XMission, L.C. v. PureHealth Research.
No. 23-4001. 6/28/2024. D.Utah. Judge Rossman. 8 USC § 1326—Fifth Amendment—Equal Protection—Discriminatory Purpose or Intent—Racially Disparate Impact.
June 28, 2024
XMission, L.C. (XMission) is an internet service provider whose infrastructure is located in Utah. Under its terms of service, XMission can opt out of unwanted spam emails on behalf of its customers, and the customers assign to XMission the right to pursue claims arising from the receipt of spam. PureHealth Research (PureHealth) is incorporated in Wyoming and has its principal place of business in Virginia. PureHealth formulates and manufactures nutritional supplements, which it sells nationwide through its website. XMission sued PureHealth, claiming that XMission’s customers in Utah received thousands of unwanted promotional emails from PureHealth, resulting in increased server maintenance costs and customer complaints. XMission asserted that the newsletter emails and the affiliate emails violated the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, 15 USC §§ 7701 to 7713, by (1) containing materially false or misleading subject headings and (2) not honoring customer opt-out requests within 10 business days. XMission also alleged that PureHealth violated Utah’s Consumer Sales Practices Act by misrepresenting its products in its promotional emails. PureHealth moved to dismiss under Fed. R. Civ. P. 12(b)(2) for lack of specific personal jurisdiction based on insufficient contacts with Utah. The district court allowed the parties to conduct jurisdictional discovery and subsequently granted the motion.
On appeal, XMission contended that PureHealth was subject to personal jurisdiction in Utah because it purposefully directed its newsletter emails at Utah residents. XMission maintained that the district court mistakenly focused its purposeful-direction part of the jurisdictional test on the customers’ opt-in conduct rather than on PureHealth’s conduct of knowingly sending the newsletter emails to XMission’s customers in Utah. The parties agreed that this is a specific, rather than a general, jurisdiction case. Specific jurisdiction is proper if (1) the out-of-state defendant “purposefully directed” its activities at forum state residents and (2) the alleged injuries “arose out of or related to” those activities. Here, PureHealth admitted that it sent newsletter emails to its former customers in Utah knowing they live in Utah, which shows that PureHealth expressly aimed its conduct at Utah. Therefore, XMission presented a prima facie showing that PureHealth purposefully directed its conduct at the forum state.
XMission also asserted that its claims arose out of or relate to PureHealth’s emails. The complaint detailed how PureHealth’s emails were sent to XMission’s Utah customers, causing those emails to reside on XMission’s Utah servers. And XMission alleged it received customer complaints that damaged its goodwill and reputation and forced it to spend money on its servers it otherwise would not have spent. Accordingly, XMission has made a prima facie showing that its injuries arose out of or related to PureHealth’s newsletter emails. Those allegations are sufficient to establish XMission’s injuries arise out of PureHealth’s newsletter emails.
The grant of the motion to dismiss was reversed and the case was remanded for further proceedings.
The full opinion is available at https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010111072149.pdf.