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Nationwide Telecom Inc. v. Dollar Phone Enterprise Inc.

United States District Court, D. Colorado

September 18, 2017

NATIONWIDE TELECOM INCORPORATED, Plaintiff,
v.
DOLLAR PHONE CORP., Defendant.

          OPINION AND ORDER DENYING MOTION TO DISMISS AND ALTERNATIVE MOTION TO TRANSFER CASE

          Marcia S. Krieger United States District Court.

         THIS MATTER comes before the Court on the Defendant's Motion to Dismiss or Change Venue (# 20), the Plaintiff's response (# 30), and the Defendant's reply (# 56). For the reasons that follow, the Motions are denied.

         I. JURISDICTION

         The Court has subject-matter jurisdiction to hear this case under 28 U.S.C. § 1332(a). The parties dispute whether the Court can exercise personal jurisdiction over the Defendant.

         II. MATERIAL FACTS[1]

         The Court begins with the somewhat skeletal allegations in the Amended Complaint (#17), before turning to the additional facts adduced during the briefing on the instant motion.

         The Plaintiff, Nationwide Telecom Inc. (“Nationwide”), is a Colorado corporation engaged in the business of providing international telephone services to its clients. As pertinent here, it does so by buying “wholesale bandwidth” on a “T1 Trunk Line” owned by CenturyLink, and it then resells the bandwidth to its customers, allowing them to make international telephone calls.

         Defendant Dollar Phone Corp. (“Dollar Phone”) is a business that “sells prepaid calling cards for international and domestic telephone communications.” Nationwide alleges that, beginning on or about June 2, 2016, Dollar Phone obtained access to Nationwide's trunk line without Nationwide's permission, and routed calls from Dollar Phone's customers through Nationwide's bandwidth on the trunk line. Subsequently, Dollar Phone refused to compensate Nationwide for its use of Nationwide's trunk line.

         Nationwide alleges four claims against Dollar Phone: (i) common-law conversion, presumably under Colorado law, in that Dollar Phone exercised unauthorized dominion over an asset - the bandwidth or trunk line - that belonged to Nationwide; (ii) civil theft in violation of C.R.S. § 18-4-405, on essentially the same facts; (iii) common-law unjust enrichment, presumably under Colorado law, based on the same facts; and (iv) violation of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030 et seq., in that Dollar Phone accessed a “protected computer” - namely, Nationwide's addresses, switches, servers and Trunk line” - without authorization and by doing so, caused Nationwide to suffer losses in the form of “conducting a damage assessment and restoring the [ ]T1 Trunk Line access, ” among other things.

         As discussed below, both sides submitted additional evidentiary material in support of their briefing on the instant motion to dismiss, and that material fleshes out the Amended Complaint's allegations significantly. Without intending at this time to resolve any factual disputes, the Court observes as follows. Dollar Phone is a New York corporation with its principal place of business in New York State. It does not maintain any operations of any kind in Colorado under its own name, nor does it own any property in this state. It is one of a constellation of related-but-(nominally) distinct entities that also include Dollar Phone Enterprise (“DPE”), among others. DPE is the entity that sells prepaid calling cards to various customers and outlets. Dollar Phone acquires “minutes of termination” - the phrase is not defined in any witness' affidavits, but appears to refer to timed or metered access to international telecommunications networks owned by others - and sells that access to DPE, allowing DPE's customers to use the calling cards to make telephone calls.

         Among the vendors from which Dollar Phone acquires these “minutes of termination” is FM & Company (“FM”), an entity located in the United Kingdom. It appears that, between June 1 and June 20, 2016, DPE's customers made telephone calls using minutes sold by Dollar Phone, and Dollar Phone routed those calls to FM. It appears that, acting upon instructions from FM, Dollar Phone then routed the calls through an Internet Protocol (“IP”) address that belonged to Nationwide. Affidavit of Chris Zambito, Docket # 24, ¶ 14, 23 (“Dollar Phone Corp. [is] the party who had actually sent calls to Plaintiff's IP addresses, the VoIP traffic at the heart of this dispute”). Over the 20-day period, Dollar Phone apparently routed approximately 157, 000 calls through Nationwide's IP address.[2] Thus, it appears to be Dollar Phone's position that although it admittedly routed phone traffic using bandwitdh that belonged to Nationwide, it did so at the direction of FM.

         In the instant motion, Dollar Phone moves to dismiss (# 20) the claims against it for lack of personal jurisdiction and for improper venue. Alternatively, Dollar Phone requests that this action be transferred to the Eastern District of New York.

         III. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

         A. ...


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