Jerry Wilkerson v. RSL Funding, L.L.C.

Opinion issued August 11, 2011.

In The

Court of

Appeals

For The

First District

of Texas

————————————

NO. 01-10-01001-CV

———————————

Jerry Wilkerson , Appellant

V.

RSL Funding,

L.L.C. , Appellee

On Appeal from the 125th District Court

Harris County, Texas

Trial Court Case No. 2009-76347

DISSENTING OPINION

This

case of first impression is important to the jurisprudence of Texas. It addresses the question of whether a

non-Texas resident who uses interactive local websites allegedly to defame a

Texas resident is subject to the same jurisdictional standards as a non-Texas

resident who uses local print media allegedly to defame a resident.

Appellee, RSL Funding, L.L.C.

(“RSL”), a Houston, Texas company, sued appellant Jerry Wilkerson, a non-Texas

resident, for defamation, libel, and business disparagement for posting

allegedly defamatory comments on local Houston Yahoo! and local Houston Yelp

websites. In this interlocutory appeal,

Wilkerson appeals the trial court’s order denying his special appearance. In dismissing this case for lack of

jurisdiction over Wilkerson, the majority converts the requested review of

whether the evidence is legally sufficient to enable Wilkerson to avoid the

reach of Texas’ long-arm statute into an objection of its own to the

competency of RSL’s evidence to establish the jurisdictional fact that

Wilkerson used www.local.yahoo.com to publish his comments — a matter not presented to the trial court and

not in dispute. In doing so, the

majority not only erroneously raises the competency of the evidence to support

the trial court’s implied findings sua

sponte on appeal, but also erroneously shifts the burden of proof from

Wilkerson, to negate the jurisdiction of the Texas courts over him, to RSL, to

prove it. Finding the jurisdictional evidence

incompetent to support the fact that Wilkerson used www.local.yahoo.com, pursuant

to its sua sponte review, the

majority erroneously goes on expressly to decline to apply the legal test for

the determination of jurisdiction over users of interactive websites—which it

acknowledges both local.yahoo.com and yelp.com are—on the ground that Wilkerson

did not own and operate the websites on which he posted his comments. By this means, it reaches the erroneous legal

conclusion that the case must be dismissed for insufficient evidence of the

court’s jurisdiction over Wilkerson and dismisses the case. The majority thus derails an important case

of first impression in a developing area of law in which internet website

owners, search engine operators, and users are all in need of the legal

guidance expressly sought by the parties here as a matter of law, not fact.

I respectfully dissent. I would hold that this Court is called upon

to review and apply the law governing personal jurisdiction over the users of interactive

websites, not to review the evidence as to whether Wilkerson used local Yahoo!

or as to whether the site is interactive.

Applying the legal test for determining jurisdiction over the users of

interactive websites, I would hold that by using the interactive local Yahoo!

website for Houston and the interactive Yelp website for Houston to post

allegedly defamatory comments about a local Houston, Texas business, appellant

subjected himself to the long-arm jurisdiction of Texas.

Background

Wilkerson

is a California resident. RSL is a Texas

company that specializes in factoring structured settlement payments. Wilkerson’s daughter, Trisha Marlene

Wilkerson (“Trisha”), also a California resident, won the California State

Lottery. Trisha and RSL entered into an

agreement by which Trisha assigned a portion of her future lottery payments to

RSL in exchange for a lump sum payment from RSL that she intended to use to

purchase a home. Wilkerson apparently

aided Trisha in conducting this business with RSL. As Trisha completed her business transaction

with RSL, Wilkerson, who was unhappy with RSL’s interaction with Trisha, posted

comments regarding RSL on two different websites specific to Houston,

Texas—local.yahoo.com for Houston and yelp.com for Houston. [1]

On

the local Houston Yahoo website, Wilkerson stated, inter alia , that “dealing with all of the lies by Jim Kelly [one of

RSL’s Houston employees] and the non returned promised phone calls by Jim and

Mr. Sanchez from accounting” had been “by far the worst experience I have had

in my 64 years of life”; that “RSL has lied repeatedly to us and misled us and

have caused numerous delays in this project that still has yet to be funded”;

that “[b]ecause of all the problems with [RSL] and their violating the

contract, we are in the process of a law suit against them and if there is

anyone else out there who have had similar experiences with [RSL], please join

us in a class action law suit”; and, “Try calling any of their offices, N.Y.,

L.A., Atlanta etc and you will find that there are no offices there, only phone

numbers that are transferred to the Houston Office. Very clever and manipulating of them. Just goes to show how they really conduct

business, smoke and mirrors.”

