Antitrust Law Daily Wrap Up, ADVERTISING—D. Nev.: Online currency exchange’s false advertising suit against competitor transferred to Georgia, (Aug 19, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by an online currency exchange against a competitor for business disparagement and false advertising for allegedly posing as customers and posting negative reviews to a consumer website, the federal district court in Las Vegas transferred venue to the Northern District of Georgia rather than dismiss the action for lack of personal jurisdiction (Dinar Corp. Inc. v. Sterling Currency Group, LLC, August 15, 2014, Gordon, A.).

Dinar Corp. Inc. is an online money services business selling Iraqi dinar. Based in Atlanta, Georgia, Sterling Currency Group is a competing online currency exchange that sells Iraqi dinar and other currencies. Dinar Corp. filed suit against Sterling, along with several of its employees, alleging defamation, business disparagement, false advertising, and unfair competition in violation of the Lanham Act. Specifically, Dinar Corp. asserted that the defendants posed as customers and posted poor reviews and disparaging comments about Dinar Corp. to a website where customers posted reviews of online currency exchange companies. Dinar Corp. also claimed that the defendants sent emails with false and disparaging information to Dinar Corp. advertisers and a prospective client. Sterling moved for dismissal due to lack of personal jurisdiction.

Jurisdiction. The court determined that the exercise of general personal jurisdiction was inappropriate. A court may exercise personal jurisdiction over a defendant when the defendant purposefully established minimum contacts with the forum state consistent with the constitutional guarantee of due process. Sterling had its principal place of business in Georgia and the employee defendants were residents of Georgia. Although Sterling prosecuted an action in the Nevada courts and one individual defendant owned another Nevada corporation, the court noted that those contacts were insufficient to show that the defendants were “at home” in Nevada.

The plaintiffs also failed to make a prima facie showing of specific personal jurisdiction, according to the court. The evidence showed that the defendants’ alleged acts were intentional and the defendant s were aware that their acts would likely cause harm in the forum state. However, the defendants did not expressly aim their conduct at Nevada. The defendants’ use of the website was passive in that the website merely offered a forum for customers to post information relating to various service providers. Moreover, the defendants’ negative reviews were equally aimed at potential customers in all 50 states and around the world. Although Dinar Corp. may have a higher concentration of customers in Nevada, the plaintiffs did not specifically allege any facts showing that the defendants’ acts were targeted at Nevada customers. Dinar Corp. also did not allege that the advertisers or customer contacted by Sterling were Nevada residents or those actions were targeted at Nevada in any way, the court noted.

Transfer. The court found that, although venue was improper in Nevada, venue should be transferred to the Northern District of Georgia. The defendants resided in Georgia and the courts in Georgia could exercise personal jurisdiction over them. The defendants did not oppose the transfer. Finally, if the case was dismissed, the plaintiffs’ claims may be barred by the applicable statute of limitations. Thus, it would be in the “interest of justice” to transfer the action, rather than dismiss it, the court concluded.

The case is No.2:13-cv-02106-APG-PAL.

Attorneys: Amber Candelaria (Candelaria Law Group) and Daniel Warner (Kelly Warner PLLC) for Dinar Corp. Inc. David M. Lilenfeld (Lilenfeld PC) and Justin L. Carley (Snell & Wilmer, LLP) for Sterling Currency Group, LLC.

Companies: Dinar Corp. Inc.; Sterling Currency Group, LLC.

Cases: Advertising NevadaNews