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WILKERSON v. RSL FUNDING, L.L.C.
388 S.W.3d 668 (2011)
Jerry WILKERSON, Appellant
v.
RSL FUNDING, L.L.C., Appellee.
No. 01-10-01001-CV.
Court of Appeals of Texas, Houston (1st Dist.).
August 11, 2011.
Rehearing En Banc Overruled December 12, 2011.
William Book, Tekell, Book, Allen & Morris LLP, Houston, TX, for Appellant.
Panel consists of Justices KEYES, SHARP, and MASSENGALE.
OPINIONMICHAEL MASSENGALE, Justice. In this interlocutory appeal, Jerry Wilkerson appeals the trial court's order denying his special appearance. Appellee RSL Funding, L.L.C. sued Wilkerson for defamation, libel, and business disparagement, all based upon statements made by Wilkerson on third-party internet sites. In his sole issue, Wilkerson contends the trial court erred in denying his special appearance and objection to jurisdiction. We find that the trial court lacked jurisdiction, and we therefore reverse and render a judgment of dismissal without prejudice. BackgroundCalifornia resident Jerry Wilkerson lives with his daughter, Trisha, who won the California state lottery. RSL Funding, L.L.C. is a financial services business that solicited Trisha by mail, offering to pay her a lump sum in exchange for a portion of her future lottery payments. Although RSL is headquartered in Houston, evidence submitted to the trial court suggests that the company advertised it had locations in New York, Chicago, Philadelphia, Washington, D.C., Los Angeles, West Palm Beach, and Atlanta. Trisha assigned a portion of her future lottery payments to RSL in exchange for a lump-sum payment. Wilkerson had no direct financial interest in his daughter's transaction. However, Trisha had a bad experience dealing with RSL, and Wilkerson decided to post a review on the internet to express his dissatisfaction. He searched the internet for RSL, and he testified that he believed he posted his comments on RSL's website. Rather than finding RSL's own website, however, Wilkerson had found third-party web pages containing basic business information about RSL. These websites permitted users to post reviews about their experiences with featured businesses, and Wilkerson posted negative reviews about RSL on two such web pages. One of these websites was maintained by the internet search engine Yahoo! (http://www.yahoo.com). The Yahoo! evidence presented by RSL included two exhibits: Exhibit C, which is an undated screenshot of part of a Yahoo! internet page, and Exhibit D, which is one page of a two-page printout from Yahoo! dated
March 18, 2010.1 It is apparent from the face of each document that neither of them is a complete copy of the represented internet page.
1. The last of Wilkerson's Yahoo! postings was dated November 20, 2009. RSL's original petition alleging defamation, libel, and business disparagement by both of the Wilkersons was filed on November 25, 2009.
2. Although presented as two separate one-page documents labeled Exhibits E and F, it appears from the header and footer of the two pages that RSL's evidence from Yelp consists of one two-page printout generated on May 18, 2010 at 3:15 pm — approximately six months after Wilkerson's two Yelp postings dated November 16 and 20, 2009. As with the Yahoo! evidence, RSL provided no evidence about the circumstances of the creation of the documents.
3. Pursuant to the long-arm statute, Texas courts can exercise personal jurisdiction over a nonresident defendant that "does business" in Texas. TEX. CIV. PRAC. & REM.CODE ANN. § 17.042 (West 2008); BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). Among other actions identified by the long-arm statute, a nonresident is considered to be "doing business" in Texas if he "commits a tort in whole or in part in this state." TEX. CIV. PRAC. & REM.CODE ANN. § 17.042(2); Moki Mac, 221 S.W.3d at 574.
