[00:00:25] Speaker 05:
Good morning and welcome all to the James Browning U.S.

[00:00:31] Speaker 05:
Courthouse here in San Francisco.

[00:00:34] Speaker 05:
This is the time set for the case of Brandon Briskin versus Shopify Incorporated.

[00:00:42] Speaker 05:
Before we proceed, I just want to make sure our colleagues on video are present and can hear me.

[00:00:50] Speaker 05:
Judge Wardlaw?

[00:00:52] Speaker 05:
I didn't hear you very well.

[00:00:53] Speaker 05:
Okay.

[00:00:53] Speaker 05:
Judge Desai?

[00:00:56] Speaker 02:
Yes, I can hear you.

[00:00:57] Speaker 02:
Thank you.

[00:00:58] Speaker 05:
All right.

[00:00:58] Speaker 05:
Thank you.

[00:00:59] Speaker 05:
Parties are ready.

[00:01:00] Speaker 05:
You may proceed.

[00:01:13] Speaker 07:
Good morning, Your Honors, and may it please the Court.

[00:01:16] Speaker 07:
Nick Sansone on behalf of Brandon Briskin.

[00:01:19] Speaker 07:
With the Court's permission, I'll reserve five minutes for rebuttal.

[00:01:24] Speaker 07:
We agree with Shopify that personal jurisdiction turns on the activities of the defendant and not on the unilateral actions of third parties.

[00:01:35] Speaker 07:
So let's look at what Shopify is alleged to have done in this case.

[00:01:41] Speaker 07:
While connected electronically to the computer of an online shopper who Shopify knew to be located in California, Shopify voluntarily and intentionally

[00:01:52] Speaker 07:
sent tracking software into California onto the shopper's computer.

[00:01:58] Speaker 07:
Precisely as Shopify intended and desired, this tracking software remained on the computer indefinitely thereafter, sending a continuous stream of information about the California shopper's online activities

[00:02:14] Speaker 07:
out of California and directly to Shopify on an ongoing basis.

[00:02:20] Speaker 01:
That's absolutely correct.

[00:02:31] Speaker 07:
it may be helpful to disaggregate the two streams of revenue, the two business models that Shopify is alleged to have engaged in.

[00:02:39] Speaker 07:
The first business model is that Shopify contracts with online merchants to provide online payment processing services.

[00:02:51] Speaker 07:
It makes money by contracting with merchants to do that.

[00:02:54] Speaker 07:
while it is connected to an online shopper in order to fulfill its obligation with the merchant.

[00:03:02] Speaker 07:
Shopify then uses that direct access to the shopper's computer to engage in its second business model, and this is separate from its relationship with the merchant.

[00:03:14] Speaker 07:
Shopify uses its connection to the online shopper

[00:03:18] Speaker 07:
for its own purposes to install tracking software onto the user's device and then use that software to continuously pull information out of California

[00:03:30] Speaker 07:
so that it itself can build an individual consumer profile of that specific shopper, again, who it knows to be located in California, and then sells that profile on to third parties.

[00:03:44] Speaker 03:
But let's say stated differently, that if your client had been visiting relatives in New York,

[00:03:52] Speaker 03:
Wouldn't his alleged injury have happened in that state if he bought the apparel from IMB, MFG, or whoever online when visiting, when he was visiting?

[00:04:03] Speaker 03:
Wouldn't the extraction have happened there?

[00:04:05] Speaker 07:
The extraction would have happened there.

[00:04:07] Speaker 03:
In New York, so then why isn't it following Mr. Briskin?

[00:04:15] Speaker 03:
I guess I'm having a hard time here.

[00:04:19] Speaker 07:
Because once the online connection is opened up, in other words, if Mr. Briskin consummates a sale, moves to make a purchase in California, and then there's an online connection that's opened up between his computer in California and Shopify, it is then Shopify's decision what to do at that point.

[00:04:42] Speaker 07:
It could simply process the transaction and move on.

[00:04:46] Speaker 07:
That isn't what Shopify chooses to do.

[00:04:48] Speaker 03:
But what if he was in New York and he made the transaction?

[00:04:51] Speaker 03:
Wouldn't this, and he stayed there for a week, and then Shopify, the same extraction happened.

[00:04:59] Speaker 03:
Wouldn't New York be the place?

[00:05:01] Speaker 07:
In that instance, yes, New York would be the proper place.

[00:05:04] Speaker 03:
So it just seems like it's following Mr. Briskin.

[00:05:09] Speaker 07:
So certainly the presence of the plaintiff in the forum state

[00:05:15] Speaker 07:
when the alleged tort occurs is jurisdictionally relevant.

[00:05:19] Speaker 07:
It certainly is not the fact upon which jurisdiction turns.

[00:05:24] Speaker 07:
As the Supreme Court has made clear, the plaintiff's affiliations with the forum state are not what's relevant.

[00:05:31] Speaker 07:
But when the plaintiff is present in the forum state and an online connection is formed between the defendant and the forum state.

[00:05:40] Speaker 00:
How is that express aiming, I suppose, at California when

[00:05:45] Speaker 00:
Shopify would do this wherever, it seems like in whatever state the plaintiff was in.

[00:05:52] Speaker 07:
Just as the defendant in Keaton versus Hustler Magazine sent its magazines into every state, knowingly did so, profited from doing that, Shopify has constructed a business model where it pulls consumer data out of every state based on the transactions that occur there.

[00:06:10] Speaker 12:
Do we need to know- Was it your position?

[00:06:14] Speaker 12:
Go ahead, did you say?

[00:06:16] Speaker 02:
Is it your position that online businesses then would be subject to jurisdiction in every state?

[00:06:23] Speaker 07:
It depends on the nature of the claim, and it depends on the nature of the business.

[00:06:28] Speaker 07:
So this court's decision in herbal brands placed two important qualifications on the express aiming requirement.

[00:06:35] Speaker 07:
The contact with the forum state has to be part of the defendant's regular course of business, and the defendant has to exercise some level of control over

[00:06:46] Speaker 07:
its contacts with the forum state.

[00:06:51] Speaker 07:
In addition, the personal jurisdiction inquiry, specific personal jurisdiction, requires that the claims arise out of or relate to that contact.

[00:07:00] Speaker 03:
Well, but I guess the rule that you're proposing, I'm seeing what Judge Desai is saying, that Shopify could be subject to personal jurisdiction in every state.

[00:07:10] Speaker 03:
Then Shopify's probably gonna get up and then they're gonna say, you know,

[00:07:15] Speaker 03:
well, there's not personal jurisdiction here.

[00:07:18] Speaker 03:
And then I'm going to say, well, where is it?

[00:07:20] Speaker 03:
And then they're going to say, well, I don't know what they're going to say.

[00:07:23] Speaker 03:
But so if it's everywhere and nowhere, I find it hard to believe that that would be the rule the Supreme Court would come up with.

[00:07:33] Speaker 12:
Can I focus you on the second business model?

[00:07:35] Speaker 12:
I understand the second business model to include brick and mortar stores in California that sell the service that includes compiling customer profiles.

[00:07:45] Speaker 12:
Do I understand that correctly?

[00:07:48] Speaker 07:
So when I referred to the second business model, I was thinking of the data extraction activities that occur entirely online.

[00:07:56] Speaker 12:
I ask you whether it's the first or the second.

[00:07:59] Speaker 12:
Do I understand that's part of your allegation?

[00:08:02] Speaker 12:
There's brick and mortar stores in California, not online stores, brick and mortar stores located in California.

[00:08:07] Speaker 07:
Shopify does have physical presence.

[00:08:09] Speaker 07:
That's just a yes or a no.

[00:08:10] Speaker 07:
Yes.

[00:08:11] Speaker 12:
All right.

[00:08:11] Speaker 12:
Because I really need to, I'm not trying to give you a hard time, but I need to understand, and you're speaking in a little bit general terms.

[00:08:17] Speaker 12:
Okay.

[00:08:18] Speaker 12:
So that means the customers in that case are retailers like REI, right?

[00:08:24] Speaker 12:
Correct.

[00:08:25] Speaker 12:
That can go into that store and buy the service that includes this payment processing service, but also what I'm going to call data stitching to compile

[00:08:34] Speaker 12:
customer profiles and they sell that service to, in my hypo, to REI.

[00:08:41] Speaker 12:
We can tell you more about your customer's REI.

[00:08:43] Speaker 12:
Is that right?

[00:08:44] Speaker 07:
That is right, but it's important to keep in mind that the company that is profiting off of the sort of data extraction, consumer compilation, Shopify sells that service to businesses, but it is, yeah.

