Enhanceworks, Inc. v. Dropbox, Inc.

03/14/2019

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

January 10, 2019 Session

ENHANCEWORKS, INC. v. DROPBOX, INC.

Appeal from the Chancery Court for Davidson County

No. 18-241-BC Joseph P. Binkley, Jr., Judge

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No. M2018-01227-COA-R3-CV

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This appeal involves the issue of personal jurisdiction over Appellee, a Delaware

corporation with its principal place of business in San Francisco, California. The trial

court, on Appellee’s Tennessee Rule of Civil Procedure 12.02(2) motion to dismiss for

lack of personal jurisdiction, decided it lacked personal jurisdiction and dismissed the

case. Appellant appeals. Discerning no error, we affirm and remand.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court

Affirmed and Remanded

KENNY ARMSTRONG, J., delivered the opinion of the court, in which FRANK G. CLEMENT,

JR., P.J., M.S. and ANDY D. BENNETT, J., joined.

John R. Jacobson, Timothy L. Warnock, Stuart A. Burkhalter, Nashville, Tennessee, for

the appellant, EnhanceWorks, Inc.

Brian M. Willen, New York, New York, John Mellyn, Washington, D.C., Robb S.

Harvey, Nashville, Tennessee for the appellee, Dropbox, Inc.

OPINION

I. Background

Charlie Corts is a resident of Nashville, Tennessee and has a background in digital

media and software development. From 2012 through 2014, Mr. Corts developed and

eventually launched the application (“app”) “Expo.” Expo is a “mobile app solution that

allows a business or individual to create a custom-branded interface that sits on top of

cloud storage services such as Box, Dropbox, Google Drive, or Microsoft OneDrive and

makes it simple to organize, present, and share content.” Mr. Corts founded

EnhanceWorks, Inc. (“EnhanceWorks,” or “Appellant”), a Delaware corporation with its

principal place of business in Nashville, Tennessee, for the purpose of further developing

and bringing Expo to the marketplace. On March 7, 2014, the first version of Expo

became available for download in the App Store. After Expo’s launch, Mr. Corts began

searching for potential customers, partners, investors, and acquirers for the app; he

presented at conferences, and used his connections to pitch Expo to established

individuals and entities within the software industry.

In early 2015, Paul Francis, who is not a party to this appeal, introduced Mr. Corts

to Robert Mylod, Jr., a member of the Board of Directors of Dropbox, Inc. (“Dropbox,”

or “Appellee”). Mr. Mylod resides in Michigan and has been a member of Dropbox’s

Board of Directors since August 2014. Dropbox is a Delaware corporation with its

principal place of business in San Francisco, California. Mr. Francis, on behalf of

EnhanceWorks, contacted Mr. Mylod to determine whether Mr. Mylod, on behalf of

Dropbox, would be interested in Expo as a potential partner, investor, or purchaser. Mr.

Francis also inquired whether Mr. Mylod would provide Mr. Corts with feedback

regarding Expo. EnhanceWorks alleges that Mr. Francis transmitted, on behalf of

EnhanceWorks, confidential “ideas, documents, and information includ[ing] a slideshow

presentation, . . . a link to an online video, and a link to Expo’s newly launched website”

to Dropbox and its Board of Directors.

On March 18, 2015, Mr. Francis facilitated an email exchange between Messrs.

Mylod and Corts. Mr. Francis informed Mr. Corts that Mr. Mylod had reviewed the

documents and information and had spoken to “one or two people at Dropbox about the

idea.” On March 19, 2015, Mr. Corts replied to Mr. Francis’s email and asked Mr.

Mylod if he would be available for a telephone call in the near future. That same day,

Mr. Mylod replied to Mr. Corts’s email stating that he was available for a telephone call

the next day. On March 20, 2015, Mr. Corts emailed Mr. Mylod stating that he called

Mr. Mylod, left him a voicemail, and requested a call back. Mr. Mylod returned Mr.

Corts’s call later that day. EnhanceWorks alleges that during this telephone call Mr.

Mylod told Mr. Corts that “Expo looked like a ‘cool UI [user interface]’ and a different

way of visualizing files” but informed Mr. Corts that the app “had no practical value for

Dropbox.” Additionally, EnhanceWorks alleges that Mr. Mylod discouraged Mr. Corts

from further engaging in development and promotion of Expo. Specifically, Mr. Corts

alleges that Mr. Mylod stated that the app was a “waste of time” and opined that Mr.

Corts should choose a different career path. On March 30, 2015, Mr. Corts emailed Mr.

Mylod thanking him for the telephone call and his feedback. Mr. Corts continued to

promote Expo after the call.

On October 17, 2017, Dropbox launched “Dropbox Professional,” an enhanced

version of Dropbox, with a $19.99 monthly fee for users. One of Dropbox Professional’s

premium features is “Dropbox Showcase.” EnhanceWorks alleges that Dropbox

Showcase is “an application that is an indistinguishable copy of Expo” (emphasis

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included in original). Furthermore, EnhanceWorks alleges that Dropbox Showcase’s

website and marketing materials are almost identical to Expo’s website and marketing

materials.