In his second Houston

local.yahoo.com comment, Wilkerson stated, “Received our check today and now we

are able to find out why RSL was so arrogant and mean and delaying everything. They did not have the money. The check is no good NSF, non sufficient

funds. Guess their word is as good as

their check.” The local Houston Yahoo!

page on which Wilkerson made his comments contained a map and photograph of

RSL’s Houston office.

On Yelp’s Houston website,

Wilkerson wrote, “Received the check today from RSL and guess what, it appears

their word is as good as their check[.]

NSF NON SUFFICIENT FUNDS. I can

see why they treated us so badly and were so rude and inconsiderate and kept

delaying, because they don’t have the money.

What a joke they are.” This

webpage, too, contained both a map and photograph of RSL’s Houston office.

RSL

filed this suit against both Trisha and Wilkerson on November 25, 2009,

alleging defamation, libel, and business disparagement. Trisha and Wilkerson both filed special

appearances supported by their affidavits.

The evidence established that Trisha was not involved in any way with

the allegedly defamatory and libelous statements posted by Wilkerson. Her special appearance was granted, and

Wilkerson’s was denied.

Wilkerson’s affidavit declared that

he is a resident of California, does not own any real or personal property in

Texas, has never owned any business in Texas, has never specifically directed

any opinion or statement of fact concerning RSL to anyone in Texas, and has

only traveled through Texas on one occasion.

Wilkerson also averred that he found the websites to which he posted his

comments by performing a Google search and did not “direct, or target, Houston,

or Texas in general when I posted my review concerning RSL.” He further stated that he does “not know how

to target a specific location when posting reviews on the internet” and “did

not attach a map or a photograph of RSL’s location or building when [he] posted

[his] review of RSL on the internet,” nor does he know how to include such

attachments.

RSL

responded to Wilkerson’s special appearance by arguing that Wilkerson

purposefully directed his actions at Texas.

RSL supported its response with the affidavit of Stewart A. Feldman, the

Chief Executive Officer of RSL, who averred that Houston is RSL’s principal

place of business. Feldman stated,

The Yelp Web site is an

interactive site that offers interactive forums where users can post comments

and communications regarding various businesses. The Yelp Web site has influence and a large

audience in RSL’s financial services industry, so that defamatory posts made on

the Yelp Web site are particularly likely to cause injury to the reputation of

RSL.

Feldman also averred that both local.yahoo.com and

yelp.com “use geographic location as the key to their respective search

options” and are “intended to help a searcher find information in specific

geographic areas.” Feldman stated that

“[m]ore likely than not it will be residents of the Houston area in particular,

or Texas residents in general, that will search RSL Funding located in Houston,

Texas.” RSL also provided evidence that

the check it gave to Trisha was in fact a good check and that Trisha was able

to use the funds from the check to purchase her home.

Personal Jurisdiction

In his sole issue, Wilkerson argues

that the trial court erred in denying his special appearance.

Here, the question is whether

Wilkerson’s acts of posting allegedly defamatory and libelous statements on

interactive websites that provide communications about local Houston businesses

are, by themselves, sufficient to support the exercise of personal jurisdiction

over him.

In the context of establishing a

Texas court’s jurisdiction over a company doing business in Texas, courts have

characterized internet usage as falling within three categories on a sliding

scale. See, e.g. , Choice Auto

Brokers, Inc. v. Dawson , 274 S.W.3d 172 , 177–78 (Tex. App.—Houston [1st

Dist.] 2008, no pet.); Michel v. Rocket

Eng’g Corp. , 45 S.W.3d 658, 677 (Tex. App.—Fort Worth 2001, no pet.). At one end of the sliding scale are websites

that are “clearly used for transacting business over the Internet,” such as

entering into contracts and the knowing and repeated transmission of files of

information. Dawson , 274 S.W.3d at 177 .

These websites may be sufficient to establish minimum contacts with a

state. Id. On the other end of the

scale are “passive” or “informational” websites that are used only for purposes

such as advertising and “are not sufficient to establish minimum contacts even

though they are accessible to residents of a particular state.” Id.

at 177–78. Between the extremes of the

scale are “interactive” websites that allow for the “exchange of information

between a potential customer and a host computer.” Id. Courts determine jurisdiction in situations

involving an interactive website by examining the degree of interaction between

the parties. Id. ; see also Karstetter v.

