Category: Personal Jurisdiction (page 2 of 3)

Postings to newsgroup support exercise of personal jurisdiction

Goldhaber v. Kohlenberg, — A.2d —-, 2007 WL 2198181 (N.J.Super.A.D. Aug. 2, 2007).

A pair of New Jersey plaintiffs sued a California defendant over “vile” messages that the defendant allegedly posted about the plaintiffs on a newsgroup devoted to cruises and cruise ships. The defendant didn’t answer the complaint, and the trial court entered a default judgment against him in excess of $1 million. That got the defendant’s attention, so he hired local counsel to move to set aside the default judgment, claiming the court lacked personal jurisdiction over him. The trial court denied the motion, and the defendant sought review with the appellate court. On appeal, the court affirmed the denial, holding that the exercise of personal jurisdiction was proper.

The case is particularly interesting in the Internet law context, because the allegations of personal jurisdiction stem exclusively from the defendant’s alleged web-based activity. Looking to an earlier Internet jurisdiction case decided by the New Jersey Supreme Court, Blakey v. Continental Airlines, 164 N.J. 38 (2000), the court observed the implicit application therein of the well-known Calder v. Jones “effects test” [465 U.S. 783, 104 S.Ct. 1482, 79 L. Ed.2d 804 (1984)].

In Calder, the defendants “edited an article that they knew would have a potentially devastating impact upon [the plaintiff],” knowing that “the brunt of that injury would be felt by [the plaintiff] in the State in which she live[d] and work[ed].” The New Jersey court found similarities in this case, even though, in reciting the facts, it stated that the defendant had “no contacts of any type with New Jersey.”

The court concluded that the author of the message board postings did, indeed, target them to New Jersey, not only knowing that plaintiffs resided there, but also knowing the municipality in which they resided. He made specific disparaging references to that municipality in many of his postings, some of which were made in response to plaintiffs’ replies to offending comments. This intentional and directed conduct, and its connection to New Jersey, according to the court, was such that the defendant should reasonably have anticipated being haled into court there.

Zippo “sliding scale” approach to personal jurisdiction rejected

Howard v. Missouri Bone and Joint Center, Inc., No. 05-476, — N.E.2d —-, 2007 WL 1217855 (Ill.App. 5th Dist. April 24, 2007)

Plaintiff Howard filed suit in Illinois against defendant Missouri Bone and Joint Center, alleging personal injury arising from “athletic training services” that defendant provided to plaintiff at its Missouri facility. Defendant moved to dismiss for lack of personal jurisdiction, arguing that its contacts with Illinois were insufficient: it had no facilities and did not transact business there, and owned no property located in the state. Further, defendant argued it was not registered to do business in Illinois, and all its activities took place at its Missouri location.

Responding to the motion to dismiss, plaintiff argued that the court could exercise general jurisdiction over defendant due to its “continuous and systematic general business contacts” in Illinois. Relying on the Zippo sliding scale test [Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997)], plaintiff claimed these contacts arose through defendant’s website which allowed its visitors to make appointments, fill out surveys, and ask questions.

The court initially denied the motion to dismiss, and the case proceeded to trial. After the court awarded a substantial judgment to the plaintiff, the defendant moved for reconsideration of the question of personal jurisdiction. This time the court found that it lacked personal jurisdiction, and it vacated the judgment. Plaintiff sought review with the Appellate Court of Illinois. On appeal, the court affirmed.

The appellate court rejected the Zippo test:

Instead, we find that the web page’s level of interactivity is irrelevant. In reality, an interactive website is similar to telephone or mail communications. A passive website is much the same as advertising on the radio or in a magazine. An ad on the Internet is no different than an ad in any other medium that provides a telephone number or other means to contact a potential defendant. It is mere advertisement or solicitation of business. Illinois courts have long held that a mere advertisement or solicitation is not enough to sustain personal jurisdiction in Illinois.

