Case: 1:20-cv-00512 Document #: 86 Filed: 08/12/20 Page 1 of 8 PageID #:1142
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`DAVID MUTNICK, for himself and others )
`similarly situated,
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`Plaintiffs,
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`CLEARVIEW AI, INC., et al.,
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`Defendants.
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`ANTHONY HALL, on behalf of himself
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`and others similarly situated,
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`Plaintiffs,
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`CLEARVIEW AI, INC.,
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`Defendant.
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`Case No. 20 C 0512
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`Judge Sharon Johnson Coleman
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`Case No. 20 C 0846
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`Judge Sharon Johnson Coleman
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`MEMORANDUM OPINION AND ORDER
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`Defendants Clearview AI, Inc. (“Clearview”), Hoan Ton-That, and Richard Schwartz move
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`to dismiss the present lawsuits under Federal Rule of Civil Procedure 12(b)(2) for lack of personal
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`jurisdiction. In the alternative, defendants seek to transfer venue to the Southern District of New
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`York under 28 U.S.C. § 1404(a). For the following reasons, the Court denies defendants’ motions.
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`BACKGROUND
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`In January and February 2020, plaintiffs brought the present lawsuits alleging that
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`defendants scraped over three billion facial images from the internet and scanned the facial images’
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`biometric identifiers and information. Thereafter, defendants built a searchable database of the
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`scanned images enabling database users to instantly identify unknown individuals using nothing
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`more than a photograph. In addition to photographs, the database includes personal and private
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`Case: 1:20-cv-00512 Document #: 86 Filed: 08/12/20 Page 2 of 8 PageID #:1143
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`data, including names, home addresses, and work addresses. Defendants have sold access to their
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`facial recognition database to Illinois law enforcement and government agencies, as well as federal
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`law enforcement agencies located in Illinois.
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`Plaintiffs bring putative class actions under the Illinois Biometric Information Privacy Act,
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`740 ILCS 14/1, et seq. (“BIPA”), a consumer privacy statute, alleging defendants’ conduct violated
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`their privacy rights and that defendants’ use of their biometric information was without their
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`knowledge and consent. On May 28, 2020, the American Civil Liberties Union (“ACLU”) and other
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`plaintiffs brought a similar lawsuit against defendant Clearview for BIPA violations in the Circuit
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`Court of Cook County alleging that through Clearview’s facial recognition database, an entity “can
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`instantaneously identify the subject of a photograph with unprecedent accuracy, enabling covert and
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`remote surveillance of Americans on a mass scale.”
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`Legal Standard
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`A motion to dismiss under Rule 12(b)(2) tests whether a federal court has personal
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`jurisdiction over a defendant. See Fed. R. Civ. P. 12(b)(2); Curry v. Revolution Labs., LLC, 949 F.3d
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`385, 392 (7th Cir. 2020). Although plaintiffs bear the burden of establishing personal jurisdiction,
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`when ruling on a Rule 12(b)(2) motion to dismiss based on the submission of written materials,
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`plaintiffs need only make a prima facie showing of personal jurisdiction. Id.; Matlin v. Spin Master
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`Corp., 921 F.3d 701, 705 (7th Cir. 2019). When the parties submit affidavits concerning personal
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`jurisdiction, the district court may weigh the affidavits when evaluating whether plaintiffs have
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`established their prima facie case. Curry, 949 F.3d at 393. If there is a factual conflict between the
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`record and defendants’ affidavits, courts resolve the conflict in plaintiffs’ favor. Id. In addition,
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`when analyzing a Rule 12(b)(2) motion without conducting an evidentiary hearing, courts accept the
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`well-pleaded, undisputed facts in the complaint as true. Matlin, 921 F.3d at 705.
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`Case: 1:20-cv-00512 Document #: 86 Filed: 08/12/20 Page 3 of 8 PageID #:1144
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`Discussion
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`Personal Jurisdiction
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`The Court’s jurisdiction over plaintiffs’ state law BIPA claims is circumscribed by both
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`Illinois law and federal due process. J.S.T. Corp. v. Foxconn Interconnect Tech. Ltd., 965 F.3d 571, 575
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`(7th Cir. 2020). It is well-settled that “the Illinois long-arm statute permits the exercise of
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`jurisdiction to the full extent permitted by the Fourteenth Amendment’s Due Process Clause,” thus
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`the Court’s inquiry is whether the exercise of personal jurisdiction over the defendants comports
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`with federal due process. Curry, 949 F.3d at 393 (citation omitted). There are two types of personal
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`jurisdiction – general and specific. J.S.T. Corp., 965 F.3d at 575. Here, plaintiffs have established
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`specific jurisdiction over all of the defendants.