On March 7, 2018, EnhanceWorks filed a complaint in Davidson County

Chancery Court, alleging: (1) breach of contract; (2) breach of the duty of good faith and

fair dealing; (3) breach of confidence; (4) intentional misrepresentation; (5) negligent

misrepresentation; (6) implied-in-fact contract; (7) unfair competition; (8) intentional

interference with business relations; and (9) violation of the Tennessee Consumer

Protection Act (“TCPA”). On March 22, 2018, the case was transferred to the Business

Court Pilot Project (“trial court”). On April 27, 2018, Dropbox filed a motion to dismiss

for lack of personal jurisdiction. On June 8, 2018, the trial court heard Dropbox’s motion

to dismiss. By order of June 26, 2018, the trial court granted the motion and dismissed

the case. EnhanceWorks appeals.

II. Issues

EnhanceWorks raises one issue for review, i.e., whether the trial court erred when

it granted Dropbox’s motion to dismiss for lack of personal jurisdiction.

III. Standard of Review

“The plaintiff bears the ultimate burden of demonstrating that the trial court may

properly exercise personal jurisdiction over a defendant.” Gordon v. Greenview Hosp.,

Inc., 300 S.W.3d 635, 643 (Tenn. 2009) (citing Chenault v. Walker, 36 S.W.3d 45, 56

(Tenn. 2001); Davis Kidd Booksellers, Inc. v. Day-Impex, Ltd., 832 S.W.2d 572, 577

(Tenn. Ct. App. 1992)). However, “[t]his burden is ordinarily not a heavy one, because

personal jurisdiction need only be demonstrated by a preponderance of the evidence.” Id.

(citations omitted).

A defendant may challenge personal jurisdiction by filing a Tennessee Rule of

Civil Procedure 12.02(2) motion to dismiss. Id. at 643-44. The defendant may or may

not choose to support its motion with affidavits or other evidentiary materials. Id. at 644

(citing Humphreys v. Selvey, 154 S.W.3d 544, 550 n.5 (Tenn. Ct. App. 2004)). Here,

Dropbox did not file an affidavit or other evidentiary materials; therefore, the trial court

reviewed only EnhanceWorks’s complaint. “Under Tennessee law, the factual

allegations in the plaintiff’s complaint must establish sufficient contacts between the

defendant and this state with reasonable particularity.” First Cmty. Bank, N.A. v. First

Tennessee Bank, N.A., 489 S.W.3d 369, 383 (Tenn. 2015). Therefore, “the trial court’s

responsibility is to determine whether the plaintiff has alleged or presented sufficient

facts to survive the motion to dismiss.” Gordon, 300 S.W.3d at 644 (citing Progeny

Mktg. v. Farmers & Merchs. Bank, No. M2003-02011-COA-R3-CV, 2005 WL 819732,

at *2 (Tenn. Ct. App. Apr. 7, 2005)). The trial court must take as true all of the factual

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allegations in the plaintiff’s complaint and supporting papers, if any, and must resolve all

factual disputes in the plaintiff’s favor. Id. (citing Chenault, 36 S.W.3d at 56; Mfrs.

Consolidation Serv., Inc., v. Rodell, 42 S.W.3d 846, 855 (Tenn. Ct. App. 2000)).

“Dismissal is proper only if all the specific facts alleged by the plaintiff collectively fail

to establish a prima facie case for personal jurisdiction.” Id. (citing Mfrs. Consolidation

Serv., Inc., 42 S.W.3d at 855).

A decision regarding the exercise of personal jurisdiction over a defendant

involves a question of law, which we review “de novo with no presumption of

correctness for the purpose of determining whether the plaintiff has made out a prima

facie basis for the exercise of personal jurisdiction over the defendant.” Id. at 645. The

question before us, then, is whether, taking the plaintiff’s factual allegations as true and

resolving all reasonably disputed facts in the plaintiff’s favor, the plaintiff has shown, by

a preponderance of the evidence, that Tennessee courts may properly exercise jurisdiction

over the defendant. See State v. NV Sumatra Tobacco Trading Co., 403 S.W.3d 726,

739 (Tenn. 2013).

IV. Analysis

Tennessee’s long-arm statute permits the courts of this state to exercise

jurisdiction on “‘[a]ny basis not inconsistent with the constitution of this state or of the

United States.’” Mfrs. Consolidation Serv., Inc., 42 S.W.3d at 855 (quoting Tenn. Code

Ann. §§ 20-2-214(a)(6), 20-2-225(2)). “The due process requirements of the Tennessee

Constitution are co-extensive with those of the United States Constitution,” and our

courts “have generally hewn closely to the United States Supreme Court’s precedents.”

Advanced Sec. Servs. Evaluation & Training, LLC v. OHR Partners Ltd., No. M2017-

00249-COA-R3-CV, 2018 WL 1391626, at *6 (Tenn. Ct. App. Mar. 20, 2018) (quoting

NV Sumatra, 403 S.W.3d 726 at 751). “When a state’s long-arm statute authorizes the

assertion of personal jurisdiction to the limits of federal due process, as does Tennessee’s

long-arm statute, the issue becomes simply whether the trial court’s exercise of personal

jurisdiction over the defendant meets due process requirements.” Mfrs. Consolidation

Serv., Inc., 42 S.W.3d at 855. “[D]ue process obligates the courts to ascertain whether it

is ‘fair and substantially just to both parties to have the case tried in the state where the

plaintiff has chosen to bring the action.’” Gordon, 300 S.W.3d at 646 (quoting Masada

Inv. Corp. v. Allen, 697 S.W.2d 332, 335 (Tenn. 1985)). A state cannot enter a binding

judgment against a defendant that has “‘no contacts, ties or relations’” with the state. NV

Sumatra, 403 S.W.3d at 743 (quoting World-Wide Volkswagen Corp. v. Woodson, 444

U.S. 286, 294 (1980)). However, the United States Supreme Court announced long ago

that “due process requires only that in order to subject a defendant to a judgment in

personam, if he be not present within the territory of the forum, he have certain minimum

contacts with it such that the maintenance of the suit does not offend ‘traditional notions

of fair play and substantial justice.’” International Shoe Co. v. Washington, 326 U.S.