[00:09:00] Speaker 12:
I appreciate that.

[00:09:00] Speaker 12:
Okay, so the answer is yes, and your other point is that Shopify is then selling that

[00:09:05] Speaker 12:
data or that customer profile, which that's a fair point.

[00:09:08] Speaker 12:
But if I could just ask one other question.

[00:09:11] Speaker 12:
You said while that connection happens, and I don't know how literally you were speaking.

[00:09:16] Speaker 12:
So the cookie gets implanted, I think.

[00:09:20] Speaker 12:
Well, that's what I want to know.

[00:09:21] Speaker 12:
Is it your allegation that the cookie gets implanted only when a customer makes a purchase?

[00:09:26] Speaker 07:
No.

[00:09:26] Speaker 07:
It's as soon as the customer clicks a link on the merchant's website.

[00:09:32] Speaker 07:
When the consumer clicks that link, the consumer is directed away from the merchant's website and is connected directly to Shopify's platform.

[00:09:42] Speaker 12:
OK, so now we don't care where the consumer is in America or in the world.

[00:09:48] Speaker 12:
Is that right?

[00:09:48] Speaker 12:
They're shopping to go buy, my hypothetical, a backpack at REI.

[00:09:52] Speaker 12:
And that customer could be with her iPad anywhere, right?

[00:09:56] Speaker 07:
That customer could be anywhere.

[00:09:57] Speaker 12:
OK, and so to answer my question, then I can get out of your way.

[00:10:01] Speaker 12:
When they is it is it your content?

[00:10:03] Speaker 12:
Well, what is your contention about when the cookie gets implanted?

[00:10:06] Speaker 07:
so it is when the customer clicks the link to navigate away from the merchants page and Gets connected to Shopify servers at that point wait a minute does the customer I'm sorry for giving for interrupting But is the customer who's just shopping on the REI website trying to choose a backpack?

[00:10:22] Speaker 12:
There's no cookie implanted yet until the customer clicks to purchase a backpack and

[00:10:27] Speaker 07:
Until the customer clicks the link that navigates to the purchase page.

[00:10:32] Speaker 07:
In other words, the page that comes up is a form.

[00:10:34] Speaker 12:
So to initiate a purchase.

[00:10:36] Speaker 07:
To initiate a purchase.

[00:10:38] Speaker 12:
All right.

[00:10:38] Speaker 12:
Thank you.

[00:10:39] Speaker 07:
Whether or not it's consummated in the end.

[00:10:41] Speaker 12:
OK.

[00:10:41] Speaker 12:
Thank you.

[00:10:44] Speaker 05:
So can I ask, you mentioned Keaton on the Supreme Court case, where they referred to continuously and deliberately exploited the forum state.

[00:10:55] Speaker 05:
That's the term.

[00:10:57] Speaker 05:
That's where personal jurisdiction seems to begin.

[00:11:03] Speaker 05:
But I guess I want to know what you think it means for a defendant to have continuously and deliberately exploited a given market.

[00:11:15] Speaker 07:
When a defendant makes money off of individuals in the forum state, whether that is by selling them products, whether that is by taking information from them or taking valuable, intangible property from them, and then uses

[00:11:38] Speaker 07:
that property, that intangible property, to then turn a profit, selling it on to other people, other businesses.

[00:11:46] Speaker 07:
We think that is the deliberate and systematic exploitation of an in-state market.

[00:11:51] Speaker 07:
Because, again, Shopify is fully aware that it is pulling information out of thousands, if not millions, of California transactions day after day on an ongoing basis.

[00:12:04] Speaker 07:
And it knows that what it's doing is valuable.

[00:12:08] Speaker 07:
In other words, if we had a hacker who was pulling out seven cents from Californians' bank accounts,

[00:12:17] Speaker 07:
That is intangible information.

[00:12:19] Speaker 07:
It translates to money in the real world.

[00:12:22] Speaker 07:
But that is the defendant going into California and taking something out.

[00:12:29] Speaker 07:
And the court need not plow new ground in order to hold that.

[00:12:32] Speaker 07:
We think the facts in this case are very analogous to the ones in this court's college source decision.

[00:12:38] Speaker 07:
Just cited at page- Cancel, can I ask?

[00:12:40] Speaker 09:
You said that there's two business models for Shopify.

[00:12:42] Speaker 09:
The first one, it just relates to the merchant, and the second is for their own business.

[00:12:46] Speaker 09:
Under your theory, under the first business model, is that enough for a personal jurisdiction?

[00:12:51] Speaker 07:
That is a tougher case.

[00:12:54] Speaker 07:
And again, it would depend on what the nature of the claim is, because the claim would have to arise out of that transaction.

[00:13:04] Speaker 07:
I think there would be a good case for personal jurisdiction in that instance because even though it is the consumer who initiates the purchase and the merchant who holds itself out to complete the purchase, it is Shopify who has contracted to perform

[00:13:22] Speaker 07:
the payment processing service wherever it occurs.

[00:13:25] Speaker 09:
And then what makes the second model so much a stronger case for personal jurisdiction then?

[00:13:31] Speaker 07:
Because the second business model only comes into play after that online connection between consumer and Shopify is already established.

[00:13:41] Speaker 07:
So for the second business model, it doesn't matter whether we conceive of the consumer as having opened up that online link or whether we conceive of Shopify as having opened up that online link.

[00:13:51] Speaker 07:
The online link is already there.

[00:13:53] Speaker 07:
Shopify then says, I have access to a California consumer's computer.

[00:13:59] Speaker 06:
For your jurisdiction argument on what you've been calling the second model,

[00:14:05] Speaker 06:
Would it make any difference if your allegation were that what were being installed on your client's computer was malware, was a virus?

[00:14:18] Speaker 06:
Would that make any difference to your personal jurisdiction argument or would it be the same?

[00:14:23] Speaker 07:
I think it would be the same because it's Shopify's decision to install whatever software it's installing on a California device.

[00:14:32] Speaker 07:
And so whether that's malware, whether that's tracking software, Shopify is intending to send that software, whatever it is, onto a California device.

[00:14:43] Speaker 12:
uh... and again just not it's not doing that as i understand i think this is important to your theory but i'm not sure it's not doing that just as a service to back to rei in the backpack not just to help rei understand its customer profiles better it's marketing those profiles absolutely correct that's business model two that's correct but business model one judge wardlaw yeah i have a question because i want to

[00:15:13] Speaker 11:
understand where we're talking.

[00:15:16] Speaker 11:
We've been talking about the purposeful availment or prong.

[00:15:23] Speaker 11:
And I want to look at the injury prong because I think the injury prong goes to what the actual tort is.

[00:15:35] Speaker 11:
And we have to kind of look at the relationship between the actions of Spotify

[00:15:42] Speaker 11:
and the claim that arises.

[00:15:47] Speaker 11:
And what I'm understanding is the injury isn't the actual insertion of the cookie or tracking the data.

[00:15:59] Speaker 11:
It's the continuous injury of the person, the shopper's data now having been extracted

[00:16:10] Speaker 11:
being marketed and circulated.

[00:16:12] Speaker 11:
And that's the privacy violation.

[00:16:16] Speaker 11:
That's the claim that you seem to have alleged here.

[00:16:20] Speaker 11:
And to go back to some of the hypotheticals, if it's a California resident who lives and works in California, if the time, if the extraction takes place in New Jersey, what difference does it make the privacy

[00:16:39] Speaker 11:
harms are still occurring to him in California.

[00:16:45] Speaker 11:
And do I have that right?

[00:16:46] Speaker 11:
I mean, there has to be the, for a specific jurisdiction, otherwise we're just left with general jurisdiction, but for specific jurisdiction, we have to link the two.

[00:16:55] Speaker 07:
That's correct.

[00:16:56] Speaker 07:
And in that instance, there would be a plausible argument for specific jurisdiction in California, precisely for the reasons that your honor articulates.

[00:17:06] Speaker 07:
But that would be a harder case, we acknowledge, and the reason for that is that it is that sort of direct insertion for the purposes of the express aiming requirement.

[00:17:18] Speaker 07:
The insertion of the tracking software we think is one of the clearest instances in which Shopify is aware that it is linked up to a computer in the forum state

[00:17:29] Speaker 07:
and it chooses to take a direct action that then gives rise to all of these harms.

[00:17:35] Speaker 07:
And that occurs in the state where the transaction occurs.

[00:17:39] Speaker 07:
So in this case, where the extraction, the implantation of the tracking software, all of the relevant conduct is alleged to have occurred while Mr. Briskin's computer was in California, we think in this case,

[00:17:55] Speaker 07:
The court need not necessarily disentangle what would happen if some of the relevant events occurred in California and some occurred elsewhere.

