Jerry Wilkerson v. RSL Funding, L.L.C.

Citations: 388 S.W.3d 668; 2011 Tex. App. LEXIS 6282; 2011 WL 3516147Docket: 01-10-01001-CV

Court: Court of Appeals of Texas; August 11, 2011; Texas; State Appellate Court

Original Court Document: View Document

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On August 11, 2011, the Court of Appeals for the First District of Texas issued an opinion in the case of Jerry Wilkerson v. RSL Funding, L.L.C., concerning an interlocutory appeal from the 125th District Court of Harris County, Texas. Wilkerson appealed the trial court's order that denied his special appearance and objection to jurisdiction in a lawsuit filed by RSL Funding for defamation, libel, and business disparagement based on statements he made on third-party internet sites.

Wilkerson, a California resident, expressed dissatisfaction with RSL Funding, a financial services company that solicited his daughter, Trisha, after she won the California lottery. Although he had no direct financial stake in the transaction, he posted negative reviews about RSL on two third-party websites, believing he was on RSL’s official site. The evidence submitted included a Yahoo! page containing RSL's contact details and user reviews, including Wilkerson's critical remarks about his experience with the company.

The court found that the trial court lacked jurisdiction over Wilkerson and reversed its decision, rendering a judgment of dismissal without prejudice. The opinion highlights issues with the evidence regarding the Yahoo! listings, including incomplete documents and lack of clarity on the authenticity and content of the reviews.

Wilkerson expresses dissatisfaction with Rapid Settlements (RSL), labeling them unprofessional and alleging breaches of contract, leading him to pursue a lawsuit. He invites others with similar grievances to join a class action. He criticizes RSL's claims of having multiple offices, asserting that calls only reach a central Houston location, suggesting deceptive business practices. In follow-up comments, Wilkerson describes RSL as dishonest, referencing their failure to return calls and their negative impact on clients. He reveals that a check he received from RSL was returned for insufficient funds (NSF), indicating financial instability. He also notes similar negative reviews about RSL on Yelp, asserting that their reputation is poor, filled with lies and misinformation. RSL initiated a defamation lawsuit against Wilkerson, who filed a special appearance to contest the court's jurisdiction, affirming his California residency and lack of ties to Texas. RSL argued that Wilkerson's online reviews were intentionally directed at a Texas audience. The trial court denied Wilkerson's special appearance, prompting him to appeal the decision. Legal standards indicate that personal jurisdiction is assessed de novo, with the plaintiff required to establish sufficient jurisdictional facts under Texas law.

To establish personal jurisdiction over a nonresident defendant in Texas, the plaintiff must demonstrate a connection between the defendant's alleged wrongdoing and the state, specifically by pleading that a tortious act occurred in Texas. A nonresident defendant can challenge this jurisdiction through a special appearance, bearing the burden to negate all grounds for jurisdiction alleged by the plaintiff. This negation can be factual, showing an absence of contacts with Texas, or legal, arguing that the alleged facts do not satisfy the requirements of purposeful availment or that exercising jurisdiction would violate fair play and substantial justice.

If the defendant presents evidence to refute jurisdiction, the plaintiff must provide counter-evidence to maintain the lawsuit, risking dismissal if they fail. The trial court's rulings on jurisdiction are reviewed de novo, and if no findings of fact are issued, all necessary supportive facts are inferred. The Due Process Clause protects individuals from being subjected to a court's judgment without meaningful contacts to that forum. Jurisdiction can only be exercised over nonresident defendants who have purposefully established minimum contacts with Texas, allowing them to reasonably anticipate being sued there. Such contacts must be deliberate, rather than random or fortuitous, and are assessed based solely on the defendant's own actions, not those of third parties.

A minimum-contacts analysis focuses on the quality and nature of a defendant's contacts with the forum state, rather than their quantity. For a court to assert jurisdiction, the defendant must be able to reasonably foresee being called into court in Texas based on their activities, regardless of whether those activities occur inside or outside the state. The analysis distinguishes between specific jurisdiction, linked to contacts causing a claim, and general jurisdiction, based on the overall extent of contacts. In this case, the defendant, Wilkerson, contests the evidence of his purposeful availment of Texas privileges, arguing that any connection to Texas was coincidental and insufficient for jurisdiction. As he disputed RSL's claim regarding the intent behind his internet postings, the burden shifted to RSL to provide evidence supporting its jurisdictional allegations. RSL asserts that Wilkerson's comments were directed at Texas, citing their publication on websites aimed at Texas users and claiming they were part of a scheme to undermine RSL's business. The discussion also addresses the use of a "sliding scale" analysis for internet-based jurisdiction, concluding that the interactive nature of websites like Yahoo! and Yelp cannot be solely attributed to individual users when assessing their minimum contacts with Texas.

Texas courts apply a sliding-scale jurisdictional analysis primarily to claims involving nonresident defendants who own and operate their own websites. This analysis becomes less relevant when assessing jurisdiction over third-party users of those websites, as their usage may be deemed 'passive,' involving merely the posting of information accessible anywhere online. Such passive usage does not establish jurisdiction based on a sliding-scale analysis. Jurisdiction requires purposeful, not random or fortuitous, contacts with the forum state; thus, it should not hinge on the isolated actions of individual users who are not the defendants. 

In the case at hand, Wilkerson did not own Yahoo! or Yelp and only contributed reviews without controlling website content, indicating that a sliding-scale analysis is inappropriate for determining personal jurisdiction over him. Instead, the constitutional standard of purposeful availment is applied to ascertain if Wilkerson intentionally used the website features to target Texas, similar to precedents where jurisdiction was upheld based on intentional exploitation of a state’s market or knowledge of a publication's circulation in that state. RSL claims that Wilkerson aimed his negative postings at it, a Texas company, and that the websites employed geographic search options, thereby asserting purposeful availment of Texas laws.