310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The Court’s

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“minimum contacts” language “has been the crux of personal jurisdiction in America

ever since International Shoe was decided.” NV Sumatra, 403 S.W.3d at 741-42.

“Federal and state courts now recognize two varieties of personal jurisdiction—

specific jurisdiction and general jurisdiction.” Gordon, 300 S.W.3d at 647. General

jurisdiction “may be asserted when the plaintiff’s cause of action does not arise out of

and is not related to the nonresident defendant’s activities in the forum state.” Id. As

stated by the Gordon Court,

[t]he threshold for satisfying the requirements for general jurisdiction is

substantially higher than the requirements for establishing specific

jurisdiction. 4 Charles Alan Wright & Arthur R. Miller Federal Practice and

Procedure § 1067.5, at 517. An assertion of general jurisdiction must be

predicated on substantial forum-related activity on the part of the defendant.

The nonresident defendant’s contacts with the forum state must be

sufficiently continuous and systematic to justify asserting jurisdiction over

the defendant based on activities that did not occur in the forum state.

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. [408,] at 416

[(1984)], 104 S.Ct. 1868; Perkins v. Benguet Consol. Mining Co., 342

U.S.[437,] at 448 [(1952)], 72 S.Ct. 413; Lindsey v. Trinity Commc'ns,

Inc., 275 S.W.3d [411,] at 417 [(2009)]; see also 4 Federal Practice and

Procedure § 1067.5, at 507.

Id. at 647-48 (footnote omitted). “Specific jurisdiction may be asserted when the

plaintiff’s cause of action arises from or is related to the nonresident defendant’s

activities in or contacts with the forum state.” Id. at 647. In order to invoke specific

jurisdiction, the plaintiff must show that the nonresident defendant has purposefully

established significant contact with the forum state and that the plaintiff’s cause of action

arises out of or is related to these activities or contacts. Id. (citing Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472 (1985)). The Tennessee Supreme Court “reiterate[d] the

law of specific personal jurisdiction, as it applies in Tennessee[,]” in NV Sumatra:

Due process permits a state to enforce its judgments against a

defendant only when the defendant has sufficient minimum contacts with

the state that jurisdiction does not offend traditional notions of fair play and

substantial justice. Minimum contacts are present when the defendant’s

purposeful conduct and connection with the forum state are such that the

defendant avails itself of the benefits and protections of the state’s laws and

should, therefore, reasonably anticipate being haled into that state’s courts.

Assessing minimum contacts involves a two-part test. The first step

is the fact-gathering exercise of identifying the relevant contacts. The

plaintiff is required to establish that minimum contacts exist by a

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preponderance of the evidence. The court should consider the quantity of

the contacts, their nature and quality, and the source and connection of the

cause of action with those contacts. A defendant’s contacts are sufficiently

meaningful when they demonstrate that the defendant has purposefully

targeted Tennessee to the extent that the defendant should reasonably

anticipate being haled into court here.

If the court finds sufficient minimum contacts, then the inquiry

should proceed to the second step. At step two, the defendant bears the

burden of showing that, despite the existence of minimum contacts,

exercising jurisdiction would be unreasonable or unfair.

NV Sumatra, 403 S.W.3d at 759-60. “Both steps call for a careful, not mechanical,

analysis of the facts of each case with particular focus on the defendant, the forum, and

the nature of the litigation.” Davis Kidd Booksellers, Inc., 832 S.W.2d at 575.

EnhanceWorks concedes that Tennessee cannot exercise general personal

jurisdiction over Dropbox. Therefore, our review and analysis concern only specific

personal jurisdiction. In applying the two-part test from NV Sumatra, we first identify

Dropbox’s alleged “relevant contacts” with Tennessee. NV Sumatra, 403 S.W.3d at 759.

In its complaint, EnhanceWorks alleges two points of contact: (1) the initial contact via

Mr. Mylod’s email and telephone call; and (2) Dropbox accessing EnhanceWorks’s

public website a few years later. After identifying the relevant contacts, we consider the

“quantity of the contacts, their nature and quality, and the source and connection of the

cause of action with those contacts.” Id. Dropbox’s and Mr. Mylod’s contacts are

sufficiently meaningful if they demonstrate that Dropbox purposefully targeted

Tennessee such that Dropbox should reasonably anticipate being haled into court here.

Id. We turn to those questions.

A. Emails and Phone Call

The first alleged point of contact between Dropbox and Tennessee concerns an

email and a telephone call. As described, supra, Mr. Francis, at EnhanceWorks’s

request, made the initial email connection between EnhanceWorks and Mr. Mylod.