In this case, the court held that the defendant had done nothing more that advertise and solicit business in Illinois. That conduct, in and of itself, was insufficient to give rise to personal jurisdiction. The court compared the facts of the case to two previous Illinois appellate cases, Pilipauskas v. Yakel, 258 Ill.App.3d 47 (1994), and Excel Energy Co. v. Pittman, 239 Ill.App.3d 160 (1992) to support its holding. The nature and quality of the acts occurring in Illlinois were insubstantial. The plaintiff had chosen to contact the defendant, and had chosen to travel to Missouri for treatment. Accordingly, the court held that exercising jurisdiction over the defendant “would not be fair, just, or reasonable.”

eBay auction not enough to confer personal jurisdiction

Great Notions, Inc. v. Danyeur, No. 06-656, 2007 WL 944407 (N.D. Tex. March 28, 2007)

Courts faced with the question of personal jurisdiction involving eBay transactions have consistently held that the typical online auction process, in and of itself, is insufficient to confer specific personal jurisdiction over an out-of-state defendant. The recent case of Great Notions, Inc. v. Danyeur, No. 06-656, 2007 WL 944407 (N.D. Tex. March 28, 2007) does not deviate from that trend.

Plaintiff sued an Arkansas defendant for copyright infringement and unfair competition. The defendant was accused of counterfeiting and selling plaintiff’s designs through his online account with eBay. There were no allegations that the eBay auction process was altered or circumvented in any way.

Defendant moved to dismiss for lack of personal jurisdiction. The court granted the motion, dismissing the case without prejudice.

Because the Texas long-arm statute confers jurisdiction to the limits of the federal constitution, the court concerned itself only with the federal due process inquiry. That question involved an analysis of (1) whether the defendant had minimum contacts with Texas resulting from an affirmative act on his part such that he could reasonably anticipate being haled into a Texas court, and (2) whether the exercise of jurisdiction would comport with traditional notions of fair play and substantial justice.

The court needed only to consider the first element, namely, whether there were minimum contacts with Texas. It held that conducting a straightforward eBay auction was insufficient to confer specific jurisdiction. The facts of this case could be distinguished from another Northern District of Texas case by the name of McGuire v. Lavoie, No. 03-161, 2003 WL 23174356 (N.D. Tx. Aug 19, 2003), in which personal jurisdiction was found where the eBay seller ended the auction prematurely and entered into a traditional sales relationship through a series of transactions with a known buyer.

For a recent eBay personal jurisdiction case with a different result, read about last year’s decision by the Eastern District of Michigan in the case of Dedvukaj v. Maloney.

Michigan federal court exercises personal jurisdiction over out-of-state eBay seller

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

A drop-down menu and a few sales create personal jurisdiction over nonresident website operator

Many of the cases that deal with personal jurisdiction arising from online activity are of limited instructional value, because the defendant often has contacts with the forum state in addition to the contacts made through the Internet. The cases are usually fact-specific, and it is sometimes difficult to distill principles that may apply to other situations where a plaintiff claims that a court should exercise personal jurisdiction over a nonresident party because of something that party did online.

The recent decision in the case of Qwest Comm. Int’l. v. Sonny Corp., however, provides some useful guidance on the question of Internet jurisdiction, because the facts are relatively simple. The defendant has a website through which products are sold, and indeed has fulfilled the orders of at least three customers living in the state where the action was filed.

Telecom giant Qwest sued family-owned Sonny Corporation in federal court in the state of Washington. From its facility in Michigan, Sonny sells educational plush toys called “Qwesties” through the website Qwest alleged, among other things, that Sonny’s use of the name “Qwesty” in connection with toys dilutes the famous Qwest trademark.

Sonny moved to dismiss for lack of personal jurisdiction. The court denied the motion, holding that Sonny purposefully availed itself to the privilege of conducting activity in the state of Washington.

The Qwesty website is simple in its layout and operation. It is not unlike thousands of other small business e-commerce websites. A visitor merely chooses a product for purchase, and, in the process of completing the transaction, selects from a drop-down menu the state to which the product should be shipped. Every state, including Washington, is listed as a choice in this drop-down menu.

Determining that it could exercise personal jurisdiction over the out-of-state defendant, the court applied both the Zippo “sliding scale” test (derived from Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp 1119 (W.D. Pa. 1997)) and the “effects doctrine” of Calder v. Jones, 465 U.S. 783 (1984). Citing to Rio Props. v. Rio Int’l Interlink, 284 F.3d 1007 (9th Cir. 2002), the court held that “[g]enerally, operating at least a passive website, in conjunction with ‘something more’ that demonstrates that the defendant directed activity toward the forum state, is sufficient to confer jurisdiction.”

