Court Opinion

ID: 9648356
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:15:59.439281+00
Date Added: 2024-06-11T17:25:02.697224
License: Public Domain

*30RAKER, Judge,
dissenting, in which BELL, Chief Judge, and HARRELL, Judge, join.
I would reverse the judgment of the Circuit Court because the court abused its discretion in denying petitioner BSI’s request for further discovery as to jurisdictional facts. The Circuit Court granted respondents KDMS and Realtime’s motion to dismiss the complaint on the grounds that respondents were not subject to the personal jurisdiction of the court and that petitioner was not entitled to discovery on the issue. The majority holds that the Circuit Court acted within its discretion to deny discovery “in light of the fact that BSI was unable to produce any evidence of a connection between Realtime Gaming and KDMS, on the one hand, and windows-casino.com and Thom, on the other, beyond a link leading to an IP address at which individuals could download the software designed by KDMS.” Maj. Op. at 28-29, 878 A.2d 583-84 (emphasis in original). I disagree.
I agree that based on the record before the court, evidence of Maryland contacts was insufficient to subject respondents KDMS and Realtime to personal jurisdiction in Maryland. Discovery in this case was to close on September 27, 2004, with discovery requests to end by August 27, 2004. On May 26, 2004, the Circuit Court issued an order granting respondents’ motion to dismiss for lack of personal jurisdiction and denying petitioner’s discovery requests as to the jurisdiction issue. Petitioner filed a motion for reconsideration on June 11, 2004. On July 27, 2004, while the motion for reconsideration was pending, petitioner sent interrogatories and document requests to respondents, seeking discovery related to personal jurisdiction. ' The Circuit Court denied petitioner’s motion for reconsideration on September 21, 2004. In my view, the court abused its discretion in denying petitioner discovery on the issue of personal jurisdiction.
The general rule is that a court should not dismiss a claim for lack of personal jurisdiction without permitting the plaintiff to obtain discovery as to jurisdictional facts. In Androutsos v. Fairfax Hospital, 323 Md. 634, 594 A.2d 574 (1991), the *31Circuit Court had dismissed a negligence action for lack of personal jurisdiction without permitting the plaintiffs to obtain discovery as to the defendant’s contacts with Maryland. In finding that the court had abused its discretion, we stated as follows:
“[0]ur discovery rules, which are broad and comprehensive in scope, have as their principal objective the required disclosure of all relevant facts surrounding the litigation before the court. In Baltimore Transit Co. v. Mezzanotti [227 Md. 8, 13-14, 174 A.2d 768, 771 (1961) ], we reasoned:
‘If all of the parties have knowledge of all of the relevant, pertinent and non-privileged facts, or the knowledge of the existence or whereabouts of such facts, the parties should be able properly to prepare their claims and defenses, thereby advancing the sound and expeditious administration of justice. In order to accomplish the above purposes, the discovery rules are to be liberally construed. And the trial judges, who are primarily called upon to administer said rules, are vested with a reasonable, sound discretion in applying them, which discretion will not be disturbed in the absence of a showing of its abuse.’
Nowhere is that rationale more applicable than when a fact-specific issue, such as whether the court can exercise personal jurisdiction over a non-resident defendant, is presented.”
Androutsos, 323 Md. at 638, 594 A.2d at 576 (citations omitted).
Although the plaintiff in a civil action bears responsibility for establishing the defendant’s amenability to suit, including personal jurisdiction, a complaint is required to contain “only such statements of fact as may be necessary to show the pleader’s entitlement to relief.” Md. Rule 2-303(b). Indeed, it is the defendant who must raise questions of personal jurisdiction at the pleading stage; under Maryland Rule 2-322(a) any defense to personal jurisdiction is waived if not raised before filing an answer to the complaint. See Hansford *32v. District of Columbia, 329 Md. 112, 120, 617 A.2d 1057, 1060 (1993). Thus, a plaintiff bears no affirmative duty to plead personal jurisdiction in a complaint, and it is inappropriate ordinarily to grant a motion to dismiss based solely on the pleadings and to deny discovery on the issue of amenability to suit. See, e.g., Edmond v. United States Postal Serv. Gen. Counsel, 953 F.2d 1398, 1401 (D.C.Cir.1992) (Ginsberg, J., concurring); Compagnie des Bauxites de Guinee v. L’Union Atlantique S.A. d’Assurances, 723 F.2d 357, 362 (3rd Cir. 1983); Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326, 1343 (2d Cir.1972); Surpitski v. Hughes-Keenan Corp., 362 F.2d 254, 255-56 (1st Cir.1966); Hart Holding Co. Inc. v. Drexel Burnham Lambert, Inc., 593 A.2d 535, 538 (Del.Ch.1991); Peterson v. Spartan Indus., Inc., 33 N.Y.2d 463, 354 N.Y.S.2d 905, 310 N.E.2d 513, 516 (1974).