Thereafter, Mr. Corts emailed Mr. Mylod and requested a telephone call with him. Mr.

Mylod’s reply email was simply: “Hi Charlie, [n]ice to meet you. I’m available in the

late morning tomorrow for a call if you are. How about 11:30 am?” Mr. Corts called Mr.

Mylod at the agreed time, but Mr. Mylod did not answer. Mr. Mylod returned Mr.

Corts’s call the same day. EnhanceWorks alleges that, during the call, Mr. Mylod stated,

inter alia, that Expo had a “cool UI [user interface]” but “no practical value for

Dropbox.” EnhanceWorks further alleges that Mr. Mylod discouraged Mr. Corts from

continuing to develop Expo. After the telephone call, Mr. Corts sent Mr. Mylod a

follow-up email thanking him for his time and advice. There is no allegation that Mr.

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Mylod responded to the follow-up email. Therefore, EnhanceWorks’s complaint alleges

only two possible initial points of contact between Mr. Mylod, on behalf of Dropbox, and

Tennessee: (1) Mr. Mylod’s response to Mr. Corts’s email; and (2) Mr. Mylod’s return

telephone call to Mr. Corts.

In applying the NV Sumatra test, we consider the quantity of the contacts, their

nature and quality, and the source and connection of the cause of action with these

contacts. NV Sumatra, 403 S.W.3d at 759-60. First, the number of the contacts is only

two: Mr. Mylod returned an email, and Mr. Mylod returned a telephone call. The nature,

quality, and source of the email and the telephone call were both responses to Mr. Corts’s

initial contact. Next, we consider the connection between the alleged causes of action

and the email response and the connection between the alleged causes of action and the

return telephone call. As set out above, the entire substance of Mr. Mylod’s response

email was to set a time for a telephone call that Mr. Corts requested; it does not relate to

EnhanceWorks’s alleged causes of action. However, even if we assume that Mr. Mylod’s

email was connected to a cause of action (which we do not) EnhanceWorks would still be

required to demonstrate that Mr. Mylod and Dropbox knew that Mr. Corts and

EnhanceWorks were located in Tennessee in order to show that Dropbox purposefully

directed its email response to Tennessee. Rice v. Karsch, 154 Fed. Appx. 454, 462 (6th

Cir. 2005) (“Finding personal jurisdiction over an individual merely because he sends an

email to a generic email address is incomprehensible to th[e] court.”); Shrader v.

Biddinger, 633 F.3d 1235, 2148 (10th Cir. 2011) (citing Rice, 154 Fed.Appx. at 462)

(“[I]f the plaintiff does not show that the defendant otherwise knew where the recipient

was located, the email itself does not demonstrate purposeful direction of the message to

the forum state, even if that happens to be where the recipient lived.”). EnhanceWorks

failed to allege specific facts from which to conclude or infer that Mr. Mylod knew he

was emailing Mr. Corts in Tennessee. Furthermore, Mr. Corts’s email address was

sufficiently generic that Mr. Mylod would not know he was emailing someone in

Tennessee. Our analysis now shifts to Mr. Mylod’s alleged statements made during the

telephone call.

As discussed, supra, EnhanceWorks alleged nine causes of action in its complaint:

(1) breach of contract; (2) breach of the duty of good faith and fair dealing; (3) breach of

confidence; (4) intentional misrepresentation; (5) negligent misrepresentation; (6)

implied-in-fact contract; (7) unfair competition; (8) intentional interference with business

relations; and (9) violation of the TCPA. On appeal, EnhanceWorks alleges that

Dropbox created a fraudulent scheme and aimed it at Tennessee when Mr.

Mylod/Dropbox discouraged Mr. Corts from further developing Expo and then developed

Dropbox Showcase, an exact replica of Expo. Specifically, EnhanceWorks’s complaint

states:

29. Little did Mr. Corts know, however, that the discouragement of

Dropbox, Mr. Mylod, the Board of Directors of Dropbox, Drew Houston

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and Dennis Woodside was apparently a ruse, as, upon information and

belief, Dropbox, Mr. Mylod, the Board of Directors of Dropbox, Drew

Houston and Dennis Woodside had decided to simply take the idea,

documents, and information and create an identical application for

Dropbox. Further, upon information and belief, because they wanted to

discourage a competitor in the marketplace and knowing full well how

pivotal a communication from Dropbox would be to the development and

expansion of an app like Expo, Mr. Mylod, Dropbox, the Board of

Directors of Dropbox, Drew Houston and Dennis Woodside also

purposefully told Mr. Corts that his product was worthless in an effort to,

among other things, compete with EnhanceWorks unfairly and ultimately

scuttle the development of Expo.

EnhanceWorks argues that the connection between Mr. Mylod’s alleged

comments during the telephone call and its causes of action establish that Dropbox

purposefully targeted Tennessee. In making this argument, EnhanceWorks urges this

Court to apply the Sixth Circuit Court of Appeals’ analysis in Neal v. Janssen, 270 F.3d

328 (6th Cir. 2001). The sole issue presented in Neal was whether the district court

properly exercised personal jurisdiction over the defendant. Id. at 330. The plaintiffs,

residents of Tennessee, owned a dressage horse they wanted to sell. Id. The defendant, a

Belgian resident, agreed to serve as the plaintiffs’ agent in selling the horse and take a

10% commission on the sale. Id. Importantly, while the defendant was working with the

plaintiffs, he “made phone calls and sent facsimiles to [the] plaintiffs in Tennessee on

several occasions . . . to discuss the sale of the horse and to present offers to purchase the

horse made by third parties.” Id. Later, the defendant called one of the plaintiffs’ sons, a

Tennessee resident, and stated that he had a prospective buyer who would pay

$312,000.00 for the horse. Id. The defendant explained that he would waive his

commission if the plaintiffs accepted the offer. Id. The plaintiffs accepted the offer and

soon after received a wire transfer into their Tennessee bank account for $311,964.50.