[00:18:03] Speaker 03:
So are all of the class members California residents, or if not, what percentage are?

[00:18:12] Speaker 07:
That is not known, the residents of the class members.

[00:18:15] Speaker 07:
The class is defined as those who made a purchase while in the state of California.

[00:18:21] Speaker 04:
So you had the first theory and the second theory, or the first type of transaction and the second, and I wanna ask you about the first.

[00:18:28] Speaker 04:
So the first is, as I understand it, just processing the REI purchase of the backpack.

[00:18:35] Speaker 04:
If Shopify, in the course of that, got your credit card number, your address, and then was very sloppy with the storage, and that information got stolen, wouldn't that be personal jurisdiction in California, too?

[00:18:48] Speaker 04:
I'm not sure why you need the second model.

[00:18:51] Speaker 07:
We think the second model makes jurisdiction even clearer, but we agree with your honor that Shopify has contracted to perform a service on behalf of merchants.

[00:19:02] Speaker 07:
It performs that service, it performs it across the country, and so when torts arise out of Shopify's conduct in performing that service on behalf of consumers as it is contracted to do, that yes, it should be understood to have expressly aimed its activities into

[00:19:21] Speaker 07:
the state where those transactions occur.

[00:19:23] Speaker 12:
Could I ask you a follow-up question about your geolocation allegation?

[00:19:27] Speaker 12:
Yes.

[00:19:28] Speaker 12:
I'm going back to, now I understand, I think you've, it's been clarifying to me to understand when you allege the cookie gets implanted.

[00:19:35] Speaker 12:
It sounds like when somebody initiates a sale, whether they consummate it or not.

[00:19:39] Speaker 12:
So that's helpful.

[00:19:41] Speaker 12:
You also allege elsewhere in the complaint that with geolocation, they know where that customer, I guess you're going to call that person a consumer, shopper, the shopper, where the shopper is.

[00:19:52] Speaker 12:
So is that true?

[00:19:54] Speaker 12:
Does Shopify know where that customer is from the get-go?

[00:19:59] Speaker 12:
At the time the cookies inserted, your allegation is they know where that shopper is?

[00:20:03] Speaker 07:
Yes.

[00:20:04] Speaker 12:
And then your allegation is the

[00:20:06] Speaker 12:
cookies stay in the device.

[00:20:08] Speaker 07:
Indefinitely thereafter.

[00:20:09] Speaker 12:
And that they continue with their geolocation capabilities to know where it goes?

[00:20:14] Speaker 07:
Correct.

[00:20:15] Speaker 12:
Is that right?

[00:20:15] Speaker 07:
Correct.

[00:20:16] Speaker 12:
Okay, thank you.

[00:20:16] Speaker 03:
Does it matter where the servers are?

[00:20:20] Speaker 07:
We don't believe so, no.

[00:20:22] Speaker 07:
Because what's relevant is what activity Shopify is directing into the forum state.

[00:20:29] Speaker 07:
And here, that occurs at the point of sale between the

[00:20:36] Speaker 07:
shopper and the merchant.

[00:20:38] Speaker 07:
And that's the juncture at which Shopify implants the software, collects the data, and then sets the process in motion for it to continually extract this stream of data.

[00:20:51] Speaker 05:
Sorry, go ahead.

[00:20:53] Speaker 07:
And I would like to briefly return, if I may, to this court's college source decision because, again, I do think that that case is very relevant to the claims alleged here.

[00:21:03] Speaker 07:
College source held that the deliberate electronic extraction of valuable intangible property out of the forum state

[00:21:11] Speaker 07:
is conduct that's expressly aimed at the forum.

[00:21:14] Speaker 07:
And whereas the college source defendant knowingly pulled data from one California plaintiff, a competitor, Shopify knowingly pulls data from thousands or millions of California shoppers day in, day out as part of its continuous systematic profitable business operations,

[00:21:33] Speaker 07:
So just as personal jurisdiction was proper in college source, just as that activity was properly understood to be expressly aimed into the forum state, even though it all occurred online and it all involved the electronic transfer of data, the same is true here.

[00:21:52] Speaker 07:
The only difference is a difference in scale.

[00:21:56] Speaker 05:
How does our case in AMA multimedia fit into all of this?

[00:22:01] Speaker 07:
AMA multimedia, it's important to look at what the offense conduct alleged is in the various cases.

[00:22:08] Speaker 07:
So in AMA multimedia, the offense conduct alleged was the posting of infringing content online.

[00:22:15] Speaker 07:
And this court has held correctly, we believe, that merely posting something on the internet and taking no further action does not expressly aim that content into every forum where it's visible.

[00:22:29] Speaker 07:
the plaintiff in such cases needs to go a step further and show that the forum state audience was actually part of the defendant's intended audience.

[00:22:41] Speaker 01:
Do you agree with the differential targeting rule of AMA and of Joe versus Webb Group?

[00:22:50] Speaker 07:
Not differential targeting, Your Honor.

[00:22:52] Speaker 07:
We agree that there must be some showing that the defendant— That sounds like what you just said.

[00:22:57] Speaker 01:
You can't just go out to the internet.

[00:23:00] Speaker 01:
You have to have something more.

[00:23:01] Speaker 01:
And that's what AMA said, and then what Web Group said, is you have to have something different about the form, a differential targeting.

[00:23:09] Speaker 01:
And now I hear you endorsing that.

[00:23:11] Speaker 07:
No, not necessarily a differential targeting.

[00:23:14] Speaker 01:
We agree that there must be some showing that the forum was part of the intended audience, but it's certainly possible to imagine... You think that AMA was correct on its own facts, that 20% of the market that they send out to is in the United States and that the United States still has no jurisdiction.

[00:23:33] Speaker 01:
Do you agree with that?

[00:23:34] Speaker 07:
No, we don't agree with that.

[00:23:36] Speaker 01:
You think we should overrule AMA?

[00:23:39] Speaker 07:
We would certainly be open to that.

[00:23:40] Speaker 01:
We don't think the court.

[00:23:41] Speaker 01:
It's only decided.

[00:23:42] Speaker 01:
It obviously has to go under your view.

[00:23:44] Speaker 07:
We don't think the court need.

[00:23:46] Speaker 12:
I do think you've said both things.

[00:23:47] Speaker 12:
So if you could slow down.

[00:23:48] Speaker 12:
This is an important question for me, at least.

[00:23:50] Speaker 07:
Yeah.

[00:23:51] Speaker 12:
What's your answer?

[00:23:52] Speaker 07:
So the answer to differential.

[00:23:55] Speaker 07:
I'll address differential targeting, and then I'll address the question of overruling AMA multimedia.

[00:24:00] Speaker 07:
The question of differential targeting, it is certainly possible to imagine.

[00:24:05] Speaker 07:
Take, for example, the New York Times website.

[00:24:08] Speaker 07:
a website where content is posted online and it is intended to reach every jurisdiction.

[00:24:15] Speaker 07:
That's part of the company's model.

[00:24:17] Speaker 07:
It wants readers in all 50 states.

[00:24:20] Speaker 07:
It intends to have readers in all 50 states.

[00:24:23] Speaker 07:
There would be no differential showing there.

[00:24:25] Speaker 07:
There would be no requirement that the plaintiffs show, well, but it has more readers in Massachusetts than in Rhode Island because every jurisdiction is an intended target of the post.

[00:24:37] Speaker 07:
But we do agree that

[00:24:39] Speaker 07:
Everybody you know for example a grandmother with a cooking blog who just sort of post something online That person is not necessarily Intending to reach every audience so if somebody if this you know grandmother is in Maine, and you have somebody Alleging a claim in Hawaii that Hawaii plaintiff would need to show not necessarily that Hawaii was different from the other states or expressly targeted and

[00:25:03] Speaker 07:
above and beyond the other states, but that posting of that blog post was intended to reach Hawaiian readers.

[00:25:13] Speaker 12:
Why, because it's got Hawaiian recipes or something?

[00:25:16] Speaker 12:
I mean, is that what your, the content would have to reveal that?

[00:25:19] Speaker 07:
Not necessarily the content.

[00:25:20] Speaker 07:
Cases like Maverick's photo have looked to advertising structure.

[00:25:24] Speaker 07:
Wannatt looked to, or excuse me, Doe looked to questions about processing speeds,

[00:25:31] Speaker 01:
I understand.

[00:25:34] Speaker 01:
Exactly, exactly.

[00:25:44] Speaker 07:
And briefly on the question of overruling AMA multimedia, again, we do think that where a website derives 20% of its viewership from a forum market, it is aiming at that market.