In Edmond, then-Circuit Judge Ruth Bader Ginsburg noted the importance of affording a plaintiff “ample opportunity” to take discovery relevant to personal jurisdiction before dismissing a claim against a defendant:
“The ruling on personal jurisdiction over Popkin was premature in the absence of any discovery; in keeping with Naartex [Consulting Corp. v. Watt, 722 F.2d 779 (D.C.Cir. 1983), cert. denied sub nom. Naartex Consulting Corp. v. Clark, 467 U.S. 1210, 104 S.Ct. 2399, 81 L.Ed.2d 355 (1984) ], that ruling should have abided a fair opportunity for plaintiffs to pursue discovery keyed to the issue of personal jurisdiction.”
Edmond, 953 F.2d 1398 at 1401.
In Surpitski, the United States Court of Appeals for the First Circuit noted as follows:
“A plaintiff who is a total stranger to a corporation should not be required, unless he has been undiligent, to try such an issue on affidavits without the benefit of full discovery. ... The condemnation of plaintiffs proposed further activities as a ‘fishing expedition’ was unwarranted. When the fish is identified, and the question is whether it is in the *33pond, we know no reason to deny a plaintiff the customary license.”
Surpitski, 362 F.2d at 255-56.
The Delaware Coui’t of Chancery addressed this issue in Hart Holding Co. and stated as follows:
“As a plaintiff does have an evidentiary burden, she may not be precluded from attempting to prove that a defendant is subject to the jurisdiction of the court, and may not ordinarily be precluded from reasonable discovery in aid of mounting such proof. Surpitski v. Hughes-Keenan Corp., 362 F.2d 254, 255 (1st Cir.1966); see 5A Wright and Miller § 1351 n. 33. Only where the facts alleged in the complaint make any claim of personal jurisdiction over defendant frivolous, might the trial court, in the exercise of its discretionary control over the discovery process, preclude reasonable discovery in aid of establishing personal jurisdiction. Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 708, 102 S.Ct. 2099, 2107, 72 L.Ed.2d 492 (1982). In Compagnie des Bauxites de Guinee v. L’Union Atlantique S.A. d'Assurances, 723 F.2d 357 (3d Cir.1983), the Court of Appeals for the Third Circuit stated the general rule:
Where the plaintiffs claim is not clearly frivolous, the district court should ordinarily allow discovery on jurisdiction in order to aid the plaintiff in discharging that burden.
723 F.2d at 362.
It is relatively rare but not unheard of that a court will require a plaintiff to attempt to make out its prima facie factual showing of defendant’s amenability to suit without the benefit of discovery. See, e.g., Wyatt v. Kaplan, 686 F.2d 276 (5th Cir.1982); Daval Steel Products v. M.V. Juraj Dalmatinac, 718 F.Supp. 159 (S.D.N.Y.1989); Singer v. Bell, 585 F.Supp. 300 (S.D.N.Y.1984); Grove Valve & Regulator Co., Inc. v. Iranian Oil Services, Ltd., 87 F.R.D. 93 (S.D.N.Y.1980). While in each of these cases the court considered matters outside of the pleading, in each instance *34the court found that plaintiffs assertion of personal jurisdiction lacked that minimal level of plausibility needed to permit discovery to go forward. No purpose is here served by detailing the facts presented in those eases; questions of this kind are inherently highly particular. But it is notable that, in Wyatt v. Kaplan, in approving the granting of a motion to dismiss under Rule 12(b)(2) where the plaintiff had been denied an opportunity to take depositions, the Fifth Circuit Court of Appeals strongly endorsed the practice that ordinarily permits discovery on such a motion:
When a defendant challenges personal jurisdiction, courts generally permit depositions confined to the issues raised in the motion to dismiss.... In appropriate cases we will not hesitate to reverse a dismissal for lack of personal jurisdiction, on the ground that plaintiff was improperly denied discovery....
