Whitney Information Network, Inc. v. Xcentric Ventures, LLC

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUG 1, 2006
No. 06-11888 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________

D. C. Docket No. 04-00047-CV-FTM-29-SPC

WHITNEY INFORMATION NETWORK, INC.,
a Colorado corporation,

Plaintiff-Appellant,

versus

XCENTRIC VENTURES, LLC,
an Arizona limited liability company,
BADBUSINESSBUREAU.ORG,
an Arizona limited liabiity company,
ED MAGEDSON, an individual,

Defendants-Appellees.

________________________

Appeal from the United States District Court
for the Middle District of Florida
_________________________

(August 1, 2006)

Before CARNES, WILSON and PRYOR, Circuit Judges.
PER CURIAM:

Plaintiff Whitney Information Network, Inc. (“Whitney”) appeals from the

district court’s order granting Defendants Xcentric Venture’s (“Xcentric”),

badbusinessbureau.org’s, and Ed Magedson’s (“Magedson”) combined motion to

dismiss for lack of personal jurisdiction. We vacate and remand for further

proceedings.

I. BACKGROUND

Whitney states that it provides “post-secondary educational and training

products and services in the areas of real estate investing, business development,

financial investment and asset protection real estate to students world-wide.”

Among other things, Whitney conducts monthly real estate training programs and

advertises its services through infomercials and on various websites. Whitney also

purports to own statutory and common law rights in various marks that are used in

connection with its educational and training services. When these marks are

entered into an Internet search engine, Whitney states, one of the search results that

appears is a website operated by Defendants.

Defendants operate the websites “www.ripoffreport.com” and

“ripoffrevenge.com,” and allegedly “hold themselves out to the public as a

‘worldwide consumer reporting website and publication, by consumers for

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consumers’ to file and document consumer complaints about ‘companies or

individuals who rip off consumers.’” According to Whitney, Defendants solicit

consumers to submit complaints about any company that has “ripped” the

consumers off, and Defendants then choose to publish certain of these complaints

on their website “www.ripoffreport.com,” thereby implying that the companies

named in the complaints are “ripping off” consumers. Whitney contends that

Defendants do not attempt to verify consumer complaints for accuracy, and seek to

“extort” money from companies complained about on Defendants’ website by

offering to cease publication of the complaints in exchange for a fee.

Complaining that Defendants’s use of its marks was causing consumer

confusion and harming its reputation, Whitney (along with its CEO Russ Whitney)

sued Defendants in federal district court, asserting claims for violations of the

Lanham Act, 15 U.S.C. § 1051 et seq., common law trademark infringement, and

defamation per se of a business reputation. Defendants moved to dismiss for lack

of personal jurisdiction, arguing that their activities did not satisfy Florida’s long-

arm statute, and that the exercise of jurisdiction would offend due process. The

district court concluded that the undisputed facts alleged in the complaint,

including Defendants’ continued publication of infringing marks in Florida on their

websites, satisfied Florida’s long-arm statute, and that the exercise of personal

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jurisdiction over Defendants would not offend due process. See Whitney Info.

Network, Inc. v. Xcentric Ventures, LLC, 347 F. Supp. 2d 1242, 1244-46 (M.D.

Fla. 2004). Accordingly, the court denied the motion to dismiss. Id. at 1246.

The case was then reassigned to a different district judge and Defendants

moved to dismiss under Fed. R. Civ. P. 12(b)(6), asserting that the complaint failed

to state a claim under the Lanham Act or for common law trademark infringement,

and that the defamation claim was barred by the Communications Decency Act

(“CDA”), 47 U.S.C. § 223 et seq. The district court agreed and dismissed the

complaint without prejudice. With respect to the defamation claim, the court found

that, based on the allegations of the complaint, Defendants did not author the

messages located on their website, but merely published the comments of third-

party consumers who felt defrauded. As a result, the court explained, Defendants

were immune from liability under the CDA because Ҥ 230(c)(1) immunizes a

service provider from liability for information developed by a third party that is

published on the Internet.” See Batzel v. Smith, 333 F.3d 1018, 1026-34 (9th Cir.