Id. Later, the plaintiffs learned that the buyer paid the defendant $480,000.00 for the

horse. Id.

The plaintiffs filed an action against the defendant in federal district court in

Tennessee for breach of fiduciary duty and fraud. Id. The defendant filed a motion to

dismiss for lack of personal jurisdiction, which the district court denied. Id. at 330-31.

Subsequently, the matter was tried to a jury without the defendant present. The jury

awarded the plaintiffs $250,000.00 in compensatory damages and $250,000.00 in

punitive damages. Id. at 331. On appeal, the defendant again argued that the district

court could not exercise personal jurisdiction over him. Id. As part of its analysis, the

Sixth Circuit opined that “[t]he acts of making phone calls and sending facsimiles into the

forum, standing alone, may be sufficient to confer jurisdiction on the foreign defendant

where the phone calls and faxes form the bases for the action.” Id. at 332 (internal

citations omitted). Further, the Sixth Circuit explained that “[w]hen the actual content of

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the communications into the forum gives rise to an intentional tort action, that alone may

constitute purposeful availment.” Id. Relying on Neal, EnhanceWorks argues that, like

the defendant in Neal, Dropbox created a fraudulent scheme and aimed it at Tennessee.

The scheme, according to EnhanceWorks, was discouraging Mr. Corts from continuing to

develop Expo because Dropbox had the intention of developing Dropbox Showcase, an

Expo replica.

Dropbox’s and Mr. Mylod’s contact with Tennessee is clearly distinguishable

from the Neal defendant’s contact with Tennessee. Unlike Mr. Mylod, the defendant in

Neal, over several months, continuously called and sent facsimiles to Tennessee in

furtherance of the established business relationship he had with the plaintiffs. Mr.

Mylod’s email and telephone call to a resident of Tennessee were merely responses to

Mr. Corts’s contacts. The conversations were largely one-sided with the substance of the

telephone call being Mr. Mylod’s communication of his thoughts concerning Expo. “A

forum State’s exercise of jurisdiction over an out-of-state intentional tortfeasor must be

based on intentional conduct by the defendant that creates the necessary contacts with the

forum.” Walden v. Fiore, 571 U.S. 277, 286 (2014). Even taking EnhanceWorks’s

allegations as true, Dropbox did not aim its actions at Tennessee. Rather, any action on

Dropbox’s part to intercept and sell Expo was accomplished, if at all, in California not in

Tennessee. In short, Dropbox’s contacts with Tennessee were not sufficiently

meaningful such that it should reasonably anticipate being haled into court here. It is not

enough that EnhanceWorks alleged that the fraudulent behavior was suffered by a

Tennessee resident. “The proper question is not where the plaintiff experienced a

particular injury or effect but whether the defendant’s conduct connects him to the forum

in a meaningful way.” Walden, 571 U.S. at 290.

“For a State to exercise jurisdiction consistent with due process, the defendant’s

suit related conduct must create a substantial connection with the forum.” Id. at 284.

Here, Mr. Mylod’s conduct, and therefore Dropbox’s conduct, did not create a substantial

connection with Tennessee. To the contrary, Mr. Mylod’s two contacts were with Mr.

Corts who happened to live in Tennessee. In determining whether minimum contacts

exist, we analyze “the defendant’s contacts with the forum State itself, not the

defendant’s contacts with persons who reside there.” Id. at 285. Furthermore, Mr.

Mylod did not make the initial connection with Mr. Corts or with EnhanceWorks. Only

after Mr. Francis first communicated with Mr. Corts and Mr. Mylod, and Mr. Corts

communicated with Mr. Mylod did Mr. Mylod return communication. Mr. Mylod was

simply responding to the initial contacts. Mr. Mylod never targeted Tennessee. See NV

Sumatra, 403 S.W.3d at 759-60. Even though Mr. Mylod, on behalf of Dropbox, sent

one email and made one return telephone call to Mr. Corts in Tennessee, for the reasons

discussed above, the quality and nature of these contacts fall short of the requirements of

due process. EnhanceWorks has failed to allege facts sufficient to demonstrate that this

was more than a single isolated call where Mr. Mylod and Dropbox were unaware that

they were dealing with Tennessee. Cf. Sledge v. Indico System Resources, Inc., 68 F.

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Supp. 3d 834, 845 (W.D. Tenn. 2014) (finding that the defendant knowingly made

numerous communications into Tennessee for his own gains, thereby availing himself of

the forum). “Due process requires that a defendant be haled into court in a forum State

based on his own affiliation with the State, not based on the ‘random, fortuitous, or

attenuated’ contacts he makes by interacting with other persons affiliated with the State.”

