Re: 3/22/05 - [UCSY] UCSY vs. Lycos: Defendant Terra Networks, S.A.'s Reply Memorandum in further Support of its Motion to Dismiss
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
CASE NO. 05-20149-CIV-MORENO/Garber
UNIVERSAL COMMUNICATION
SYSTEMS, INC., a Nevada corporation,
and MICHAEL J. ZWEBNER,
Individually and Others Similarly Situated,
Plaintiffs,
vs.
LYCOS, INC., d/b/a THE LYCOS NETWORK
& TERRA NETWORKS, S.A., et al.,
Defendants.
DEFENDANT TERRA NETWORKS, S.A.’s REPLY MEMORANDUM
IN FURTHER SUPPORT OF ITS MOTION TO DISMISS
Defendant Terra Networks, S.A. submits this Reply Memorandum in further support of its Motion to Dismiss Plaintiffs’ First Amended Complaint pursuant to Rule 12(b) of the Federal Rules of Civil Procedure.
INTRODUCTION
Plaintiffs failed to serve Terra Networks, S.A., a Spanish corporation, properly under the Hague Convention. Still, even if Terra Networks, S.A. were served properly, it would not be subject to personal jurisdiction in Florida. Nothing in Plaintiffs’ largely unsworn and befuddled opposition papers undermine these basic facts, or remedy Plaintiffs’ fundamental failure to bring Terra Networks, S.A. properly before the Court. Therefore, Plaintiffs’ First Amended Complaint should be dismissed as to Terra Networks, S.A.
I. SERVICE WAS NOT PROPER
Plaintiffs argue service upon Terra Networks, S.A. was proper under “FS § 48.161, by substituted service upon the Florida Secretary of State.” As Judge Moore recently noted:
Florida courts “have consistently held that statutes relating to substituted service of process. . . must be strictly construed; and that the burden of proof to sustain the validity of substituted service of process rests upon the person seeking to invoke the provisions of such statutes. The plaintiff has the burden to plead and prove facts that “clearly justify as a matter of law the applicably of the substituted service statutes in order to meet a legal challenge to such service.” See Glen v. Club Mediterranee, 2005 WL 497816, *2 (S.D. Fla. 2005)(internal citations omitted). Plaintiffs fail to meet this standard.
A. The Hague Convention Applies
As Terra Networks, S.A. argued in its moving papers, service upon Terra Networks, S.A., a Spanish corporation, must comply with Fed. R. Civ. P.4 and the Hague Convention. As the recent and, Terra Networks, S.A. submits, dispositive opinion in Club Mediterranee explains, the Hague Convention is applicable “[ijf the internal law of the forum state defines the applicable method of serving process as requiring the transmittal of documents abroad. . . .“ Club Mediterranee at * 3 (citing VolkswagenwerkAkitengesellschaft v. Schlunk, 486 U.S. 694,700(1988)). Therefore,” [ijn each case, a court must determine whether the forum’s state law requires the sending of process abroad.” McClenon v. Nissan Motor Corp., 726 F.Supp. 822, 824 (N.D. Fla. 1989).
To serve a foreign corporation that is alleged to be doing business within the State of Florida under Florida Statutes § 48.16 1, as Plaintiffs here claimed to have done, the summons and complaint must be served on the Florida Secretary of State and on the foreign corporation at its overseas offices. See Club Mediterranee, *2 (citing Fla. Stat. § 48.18 1(1), 48.161; McClenon, 726 F.Supp. at 825). In McClenon, the court explained that because Florida Statutes § 48.161 requires the sending of notice of process directly to the foreign defendant, in addition to service upon the Secretary of State, the Florida Statute requires “the transmittal of documents abroad.” see Glen, *3 (citing McClenon, 726 F.Supp. at 825). Accordingly, in this case, the Florida Statute under which Plaintiffs have attempted to serve Terra Networks, S.A. requires the “transmittal of documents abroad.” See McClenon, 726 F.Supp. at 825; Club Mediterranee *2. Therefore, the Hague Service Convention applies, and Terra Networks, S.A. is entitled to its benefits.[1]’
[1] For example, for the purposes of Hague service, “the Spanish Central Authority has informed the Department of State that unless the party to be served accepts service voluntarily, the documents being served by mail must be translated into Spanish.” See U.S. Dep’t of State, Judicial Assistance Spain, at travel.state.gov.
B. Terra Networks, S.A. Was Not Properly Served
Plaintiffs argue they satisfied these conditions through the service of a Summons and First Amended Complaint upon Terra Networks, S.A.‘s “satellite office j Miami, Florida to the corporate offices of Terra Networks, S.A. in Barcelona, Spain.” (Opp. Memo., p. 3). Plaintiffs then cite to a February 2, 2005 cover letter to Florida’s Secretary of State (Opp. Memo., Exh. 3,) and two Certified Mail Receipts as evidence of such service. (Faro Decl., ¶ 6). Plaintiffs’ argument is disingenuous in the extreme.
