Melissa Dorman Matthews Achieves Appellate Victory in Houston Court of Appeals for the First District of Texas

January 21, 2020 02:51 PM
Melissa Dorman Matthews

IADC member Melissa Dorman Matthews, and her colleague David Green, both partners at Hartline Barger LLP, achieved an appellate victory, with dismissal of their Canadian client, Stocksy United, by the Houston Court of Appeals [1st Dist.]. On December 19, 2019, the court of appeals reversed the trial court’s denial of Stocksy’s special appearance, and rendered judgment that dismissed Stocksy from the case.

Stocksy is a platform cooperative that licenses stock photography for advertisements and other commercial uses to purchasers all over the world. Stocksy is a privately held; it is incorporated under the laws of Alberta, Canada and headquartered in British Columbia, Canada. Stocksy does not have a registered agent in Texas, is not authorized to do business in Texas, does not maintain a place of business in Texas, and does not have any employees or agents who work in Texas.

Texas resident and co-defendant Kristen Curette took photographs of a minor, Savannah Morris (also a Texas resident) and uploaded them to Stocksy’s website. Morris claimed Curette did not obtain Morris’s effective consent. While this dispute was pending, Morris became an adult.

Morris sued Stocksy for misappropriation of likeness. Stocksy filed a special appearance, and, in response, Morris argued that Stocksy was subject to specific jurisdiction because Curette acted as Stocksy’s agent when she took the photographs and uploaded them onto the website. The trial court agreed with Morris and denied Stocksy’s special appearance.

When Curette photographed Morris, Curette was a Contributor to Stocksy. To be a Contributor, a photographer had to submit an application to Stocksy. Upon approval, Stocksy and the applicant entered into two agreements: 1) the Member Agreement, which was the document by which Stocksy transferred one Class C share of the cooperative to the photographer, thereby making the photographer a Stocksy Contributor; and 2) the Member Supply Agreement, which governed the terms by which the Contributor supplied content for license through Stocksy’s website. Under the Member Supply Agreement, the Contributor took photographs at his or her discretion and without direction or oversight from Stocksy. The only requirements were that the photographs be original work, and that model releases be obtained for the persons depicted in the photographs.

The Member Supply Agreement provided that the Contributor supplied content to Stocksy as an independent contractor. It specifically disclaimed any relationship of joint venturers, partners, principal and agent, or employer and employee. The agreement further provided that neither party had the power to bind or obligate the other in any manner. Both Stocksy agreements contained choice-of law and forum selection provisions that specified Canadian law would apply.

Under Texas law, an agency-based theory of imputed contacts may serve as the basis for the exercise of personal jurisdiction over a foreign defendant. However, the existence of an agency relationship was Morris’s burden to prove, and she failed to do so. The court of appeals noted that shareholder status was not ipso facto proof of agency. Instead, the “essential feature” of agency is the “right of control.” Morris did not dispute or present evidence otherwise rebutting the Stocksy’s proof that there was no agency relationship and that Stocksy exercised no control over Curette. Morris further contended that Stocksy was subject to specific jurisdiction based on its own Texas contacts, because it sought Contributors from Texas and sold photographs to Texas residents. However, Morris presented no evidence that Stocksy licensed any of the photographs of Morris to third parties in Texas. Stocksy’s requests for Contributors were not targeted to Texas; it sought applications from photographers from all over the world.

The court of appeals concluded that the evidence was insufficient to support the trial court’s legal conclusion that Curette acted as Stocksy’s agent, and that Morris has not otherwise alleged facts that, if true, brought Stocksy within the reach of Texas’s long-arm statute. The court of appeals reversed the trial court’s denial of Stocksy’s special appearance, and rendered judgment dismissing Stocksy.

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