Realtime is a Georgia LLC with its principal place of business in Georgia. It is a holding company that owns all of the interests of KDMS, a Delaware LLC with its principal place of business in Georgia. KDMS develops interactive software used in the online gaming business. KDMS entered into a marketing agreement with Montana Overseas, a Panamanian corporation, wherein Montana Overseas would issue licenses to use the KDMS software. One of the licensees is windowscasino.com which is owned by an entity in St. Helier, Jersey, United Kingdom. Windowscasino.com is an interactive online casino that promotes only the games designed by KDMS.
Windowscasino.com entered into an "affiliate" arrangement with Travis Thom, a resident of Albuquerque, New Mexico. Under the arrangement, Thom paid windowscasino.com for a software package that allowed Thom to get paid when individuals came to gamble at windowscasino.com via a link on Thom's site (goldenrhinocasino.com). Thom then embarked on a mass e-mail solicitation. That solicitation resulted in 240 emails in a 24 hour period being received by employees of Beyond Systems in Maryland.
Beyond Systems brought an action against Realtime and KDMS under Maryland's anti-spam law, the Maryland Commercial Electronic Mail Act, Section 14-3001, et seq., of the Commercial Law Article of the Maryland Code. The Circuit Court had dismissed Beyond Systems' complaint on the basis that it could not exercise personal jurisdiction over Realtime and KDMS. The Court of Appeals affirmed the dismissal.
The Court first rejected the attempt to bottom jurisdiction on the basis of "general personal jurisdiction" as follows:
Though the maintenance of a website is, conceivably, a continuous presence everywhere, the existence of a website alone is not sufficient to establish general jurisdiction in Maryland over Realtime Gaming and KDMS. BSI provided the trial court with no evidence beyond Realtime Gaming and KDMS’s website, to establish substantial, continuous, systematic contacts with Maryland. Therefore, we conclude that the trial court properly determined that it lacked general jurisdiction over Realtime Gaming and KDMS.Oddly, the Court referred to the websites in question as belonging to Realtime and KDMS. In fact, the website that operated the casino was owned by the Jersey, U.K. entity and there was no evidence of common ownership of that entity, on one side, and Realtime and KDMS, on the other. However, the IP address of the website was registered to Realtime and KDMS. In rejecting the assertion of specific personal jurisdiction over the defendants, the Court stated that:
The only evidence of any kind of relationship between Realtime Gaming and KDMS and windowscasino.com is the fact that the windowscasino.com website contains a link to an IP address registered to KDMS where customers can download the gaming software. This does not establish or even indicate a relationship, principal-agent or contractual, between Realtime Gaming and KDMS, on the one hand, and windowscasino.com on the other in which windowscasino.com is empowered to act on Realtime Gaming and KDMS’s behalf or whether Realtime Gaming and KDMS control windowscasino.com. BSI does not provide any evidence of mutual corporate officers, board members, owners, or other such controlling individuals or entities to show anything more than that windowscasino.com has obtained a sub-license from Montana Overseas. A mere link with no more compelling evidence is insufficient to create the necessary nexus between Realtime Gaming and KDMS, and windowscasino.com and Thom.Three judges of the Court (Chief Judge Bell and Judges Raker and Harrell) dissented, arguing that the Plaintiff should have been allowed to take discovery on the personal jurisdiction issue. They noted that:
The relationship between [defendants] and windowscasino.com is shrouded in the mists of holding companies, offshore entities, and multi-level licensing arrangements. According to respondents, KDMS has entered into an exclusive license with a master licensee (Panama-based Montana Overseas). Montana Overseas, in turn, sub-licenses the software to many client casinos, among them windowscasino.com (seemingly a trade name of either Angel de la Mañana, a Costa Rican corporation, or ADLM, Ltd., located in the Channel Island of Jersey). Respondents assert that KDMS and Realtime have no direct relationship with their sub-licensees, and exercise no control over the manner in which the sub-licensees advertise their services. Under BSI’s theory, on the other hand, the licensing and sub-licensing agreements are shams, Montana Overseas, Angel de la Mañana, and ADLM are mere dummy corporations, and windowscasino.com is a trade name or alter ego of KDMS/Realtime.
While the relationships may be exactly as KDMS and Realtime claim, the three facts detailed above provide some credence to BSI’s theory. A KDMS-owned server is providing KDMS-developed software directly to end users. This server’s collection of affiliate identification numbers suggests that KDMS and Realtime may have some role in the administration of windowscasino.com’s affiliate commission system.
These facts alone do not establish an agency relationship between KDMS/Realtime and windowscasino.com, but they do render BSI’s request for discovery something more than a “fishing expedition.” BSI is entitled to more information regarding the connections among the various entities. Who owns Montana Overseas, Angel de la Mañana, and ADLM? Do these companies have any assets or employees? Who is acting as the “house” when a gambler bets at windowscasino.com? Do the purported licensing agreements between KDMS/Realtime, Montana Overseas, and Angel de la Mañana or ADLM actually exist, and if so, what do they contain? Is the software licensed for a flat fee, or do KDMS and Realtime receive an additional payment for each download? What aspects of windowscasino.com’s business, if any, are run directly by KDMS and Realtime? Do KDMS and Realtime write advertising copy for windowscasino.com and its affiliates?I think that, on balance, the dissenters have the better argument. If discovery on the personal jurisdiction issue is not allowed in cases such as this, the opinion will have essentially established a roadmap to making an end-run around not only anti-spam laws, but virtually every attempt to exercise state and local jurisdiction over Internet commerce. At the very least, the plaintiff should have been allowed to take limited discovery to determine whether the actual relationship among the defendants was really as independent as its "public face" purported it to be.