Court: District Court, D. Maryland; May 28, 2014; Federal District Court
Maryland Plaintiffs Vijai Rao and Sumathi Mathur filed a lawsuit against the Alaska-based airline Era Alaska Airlines and other Alaska defendants for the loss of personal property during an intra-Alaska flight. The defendants moved to dismiss the case, claiming that Maryland lacked personal jurisdiction because the flight occurred solely within Alaska and the airline conducts business only in that state. The Plaintiffs countered that purchasing their tickets online established sufficient jurisdiction in Maryland. However, the court found that Maryland could not exercise personal jurisdiction over the defendants. It determined that the interests of justice warranted transferring the case to the U.S. District Court for the District of Alaska.
In their complaint, the Plaintiffs alleged that after boarding an Era flight from Kodiak to Anchorage on August 22, 2010, they discovered their valuable personal items, including jewelry and cash in a carrying case, were missing upon arrival. They attempted to locate the items at the Anchorage airport but were denied access to search the airplane. Era later misled Rao by claiming the items were found at Kodiak and promised to refund his travel expenses, which discouraged him from verifying the situation. The airline ultimately failed to recover the items. The Plaintiffs filed a formal complaint and police report, alleging emotional distress due to the loss, despite not specifying that the items had personal or sensitive significance. On August 23, 2012, they filed a six-count complaint against Era, its president, and various unidentified entities, citing negligence, breach of warranty, fraud, violation of consumer protection laws, gross negligence, and seeking punitive damages. The defendants' motion to dismiss for lack of personal jurisdiction was initially denied in May 2013, allowing for limited discovery to assess any potential connection to Maryland.
A proposed Discovery Plan was filed by the parties on June 21, 2013. On September 25, 2013, Plaintiffs sought to amend their Complaint, asserting that the limited discovery period ended on September 23, 2013. They aim to include additional facts to establish personal jurisdiction in Maryland over the Defendants, specifically noting that the Defendants use the online service Sabre, a Global Distribution System, which facilitates bookings and reservations in Maryland. Plaintiffs also mention their past service reservations through expedia.com in Maryland. Defendants Era and Hadjukovich opposed the amendment and have renewed their motion to dismiss the case, citing a lack of personal jurisdiction, to which Plaintiffs have responded. Both motions are currently under consideration.
Regarding personal jurisdiction, when challenged under Fed. R. Civ. P. 12(b)(2), the burden lies with the plaintiff to demonstrate jurisdiction by a preponderance of evidence. If no evidentiary hearing is held, the plaintiff must show a prima facie case for jurisdiction based on the complaint and supporting documents. The court must view allegations in the light most favorable to the plaintiff but is not obligated to accept conclusory statements. Personal jurisdiction can be general or specific; general jurisdiction requires continuous and systematic activities in the state, while specific jurisdiction arises from the defendant's minimum contacts related to the plaintiff's claims. The court assesses three factors for specific jurisdiction: purposeful availment of conducting activities in the state, whether the claims arise from those activities, and the constitutional reasonableness of exercising jurisdiction. The analysis involves two steps: confirming jurisdiction under the state's long-arm statute and ensuring compliance with the Fourteenth Amendment's due process requirements. Maryland's long-arm statute aligns with the due process limits, necessitating the examination of both elements in assessing personal jurisdiction.
Plaintiffs do not claim that Era is subject to general jurisdiction in Maryland; thus, for the court to assert jurisdiction, their claims must stem from actions specified in the Maryland long-arm jurisdiction statute. This statute allows personal jurisdiction if a defendant: (1) transacts business in Maryland; (2) contracts to provide goods or services in the state; (3) causes tortious injury in Maryland; (4) causes tortious injury outside the state while engaging in business in Maryland; (5) has an interest in real property in Maryland; or (6) contracts to insure or act as surety for matters in Maryland.
The plaintiffs reference sections 6-103(b)(1) and 6-103(b)(2) of the statute. Section 6-103(b)(2) is inapplicable because Era did not contract to supply goods or services in Maryland; even if Plaintiffs purchased tickets in Maryland, the services were rendered in Alaska. Therefore, this section does not establish jurisdiction.
Conversely, section 6-103(b)(1) raises more complex issues. Plaintiffs argue that online transactions are integral to modern tourism, claiming that Era uses its Sabre membership to facilitate customer interactions and ticketing. However, the cause of action originates from events in Alaska, leading to ambiguity about whether the actions of Era's employees in Alaska can be interpreted as "transacting business" in Maryland simply because tickets were purchased there. The parties did not clarify this point.
Maryland courts align the state's long-arm statute with constitutional due process limits on personal jurisdiction. If the contacts asserted by Plaintiffs meet due process standards, they likely satisfy the Maryland long-arm statute, particularly if the Plaintiffs' claims arise from ticket purchases in Maryland. For due process, a defendant must have "minimum contacts" with the forum state, ensuring that a lawsuit does not violate principles of fair play and substantial justice. This requires showing that the defendant purposefully directed activities at the forum's residents and that the plaintiff's claims arise from those activities, preventing defendants from being summoned to a jurisdiction based on random or fortuitous contacts.
