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BHR Recovery Communities, Inc. v. TOP Seek, LLC

United States District Court, E.D. Virginia, Richmond Division

November 29, 2018

TOP SEEK, LLC, et al., Defendants.



         The plaintiff, BHR Recovery Communities, Inc. d/b/a Broad Highway Recovery ("Broad Highway"), operates an addiction recovery business in Richmond, Virginia. Broad Highway alleges that Top Seek, LLC ("Top Seek"), and numerous unidentified defendants tried to steal some of Broad Highway's customers. Allegedly, the defendants secretly changed the phone number on Broad Highway's Google business listing. This nefarious change detoured Broad Highway's customers to a different road to recovery. Top Seek has moved to dismiss Broad Highway's six-count amended complaint for lack of personal jurisdiction and failure to state a claim.[1]

         The Court grants in part and denies in part Top Seek's motion. Specifically, the Court finds that it can exercise personal jurisdiction over Top Seek. Count 1 fails because non-binding authority persuades the Court that Virginia's unauthorized use of a name statute protects only natural persons, not entities like Broad Highway. Broad Highway fails to plead detrimental reliance, a necessary element of a Virginia Consumer Protection Act ("VCPA") claim, so Count 2 also fails. As to Count 3, Broad Highway does not plead business conspiracy with the requisite particularity. Conversely, Broad Highway adequately pleads the elements of a Lanham Act claim, so the Court will deny Top Seek's motion to dismiss Count 4. Similarly, because Broad Highway pleads the elements for violations of Virginia Code §§ 18.2-214 and 18.2-216, Counts 5 and 6 will proceed.


         Broad Highway operates as an intervention program and sober living facility in Virginia. Broad Highway initially sued Life Solutions, Inc. ("Life Solutions"); Best Drug Rehabilitation, Inc. and Best Drug Rehabilitation Holdings, Inc. (collectively, "Best Drug"); Serenity Point Recovery, Inc. ("Serenity"); A Forever Recovery, Inc. ("A Forever Recovery"); and Tony Logue, the intake coordinator for Life Solutions. Best Drug, Serenity, and A Forever Recovery operate substance abuse treatment facilities in Michigan. Life Solutions operates a call center that attempts to place people seeking treatment in these Michigan facilities, among others. After the Court allowed limited jurisdictional discovery, Broad Highway dismissed all of these defendants and sued Top Seek in an amended complaint.

         On September 2, 2015, Top Seek entered into a contract to generate sales leads for Life Solutions. Essentially, Top Seek promised to generate leads so that Life Solutions could route clients seeking substance abuse treatment to the Michigan facilities. On December 9, 2016, Top Seek contracted with Century Interactive/Call Box, Inc. ("Call Box"), to set up a unique phone number to track sales that Top Seek generated. Through Call Box, Top Seek established a number with an "804" area code (the "804 number") to forward calls to Life Solutions in Michigan. The 804 area code "is Virginia specific." (Am. Compl., at 4.)

         On February 23, 2017, Top Seek caused Google to change the phone number on Broad Highway's Google business listing[2] from a toll-free "855" number to the 804 number. Top Seek took certain measures to hide its identity when changing the phone number. For instance, Top Seek used a Gmail account with a fake name and a recovery e-mail account hosted by a Hungarian proxy provider called Your Own Protection Mail ("YOPmail"). To set up the Gmail account, Top Seek also used a Canadian telephone number from an internet-based provider named Text-Me. Additionally, a company called Sophidea, Inc., masked the IP address of the computer that Top Seek used to switch Broad Highway's phone number. Through social media and its contacts in the treatment community, Broad Highway discovered that its Google listing contained the incorrect phone number on March 2, 2017.

         Upon noticing the wrong phone number, Broad Highway's owner, Sam Davis, called the 804 number, and someone with "Treatment Services" answered. When Davis asked why he had been connected to Treatment Services and requested to speak to a supervisor, the recipient terminated the call. Another person, seemingly affiliated with Broad Highway, then called the 804 number and was directed to a Michigan facility called, "Serenity." Soon thereafter, Tony Logue called the Broad Highway caller back to discuss Life Solutions' rehabilitation programs.

         Logue then sent an e-mail to the caller providing information about a Life Solutions facility called "A Forever Recovery." Someone had registered the e-mail address that Logue used with Domain by Proxy, LLC, to shield the registrant's identity. The next day, on March 3, 2017, Logue e-mailed a financial agreement for Serenity to the caller. It proposed a $29, 000 down payment. On March 22, 2017, Top Seek terminated the 804 number with Call Box. Top Seek and Life Solutions renewed their contract on July 26, 2017.

         The amended complaint alleges six counts: (1) unauthorized use of a name; (2) VCPA violation; (3) business conspiracy; (4) Lanham Act violation; (5) violation of Va. Code § 18.2-214; and (6) violation of Va. Code § 18.2-216.

         II. DISCUSSION [3]

         A. Personal Jurisdiction

         A court can exercise personal jurisdiction over a non-resident defendant if the defendant has certain minimum contacts with the forum state such that the suit does not offend "traditional notions of fair play and substantial justice." Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). In this case, the Court must determine whether it can exercise specific personal jurisdiction by examining three factors: (1) whether the defendant purposefully availed itself of conducting activities in Virginia; (2) whether the plaintiffs claim arose out of those activities directed at Virginia; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable. Perdue Foods LLC v. BRF S.A., 814 F.3d 185, 189 (4th Cir. 2016).

         When a case involves internet contacts, a sliding scale test determines whether a "defendant purposefully availed itself of the privilege of conducting activities in the [s]tate." ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712-13 (4th Cir. 2002). At one end of the scale, a defendant actively does business over the internet, like entering into contracts with residents of foreign jurisdictions and repeatedly transmitting internet files. Id. at 713. At the other, passive end of the scale, a defendant simply posts information online. Id. at 713-14. Within the middle ground, a defendant might have an interactive website. Id. at 714.

         Using the sliding scale, a court may exercise jurisdiction over a foreign entity that "(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." Id. In other words, "specific jurisdiction in the Internet context may be based only on an out-of-state person's Internet activity directed at [Virginia] and causing injury that gives rise to a potential claim cognizable in [Virginia]." Id. Under this test, a federal court in Virginia had jurisdiction over a defendant who transmitted spam e-mails through servers in Virginia when the plaintiffs claims stemmed directly from that activity. Verizon Online Servs., Inc. v. Ralsky, 203 F.Supp.2d 601, 620-21 (E.D. Va. 2002).

         Broad Highway's amended complaint satisfies the ALS Scan test. First, Broad Highway claims that Top Seek directed electronic activity into Virginia by changing the phone number for a Virginia business' Google listing. Second, Broad Highway alleges that Top Seek intentionally used the "804" area code to target "a Virginia audience," Young v. New Haven Advocate, 315 F.3d 256, 263 (4th Cir. 2002), and to forward Virginia callers to Broad Highway's competitors in Michigan. Finally, and as set forth in this Opinion, Top Seek's actions created potential causes of action cognizable in Virginia's courts. Like in Verizon, Top Seek's connection with Virginia stems from Broad Highway's claims themselves. 203 F.Supp.2d at 620. The amended complaint alleges that Top Seek did more than simply "place[] information on the Internet." ALS Scan, 293 F.3d at 712. Instead, Top Seek targeted a Virginia company and attempted to usurp Virginia clients using a phone number with a Virginia area code. For these reasons, the Court can constitutionally exercise personal jurisdiction over Top Seek.

         B. Count 1: Unauthorized Use of a Name (Va. ...

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