Opinion ID: 781750
Heading Depth: 4
Heading Rank: 2

Heading: Purposeful availment as to NTW

Text: 20
21 To show purposeful availment by NTW, Bridgeport first argues that NTW issued mechanical licenses to Rap-A-Lot Records (RAL) and other entities for allegedly infringing compositions and has received royalties therefrom. Bridgeport asserts that in relation to these mechanical licenses, NTW has a financial interest in RAL selling as many records as possible that contain NTW's compositions, NTW does not desire to limit exploitation of its compositions to a less-than-national market, NTW has no objection to NTW's compositions being sold in Tennessee, and NTW knows that RAL distributes nationally and is likely to exploit NTW's compositions throughout the entirety of the United Sates, including in Tennessee. Based on the rationale set forth in Tobin, Bridgeport argues that the foregoing conduct constitutes purposeful availment. 22 In Tobin, the court found purposeful availment based on the existence of a nationwide distribution agreement. The agreement required the defendant distribution company, Astra, to distribute the drug rotidrine on behalf of defendant manufacturer, Duphar, throughout Astra's territory. The relevant agreement defined the distribution territory as the United States of America, its territories and possessions, and Puerto Rico. Tobin, 993 F.2d at 543 (explaining that a manufacturer cannot insulate itself from suit merely by using an independent national distributor to market its products). 23 In contrast to Tobin, NTW's contacts with Tennessee in the instant action lack the additional element present in Tobin, chiefly, the fact that the Tobin defendants were not merely aware that their distributor was likely to market the product in all fifty states; rather, the parties' contract required it. Unlike in Tobin, Bridgeport does not assert that NTW entered into a distribution agreement with RAL or any other party that placed an affirmative obligation upon the third party to distribute NTW's compositions in Tennessee or elsewhere. Bridgeport even concedes in its brief that with respect to the RAL-NTW licensing, [h]ow the subject composition is exploited is `pretty much out of [NTW's] hands.' NTW's knowledge that RAL was likely to distribute NTW's compositions nationally, coupled with its lack of objection to Tennessee sales, if such sales were ever to occur, is insufficient conduct upon which to predicate purposeful availment. 24 As further support for its position, Bridgeport asserts that allegedly infringing NTW compositions on RAL sound recordings have been sold by at least two Nashville, Tennessee retailers. However, Bridgeport does not adduce any evidence that NTW took any actions to direct the compositions to Tennessee. Rather, Bridgeport asserts that NTW does not doubt that such sales have occurred and does not object to Tennessee distribution and sales. Bridgeport makes similar arguments with respect to a synchronization licence related to the film Dangerous Minds. 8 However, as with the mechanical licenses, the Court finds these contacts too random, fortuitous, and attenuated for a finding of purposeful availment. 25
26 Bridgeport asserts that NTW has engaged in advertising and marketing activities directed at Tennessee and that these activities require a finding of purposeful availment. Bridgeport also argues that RAL advertises nationally, including in Tennessee, on behalf of and to the financial benefit of NTW on national television and radio spots, and in national magazines. Appellants' Br. at 16. As evidence of NTW's marketing activities, NTW points to a single statement from the deposition of Mr. Bruce Toval, NTW's CEO, that [w]e attempt to market nationally. 9 27 Although it has been established in this Circuit that [a]dvertising is among the activities that constitute `reaching out' to forum state residents, Creech v. Roberts, 908 F.2d 75, 79 (6th Cir.1990) (citing LAK, 885 F.2d at 1300), the instant record does not support a finding of purposeful availment based upon a single statement that NTW attempts to market nationally. 10 The record does not contain any evidence of advertising directly targeting or even actually reaching Tennessee. Nor does the record reflect the extent and nature of NTW's advertising. Moreover, Bridgeport does not actually adduce any evidence that RAL undertook advertising expressly on NTW's behalf, nor does Bridgeport provide any basis on which to impute RAL's conduct to NTW. 28
