United States: Television, Personal Jurisdiction, And Whether Corporate Knowledge Can Be Imputed From Internet Drivel

You wouldn't be the first to notice that some of our posts say more about television programs – and certainly with more gusto – than about the law. We could make the case that pop culture and the law are related, and that familiarity with the former can make one a better advocate when engaged in the latter. We could even cite an article on the value of pop culture that was written by an in-house lawyer who might be the smartest person we know. But let's not perpetrate a fraud. Truth be told, it's flat-out easier to tackle tv than preemption. Would you rather binge watch Orange is the New Black or the latest judicial jibberings on the parallel violation exception? Especially in these lingering dog days of Summer, not much in the law seems dramatic or even mildly entertaining. To be sure, not so long ago the Summer was also a wasteland for television. The good stuff concluded in the Spring. Summer was strictly for repeats. Under the old model, after fine offerings such as Game of Thrones and The Americans wrapped up before Memorial Day, there would be nothing worth watching until the Fall season, when a couple of decent shows might temporarily distract you from the decline of the West (by which we mean the American League West, the AFC West, and the overall culture of the Enlightenment). But things have changed when it comes to programming. Television comes through whilst the law remains in its mid-year torpor. Of a sudden, Summer tv offers a bounty for couch potatoes seeking an escape from the inferno. So hang up that seersucker suit, pour out a Pimm's, and feast your eyes on these tv treasures:

Stranger Things (Netflix) – We love the 80s. That was when we entered law school and, more importantly, exited law school. A decade that starts with the eruption of Mt. St. Helens and ends with the collapse of the Berlin Wall, and that introduced Seinfeld and The Simpsons in-between, is special. Stranger Things is a love letter to the 80s. It is a Spielbergian, Stephen King-ian mash up of horror, sci-fi, government conspiracy, and teen-agers coming of age. Stranger Things also supplies a great role for Winona Ryder, who first grabbed our eyes in Heathers (1988). You know how at the end of a Netflix episode a clock starts counting down in the corner, and you have to decide either to exit or let the next episode start? With Stranger Things, we always let the next episode take over the screen, and let all the next episodes take over our day. Could. Not. Stop. Watching.

Mr. Robot (USA) – Maybe this bold show is undergoing something of a sophomore slump, but the episode that mimics 90s sitcoms (e.g., Full House, Family Matters) may have been the best hour of tv since Cersei burned down the town and the Khalisi set sail with a dragon escort. If you watch this show, you might actually have something substantive to say to the techno-geeks who patrol your office. And they might have something to say to you besides, "Have you tried rebooting?"

The Night Of (HBO) – One always has high expectations for any show in the 9 pm Sunday night slot on HBO, and The Night Of does not disappoint. It is based on a British show called Criminal Justice. One of the writers for the American version is Richard Price, who has penned some fine novels (Lush Life) and some of the best episodes of The Wire. The first couple chapters of The Night Of were blisteringly suspenseful, reminding us how modern technology spies on us, but how there are still tragedies that manage to evade the cameras and our understanding. Then the show settled into a Law & Order-type procedural, complete with the requisite interview of someone at their workplace. (Comedian John Mulaney does a bit about a guy calmly loading crates onto a truck while answering questions about a grisly murder. "Tony Ramirez? Yeah, I remember him. Worked on Tuesdays, I think." Keeps lifting crates. A detective puts a picture under the witness's nose. The witness hardly pauses as he flings a crate into the trailer. "No, I don't recognize him" Picks up another crate.) The workplace interview in The Night Of involved a hearse driver, so the creepiness level was turned up to 11. The most recent entry of The Night Of featured a cross-examination of a defense expert by the prosecutor. The expert and prosecutor clearly have been locking horns for many years. By now, they know each other's moves. They even seem to enjoy each other's company. The wry back-and-forth reminded us of some mini-battles we have had with certain plaintiff experts we have deposed repeatedly. Of course, in our case there was no murder — except, you know, for the expert's occasional murder of the truth.

Watch these shows and you will thank us.

What's that? You came to this blog to learn a little something about the law, not television? Okay, if you insist. But how about if we split the difference, and discuss a case about television? To be precise, it is a case about televisions, in the plural. In Oliver v. Funai Corp., 2015 WL 930541 (D. N.J. Dec. 21, 2015), the plaintiffs claimed that the defendants sold them defective televisions. The defect consisted in certain allegedly faulty components. When those components went bad, the televisions would "stop displaying a picture and sound." That does, indeed, seem like a problem. The plaintiffs alleged that the televisions in question typically failed outside of the stated one-year warranty period and ninety-day warranty period for labor, leaving consumers with little reprieve. The legal claims included fraudulent concealment and the like. There were two plaintiffs, one in Massachusetts and one in Arizona. One of the plaintiffs alleged that he purchased his television in September of 2012, and that the same television failed in January 2014, after only 190 hours of usage. At this point, and not just because we are a crotchety defense hack, we grew suspicious of that plaintiff. Four months of tv viewing, totaling only 190 hours? That's just a little more than an hour and a half a day. Who watches so little tv? Most people would burn through 190 hours just during the NFL playoffs. Was this person confining their viewing to PBS specials on How Turtles Do Calculus, or the Cleveland Symphony's production of an opera based on Kafka's Metamorphosis, "Roach!" Surely there is an issue in this case of credibility and/or limitation of damages.