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`To show specific personal jurisdiction, the defendants’ contacts with the forum state must
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`be directly related to the challenged conduct. Curry, 949 F.3d at 395; Matlin, 921 F.3d at 705. In
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`short, the Court’s inquiry focuses on the “relationship among the defendant, the forum, and the
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`litigation.” Walden v. Fiore, 571 U.S. 277, 284, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014). There are
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`three “essential requirements” to establish specific personal jurisdiction: (1) defendants must have
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`purposefully availed themselves of the privilege to conduct business in the forum state or
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`purposefully directed their activities at the state; (2) plaintiffs’ injuries resulted from the defendants’
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`forum-related activities; and (3) the federal court’s exercise of jurisdiction comports with traditional
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`notions of fair play and substantial justice. Lexington Ins. Co. v. Hotai Ins. Co., Ltd., 938 F.3d 874, 878
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`(7th Cir. 2019).
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`Examining the evidence, allegations, and averments presented by the parties, individual
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`defendants Ton-That and Schwartz founded Clearview in 2017. Ton-That and Schwartz have high-
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`ranking positions in management and operations at Clearview. More specifically, Ton-That is
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`Clearview’s CEO and is responsible for managing Clearview’s technological matters. Schwartz is
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`Case: 1:20-cv-00512 Document #: 86 Filed: 08/12/20 Page 4 of 8 PageID #:1145
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`Clearview’s president managing Clearview’s sales. Schwartz and Ton-That have contributed
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`significant resources to Clearview’s operations. Schwartz, for example, has paid for the servers and
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`other costs necessary to carry out Clearview’s scraping and scanning operations.
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`As Clearview’s principals, Schwartz and Ton-That have executed hundreds of agreements on
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`behalf of Clearview with numerous Illinois law enforcement and other government agencies, as well
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`as private entities in Illinois, to provide access to its facial recognition database. Through these
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`agreements, defendants have sold, disclosed, obtained, and profited from the biometric identifiers of
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`Illinois citizens. Some of the entities to whom Clearview sold biometric information include the
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`Chicago, Rockford, and Naperville police departments. Also, Clearview marketed its licenses (user
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`accounts) for its facial recognition database to the Illinois Secretary of State and negotiated a
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`contract with the Secretary of State via a series of emails, mail, and phone calls. As to Clearview’s
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`price quote to the Secretary of State, set forth in a letter dated October 1, 2019, Clearview directed
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`payments to be sent to Clearview AI/Attn: Richard Schwartz at Schwartz’s residence in New York
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`City.
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`Plaintiffs further maintain that defendants purposely directed their “illegal harvesting”
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`operation at the State of Illinois. To clarify, the images contained in the facial recognition databases
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`sold to Illinois entities were uploaded and created using internet-based platforms and websites from
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`companies in Illinois or companies who operate servers in Illinois. Simply put, defendants took
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`biometric information from Illinois residents, created a surveillance database, and then marketed and
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`sold licenses to use this database to entities in Illinois. As a result, plaintiffs’ privacy rights were
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`violated.
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`Despite the evidence, allegations, and averments that defendants purposefully directed their
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`activities to the State of Illinois and that plaintiffs’ alleged injuries resulted from these purposeful
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`contacts, the Clearview defendants argue that there is no personal jurisdiction because they have
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`submitted sworn declarations that they never targeted businesses in Illinois and never travelled to
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`Illinois. Defendants’ argument is untenable for several reasons, including that under established
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`Seventh Circuit precedent, if there is a factual conflict between the record and defendants’ affidavits
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`– as is the case here – courts resolve the conflict in plaintiff’s favor. Curry, 949 F.3d at 393. And, as
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`the Supreme Court explained over 35 years ago, “[i]t is an inescapable fact of modern commercial
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`life that a substantial amount of business is transacted solely by mail and wire communications
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`across state lines, thus obviating the need for physical presence within a State in which business is
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`conducted.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).
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`In other words, “physical presence is not necessary for a defendant to have sufficient minimum
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`contacts with a forum state.” Curry, 949 F.3d at 398.
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`Defendants’ other arguments are equally without merit. For instance, that Clearview also
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`obtained biometric information from millions of other Americans and marketed and sold its
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`database in other states does not save the day. Curry, 949 F.3d at 399 (“There is no per se
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`requirement that the defendant especially target the forum in its business activity; it is sufficient that
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`the defendant reasonably could foresee that its product would be sold in the forum.”). Simply put, it
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`is not necessary that Clearview exclusively targeted only Illinois’ residents and then marketed and
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`sold its database only to Illinois entities. See, e.g., Norberg v. Shutterfly, Inc., 152 F.Supp.3d 1103, 1105
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`(N.D. Ill. 2015) (Norgle, J.).
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`Clearview’s management, Ton-That and Schwartz, argue that they cannot be subject to
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`personal jurisdiction based on the company’s contacts with Illinois. It appears that defendants are
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`arguing that the fiduciary shield doctrine should apply. See Rice v. Nova Biomedical Corp., 38 F.3d 909,
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`912 (7th Cir. 1994). Not only is defendants’ fiduciary shield argument perfunctory, undeveloped and
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`thus waived, “[c]ourts in this district have consistently refused to apply the fiduciary shield doctrine
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`to corporate presidents and CEOs.” Hundt v. DirectSat USA, LLC, No. 08 C 7238, 2010 WL
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`1996590, at *7 (N.D. Ill. May 17, 2010) (Gottschall, J.)
