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David Green Achieves Appellate Victory Dismissing Stocksy

David Green and the Hartline Barger appellate team achieved a 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.

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

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

The co-defendant was a Contributor to Stocksy when she photographed the plaintiff. 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 the plaintiff’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.” The plaintiff 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 the co-defendant. The plaintiff 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, the plaintiff presented no evidence that Stocksy licensed any of the photographs of her 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 the co-defendant acted as Stocksy’s agent, and that the plaintiff 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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