Voss , 184 S.W.3d 396, 405 (Tex. App.—Dallas 2006, no pet.) (characterizing

eBay as interactive website and concluding that court had “to look beyond the

internet activity to the degree of interaction between the parties.”).

The two websites used by Wilkerson

were clearly interactive — they

allowed for the “exchange of information between a potential customer and a

host computer.” See Dawson , 274 S.W.3d at 178 ; Karstetter ,

184 S.W.3d at 405 . Therefore, the degree of interaction

between the parties must be examined to determine jurisdiction. See

Dawson , 274 S.W.3d at 178 . [2]

Here, the contact in question is an

individual’s direct use of the internet to commit, allegedly, the torts of

libel, defamation, and business disparagement.

Thus, as we determine the “degree of interaction” between the parties in

this case, we also look to other libel and defamation cases that involved the

distribution of tortious statements to broad audiences to determine whether

Wilkerson’s contact with Texas via the internet is sufficient to satisfy the

minimum-contacts requirement. See Revell v. Lidov , 317 F.3d 467 , 471–72

(5th Cir. 2002) (holding that sliding scale used to evaluate internet contacts

is still applicable in defamation case, in spite of defamation cause of

action’s “unique features,” concluding that sliding scale is compatible “with

the ‘effects’ test of Calder v. Jones [,

465 U.S. 783 , 104 S. Ct. 1482 (1984),] for intentional torts,” and stating, “we

must evaluate the extent of [the interactivity between parties on internet

“bulletin board”] as well as [appellant’s] arguments with respect to Calder ”); see generally Touradji v.

Beach Capital P’ship, L.P. , 316 S.W.3d 15 , 24–25 (Tex. App.—Houston [1st

Dist.] 2010, no pet.) (“We focus our analysis on the relationship among the

non-resident, the forum, and the litigation to determine if the alleged

liability arises from or is related to an activity conducted in Texas.”).

The tort of libel is generally held

to occur wherever the offending material is circulated. Tabor,

Chhabra & Gibbs, P.A. v. Med. Legal Evaluations, Inc. , 237 S.W.3d 762,

774 (Tex. App.—Houston [1st Dist.] 2007, no pet.) (quoting Keeton v. Hustler Magazine, Inc. , 465 U.S. 770, 777 , 104 S. Ct.

1473, 1479 (1984)). In Calder , an entertainer who lived and

worked in California brought suit in California alleging that she had been

libeled by Florida residents in an article printed in the National Enquirer . 465 U.S.

at 784–85, 104 S. Ct. at 1484–85. The

Supreme Court held that the California court had personal jurisdiction over the

Florida defendants because

[t]he allegedly libelous

story concerned the California activities of a California resident. It impugned the professionalism of an

entertainer whose television career was centered in California. The article was drawn from California

sources, and the brunt of the harm, in terms of both respondent’s emotional

distress and the injury to her professional reputation, was suffered in

California. In sum, California is the

focal point both of the story and of the harm suffered.

Id. at 788–89,

104 S. Ct. at 1486. However, “[t]he

Texas Supreme Court has warned that, in applying Calder , we should be mindful of shifting our focus from ‘the

relationship among the defendant , the

forum and the litigation’ to the relationship among the ‘ plaintiff , the forum . . . and the

litigation.’” Tabor, Chhabra & Gibbs , 237 S.W.3d at 775 (quoting Michiana Easy Livin’ Country, Inc. v. Holten ,

168 S.W.3d 777, 790 (Tex. 2005)).

This

Court has applied the law set out by the Supreme Court in Calder and Keeton to find

that a Texas court could properly exercise personal jurisdiction over a

non-resident defendant in a defamation case for the distribution of allegedly

defamatory printed material in Texas and elsewhere. Paul

Gillrie Inst., Inc. v. Universal Computer Consulting, Ltd. , 183 S.W.3d 755,

761 (Tex. App.—Houston [1st Dist.] 2005, no pet.). In that case, the Paul Gillrie Institute

allegedly defamed a corporation with its headquarters and principal place of

business in Texas and mailed the trade publication containing the article to

subscribers across the country, including approximately fifty subscribers in

Texas, some of whom were customers of the corporation. Id. at

760–61.

