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Deborah Johns v. Newsmax Media

August 24, 2012

DEBORAH JOHNS,
PLAINTIFF,
v.
NEWSMAX MEDIA, INC., DEFENDANT.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

OPINION ON DEFENDANT'S MOTION TO DISMISS, TRANSFER, OR COMPEL ARBITRATION

Deborah Johns contracted with Newsmax Media, Inc. ("Newsmax") to provide advertising and marketing services to her. Newsmax was to arrange for email advertisements and distribute these advertisements to Ms. Johns' email list of approximately 100,000 individuals. Less than five months after entering into the agreement, Newsmax terminated it. Ms. Johns then instituted this breach of contract suit.

Pending before the court is a motion to dismiss filed by Newsmax contending that the Court lacks personal jurisdiction over Newsmax and that venue in the District of Columbia is improper. Alternatively, Newsmax argues for an order to stay proceedings and to compel arbitration based upon an arbitration clause in the parties' agreement. Ms. Johns opposes the motion contending that jurisdiction and venue are proper and that the arbitration clause is unenforceable. The Court will deny the motion to dismiss but will grant the motion to stay the case and compel arbitration.

I. FACTS

Newsmax is a news media organization headquartered in Florida and incorporated in Nevada. Ruddy Aff., [Dkt. 4-2] ¶ 5. It employs a "Washington Bureau Chief," who works out of a home office in Maryland. Id. ¶ 7. It sublets an office within the District of Columbia, where it employs two independent contractors whose work is not related to the present dispute. Id. ¶ 8. Ms. Johns resides in Roseville, California, and conducted the business subject to this dispute through an office located in the District of Columbia. Compl. ¶ 4.

After making their original business connection at a trade show in the District of Columbia,*fn1 Ms. Johns and Newsmax entered into a written contract for marketing services (the "Agreement"). Id. ¶ 8. The Agreement was negotiated via telephone from Ms. Johns' office in the District and Newsmax's office in Florida. Opp'n at 4. In accordance with the Agreement, Ms. Johns gave Newsmax a list containing approximately 100,000 email addresses for Newsmax to provide the associated marketing services. Compl. ¶¶ 9-10. Newsmax also agreed to maintain and update the email list on a monthly basis. Id. ¶ 13. The list at all times remained the property of Ms. Johns. Id. ¶ 12. The Agreement included a dispute resolution clause that requires the parties to arbitrate "any [unresolved] controversies, claims, or disputes which may materially affect the performance of either Party under th[e] Agreement." Compl., Ex. 1 ("Marketing Agreement") ¶ 23. After finalizing the Agreement, Newsmax sent all payments and communications to Ms. Johns' District of Columbia office. Opp'n at 4. On October 26, 2011, Newsmax terminated the Agreement through an email sent to Ms. Johns. Compl. ¶ 15. Newsmax then ceased marketing activity with the list and later refused Ms. Johns' request to return the updated list in accordance with the Agreement. Compl. ¶ 19. Ms. Johns sues for breach of contract, conversion, misappropriation, and interference with prospective business advantage.

II. LEGAL STANDARD

A. Personal Jurisdiction

On a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of establishing a factual basis for the court's exercise of personal jurisdiction over the defendant. Crane v. N.Y. Zoological Soc'y, 894 F.2d 454, 456 (D.C. Cir. 1990). The plaintiff must allege specific acts connecting the defendant with the forum. Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001). Bare allegations and conclusory statements are insufficient. See id.

In determining whether a factual basis for personal jurisdiction exists, the court should resolve factual discrepancies in the record in favor of the plaintiff. Crane, 894 F.2d at 456. However, the court need not treat all the plaintiff's allegations as true. United States v. Philip Morris Inc., 116 F. Supp. 2d 116, 120 n.4 (D.D.C. 2000). Instead, the court "may receive and weigh affidavits and any other relevant matter to assist it in determining the jurisdictional facts." Id.

Because Ms. Johns brings a breach of contract action independent of federal law, the Court looks to the law of the District of Columbia to determine whether Newsmax may be sued in this jurisdiction. Three statutory provisions are relevant in determining whether a local court may exercise personal jurisdiction over a defendant in the District of Columbia. The first, D.C. Code § 13-422, grants general jurisdiction by permitting a local court to "exercise personal jurisdiction over a person domiciled in, organized under the laws of, or maintaining his or its principal place of business in, the District of Columbia." D.C. Code § 13-422 (2005); see also Richard v. Bell Atl. Corp., 946 F. Supp. 54, 73-74 (D.D.C. 1996) (holding that a D.C. mailing address alone is insufficient to establish general personal jurisdiction absent allegations regarding residence or personal place of business); Dickson v. United States, 831 F. Supp. 893, 897 (D.D.C. 1993). The second provision is D.C. Code § 13-334, which grants general jurisdiction over foreign corporations who have been served within the District and do consistent business within the District. See D.C. Code § 13-334 (2005); AMAF Int'l Corp. v. Ralston Purina Co., 428 A.2d 849, 850 (D.C. 1981). The third relevant provision, D.C. Code § 13-423, is D.C.'s long arm statute and grants specific jurisdiction. Under the long arm statute, personal jurisdiction exists over a person as to a claim for relief arising from that person

(1) transacting any business in the District of Columbia; (2) contracting to supply services in the District of Columbia; (3) causing tortious injury in the District of Columbia by an act or omission in the District of Columbia; (4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia.

D.C. Code § 13-423(a) (2005); see also GTE New Media Servs. v. Bellsouth Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000). Subsection (b) limits the reach of the statute by noting that "[w]hen jurisdiction over a person is based solely upon this section, only a claim for relief arising from acts enumerated in this section may be asserted against him." D.C. Code § 13-423(b).

Under both specific and general jurisdiction, the exercise of jurisdiction must also meet the constitutional requirements of due process. Capital Bank Int'l. Ltd v. Citigroup, Inc., 276 F. Supp. 2d 72, 75 (D.D.C. 2003). The Due Process Clause of the Fifth Amendment to the U.S. Constitution requires the plaintiff to demonstrate "'minimum contacts' between the defendant and the forum establishing that 'the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" GTE New Media Servs., 199 F.3d at 1347 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); see also Price v. Socialist People's Libyan Arab Jamahiriya, 294 F.3d 82, 95 (D.C. Cir. 2002). These minimum contacts must be grounded in "some act by which the defendant purposefully avails itself of the privilege of conducting activities with the forum state, thus invoking the benefits and protections of its laws." Asahi Metal Indus. v. Super. Ct. of Cal., 480 U.S. 102, 109 (1988). In short, ...


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