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DATABASE AMERICA, INC. v. BELLSOUTH ADVERTISING &

April 28, 1993

DATABASE AMERICA, INC. and ED BURNETTE CONSULTANTS, INC., Plaintiffs,
v.
BELLSOUTH ADVERTISING & PUBLISHING CORP., Defendant.



The opinion of the court was delivered by: LECHNER

 LECHNER, District Judge

 Currently before the court is the motion of defendant Bellsouth Advertising & Publishing Corp. ("BAPCO") to transfer the claims of plaintiffs Database America, Inc. ("Database") and Ed Burnette Consultants, Inc. ("Burnette") (collectively, the "Plaintiffs") to the United States District Court for the Northern District of Georgia pursuant to 28 U.S.C. §§ 1404(a) and 1406(a). *fn1"

 For the reasons that follow, the motion is granted pursuant to 28 U.S.C. § 1406(a). *fn2"

 Facts

 Database and Burnette are related New Jersey corporations *fn3" with their principal and only places of business located in Montvale, New Jersey. Complaint (the "Complaint"), filed 26 Aug. 1992, P 1; Goldner Decl., P 2; Burnette Decl., P 1. Since 1974, Burnette has been engaged in the business of preparing and selling lists. Complaint, P 5; Opp. Brief at 2. These lists, which are prepared in Montvale with the aid of a computer database, contain factual information on businesses in the United States, such as names, addresses, telephone numbers and advertising data. Opp. Brief at 3. Plaintiffs concede that some of this factual information has been taken from yellow pages in directories published by BAPCO and by other, unrelated companies. Complaint, P 5; Goldner Decl., PP 4, 10; Burnette Decl., P 3. Neither Database nor Burnette actually publish or has published its own yellow page directories. Opp. Brief at 3; Ambrosino Decl., P 5.

 BAPCO is a Georgia corporation with its principal place of business in Atlanta, Georgia. *fn4" Complaint, P 2; Sgrosso Aff., P 4. BAPCO has no office, telephone or bank account in New Jersey. Sgrosso Aff., P 10; Moving Brief at 4. It does not maintain any sales, manufacturing or other type of office or employees in New Jersey. Sgrosso Aff., PP 10-11; Moving Brief at 4. BAPCO further alleges:

 
BAPCO does not hold itself out to the public as doing business in New Jersey and has not qualified with the Secretary of State's office in New Jersey to do business within the state. BAPCO does not have a designated agent for the receipt of service of process in New Jersey and does not pay taxes in the state. BAPCO does not send any goods into New Jersey, nor does BAPCO perform any services within the state, including the sale of advertising for any of its yellow pages directories. Finally, BAPCO does not solicit sales of advertisements for its Yellow Pages directories outside the southeastern United States.

 Moving Brief at 4 (citations omitted); see also Sgrosso Aff., PP 12-14.

 Since 1984, BAPCO has been in the business of "creating, compiling, publishing and distributing classified telephone directories (Yellow Pages) in nine southeastern states." *fn5" Moving Brief at 2; Sgrosso Aff., P 6. Those states are Georgia, Florida, Tennessee, North Carolina, South Carolina, Alabama, Louisiana, Mississippi and Kentucky. Sgrosso Aff., P 7; Dowling Aff., P 18. BAPCO does not create, publish or distribute any yellow pages directories for use by telephone subscribers in New Jersey. *fn6" Sgrosso Aff., P 9; Moving Brief at 4.

 Annually, BAPCO publishes more than five hundred different telephone directories, including yellow pages. *fn7" Sgrosso Aff., P 8; Moving Brief at 2-3. BAPCO asserts that, since 1984, it has protected its yellow pages directories from unauthorized use by copyrighting the directories. Moving Brief at 1, 3. BAPCO also sells advertising space and business listings in the yellow page directories which it publishes. Dowling Aff., P 9; Moving Brief at 5; see infra at pp.11-17 (discussing sales of advertising).

 A. The BAPCO/Burnette Relationship

 It does not appear that BAPCO has ever entered into business transactions directly with Database. Moving Brief at 5; Hudson Aff., P 9. As for business dealings with Burnette, BAPCO describes its relationship with Burnette as follows: "BAPCO entered into minor and infrequent business transactions with Burnette on a sporadic basis between 1984-88." Moving Brief at 4; see also Hudson Aff., P 4. Specifically, BAPCO states:

 
BAPCO's business transactions were with Burnette as a broker of mailing lists and were primarily directed to the rental of mailing lists containing information derived from many sources, and related data processing services. BAPCO utilized the mailing lists and data processing services supplied by Burnette to assist BAPCO's solicitation of businesses which might have had an interest in placing business information within the Regional Industrial Pages directories and to assist in determining which businesses should have received copies of the Regional Industrial Pages directories.

 Hudson Aff., P 5.