4. For purposes of establishing personal jurisdiction in cases involving internet usage, several Texas courts have used the "sliding scale" analysis first utilized in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa.1997). See, e.g., Choice Auto Brokers, Inc. v. Dawson, 274 S.W.3d 172, 177-78 (Tex.App.-Houston [1st Dist.] 2008, no pet.); Karstetter v. Voss, 184 S.W.3d 396, 404 (Tex.App.-Dallas 2006, no pet.); Experimental Aircraft Ass'n, Inc. v. Doctor, 76 S.W.3d 496, 507 (Tex.App.-Houston [14th Dist.] 2002, no pet.). The court in Zippo observed that "the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet." Zippo, 952 F.Supp. at 1124. At one end of the range of activity, personal jurisdiction may be exercised over a nonresident defendant "clearly does business" in the forum over the internet, such as by entering into a contract with a forum resident involving the knowing and repeated exchange of data over the internet. Id. At the opposite end of the spectrum, personal jurisdiction may not be exercised over a nonresident based solely upon maintenance of a "passive" website when it has simply posted information on a website which is accessible to users in the forum. Id. The "middle ground" in the Zippo sliding-scale analysis is occupied by "interactive" websites permitting users to exchange information with the host computer. Id. The exercise of personal jurisdiction over a nonresident defendant operating such a website depends upon "the level of interactivity and commercial nature of the exchange of information that occurs" on the site. Id.
5. See, e.g., Choice Auto Brokers, 274 S.W.3d at 178; Michel v. Rocket Eng'g Corp., 45 S.W.3d 658 (Tex.App.-Fort Worth 2001, no pet.); Experimental Aircraft Ass'n, 76 S.W.3d at 507; see also Mink v. AAAA Dev. LLC, 190 F.3d 333, 336-37 (5th Cir.1999) (applying Texas law). But see Karstetter, 184 S.W.3d at 405 (applying sliding-scale standard to evaluate eBay internet auction site when claim was asserted against seller utilizing site).
6. See, e.g., McGuire v. Lavoie, No. Civ. A. 3:03-CV-0161-BH, 2003 WL 23174753, at *3 (N.D.Tex. Aug. 19, 2003) ("Because the majority of cases applying the [sliding scale] test involve a defendant's conduct over its own website, its application to an internet auction site is questionable."); Action Tapes, Inc. v. Weaver, No. Civ. 3:05-CV-1693-H, 2005 WL 3199706, at *2 (N.D.Tex. Nov. 23, 2005) ("The sellers and buyers who connect through eBay cannot be said themselves to control eBay's degree of commercial interactivity.... Accordingly, the `sliding scale' standard is not applicable in this case."); Attaway v. Omega, 903 N.E.2d 73, 78 (Ind.Ct.App.2009) ("[The sliding scale] mode of analysis makes little sense in the eBay context since eBay, and not the user, controls the interactivity and marketing efforts of the website."); Foley v. Yacht Mgmt. Grp., Inc., No. 08 C 7254, 2009 WL 2020776, at *3 n. 1 (N.D.Ill. July 9, 2009) (declining to apply sliding-scale approach and instead applying traditional analysis focusing on purposeful availment of forum).
7. See, e.g., Zippo, 952 F.Supp. at 1124; Choice Auto Brokers, 274 S.W.3d at 177-78.
8. See generally Kevin F. King, Personal Jurisdiction, Internet Commerce, and Privacy: The Pervasive Legal Consequences of Modern Geolocation Technologies, 21 ALB. L.J. SCI. & TECH. 61, 73-75 (2011) (explaining how websites utilize geolocation tools to "modify generic content ... to highlight aspects that are most relevant to a user's specific location").
9. In a somewhat similar vein, the dissent repeatedly and emphatically refers to Yahoo! and Yelp as "local websites," as if Wilkerson's postings appeared in the internet equivalent of a local newspaper. The evidence does not support that characterization. Even to the extent we might take judicial notice that Yahoo! and Yelp organize some of their content to associate it with a particular locality, no evidence was produced in the trial court that Wilkerson associated his comments with Houston-specific content on those websites or that he deliberately used Yahoo! or Yelp anticipating that those websites would do it for him. Indeed the only evidence on this subject, Wilkerson's testimony, was to the contrary.
