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R&R Auction Co. v. Johnson

United States District Court, D. New Hampshire

March 2, 2016

R&R Auction Company, LLC
v.
Michael Johnson Opinion No. 2016 DNH 040

          MEMORANDUM AND ORDER

          PAUL BARBADORO, District Judge.

         This lawsuit is the latest installment in an ongoing dispute between R&R Auction Company, LLC, a New Hampshire-based auction house, and Michael Johnson, a California resident. After bidding in a number of the company's auctions between 2005 and 2011, Johnson complained that items he had acquired through R&R Auction were inauthentic. He filed suit against R&R Auction in 2012 in California state court.

         After years of increasingly hostile litigation in California, R&R Auction brought this action in 2015, alleging that Johnson has acted improperly in the course of prosecuting his California lawsuit. R&R Auction complains, among other things, that Johnson created several websites that incorporate R&R Auction's name, and posted information online that has harmed R&R Auction's reputation. R&R Auction's complaint includes a raft of federal and state-law claims. Johnson has responded with a motion to dismiss for lack of personal jurisdiction.

         I. BACKGROUND

         R&R Auction is a limited liability company formed under New Hampshire law, with its principal place of business in Amherst, New Hampshire. It hosts auctions via a print catalog and its website, rrauction.com. Johnson is a California resident.

         From 2003 until 2011, R&R Auction mailed, at Johnson's request, auction catalogs to Johnson in California. From 2005 until 2011, Johnson participated in auctions through the company's website, acquiring more than eighty items in thirtythree auctions. Johnson also consigned for sale more than twenty items through R&R Auction, and sold items in six auctions.

         Both R&R Auction's catalog and website describe the terms and conditions that must be met to participate in an auction. The catalog provides that "[p]lacing a bid in this auction constitutes full acceptance of all of the conditions, bidding rules, and terms of sale presented [in the catalog], " and similar language appears on the website. Doc. No. 1 at 8. These terms include a "Guarantees" provision regarding the authenticity of items acquired through R&R Auction. According to this provision, "[t]he buyer's only remedy under this guarantee is the cancellation of the sale [of the inauthentic item] and the refund of the purchase price." Id.

         In 2011, Johnson began to claim that items he had acquired through R&R Auction were inauthentic. When he and R&R Auction were unable to reach an amicable resolution, Johnson filed suit in 2012 in Santa Barbara County Superior Court in California. Johnson alleged that R&R Auction had violated California law by auctioning (reportedly) knockoff items.

         While the California lawsuit was ongoing, Johnson registered several Internet domain names incorporating the term "R&R Auction, " or the names of individuals associated with R&R Auction. I describe these sites collectively as "the Litigation Website."[1] Doc. No. 1 at 17. The Litigation Website's stated purpose is to "provide a venue in which interested parties may learn more about this case which is currently in litigation in Santa Barbara Superior Court." Id . To that end, the website includes contact information for Johnson's attorneys, and allows visitors to submit a "message regarding this potential lawsuit." Id . The website also provides links to Twitter, Facebook, and YouTube pages, reportedly operated by Johnson, that were created in connection with the California lawsuit. The website is accessible in New Hampshire, and has been viewed by at least one New Hampshire resident. Doc. No. 15 at 3.

         Johnson began posting information about his lawsuit on the Litigation Website and other websites. In September 2014, he made several posts on complaintsboard.com, stating that a class action lawsuit had been filed "against RR Auction located in Amherst, New Hampshire, " and inviting "potential class member[s]" to visit the Litigation Website. Doc. No. 1 at 12-13. In January and February 2015, Johnson posted video depositions taken of several R&R Auction employees.

         In March 2015, Johnson posted to the Litigation Website the so-called "Alleged Burris Affidavit, " a 2008 affidavit purportedly authored by Karen Burris, a former R&R Auction employee. Id. at 20-26. Burris was R&R Auction's office manager from 2001 until 2008, when R&R Auction accused her of stealing more than $400, 000 from the company. On April 2, 2008, the day after R&R Auction forwarded information about the missing funds to law enforcement, Burris committed suicide. Id. at 21. Several months later, R&R Auction reached a confidential settlement and non-disclosure agreement with Burris's estate, her late husband, William Burris, and Mr. Burris's company. Id . In February 2015, Johnson's counsel subpoenaed Mr. Burris, then living in Montana, for "[a]ll writings about or concerning R&R Auction Company" in Mr. Burris's possession. Id. at 22. Johnson's counsel then interviewed Mr. Burris, without notifying R&R Auction. When Mr. Burris turned over the "Alleged Burris Affidavit" to Johnson, Johnson filed that document in court, and posted it on his website.

         These various postings led to unwanted negative attention for R&R Auction. Members of the press wrote articles about the California litigation, often referring to materials posted on the Litigation Website. Id. at 36-37. Bob Sanders from the New Hampshire Business Review, for example, contacted R&R Auction for comment, noting that he currently "only [had] the plaintiffs side" but had "the depositions on the plaintiffs website." Id. at 36. R&R Auction was criticized on social media, and certain past, present, and potential R&R Auction customers have contacted the company to express concern about Johnson's lawsuit. Some ended their relationship with the company.