As it explained in its moving papers, Terra Networks, S.A. is a Spanish corporation with no offices or agents in Florida. (Coichero Decl., ¶ 3; see also, Decl. of Joanna Franyie Romano, submitted herewith, ¶3). Attached hereto as Exhibits A and B, respectively. Therefore, it has no “satellite office in Miami” which could accept service. Id. As to Plaintiffs’ claim to have served Terra Networks, S.A. at its Barcelona offices, Plaintiffs fail to satisfy their burden of establishing such service. Indeed, Mr. Faro’s Declaration states Terra Networks, S.A. “[acknowledge] receipt of a copy of the Summons and Amended Complaint at it [sic] Miami office,” citing to two U.S. Postal Service Certified Mail Receipts. (Faro Decl., ¶ 6). The only receipt bearing a recipient’s signature is the receipt addressed to “Terra Lycos, aka Terra Networks,” at a Miami address. (Faro Decl., Exh. 7). There is a Terra Networks at that address, only it is Terra Networks USA, LLC, a separate and distinct entity from Terra Networks, S .A., the purported defendant here. (Romano Decl. ¶2). As Terra Networks, S.A. discussed in its moving papers, and it further discusses below, service upon a subsidiary is not service upon the parent. See infra, sec. IC.
The second receipt attached to the Faro Declaration — addressed to Terra Networks, at a Barcelona, Spain address — is unsigned, and bears no postmark or other evidence of ever being paid for, mailed, or received. This is perhaps explained by the Receipt’s designated use being for “Domestic Mail Only.” (Faro Decl., Exh. 7). Plaintiffs’ use of the United States domestic mail service to effect service in Spain is faulty in the extreme. Mr. Faro’s Declaration and its unsigned and facially faulty proof of service is insufficient to prove service upon Terra Networks, S.A.
C. The Purported Service At The Miami Address Is Insufficient To Bring Terra Networks, S.A. Before The Court
“The fact that a party served within the state is a wholly owned subsidiary of another company does not, by itself, support substituted service under Florida law.” Id. (citing Mac Millan-Bloedel, Ltd. v. Canada, 391 So.2d 749, 751 (Fla. 5th DCA 1980); Volkswagenwerk Atkiengelselischaft v. McCurdy, 340 So.2d 544, 546 (Fla. 1976)). The parent-subsidiary relationship alone does not establish the agency necessary for serving process on the parent through the subsidiary. B. G. Wasden v. Yamaha Motor Co., 131 F.R.D. 206,209 (M.D. Fla. 1990). The plaintiff has the burden of showing “that the parent corporation exercised such a degree of control over its subsidiary that the activities of the subsidiary were in fact the activities of the parent within the state MeClenon, 726 F.Supp. at 826 (citations and quotations omitted). As the Romano Declaration, submitted herewith, and the Coichero Declaration, already in the record, make abundantly clear, Terra Networks, S.A. has no offices or agents in Florida. The only entities who could have received the Summons and First Amended Complaint at the Miami office Plaintiffs make so much of were Terra Networks USA, LLC — Terra Networks, S.A.’s subsidiary — or Terra Networks Operations, Inc., Terra Networks USA, LLC’s wholly owned subsidiary. No matter who received the Summons and First Amended Complaint at the Miami address, it was not Terra Networks, S.A.
As noted above, Florida courts have held that statutes providing for substituted service must be strictly construed. Club Mediterranee, *2. “A plaintiff seeking to effectuate service of process under those statutes has the burden of presenting facts that clearly justify the applicability of the statute.” Id. Here, Mr. Faro’ s Declaration has neither presented nor proven any facts tending to show that Defendant Terra Networks, S.A. exercised control over its Florida subsidiaries. There is no evidence that the parent and subsidiary companies were alter egos or that the parent throughly controlled the subsidiary. Plaintiffs have merely relied upon the fact that an entity named “Terra Networks” can be found at the Miami address. Plaintiffs’ unsworn claims in their Memorandum and the facially faulty Certified Mail Receipts cannot satisfy the burden of proving proper service of process.
II. IN ANY EVENT, THE COURT LACKS PERSONAL JURISDICTION OVER TERRA NETWORKS, S.A.
Plaintiffs rely upon a few unauthenticated pages of documentary material, from a Terra Networks website to support the Court’s exercise of personal jurisdiction over Terra Networks, S .A. and to controvert the Colchero Declaration. The web pages satisfy neither goal. First, they are unauthenticated, hearsay documents, and are, therefore, not competent evidence. See Cornell v. Assicurazioni Generali, S.p.A., Nos. 97 Civ. 2262 and 98 Civ. 9186, 2000 WL 1191124 at *1 (S.D.N.Y. Aug.22, 2000) (factual allegations, made in memorandum of law, but not in the complaint or affidavits or other evidence, do not constitute evidence that can be considered on a motion to dismiss for lack of personal jurisdiction); Gallery 13, Ltd. v. Easter, 1995 WL 258143 at *2 (S.D.N.Y. May 2, 1995) (same); Stilley v. American Chambers Life Ins. Co., No. 91 Civ. 7022, 1992 WL 147906 at *2 (S.D.N.Y. June 18, 1992)(same). Nevertheless, even if they were properly before the Court, they do not demonstrate Terra Networks, S.A.’s presence in Florida for the purposes of the exercise of personal jurisdiction. Substantially more than a website is required to bring a foreign corporation, with no other contracts with the forum, within the authority of a district court.