10. Indeed, the substance of Wilkerson's communication indicates that he was addressing a more generalized and nontargeted audience of RSL's past, current, or future clients who believed based on RSL's advertising that it had offices in places other than Houston. As noted above, he wrote on Yahoo!: "Try calling any of their offices, N.Y., L.A., Atlanta etc and you will find that there are no offices there, only phone numbers that are transferred to the Houston Office."
11. The deficiency in RSL's evidence is one of substance, not form, because it does not establish that Wilkerson's actions were purposefully or deliberately directed at Texas. Proof that Wilkerson's comments were ultimately associated with a webpage that included "local" in its URL is only relevant if the evidence shows that Wilkerson intentionally directed his comments to a local website. RSL produced evidence of what it found without producing evidence that reflects what Wilkerson did when he posted his comments.
12. Although not part of the evidentiary record, it is common knowledge, and we thus take judicial notice, that websites such as Yahoo! and Yelp commonly repackage and republish user contributions along with other information like the maps, addresses, photographs, and other identifying characteristics relied upon by RSL. See Yahoo! Terms of Service, YAHOO!, at § 9 (Nov. 24, 2008), http://info.yahoo.com/legal/us/yahoo/utos/utos-173.html (providing that users submitting content to Yahoo! grant the website operator a license to "to use, distribute, reproduce, modify, adapt, publish, translate, publicly perform and publicly display such Content (in whole or in part) and to incorporate such Content into other works in any format or medium now known or later developed"); Terms of Service, YELP, at § 5(B) (July 21, 2010), http://www.yelp.com/static?p=tos ("We may use Your Content in a number of different ways, including publicly displaying it, reformatting it, incorporating it into advertisements and other works, creating derivative works from it, promoting it, distributing it, and allowing others to do the same in connection with their own websites and media platforms....").
13. See, e.g., Shrader v. Biddinger, 633 F.3d 1235, 1244 (10th Cir.2011) ("defamatory postings may give rise to personal jurisdiction if they are directed specifically at a forum state audience or otherwise make the forum state the focal point of the message").
14. In any case, simply referencing Texas or Texas residents is not sufficient to demonstrate that Texas was specifically targeted by the allegedly tortious statements. See, e.g., Johnson v. Arden, 614 F.3d 785, 796 (8th Cir.2010) (no targeting of Missouri sufficient to support exercise of specific personal jurisdiction based upon allegedly defamatory internet posting stating that "Sue Johnson [a Missouri resident] and Cozy Kittens [a Missouri limited liability company] operated from Unionville, Missouri, where they killed cats, sold infected cats and kittens, brutally killed and tortured unwanted cats and operated a `kitten mill' in Unionville, Missouri.").
15. In his deposition, Wilkerson testified that there was no lawsuit. He said, "I was just trying to drum up some business for a class action lawsuit possibly after reading the reviews and reading past histories of RSL." He was not asked whether this comment was directed toward Texas residents, and considering that he lives in California, the comment itself is not evidence suggesting that Texas residents were targeted by his solicitation of support for a lawsuit.
16. See, e.g., Machulsky v. Hall, 210 F.Supp.2d 531, 542 (D.N.J.2002) (buyer's negative eBay feedback about seller was not purposefully directed toward seller's home state of New Jersey); Bailey v. Turbine Design, Inc., 86 F.Supp.2d 790, 796 (W.D.Tenn.2000) (holding defamatory statements posted on defendant's website attacked plaintiff as a nationwide competitor in aircraft conversions, not as a Tennessee businessman); English Sports Betting, Inc. v. Tostigan, No. CIV.A. 01-2202, 2002 WL 461592, at *3 (E.D.Pa. Mar. 15, 2002) (stating that "[t]here is a difference between tortious conduct targeted at a forum resident and tortious conduct expressly aimed at the forum," and holding that defamatory statements published online did not target Pennsylvania, the forum state); Archer & White, Inc. v. Tishler, No. CIV.A.3:03-CV-0742-D, 2003 WL 22456806, at *3 (N.D.Tex. Oct. 23, 2003) (allegedly defamatory statement on third-party website about seller of dentist's drills was not directed at Texas, where Texas-based seller made most of its sales).
