IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ERROL F. TROBEE, : : Plaintiff : CIVIL ACTION : vs. : : NO. 2458 S 1993 : AMERICA ONLINE, INC., : : Defendant : PRELIMINARY OBJECTIONS PETITION RAISING A QUESTION OF JURISDICTION 1. The Court of Common Pleas of Dauphin County, Pennsylvania, lacks matter jurisdiction of this action. 2. The Court of Common Pleas of Dauphin County, Pennsylvania, lacks matter jurisdiction of this person of the defendant. WHEREFORE, the Defendant prays that the Plaintiff's Complaint will be dismissed. OBJECTION TO VENUE 3. Dauphin County is the the proper venue for this action. WHEREFORE, the Defendant prays that the Plaintiff's Complaint will be dismissed. OBJECTION TO SERVICE OF THE COMPLAINT 4. The Plaintiff has not served the Complaint upon the Defendant as required by law. WHEREFORE, the Defendant prays that the Plaintiff's Complaint will be dismissed. MOTION TO STRIKE BECAUSE OF LACK OF CONFORMITY WITH RULE OF LAW 5. The Plaintiff's Complaint appears to plead a cause of action based upon a contract. 6. The Plaintiff's Complaint fails to set forth whether the alleged contract was oral or written. 7. if the alleged contract upon which the Plaintiff's cause of action is based is written, the Plaintiff has failed to attach a copy of the writing to the Complaint. WHEREFORE, the Defendant prays that the Plaintiff's Complaint be stricken. Penn B. Glazier, Esquire Attorney for the Defendant Attorney I.D. #06949 625 West Chestnut Street Lancaster PA 17603-3495 (717) 291-1023 IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION - LAW : ERROL F. TROBEE, : : Plaintiff : CIVIL ACTION : vs. : : AMERICA ONLINE, INC., : No. 2458 S 1993 : Defendant : : : : : ANSWER TO PRELIMINARY OBJECTIONS QUESTION OF JURISDICTION 1. All events mentioned in the Complaint were transacted from the Computer of the Plaintiff which is and was located at 1240 F Hampton Hill Courts, Harrisburg, Dauphin County, Pennsylvania. 2. Since the Defendant is doing business in Dauphin County Pennsylvania, and provides "Local Access" via contracted telephone lines, The Court of Common Pleas of Dauphin County Pennsylvania does have jurisdiction of the Person of the Defendant. Wherefore, the Plaintiff prays the Objections of the Defendant be denied under PA R.C.P. Rule 2179 (2). OBJECTION TO VENUE 3. Since the Defendant is doing business in Dauphin County Pennsylvania, The Court of Common Pleas of Dauphin County Pennsylvania does have jurisdiction of the Person of the Defendant. Wherefore, the Plaintiff prays the Objections of the Defendant be denied under PA R.C.P. Rule 2179 (2). SERVICE OF THE COMPLAINT 4. The Attorney/Agent for the Defendant has received notice of the complaint being filed as evidenced by their filing of Objections to the Complaint. In addition, The Complaint was sent via Overnight mail on August 12, 1993 to the Defendant and their Agent/Attorney in accordance with PA R.C.P. 403 and 424 (3). WHEREFORE, the Plaintiff prays that the Objection be denied. LACK OF CONFORMITY WITH LAW 5. As with any form of Employment, the contract is implied, based upon prior conduct that of payment for service performed. This is an implied contract of the two parties, Employer and Employee and was conducted as a normal course of business. 6. The Defendant had a prior conduct of reimbursing the Plaintiff for services rendered. 7. The Contract was and offer and acceptance on a mutual basis by the Defendant and Plaintiff for services rendered. The Payment that had previously been credited to the Plaintiff had been withdrawn by the Defendant by canceling the Plaintiff's Accounts and have refused to reimburse the Plaintiff for the Services Rendered in Good Faith. WHEREFORE, the Plaintiff prays the the MOTION TO STRIKE be overruled. Pa Rules of Civil Law notes. Rule 403: If a rule of civil procedure authorizes original process to be served by mail, a copy of the process shall be mailed to the defendant by any form of mail requiring a receipt signed by the defendant of his authorized agent. Service is complete upon delivery of the mail. Rule 424: Service of original process upon a corporation or similar entity shall be made by handing a copy to any of the following persons provided the person served is not a plaintiff in the action: (3) an agent authorized by the corporation or similar entity in writing to receive service process for it. IN THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ERROL F. TROBEE, | | Plaintiff | CIVIL ACTION | | vs. | No. 2458 S 1993 | AMERICA ONLINE, INC. | | Defendant | | | BRIEF IN OPPOSITION TO DEFENDANT'S PRELIMINARY OBJECTIONS TO PLAINTIFF'S AMENDED COMPLAINT The Plaintiff has brought this suit based upon the employment by Defendant of Plaintiff to work for Defendant, which operates a nationwide service allowing people located at different places throughout the United States and elsewhere, to