District Court Exercises Personal Jurisdiction Over Defendant Non-U.S. Executive Who Operated an Affiliate Corporation in the Forum State

The World in U.S. Courts: Winter 2015 - Personal Jurisdiction

Pearson Education, Inc., et al. v. Hotfile Corp., et al., U.S. District Court for the Southern District of Florida, October 29, 2014

Defendant Hotfile, a Panamanian corporation, formerly operated an online “storage locker” which allowed users to upload and share digital content. No restriction was placed on the type of content that could be uploaded and subsequently downloaded by Hotfile’s users; as a result, a large percentage of the files transferred through the Hotfile service proved to be unauthorized copies of copyrighted works. Plaintiffs, five of the largest textbook publishing companies in the United States, commenced an action alleging that Defendants intentionally and willingly allowed for, encouraged, and profited from the illegal download and distribution of their copyrighted works and were thus vicariously liable for the copyright infringement committed by Hotfile users. Defendant Anton Titov—a Russian citizen living in Bulgaria—was a central figure in Hotfile’s ownership and operation, and challenged the Court’s jurisdiction over him. Plaintiffs asserted that Titov’s extensive involvement with Hotfile, as well as its internet service provider-affiliate Lemuria Communications, Inc., a Florida corporation, were sufficient to confer general jurisdiction over Titov.

The Court addressed personal jurisdiction using a two-part test: first, the Court must determine whether the Florida long-arm statute provides a sufficient basis for personal jurisdiction, then must ascertain whether sufficient minimum contacts exist between the defendant and the forum state so as to satisfy traditional notions of fair play and substantial justice under the Due Process Clause of the Fourteenth Amendment.

The Court found that jurisdiction was proper under the Florida long-arm statute because Titov was instrumental in the organization, maintenance, and operation of the Hotfile enterprise, a business operating in Florida. Coupled with Titov’s continued operation of a Florida corporation, the facts were sufficient to find jurisdiction under Florida’s general jurisdiction statute. The Court also found that sufficient minimum contacts existed between Titov and the forum state to satisfy the Due Process Clause: it was determined that Titov was a high-ranking, central figure at Hotfile, who was critical to the company’s formation and maintenance, and that he personally had a hand in every aspect of the conduct underpinning Plaintiffs’ theories of liability. The Court found that although Titov resided in Bulgaria, he could reasonably expect to be sued in the U.S. for the allegedly pervasive infringement activities of a business operating there. While the burden on Titov could be substantial, the other factors overwhelmingly favored the exercise of jurisdiction.

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