Limits To Relying On Internet Materials and Information In Court (Part II)

Third Circuit criticized district court’s judicial notice and use of Internet information on motion to dismiss complaint, in Victaulic Co. v. Tieman, 499 F.3d 227 (3d Cir. 2007)

As another example of the limits of using Internet materials and information in the courts (see prior blog post), the Third Circuit was troubled by the district court’s sua sponte use of Internet information.

In the case, employee Joseph Tieman was a sales representative for Victaulic Company, a manufacturer of valves, couplings, sprinkler heads, and other mechanical devices. He had signed a Non-Disclosure, Invention Assignment and Non-Competition Agreement, which included a covenant not to compete. When he left Victaulic, he began working for competitor Tyco Fire Products, LP in a similar sales position. Tieman and Tyco sought a declaratory judgment that the covenant not to compete was invalid under state law. Victaulic filed counterclaims for breach of contract, misappropriation of trade secrets, tortious interference with contractual relations, and unfair competition. Tyco and Tieman moved to dismiss the counterclaim for failure to state a claim. The motion was granted on the breach of contract, tortious interference, and unfair competition claims. Victaulic appealed the dismissal of the claims.

In its ruling, the district court took noted that the covenant not to compete covered “any geographic region in which Victaulic products are sold.” The district court took judicial notice from the company website that Victaulic had “a global business with facilities in North America, Asia, Europe, and the Middle East.” Specifically, the district court noted:

“While Victaulic's brief makes representations about the company's global reach, its pleadings do not. However, Victaulic's Web site verifies that it is a global business with facilities in North America, Asia, Europe, and the Middle East. See http://www.victaulic.com/content/whereisvic. htm (last visited Mar. 27, 2007). We take judicial notice of this information as a matter of public record that is capable of accurate and ready determination by a source whose accuracy cannot reasonably be questioned. See Fed. R. Evid. 201(b).”

Victaulic Co. v. Tieman, No. 06-5601, at 7-8 n.8 (EDPA 2007)

The Third Circuit reversed the dismissal of the complaint. Among other issues, the circuit was troubled by the district court’s judicial notice:

“Of particular concern is that the District Court used the website at http://www.victaulic.com to establish certain facts about Victaulic’s business. While it is proper for a court to take judicial notice of facts not reasonably subject to dispute, FED. R. EVID. 201(b), several concerns come into play here. First, we require that evidence be authenticated before it can be admitted. Id. 901(a). Thus we allow judicial notice only from sources not reasonably subject to dispute. Id. 201(b). Anyone may purchase an internet address, and so, without proceeding to discovery or some other means of authentication, it is premature to assume that a webpage is owned by a company merely because its trade name appears in the uniform resource locator. Cf. United States v. Jackson, 208 F.3d 633, 638 (7th Cir. 2000) (holding that information from the internet must be properly authenticated to be admitted); In re Homestore.com, Inc. Sec. Litig., 347 F. Supp. 2d 769, 782–83 (C.D. Cal. 2004) (“Printouts from a web site do not bear the indicia of reliability demanded for other self-authenticating documents under FED. R. EVID. 902. To be authenticated, some statement or affidavit from someone with knowledge is required . . . .”). Second, a company’s website is a marketing tool. Often, marketing material is full of imprecise puffery that no one should take at face value. Cf. Catrol, Inc. v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993) (distinguishing between mere puffery and actual misrepresentations). Thus courts should be wary of finding judicially noticeable facts amongst all the fluff; private corporate websites, particularly when describing their own business, generally are not the sorts of “sources whose accuracy cannot reasonably be questioned,” FED. R. EVID. 201(b), that our judicial notice rule contemplates. We also note that the District Court employed judicial notice at an early stage in this litigation and outside the context of an evidentiary proceeding. While the rules allow a court to take judicial notice at any stage of the proceedings, FED. R. EVID. 201(f), we believe that it should be done sparingly at the pleadings stage. Only in the clearest of cases should a district court reach outside the pleadings for facts necessary to resolve a case at that point. Resolving a thorny issue like reasonableness by resorting to a party’s unauthenticated marketing material falls far short of the bar. Moreover, having taken judicial notice of the nature of Victaulic’s business, the District Court used this to infer that Tieman’s training, specialized knowledge, and trade secrets -- in short, all of the things that the covenant not to compete legitimately protects—are not transferable among industries the company serves. Taking a bare “fact” that is reflected not in the pleadings, but on a corporate website, and then drawing inferences against the non-moving party so as to dismiss its well-pleaded claims on the basis of an affirmative defense, takes us, as a matter of process, far too far afield from the adversarial context of litigation.”

Victaulic, 499 F.3d at 236-37.

The Victaulic case represents yet another instance in which a circuit has paused over the appropriate use of information from the Internet. As these cases teach, Internet information, like other evidence, may be considered where threshold evidentiary standards are met.

Federal Rules of Evidence
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