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In Comtech 21, the court found that the website solicited Connecticut consumers by virtue of the fact that it had "a Connecticut drop down menu by which customers can locate area codes and communities from which the defendant can provide Connecticut customers with telephone numbers."
Summary of this case from Bernaud v. SazdovOpinion
Nos. CV 08-5016700 S, CV 07-5013941 S
July 8, 2010
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO DISMISS (#101)
The plaintiff, Comtech 21, LLC, brings this action against the defendant, Broadvox, LLC, by a seven-count complaint filed on January 2, 2008 (Docket Number CV 08 5016700). In its complaint, the plaintiff alleges that it had contracts with the defendant to provide voice over internet protocol ("VoIP") services for local calls, which were to originate and terminate in a local calling area. It claims that the defendant breached these contracts by sending millions of non-local calls over the plaintiff's circuits, which caused it to be assessed charges.
The defendant filed a motion to dismiss this action for lack of personal jurisdiction on February 25, 2008. The plaintiff filed its objection on May 18, 2010. The defendant filed its reply on June 24, 2010. The parties appeared for oral argument on June 28, 2010. The court notes that the plaintiff previously filed suit against Broadvox Inc., Broadvox Corporation and Broadvox Distribution on September 13, 2007 (Docket Number CV 07 5013941). Although these three entities appear to be the incorrect defendants, the plaintiff contended at oral argument that this issue remains in dispute. As such, the court will render a decision on the defendant's motion to dismiss filed in Docket Number CV 08 5016700, which also applies to the motion to dismiss pending in Docket Number CV 07 5013941.
The defendants appended to their motion the affidavit of Andre Temnorod, dated October 30, 2007. He attests: "Broadvox Corporation and Broadvox Distribution LLC are non-operating entities which have no assets and no employees, and do not have any business dealings with Comtech nor any other individuals or entity located in Connecticut."
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Beecher v. Mohegan Tribe of Indians of Connecticut, 282 Conn. 130, 134, 918 A.2d 880 (2007). "The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however . . . the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue . . ." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007). "If the defendant challenging the court's personal jurisdiction is a foreign corporation . . . it is the plaintiff's burden to prove the court's jurisdiction." Id., 515.
The defendant argues that personal jurisdiction cannot be conferred under Connecticut's longarm statutes and that it does not have minimum contacts with the state sufficient to satisfy due process. The defendant is a LLC formed in Delaware. From its inception until 2008, its headquarters and principal place of business was in Cleveland, Ohio. In 2008, the company moved its headquarters to Dallas, Texas. It argues that: it never had employees or offices in Connecticut; was never registered or licensed to do business in Connecticut; never maintained any banking or brokerage accounts in Connecticut; never owned, leased or used any real estate in Connecticut; never used a computer or computer network in Connecticut; never had an address, post office box, telephone or fax listing in Connecticut; was never required to file a tax return or pay taxes to Connecticut; and never brought suit or participated in arbitration or any other administrative hearing in Connecticut. The plaintiff counters that both §§ 52-59b and 33-929 confer personal jurisdiction over the defendant. The plaintiff argues that the defendant made its VoIP services available to Connecticut residents and built both a corporate and residential customer base in this state. Moreover, the plaintiff contends that the defendant solicited Connecticut customers over the internet.
"When a defendant files a motion to dismiss challenging the court's jurisdiction, a two part inquiry is required. The trial court must first decide whether the applicable state longarm statute authorizes the assertion of jurisdiction over the [defendant]. If the statutory requirements [are] met, its second obligation [is] then to decide whether the exercise of jurisdiction over the [defendant] would violate constitutional principles of due process." (Internal quotation marks omitted.) Knipple v. Viking Communications, Ltd., 236 Conn. 602, 606, 674 A.2d 426 (1996). Section 52-59b(a)(1), in relevant part, provides: "As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any . . . foreign voluntary association . . . who in person or through an agent . . . Transacts any business within the state." "[A]lthough the term `[t]ransacts any business' is not defined by statute, we previously have construed the term to embrace a single purposeful business transaction . . . [A] nonresident individual who has not entered this state physically nevertheless may be subject to jurisdiction in this state under § 52-59b(a)(1) if that individual has invoked the benefits and protection of Connecticut's laws by virtue of his or her purposeful Connecticut related activity." (Citations omitted; internal quotation marks omitted.) Ryan v. Cerullo, 282 Conn. 109, 119-20, 918 A.2d 867 (2007). "A `purposeful business transaction' is one in which the defendant has engaged in some form of affirmative conduct allowing or promoting the transaction of business within the forum state." Zemina v. Petrol Plus, Inc., Superior Court, judicial district of New Haven, Docket No. CV 97 128590 (March 3, 1998, Levin, J) ( 22 Conn. L. Rptr. 94, 95). "In determining whether the plaintiffs' cause of action arose from the defendants' transaction of business within this state we do not resort to a rigid formula. Rather, we balance considerations of public policy, common sense, and the chronology and geography of the relevant factors." Zartolas v. Nisenfeld, 184 Conn. 471, 477, 440 A.2d 179 (1981).