RSL failed to provide evidence supporting its claim that Wilkerson used 'www.local.yahoo.com' to publish comments specifically linked to Houston. The only evidence presented was a printout of a Yahoo! webpage with a 'local' reference in the URL, which does not prove Wilkerson's responsibility for any Houston-related content. RSL argued that the 'local' designation indicates a focus on geographic searches, particularly for Houston residents, but this assertion lacks citation and competent evidence. The evidence showing that Yahoo! and Yelp have business listings for RSL’s Houston office does not demonstrate that these platforms target Texas residents or entities.

The unilateral actions of these websites or their users do not establish personal jurisdiction over Wilkerson. Even if Yahoo! and Yelp were targeting Texas, there is no evidence Wilkerson knew or should have known his comments were directed at Texas. RSL did not provide proof of Wilkerson's intent to target Texas or the origins of the information it relied on, only presenting printouts without demonstrating how Wilkerson targeted Texas. Wilkerson denied intending to target Texas, and RSL did not refute this denial. Furthermore, RSL's argument that the presence of RSL’s building photo, a Houston address, and a map in the comments indicates purposeful direction towards Texas is unsupported by the evidence provided.

RSL's evidence to support its claims consists solely of printouts from Yahoo! and Yelp, which demonstrate the content of Wilkerson’s comments but do not establish that he provided any additional information about RSL, such as addresses or maps. Wilkerson did not claim responsibility for the appearance of this information on the websites and denied any intention to link his comments with localized content. The evidence indicates that website content is often customized based on the viewer's location, making it insufficient to establish personal jurisdiction over Wilkerson in Texas solely because Texas-related content appeared on the websites. 

In assessing personal jurisdiction, only the defendant's own purposeful contacts with Texas are relevant. RSL failed to show that Wilkerson’s comments were intentionally directed at Texas, presenting no evidence that he aimed his internet commentary at the state. Although Wilkerson mentioned RSL's Houston office in his review, he did not specify the location of the employees he referenced, nor did he provide evidence that would contradict his claims. RSL also contended that Wilkerson's solicitation of Texas residents for a lawsuit demonstrated purposeful availment; however, this claim did not specify whether the lawsuit was intended to be filed in Texas or indicate that only Texas residents were targeted.

Wilkerson's online comments were aimed at a global audience rather than specifically targeting Texas residents, which is crucial for establishing personal jurisdiction. There is no evidence that he sought any benefits from Texas or had any financial interest in the transaction involving RSL and his daughter. RSL argued that Wilkerson's internet postings established a substantial presence in Texas, as searches for RSL would yield results categorized in Houston. However, the court emphasized that jurisdiction cannot be based solely on the effects of conduct in Texas; it must stem from the defendant's actions and connections to the forum state. Citing Calder v. Jones, the court noted that Wilkerson did not demonstrate a continuous and intentional engagement with a Texas audience, which is necessary to establish jurisdiction. The evidence presented by Wilkerson negated RSL’s claims of personal jurisdiction, showing that his postings were not directed specifically at Texas. Consequently, RSL failed to meet its burden of proof. The trial court's denial of Wilkerson’s special appearance was deemed an error, leading to a reversal of the judgment and a dismissal of the case for lack of personal jurisdiction.

RSL submitted two documents, Exhibits E and F, which appear to be a single two-page printout from Yelp, generated on May 18, 2010, approximately six months after two relevant Yelp postings from November 2009. However, RSL did not provide information regarding how these documents were created. Texas courts, under the long-arm statute, can exercise personal jurisdiction over nonresident defendants engaging in business activities in Texas, including committing a tort partly in the state. The concept of 'doing business' is defined by the Texas Civil Practice and Remedies Code, specifically referencing actions such as committing a tort.

In cases involving internet usage, Texas courts apply the 'sliding scale' analysis from Zippo Manufacturing Co. v. Zippo Dot Com, Inc., which correlates the ability to exercise personal jurisdiction with the nature and quality of online commercial activity. A nonresident defendant can be subject to jurisdiction if they engage in significant commercial activities over the internet, such as actively conducting transactions with Texas residents. Conversely, merely maintaining a passive website does not warrant jurisdiction. Interactive websites, which allow information exchange, fall in between, and jurisdiction depends on the level of interactivity and commercial exchange.

While several cases have utilized this sliding scale to evaluate jurisdiction, its application to platforms like eBay is debated since users do not control the site's commercial interactivity. Therefore, the sliding scale may not be applicable in cases involving internet auction sites, as the interactions between sellers and buyers do not reflect the site's operational control.

The dissent's characterization of Yahoo! and Yelp as "local websites" is unsupported by evidence, particularly regarding Wilkerson’s comments. There is no indication that Wilkerson associated his remarks with Houston or used these platforms expecting localized outreach. His communication was aimed at a broader audience, referencing various cities without focusing on Texas. RSL failed to provide substantial evidence that Wilkerson’s comments were intentionally directed towards Texas, as mere association with a local URL does not suffice without proof of intent. Judicial notice acknowledges that platforms like Yahoo! and Yelp curate user content along with other data, but this does not demonstrate Wilkerson's intent to target Texas residents specifically. Past legal precedents emphasize that simply mentioning a forum state or its residents does not establish specific personal jurisdiction. Wilkerson's deposition indicated he was not targeting Texas residents but rather attempting to generate interest in a potential class action lawsuit, further illustrating a lack of intent towards Texas. Various cases are cited to support the notion that tortious conduct must be expressly aimed at the forum state to establish jurisdiction.