[00:25:56] Speaker 07:
But that said, this court need not address whether AMA was right on its facts, because this case involves fundamentally different offense conduct.

[00:26:07] Speaker 01:
Do you agree that

[00:26:08] Speaker 01:
You would lose under a differential targeting rule that there isn't differential targeting here of California versus any other state or jurisdiction?

[00:26:19] Speaker 07:
There is nothing in the record to indicate that Shopify targeted California more than any other state.

[00:26:25] Speaker 01:
You would lose under a differential, if we adhere to that.

[00:26:28] Speaker 07:
If by differential you mean that comparatively the contacts with the forum state are greater than the contacts with other states, we don't think there's an allegation that establishes that.

[00:26:40] Speaker 07:
But even Shopify has disavowed that understanding of this court's something more requirement.

[00:26:47] Speaker 04:
And I think- But if we think AMA requires

[00:26:50] Speaker 04:
Extra in the jurisdiction more targeting in the jurisdiction if we think that maybe you don't think it says that but if we think it says that we need to overrule it on your view This court would need to overrule that aspect of AMA multimedia certainly to the extent that it reads that case to establish that sort of

[00:27:07] Speaker 07:
rule that the forum state contacts must be greater than the contacts in any other jurisdiction.

[00:27:13] Speaker 09:
And the other dispositive part of AMA was that it did have interactive features also.

[00:27:20] Speaker 09:
It wasn't just a passive website.

[00:27:21] Speaker 09:
So if you're saying that Shopify has, this is not a passive website case because there's this scraping of data, then that part of AMA should be overruled as well, right?

[00:27:32] Speaker 09:
Correct.

[00:27:33] Speaker 07:
Although I will actually note that we actually agree with the Chamber of Commerce in its discussion of the distinction between a passive website and an interactive website not necessarily being that helpful to the jurisdictional analysis.

[00:27:49] Speaker 07:
We think it's more helpful to look at what is the offense conduct alleged.

[00:27:53] Speaker 07:
And if the offense conduct alleged is posting content online, whether that website is passive, interactive, whether it has a comment feature or not,

[00:28:02] Speaker 07:
If all that the defendant is alleged to have done is post-content online, we think that the sort of Mavericks photo AMA doe sort of analysis would apply.

[00:28:15] Speaker 07:
Whereas if the conduct alleged is as here, a direct bilateral exchange of information with the forum user and using that exchange to exploit a forum market,

[00:28:29] Speaker 09:
Is it is so a clear is this positive feature then that that it's scraping data then would you phrase it that simply or?

[00:28:36] Speaker 07:
not um, I think that would be that would be one way of Sort of articulating what the offense conduct here is is alleged to have been I think your answer on my on my model one question was if they

[00:28:51] Speaker 04:
They don't have to scrape the data.

[00:28:52] Speaker 04:
The data could be part of the transaction.

[00:28:54] Speaker 04:
If they then lose it because they're sloppy, that's also enough.

[00:28:56] Speaker 04:
It's not like you have to have scraping, right?

[00:28:58] Speaker 04:
Or some sort of extra stealing.

[00:29:01] Speaker 07:
That's true.

[00:29:01] Speaker 07:
We don't think that's required.

[00:29:02] Speaker 07:
We think the scraping would be sufficient to decide this case.

[00:29:06] Speaker 12:
But I thought your allegation was that it's scraped and then marketed.

[00:29:11] Speaker 07:
Correct.

[00:29:11] Speaker 12:
It's being sold.

[00:29:12] Speaker 07:
Yes.

[00:29:13] Speaker 12:
I was just asking about how.

[00:29:14] Speaker 12:
Yeah.

[00:29:14] Speaker 12:
So we're just taking these in different hypos.

[00:29:17] Speaker 12:
Thank you.

[00:29:18] Speaker 05:
Did you want to reserve the balance of your time?

[00:29:20] Speaker 07:
If I may, Your Honor.

[00:29:23] Speaker 07:
Thank you.

[00:29:41] Speaker 08:
Good morning, Your Honors.

[00:29:43] Speaker 08:
Moaz Kaba on behalf of the three Shopify entities.

[00:29:48] Speaker 08:
May it please the Court.

[00:29:50] Speaker 08:
No court or case has ever endorsed the expansion of personal jurisdiction that appellant proposes here.

[00:29:58] Speaker 08:
Appellant essentially argues that because an internet service can function anywhere, the company must be subject to jurisdiction everywhere, no matter that Shopify is completely forum-agnostic, has no specific focus on California, and has no direct dealings with customers like Appellant at all.

[00:30:17] Speaker 01:
Where did the torts alleged here take place?

[00:30:21] Speaker 01:
Where was the conduct that violated

[00:30:24] Speaker 01:
the laws that they allege.

[00:30:26] Speaker 01:
Where did that conduct occur?

[00:30:27] Speaker 08:
It happened, according to them, virtually.

[00:30:31] Speaker 08:
So it happened.

[00:30:32] Speaker 01:
It happened somewhere.

[00:30:33] Speaker 01:
Some place has jurisdiction.

[00:30:35] Speaker 01:
There is a place of the tort.

[00:30:37] Speaker 01:
What is the place of the tort here?

[00:30:38] Speaker 08:
Well, I think the question gets to the unique nature of the complexities around internet transactions.

[00:30:44] Speaker 08:
So the harm, they certainly allege.

[00:30:46] Speaker 01:
Nowhere?

[00:30:47] Speaker 01:
I'm not getting an answer.

[00:30:48] Speaker 01:
What is the jurisdiction where the place of the tort occurs?

[00:30:51] Speaker 08:
I would say the jurisdiction, at the very least, is in the home states of the defendants.

[00:30:56] Speaker 08:
So in here, you have New York, and you have Delaware.

[00:30:59] Speaker 01:
a device in California and putting something on the device and collecting information from the device in California and sending it out doesn't occur in California?

[00:31:10] Speaker 08:
I would say that the harm is experienced in California.

[00:31:13] Speaker 01:
I just described conduct.

[00:31:17] Speaker 01:
So an electronic signal is sent over.

[00:31:20] Speaker 01:
Something is implanted on a device that is in California.

[00:31:24] Speaker 01:
The computer knows it's in California.

[00:31:27] Speaker 01:
It takes data in California from a device in California and ships it out of California.

[00:31:32] Speaker 01:
And the claim is that the collection and transmission of the data violates California statutes.

[00:31:39] Speaker 01:
How does that conduct not occur in California?

[00:31:42] Speaker 08:
Well, I think on the hypothetical you described, yes.

[00:31:44] Speaker 08:
What they are alleging is that Shopify has made a decision, one of the three Shopify entities has made a decision

[00:31:55] Speaker 08:
that to service merchants, those merchants elect for payment processing services.

[00:32:00] Speaker 12:
That's not quite right, sir.

[00:32:02] Speaker 12:
In response to the panel's questions today, he's alleged more specifically, I think, that at the time a purchase is initiated, whether it's consummated or not, that with their geolocation capabilities, they know where that computer is, to follow up on Judge Collins' point, and that that's when the cookies are inserted.

[00:32:22] Speaker 12:
And I think the allegation is,

[00:32:23] Speaker 12:
That's the harm, because that's the invasion of privacy.

[00:32:26] Speaker 08:
I agree with that.

[00:32:28] Speaker 08:
I do think they are alleging that the complaint's actual allegation says that at the time you navigate to the checkout page, there's a cookie inserted and the harm is then experienced in California.

[00:32:40] Speaker 12:
So understanding those allegations, because I think that's what we just spent about 25 minutes on that, understanding that, could you answer Judge Collins' question?

[00:32:47] Speaker 08:
Yeah, I think in the hypothetical that Judge Collins is presenting, the act and the harm is occurring in wherever the

[00:32:57] Speaker 08:
consumer or the user may be.

[00:32:59] Speaker 06:
Council, if their allegation were that Shopify were deliberately inserting a virus or software that say stole the user's social security number, would your jurisdiction argument be any different in my hypothetical?

[00:33:19] Speaker 08:
I would say that if they allege that Shopify chooses affirmatively to target California consumers and take their social security numbers.

[00:33:31] Speaker 06:
Whether they chose to do it or not, that's what they did.

[00:33:35] Speaker 06:
They inserted a virus into a computer physically located in California to steal the social security number on that computer located in Sacramento.

[00:33:47] Speaker 08:
I would say in the scenario that you're describing, I think it would be a much stronger case of satisfying the Calder effect.

[00:33:56] Speaker 06:
What I'm having trouble understanding is jurisprudentially what the difference is between my hypothetical and their allegation of putting this tracking and using this tracking information in California.