29 Appellants' assertions as to NTW's contract with Bluewater, a Tennessee corporation, require a brief departure from the Court's purposeful availment analysis. Bridgeport asserts that NTW's contract with Tennessee-based Bluewater is sufficient for a finding of personal jurisdiction because the contract is with a Tennessee entity and contains choice of law and venue provisions relating to Tennessee. NTW does not dispute that it contracted with Bluewater to collect foreign royalties related to NTW's compositions or that the contract contained a choice of law and venue provisions designating Tennessee law and venue. Appellees do, however, complain that Bridgeport did not assert this matter before the district court and thus that it is not appropriate for consideration on appeal. 30 As to the Bluewater contract, the district court did not make a finding as to purposeful availment and instead, in a footnote, indicated that the contract could not serve as a basis for jurisdiction because Bridgeport did not assert that the contract is related to the infringement action against NTW. Bridgeport for the first time on appeal now makes such arguments, arguments which we decline to address. See Preferred RX v. Am. Prescription Plan, 46 F.3d 535, 549 (6th Cir.1995) (subject to limited exceptions, this court will not consider issues not presented to the district court but raised for the first time on appeal); Overstreet v. Lexington-Fayette Urban County Gov't, 305 F.3d 566, 578 (6th Cir.2002); Bailey v. Floyd County Bd. of Educ., 106 F.3d 135, 143 (6th Cir.1997) (explaining that the court will not consider arguments raised for the first time on appeal unless our failure to consider the issue will result in a plain miscarriage of justice). We find no basis to depart from this principle in the instant action. 31
32 With respect to NTW's affiliation with ASCAP and BMI, Bridgeport cites the following conduct in support of purposeful availment: (1) NTW initially affiliated with ASCAP and BMI through the PROs' Tennessee offices; (2) the PROs collect royalties, monitor performances, and perform enforcement functions on behalf of their members; and (3) NTW licensed its entire music composition catalog to ASCAP and BMI, which in turn re-licensed these compositions to third parties. 33 With respect to the collection, monitoring, enforcement, and licensing activities, the record does not support a finding of purposeful availment. As with the mechanical licenses granted to RAL, the record does not reflect that BMI or ASCAP have any affirmative duty to license or market the subject compositions specifically in Tennessee or even nationally. As to the royalty collection, monitoring, and enforcement functions, the nature of these functions has not been submitted with sufficient clarity to the Court as to permit a purposeful availment finding. 34 With respect to the initial contractual affiliation with the PROs through the Tennessee offices of these organizations, in analyzing whether contractual relationships are sufficient to confer specific jurisdiction, the Court focuses on the actions of the defendant in the negotiation and performance of the contract to determine whether it should be subject to suit in the forum state. See Nationwide, 91 F.3d at 795. As explained in Nationwide: 35 [T]he existence of a contract with a citizen of the forum state, standing alone, will not suffice to confer personal jurisdiction over a foreign defendant. Rather, prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing ... must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum. 36 Id. at 795 (internal citation omitted). 37 As to these factors, Bridgeport does not assert that NTW had any type of substantial contacts or negotiations specifically with the Tennessee offices of BMI and ASCAP, that the contracts' terms contained Tennessee forum or venue selection clauses, or that the parties' course of dealing implicated conduct in the Tennessee forum, other than by way of initial affiliation and the collection of royalties for songs performed in Tennessee. Bridgeport even notes that after initial affiliation, NTW's contact with BMI and ASCAP was maintained through offices not based Tennessee. Based on the foregoing, we cannot find that NTW's prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing support a finding of purposeful availment. 38
39 In this Circuit, operation of an Internet website can constitute the purposeful availment of the privilege of acting in a forum state under the first Mohasco factor `if the website is interactive to a degree that reveals specifically intended interaction with residents of the state.' Bird, 289 F.3d at 874 (quoting Neogen, 282 F.3d at 890). Bridgeport asserts that NTW allows and expects its compositions to be sold on the internet and thus has availed itself of doing business in Tennessee. However, Bridgeport does not assert that NTW hosts or operates a website, let alone one that is sufficiently interactive for a finding a purposeful availment. Even under the more relaxed prima facie standard, Bridgeport's arguments are insufficient to establish purposeful availment as the result of internet activity. 40
41 As none of the foregoing factors support exercising specific personal jurisdiction over NTW, the Court affirms the district court's dismissal of all 11 actions against NTW.