Netflix washes Soderbergh film clean off Connecticut District Court docket.

Streaming on Netflix beginning yesterday, The Laundromat, a Steven Soderbergh-directed drama starring Meryl Streep, Gary Oldman, and Antonio Banderas evaded a temporary restraining order as the SVOD platform prevailed on a motion to dismiss. The plaintiffs had sought to block Friday’s release of the film to the approximately 139 million worldwide Netflix subscribers.

Plaintiffs Mossack Fonseca and its principals alleged trademark dilution and false advertising claims based on the use of their logo, and libel and invasion of privacy claims based on their alleged portrayal as “ruthless, uncaring, and unethical lawyers involved in money laundering, tax evasion, and/or other criminal activities that benefit wealthy people . . . .” What remains unclear is why they chose to file their time-sensitive complaint and TRO application in the U.S. District Court for the District of Connecticut.

Netflix challenged the complaint on exactly that ground, moving to dismiss it for lack of personal jurisdiction. A court must have jurisdiction, or legal authority, over both the type of case at issue (“subject-matter jurisdiction”) and the person of the defendant. The procedural issue here concerned only the power of a federal court sitting in Connecticut over the corporate “person” of defendant Netflix–a Delaware corporation headquartered in California and, as far as Connecticut is concerned, a non-resident, or “foreign”, corporation.

Legal Background
Traditionally, corporate citizenship in the state in which the court sits provided this power. A corporation is a citizen of the state of its incorporation and the state in which it has its headquarters. A defendant could also consent to jurisdiction or come under the court’s authority be being physically served with the summons and complaint in a case. None of those conditions applied in Connecticut.

When there is no traditional base of jurisdictional power, a plaintiff must rely on the applicable “long arm” statute. Under a long line of U.S. Supreme Court precedent, this type of statute allows a state (and a federal court sitting therein) to exercise personal jurisdiction over citizens of other states so long as the exercise is consistent with the Constitution. Under the Constitution’s guarantee of due process, a defendant from outside the state must have certain minimum contacts with the state such that the exercise of jurisdiction over the defendant there does not offend traditional notions of fair play and substantial justice.

Interestingly, however, Connecticut’s long-arm statute “empowers only a resident of th[e] state or a person having a usual place of business in th[e] state to sue a foreign corporation in a Connecticut court.” Mossack Fonseca & Co. v. Netflix, Inc., No. 3:19cv1618 (Oct. 17, 2019) (citing Matthews v. SBA, Inc., 149 Conn. App. 513, 555 (2014)). In other words, the residence of the plaintiff matters as much as that of the defendant–the person whom the plaintiff seeks to bring under the court’s authority.

The court noted that the plaintiffs were residents of Panama, not Connecticut. They had no Connecticut office, did no business in the state, and had not alleged ever even setting foot there. Thus, under the Connecticut long-arm statute, they had no right to use of the state’s courts (or of the federal court for the District of Connecticut, which looks to the state statute to determine whether it has personal jurisdiction).

Having no such means of meeting the statute’s requirements to bring their action against Netflix in Connecticut, the plaintiffs argued that because Netflix had filed to do business in the state as a foreign corporation, the SVOD platform had essentially consent to be sued there. The court disagreed and likewise refused to accept the plaintiffs’ unsupported contention that protection of their trademark under the Inter-American Convention for Trade Mark and Commercial Protection gave them the right to sue in any U.S. court. It dismissed the complaint and denied the TRO.

Netflix must still defend the case after the Connecticut court’s transfer of it to the Central District of California. Whatever the ultimate outcome, however, it won’t be decided for some time–and The Laundromat will be streaming on demand all the while.

Dane Johnson
djohnson@iss.law