I would hold that this case is

similar to Calder and this Court’s

prior case in Gillrie in that the

non-resident defendant’s conduct was purposefully directed at Texas. Specifically, Wilkerson’s posting of

allegedly defamatory statements regarding a Houston business on local websites

that review Houston, Texas businesses was purposely directed at visitors to

those targeted local websites, including consumers seeking information

regarding the provision of financial services by Houston businesses. Wilkerson’s posts referred to a Texas

company, specifically named two of its Texas employees and its accounting

department, made factual statements about its provision of financial services

that RSL contends were false and defamatory, and solicited participants in a

class action lawsuit against the company.

Wilkerson made his comments on websites that included a map and

photograph of RSL’s Houston offices and that would be of particular interest to

Texas residents investigating local firms that provide financial services, like

RSL. Wilkerson complained of RSL’s acts

undertaken in Texas, and — as the

allegedly defamatory posts indicate — Wilkerson was aware that RSL is a resident of and has its principal place

of business in Texas, where any harm was suffered. See BMC

Software Belgium, N.V. v. Marchand , 83 S.W.3d 789, 795 (Tex. 2002) (holding that foreseeability of causing

injury in Texas, though not determinative, is important consideration in

establishing minimum contacts).

I would hold that Wilkerson’s

“interaction” with Texas by posting his allegedly defamatory and libelous

statements online on local.yahoo.com’s Houston website and yelp.com’s Houston

website is sufficient to support the trial court’s exercise of personal

jurisdiction over him. See Moki Mac River Expeditions v. Drugg ,

221 S.W.3d 569, 577 (Tex. 2007) (holding that sufficient minimum contacts exist

when non-resident defendant “purposefully directed action toward Texas”); Tempest Broad. Corp. v. Imlay , 150

S.W.3d 861, 875 (Tex. App.—Houston [14th Dist.] 2004, no pet.) (holding that

single, substantial act can support exercise of personal jurisdiction).

Wilkerson argues that he did not

purposefully avail himself of the benefits of “doing business” in Texas. He states in his affidavit that he did not

intentionally direct his actions to Texas, because he only performed a Google

search and posted a review of RSL on the websites the search returned, and he

did not attach the maps or photographs to his posts and did not know how to do

so. However, this evidence does not

overwhelm the other evidence in the record already discussed.

Wilkerson also argues that Revell and Pearl v. Abshire support his claim that the trial court cannot

properly exercise personal jurisdiction over him. I would hold that this case is

distinguishable from both cases. In Revell , the Fifth Circuit held that the Texas

court could not exercise personal jurisdiction based on an allegedly defamatory

article posted to an internet bulletin board because

the article written by Lidov

about Revell contains no reference to Texas, nor does it refer to the Texas

activities of Revell [the resident plaintiff], and it was not directed at Texas

readers as distinguished from readers in other states. Texas was not the focal point of the article

or the harm suffered, unlike Calder ,

in which the article contained descriptions of the California activities of the

plaintiff, drew upon California sources, and found its largest audience in

California.

Revell , 317 F.3d

at 473 (citing Calder , 465 U.S. at

788 , 104 S. Ct. at 1482 ). As already

discussed, Wilkerson’s posts were made on websites that distribute reviews of

local Houston businesses, specifically referred to RSL’s Houston office and to

specific employees in the Houston office, made factual statements that

complained of RSL’s Texas activities as a provider of financial services, and

were directed to a medium that would be more likely to reach Texas readers than

readers in other states, specifically including actual and potential customers

of RSL and of other financial services providers in the Houston area. Furthermore, Texas was the focal point of

Wilkerson’s posts and of any harm suffered.

In Pearl v. Abshire , the Fort Worth Court

of Appeals held, in a memorandum opinion, that the Texas court did not have

personal jurisdiction over Pearl, the non-resident defendant, based on his

posting of messages on the Yahoo! Finance AXA internet message board. No. 02-08-286-CV, 2009 WL 1996288 , at *1, *4

(Tex. App.—Fort Worth July 9, 2009, no pet.) (mem. op.). The Fort Worth court concluded that

Pearl’s internet connections

with Texas were in fortuitous response to the postings of a Texas resident,

Abshire. By his own admission, Abshire

[the resident plaintiff] purposefully posted messages in an attempt to prompt

Message Board readers like Pearl [the non-resident defendant] to respond, and

he acknowledged that his posts had, from time to time, provoked vitriolic

responses. There is no evidence that

Pearl ever posted any message about Abshire, except in response to, and shortly

following, an initiating post by Abshire.

Although some statements reference Texas, there is no evidence that

Pearl directed his statements at Texas other than the fact that Abshire

happened to be located in Texas at the time Pearl’s messages were posted.

