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Rist v. Xcentric Ventures, LLC

United States District Court, Fourth Circuit

June 12, 2013

RICHARD RIST; THE LARGE ART COMPANY Plaintiffs
v.
XCENTRIC VENTURES, LLC; DOES I-III, Defendants

MEMORANDUM AND ORDER RE: MOTION TO DISMISS

MARVIN J. GARBIS, District Judge.

The Court has before it Defendant Xcentric Ventures, LLC's Motion to Dismiss the Complaint for Lack of Juridiction [sic] [Document 5] and the materials submitted relating thereto. The Court has reviewed the briefs and accompanying materials and finds a hearing unnecessary.

I. INTRODUCTION

At all times relevant hereto, (1) Plaintiff Richard Rist ("Rist"), a Maryland resident, has been the owner of Plaintiff The Large Art Company ("LAC"), a Maryland corporation, and (2) Defendant Xcentric Ventures, LLC ("Xcentric"), an Arizona company, has operated a website known as the "Ripoff Report."

Rist has sued Xcentric and three John Doe Defendants for publishing defamatory statements in the Ripoff Report.

By the instant motion, Xcentric seeks dismissal, contending hat, with regard to claims against it, this District is not a proper venue, and this Court lacks personal jurisdiction over it.

II. LEGAL FRAMEWORK

A. Venue

"The appropriate venue of an action is a procedural matter that is governed by federal rule and statutes." Albermarle Corp. v. AstraZeneca UK Ltd. , 628 F.3d 643, 650 (4th Cir. 2010)(citing Rule[1] 12(b)(3), 28 U.S.C. § 1391, and 28 U.S.C. § 1406(a)). When a Rule 12(b)(3) motion to dismiss is filed, the plaintiff bears the burden to establish that venue is proper in the judicial district in which the plaintiff has brought the action. Jones v. Koons Auto., Inc. , 752 F.Supp.2d 670, 679-80 (4th Cir. 2010).

When considering a motion to dismiss for improper venue, a court must view all reasonable inferences and facts in the plaintiff's favor. Id. at 680; CoStar Realty Info., Inc. v. Field , 612 F.Supp.2d 660, 672 (D. Md. 2009). However, the court is free to consider evidence outside the pleadings, unlike under a Rule 12(b)(6) motion. Sucampo Pharms., Inc. v. Astellas Pharma, Inc. , 471 F.3d 544, 549-50 (4th Cir. 2006).

B. Personal Jurisdiction

When a defendant moves pursuant to Rule 12(b)(2) to dismiss a complaint for lack of personal jurisdiction, the burden is on the plaintiff "to prove grounds for jurisdiction by a preponderance of the evidence." Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc. , 334 F.3d 390, 396 (4th Cir. 2003).

"If the existence of jurisdiction turns on disputed factual questions the court may resolve the challenge on the basis of a separate evidentiary hearing, or may defer ruling pending receipt at trial of evidence relevant to the jurisdictional question." Combs v. Bakker , 886 F.2d 673 (4th Cir. 1989). However, if the court decides to rule on the basis of the complaint, affidavits, and discovery materials, without conducting an evidentiary hearing, "the plaintiff need only make a prima facie showing of personal jurisdiction, " and the court is to "take all disputed facts and reasonable inferences in favor of the plaintiff." Carefirst , 334 F.3d at 396.

III. DISCUSSION

A. Background

Xcentric's website, the Ripoff Report, allows registered users to post, free of charge, consumer complaints, called "Reports, " against any business or individual located anywhere. The Ripoff Report is characterized as a "worldwide consumer reporting Website and publication by consumers and for consumers." Compl. ¶ 13, ECF No. 1. The website contains advertisements encouraging and soliciting users to submit Reports against companies and individuals that "rip them off."[2] These Reports can be viewed by anyone, free of charge. At present, it appears the Ripoff Report website contains approximately 700, 000 Reports and millions of additional comments pertaining to companies and individuals in many locations. Mot. 2, ECF No. 5. About 8, 300 (1.2%) of these Reports refer to Maryland residents and businesses.[3]

Xcentric has a firm policy of never removing any Report from its database - regardless of whether a Report is claimed to contain defamatory statements or whether the original author asks for it to be removed. Nor will Xcentric remove a Report for compensation. A rebuttal, however, is allowed to be posted, free of charge.

As discussed below, the parties present materially conflicting positions relating to the actions taken by Xcentric with regard to the content and presentation of the alleged defamatory statements made in the Reports. There is, however, no doubt that Xcentric offers services, for a fee, to those who are the subject of derogatory statements in Reports, i.e., arbitration and/or membership in a Corporate Advocacy Program ("CAP") to assist the subject of an adverse Report to repair its reputation. Six Maryland companies have become CAP members. Opp'n 3, ECF No. 6; Reply 2, ECF No. 8.[4]

Sometime prior to January 21, 2012, the three Reports at issue were posted on the website. These contained allegedly defamatory statements about Plaintiffs, for example:

Large Art Company is operated by Richard Rist. He is a fraud and ripped us off and he disrespected the memory of our son. He sold us a piece of art that he claimed was manufactured in the U.S. and when we received the bronze it had a sticker on the bottom of it that said it was made in Mexico.... we were informed that Large Art had been ripping off their copyrighted works and selling them....

Compl. ¶ 33 (Armydog from New York).

A WARNING to bronze art and sculpture buyers... a string of lies I was told to when they began their attempted RIP OFF!... Do not do business with this company [LAC]; they will say whatever it takes to get your money, then SCREW You....

Compl. ¶ 47 (Vanessa from Maine).

LARGE ART IS STILL SELLING KNOCK OFFS.... This company damages artists of their [sic] reputation, integrity, income, since many years and fools clients....

Compl. ¶ 61 (Christin from Munich, Germany).

On January 31, 2012, Rist - having become aware of the Reports at issue - contacted Xcentric by email to ask about the arbitration services. Opp'n, Ex. K, ECF No. 6-11. In response, Xcentric provided information about the arbitration services for which it charged a fee and suggested CAP (another fee-producing service) as another option.

Rist decided to eschew the offered fee-bearing services and to file a free rebuttal to one of the Reports. The rebuttal appeared on the website following the Report posted by "Christin" from Munich, Germany, stated that the adverse statements in the Report were false, that Rist suspected that the Report was made by a competitor, and contained a link to the Better Business Bureau record on LAC. See Mot. Ex. 1, ECF No. 5-1.

The "author" of the Report, now identifying him/herself as "Impala - Bad Kohlgrub (Germany), " responded a few days later by reiterating the complaint that LAC sells knockoffs and including a link to www.bronzecopyright.com. Id.

Rist then filed the instant lawsuit. By the instant motion, Xcentric seeks dismissal contending that Plaintiffs are bound by a forum selection agreement and that it is not ...


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