eBay Inc. v. Mary Kay Inc. ( 2015 )

REVERSE and RENDER; and Opinion Filed June 25, 2015.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00782-CV
EBAY INC., Appellant
V.
MARY KAY INC., Appellee
On Appeal from the 101st Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-1403318
MEMORANDUM OPINION
Before Justices Lang-Miers, Brown, and Stoddart
Opinion by Justice Brown
Pursuant to Texas Rule of Civil Procedure 202, Mary Kay Inc. petitioned the trial court
for an order authorizing it to depose eBay Inc. to obtain the identities of forty-eight eBay sellers
in anticipation of claims against them for the unauthorized sale of Mary Kay products. eBay
appeals the trial court’s order granting Mary Kay’s request. Relying on the Texas Supreme
Court’s opinion in In re Doe (Trooper), 444 S.W.3d 603 (Tex. 2014), eBay maintains that,
absent a showing the trial court would have personal jurisdiction over the anonymous eBay
users, Mary Kay cannot use rule 202 to discover the users’ identifying information. We agree.
We reverse the trial court’s order and render judgment denying Mary Kay’s rule 202 petition.
BACKGROUND
Under rule 202, a person may petition the court for an order authorizing the taking of a
deposition to obtain the testimony of any person for use in an anticipated suit or to investigate a
potential claim or suit. TEX. R. CIV. P. 202.1. If a suit is anticipated, the petition must be filed
in a proper court of any county where venue of the anticipated suit may lie. Id. 202.2(b)(1).
Mary Kay manufactures cosmetics and skin-care products and sells them directly to its
Independent Beauty Consultants (IBCs). A person becomes an IBC when she submits an IBC
agreement to Mary Kay and purchases a demonstration kit. IBCs are prohibited from selling
Mary Kay products on internet auction sites such as eBay without Mary Kay’s prior written
approval. IBCs are also prohibited from using the Mary Kay name and trademark in internet
advertising without prior written approval.
In March 2014, Mary Kay filed a verified rule 202 petition requesting authority to depose
upon written questions an eBay corporate representative. Mary Kay is a Delaware corporation
with its principal place of business in Addison, Texas. eBay is a Delaware corporation with its
principal place of business in California. eBay was served through its registered agent in Dallas.
In the petition, Mary Kay listed the eBay usernames of forty-eight people selling Mary
Kay products on eBay. Mary Kay alleged the users were selling expired products and/or
unlawfully using Mary Kay’s trademarks and copyrights to promote sales. Mary Kay sought to
acquire from eBay information sufficient to identify those forty-eight eBay users in anticipation
of claims against them. Mary Kay did not anticipate claims against eBay. As alleged in its
petition, Mary Kay’s claims include trademark infringement, copyright infringement, breach of
contract, unfair competition, misappropriation of confidential information, and tortious
interference with contract. Mary Kay alleged that it could not obtain the names, addresses, and
phone numbers of these individuals and that the requested deposition was the only way to
determine the users’ identities. Mary Kay asserted venue was proper in Dallas County because it
anticipated pursuing actions against the anonymous users in Dallas County.
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eBay opposed Mary Kay’s petition. It argued, among other things, that many of the
sellers appeared to be non-residents who might not be subject to personal jurisdiction here and
that Mary Kay could not use rule 202 to get around this obstacle. The trial court held two
hearings at which it heard the arguments of counsel and Mary Kay presented over 700 pages of
evidence taken from eBay’s website showing Mary Kay products for sale by the sellers in
question. At the conclusion of the second hearing, the trial court ruled it would authorize the
requested deposition. On May 20, 2014, the trial court issued an order granting Mary Kay’s
request to take eBay’s deposition. The court ordered eBay to provide Mary Kay, by deposition
on written questions, with the name, address, telephone number, fax number, and email address
associated with each of the forty-eight eBay usernames. The court further ordered that the
deposition shall occur in Dallas at the office of eBay’s counsel within thirty days. This appeal
followed. See In re Jorden, 249 S.W.3d 416, 419 (Tex. 2008) (orig. proceeding) (pre-suit order
authorizing deposition of party against whom suit is not anticipated is final appealable order).
On eBay’s motion, this Court stayed the trial court’s order pending resolution of this appeal.
DISCUSSION
In August 2014, while this appeal was pending, the Texas Supreme Court issued its
opinion in Trooper. The issue before the court was whether, under rule 202, a proper court must
have personal jurisdiction over the potential defendant. Trooper, 444 S.W.3d at 604. The court
concluded it must. In its first issue on appeal, eBay contends that Trooper requires reversal of
the trial court’s order.
In Trooper, an anonymous blogger calling himself “the Trooper” launched an online
attack against a software company and its CEO (collectively referred to as “the company”). Id.
at 604–05. The company filed a rule 202 petition in a Harris County district court seeking to
depose Google, the host of Trooper’s blog. Id. at 605. The company requested Google’s
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disclosure of Trooper’s identifying information in anticipation of a suit against him for libel,
business disparagement, and, if he is a company employee, breach of fiduciary duty. Id. The
company gave Trooper notice of the petition by sending it to his blog email address. Google did
not oppose the rule 202 petition, but Trooper did. Appearing through counsel as John Doe, he
filed a special appearance. Trooper maintained his only contact with Texas was the fact that his
blog could be read online here. Id. He argued that because he did not have sufficient minimum
contacts with Texas, there was no proper court to order a deposition to investigate a suit in which
he may be a defendant. The trial court granted the company’s request to take Google’s
deposition. Id.