2003); Ben Ezra, Weinstein, & Co., Inc., 206 F.3d 980, 986 (10th Cir. 2000); Zeran

v. Am. Online, Inc., 129 F.3d 327, 331 (4th Cir. 1997).

Plaintiffs filed a motion for reconsideration and for an enlargement of time

to file an amended complaint, noting that the district court’s dismissal had been

4
without prejudice. The court denied reconsideration as to its previous order, but

granted Plaintiffs time to file an amended complaint. The amended complaint

contained significant changes, naming Whitney as the sole plaintiff, eliminating the

Lanham Act and common law trademark infringement claims, and adding new

allegations in support of the defamation claim. These allegations claimed, inter

alia, that Defendants tailored and rewrote consumer complaints submitted by third

parties to make it appear that, regardless of the true nature of the complaint, the

company complained of (i.e., Whitney) was “ripping off” customers. See, e.g.,

Pl.’s Am. Compl. ¶¶ 38-39. This tailoring and rewriting allegedly included the

addition of words such as “ripoff,” “dishonest,” and “scam.” See id. Furthermore,

Whitney claimed that Defendants knowingly fabricated entire consumer

complaints, “which were then attributed to people with false names or

‘anonymous’ titles from fictional locations around the United States . . . and were

false and slanderous.” Id. ¶ 40.

Defendants responded by moving to dismiss the amended complaint for lack

of personal jurisdiction, claiming that the grounds previously relied upon by the

district court for finding jurisdiction no longer existed. Whitney’s defamation

claim, Defendants asserted, “is brought by a Colorado corporation that does

business all over the country and did not suffer the brunt of the harm in Florida.”

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Furthermore, Defendants argued, Florida’s long-arm statute was not satisfied

because they had committed no tort, for the CDA “prohibits publisher liability for

defamation where the claim is against an interactive computer service.” In support

of this argument, Defendants submitted the declarations of Defendant Magedson

and Ben Smith, who provided technology services to Defendant Xcentric.

Magedson declared that neither he nor any agent of Xcentric “authored the

statements that are the subject of this lawsuit,” while Smith declared that the IP

addresses1 of those computers that posted the complaints or rebuttals at issue did

not match the IP address of any computer used by Xcentric or its agents. Whitney

responded by arguing, inter alia, that Magedson’s declaration was insufficient to

controvert all jurisdictional allegations of the amended complaint, and that Smith’s

declaration reached the merits of Whitney’s claim, thereby “making it

inappropriate on a motion to dismiss under Rule 12(b)(2), and more suited to a

summary judgment motion . . . .”

The district court agreed that Whitney had not satisfied the requirements of

Florida’s long-arm statute, and granted the motion to dismiss on that basis. Given

the protection afforded Defendants under the CDA, the court stated, “[Whitney’s]

new allegations that Defendants were the authors of some of the statements on

1
Smith explained in his declaration that “[a]n IP address is a unique address that
identifies the computer that the submission came from.”

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their website are essential to the survival of its argument in support of personal

jurisdiction.” If Defendants did not “author” the statements, the court reasoned,

“then they are immune under the [CDA], did not commit a tortious act in the state

of Florida, and the Court lacks personal jurisdiction over them.” The court agreed

that the allegations of Whitney’s amended complaint made a prima facie case for

jurisdiction, but found that Defendants’ declarations–particularly that of Ben

Smith–caused the burden to shift back to Whitney to prove jurisdiction by means

of an affidavit or other sworn statement. Whitney had produced no such materials,

the court explained, and therefore failed to carry its burden. Having concluded that

Whitney did not satisfy the requirements of Florida’s long-arm statute, the court

declined to perform a due process analysis and dismissed the amended complaint

with prejudice. Whitney now appeals that dismissal.

II. STANDARD OF REVIEW

We review a dismissal for lack of personal jurisdiction de novo. Alexander

Proudfoot Co. World Headquarters L.P. v. Thayer, 877 F.2d 912, 916 (11th Cir.

