Case 2:05-cv-02257-KHV-JPO Document 32 Filed 12/06/05 Page 1 of 8

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

GRACELAND COLLEGE CENTER FOR )

PROFESSIONAL DEVELOPMENT AND )
LIFELONG LEARNING, INC., )
d/b/a SKILLPATH )
)
Plaintiff, )
)
v. ) Case No.05-2257-KHV
)
MICHAEL F. PRICE, )
BizSummits LLC, and )
Specialty Holdings LLC d/b/a VC South, )
)
)
Defendants. )

MEMORANDUM IN SUPPORT OF DEFENDANTS

MOTION TO DISMISS THE FIRST AMENDED COMPLAINT

The defendants have moved to dismiss plaintiffs First Amended Complaint pursuant to

Rule 12(b)(2) for lack of jurisdiction over the person. Put simply, the defendant has insufficient

contact with the state of Kansas for this court to assert jurisdiction in this case.

Before a federal court can assert personal jurisdiction over a defendant in a federal

question case, the court must determine that the exercise of jurisdiction comports with due

process and that an applicable statute potentially confers jurisdiction by authorizing service of

process. Deprenyl Animal Health, Inc. v. University of Toronto Innovations Foundation, 161 F.

Supp. 2d 1272, 1275 (citing Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th

Cir.2000)). Because the Kansas long-arm statute is construed liberally to allow jurisdiction to

the full extent permitted by due process, the same constitutional standard is applied to plaintiffs
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state law claims. See Deprenyl, 161 F. Supp. 2d at 1275 (citing Federated Rural Elec. Ins. Corp.

v. Kootenai Elec. Coop., 17 F.3d 1302, 1305 (10th Cir.1994)).

The applicable constitutional standard was recently articulated by the Tenth Circuit in

Doreing ex rel. Barrett v. Copper Mountain, Inc., 259 F.3d 1202, 1210:

Consistent with due process, a court may exercise personal jurisdiction over a
nonresident defendant if minimum contacts exist between the defendant and the forum
state such that maintenance of the lawsuit would not offend traditional notions of fair
play and substantial justice. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
291-92 (1980) (quotation omitted). The minimum contacts standard may be met in one
of two ways: (1) a court may exercise general jurisdiction if the defendant's contacts with
the forum state are continuous and systematic; or (2) a court may exercise specific
jurisdiction over a defendant if it purposefully directs activities at residents of the forum
and the litigation results from alleged injuries that arise out of or relate to those activities.
See Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 455 (10th Cir.1996).

Insofar as defendants are residents of Georgia and doing no business in Kansas, plaintiff

cannot claim that the defendants contacts with Kansas are continuous and systematic. Hence,

the real issue here is whether the court may exercise specific jurisdiction in this case. Because

the defendants have not purposefully directed activities at residents of Kansas, specific

jurisdiction also is not present here.

As set forth in the Affidavit of Michael F. Price (Defendants Affidavit), attached

hereto as Exhibit A and incorporated by this reference:

1. The seminars that are the subject of plaintiffs copyright infringement claims were

marketed exclusively to Georgia residents, the seminars were conducted in Georgia, and only

Georgia residents enrolled and participated in those seminars. Defendants Affidavit, 4-6, 8-

9.

2. The seminars that are the subject of plaintiffs copyright infringement claims were

never marketed in Kansas, nor have any Kansas residents enrolled or participated in those

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seminars. Defendants Affidavit, 6.

3. Defendants marketing efforts to drive traffic to its website were limited to the

state of Georgia, and more specifically, the metropolitan Atlanta area. Defendants Affidavit, 7

4. Defendant Michael Price has not traveled nor made phone calls to Kansas to

market BizSummits seminars. Defendants Affidavit, 10-11.

5. Defendant Prices activities as alleged in plaintiffs complaint were conducted in

his capacity as President of BizSummits LLC (BizSummits). Defendants Affidavit, 1.

6. BizSummits does not do business in the state of Kansas and does not actively

market its services within the state of Kansas or to Kansas residents. Defendants Affidavit,

12(D).

7. BizSummits has never conducted a seminar of any kind within the state of

Kansas, nor does BizSummits provides services of any kind within the state of Kansas.

Defendants Affidavit, 12(A-B).

