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Wargaming.net Case Against Blitzteam Dismissed for Lack of Personal Jurisdiction
In our Year-In-Review post, we discussed three different clone cases brought by foreign companies in U.S. district courts in California:
Job Games Bilism Yazilim Ve Pazarlama A.S. v. SayGames LLC, 458 F. Supp. 3d 1202, 1214 (N.D. Cal. 2020)
Voodoo SAS v. SayGames LLC, No. 19-CV-07480-BLF, 2020 WL 3791657 (N.D. Cal. July 7, 2020)
Wargaming.net Ltd. v. Blitzteam, LLC, Case No.: CV 20-02763-CJC (MRWx) (C.D. Cal. Oct. 20, 2020)
In the first two cases (Job Games and Voodoo), the Northern District of California held that “passively” publishing on the App Store wasn’t sufficient to create jurisdiction in California without “something more.” In my view, these courts took an unduly narrow view of how the apps and advertising targeted California citizens and incorrectly decided the “purposeful availment” test.
In a third case (Wargaming), a Central District of California court in October of last year initially refused to dismiss the plaintiff’s case on personal jurisdiction grounds and allowed jurisdictional discovery. Earlier this month, however, the same court has now dismissed the case on personal jurisdiction grounds. The court continued to share my view about purposeful availment, but nevertheless dismissed the case on “fair play and substantial justice grounds.”
THE FEDERAL LONG ARM STATUTE
In Wargaming, the plaintiff argued for personal jurisdiction under the federal long-arm statute, FRCP 4(k)(2) which has three requirements:
the claim against the defendant must arise under federal law;
the defendant must not be subject to the personal jurisdiction of any state court of general jurisdiction; and
the federal court’s exercise of personal jurisdiction must comport with due process.
In this case, the first two requirements were undisputed, leaving the third prong the only one in question. The court provided further explanation on plaintiff’s burden for meeting the third prong:
The due process analysis under Rule 4(k)(2) is nearly identical to traditional personal jurisdiction analysis with one significant difference: rather than considering contacts between the [defendant] and the forum state, [courts] consider contacts with the nation as a whole. Constitutional due process concerns are satisfied when a nonresident defendant has “certain minimum contacts” with the forum “such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.”
Unlike the Northern District courts in the previous cases, the Central District recognized the importance in the defendant’s choice of making its allegedly infringing game available to U.S. players through the Apple and Google stores. Similarly, unlike the other courts, the Central District court was persuaded by Wargaming’s evidence that the defendant “ran advertisements specifically targeted at the United States” and recognized the obvious — i.e., that when you buy Facebook ads, those are specifically targeted at the geographic region you pay for. Finally, the district court highlighted the fact that the defendant had a separate terms of service for U.S. players that took advantage of U.S. law.
Nevertheless, the defendant was able to present a compelling case for why it would be unreasonable for the court to assert jurisdiction. Again, the court explained the standard:
In determining whether the exercise of jurisdiction over a nonresident defendant comports with ‘fair play and substantial justice,’ [the Court] must consider seven factors: (1) the extent of the defendants’ purposeful interjection into the forum state’s affairs; (2) the burden on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of the defendants’ state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff’s interest in convenient and effective relief; and (7) the existence of an alternative forum.
The court found that five of the seven factors favored the defendant and highlighted the fact that Wargaming had “already filed and lost five actions in Belarus related to infringement of its source code.” The court also focused on the fact that neither party is a U.S. citizen; that U.S. citizens aren’t being harmed by the defendant’s conduct; and that, as a result, the U.S. has “little interest in adjudicating this suit.” In sum, the court saw this as a dispute between two completely foreign companies that had adequate forums in their home countries of Cyprus and Belarus and had already been litigating there.
I was pleased to see that the Central District court, unlike the previous decisions in the Northern District, correctly concluded that the defendant “purposefully availed” itself of the privilege of conducting business in the U.S. I also don’t necessarily disagree with the court’s decision to nevertheless throw out the case on reasonableness grounds, in light of the parties and the facts. What remains to be seen is how the other two Northern District cases will fare on appeal. I hope that the appellate court will agree with the Central District on purposeful availment even if they ultimately uphold the decisions on reasonableness grounds in keeping with the Central District’s view of these foreign litigant clone cases.