Plaintiffs acknowledge that Era operates flights solely within Alaska, and they traveled to Alaska for their flights. However, they purchased tickets online through Expedia, part of the Sabre global distribution system, which has offices in Maryland. Despite this, Plaintiffs provide no additional facts to support Maryland's jurisdiction over Era. The Fourth Circuit's ALS Scan ruling cites the Zippo case, explaining that the ability to exercise personal jurisdiction is proportional to the nature of a defendant's online commercial activity. A sliding scale exists: at one end, clear business transactions warrant jurisdiction, while at the other, passive websites do not. Interactive sites fall in between, with jurisdiction depending on the level of interactivity and commercial exchanges involved.
A State may exercise judicial power over individuals outside its borders if those individuals engage in electronic activities with the intent to conduct business within the State, leading to potential legal claims in the State's courts. The Fourth Circuit's decision in ALS Scan illustrates that simply having a website accessible in a State does not establish personal jurisdiction if the website operator has no other connections to the State. The mere accessibility of a website does not demonstrate ongoing conduct by the defendants within the State. The Fourth Circuit cautioned against a broad interpretation of personal jurisdiction based on internet activity, which would undermine the principle of limited geographical judicial power.
In contrast, the Zippo case demonstrated a scenario where the out-of-state defendant actively chose to engage with Pennsylvania residents by processing their applications for a subscription service, thereby establishing sufficient grounds for personal jurisdiction since the defendant was aware of the consequences of its actions. The Western District of Pennsylvania emphasized that the defendant had the option not to sell services to Pennsylvania residents, highlighting the importance of voluntary engagement in determining jurisdiction.
In Young v. New Haven Advocate, the Fourth Circuit evaluated whether Connecticut newspapers could be subject to jurisdiction in Virginia for defamation related to a Virginia resident. The court found that the newspapers did not intend their content for a Virginia audience, thus rejecting jurisdiction based solely on the knowledge of the warden’s residency, as it would undermine due process principles. However, a different outcome was reached in Calder v. Jones, where the defendants were aware that their publication had significant circulation in the state seeking jurisdiction, leading to a finding of personal jurisdiction.
In Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., a Maryland trademark suit was filed against a non-profit based in Illinois, with minimal ties to Maryland, primarily a website and a few donations from Maryland residents. The Fourth Circuit observed that the CPC's website was predominantly focused on its Chicago work rather than actively targeting Maryland. It concluded that a generalized solicitation for donations was insufficient to establish personal jurisdiction in Maryland. The case highlights the Fourth Circuit's reluctance to extend jurisdiction based solely on online presence. The plaintiffs attempted to differentiate their case by arguing that Era, another defendant, interacted with Maryland residents through its membership in Sabre for travel services. However, the record did not support this claim, as Era primarily advertised in Alaska, and customers from Maryland had to actively seek them out. Consequently, the court found that Era did not engage in business within Maryland, and the plaintiffs failed to demonstrate sufficient grounds for personal jurisdiction. Additionally, the defendants argued that there was no connection between defendant Bob Hadjukovich and Maryland, which the plaintiffs did not contest, leading to the conclusion that the court also lacked personal jurisdiction over Hadjukovich.
Plaintiffs seek to amend their complaint to bolster their claim of jurisdiction in Maryland. The decision to grant such a motion lies within the Court's discretion, guided by Rule 15(a)(2), which encourages amendments when justice requires, unless they would cause prejudice, reward bad faith, or be futile. The Court has determined that the proposed amendments would not establish jurisdiction over Defendants and therefore deems the amendment futile, leading to a denial of the motion.
Despite the lack of jurisdiction, Plaintiffs argue for a transfer of the case to Alaska instead of outright dismissal, referencing 28 U.S.C. § 1404(a). The applicable statute for venue issues is 28 U.S.C. § 1406(a), which permits dismissal or transfer if the venue is improper. The Court notes that while transferring the case could be justified, it is uncertain whether such a transfer would serve the interests of justice due to the questionable nature of Plaintiffs' claims, potential issues with the statute of limitations, and the appropriateness of the claims under Alaska law.
Considering that dismissing the case could bar Plaintiffs from re-filing their claims after the statute of limitations has expired, and noting that Defendants have not contested the transfer argument, the Court decides to transfer the case to the United States District Court for the District of Alaska instead of dismissing it.
The Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction is denied, and the Plaintiffs’ Motion for Leave to Amend the Complaint is also denied. The case will be transferred to the United States District Court for the District of Alaska. This decision addresses both the Plaintiffs’ Motion to Amend and the Defendants’ Renewed Motion to Dismiss, including the respective oppositions and replies. The court notes that the Plaintiffs mislaid their case, as they left it on the airplane, rather than the Defendants being responsible. The complaint lacks specific allegations regarding the unnamed Defendants' identities and the basis for their liability, merely stating that their identities are unknown. The Plaintiffs’ arguments about personal jurisdiction primarily reference outdated case law predating the Internet, failing to cite any relevant cases from after 1993. Additionally, the Fourth Circuit's rejection of the "effects test" is highlighted, indicating that personal jurisdiction cannot be established as the events related to the complaint occurred entirely in Alaska.