First Cmty. Bank, N.A., 489 S.W.3d at 393-94 (citing Walden, 571 U.S. at 284-85

(quoting Burger King, 471 U.S. at 475)). Mr. Mylod’s reply email and telephone call to

Mr. Corts are the “random, fortuitous, or attenuated” contacts the Supreme Court warned

against in Burger King. See Burger King, 471 U.S. at 475. We agree with the trial court

that Mr. Mylod’s email and telephone communications with Mr. Corts did not

purposefully target Tennessee such that Dropbox should reasonably anticipate being

haled into court here. NV Sumatra, 403 S.W.3d at 759-60. Therefore, EnhanceWorks

has not established that Mr. Mylod/Dropbox’s reply email and telephone call constitute

sufficient minimum contacts with Tennessee. Id.

B. Website

The second alleged point of contact between Dropbox and Tennessee concerns

Dropbox accessing Expo’s public website. Specifically, EnhanceWorks alleged in its

complaint that

[a]long with creating an application that is nearly identical to Expo,

Dropbox also appears to have used the Expo website and Expo marketing

materials to create Dropbox Showcase’s website and marketing material,

while providing only perfunctory revisions in an apparent effort to avoid

detection of its copying[.]

Essentially, EnhanceWorks argues that Dropbox accessed Expo’s public website and

copied materials from it. Indeed, EnhanceWorks does not specifically allege that

Dropbox actually accessed the website; the complaint states only that “Dropbox . . .

appears to have used the Expo website.” (emphasis added).

Tennessee case law is rather sparse on the question of how personal jurisdiction is

related to the Internet and contacts made through that medium. We find guidance,

however, in the case law of our sister states. In ALS Scan, Inc. v. Digital Service

Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002), the Fourth Circuit Court of Appeals

articulated a new test for specific personal jurisdiction in the Internet era, to-wit:

[A] State may, consistent with due process, exercise judicial power over a

person outside of the State when that person (1) directs electronic activity

into the State, (2) with the manifested intent of engaging in business or

other interactions within the State, and (3) that activity creates, in a person

within the State, a potential cause of action cognizable in the State’s courts.

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Under this standard, a person who simply places information on the

Internet does not subject himself to jurisdiction in each State into

which the electronic signal is transmitted and received. Such passive

Internet activity does not generally include directing electronic activity

into the State with the manifested intent of engaging business or other

interactions in the State thus creating in a person within the State a

potential cause of action cognizable in courts located in the State.

Id. (emphasis added).1 “This standard for reconciling contacts through electronic media

with standard due process principles is not dissimilar to that applied by the Supreme

Court in Calder v. Jones, 465 U.S. 783 (1984).” Id. In Calder, the Supreme Court held

that personal jurisdiction was proper in California based on the “effects” of the

defendants’ conduct in Florida because “California [was] the focal point both of the story

and of the harm suffered.” Calder, 465 U.S. at 788-90. “Analogously, under the

standard [adopted by the Fourth Circuit], specific jurisdiction in the Internet context may

be based only on an out-of-state person’s Internet activity directed at [the forum state]

and causing injury that gives rise to a potential claim cognizable in [the forum state].”

ALS Scan, Inc., 293 F.3d at 714.

In 2011, the Tenth Circuit Court of Appeals addressed the complexity of personal

jurisdiction in the Internet age in Shrader v. Biddinger, 633 F.3d 1235 (10th Cir. 2011).

1

In articulating this new test, the ALS Scan, Inc. Court adopted the model developed in Zippo

Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997). ALS Scan, Inc., 293

F.3d at 713. While the majority of jurisdictions have adopted the Zippo test, including the Sixth Circuit

Court of Appeals, according to our research, Tennessee courts have yet to formally adopt it. In Cadle Co.

v. Schlichtmann, 123 F. App’x 675, 678 (6th Cir. 2005), the Sixth Circuit explained the Zippo test:

The “operation of an Internet website can constitute the purposeful availment of

the privilege of acting in a forum state . . . if the website is interactive to a degree that

reveals specifically intended interaction with residents of the state.” Bird v. Parsons, 289

F.3d 865, 874 (6th Cir. 2002) (internal quotations omitted). In evaluating whether the

defendant’s contact with the forum state constituted purposeful availment, this and other

circuits have used the “Zippo sliding scale” approach, which distinguishes between

interactive websites, where the defendant establishes repeated online contacts with

residents of the forum state, and websites that are passive, where the defendant merely

posts information on the site. See, e.g., Neogen Corp. v. Neo Gen Screening, Inc., 282

F.3d 883, 890 (6th Cir. 2002) (citing Zippo Mfg. Co., 952 F.Supp. at 1124); Revell v.

Lidov, 317 F.3d 467, 472 (5th Cir. 2002)). Interactive websites can subject the defendant

to specific personal jurisdiction, whereas passive websites are less likely to confer such

jurisdiction. Neogen Corp., 282 F.3d at 889-91.

Id. While we conclude that the Zippo test would be concordant with Tennessee case law concerning

personal jurisdiction, it does not apply to the facts of this case. The Zippo test is applicable when the

defendant operates a website that can be accessed from any jurisdiction. In this case, the defendant is

accused of accessing the plaintiff’s website.