[00:34:10] Speaker 06:
violates California law, I'm having trouble understanding what the jurisprudential difference is between what they're alleging and what my hypothetical is.

[00:34:18] Speaker 08:
Because their allegation, as the facts of this case demonstrate, Shopify contracts with merchants.

[00:34:26] Speaker 08:
Shopify performs these services for any merchant that elects to do it in any state in the country.

[00:34:31] Speaker 08:
As Judge Callahan was just noting,

[00:34:33] Speaker 08:
If the appellant happened to be in Nevada, they would say, I suffered my harm in Nevada, and you did this bad act to me in Nevada.

[00:34:41] Speaker 06:
Shopify would have the option of deciding that because it viewed California laws as too draconian.

[00:34:49] Speaker 06:
it was not going to do business for anybody located in California.

[00:34:53] Speaker 06:
Shopify could make that decision, right?

[00:34:57] Speaker 08:
I don't think the Supreme Court's jurisprudence requires that sort of deal.

[00:35:01] Speaker 06:
Thank you.

[00:35:01] Speaker 06:
The Supreme Court's jurisdiction requires that.

[00:35:03] Speaker 06:
I'm asking you, Shopify has the ability to say, we're not going to do business with anybody in California or anybody in Hawaii because their laws are not to our liking and we don't want to be hailed into court

[00:35:14] Speaker 08:
Well, the problem even with that is Shopify is not doing business with consumers.

[00:35:19] Speaker 08:
Shopify is doing business with merchants.

[00:35:21] Speaker 08:
Those merchants are themselves forum agnostic.

[00:35:24] Speaker 08:
And so Shopify, it isn't a question of Shopify saying, I won't do business in California.

[00:35:30] Speaker 08:
It is the merchants then with whom the appellant actually has a relationship that we have to not do business in California.

[00:35:36] Speaker 04:
I think Judge Bennett is asking, I think, if I understand it right, like a technical question.

[00:35:41] Speaker 04:
You're saying we don't do that, but could you say no IP address coming from California will be processed by our company?

[00:35:49] Speaker 08:
I don't have the technological facility to answer that specific question.

[00:35:54] Speaker 08:
It is possible, I suppose, that different companies could block websites from California, and Shopify would have to tell all of its merchants that you may not have California consumers either.

[00:36:07] Speaker 08:
I think, as a technological matter, that may be possible.

[00:36:11] Speaker 08:
I think the complexity also happens because people are on cell phones.

[00:36:15] Speaker 08:
They're moving around.

[00:36:16] Speaker 08:
You may have your New York phone and you happen to be using it in California.

[00:36:22] Speaker 08:
In fact, the class allegation in this case is not for citizens of California.

[00:36:28] Speaker 08:
It's for anyone who accessed a website while they were in California.

[00:36:31] Speaker 12:
Well, that's the point.

[00:36:32] Speaker 12:
I think that's why it matters that he's clarified that he thinks, he's alleging,

[00:36:37] Speaker 12:
that at the time a purchase is initiated, Shopify knows where that computer is.

[00:36:45] Speaker 12:
And that's a California computer in these hypotheticals.

[00:36:49] Speaker 08:
And I can see that point.

[00:36:52] Speaker 08:
The point I am making is knowledge that harm is going to be suffered in a jurisdiction has been found expressly to be insufficient under the Supreme Court's jurisdiction.

[00:37:01] Speaker 12:
Yeah, but that's not all they're alleging.

[00:37:03] Speaker 12:
That's not all they're alleging.

[00:37:04] Speaker 01:
It goes beyond harm.

[00:37:06] Speaker 01:
Again, I go back.

[00:37:07] Speaker 01:
What's your best case for the proposition that tortious conduct that occurs in a jurisdiction and produces injury in the jurisdiction is not sufficient for a specific person's jurisdiction?

[00:37:19] Speaker 08:
Do we have any case that says that?

[00:37:22] Speaker 08:
The Asahi case on a stream of commerce theory says that just because the harm, even if the harm happens in the jurisdiction.

[00:37:28] Speaker 01:
We added torsious conduct.

[00:37:31] Speaker 01:
Do you have a case that says that torsious conduct can occur in a jurisdiction producing injury there to a resident there?

[00:37:37] Speaker 01:
And there's no specific person.

[00:37:39] Speaker 08:
I think the Third Circuit's decision in Hassan and the First Circuit's decision in Rosenthal.

[00:37:44] Speaker 01:
The decision that says that?

[00:37:46] Speaker 08:
I think the Supreme Court has reserved that question in a number of decisions.

[00:37:50] Speaker 08:
Well, let's assume.

[00:37:52] Speaker 10:
I'm sorry.

[00:37:53] Speaker 10:
Go ahead.

[00:37:54] Speaker 10:
Do you acknowledge that there's a brick and mortar store now in California for Shopify?

[00:37:59] Speaker 08:
Judge Rawlinson, there was in the complaint alleged in 2018 that Shopify had, it's paragraph 11, had a physical location, but it was targeted to merchants, not to consumers.

[00:38:12] Speaker 10:
But the fact that there is a physical location, how does that change your argument, if at all?

[00:38:17] Speaker 10:
Why wouldn't that establish jurisdiction?

[00:38:19] Speaker 08:
It doesn't change the argument because under the Supreme Court's personal jurisdiction jurisprudence, the acts, the contacts need to relate to the claim or that is stated differently.

[00:38:31] Speaker 12:
I thought those brick and mortar stores were selling this service that includes stitching together data and profiling

[00:38:40] Speaker 12:
The customers.

[00:38:40] Speaker 08:
That's not the allegation of the complaint.

[00:38:42] Speaker 12:
I've read the complaint several times.

[00:38:44] Speaker 12:
Tell me what we're missing.

[00:38:45] Speaker 08:
The allegation of the complaint is Shopify opened a physical store located in Los Angeles that it uses to market services to California merchants.

[00:38:53] Speaker 12:
We were in the courtroom when it posted counsel.

[00:38:56] Speaker 12:
Just talked about business model number two.

[00:38:59] Speaker 08:
Business model number two is what they're saying here now.

[00:39:03] Speaker 08:
In the actual complaint, there was no allegation that we're actually selling these payment processing services that allow us to extract customer data at the physical location.

[00:39:15] Speaker 12:
Well, I guess I may beg to differ with you, but rather than eating up your time, it just seems to me that's an argument that they need to amend.

[00:39:20] Speaker 08:
Well, no, because there are also declarations in this case that directly refute their business model number two and say it does not exist.

[00:39:29] Speaker 12:
OK, so tell me where in the record we should look for that.

[00:39:32] Speaker 08:
To the excerpts of record at 96 through 99, there is the declaration of Seth Brassic.

[00:39:40] Speaker 08:
In support of our motion, Shopify's motion to dismiss at record 137 to 140, the declaration of Aaron McIntomney, they are clear.

[00:39:51] Speaker 08:
We do not share customer information across merchants.

[00:39:55] Speaker 08:
They declarations are clear.

[00:39:57] Speaker 08:
Shopify acts at the direction of merchants.

[00:40:00] Speaker 12:
That's different across merchants.

[00:40:01] Speaker 12:
I've read these declarations, but again, I don't want to take up a lot of your time.

[00:40:04] Speaker 12:
Are there other places in the record we should look?

[00:40:06] Speaker 08:
Those are the key declarations that refute the idea that Shopify is engaged in business model number two, which I understood to be we are taking information from consumers and using it to sell them to other merchants.

[00:40:20] Speaker 08:
That's how I understood

[00:40:22] Speaker 08:
their business model number two.

[00:40:23] Speaker 08:
But going back to the question.

[00:40:25] Speaker 10:
Can I just ask more specifically on the facts?

[00:40:27] Speaker 10:
I wanted you to finish answering my question, please.

[00:40:30] Speaker 08:
Going back to the question of the physical store, the plaintiff does not allege that anything that happened in that physical store is in any way connected to the complaint.

[00:40:39] Speaker 08:
Put aside arising out of, which has been understood to be a causal connection, even related to has real meaning, as a Supreme Court explained in Ford.

[00:40:47] Speaker 08:
You cannot.

[00:40:48] Speaker 08:
It's broad, though.

[00:40:49] Speaker 08:
It's broad, but in four, the Supreme Court said there was a strong relationship between the conduct in the state and the claim.

[00:40:59] Speaker 08:
And as this court in Yamashita explained, there was a strong relationship or a strong connection.

[00:41:06] Speaker 08:
Here, there has been no alleged connection between the existence of that store and anything that caused plaintiff's claims.