chat, simultaneously utilizing a computer and modem and software designed by and supplied by Defendant to its customers, including a large customer base solicited in and located in Pennsylvania. The Defendant has filed preliminary objections and Plaintiff is responding to same. QUESTIONS PRESENTED I. Does the Court of Common Pleas of Dauphin County have subject matter and personal jurisdiction over the Defendant, and is the venue properly laid in Dauphin County? II. Should Plaintiff's Amended Complaint be stricken for failure to comply with Pa. R. C. P. No. 1019(H)? ARGUMENT I. BOTH THE SUBJECT MATTER OF THIS ACTION AND THE PARTIES, AND VENUE IS PROPERLY LAID IN DAUPHIN COUNTY. Defendant alleges that there are insufficient "minimum contacts" between the Commonwealth of Pennsylvania and the Defendant for this Court to lawfully exercise its jurisdiction in a matter involving a citizen of the Commonwealth. Plaintiff respectfully disagrees. Defendant, a corporation whose headquarters are located in Virginia, operates and has as its sole source of continuing income a service provided to computer users nationwide (and now internationally) by which computer users, utilizing telephone lines and a modem, may talk to each other and interact in groups of up to 23 persons simultaneously. Plaintiff, as plead in the Amended Complaint, was employed by Defendant to manage, host and write the contents of an entertainment program regularly scheduled on Defendant's system. That type of program continues through the present date. Defendant's customers utilize the computer system to play live, interactive word games, "brain teasers", and other games similar in format to game shows presented on television. Each game lasts one hour, and Defendant's customers utilize the service specifically to participate in such games, paying $3.50 for each hour that they utilize the service. In order to utilize the service, a customer must have a computer, a modem (allowing a computer uses to communicate via telephone lines), and an active telephone line attached to the modem. The user cannot utilize Defendant's service, however, unless the user has a software program created by and/or for Defendant which allows the customer to contact Defendant. This software can only be obtained from defendant. How does a customer obtain this software program? In the main , a customer does so by clipping a coupon which the customer finds in a magazine which he or she purchases at their local newsstand, or in some instances, the software is included in the magazine itself. The advertisements are a part of a marketing program designed by Defendant to solicit customers in every state and commonwealth, including Pennsylvania. (See Exhibits C and D) The customer may also purchase a computer through their local computer store into which the program has been already installed. Defendant has entered into a major program of contracting with computer suppliers to install their computer program in the computers which the suppliers sell so that a customer will have the program available for his or her use the moment they start utilizing the computer, thus avoiding the necessity of the customer actually having to request a copy. In both these instances, the Defendant has arranged, through the normal channels of commerce, for the software necessary for a computer user to utilize their service to come into the hands of said users. Defendant has solicited customers in the Commonwealth of Pennsylvania directly by placing advertisements and/or software into publications whose distribution was known to include Pennsylvania, and by placing its software into computers to be sold in Pennsylvania. Clearly, this distinguishes this matter from the situation the Court faced in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 291 (1980), cited in Defendant's brief. A court may exercise in personam jurisdiction over a non-resident if (1) jurisdiction is conferred by the state long-arm statute and (2) the exercise of jurisdiction under the statute meets constitutional standards of due process. Kenneth H. Oaks, Ltd. V. Josephson, 568 A. 2d 215, 216 (Pa. Super. 1989). Pennsylvania's long-arm statute, 42 Pa. C.S. 5322(b), provides, in part, that Pennsylvania courts may exercise jurisdiction over non- resident defendants "to the fullest extent allowed under the Constitution of the United States" and jurisdiction may be based "on the most minimum contact with this Commonwealth allowed under the Constitution of the United States" Ibid. Under the Fourteenth Amendment to the United States Constitution, a state may exercise personal jurisdiction over a defendant so long as the defendant has "certain minimum contacts... such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice", Ibid., citing Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940). In the context of contractual issues, the