 The business transactions between BAPCO and Burnette commenced in 1984 when Burnette sent an unsolicited marketing proposal to BAPCO. See Goldner Decl., P 9, Burnette Decl., P 8. In 1984, Burnette entered into an agreement with BAPCO to provide data for BAPCO's distribution of the Bellsouth Advertising Industrial Directory (the "BAPCO Industrial Directory") -- a business-to-business directory -- in Florida and in four Georgia counties. Goldner Decl., P 10; Burnette Decl., P 10; Hudson Aff., P 6. To carry out this project, Burnette "gathered a series of lists, merged and unduplicated, and created a single, comprehensive distribution file." Goldner Decl., P 10. In conversations among Ed Burnette ("Ed Burnette") and Paul Goldner ("Goldner"), both of Burnette, and John Mendoza ("Mendoza"), Manager of Direct Marketing for BAPCO, *fn8" Burnette alleges it disclosed that the data which it would use to compile its list for BAPCO would be yellow pages-based, including the use of BAPCO's own yellow pages. *fn9" Goldner Decl., P 10; Burnette Decl., P 10; Complaint, P 8.

 In 1985, Burnette and BAPCO entered into a second agreement for Burnette to provide BAPCO with a distribution file for the Bellsouth Industrial Directory covering North Carolina, South Carolina, Georgia and Florida. Opp. Brief at 9; Ambrosino Decl., P 7. The distribution file, which was produced at Burnette's office in New Jersey, merged multiple lists into a single distribution list for BAPCO. Ambrosino Decl., P 7. This particular distribution list allegedly merged two yellow page sources: National Business Lists ("NBL") and Burnette's Master File. *fn10" Ambrosino Decl., P 7. In preparing this second list, Allen Ambrosino ("Ambrosino") and another Burnette employee visited Georgia in February 1986 to meet with BAPCO personnel. Ambrosino Decl., P 8. Throughout this project, it is alleged Burnette informed BAPCO that the distribution list was completed using yellow pages-sourced databases. Ambrosino Decl., P 9.

 In 1986, BAPCO and Burnette entered into a third agreement for the formation of a distribution list for the BAPCO Industrial Directory. Opp. Brief at 9. According to Burnette, the 1986 project again used yellow pages-based data, including BAPCO's yellow pages, to fulfill this agreement. Opp. Brief at 9. It is alleged that, during this project, Goldner again told Mendoza that the file produced by Burnette for this project was yellow pages-based and included information from BAPCO's yellow pages. *fn11" Opp. Brief at 9. It is also alleged that, in addition to Mendoza, BAPCO employees Fred Monacelli ("Monacelli"), Bud Record ("Record") and Lee Harken were told of the yellow page-based sources for the 1985 and 1986 distribution lists. Ambrosino Decl., P 9.

 In 1987, BAPCO and Burnette entered into a fourth agreement to produce data for the BAPCO Industrial Directory. Opp. Brief at 9. At this time, John Ripa ("Ripa") of Burnette assumed responsibility for the BAPCO account. Ambrosino Decl., P 10. Similarly, John Hudson ("Hudson") of BAPCO was placed in charge of BAPCO's Industrial Directories and became Burnette's primary contact at BAPCO. Ambrosino Decl., P 10. In a number of telephone conversations and correspondence, Ripa allegedly advised Hudson that the database used to produce the necessary data was yellow page-based. *fn12" Opp. Brief at 9. Plaintiffs also allege Hudson spent two days in Englewood, New Jersey in March, 1987, for the purpose of "going through, in great detail, with Mr. Ripa the contents, methods and procedures used to create the computer files from which the [BAPCO] Industrial Directory's data was provided to [BAPCO]." Opp. Brief at 9-10; Goldner Decl., PP 14-15; Ripa Decl., PP 4, 8; Ambrosino Decl., P 17. These conversations, moreover, are alleged to have included "a full description of the business file and Yellow Page ingredient." Opp. Brief at 10; Ripa Decl., PP 4, 8-12.

 Also in 1987, Plaintiffs worked on a number of additional projects with BAPCO. For instance, Goldner and Allen Ambrosino ("Ambrosino") of Burnette worked on a project with BAPCO personnel Mendoza, Record and Monacelli in which Burnette assisted BAPCO in assembling a centralized purchasing structure for all BAPCO subsidiaries. Opp. Brief at 10. Plaintiffs allege that, during this project, it was disclosed to BAPCO personnel by Ambrosino and Goldner that the Burnette database was derived from yellow pages, including the yellow pages of BAPCO. Id. According to Plaintiffs, these discussions occurred from November 1986 through early 1988. *fn13" Id. In addition, on 21 January 1987, Ripa and Ambrosino met in Georgia with Hudson and Ann McElroy of BAPCO to review two projects for BAPCO's Gulf Coast and Mid-Atlantic directories. Ripa Decl., P 5; Ambrosino Decl., P 12. The fact of yellow pages-based data was allegedly discussed at this meeting as well. Ripa Decl., P 6; Ambrosino Decl., P 13.