A. Terra Networks, S.A. Does Not Have A Miami Office
Plaintiffs argue that the reference on a Terra Networks’ web page to a Miami, Florida office conclusively establishes Terra Networks, S.A.’s presence in Florida. The isolated reference to a Miami office, under the “Our Offices” heading, however, is a reference to one of the offices of one of the entities that constitute the “Terra Group” of entities owned, directly or indirectly by Terra Networks, S.A. (Romano Decl., 4-6). The Miami office referred to on the web page is leased by Terra Networks Operations (“Terra Network Operations”), which in turn owns 100% of the shares of Terra Networks Operations, Inc. (“Terra Networks Operations”). (Romano Decl., ¶3). While both Terra Networks USA and Terra Networks Operations operate out of the Miami office, Terra Networks, S.A. most definitely does not. (Coichero Decl., ¶3). The web page merely identifies the various offices of the several entities within the “Terra Group” of companies.
B. A Website Alone Will Not Subject Terra To The Personal Jurisdiction Of The Court
Plaintiffs also argue that “Terra Networks, S.A. has an internet portal that is accessible from the USA, including the Southern District of Florida,” and that because it has “an on-line registration form,” Terra Networks, S.A. is subject to the general jurisdiction of the Court. (Opp. Memo., p. 7). Notwithstanding the fact that this “internet portal” is not alleged as a basis for jurisdiction in Plaintiffs’ First Amended Complaint, and the material which purports to document its existence and its access by Florida residents is unsworn, unauthenticated, and obviously incomplete, the operation of a Florida accessible internet portal alone will not subject Terra Networks, S.A. to personal jurisdiction in Florida. Infosys Inc. v. Billingnetwork. corn, Inc., 2003 WL 22012687 (N.D. Ill. 2003) is instructive.
In Infosys, the Northern District of Illinois observed that personal jurisdiction based upon a defendant’s internet activity “ is typically determined based not only on the defendant’s Internet activities, but also on its non-Internet activities.” Infosys, at *4 (citing Watchworks, Inc. v. Total Time, Inc., 2002 WL 424631, *6 (N.D. Ill. 2002)). Applying this rule, the Infosys court assumed the defendant’s website sufficiently interactive, but held “general jurisdiction does not exist because of the absence of any non-website activities by [the Defendant.]” Id. The analysis should be no different here. See Even assuming, arguendo, Terra Networks, S.A. operated the unsworn “internet portal” to which Plaintiffs refer, Plaintiffs have failed to demonstrate any “non-website” factors which would support general jurisdiction over Terra Networks, S.A.
The foregoing, however, is merely academic. Terra Networks Operations, Inc. — not Terra Networks, S .A. — operates the website upon which Plaintiffs rest their jurisdictional claims. (Romano Decl., ¶6).
Hartoy Inc. v. Thompson, 2003 WL 21468079 (S.D. Fla. 2003) is consistent with this approach. There the court found the defendant’s interactive website, “combined with the fact that Florida residents [including the Plaintiff] actually availed themselves of the opportunity to purchase” from the website were sufficient to subject the defendant to the jurisdiction in Florida. Hartoy, *5• “Ultimately, personal jurisdiction over a defendant that maintains a website must, like personal jurisdiction over all other defendants, satisfy the jurisdictional constraints placed upon the federal court by the forum state or any applicable federal statute and the due process analysis established by International Shoe Company v. State of Washington and its progeny.” 4A Fed. Prac. & Proc. Civ.3d § 1073.1. As the Court of Appeals for the District of Columbia has stated:
We do not believe that the advent of advanced technology, say, as with the Internet, should vitiate long-held and inviolate principles of federal court jurisdiction. The Due Process Clause exists, in part, to give “a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.”
GTE New Media Servs., Inc. v. BellSouth Corp., 199 F.3d 1343, 1350, (D.C. Cir. 2000)(quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). Thus, the analysis applicable to a case involving jurisdiction based on the Internet (or any other modern technology) should not be different at its most basic level from any other personal jurisdiction case. If the defendant is not physically present in or a resident of the forum state, and has not been physically served in the forum state, the federal court must undertake the traditional personal jurisdiction analysis. 4A Fed. Prac. & Proc. Civ.3d § 1073.1.
CONCLUSION
Plaintiffs bore the burden of establishing proper service under the Hague Convention and personal jurisdiction. They have done neither. Plaintiffs’ First Amended Complaint should be dismissed by reason of either failure.
Respectfully submitted,
STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
Attorneys for Defendant TERRA NETWORKS, S.A.
Suite 2200 - Museum Tower
150 West Flagler Street
Miami, FL 33130
Telephone No: (305) 789-3200
Facsimile No: (305) 789-3395 |