Wyatt v. Kaplan, 686 F.2d at 283.”
Hart Holding Co., 593 A.2d at 539-40.
This case is not one which falls into the category of “clearly frivolous.” The elusive nature of Internet presence, together with the strong incentives for “spammers” to conceal their identities, portends that often there will be a dearth of jurisdictional facts in future cases brought under the Commercial Electronic Mail statute. The General Assembly has created a private cause of action to aid Maryland residents in the escalating battle against unsolicited, deceptive commercial email. The effectiveness of that tool will be diminished if we close the courthouse door to plaintiffs without providing them the means to uncover facts that would support personal jurisdiction.
The e-mails at issue in this case were composed by an entity named windowscasino.com, and sent into Maryland by that entity through its “affiliate,” Travis Thom. I disagree with the majority’s conclusion that “BSI was unable to produce any evidence of a connection between Realtime Gaming and KDMS, on the one hand, and windowscasino.com and Thom, *35on the other, beyond a link leading to an IP address at which individuals could download the software designed by KDMS.”
BSI established three facts casting doubt on respondents’ contention that windowscasino.com is, at most, a sub-licensee of KDMS software and has no agency relationship with respondents. First, the hyperlink “http://wincasinoclicks.com/ SmartDownload.asp?affid=13462” permitted Maryland recipients of the e-mail to download KDMS-designed software. Second, the domain name “wincasinoclicks.com” corresponds to an IP address registered to KDMS and Realtime. Thus, an e-mail recipient who clicked on the hyperlink would be downloading KDMS software from a server belonging to KDMS. Third, BSI’s expert, Paul A. Wagner, stated in his affidavit that the “?affid=13462” portion of the hyperlink most likely served to identify the affiliate (in this case Travis Thom) who recruited the gambler. Assuming this uncontroverted allegation to be true, a KDMS-owned server was collecting information that could have been used to determine Travis Thom’s compensation.
The relationship between respondents and windowscasino.com is shrouded in the mists of holding companies, offshore entities, and multi-level licensing arrangements. According to respondents, KDMS has entered into an exclusive license with a master licensee (Panama-based Montana Overseas). Montana Overseas, in turn, sub-licenses the software to many client casinos, among them windowscasino.com (seemingly a trade name of either Angel de la Mañana, a Costa Rican corporation, or ADLM, Ltd., located in the Channel Island of Jersey). Respondents assert that KDMS and Realtime have no direct relationship with their sub-licensees, and exercise no control over the manner in which the sub-licensees advertise their services. Under BSPs theory, on the other hand, the licensing and sub-licensing agreements are shams, Montana Overseas, Angel de la Mañana, and ADLM are mere dummy corporations, and windowscasino.com is a trade name or alter ego of KDMS/Realtime.
*36While the relationships may be exactly as KDMS and Realtime claim, the three facts detailed above provide some credence to BSI’s theory. A KDMS-owned server is providing KDMS-developed software directly to end users. This server’s collection of affiliate identification numbers suggests that KDMS and Realtime may have some role in the administration of windowscasino.com’s affiliate commission system.
These facts alone do not establish an agency relationship between KDMS/Realtime and windowscasino.com, but they do render BSI’s request for discovery something more than a “fishing expedition.” BSI is entitled to more information regarding the connections among the various entities. Who owns Montana Overseas, Angel de la Mañana, and ADLM? Do these companies have any assets or employees? Who is acting as the “house” when a gambler bets at windowscasino.com? Do the purported licensing agreements between KDMS/Realtime, Montana Overseas, and Angel de la Mañana or ADLM actually exist, and if so, what do they contain? Is the software licensed for a flat fee, or do KDMS and Realtime receive an additional payment for each download? What aspects of windowscasino.com’s business, if any, are run directly by KDMS and Realtime? Do KDMS and Realtime write advertising copy for windowscasino.com and its affiliates?
Answers to the above questions might establish that KDMS and Realtime merely develop software, provide some incidental hosting services, and can in no way be deemed to have purposefully “sent” Travis Thom’s e-mails into Maryland. But they might also establish that the advertisement and the strategy for e-mailing it in bulk were the direct creations of KDMS and Realtime, hiding behind multiple layers of dummy corporations and sham licensees in an attempt to disguise their operation of a “spam”-dependent business.
I respectfully dissent.
Chief Judge BELL and Judge HARRELL have authorized me to state that they join in this dissenting opinion.