United States Supreme Court has held that parties who reach beyond one state and create continuing relationships and obligations with citizens of another state are subject to regulation and sanctions in the other State for the consequences of their activities. Ibid at 217, citing Burger King Corp. v. Rudziewicz, 471 U.S. 462, 485-486, 105 S.Ct. 2174, 2189, 85 L.Ed.2d 132, 141 (1978) quoting Travelers Health Assn. v. Virginia, 339 U.S. 643, 647, 70 S.Ct. 927, 929, 94 L. Ed. 1154 (1950). There can be no question but that defendant America Online Inc. has created continuing relationships and obligations with citizens of Pennsylvania. To the best of plaintiff's knowledge, belief and information, defendant derives all, or the majority of, its revenue from subscriber fees paid by users of its service. Based upon the population of the Commonwealth in proportion to the population of the United States Plaintiff believes that, based upon Defendant's stated subscriber base of 600,000, the subscriber base located in the Commonwealth would be approximately 28,000. (See Exhibit A) The Defendant's database will only allow a maximum of 256 to be listed in any one category, but the Plaintiff believes that many more exist. In addition, with more than 12,000,000 "sign on sessions" per month, as stated in a letter from Steve Case, CEO, America Online, Inc., (See Exhibit B) that it is reasonable to assume from the population base that there are 576,000 "sign on sessions" from the Commonwealth each month. ( Plaintiff believes that, upon admission of additional discovery material, the number of Commonwealth residents and "sign on's" from the Commonwealth can be proven and thus prove that "Minimum Contact" does, in fact, exist in this case. Defendant has contracted with several long-distance telephone carriers to provide local access to defendant's system. By doing this, defendant's customers do not have to dial directly to Virginia and pay a long-distance telephone charge in addition to their per-hour usage fee; the customer pays the usage fee, and defendant pays for the charges associated with the use of the long-distance telephone carrier. At the present time, defendant offers 66 telephone numbers within the Commonwealth, including 23 in area code 717, and 3 located in the Harrisburg vicinity (see Exhibit F, listing of local access numbers, provided by America Online). The Plaintiff is willing to depose and call as "material witness's", officials of Tymenet and SprintNet to testify as to the validity of the list of access numbers and the number of "sign on's". The provision of these "local access nodes" within the Commonwealth is but another indication of defendant's presence within the Commonwealth, being an activity "purposefully directed" towards the residents of the Commonwealth. Ibid. If additional Discovery is allowed, the Plaintiff will request in the course of discovery, information regarding the number of subscribers to the defendant's service located in the Commonwealth and the revenue derived therefrom. Dismissing this action at this time will deny plaintiff access to evidence on this subject, which is solely within the possession of the defendant. Does requiring defendant to submit to the jurisdiction of the Court of Common Pleas of Dauphin County "offend traditional notions of fair play and substantial justice" ? Graham v. Machinery Distribution, Inc. 599 A. 2d 984, 986 (Pa. Super. 1991), citing Hanson v. Denkla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2L. Ed. 2d 1283, 1298 (1958). Plaintiff submits that it does not. Defendant has solicited a substantial membership base in the Commonwealth, and continues to do so via advertising and allowing their corporate name to be used in advertising "reasonably calculated to reach" the Commonwealth (See Exhibits C, D, and E). World-Wide Volkswagen Corp. V. Woodson, 444 U. S. 291, 295. Defendant has contracted with long-distance service providers (Tymnet and SprintNet, formerly Telenet) to provide local access for utilization of defendant's services. Additionally, defendant employs persons through its Interactive Educational Services program (IES) to teach courses online to defendant's customers, both for college credit and not-for-credit. Plaintiff will submit the affidavit of one of the persons so employed, Brian Youngerman, who has taught a number of courses online and, at all times while doing so, has been and is a resident of Pennsylvania. Mr. Youngerman will testify that he has always been paid for his services on a regular basis by defendant America Online Inc. (Previously known as Quantum Computer Services, Inc.) Plaintiff is aware of at least one other person residing in the Commonwealth who teaches courses on defendant's service to defendant's customers, who, like Mr. Youngerman, is paid for such teaching and who resides in the Commonwealth. (See Exhibit I) There