[00:41:14] Speaker 08:
Plaintiff has not even alleged that the merchant with whom he transacted, IAB MFG, had anything to do with the store, sought services from the store, or otherwise.

[00:41:25] Speaker 04:
So Ford talks about creating an ecosystem that will cause this type of injury to occur.

[00:41:31] Speaker 04:
You're fixing cars, you're selling this type of car, so bringing a car in, now you're in this ecosystem.

[00:41:37] Speaker 04:
Why isn't this paragraph 11 talking about creating an ecosystem where there

[00:41:42] Speaker 04:
processing data for California merchants.

[00:41:43] Speaker 04:
They've got a brick and mortar store to get more California merchants to use their services, and then when they do the services, they have these allegations.

[00:41:50] Speaker 04:
Now you may deny the allegations, and that's what the case would be if there is jurisdiction, but the core idea is this claim arises out of the ecosystem created by servicing merchants in California.

[00:42:00] Speaker 08:
Yeah, but Ford was, went, I think, on at some length.

[00:42:03] Speaker 08:
It wasn't just about Ford sells cars into this jurisdiction.

[00:42:07] Speaker 08:
It was about Ford is specifically marketing to the very class of consumers who were harmed.

[00:42:11] Speaker 08:
Ford is specifically servicing these models of cars.

[00:42:14] Speaker 04:
But they're marketing to sell a car.

[00:42:16] Speaker 04:
The car wasn't actually sold in that jurisdiction.

[00:42:19] Speaker 04:
It's creating the ecosystem where this car will be in California.

[00:42:22] Speaker 04:
So here they're creating an ecosystem where these services are going to be done in California.

[00:42:27] Speaker 08:
But in Ford, the ecosystem was created, a market was developed, serviced, and cultivated for the very class of consumers at issue.

[00:42:36] Speaker 08:
There would be a difference here, Judge Friedland, if the question was,

[00:42:40] Speaker 08:
Can a merchant sue Shopify or a Shopify entity in California as a result of this brick and mortar location?

[00:42:50] Speaker 08:
I think that's a different question.

[00:42:51] Speaker 08:
Here, there is no ecosystem being created for the class of consumers that appellant seeks to represent.

[00:42:58] Speaker 04:
In Ford, it happened to be the, I mean, if Ford cars were

[00:43:03] Speaker 04:
Injuring pedestrians and now the pedestrian is injured by the Ford car that's in the state because of all the ecosystem Don't you think the pedestrian could sue just as much as the car owner?

[00:43:13] Speaker 08:
I think I think in that case actually the pedestrian could sue the car driver certainly It's a I'm having a little bit of a difficulty trying to see how the pedestrian could then Go all the way back to the car the car explodes and kills the driver and the pedestrian you don't think the pedestrian can sue I

[00:43:29] Speaker 08:
I think in Ford, under the facts of Ford, it's possible that the pedestrian could sue, given Ford's extensive activities in cultivating a market.

[00:43:41] Speaker 04:
And so here you have the service to the vendor in California and the customer of the vendor, and so the customer's like the pedestrian, no?

[00:43:48] Speaker 08:
No, but here the merchant is the one that is electing to opt into certain services or not and make those services available to its consumers or not.

[00:44:00] Speaker 08:
The existence of a single physical store in California targeting an entirely different class of people.

[00:44:07] Speaker 08:
Shopify's only customers are merchants.

[00:44:09] Speaker 03:
Well, the Supreme Court hasn't really answered this question exactly.

[00:44:13] Speaker 03:
I mean, obviously Shopify, I was on the 3J and you won.

[00:44:17] Speaker 03:
Okay, but that was based on existing precedent.

[00:44:21] Speaker 03:
We're en banc, we can overrule some of our precedent or we can decide what we think the Supreme Court would do.

[00:44:27] Speaker 03:
I think I see the Supreme Court is going to say that virtual presence is enough for personal jurisdiction under certain circumstances.

[00:44:38] Speaker 03:
Now, if you argue that Briskin is saying it just follows everywhere the plaintiff is, that gets in the way of some of their precedent.

[00:44:47] Speaker 03:
But you're saying they would have...

[00:44:51] Speaker 03:
It can't be right that Shopify, that there's no jurisdiction for Shopify invading people's privacy.

[00:44:59] Speaker 08:
I am arguing there is jurisdiction.

[00:45:01] Speaker 03:
And you're saying it's where?

[00:45:02] Speaker 08:
At the very least, where there is general jurisdiction.

[00:45:05] Speaker 08:
So in the states in which Shopify is at home, which here there are Shopify entities, as we've explained, that are at home in New York, that are at home in Delaware.

[00:45:16] Speaker 08:
I think to get beyond that,

[00:45:17] Speaker 11:
Right counsel, excuse me, but to be clear, what you're saying is there's no specific personal jurisdiction as regards your client anywhere.

[00:45:29] Speaker 08:
On the facts alleged, I would agree with you.

[00:45:33] Speaker 08:
On the facts alleged, as this court, and I think taking cues from the Supreme Court's decisions in Asahi and Jay McIntyre have held,

[00:45:42] Speaker 08:
You cannot simply have your website functions in our state and that's enough.

[00:45:50] Speaker 08:
There needs to be express aiming in a way that is related to the claims at issue.

[00:45:55] Speaker 05:
What's your best argument that Shopify's conduct does not relate to brisken suit?

[00:46:01] Speaker 08:
Because the conduct of which he alleges that is related is simply the functioning of the Shopify payment services.

[00:46:09] Speaker 08:
The brick and mortar store that has been alleged in this case as that something more does not bear a relationship, much less a strong relationship, with the claims at issue in this case.

[00:46:22] Speaker 08:
Contracting with other merchants in California does not bear a relationship with the claims at issue in this case.

[00:46:31] Speaker 05:
So you're saying that Shopify's relationship with the merchants is irrelevant?

[00:46:37] Speaker 08:
I'm saying Shopify's relationship with a merchant, which is the only one that's implicated in this case, is not the driver of the jurisdictional inquiry.

[00:46:46] Speaker 08:
Because as the Supreme Court said in Walden and in Bersalmeyer Squibb, it is what the defendant does to connect itself to the forum and the claim.

[00:46:58] Speaker 08:
It is not the defendant's relationship with a foreign party.

[00:47:00] Speaker 09:
So why isn't the data scraping enough?

[00:47:02] Speaker 09:
That's the something more that everyone's talking about.

[00:47:04] Speaker 08:
But that is the actual, according to them, that is the way the website functions.

[00:47:09] Speaker 08:
That is the way the interactivity functions.

[00:47:11] Speaker 09:
So why is that not enough for personal jurisdiction then?

[00:47:13] Speaker 08:
Because that is an act that does not reflect express aiming into the forum.

[00:47:19] Speaker 12:
But while the computer is in California, that's what he's saying.

[00:47:22] Speaker 12:
With geolocation, we know that computer is in California when the data scraping occurs.

[00:47:26] Speaker 08:
But in that scenario, we are allowing the plaintiff's connection to the forum to drive the inquiry.

[00:47:34] Speaker 12:
No, no.

[00:47:35] Speaker 12:
I don't think so.

[00:47:36] Speaker 12:
What he's alleging is defendants know it.

[00:47:38] Speaker 12:
They know where that thing is, right?

[00:47:41] Speaker 12:
Wherever the plaintiff is.

[00:47:42] Speaker 12:
And so they're limiting this class, I think, to computers in California.

[00:47:46] Speaker 12:
And defendants' purposeful availment, if you want to talk about it, I actually think you to the court or tort or contract theory would probably get you there.

[00:47:54] Speaker 12:
because of the geolocation function.

[00:47:57] Speaker 08:
And what I would suggest to you is that knowledge that harm is going to be experienced, knowledge in Walden as an example.

[00:48:06] Speaker 08:
Yes, I agree Judge Collins, it's not on all fours because the act occurred there in Georgia, but the allegation and what this court initially found persuasive

[00:48:16] Speaker 08:
was, but you knew the loss was going to be experienced in Nevada.

[00:48:20] Speaker 08:
You knew the plaintiff would be missing its monies in its home state in Nevada.

[00:48:25] Speaker 08:
And the court said that is going to turn the jurisdictional inquiry into where plaintiff is and where the harm follows the plaintiff.

[00:48:34] Speaker 05:
So in this case, I see no limiting line from what they are- But didn't Shopify purposefully direct its activity at California?

[00:48:44] Speaker 08:
It absolutely did not.

[00:48:46] Speaker 08:
Shopify directed its activity to merchants all around the country.