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The Tenth Circuit explained that “[t]he basic problem with relating [Internet] activities[,]

[such as hosting a website, posting on the Internet, or sending mass emails,] directly to

the general principles developed pre-[I]nternet is that, in a sense, the [I]nternet operates

‘in’ every state regardless of where the user is physically located, potentially rendering

the territorial limits of personal jurisdiction meaningless.” Shrader, 633 F.3d at 1240.

To avoid subjecting every person who uses the Internet to personal jurisdiction in every

state, the law must adapt and grow alongside technology. “[I]n considering what ‘more’

could create personal jurisdiction for such [Internet] activities, courts look to indications

that a defendant deliberately directed its message at an audience in the forum state and

intended harm to the plaintiff occurring primarily or particularly in the forum state.”

Shrader, 633 F.3d at 1241. Applying the ALS Scan, Inc. test, the Shrader court

concluded that “merely posting information on the [I]nternet does not, in itself, subject

the poster to personal jurisdiction wherever that information may be accessed.” Shrader,

633 F.3d at 1244.

The Fourth Circuit’s test in ALS Scan, Inc. is harmonious with Tennessee

common law concerning specific personal jurisdiction. As articulated by the Tennessee

Supreme Court in NV Sumatra, “[a] defendant’s contacts are sufficiently meaningful

when they demonstrate that the defendant has purposefully targeted Tennessee to the

extent that the defendant should reasonably anticipate being haled into court here.” NV

Sumatra, 403 S.W.3d at 760. Applying NV Sumatra to Internet contacts, we reason that

for a defendant’s Internet contacts to be sufficiently meaningful, they must be more than

“passive Internet activity” such that the defendant directs electronic activity into

Tennessee “with the manifested intent of engaging business or other interactions in the

State thus creating in a person within the State a potential cause of action cognizable in

[Tennessee].” ALS Scan, Inc., 293 F.3d at 714.

Following the reasoning of ALS Scan, Inc. and Shrader, we conclude that merely

accessing a public website from the Internet does not, in itself, subject the individual

accessing the site to personal jurisdiction wherever the website may be located. See

Shrader, 633 F.3d at 1244; ALS Scan, Inc., 293 F.3d at 714; see also Wright v. Writers

Coffee Shop, LLC, No. 1:17-CV-355, 2018 WL 6729642, at *4 (E.D. Tenn. Dec. 21,

2018) (“Without knowing that Plaintiff was a resident of Tennessee, Defendants could

not have purposefully availed themselves of the privilege of causing consequences in

Tennessee by interacting with Plaintiff online.”); Traton News, LLC v. Traton Corp.,

914 F. Supp. 2d 901, 912 (S.D. Ohio 2012), aff’d in part, 528 F. App’x 525 (6th Cir.

2013) (concluding that the defendant’s act of using the plaintiff’s website was insufficient

to confer personal jurisdiction over the defendant, regardless of how many times the

defendant visited the website). Observing a public website on the Internet is “passive

Internet activity,” which “does not generally include directing electronic activity into the

State.” ALS Scan, Inc., 293 F.3d at 714. A person accessing a public website would not

“reasonably anticipate being haled into court” wherever the website might be maintained.

Id.; NV Sumatra, 403 S.W.3d at 760. From our review of the complaint, EnhanceWorks

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does not allege sufficient facts to demonstrate that, by accessing Expo’s website and

copying its materials, Dropbox “deliberately directed its message [or any electronic

activity] at an audience in the forum state . . . .” Shrader, 633 F.3d at 1241.

Nonetheless, EnhanceWorks argues that when “a defendant is alleged to have

accessed a website and wrongfully obtained information from that website . . . the contact

at issue is deemed to have occurred in the company’s physical location.” Therefore,

according to EnhanceWorks, because Dropbox allegedly stole information from Expo’s

website, the contact is deemed to have occurred in Tennessee, EnhanceWorks’s physical

location. EnhanceWorks cites two cases for this proposition, Premedics, Inc. v. Zoll

Medical Corporation, No. 3:06-0716, 2007 WL 3012968 (M.D. Tenn. Oct. 9, 2007) and

Facebook, Inc. v. ConnectU LLC, No. C 07-01389 RS, 2007 WL 2326090 (N.D. Cal.

Aug. 13, 2007). These cases concern motions to dismiss for lack of personal jurisdiction.

In analyzing whether the defendants purposefully availed themselves of the privilege of

conducting activities in the forum states, both federal courts applied the Calder “effects

test.” Calder, 465 U.S. at 788-90. “In cases involving intentional conduct, the

‘purposeful availment’ prong [of specific personal jurisdiction] can be satisfied by

meeting the ‘effects test’ . . . .” Faceboook, Inc., 2007 WL 2326090, at *3 (citing

Calder, 465 U.S. at 788-90). The “effects test” “finds personal jurisdiction ‘where an

individual purposefully directs activities towards the forum state with the intent to cause

harm there.’” Predemics, Inc., 2007 WL 3012968, at *4 (citing Koch v. Local 438, 54

Fed. Appx. 807, 810 (6th Cir. 2002)).