are many areas of interest available to defendant's customers utilizing defendant's service. These include live interactive chat (generally referred to by defendant as "People Connection"), Lifestyles and Hobbies, Games and Entertainment, Computers and Computing, etc. Each area is manned by staffers with diverse responsibilities. These include reviewing and replying to questions asked by customers utilizing the particular area; supervising live, interactive games as they proceed and making sure that players conform to acceptable standards of conduct, researching and posting new material of interest to customers in each reference area (referred to as "forums"). Without reaching the issue of whether these persons are employees of defendant, plaintiff notes that it is the services provided by these persons which permits defendant to make available the broad range of interest offerings which it does and therefore to attract the customers to utilize its services. A number of these services providers are located in the Commonwealth of Pennsylvania. Plaintiff will seek, through additional discovery, the names and duties of each of these persons and may call some or all to testify at trial. These persons are chosen by defendant. The utilization of such persons, performing services for and under the control and direction of defendant, in the conduct of defendant's business, located in and residing within the Commonwealth and remunerated in the form of "Free Connect Time" is but another area of contact between the defendant and the Commonwealth, making it proper and appropriate for the exercise of in personam jurisdiction over the defendant. In Asahi Metal Industry Co, Ltd. v. Superior Court of California, 480 U. S. 102, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987) The United States Supreme Court established several criteria for determining whether minimum contacts are present with the forum state: 1. Is the product designed for the market in the forum state? 2. Does the non-resident party advertise in the forum state? 3. Has the non-resident party established channels for providing regular advice to customers in the forum state? 4. Does the non-resident party market its product through a distributor who has agreed to serve as the sales agent in the forum state? Asahi Metal Industry Co, Ltd. v. Superior Court of California, 480 U. S. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d at 104-105. These criteria are not cumulative; if any one is present, it is evidence that the party itself has created a substantial connection with the forum state. Burger King Corp. v. Rudziewicz, 471 U.S. 462, 47 5, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528, 542. Examining the criteria, one finds that the defendant's product (its service) is not specifically designed for marketing in Pennsylvania, but defendant does advertise in the Commonwealth by utilizing media reasonably anticipated to reach citizens in the Commonwealth. (See Exhibits C, D, and E) In addition, the Defendant knowingly ships its software to the Commonwealth as a matter of everyday practice. (See Exhibit G) Regarding the third criteria, plaintiff will demonstrate, through subpoenaed testimony at trial, that one of defendant's main channels of advice to its customers are staffers who are designated as "guides". One of the primary function of these "guides" is to assist customers in utilizing defendant's service. These persons are known to defendant's customers, since they appear online as "Guide ___" (a two-or three-letter suffix following the word "Guide"). At least three of these guides known to Plaintiff are a resident of the Commonwealth and provides his/ her services to the defendant from her residence. The fourth criteria involves facts which are in the control of defendant. Plaintiff believes, as has been alleged earlier, that defendant has contracted with distributors of computer hardware to market its product as part of a "package" of computer hardware and software, and that some of said distributors are located in the Commonwealth. Plaintiff will be seeking to obtain this information through additional discovery. On April 17, 1994, in the "Center Stage" forum held on America Online, Steve Case, the President and Chief Executive Officer of the Defendant was asked the following question: "Question How many people work with AOL? (defendant America Online, Inc.: emphasis added) Steve Case We have about 400 employees here in our offices...but hundreds more providing support from other locations (guides, forum leaders, etc.) We've doubled our staff over the past year, to try to keep up with the demand. (Transcript of President's Roundtable Online discussion held in "Center Stage", dated April 17, 1994. See Exhibit H) Plaintiff does not seek to have the Court rule, at this time, whether Mr. Case's statement constitutes an admission of the