What does any of this have to do with drug or device law? The Oliver case involves one issue we have addressed a lot recently, personal jurisdiction, and one we hardly ever see, which is whether internet postings constitute information that can be attributed to a corporate defendant.

Personal Jurisdiction

The defendants in Oliver were (1) Funai Corp., which is incorporated and has its principal place of business in New Jersey, and (2) its parent, Funai Electric, a company incorporated and headquartered in Japan. Was there personal jurisdiction over the Japanese parent company? As most of our readers know by now, personal jurisdiction consist of both general jurisdiction and specific jurisdiction. With general jurisdiction, a company can be sued for anything. With specific jurisdiction, a company can be sued only for its conduct specifically in and targeted to that particular jurisdiction. Under the Supreme Court's decision in Bauman, general jurisdiction extends only to companies that are essentially "at home" in that jurisdiction, and that at-home-ness applies to place of incorporation, principal place of business, and extremely rare exceptions, such as temporary relocation of a company during war time. The Oliver court easily decided that the plaintiffs could not show general jurisdiction under the paradigmatic examples laid out in Bauman. In support of their general jurisdiction argument, the plaintiffs chiefly relied upon the fact that Funai Electric allegedly "funnels its televisions through the State of New Jersey." But it is well-settled by the Supreme Court that while "[f]low of a manufacturer's products into a forum ... may bolster an affiliation germane to specific jurisdiction... ties serving to bolster the exercise of specific jurisdiction do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant."

So now we are onto specific jurisdiction. And the plaintiffs still do not have enough contacts to cross the finish line. The Oliver court concluded that the connection between Funai Electric's allegedly manufacturing televisions for distribution to its New Jersey subsidiary was not enough to establish jurisdiction in New Jersey for a case where the plaintiffs bought, used (though clearly not enough), and were unhappy with their televisions in other states. In fact, the plaintiffs' argument for specific jurisdiction was really another general jurisdiction argument in disguise. Under their theory, by running televisions through a New Jersey distributor, a company at home in Japan would have opened itself up to litigation in New Jersey by any American consumer. The court rejected such a nonsensical result. Indeed, the court was so struck by the nonsensical nature of the plaintiffs' position that it also rejected a request for jurisdictional discovery.

Fraudulent Concealment

With Funai Electric now out of the Oliver case, that left only Funai Corp., which also had a strong argument for dismissal on the pleadings. Funai Corp contended that the plaintiffs could not meet the elements of a fraudulent concealment claim because the plaintiffs failed to plead that Funai Corp. knew of the defect prior to the plaintiffs' purchases. In response, the plaintiffs directed the court to "numerous consumer complaints that 'date back to 2011 and beyond." But the complaints appeared on the websites of third-parties such as Amazon and Wal-Mart, and the plaintiffs provided no indication that the defendants viewed or would have viewed those websites. Moreover, many of the postings, written by unknown bloggers (i.e., "oliveubabe" and "2ofakind0") [Sure, those are funny names. But have you seen some of the names our commenters use? Which reminds us — "Cocaine Princess," where have you been?], did not specifically reference the defect alleged in the plaintiffs' complaint; rather, they alleged general problems with the televisions' functionality or quality. Accordingly, the court was not persuaded that knowledge of the alleged defect could be imputed to the defendants based upon anonymous internet complaints on third-party websites. Nor was the court persuaded that knowledge could be imputed to the defendants based upon the representations made in the anonymous internet complaints that the consumers contacted the defendant via phone to voice their concerns.

This ruling in Oliver should be of interest to our clients. As the court reasoned in Oliver, "[i]mputing knowledge of a defect to a manufacturer based upon an internet posting would mean that virtually every consumer product company would be subject to fraud claims and extensive discovery." That is true because everything is on the internet. And by "everything," we mean everything that is true, false, something-in-between, and crazy. If the mere existence of some statement or accusation on the internet could be attributed to a corporate defendant, then it is open season for alleging all sorts of corporate frauds. That is an unacceptable result. The internet, as wonderful and useful as it can be, is a vast mess. Most of what you see on the internet is ridiculous, frivolous, and merits no assumption of veracity.

There is one exception. If you are on our website and you are reading legal analysis or a tv recommendation, then you can take judicial notice.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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