8. In order to participate in a BizSummits seminar, or any of the seminars relevant

to the allegations in plaintiffs complaint, a Kansas resident would have to travel to another state

to attend. Defendants Affidavit, 12(C).

9. No Kansas resident has ever registered or attended any seminar provided by

BizSummits or marketed under the names SkillSummit or SkillSummits. Defendants Affidavit,

12(C).

Under no circumstances is plaintiff able to establish that defendants purposefully directed

activities at residents of Kansas; all indications and evidence are to the contrary.

Defendants are mindful of Judge Waxses decision in Rainy Day Books, Inc. v. Rainy

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Day Books & Caf, LLC, 186 F. Supp. 2d 1158 (D. Kan. 2002). In brief, Judge Waxse adopted

the sliding scale test for internet activities to determine whether a partys website alone

constitutes sufficient minimum contacts under the applicable constitutional analysis. See 186 F.

Supp. 2d at 1163 (citing Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1123-24

(W.D.Pa.1997) and Soma Medical Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1296-97

(10th Cir.1999)). Under this test,

[f]irst, personal jurisdiction is established when a defendant clearly does business over
the Internet, such as entering into contracts which require the knowing and repeated
transmission of computer files over the Internet. Second, exercising personal
jurisdiction is not appropriate when the Internet use involves [a] passive Web site that
does little more than make information available to those who are interested in it.
Under these circumstances, a defendant has simply posted information on an Internet
Web site which is accessible to users in foreign jurisdictions. Third, a middle category
encompasses interactive Web sites where a user can exchange information with the host
computer. Whether the exercise of jurisdiction is appropriate depends upon the level
of interactivity and commercial nature of the exchange of information that occurs on the
Web site.

Rainy Day Books, 186 F. Supp. 2d at 1163 (quoting Soma Medical, 196 F.3d at 1296; quoting

Zippo, 952 F.Supp. at 1123-24).

In Rainy Day Books, Judge Waxse concluded that a website that sold books online was a

commercial website doing business over the Internet; consequently, the defendant that operated

the site was subject to personal jurisdiction in Kansas because Kansas residents were able to

purchase books from the defendant over the Internet. 186 F. Supp. 2d at 1163-65.

The standard articulated in Rainy Day Books for determining whether a court may

exercise jurisdiction of this middle category of websites is: [w]hether the exercise of

jurisdiction is appropriate depends upon the level of interactivity and commercial nature of the

exchange of information that occurs on the Web site. 186 F. Supp. 2d at 1163.

The factual distinctions in the present case, coupled with the lack of purposeful efforts to

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direct activities in Kansas militate both a finding that defendants website is at worst within the

middle category of websites that encompasses interactive Web sites where a user can

exchange information with the host computer. Id. At 1163 (internal quotations removed).

Keeping in mind the requirement that the defendants must purposefully direct activities at the

residents of the forum, see Copper Mountain, Inc., 259 F.3d at 1210, when the business activities

of the defendant should be considered and taken into account, the Court should find that the

nature of defendants website does not subject defendants to jurisdiction in Kansas.

Unlike the situation in Rainy Day Books, where an online bookstore was making

available books for sale and delivery into Kansas, the defendants here are offering a service

seminarsthat are not available in Kansas. See Defendants Affidavit, 12(B). While Kansas

residents are free to access this website, no efforts are undertaken to market to Kansas residents

or otherwise drive Kansas residents to the website. See id., 4-7. Even if a Kansas resident

chose to enroll and participate in one of defendants seminars, that resident would be required to

travel to another state to receive the services purchased. Id., 12(C).

Consequently, the facts in this case are most closely analogous to a situation whereby a

Kansas resident places a phone call to a Georgia company to purchase a service provided in

Georgia and then travels to Georgia to receive that service. Under such circumstances, under

any test the Georgia company would not have purposefully directed its business activities at

the forum in such a way as not to offend traditional notions of fair play and substantial justice by

hailing the Georgia company into court in Kansas.

The standard articulated in Rainy Day Books for determining whether a court may

exercise jurisdiction of this middle category of websites is: [w]hether the exercise of

jurisdiction is appropriate depends upon the level of interactivity and commercial nature of the

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exchange of information that occurs on the Web site. 186 F. Supp. 2d at 1163.

Indeed, with all due respect to Judge Waxse and the rulings upon which he relies in Rainy

Day Books, the sliding scale test takes the notion of online business through commercial

websitesvirtual businesses if you will, too far.