1989). “When a district court does not conduct a discretionary evidentiary hearing

on a motion to dismiss for lack of jurisdiction, the plaintiff must establish a prima

facie case of personal jurisdiction over a nonresident defendant.” Madara v. Hall,

916 F.2d 1510, 1514 (11th Cir. 1990). “A prima facie case is established if the

7
plaintiff presents enough evidence to withstand a motion for a directed verdict.”

Id.

“[We] must construe the allegations in the complaint as true, to the extent

they are uncontroverted by defendant’s affidavits or deposition testimony.” Morris

v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988). If a plaintiff pleads sufficient

material facts to establish a basis for personal jurisdiction and a defendant then

submits affidavits controverting those allegations, “the burden traditionally shifts

back to the plaintiff to produce evidence supporting jurisdiction[,] unless those

affidavits contain only conclusory assertions that the defendant is not subject to

jurisdiction.” Meier ex rel. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1269

(11th Cir. 2002); see Future Tech. Today, Inc. v. OSF Healthcare Sys., 218 F.3d

1247, 1249 (11th Cir. 2000) (per curiam). When the plaintiff’s complaint and

supporting evidence conflict with the defendant’s affidavits, we must construe all

reasonable inferences in favor of the plaintiff. Meier, 288 F.3d at 1269; Madara,

916 F.2d at 1514.

III. DISCUSSION

The determination of whether a court has personal jurisdiction over a given

defendant involves a two-part inquiry. Mut. Serv. Ins. Co. v. Frit Indus., Inc., 358

F.3d 1312, 1319 (11th Cir. 2004). First, the court determines “whether the

8
exercise of jurisdiction is appropriate under the forum state’s long-arm statute.”

Id. Second, the court must examine whether the exercise of personal jurisdiction

would violate the Fourteenth Amendment’s Due Process Clause, “which requires

that the defendant have minimum contacts with the forum state and that the

exercise of jurisdiction over the defendant does not offend traditional notions of

fair play and substantial justice.” Id. (internal quotes omitted).

Here, the sole issue raised on appeal is whether the district court erred in

determining that Whitney failed to satisfy the requirements of Florida’s long-arm

statute. The only portion of the long-arm statute upon which Whitney relied was

Fla. Stat. § 48.193(1)(b), which “provides for the assertion of jurisdiction over an

out-of-state defendant who commits a tortious act in Florida.” Horizon Aggressive

Growth, L.P. v. Rothstein-Kass, P.A., 421 F.3d 1162, 1168 (11th Cir. 2005).2 We

must construe the provisions of the long-arm statute as the Florida Supreme Court

2
The statute states in relevant part:

(1) Any person, whether or not a citizen or resident of this state, who personally or
through an agent does any of the acts enumerated in this subsection thereby submits
himself or herself and, if he or she is a natural person, his or her personal
representative to the jurisdiction of the courts of this state for any cause of action
arising from the doing of any of the following acts:
...

(b) Committing a tortious act within this state.

Fla. Stat. § 48.193(1)(b).

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would. Id. at 1166-67. “‘[C]ommitting a tortious act’ in Florida under section

48.193(1)(b) can occur through the non-resident defendant’s telephonic, electronic,

or written communications into Florida,” so long as the plaintiff’s cause of action

arises from the communications. Wendt v. Horowitz, 822 So. 2d 1252, 1260 (Fla.

2002) (quoting Fla. Stat. § 48.193(1)(b)). The district court found–and Defendants

do not dispute on appeal–that the allegations of Whitney’s amended complaint, if

taken as true, satisfied the requirements of § 48.193(1)(b) as to each of the

Defendants. This was so, the court explained, because the amended complaint,

unlike the original complaint, alleged that Defendants “were the authors of some of

the statements on their website,” not merely publishers of third-party statements.