 On 12 February 1988, Hudson of BAPCO is alleged to have again met Burnette personnel in Englewood, New Jersey. Opp. Brief at 10; Ripa Decl., P 16; Ambrosino Decl., P 18. This visit lasted two days and was allegedly arranged so that Hudson could review previous projects and a plan for a new distribution of the BAPCO Industrial Directory in the Pacific Northwest. Ripa Decl., P 16; Ambrosino Decl., P 18. It is alleged that, during this meeting, "the data requested by [BAPCO] for distribution of its Industrial Pages would again come from the Database file which was derived from yellow pages data, including BAPCO yellow pages data." Opp. Brief at 10. The project was completed in March 1988. Ripa Decl., P 16. BAPCO has not published or distributed its Industrial Directories since May 1988. Hudson Aff., P 6.

 In acknowledging these dealings with Burnette, BAPCO downplays their significance, as well as the relationship between the services for which it hired Burnette and its yellow pages as follows:

 
For a typical transaction, BAPCO sent a purchase order from Atlanta to Burnette in New Jersey and, in response, Burnette performed list-related services in that state and shipped to BAPCO in Atlanta lists of businesses to be solicited and mailing labels for businesses which should receive a copy of the [BAPCO] Industrial Pages Directories. The [BAPCO] Industrial Pages Directories were not associated with nor related to BAPCO's copyrighted yellow pages.

 Moving Brief at 5 (citations omitted); see also Hudson Aff., P 7.

 Burnette alleges that, although BAPCO has ceased publishing the BAPCO Industrial Directory, its business dealings with BAPCO have continued. Burnette vaguely states:

 
The relationship between [BAPCO] and [Burnette] continued in two areas:
 
a. Filling various list orders placed by John Mendoza and others from [BAPCO through 1991] . . .
 
b. Continuing discussions relating to management of [BAPCO]'s telephone subscriber data. *fn14"

 Goldner Decl., P 16; see also Ripa Decl., P 17; Ambrosino Decl., P 19. Burnette indicates that its "most recent contact" with BAPCO was with BAPCO employee Lane McRae ("McRae"). Sobel Decl., P 2; Ambrosino Decl., P 20. According to Burnette, in January 1992, McRae visited its offices in New Jersey "in reference to acquiring data from [Burnette] for the purpose of introducing an electronic yellow pages." Sobel Decl., P 2; Ambrosino Decl., P 20. Burnette speculates McRae "would not have sought [its] services had she not already known [Burnette] compiled yellow pages." Sobel Decl., P 4; see also Opp. Brief at 11.

 B. Other Alleged Business Conducted by BAPCO in New Jersey

 As mentioned, BAPCO accepts local and nationwide advertising for its yellow pages. This occurs through two channels. Dowling Aff., P 9. Local advertisers -- those within the nine southeastern states in which BAPCO distributes its yellow pages -- purchase advertising directly from BAPCO or from its outside vendor. Dowling Aff., P 9; Moving Brief at 5. In contrast, BAPCO "does not solicit sales of advertisements in BAPCO's directories from advertisers located outside the southeastern United States." Dowling Aff., P 18. National advertisers -- those outside the BAPCO distribution area -- purchase advertising space from Certified Marketing Representatives (the "CMRs"). Bowling Aff., P 9; Moving Brief at 5.

 Although BAPCO states it "has never contacted an advertiser in New Jersey to solicit advertisements," id., seven CMRs which deal with BAPCO have headquarters in New Jersey. *fn15" Like all CMRs which do business with BAPCO, the New Jersey CMRs have standard written contracts with BAPCO to publish national advertising in its yellow pages directories (the "CMR Agreements"). *fn16" Moving Brief at 5-6; see also Opp. Brief App. at A146-52 (sample CMR Agreements); Petty Aff., Ex. F (same).

 BAPCO has accepted advertising for placement in its yellow pages from CMRs since 1 January 1984. *fn17" Moving Brief at 5-6. The sales activities of CMRs generate revenue for BAPCO. *fn18" Nevertheless, BAPCO asserts it does not control the day-to-day operations of any CMR, nor are any of the persons who work for CMRs employees or agents of BAPCO. *fn19" Dowling Aff., PP 14, 20; Moving Brief at 6. According to BAPCO:

 
CMRs operate completely independent of BAPCO and work directly with national advertisers to determine which directories throughout the United States are available for the placement of national advertising. CMRs represent the national advertisers by placing orders for national advertising with various publishers through a nationwide electronic network that connects CMRs to publishers.

 Moving Brief at 5. Moreover, the CMR Agreements specifically state that a CMR "is an independent contractor and not an employee, agent, partner or joint venturer of or with [BAPCO]. ...


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