The fact that a website is interactive and allows business to be conducted over it should

be beside the point in determining whether the activities are directed toward the forum state. By

way of example, almost all businesses in the United States have telephone service. By virtue of

having phone service those businesses are connected to a complex network of phone lines,

switches, and interconnections that span the nation and beyond. Any person with access to a

phone may call any business with a phone. And like in Rainy Day Books, that remote customer

would be freeover the phoneto enquire about what books are available and if interested,

provide their name (an interactive exchange of data) and credit card information in order to

complete a transaction over the phone (thus, doing business over the phone network). So if a

resident of Alaska purchases a book from our own Rainy Day Books in Kansas via credit card

over the phone, should Rainy Day Books be subject to personal jurisdiction in Alaskan courts

because the processing of a transaction over the phone constitutes purposefully directing

activities to residents of Alaska? No.

Without more, even an interactive website is nothing more than an automated phone

answering system allowing customers to call and process transactions over the phone. The fact

that the system is automated or interactive has nothing whatsoever to do with whether business

activities are purposefully directed toward the forum and thus should not be material in the

jurisdictional analysis.

In this day and age of e-commerce and interactive websites worldwide, a literal

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application of the sliding scale test will cause most businesses to be subject to being sued in

courts nationwide, whether or not that business does business nationwide or even outside of a

small geographic region. Such a result itself seems offensive to traditional notions of fair play

and substantial justice.

More consistent with fair play and substantial justice was the analysis set forth by Judge

Lungstrum in Scherer v. Curators of the Univ. of Missouri, 152 F. Supp. 2d 1278 (D. Kan.

2001). In Scherer, the alleged contact with the forum for purposes of determining the exercise of

specific jurisdiction included a law schools passive website, the sending of materials from

Kansas to Missouri, letters and emails from Kansas to Missouri, an email from Missouri to

Kansas, a letter from Missouri to Kansas, and a phone call from Missouri to Kansas. See 152 F.

Supp. 2d at 1284-85. Concluding that these contacts were insufficient, the court said: Bearing

in mind the relevant standards for establishing jurisdiction over forum-related activities, the court

cannot conclude that the Law School purposefully availed itself of the privilege of acting

within Kansas by virtue of its response to plaintiffs inquiries. Id. at 1285. Indeed, earlier in

the opinion, Judge Lungstrum refused to find the law school subject to general jurisdiction

notwithstanding the law schools efforts to recruit students from Kansas. See 152 F. Supp. 2d at

1283-84.

The contact between the defendant and the forum state in Scherer was substantially

greater than the contact here. The court in Scherer did not analyze the UMKC School of Laws

website or the extent to which it was truly passive or whether that site was more appropriately

categorized as within the middle category articulated in Rainy Day Books, supra. But the fact

that the plaintiff and defendant shared information that was sent to and from the forum was not

sufficient for the court in Scherer to conclude that personal jurisdiction was appropriate in that

case. In the end, Mr. Scherer was attempting to go to school in Missouri, just like the seminar

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participants in the instant case are going to seminars in Georgia. The fact that the school

interacted with students from the forum and had a website to recruit them was insufficient to

establish jurisdiction in Kansas. The court should hold that the same is true here.

WHEREFORE, defendants respectfully request the Court to grant this motion and

dismiss plaintiffs first amended complaint in its entirety pursuant to Fed. R. Civ. P. 12(b)(2).

Respectfully submitted,

HELDER LAW FIRM

/s/ Jan P. Helder, Jr.

Jan P. Helder, Jr., KS #14440
2300 Main Street, 9 th Floor
Kansas City, Missouri 64108
Telephone: (816) 561-5000
Facsimile: (816) 561-5001
jph@helderlaw.com

ATTORNEY FOR DEFENDANTS

CERTIFICATE OF SERVICE

I hereby certify that on this 6th day of December, 2005, this document was electronically

filed with the Court, which automatically notified the following electronic filing participant:

Robert O. Lesley, Esq.

Sonnenschein Nath & Rosenthal LLP
4520 Main Street, Suite 1100
Kansas City, MO 64111
rlesley@sonnenschein.com

Attorneys for Plaintiff

/s/ Jan P. Helder, Jr.
Attorney for Defendant