Under the CDA, “[n]o provider or user of an interactive computer service shall be

treated as the publisher or speaker of any information provided by another

information content provider.” 47 U.S.C. § 230(c)(1) (emphasis added).3 “No

3
The CDA defines the term “interactive computer service” as “any information service,
system, or access software provider that provides or enables computer access by multiple users
to a computer server, including specifically a service or system that provides access to the
Internet and such systems operated or services offered by libraries or educational institutions.”
47 U.S.C. § 230(f)(2). Whitney does not dispute on appeal that Defendants Xcentric or
badbusinessbureau.org qualified as a “provider or user of an interactive computer service” under
§ 230(c)(1). Cf. Batzel, 333 F.3d at 1030 (“There is . . . no need here to decide whether a listserv
or website itself fits the broad statutory definition of ‘interactive computer service,’ because the
language of § 230(c)(1) confers immunity not just on ‘providers’ of such services, but also on
‘users’ of such services.”). Whitney does contend, however, that Defendant Magedson could not
have qualified for CDA immunity because he “submitted no evidence to establish himself as an
‘interactive computer service.’” Although we need not address this argument because Whitney
raises it for the first time in its reply brief, see Bauknight v. Monroe County, Fla., 446 F.3d 1327,
1329 n.2 (11th Cir. 2006), we note that § 230(c)(1) requires only that Magedson have been a

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cause of action may be brought and no liability may be imposed under any State or

local law that is inconsistent with this section.” Id. § 230(e)(3). An “information

content provider” is “any person or entity that is responsible, in whole or in part,

for the creation or development of information provided through the Internet or

any other interactive computer service.” Id. § 230(f)(3). By alleging that

Defendants authored some of the statements posted on the website, Whitney

indicated that Defendants were themselves an “information content provider” and

thus not necessarily immune under the CDA. The court further determined,

however, that the Smith and Magedson declarations controverted these critical

allegations about authorship, and thereby shifted the burden back to Whitney “to

substantiate [its] jurisdictional allegations by affidavits or other competent proof,

and not merely [to] reiterate the factual allegations in the complaint.” Future Tech.

Today, 218 F.3d at 1249 (internal quotes omitted). In producing no such evidence,

the court held, Whitney failed to carry this burden and Defendants were therefore

entitled to dismissal.

A defendant’s filing of an affidavit contesting jurisdictional allegations

shifts the burden back to the plaintiff (to support those allegations with evidence)

only when the defendant’s affidavit is legally sufficient to effect the shift. See

“provider or user” of an interactive computer service, not the service itself.

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Acquadro v. Bergeron, 851 So. 2d 665, 671 (Fla. 2003); Horizon Aggressive

Growth, 421 F.3d at 1168-69. The mere assertion of a legal conclusion, for

example, is insufficient to shift the burden back to the plaintiff. See, e.g.,

Acquadro, 851 So. 2d at 672 (explaining that defendant’s statement in her affidavit

that she “did not make defamatory statements” about the plaintiff was insufficient

to shift the burden back to plaintiff); Posner v. Essex Ins. Co., 178 F.3d 1209, 1215

(11th Cir. 1999) (per curiam) (explaining that statements which, though presented

in the form of factual declarations, are in substance legal conclusions do not

“trigger a duty for Plaintiffs to respond with evidence of their own supporting

jurisdiction”). On appeal, Whitney contends that Defendants’ declarations were

insufficient to shift the burden of proof because those declarations contained

conclusory denials and failed to contest all relevant allegations of the amended

complaint. Defendants maintain that the declarations adequately disputed any

claim that they “authored” the complaints or rebuttals about Whitney on their

website. As Whitney produced no evidence to the contrary, Defendants argue,

they were clearly entitled to CDA immunity and thus committed no tort for

purposes of § 48.193(1)(b). Having reviewed the declarations, we disagree that

they were adequate to shift the burden back to Whitney. Thus, it is not clear that

Defendants were entitled to CDA immunity.

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 Magedson states that agents of Xcentric “do not choose which stories to

post,” that they “review the reports before posting solely to redact profanity,

obscenity and personal contact information,” and that they “are instructed never to

add content to a report.” While these statements may describe Xcentric’s review

practices and what its agents are generally instructed to do, the statements make no

representation about what actually occurred with respect to the website postings

about Whitney. Magedson also declares summarily that neither he nor any agent

of Xcentric “authored the statements that are the subject of this lawsuit,” but he

does not explain how he has knowledge as to the actions of Xcentric’s agents.