The court concluded that Sonny’s website is sufficiently interactive under the Zippo test because it is used to “advertise, sell and ship [the] product[s] into customers’ Washington homes.” In holding that Sonny’s conduct satisfied the “effects doctrine,” the court emphasized that sales efforts are “expressly aimed at Washington in that the website lists Washington as an available shipping location and Defendant intentionally ship[s] its product into this state.” Furthermore, that conduct has allegedly caused harm in Washington.

One is left to wonder whether the holding would have been different had Sonny omitted the drop-down menu that included Washington state as a choice. If it were up to the Internet user to manually type in his or her home state, would that render the consumers as the ones doing the “express aiming” and not Sonny? Should a website owner only pre-populate its form fields with the names of states in which it is willing to conduct litigation?

Qwest Comm. Int’l, Inc. v. Sonny Corp., (Slip Op.) 2006 WL 1319451 (W.D. Wash., May 15, 2006).

File sharers now have even more to fear

Decision confirms that illegal P2P users can expect to get sued many miles from home.

The United States District Court for the District of Columbia has handed another procedural victory to plaintiff record companies in a copyright infringement suit relating to music traded over P2P networks. The court ruled that it had personal jurisdiction over an out-of-state accused file-sharer merely because the defendant offered sound recordings to the public and was able to download recordings made available by others.

Plaintiff record companies filed suit against 35 John Doe defendants, identifying those defendants by their IP addresses and the songs they were accused of illegally distributing. John Doe #18, who was notified of the suit by his ISP Verizon, asked the court to dismiss the case for lack of personal jurisdiction, arguing that he did not have sufficient contacts with the District of Columbia.

The court denied John Doe #18’s motion to dismiss. For one thing, the motion was premature. “Simply, the parties [could not] formally litigate any aspect of personal jurisdiction until the defendant [had] actually been identified.” Without knowing who the defendant was, the court could not tell whether it had jurisdiction.

As it turns out, the prematurity of the motion was inconsequential. The court held that, anonymous or not, the plaintiffs established that the court had personal jurisdiction over John Doe #18. By simply contracting with Verizon, a “District of Columbia-based ISP,” and using a Verizon facility to trade files, John Doe #18 was “transacting business” in the District, and caused tortious injury in the District.

Further, by simply making files available for download by others through his file-sharing software, and being able to download other files, John Doe #18 “clearly directed tortious activity into the District of Columbia.”

Finally, citing to the case of Gorman v. Ameritrade Holding Corp., 293 F.3d 506 (D.C.Cir. 2002), and the famous case of Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, (W.D.Pa.1997), the court held that John Doe #18’s computer was “transformed . . . into an interactive Internet site.” This “interactivity” provided the sort of “continuous” and “systematic” contacts with the forum sufficient to support personal jurisdiction over the defendant.

Virgin Records America, Inc. v. Does 1-35, Slip Copy, 2006 WL 1028956 (D.D.C., April 18, 2006).

Accessing out-of-state server provides basis for personal jurisdiction

Case presents atypical internet jurisdiction fact pattern.

Fact patterns dealing with personal jurisdiction arising from conduct on the Internet typically have the information service provider as the defendant, with the plaintiff as one who accessed that information. In a recent case from the U.S. District Court for the Northern District of Texas, however, that typical fact pattern is reversed.

Plaintiff Flowserve filed a lawsuit in a federal court against defendant Drago, a Missouri resident with no physical presence in Texas. Drago was accused of unlawfully accessing data and email servers located in Texas. Through this access, Flowserve alleged, Draco misappropriated confidential information with which he set up a competing enterprise.

In denying the defendant’s motion to dismiss for lack of personal jurisdiction, the court held that despite the lack of physical presence in Texas, Draco’s activities in accessing the server located in Texas contributed to the sufficient minimum contacts with the state to satisfy the International Shoe requirements. The court further determined that the exercise of personal jurisdiction comported with traditional notions of fair play and substantial justice.