[00:48:51] Speaker 01:
Plaintiffs claim that Shopify... Are you relying on differential targeting?

[00:48:55] Speaker 01:
I'm sorry.

[00:48:55] Speaker 01:
Are you relying on the differential targeting rule?

[00:48:57] Speaker 08:
I'm not relying on AMA's differential targeting rule.

[00:49:01] Speaker 08:
I think differential targeting or differential excess, depending on the framing, there's framing both AMA and in Doe, I think that is...

[00:49:13] Speaker 08:
sufficient to establish to something more.

[00:49:16] Speaker 08:
I would not say it is necessary to establish to something more, as Your Honor knows.

[00:49:20] Speaker 01:
But in response to the Chief Judge's question, that seemed to me what you were saying was differential targeting, because why isn't this enough to send into California?

[00:49:31] Speaker 01:
And you said, well, but you send in everywhere.

[00:49:32] Speaker 01:
Well, maybe this is like Keaton, that you sell publications in 50 states, you're a subject in 50 states.

[00:49:39] Speaker 08:
I think Keaton says there was sort of a deliberate and active exploitation of the market.

[00:49:45] Speaker 08:
Here, we don't have a deliberate active exploitation of the market.

[00:49:48] Speaker 04:
But I think that gets to the combination of Judge Kristen and Judge Bennett's questions.

[00:49:51] Speaker 04:
If you know you have the ability to block California purchases, you're putting in the cookie when you know the person's in California, once you continue to do it, isn't that deliberate?

[00:50:00] Speaker 08:
No, I would say, well, the act itself may be deliberate, but it's targeting a person.

[00:50:05] Speaker 08:
It's not targeting the forum.

[00:50:07] Speaker 08:
And that is an important distinction.

[00:50:09] Speaker 08:
I don't disagree.

[00:50:10] Speaker 08:
If you know the person is in California and then you are doing something to deliberately target that person, I agree.

[00:50:16] Speaker 08:
That is a deliberate act.

[00:50:18] Speaker 08:
And there hasn't been a dispute over the intentionality of the acts here.

[00:50:22] Speaker 08:
It is, but are you

[00:50:24] Speaker 08:
purposefully directing your activities at the forum as opposed to as a resident in that forum.

[00:50:29] Speaker 04:
But why is it any different at that point?

[00:50:31] Speaker 04:
I mean, it's an electronic transaction that you know is happening to a thing in California.

[00:50:35] Speaker 04:
Why is it any different than Herbal Brands sending the product then to California?

[00:50:38] Speaker 04:
It's you're doing the thing to California.

[00:50:40] Speaker 08:
Right.

[00:50:40] Speaker 08:
So in herbal brands, I do think there is a distinction between physical good and virtual goods.

[00:50:47] Speaker 08:
And I think that this court's precedents have acknowledged that herbal brand itself says that there is a distinction, a meaningful distinction between physical goods and virtual goods.

[00:50:54] Speaker 04:
But now we're on Bonk, so should there be?

[00:50:55] Speaker 08:
Yes.

[00:50:58] Speaker 08:
Even under herbal brands, I submit, we win.

[00:51:01] Speaker 08:
Because herbal brands did not say it is just the delivery of a good.

[00:51:05] Speaker 08:
It has to be the delivery of the good in the regular course of business.

[00:51:09] Speaker 08:
And you have to have control over the distribution.

[00:51:11] Speaker 04:
And all of those things were satisfied between these questions that were asked.

[00:51:14] Speaker 08:
But they are not satisfied on the facts of this case.

[00:51:18] Speaker 04:
Why not?

[00:51:19] Speaker 08:
Because the claim that they allege in this case

[00:51:23] Speaker 08:
the claim occurs when the tracking software is input.

[00:51:27] Speaker 08:
That is the claim of the privacy violation.

[00:51:30] Speaker 08:
And at that moment, Shopify has not expressly aimed its conduct.

[00:51:35] Speaker 12:
Well, it hasn't limited its conduct.

[00:51:38] Speaker 12:
It hasn't limited its conduct to California.

[00:51:40] Speaker 12:
But it knows that it's doing this to a computer in California.

[00:51:44] Speaker 12:
That's the allegation.

[00:51:45] Speaker 12:
I don't know if it's true.

[00:51:46] Speaker 08:
Right.

[00:51:47] Speaker 08:
It is not true, but even putting that aside for now, the harm, though, occurs at the time that the cookie is implanted.

[00:51:55] Speaker 08:
And at that point, there is no allegation that at the time the cookie goes in, we know that they're uncalled for.

[00:52:00] Speaker 12:
But that's what he just said.

[00:52:01] Speaker 12:
No, he's saying... He just said that the cookie is inserted at the time somebody initiates a sale, whether it's consummated or not.

[00:52:10] Speaker 12:
And when I asked about the geolocation, when does that click in?

[00:52:13] Speaker 12:
And he says the same time.

[00:52:18] Speaker 08:
I think the fair reading of the complaint is after the cookie's implanted, that's when you get the information.

[00:52:22] Speaker 08:
Well, that's different.

[00:52:23] Speaker 12:
That's why I asked the question, because I think there's some wiggle room in the complaint as well.

[00:52:27] Speaker 12:
So maybe they need to amend.

[00:52:29] Speaker 12:
But if the facts are in the hypothetical that we have been posing are true, I still have not heard an answer to the question that Judge Friedland asked, that I've asked, that actually

[00:52:39] Speaker 12:
maybe the majority of the panel has asked at this point.

[00:52:41] Speaker 12:
Why isn't that enough?

[00:52:42] Speaker 08:
Because that may be express aiming at a resident of the forum, but it is not express aiming at the forum itself.

[00:52:49] Speaker 08:
And that is what is required.

[00:52:51] Speaker 08:
if there is no limiting line in what plaintiffs are proposing.

[00:52:57] Speaker 06:
Well, there is a limiting line in what plaintiffs are proposing.

[00:53:01] Speaker 06:
As I see it, it's that if a company makes the choice that it is going to do this with regard to residents in Albuquerque or Sioux Falls, then it's subject to jurisdiction.

[00:53:16] Speaker 06:
in Albuquerque and Sioux Falls because it can decide that it's not going to deal with anybody who's in New Mexico if it wants to and having decided New Mexico is a good market we want to go there and if cookies are implanted

[00:53:34] Speaker 06:
in computers in New Mexico, so be it, there is a choice, as I see it, to not do business in particular jurisdictions, or not do business involving consumers who live in particular jurisdictions, or that's where their credit card says they live, or their IP address says their computer physically is.

[00:53:57] Speaker 08:
I don't believe that that set of facts would apply in this case for the reasons I've explained, namely that we deal with merchants who themselves are forum agnostic.

[00:54:07] Speaker 08:
But even if it did, there is no precedent that says that the way that a company avoids jurisdiction

[00:54:14] Speaker 08:
is by not interacting with consumers in those states at all, because that, frankly, would turn all sorts, would create all sorts of problems for California and other states.

[00:54:26] Speaker 08:
The question is not, have you not, have you chosen to block someone?

[00:54:31] Speaker 08:
The question is, have you expressly aimed your conduct at a state, not at a resident of the state, not just with knowledge that a resident of the state may suffer harm?

[00:54:40] Speaker 08:
And again, I would say that

[00:54:42] Speaker 09:
Well, isn't it the choice of merchants that matters here?

[00:54:45] Speaker 09:
And then it sounds like Shopify chooses to allow California merchants or merchants that sell in California.

[00:54:52] Speaker 08:
Shopify provides services to merchants wherever they may be, and yes.

[00:54:56] Speaker 09:
They could also choose not to target merchants that sell in California.

[00:55:00] Speaker 08:
I suppose that is true.

[00:55:04] Speaker 09:
Then why isn't that the choice that they're making to go into California?

[00:55:07] Speaker 08:
Because that is a choice that is being made across the country.

[00:55:11] Speaker 09:
Yeah, just because they have, they choose to sell, why doesn't mean that they can't sell, the choice of selling California is not enough for personal jurisdiction there.

[00:55:20] Speaker 08:
Judge, I would submit that under that framing, if that is the driver of personal jurisdiction jurisprudence, we are inviting a whole host of other problems where

[00:55:30] Speaker 08:
individual companies will have to opt out of doing business in a state because just the fact of doing business in the state would be enough.

[00:55:37] Speaker 08:
And herbal brands doesn't say that, and Asahi doesn't say that.

[00:55:41] Speaker 08:
In Asahi, the manufacturer knew that 20,000 or likely expected 20,000 tires would come into the jurisdiction.

[00:55:49] Speaker 08:
But there was no rule that said, well, if you go into the jurisdiction, if you choose to do business in the jurisdiction, that's enough.