Trooper sought mandamus relief in the supreme court. After examining the history of
rule 202, the court concluded that, for two reasons, a proper court under rule 202 must have
personal jurisdiction over the potential defendant. Id. at 608. First, the court reasoned that
allowing discovery of a potential claim against a defendant over which the court would not have
personal jurisdiction would deny the defendant protections Texas procedure otherwise affords.
Id. Rule of civil procedure 120a entitles a defendant who files a special appearance to have the
issue of personal jurisdiction heard and decided before any other matter. Id.; see TEX. R. CIV. P.
120a. Discovery is limited to jurisdictional issues. Trooper, 444 S.W.3d at 608. To allow
witnesses in a potential suit to be deposed more extensively than would be permitted if suit were
actually filed would circumvent the protections of rule 120a. Id. at 608–09. Second, the court
found that it would be an unreasonable expansion of rule 202 to allow it to be used to order
discovery without personal jurisdiction over a defendant. Id. at 610. It noted that rule 202 was
already the broadest pre-suit discovery authority in the country. If there was no requirement that
a court have personal jurisdiction over a defendant, the rule could be used “by anyone in the
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world to investigate anyone else in the world against whom suit could be brought within the
court’s subject-matter jurisdiction.” Id. This is not the intent of the rule. Id.
In Trooper, the court stated that the burden is on the potential plaintiff seeking discovery
under rule 202 to plead allegations showing personal jurisdiction over the potential defendants.
Id. The court acknowledged that in cases such as this where the identity of the potential
defendant is unknown and may be impossible to ascertain, this is a heavy burden. But it stated
that rule 202 does not guarantee access to information for every petitioner who claims to need it.
The court refused to interpret the rule to make Texas “the world’s inspector general.” Id. at 611.
Mary Kay seeks to distinguish Trooper on the basis that neither eBay nor any of the
anonymous parties filed a special appearance. Mary Kay further notes that eBay lacked standing
to challenge the trial court’s personal jurisdiction over the anonymous sellers. But in our
estimation, Trooper does not turn on the fact that Trooper filed a special appearance. Like this
case, Trooper is about whether the potential plaintiff established that the trial court was a proper
court in which to file its rule 202 petition.
Trooper places the burden on Mary Kay to plead allegations showing the trial court’s
personal jurisdiction over the forty-eight potential defendants. See id. at 610. Mary Kay’s rule
202 petition merely lists the sellers’ eBay usernames. Mary Kay does not know or allege
whether or not the sellers are IBCs. There is no information about where they live or their
contacts with Texas. We reject Mary Kay’s contention that the allegations in its petition about
the nature of its claims, as well as the fact that Mary Kay is based in Dallas County and eBay is
available here, are sufficient to show the court had personal jurisdiction over the potential
defendants. Mary Kay’s petition does not allege any jurisdictional facts to establish personal
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jurisdiction over the anonymous eBay sellers. 1 Because Mary Kay did not meet its burden, albeit
a heavy one, to plead jurisdictional facts sufficient to establish the trial court had personal
jurisdiction over the potential defendants and thus was a proper court, the trial court abused its
discretion in granting Mary Kay’s rule 202 petition. See Patton Boggs LLP v. Moseley, 394
S.W.3d 565, 568–69 (Tex. App.—Dallas 2011, orig. proceeding) (we review court’s order
granting rule 202 petition under abuse of discretion standard). We sustain eBay’s first issue and
need not consider its other two issues.
We reverse the trial court’s order and render judgment denying Mary Kay’s rule 202
petition.
/Ada Brown/
ADA BROWN
JUSTICE
140782F.P05
1
Citing the following special appearance cases, Mary Kay also asserts that even if its rule 202 petition contained no jurisdictional
allegations, the potential defendants had the burden to come forward and say they were non-residents. See Kelly v. Gen. Interior Constr., Inc.,
301 S.W.3d 653, 658 (Tex. 2010); Temperature Sys., Inc. v. Bill Pepper, Inc., 854 S.W.2d 669, 673 (Tex. App.—Dallas 1993, writ dism’d). If
this were true, Trooper’s acknowledgement of the substantial, perhaps impossible, burden on a potential plaintiff when the identity of the
potential defendant is unknown would have been unnecessary.
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
EBAY INC., Appellant On Appeal from the 101st Judicial District
Court, Dallas County, Texas
No. 05-14-00782-CV V. Trial Court Cause No. DC-1403318.
Opinion delivered by Justice Brown. Justices
MARY KAY INC., Appellee Lang-Miers and Stoddart participating.
In accordance with this Court’s opinion of this date, the trial court’s May 20, 2014 order
is REVERSED and judgment is RENDERED denying appellee Mary Kay Inc.’s rule 202
petition. It is ORDERED that appellant eBay Inc. recover its costs of this appeal from appellee
Mary Kay Inc. The District Clerk of Dallas County is directed to release the full amount of the
balance of the cash deposit in lieu of supersedes bond to appellant eBay Inc. or its counsel
Vinson & Elkins LLP.
Judgment entered this 25th day of June, 2015.
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