In the case of Dedvukaj v. Maloney, the U.S. District Court for the Eastern District of Michigan has held that it can exercise personal jurisdiction over a New York eBay seller accused of breach of contract, fraud and misrepresentation in connection with an auction that went sour.

Plaintiff Maloney, a Michigan resident, won two eBay auctions for paintings from defendant Dedvukaj, a seller based in Syracuse, New York. The auctions advertised the paintings as being originals, and the defendant apparently verified the authenticity of the paintings over the phone. After the auctions closed, the plaintiff sought to collect the art works, but the defendant never shipped them. (There appears to be a dispute over whether the defendant was selling original paintings or copies.) The plaintiff refused a refund and demanded either the original paintings or their fair market value.

The plaintiff filed a lawsuit in his home state of Michigan alleging breach of contract, fraud and misrepresentation. The defendant moved to dismiss for lack of personal jurisdiction, or alternatively to transfer venue to the Northern District of New York.

The defendant argued that the Michigan court did not have personal jurisdiction over him because he sold items through eBay, and bids are “random” and “fortuitous,” as sellers cannot control who bids on a given item. The defendant also argued that because he did not target or specifically market his auctions to Michigan residents, his contacts were too attenuated for the court to find personal jurisdiction.

The court first looked to whether the Michigan long arm statute would support the exercise of personal jurisdiction. It held that by communicating with the Michigan plaintiff by telephone and e-mail, accepting the winning bids, and confirming shipping charges to Michigan, the defendant transacted business in Michigan. Because the dispute arose out of that business transaction, the defendant satisfied the requirements of the long arm statute.

The court next looked to whether the exercise of personal jurisdiction would pass muster under a constitutional due process analysis. It discussed a number of analogous cases, eventually holding that the defendant’s auction clearly supported personal jurisdiction in Michigan through purposeful availment.

For example, in First Tennessee Nat. Corp. v. Horizon Nat. Bank a court found personal jurisdiction existed where the defendant’s website stated the bank could lend in “[all] 50 States.” 225 F.Supp.2d 816, 820-21. In another case, a court found purposeful availment where a website stated it would do business “for any parent in any state,” specifically including Michigan. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 891 (2002).

Using these cases as precedent, the court noted that the defendant’s auction listing stated he would ship anywhere in the United States. Additionally, defendant listed a toll-free telephone number and e-mail address in the auction. In part because the defendant did not limit buyers from Michigan from participating in his auction, and because he displayed a willingness to communicate with buyers from any state, the court found that the defendant had purposefully availed himself to the benefits of conducting business in Michigan.

Some other factors the court considered in finding purposeful availment: the number of e-mails and phone calls between the plaintiff and the defendant, the intentional and misleading nature of the communications between the parties, and the defendant’s acceptance of payment from Michigan.

Accordingly, the court denied the defendant’s motion to dismiss for lack of personal jurisdiction, and also denied the alternate motion for transfer of venue. It presented an essential fact underlying the analysis of personal jurisdiction arising from web-based transactions: “Sellers cannot expect to avail themselves of the benefits of the internet-created world market that they purposefully exploit and profit from without accepting the concomitant legal responsibilities that such an expanded market may bring with it.”

Dedvukaj v. Maloney, 2006 WL 2520347 (E.D. Mich., August 31, 2006)

See also:

Interactive websites supported exercise of personal jurisdiction