Moreover, § 52-59b(a)(2), in relevant part, provides: "As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any . . . foreign voluntary association . . . who in person or through an agent . . . commits a tortious act within the state . . ." In Rios v. Fergusan, 51 Conn.Sup. 212, 222-23, 978 A.2d 592 (2008), the court, as a matter of first impression, held that it had long-arm jurisdiction under § 52-59b(a)(2) to enter a restraining order against a non-resident who created and disseminated a recording on the internet threatening a resident with physical harm. The Rios court noted that: "Several Connecticut courts have held that a nonresident `commits a tortious act within the state' for purposes of § 52-59b(a)(2) by sending a communication whose content may be considered tortious directly into Connecticut." Id., 218. Further, the court noted that: "In Knipple v. Viking Communications Ltd., 236 Conn. 602, 674 A.2d 426 (1996), the Supreme Court held that [f]alse representations entering Connecticut by wire or mail constitute tortious conduct in Connecticut under . . . § 33-929 (f)(4) . . . Although in that case the court was addressing the issue of personal jurisdiction under [33-929(f)(4)] . . . it cited with approval David v. Weitzman, 677 F.Sup. 95, 98 (D.Conn. 1987), in which the District Court held that the transmission of fraudulent misrepresentations into Connecticut by mail or telephone was tortious conduct in Connecticut sufficient to establish personal jurisdiction under . . . 52-59b(a)(2)." (Internal quotation marks omitted.) Id., 219-20. Thus, the Rios court concluded that "a nonresident defendant does not need to be physically present in Connecticut at the time of the commission of the alleged tortious act for him to have `commit[ted] a tortious act within the state' for purposes of § 52-59b(a)(2)." Id., 220.
Additionally, Section § 33-929 (f)(2), in relevant part, provides: "Every foreign corporation shall be subject to suit in this state . . . whether or not such foreign corporation is transacting or has transacted business in this state . . . as follows . . . out of any business solicited in this state by mail or otherwise if the corporation has repeatedly so solicited business, whether the orders or offers relating thereto were accepted within or without the state . . ." In RJM Aviation Associates, Inc. v. London Aircraft Service Center, Inc., Superior Court, judicial district of New Britain, Docket No. CV 06 5000572 (June 17, 2008, Gilligan, J.) ( 45 Conn. L. Rptr. 759, 760-62), the court found that it lacked jurisdiction over a foreign corporation that provided aircraft repair services in a foreign state to an airplane owned by a resident of Connecticut. The plaintiff argued that § 33-929(f)(2) should have applied because the foreign corporation maintained a website to reach airplane owners in each state. See id., 760. The court found, however, the website did not specifically target customers in Connecticut. See id., 762.
In reaching its decision, the court relied upon Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.Sup. 1119 (W.D.Pa. 1997), in discerning whether an internet web site may be used as the basis for conferring personal jurisdiction over an out-of-state defendant. See id., 760-61. In Zippo Manufacturing Co. v. Zippo Dot Coin, Inc., the court delineated the various means through which a person or corporation might use a web site for commercial purposes and how that use might be construed by a court when considering the issue of personal jurisdiction. "[T]he 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. This sliding scale is consistent with well developed personal jurisdiction principles. At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper . . . At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise personal jurisdiction . . . The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site." Id., 1124; see also Delbuono v. Imperial Palace Hotel Casino, LLC, Superior Court, judicial district of New Haven, Docket No. CV 07 5011543 (December 4, 2007, Zoarski, J.T.R.) (relying on Zippo in determining whether it may exercise jurisdiction under § 33-929(f)(2)).
Here, the defendant is a communications company that provides wholesale communications services to other communications carriers. Specifically, it purchases communications traffic from various vendors, such as the plaintiff, and resells it on a wholesale basis in the form of VoIP minutes to its customers. VoIP is the routing of voice conversations over the Internet. The defendant entered into four contracts with the plaintiff for the purchase of access to four circuits located in Los Angeles, Atlanta, New York and Miami. In the affidavit of Andre Temnorod, the defendant's Chief Executive Officer, dated October 30, 2007, he attests: "Broadvox did not purchase any services from Plaintiff located in Connecticut," and that "Broadvox has never bought nor sold significant communications traffic, nor done any significant business in Connecticut." Temnorod does concede that: "Only .25% of all purchasing that Broadvox has made in its brief existence has been made from Connecticut businesses . . . Only .06% of Broadvox's sales during its existence have been made to Connecticut customers."
Attached to its reply memorandum, the defendant attaches a second affidavit from Temnorod, dated June 24, 2010, in which he attests to the following. "Only .84% . . . of all purchasing that Broadvox has made in its entire existence has been made from Connecticut businesses . . . Only .04% . . . of Broadvox's sales during its existence have been to Connecticut customers. In the past five years, the total amount of sales to Connecticut customers is less than $70,000 (total not per year)."