Flowserve Corp. v. Midwest Pipe Repair, LLC, (Slip Op.) 2006 WL 265521 (N.D. Tex., February 3, 2006).

Hotel reservation website gave rise to personal jurisdiction in California

The California Supreme Court has weighed in on the perennial Internet law issue of when a defendant is subject to personal jurisdiction in another state based on the activities of its website. In the case of Snowney v. Harrah’s Entertainment, Inc. et al., decided on June 6, 2005, the court determined that the out-of-state defendants’ website was sufficient to establish personal jurisdiction in California.

Plaintiff Snowney filed a class action lawsuit in California against a group of defendants who owned and operated hotels in Nevada. Snowney complained that the defendants had, without providing proper notice, charged a $3 energy surcharge to each person who made a hotel reservation. None of the defendants conducted business in California or had bank accounts there. Among their many marketing activities, however, the defendants maintained a website through which visitors could obtain room quotes and make reservations. Moreover, the website “touted the proximity of the hotels to California” and provided driving directions from California.

The defendants had claimed that the California courts could not exercise personal jurisdiction over them, and the trial court agreed, quashing the summons. The appellate court, however, reversed the trial court and the matter went to the California Supreme Court which held that the defendants’ website, especially in conjunction with the defendants’ other marketing activities, was sufficient to give rise to personal jurisdiction.

The court found that the website “specifically targeted residents of California.” It further observed that the defendant had conceded that many of its patrons came from California, and that some of those patrons had made reservations using the website. Through these activities, the defendants had “purposefully availed themselves to the privilege of conducting business in California via the Internet.”

Snowney v. Harrah’s Entertainment, Inc., 2005 WL 1324094 (Cal., June 6, 2005).

No dog-gone jurisdiction over New Jersey resident

Paws With a Cause, Inc., a Michigan non-profit corporation, sued Paws For a Cause, LLC, a New Jersey entity, for trademark infringement in federal court in Michigan. Plaintiff operates the website, while defendant operates The defendant moved to dismiss under Fed. R. Civ. P. 12(b)(2), citing a lack of personal jurisdiction.

The defendant explained that it had “never ever conducted business of any type with anyone from the State of Michigan.” The plaintiff, however, claimed that it suffered a tortious injury in Michigan from the defendant’s operation of the website with a confusingly similar domain name. The plaintiff also argued that the defendant had caused injury in Michigan by maintaining an unauthorized link from its website to the plaintiff’s website. Finally, the plaintiff argued that it suffered injury resulting from the defendant’s “telephonic threat to pursue a criminal investigation unless plaintiff withdrew its complaint.”

The court rejected the plaintiff’s arguments. It held that even if the potential confusion caused by the similarities in the parties’ names caused some sort of tortious injury in Michigan, the defendant’s contacts with Michigan were too attenuated to satisfy due process. As for the threat of criminal prosecution, the court noted that although it lacked diplomacy, it “was not totally unjustified.” In any event, the threat couldn’t give rise to personal jurisdiction, as the plaintiff’s claims did not arise from the communication.

Paws With a Cause, Inc. v. Paws For a Cause, LLC, 2005 WL 1118114 (W.D.Mich., May 11, 2005).

Listing in web directory not enough for personal jurisdiction

Plaintiff Kalk, a resident of Delaware, filed suit in federal court in Delaware against his former employer, Fairfield Language Technologies, who has its principal place of business in Virginia. The dispute arose out of Kalk’s employment by Fairfield in the state of Florida.

Fairfield moved to dismiss the complaint for lack of personal jurisdiction. The court granted the motion. Fairfield argued that it did not transact business in Delaware or own property there, nor had it purposefully availed itself to the privilege of conducting activities in Delaware.

The only evidence Kalk submitted regarding Fairfield’s contacts with Delaware was evidence of a link to and description of Fairfield’s website on the Delaware Immigration Directory’s website. This evidence was not persuasive. The court found that Kalk adduced no evidence that Fairfield sought to be listed on the website. Thus, the court held that Kalk’s evidence was insufficient to show purposeful availment.

Kalk v. Fairfield Language Technologies 2005 WL 945715 (D.Del., April 22, 2005).

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