the Court rules on a defendant's motion to dismiss based on the submission of written materials without holding an evidentiary hearing, the plaintiff "need only make out a prima facie case of personal jurisdiction.'" Id. (quoting Purdue Res Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003)). A federal court sitting in diversity has personal jurisdiction over a defendant only if the courts of the state in which it sits would have personal jurisdiction. See Daimler AG v. Bauman, 134 S.Ct. 746, 753 (2014) ("Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons"); See also RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997).
"A federal court borrowing a state jurisdictional statute may acquire personal jurisdiction only to the extent that the state law authorized service of process." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). The Illinois long-arm statute governs service of process in Illinois and "permits its courts to exercise jurisdiction on any basis permitted by the Illinois and United States constitutions." See 735 ILCS 5/2-209(c); Hyatt, 302 F.3d at 714. Due process requirements for jurisdiction under the Illinois Constitution parallel due process requirements for jurisdiction under the United State Constitution; therefore, the inquiry collapses into whether the exercise of jurisdiction over SNV would comport with the due process requirements of the federal Constitution. See Central States, Southeast and Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 940 (7th Cir. 2000); accord Hyatt, 302 F.3d at 714-716.
To satisfy the requirements of due process, SNV must have "minimum contacts" with Illinois and those minimum contacts must not offend "traditional notions of fair play and substantial justice." See RAR, 107 F.3d at 1275, discussing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). There exist two types of jurisdiction: general and specific. See Hyatt, 302 F.3d at 713, discussing Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 (1984). General jurisdiction is proper only if SNV has "continuous and systematic" contacts with Illinois; if such contacts exist, the Court may exercise personal jurisdiction over SNV even if the case does not arise out of and is not related to SNV's forum contacts. See Hyatt, 302 F.3d at 713. Specific jurisdiction allows the Court to exercise jurisdiction over a defendant whose contacts with the forum state are limited but "the plaintiff's cause of action [arises] out of or [is] related to these minimum contacts that sufficiently comport with fairness and justice. See Central States, 230 F.3d at 943.
A. Internet Activity
Dolemba argues that SNV is subject to jurisdiction because it has, through CIA, specifically directed commercial activity in Illinois via the Internet. Although the issue of what type of Internet activity is sufficient to establish personal jurisdiction in a particular forum has yet to be fully determined by the Seventh Circuit, a jurisprudence of the necessary relationship has emerged at the district court level. See Linehan v. Golden Nuggett, No. 05 C 7030, 2008 WL 4181743, at *5 (N.D. Ill. Sept. 5, 2008). Courts in this district have adopted a "sliding scale" approach that divides Internet activities into three categories: (1) those in which the defendant clearly transacts business in foreign jurisdictions over the Internet; (2) those in which a defendant has posted information on the internet, but has no further communication with potential customers via the Internet; and (3) those in which the defendant operates an interactive website that allows defendant and potential customers in foreign jurisdictions to communicate regarding defendant's goods or services. See, e.g., Richter v. INSTAR Enterprises Int'l, Inc., 594 F.Supp.2d 1000, 1007-08 (N.D. Ill. 2009); George S. May Int'l Co. v. Xcentric Ventures, LLC, 409 F.Supp.2d 1052, 1058 (N.D. Ill. 2006); Berthold Types v. European Mikrograf Corp., 102 F.Supp.2d 928, 932 (N.D. Ill. 2000); Euromarket Designs Inc. v. Crate & Barrell, Ltd., 96 F.Supp.2d 824, ...