1. The majority claims:
RSL produced no evidence to support its allegation that Wilkerson used "www.local.yahoo.com" to publish his comments in some fashion specifically associated with Houston. There is only evidence that RSL printed out a Yahoo! webpage that included a "local" reference in its web address (i.e. its uniform resource locator, or URL). The evidence that Wilkerson's comment was associated with Houston-related content on Yahoo! is not evidence that Wilkerson was responsible for that association, particularly if RSL or its Houston-based attorneys prepared the evidence of what appears on Yahoo! from their Houston-located computers.
Op. at 677-78. Wilkerson made no objection to the form of RSL's evidence of jurisdictional facts below, and he does not argue that the evidence of jurisdictional facts is defective on appeal. The majority makes this argument and issues its ruling sua sponte and, in doing so, it misapplies the law. The burden of proof in a special appearance is on the non-resident to prove the absence of jurisdiction; it is not on the resident plaintiff to prove the existence of facts sufficient to subject the non-resident to the jurisdiction of the Texas courts. See CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996) ("In Texas, a nonresident must negate all bases of personal jurisdiction to prevail in a special appearance."); Gonzalez v. AAG Las Vegas, L.L.C., 317 S.W.3d 278, 282 (Tex.App.-Houston [1st Dist.] 2009, pet. denied) ("[A] nonresident defendant who files a special appearance assumes the burden of negating all bases of personal jurisdiction that the plaintiff has alleged."). Moreover, even if the burden had been on RSL to prove jurisdictional facts sufficient to establish jurisdiction over Wilkerson, as the majority implicitly holds, rather than on Wilkerson to negate the factual basis of RSL's allegations, parties having an objection to the form of the evidence are required not only to make their objection in the trial court but to secure a ruling on the objection by that court, or the objection is waived. See, e.g., Commint Tech. Servs., Inc. v. Quickel, 314 S.W.3d 646, 650 (Tex.App.-Houston [14th Dist.] 2010, no pet.) (discussing summary judgment evidence). Here, Wilkerson did not object to the form of RSL's evidence, nor did he attempt to negate the court's jurisdiction over him by proving that he did not use www.local.yahoo.com to publish his comments.
2. Notably, in refusing to apply the sliding scale for interactive websites in this case, the majority fails to identify any prior Texas cases addressing interactive websites that have similarly refused to use the sliding scale for such cases; rather, it cites several Texas and one Fifth Circuit Court of Appeals case that do use it. In support of its refusal to apply this standard, the majority references, in its footnote 6, only unpublished cases of no precedential value (and one published case) from other jurisdictions. These cases present neither binding nor persuasive authority and are also inapplicable in that they reference different factual scenarios. Likewise, the mostly unpublished cases from other jurisdictions cited in the majority's footnote 16 as failing to find that online defamatory statements were directed at the forum state are neither binding nor persuasive authority, present different fact patterns, and are inapplicable.
3. Wilkerson did not argue that exercise of personal jurisdiction would not be fair and just; therefore, it is not necessary to address this issue. See Glattly v. CMS Viron Corp., 177 S.W.3d 438, 450 (Tex.App.-Houston [1st Dist.] 2005, no pet.) (holding that defendant bears burden of presenting "compelling case" that exercising jurisdiction over it would not be fair and just); see also Guardian Royal Exch. Assurance Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 231 (Tex.1991) (holding that when non-resident defendant has purposefully established minimum contacts, Texas court's exercise of personal jurisdiction will not comport with fair play and substantial justice "only in rare cases").
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