In Premedics, one of the defendants “accessed Premedics’ [I]nternet website, []

navigated onto the AED Manager portion of the website . . ., [and] created an

unauthorized test account for the AED Manager, an account that [was] only distributed to

Premedics’ own web developers.” Premedics, Inc., 2007 WL 3012968, at *1. The

defendants were then able to receive the automated “action item” emails, which

Premedics claimed was a proprietary component of its system. Id. The Premedics court

acknowledged the challenges of determining purposeful availment when the Internet is

involved. Id. at *4. Ultimately, the court concluded that the Calder effects test was

satisfied because the defendants acted intentionally when they “navigated to Premedics’

website, logged into the AED Manager using a falsified test account, and obtained

informational emails indicating how AED Manager operates . . . .” Premedics, Inc.,

2007 WL 3012968, at *5. Further, the Premedics court found that “Premedics’ physical

location and incorporation in the state of Tennessee [were] facts plainly stated on the

home page of the Premedics website . . . .” Id.

Similarly, in Facebook, the allegation was that the defendants gained unauthorized

access to Facebook “by logging into [it] using borrowed or falsified login information,

and then importing profile and email account information from a registered user,

‘grabbing’ email addresses from the friends listed on that user’s profile, and adding those

email addresses to ConnectU’s database.” Faceboook, Inc., 2007 WL 2326090, at *2.

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Facebook also alleged that the defendants sent unsolicited emails to the stolen email

addresses asking users to join ConnectU, a competing social networking site. Id. The

Facebook court acknowledged the difficulty with “apply[ing] traditional geographically-

based precepts of jurisdiction in a world where such borderlines are decreasingly

important in many other contexts.” Id. at *6. The court ultimately determined that “the

technology of the Internet can . . . provide a means whereby specific, targeted conduct

may be ‘expressly aimed’ at a particular individual or entity, despite the fact that the

person engaging in the conduct may not know the geographic location of the individual

or entity.” Id. at*5 (emphasis in original). The Facebook court applied the Calder

effects test and held that the defendants expressly aimed their conduct at Facebook when

it hacked into the website. Id. at *5-6. The court opined that the defendants could be

haled into California court, despite not knowing Facebook’s physical address, because

the defendants expressly aimed their conduct at Facebook’s website. Id. at *7.

Here, EnhanceWorks encouraged Dropbox to access its website and review its

information and marketing materials when it included a link to Expo’s website with the

materials sent to Mr. Mylod and Dropbox. Unlike the defendants in Premedics and

Facebook, there is no allegation in the complaint that Dropbox “hacked” into Expo’s

website and stole proprietary information; the entire allegation concerning the website

was that “Dropbox appear[ed] to have used the Expo website” to create Dropbox

Showcase’s website. Dropbox’s actions did not rise to the level of directing activities or

conduct into Expo’s website and, therefore, Tennessee. Taking EnhanceWorks’s

allegations as true and giving all reasonable inference in its favor, Dropbox, at most,

copied marketing materials from the public website and used those materials outside

Tennessee to create and promote Dropbox Showcase. There are no allegations that

Dropbox purposefully directed its activities towards Tennessee with the intent to cause

harm here. Predemics, Inc., 2007 WL 3012968, at *4 (citing Koch, 54 Fed. Appx. at

810). Finally, there are no allegations in the complaint that Expo’s website indicated that

EnhanceWorks was a Tennessee company, or that Dropbox otherwise knew that the

website was connected to Tennessee.

We reach our conclusion finding no personal jurisdiction whether we apply the

tests in ALS Scan, Inc. and Shrader or the analyses in Premedics and Facebook.

Indeed, our conclusion is in line with a previous decision from this Court relating to

personal jurisdiction and the Internet. In Hibdon v. Grabowski, 195 S.W.3d 48, 71

(Tenn. Ct. App. 2005), we concluded that a trial court properly exercised personal

jurisdiction over the defendants when they “directed many of their Internet messages to

residents of Tennessee.” Id. We also noted that personal jurisdiction was proper because

the alleged causes of action “arose specifically from injuries arising out of or relating to

those Internet messages.” Id. Here, EnhanceWorks did not allege sufficient facts to

demonstrate that Dropbox deliberately directed any electronic activity to Expo’s website

or to the State of Tennessee. To the contrary, the allegation is that Dropbox copied

information from the public website and used it in another state.

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From our review, we conclude that EnhanceWorks failed to meet its burden to

show that Dropbox purposefully created significant contacts with Tennessee. See

Gordon, 300 S.W.3d at 647. Therefore, we agree with the trial court’s finding that

EnhanceWorks did not establish Dropbox’s minimum contacts. Because EnhanceWorks

failed to establish Dropbox’s minimum contacts with Tennessee, we do not reach the

second step of the NV Sumatra test and, as such, do not consider whether exercising

jurisdiction over Dropbox would be unreasonable or unfair. See NV Sumatra, 403

S.W.3d at 760.

Our conclusion does not deprive EnhanceWorks from pursuing relief in the

proper forum; it merely ensures that due process is met, and that the case will be tried in a

state that is “‘fair and substantially just to both parties . . . .’” Gordon, 300 S.W.3d at 646

(quoting Masada Inv. Corp., 697 S.W.2d at 335).

V. Conclusion

For the foregoing reasons, we affirm the trial court’s order granting Dropbox’s

motion to dismiss for lack of personal jurisdiction. The case is remanded for such further

proceedings as are necessary and consistent with this opinion. Costs of the appeal are

assessed against Appellant, EnhanceWorks, Inc., and its surety, for all of which execution

may issue if necessary.

_________________________________

KENNY ARMSTRONG, JUDGE

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