         Thus, after years of increasingly bitter litigation in California, R&R Auction filed this suit in New Hampshire. In its fifteen-count complaint, R&R Auction alleges that "[a]s a direct and proximate result of the California Litigation, the Litigation Website, and Mr. Johnson's other conduct, RR Auction has suffered a material decline in business." Id. at 44.

         II. STANDARD OF REVIEW

         When a defendant challenges the court's personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of establishing a basis for asserting jurisdiction. See Mass. Sch. Of Law at Andover, Inc. v. Am. Bar. Ass'n., 142 F.3d 26, 34 (1st Cir. 1998). Because I did not hold an evidentiary hearing in this case, R&R Auction need only make a prima facie showing of jurisdiction. See Cossaboon v. Me. Med. Ctr., 600 F.3d 25, 31 (1st Cir. 2010).

         To meet this standard, R&R Auction must "adduce evidence of specific facts" that support its jurisdictional claim. Foster-Miller, Inc. v. Babcock & Wilson Can., 46 F.3d 138, 145 (1st Cir. 1995). I accept "specific facts affirmatively alleged by the plaintiff as true (whether or not disputed) and construe them in the light most congenial to the plaintiff's jurisdictional claim." Mass. Sch. Of Law, 142 F.3d at 34. I need not, however, "credit conclusory allegations or draw farfetched inferences." Id . (citation omitted). I may also consider uncontested facts submitted by the defendant. Id . In conducting this analysis, I assess "whether the facts duly proffered, [when] fully credited, support the exercise of personal jurisdiction." Alers-Rodriguez v. Fullerton Tires Corp., 115 F.3d 81, 83 (1st Cir. 1997).

         III. ANALYSIS

         A. Legal Framework

         Personal jurisdiction over an out-of-state defendant turns on both (1) constitutionally sufficient "minimum contacts, " and (2) service of process in accordance with Federal Rule of Civil Procedure 4(k). For claims based on federal law, the Fifth Amendment's due process clause sets the constitutional limits of the court's jurisdiction. United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001). The Fifth Amendment demands only that the defendant have sufficient "minimum contacts" with the United States as a whole. Id . State law claims, however, are governed by the Fourteenth Amendment's due process clause, which requires that the defendant have sufficient contacts with the particular state in which the court sits. Id . Here, R&R Auction has brought both federal and state law claims.

         Federal Rule of Civil Procedure 4(k) authorizes extraterritorial service of process either when allowed by a federal statute, or when "permitted by the law of the state in which the district court sits." United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1086 (1st Cir. 1992) (internal quotation marks omitted); Fed.R.Civ.P. 4(k). In this case, R&R Auction has not identified a federal statute authorizing it to serve Johnson in New Hampshire. See Sarah's Hat Boxes, L.L.C. v. Patch Me Up, L.L.C., 2013 DNH 058, 9 n.4 (noting that the Lanham Act does not allow nationwide service of process). Instead, it relies exclusively on New Hampshire's long-arm statute. New Hampshire's long-arm statute, in turn, is coextensive with the Fourteenth Amendment. See Presby Patent Trust v. Infiltrator Sys., Inc., 2015 DNH 111, 2-3. Therefore, in order to satisfy Rule 4, R&R Auction must satisfy the Fourteenth Amendment's due process clause with respect to both its state and federal claims. Situation Management Systems v. ASP Consulting Grp., 2006 DNH 092, 5.

         The Fourteenth Amendment requires that a defendant have sufficient "minimum contacts" with the forum such that "maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation and punctuation omitted). This "minimum contacts" inquiry is necessarily fact-specific, requiring "an individualized assessment and factual analysis of the precise mix of contacts that characterize each case." Pritzker v. Yari, 42 F.3d 53, 60 (1st Cir. 1994). A defendant cannot be subjected to personal jurisdiction based upon merely "random, fortuitous, or attenuated contacts" with the forum. Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985) (internal punctuation omitted). Instead, there must be some "act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id.

         Personal jurisdiction comes in two varieties - general and specific - depending upon the nature of the defendant's contacts with the forum. Sarah's Hat Boxes, 2013 DNH 058, 11. General jurisdiction exists where the defendant has engaged in "continuous and systematic" activity in the forum "sufficient to establish jurisdiction in that state over all matters including matters unrelated to the defendant's contacts in the forum state." Id . (citing Northern Laminate Sales, Inc. v. David, 403 F.3d 14, 24 (1st Cir. 2005). Specific jurisdiction "exists only when the cause of action arises from or relates to the defendant's contacts with the forum state." Id . R&R Auction asserts that specific personal jurisdiction exists here.

         The First Circuit applies a three-part test to decide whether specific jurisdiction exists: (1) whether the claims arise out of, or are related to, the defendant's forum-related activities ("relatedness"), (2) whether the defendant has purposefully availed himself of the protections and benefits of the forum state's laws ("purposeful availment"), and (3) whether the exercise of jurisdiction is reasonable under the circumstances (the "gestalt factors"). Phillips v. Prairie Eye Ctr., 530 F.3d 22, 27 (1st Cir. 2008). The plaintiff ...


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