[00:55:57] Speaker 12:
Herbal brands didn't say that because herbal brands didn't have to say that.

[00:56:00] Speaker 12:
Well, but we're in a different land now.

[00:56:02] Speaker 12:
This is the question is that now this is the next step I don't know.

[00:56:06] Speaker 12:
I don't think herbal brands is helping you very much.

[00:56:09] Speaker 09:
I I understand me that the court is on bong so the court can do as it wishes I The questions asked does the original public meaning of the due process clause help you in any way how should it inform our decision I

[00:56:23] Speaker 08:
I think the due process clause was originally understood to be more limited.

[00:56:28] Speaker 08:
I think it is hard to say that from that, any company that chooses to do business effectively, which is the rule I think that is being proposed, in any state in the country may become subject to jurisdiction in that state.

[00:56:46] Speaker 08:
Justice Kagan in Ford actually said, we are getting awfully close.

[00:56:51] Speaker 08:
If that is the rule, we're getting awfully close to general jurisdiction and taking out the real limits of specific jurisdiction.

[00:56:58] Speaker 08:
I think that is fundamentally the problem.

[00:57:00] Speaker 09:
Some academics that believe that that's what actually the original meaning of the Fifth Amendment is, right?

[00:57:05] Speaker 09:
Do you acknowledge that?

[00:57:06] Speaker 09:
I missed the first part.

[00:57:07] Speaker 09:
Sorry.

[00:57:08] Speaker 09:
Some academics actually believe that that is true, that under the original public meaning of the Fifth Amendment, there is essentially universal jurisdiction.

[00:57:15] Speaker 08:
I think that's right, but I would also submit that the Supreme Court has never accepted that, in fact, across the spectrum has rejected that idea that simply doing business in a state

[00:57:28] Speaker 08:
ought to be sufficient because you chose, you did not choose not to do business in that state.

[00:57:34] Speaker 11:
And I think if that were- The limitation on that is the arise out of, the injury has to arise out of or relate to that particular business.

[00:57:44] Speaker 11:
That's the limitation.

[00:57:46] Speaker 11:
Not that simply doing business is

[00:57:50] Speaker 11:
the limitation.

[00:57:51] Speaker 11:
So you have to look at what the injury was and what it rose out of or related to.

[00:57:58] Speaker 08:
I agree, Judge Worla.

[00:58:00] Speaker 08:
But if we were to say that the fact that you choose to do business in a state is sufficient to satisfy express aiming, that does grossly expand specific jurisdiction in a way that has never been found to be appropriate under either this court's

[00:58:17] Speaker 08:
panel precedent or the Supreme Court's precedent.

[00:58:20] Speaker 08:
And I think it would stand in direct contrast and create a split with two other circuits that have looked at this issue on very similar facts and ruled that- How do you distinguish the Calderby Jones case then?

[00:58:35] Speaker 08:
I think the way that the Calder case came out, we actually support the tests announced in Calder.

[00:58:43] Speaker 08:
We're saying that to satisfy express aiming, as Calder held, you need in the virtual context to show something more than your website functions in the jurisdiction.

[00:58:54] Speaker 08:
And I think that that test, that something more test, as applied to the internet, has been workable across courts in this country.

[00:59:03] Speaker 08:
District courts throughout the Ninth Circuit have dealt with very similar fact patterns.

[00:59:07] Speaker 01:
Let's give one just factual question.

[00:59:08] Speaker 01:
I want to make sure I understand.

[00:59:10] Speaker 01:
On this, what we were calling the second theory, you've said that they don't sell the data.

[00:59:18] Speaker 01:
Does Shopify transmit data from the consumer after the transaction is completed?

[00:59:24] Speaker 08:
Pursuant to the directions of the merchant with whom Shopify has a relationship, Shopify does transmit the data consistent with the merchant's directions.

[00:59:34] Speaker 11:
Can I make that a yes?

[00:59:36] Speaker 08:
Yes.

[00:59:36] Speaker 08:
Yes, Judge Collins.

[00:59:37] Speaker 08:
Shopify, consistent with the merchant's directions, will process the data as directed.

[00:59:43] Speaker 11:
Judge Wardlaw?

[00:59:44] Speaker 11:
Yes, counsel.

[00:59:46] Speaker 11:
Isn't it a fact that Shopify actually transmits

[00:59:52] Speaker 11:
the consumer's information among its merchants within which it contracts.

[01:00:00] Speaker 11:
For example, if I were to choose to make a purchase from a merchant in the Shopify network and give them my information, and then I go to another merchant, and I don't know whether it's Shopify or not Shopify, but I go to do another transaction

[01:00:22] Speaker 11:
All of a sudden, a window for Shopify will appear, completely different merchant, but it's a Shopify-connected merchant.

[01:00:33] Speaker 11:
Isn't that true?

[01:00:34] Speaker 08:
That is not accurate as a factual matter, and that's the declaration I was pointing Judge Christentu to earlier, the declaration of Seth Brassic, which is, in the excerpts of record, explicitly said.

[01:00:46] Speaker 11:
Perhaps that's the reason why there should have been more jurisdictional discovery, because

[01:00:51] Speaker 11:
honestly, in my personal experience with Shopify.

[01:00:56] Speaker 08:
Yeah, I can't speak to that, Judge Wardlaw.

[01:01:01] Speaker 08:
I know.

[01:01:01] Speaker 08:
I know.

[01:01:02] Speaker 11:
I'm just saying, I've seen this happen with Shopify.

[01:01:05] Speaker 11:
I know.

[01:01:06] Speaker 11:
I'm not saying anything negative about Shopify.

[01:01:09] Speaker 11:
It's actually, I find it convenient.

[01:01:11] Speaker 11:
But they're completely different merchants than just in the Shopify sort of network of agreements.

[01:01:19] Speaker 08:
Right.

[01:01:20] Speaker 08:
I don't know, there may be specific things on your browser, specific other autofills.

[01:01:26] Speaker 11:
I'm not quite sure, but.

[01:01:29] Speaker 08:
But the declaration, at least in this case, for which there's no response, has been that Shopify does not share customer transaction data between one merchant and the other.

[01:01:43] Speaker 08:
I know I'm out of time.

[01:01:46] Speaker 05:
You are out of time.

[01:01:47] Speaker 08:
Thank you.

[01:01:48] Speaker 08:
I would just close with pointing out that

[01:01:52] Speaker 08:
What the panel opinion held here and the articulation of the test here, which is the Calder effects test where express aiming requires something more, has been a workable solution.

[01:02:03] Speaker 08:
It is the solution in the first and the third circuits.

[01:02:06] Speaker 08:
It is a solution that the district courts throughout this circuit have applied on very similar facts.

[01:02:11] Speaker 08:
And we would submit that it should remain the law in this circuit.

[01:02:15] Speaker 05:
Thank you.

[01:02:34] Speaker 07:
Thank you, Your Honors.

[01:02:35] Speaker 07:
I'll be brief on rebuttal.

[01:02:37] Speaker 07:
I just want to emphasize that a friend on the other side essentially said that there is no specific jurisdiction anywhere for the claims alleged in this case.

[01:02:49] Speaker 07:
I'm not aware of any case in which a tort is alleged and there is no specific jurisdiction in any forum

[01:02:59] Speaker 07:
to adjudicate that toward.

[01:03:02] Speaker 07:
What we have here is Shopify installed software on a California computer, pulled data off the California device, compiled a profile of a California consumer, allegedly in violation of California law.

[01:03:15] Speaker 07:
There is no other forum other than California that has an interest in this litigation.

[01:03:21] Speaker 07:
And so if specific jurisdiction is not proper in California,

[01:03:29] Speaker 07:
It's not proper anywhere and an injured California consumer or the California Attorney General seeking to enforce California's data privacy laws would then have to turn to a foreign court, perhaps in Canada, perhaps in Belarus if that's where Shopify were incorporated, anywhere else and trust those foreign courts to adjudicate California's laws.

[01:03:53] Speaker 07:
Nothing in Supreme Court precedent requires that odd result so we asked this court to

[01:03:59] Speaker 07:
faithfully apply the principles in international shoe and hold the jurisdiction as appropriate here.

[01:04:06] Speaker 05:
Thank you very much, Mr. Sansone.

[01:04:08] Speaker 05:
Mr. Cava, I appreciate the argument presentations presented here today.

[01:04:15] Speaker 05:
The case of Brandon Verskin versus Shopify Incorporated is now submitted.

[01:04:21] Speaker 05:
We are adjourned.

[01:04:21] Speaker 05:
Thank you.