central issue of this case, that being whether so-called "remote staff" are employees of defendant. It is clear, however, that defendant does regard such remote staff as employees. Plaintiff has already made the court aware of the presence of several such remote staff members, including one "guide", who are located in the Commonwealth and have been located here at all times relevant to the matter before the Court. The presence of such employees in the Commonwealth, conducting the business of the defendant, indicates clearly that the defendant's claim not to have sufficient contacts with the Commonwealth as to require the defendant to defend this matter in the courts of the Commonwealth lacks any support whatsoever. When preliminary objections, if sustained, would result in the dismissal of an action, such objections should be sustained only in cases which are clear and free from doubt. Barber v. Pittsburgh Corning Corp., 317 Pa. Super. 285, 302--3, 464 A. 2 d 323, 332 (1983), cert. denied 467 U.S. 1205, 104 S.Ct. 2387, 81 L. Ed. 2d 346 (1984). Moreover, when deciding a motion to dismiss for lack of personal jurisdiction, the court must consider the evidence in the light most favorable to the non-moving party. Ibid. Plaintiff submits that it is clear that minimum contacts exist between the defendant and the Commonwealth of Pennsylvania, and therefore the motion to dismiss should be denied. Defendant also seeks dismissal based upon improper venue. If, as has been argued above, this Court can properly exercise in personam jurisdiction over the defendant, then there is no other forum within the Commonwealth which is more appropriate. Indeed, defendant has failed to argue that this action should be transferred to any other venue with in the Commonwealth. Plaintiff resides within the county. Defendant has a client base within the county from which it derives revenue, and provides local access to its service within the county by the provision of local access telephone numbers. Plaintiff submits that Dauphin County is an appropriate forum for the litigation of this matter. II. IT IS MANIFESTLY UNFAIR AND UNJUST TO DISMISS PLAINTIFF'S COMPLAINT FOR FAILURE TO SPECIFICALLY ALLEGE WHETHER PLAINTIFF'S CLAIM IS BASED UPON A WRITING. Defendant seeks dismissal of Plaintiff's Amended Complaint for failure to allege whether the claim is based upon a writing, and, if so, to attach same thereto. This is a technical objection. Plaintiff has, this day, filed a motion to permit a second Amendment to the Complaint to correct this technical defect. Defendant is aware that a portion of Plaintiff's claim is in fact based upon a writing, the "Terms of Service" agreement (hereinafter "TOS") which all customers of defendant agree to abide by in order to utilize defendant's service. This document was created by defendant, has been changed by defendant, and copies of it, in all of its versions, are solely in the possession of defendant. To not dismiss this action for failure to comply with a technicality will in no way harm defendant, since the writing in question is already in its possession and is known to it. In addition, Pa. R.C.P. Rule 1019 (h) states, "A pleading shall state specifically whether any claim or defense set forth therein is based upon a writing. If so, the pleader shall attach a copy of the writing, or the material part thereof, but if the writing or copy is not accessible to him, it is sufficient so to state, together with the reason, and to set forth the substance of the writing." However, Pa.R.C.P. 126 states, "LIBERAL CONSTRUCTION AND APPLICATION OF RULES. The rules shall be liberally construed to secure the just, speedy and inexpensive determination of every action or proceeding to which they are applicable. The court at every stage of any such action or proceeding may disregard any error or defect of procedure which does not affect the substantial rights of the parties. An answer to Defendant's objection with regard to any "Employment Contract" was answered by the Plaintiff on March 21, 1994 and served on the Defendant on the same day. The "Rights of the Defendant" have not been substantially affected in any manner, because the Defendant has, or should have, in their possession, any contract referred to by the Plaintiff. CONCLUSION For the foregoing reasons, Plaintiff submits that its action should not be dismissed. _________________________ Errol F. Trobee Plaintiff [Address and phone deleted] PROOF OF SERVICE I hereby certify that I am this day serving the foregoing document unto the person(s) and in the manner indicated below, which service satisfies the requirement of PA R.C.P. 440. Service by first class mail addressed as follows: Errol F. Trobee [Address deleted] Date: 8/6/93 Penn B. Glazier, Esquire Attorney for the Defendant Attorney I.D. #06949 625 West Chestnut Street Lancaster PA 17603-3495 (717) 291-1023