Even if this conclusory denial can be said to challenge Whitney’s allegation that

Defendants fabricated some of the consumer complaints posted on their website, it

does not controvert Whitney’s allegations that Defendants tailored complaints

submitted by other individuals, adding words such as “ripoff,” “dishonest,” or

“scam.” Indeed, Magedson’s own representation about Xcentric’s policy regarding

redactions implies that Xcentric’s agents had the power to edit consumer

complaints before they were posted.4

Defendants contend that Magedson’s assertions about authorship are

supported by the Smith declaration, because Smith found that none of the captured

4
Magedson also conceded that he “do[es] not personally review all of the postings that
are made on Rip-off Report before they are posted.”

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IP addresses of computers from which reports were posted about Whitney on

Defendants’ website matched the IP address of “any computer used by Xcentric or

its agents . . . .” Smith further states that he did not recognize the contact

information provided by any of the persons who submitted consumer complaints

about Whitney as belonging to agents of Xcentric. The implication is that

Defendants did not fabricate and post any of the consumer complaints at issue,

because if they had done so the IP addresses of their computers would have

appeared during Smith’s examination, or he would have recognized their contact

information. However, Smith admits that he was unable to obtain IP addresses

corresponding to three of the consumer complaints at issue. Furthermore, it is not

clear that the IP addresses of computers used by Xcentric’s agents would have

even appeared during Smith’s search if those computers were used merely to revise

consumer complaints submitted by others, rather than to submit a fabricated

complaint.5

As indicated above, the CDA defines an “information content provider” as

“any person or entity that is responsible, in whole or in part, for the creation or

5
Whitney suggests that Xcentric’s agents might have used non-work computers and
assumed names as a subterfuge for submitting fabricated complaints, such as by logging on a
computer at an internet cafe under an assumed name. Whitney did not allege this in its amended
complaint, however, and it is not a defect in Defendants’ evidence, but rather mere speculation
on the part of Whitney that we give little weight.

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development of information provided through the Internet or any other interactive

computer service.” 47 U.S.C. § 230(f)(3) (emphasis added). For the reasons

stated, Defendants’ declarations do not adequately rebut the allegations of the

amended complaint insofar as it pleads Defendants’ involvement in creating or

developing the alleged defamatory content of consumer complaints posted on their

website. Thus, whether Defendants were entitled to CDA immunity remained in

question, as did the issue of whether their conduct was tortious. Cf. Hy Cite Corp.

v. badbusinessbureau.com, L.L.C., 418 F. Supp. 2d 1142, 1148-49 (D. Ariz. 2005)

(declining to grant defendants’ motion to dismiss based on CDA immunity because

plaintiffs alleged that defendants added editorial comments, titles, and original

content to third-party complaints posted on defendants’ website). The district

court therefore erred when it shifted the burden of proof to Whitney based on

Defendants’ declarations and then granted Defendants’ motion to dismiss based on

Whitney’s failure to substantiate its allegations with evidence. Taking the

allegations of the amended complaint as true to the extent they were not

controverted by Defendants’ declarations, and construing all reasonable inferences

in favor of Whitney, see Madara, 916 F.2d at 1514, we conclude that Whitney

would have survived a motion for directed verdict on whether it satisfied

§ 48.193(1)(b) of Florida’s long-arm statute. See Carruthers v. BSA Adver., Inc.,

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357 F.3d 1213, 1215 (11th Cir. 2004) (per curiam) (“A directed verdict is only

proper when the facts and inferences so overwhelmingly favor the verdict that no

reasonable juror could reach a contrary decision.”) (citation omitted). As the

district court declined to address whether the exercise of personal jurisdiction over

Defendants would violate due process (an issue not briefed on appeal), we vacate

the district court’s judgment and remand for further proceedings.

IV. CONCLUSION

The district court erred in concluding that Whitney failed to satisfy

§ 48.193(1)(b) of Florida’s long-arm statute with respect to Defendants, and thus

erred in dismissing the amended complaint for lack of personal jurisdiction on that

basis. Whether the exercise of personal jurisdiction over Defendants would violate

due process, however, is yet to be resolved. Accordingly, we vacate the judgment

of the district court and remand the case for further proceedings consistent with

this opinion.

VACATED AND REMANDED.

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