Id. at *4. Here, however, Wilkerson deliberately sought

a forum in which he could post his statements regarding RSL by performing a

Google search, and he posted them in a way that focused on a Texas business,

the actions of a Texas resident that were undertaken in Texas, and the

consumers of Texas financial services.

Thus, Pearl does not apply in

the instant case. [3]

I would overrule Wilkerson’s sole

issue.

Conclusion

I would conclude that the trial

court correctly determined that it could exercise personal jurisdiction over

Wilkerson, and I would affirm the judgment of the trial court.

Evelyn

V. Keyes

Justice

Panel

consists of Justices Keyes, Sharp, and Massengale.

Justice

Keyes, dissenting.

[1] The

majority claims:

RSL produced no evidence to support

its allegation that Wilkerson used “www.local.yahoo.com” to publish his

comments in some fashion specifically associated with Houston. There is only evidence that RSL printed out a

Yahoo! webpage that included a “local” reference in its web address (i.e. its

uniform resource locator, or URL). The

evidence that Wilkerson’s comment was associated with Houston-related content

on Yahoo! is not evidence that Wilkerson was responsible for that association,

particularly if RSL or its Houston-based attorneys prepared the evidence of

what appears on Yahoo! from their Houston-located computers.

Slip op. at 16–17.

Wilkerson made no objection to the form of RSL’s evidence of

jurisdictional facts below, and he does not argue that the evidence of

jurisdictional facts is defective on appeal.

The majority makes this argument and issues its ruling sua sponte and, in doing so, it

misapplies the law. The burden of proof

in a special appearance is on the non-resident

to prove the absence of jurisdiction;

it is not on the resident plaintiff to prove the existence of facts sufficient

to subject the non-resident to the jurisdiction of the Texas courts. See

CSR Ltd. v. Link , 925 S.W.2d 591, 596

(Tex. 1996) (“In Texas, a nonresident must negate all bases of personal

jurisdiction to prevail in a special appearance.”); Gonzalez v. AAG Las Vegas, L.L.C. , 317 S.W.3d 278, 282 (Tex.

App.—Houston [1st Dist.] 2009, pet. denied) (“[A] nonresident defendant who

files a special appearance assumes the burden of negating all bases of personal

jurisdiction that the plaintiff has alleged.”).

Moreover, even if the burden had been on RSL to prove jurisdictional

facts sufficient to establish jurisdiction over Wilkerson, as the majority

implicitly holds, rather than on Wilkerson to negate the factual basis of RSL’s

allegations, parties having an objection to the form of the evidence are

required not only to make their objection in the trial court but to secure a

ruling on the objection by that court, or the objection is waived. See,

e.g. , Commint Tech. Servs., Inc. v.

Quickel , 314 S.W.3d 646, 650 (Tex. App.—Houston [14th Dist.] 2010, no pet.)

(discussing summary judgment evidence).

Here, Wilkerson did not object to the form of RSL’s evidence, nor did he

attempt to negate the court’s jurisdiction over him by proving that he did not

use www.local.yahoo.com to publish his comments.

[2]

Notably, in refusing to apply

the sliding scale for interactive websites in this case, the majority fails to

identify any prior Texas cases addressing interactive websites that have

similarly refused to use the sliding scale for such cases; rather, it cites

several Texas and one Fifth Circuit Court of Appeals case that do use it. In support of its refusal to apply this

standard, the majority references, in its footnote 6, only unpublished cases of

no precedential value (and one published case) from other jurisdictions. These cases present neither binding nor

persuasive authority and are also inapplicable in that they reference different

factual scenarios. Likewise, the mostly

unpublished cases from other jurisdictions cited in the majority’s footnote 16

as failing to find that online defamatory statements were directed at the forum

state are neither binding nor persuasive authority, present different fact

patterns, and are inapplicable.

[3]

Wilkerson did not argue that exercise of personal jurisdiction would not

be fair and just; therefore, it is not necessary to address this issue. See

Glattly v. CMS Viron Corp. , 177 S.W.3d 438, 450 (Tex. App.—Houston [1st

Dist.] 2005, no pet.) (holding that defendant bears burden of presenting

“compelling case” that exercising jurisdiction over it would not be fair and

just); see also Guardian Royal Exch.

Assurance Ltd. v. English China Clays, P.L.C. , 815 S.W.2d 223, 231 (Tex.

1991) (holding that when non-resident defendant has purposefully established

minimum contacts, Texas court’s exercise of personal jurisdiction will not

comport with fair play and substantial justice “only in rare cases”).