A Cautionary Tale On Social Media And US Jurisdiction

• Published date: 23 August 2022
• Subject Matter: Intellectual Property, Media, Telecoms, IT, Entertainment, Copyright, Trademark, Advertising, Marketing & Branding, Social Media
• Law Firm: Pryor Cashman LLP
• Author: Ms Dyan Finguerra-DuCharme and Nicholas Saady

The U.S. District Court for the Central District of California recently determined that a foreign company was subject to the jurisdiction of U.S. courts based, in part, on its social media activity.

The Aug. 3 Miles Park McCollum v. Opulous decision involves rapper Lil Yachty, the online music distribution company Ditto Music, and its founder.

The ruling is factually specific, but it is an important decision for all foreign companies, individuals, their respective advisers, and those seeking to sue them before the U.S. courts because the majority of the court's analysis was based on the defendants' social media activities.

Although the decision does not engage in a state-based personal jurisdiction analysis, it provides useful guidance to domestic U.S. defendants about how their social media presence may lead them to be subject to jurisdiction in other states.

The decision is particularly notable because the U.S. Supreme Court has provided little guidance about how social media activity may provide virtual contacts sufficient to establish personal jurisdiction.

In its 2014 decision in Walden v. Fiore, the high court left the issue "for another day,"¹ despite former Justice Stephen Breyer's fortuitous warnings over a decade ago in J. McIntyre Machinery Ltd. v. Nicastro on the impact of advertising goods and services on websites for personal jurisdictional analyses² ' warnings now extensible to social media as a primary method of modern advertising.

The lack of guidance from the Supreme Court also makes lower courts' rulings ' especially the Opulous decision³ ' instructive for companies, businesses and individuals.

The Facts of the Opulous Case

Lil Yachty met with defendant Lee James Parsons ' the founder of both other defendants, Opulous and Ditto Ltd. ' to pitch the Opulous platform, which is described as "the only platform to mint Music Fungible Tokens."⁴

The parties allegedly never agreed on any terms, nor entered into any agreement. However, the defendants later launched a "press and advertisement campaign that [allegedly] falsely represented" Lil Yachty as being affiliated with Opulous, allegedly falsely represented that his works would be sold on Opulous, and allegedly used his name, trademark and photographic likeness without authorization.

Ditto and Parsons⁵ moved to dismiss Lil Yachty's case for lack of personal jurisdiction, under Federal Rule of Civil Procedure 12(b)(2) ' because Ditto was formed and is headquartered in England.

Parsons is...