The plaintiff submits the affidavit of Michael Brady, the plaintiff's vice president of sales and operations, dated May 6, 2010. He attests: "Broadvox has many corporate and residential customers in the 203 and 860 area codes in Connecticut. These customers use Broadvox for calls that originate in Connecticut and terminate both inside Connecticut and outside Connecticut. Broadvox transmitted numerous calls out of the State of Connecticut using Comtech's circuits . . . Broadvox routed calls that originated in a 203 and 860 area code through Comtech's circuits in New York, Los Angeles, Atlanta and Miami. While contracts with Comtech were in full force and effect, Broadvox routed numerous calls originating in Connecticut and terminating in New York, Los Angeles, Atlanta and Miami through Comtech's circuits. The transmission of these non-local calls by Broadvox over Comtech's circuits was in breach of the contracts between the parties which allowed for the transmission only of local calls only over Comtech's circuits. Broadvox's transmission of these calls that originated in Connecticut constituted acts in breach of contracts that occurred within the state of Connecticut."
Brady further attests: "Broadvox specifically solicits, targets and advertises to Connecticut customers over the Internet. One website . . . allows customers to click `Connecticut' as an option to locate area codes and communities from which Broadvox can provide Connecticut customers with telephone numbers. The Connecticut drop box on this website lists 43 communities in Connecticut where Broadvox telephone numbers can be obtained . . . Another Broadvox website, identifies Stamford, Connecticut, as one of two locations in New England where Broadvox maintains a `Point of Presence.' . . . The Point of Presence that this website describes runs call traffic through a carrier hotel in Stamford, Connecticut and constitutes a physical presence in the state of Connecticut."
In light of today's advanced technologies, it is well established that a physical presence in Connecticut is not required to establish long-arm jurisdiction. In this context, the question is not whether the defendant has physically entered the state, but rather whether the defendant's method or operation of business amounts to a transaction of business here in Connecticut sufficient for this court to confer long-arm jurisdiction over it. The court is satisfied that either § 52-59b(a)(1), (a)(2), or § 33-929(f)(2) authorize its jurisdiction over the defendant.
The plaintiff, however, contends that the defendant does indeed have a physical presence in Connecticut. In his affidavit, Brady attests that the defendant's website identifies a "point of presence" in Stamford, Connecticut that it runs call traffic through. Temnorod, in his June 24, 2010 affidavit, attests: "This claim is simply false. The `Point of Presence' is merely illustrative to show a user where Broadvox could provide service . . ." Because the court finds that other aspects of the defendant's business provide sufficient bases for this court's jurisdiction, the court need not address this factual dispute.
As for § 52-59b(a)(1), the defendant transacts business in this state. The defendant made purchases from Connecticut businesses and made sales to Connecticut customers. These corporate and residential customers use the defendant's services for calls that originate and terminate in Connecticut through the plaintiff's circuits. In regard to § 52-59b(a)(2), the defendant's alleged transmission of non-local calls over the plaintiff's circuits forms the basis of the plaintiffs action, alleging breach of contract and various tort claims, against the defendant. These non-local calls over the plaintiff's circuits constitute tortious acts occurring within the state. Finally and in regard to § 33-929(f)(2), the defendant specifically solicits, targets and advertises to Connecticut customers over the Internet. On its website, there is a Connecticut drop down menu by which customers can locate area codes and communities from which the defendant can provide Connecticut customers with telephone numbers. Therefore, Connecticut's long-arm statutes authorize this court's jurisdiction over the defendant.
The court must now undertake the second part of its inquiry. "[T]he constitutional due process standard requires that, in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice . . . The due process test for personal jurisdiction has two related components: the minimum contacts inquiry and the reasonableness inquiry. The court must first determine whether the defendant has sufficient contacts with the forum state to justify the court's exercise of personal jurisdiction . . . A state court will have specific jurisdiction over a nonresident defendant whenever the defendant has purposefully directed [its] activities at residents of the forum . . . and the litigation [has] result[ed] from alleged injuries that arise out of or relate to those activities . . ." (Citations omitted; internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., supra, 282 Conn. 523-24. "Once minimum contacts have been established, [t]he second stage of the due process inquiry asks whether the assertion of personal jurisdiction comports with traditional notions of fair play and substantial justice — that is, whether it is reasonable under the circumstances of the particular case." (Internal quotation marks omitted.) Id., 525.
Here, the court is satisfied that its exercise of jurisdiction over the defendant satisfies due process. The defendant has sufficient contacts with Connecticut to justify this court's exercise of personal jurisdiction. The defendant made purchases from Connecticut businesses and made sales to Connecticut customers. These customers used the defendant's services for calls that originated and terminated in Connecticut through the plaintiff's circuits. Additionally, the defendant specifically solicits, targets and advertises to Connecticut customers on its website. Thus, it has purposefully directed its activities at residents of Connecticut. Furthermore, this litigation resulted from alleged injuries that arise out of or relate to those activities, namely, the defendant's alleged transmission of non-local calls over the plaintiff's circuits. Given these circumstances, this court's assertion of personal jurisdiction comports with traditional notions of fair play and substantial justice.
The defendant's motion to dismiss is hereby denied.