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`In sum, despite defendants’ arguments to the contrary, their contacts with Illinois were not
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`“random, fortuitous, or attenuated.” Curry, 949 F.3d at 396 (citing Burger King, 471 U.S. at 475).
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`Accordingly, the Court denies defendants’ Rule 12(b)(2) motions because the Court has personal
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`jurisdiction over all of the defendants.
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`Transfer Venue
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`Next, defendants seek to transfer venue to the Southern District of New York under 28
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`U.S.C. § 1404(a). Because venue and jurisdiction are proper in both the Northern District of Illinois
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`and the Southern District of New York, the Court will “evaluate both the convenience of the parties
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`and various public-interest considerations.” Mueller v. Apple Leisure Corp., 880 F.3d 890, 894 (7th Cir.
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`2018).
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`Factors that relate to the parties’ private interests, also known as the convenience factors,
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`include “the availability of and access to witnesses, and each party’s access to and distance from
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`resources in each forum.” Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc., 626 F.3d 973, 978
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`(7th Cir. 2010); see also Fischer v. Magyar Allamvasutak Zrt., 777 F.3d 847, 868 (7th Cir. 2015). Other
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`private factors include “the location of material events and the relative ease of access to sources of
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`proof.” Research Automation, 626 F.3d at 978.
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`The ease of access related to resources and witnesses, along with the location of material
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`events, involve both New York and Illinois. Defendants reside in New York and Clearview has
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`operations there. Defendants sold access to their database to numerous entities located in Illinois,
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`including the Chicago Police Department, allegedly harming Illinois citizens. Under the
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`circumstances, the above mentioned-convenience factors do not weigh in favor of either forum in
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`light of modern electronic discovery practices, especially now during the COVID-19 pandemic
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`where depositions and court hearings are done remotely via video and audio conferencing. See In re
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`Hudson, 710 F.3d 716, 719 (7th Cir. 2013) (“In our age of advanced electronic communication,
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`including high-quality videoconferencing, changes of venue motivated by concerns with travel
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`inconvenience should be fewer than in the past.”). That said, courts in this district also consider the
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`plaintiffs’ choice of forum, especially if it is their home forum, when weighing convenience factors,
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`which here favors the Northern District of Illinois. See Nicks v. Koch Meat Co., Inc., 260 F.Supp.3d
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`942, 955 (N.D. Ill. 2017) (St. Eve, J.) (citing In re Nat’l Presto Indus., Inc., 347 F.3d 662, 663–64 (7th
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`Cir. 2003)).
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`Turning to the public interest considerations, the Court looks to the respective docket
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`congestion, the Courts’ familiarity with the relevant law, and the relationship of the community to
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`the controversy. Research Automation, 626 F.3d at 978; see also In re Ryze Claims Solutions, LLC, ___
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`F.3d ___, 2020 WL 4432608, at *4 (7th Cir. Aug. 3, 2020). Looking to the March 31, 2020 Federal
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`Court Management Statistic Report, the Southern District of New York is a little less congested than
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`the Northern District of Illinois. Specifically, in the Southern District of New York, the time from
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`filing a lawsuit until trial is 31.0 months and the time from filing to disposition 14.7 months.
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`Whereas, in the Northern District of Illinois, the time from filing to trial is 39 months and the time
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`from filing to disposition is 15 months. As such, this public interest factor slightly weighs in favor
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`of transfer to the Southern District of New York.
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`Otherwise, the remaining public interest considerations strongly weigh in favor of the
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`Northern District of Illinois. Illinois courts have much more familiarity with Illinois’ BIPA statute
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`than the Southern District of New York. And, Illinois courts, including its federal courts, have a
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`strong interest in protecting the privacy rights of Illinois residents. Thus, after carefully considering
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`and weighing the public and private interest factors, the Court, in its discretion, denies defendants’
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`motion to transfer venue.
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`On a final note, defendants argue that there are several similar cases against it in the
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`Southern District of New York based on its facial recognition database; therefore, the present cases
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`belong there. Yet, when plaintiff David Mutnick attempted to intervene in the Southern District of
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`New York cases, the district court concluded that “the six New York cases and Mutnick’s case,
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`while all premised on the same underlying facts, raise different legal issues, have partially non-
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`overlapping class definitions, and may require different discovery. All this undercuts Mutnick’s
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`claimed interest in seeing that they are all resolved in the same manner.” Calderon v. Clearview AI, Inc.,
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`2020 WL 2792979, at *6 (S.D.N.Y. May 29, 2020). Defendants’ argument is thus unavailing.
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`Conclusion
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`For these reasons, the Court denies defendants’ Rule 12(b)(2) and § 1404(a) motions [29, 45].
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`IT IS SO ORDERED.
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`Date: 8/12/2020
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`Entered: _____________________________
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` SHARON JOHNSON COLEMAN
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` United States District Judge
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