Tag Archives: minimum contacts

Deliberate exploitation of market subjects GoDaddy to personal jurisdiction in Illinois

uBid v. GoDaddy, — F.3d —, 2010 WL 3768075 (7th Cir. September 29, 2010)

uBid sued GoDaddy in federal court in Illinois, alleging cybersquatting. uBid claimed that GoDaddy — an Arizona-based company — intended to profit in bad faith by registering on behalf of its customers certain domain names that were similar to uBid’s trademarks. uBid alleged that GoDaddy would set up parked pages at those domains, displaying sponsored links to sites run by uBid’s competitors.

The district court dismissed the case, finding that the court lacked personal jurisdiction over GoDaddy. uBid sought review with the Seventh Circuit. On appeal, the court reversed, holding that the exercise of personal jurisdiction over GoDaddy would not violate due process.

Contact with the forum state

The court held that GoDaddy’s activities in Illinois were not continuous or systematic enough for the exercise of general jurisdiction. But applying the standards set forth in Keeton v. Hustler, the court found that GoDaddy’s efforts to exploit the Illinois marketplace were done so thoroughly, deliberately and successfully that it would not be unfair for GoDaddy to appear in court in Illinois.

After all, in part through its ads at Wrigley Field, the United Center and Joliet Speedway, not to mention the numerous Super Bowl ads seen in Illinois, GoDaddy had acquired hundreds of thousands of customers in the state.

Relatedness of claims

In finding that GoDaddy’s contacts with Illinois were sufficiently related to the claims in the case, the court similarly looked to the extent and nature of GoDaddy’s advertising and marketing. The court couched the relatedness in terms of a quid pro quo:

[O]ut-of-state residents may avail themselves of the benefits and protections of doing business in a forum state, but they do so in exchange for submitting to jurisdiction in that state for claims arising from or relating to those activities.

In this case, GoDaddy’s connection with Illinois and uBid’s claims made the relatedness quid pro quo “balanced and reasonable.” GoDaddy’s contacts with Illinois alleged in the complaint and the alleged wrongs committed were so “intimately related” that GoDaddy should not have been surprised to find itself sued in Illinois.

Fair play and substantial justice

Finally, the court examined the question of whether the exercise of personal jurisdiction would comport with traditional notions of fair play and substantial justice. Again, the court’s finding relied on the thoroughness with which GoDaddy had exploited the Illinois marketplace.

Race car image courtesy Flickr user Jr 88 Rules under this Creative Commons license.

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Internet transactions support exercise of personal jurisdiction over out of state cigarette seller

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Illinois v. Hemi Group LLC, — F.3d —, 2010 WL 3547647 (7th Cir. September 14, 2010)

Seventh Circuit declines once again to adopt the Zippo test for personal jurisdiction in internet cases.

The State of Illinois filed a civil suit in federal court in Illinois against a New Mexico-based online cigarette seller. The trial court denied the defendant’s motion to dismiss for lack of personal jurisdiction. The defendant sought review with the Seventh Circuit. On appeal, the court affirmed the denial of the motion, holding that the defendant’s website satisfied the minimum contacts requirement for the exercise of personal jurisdiction.

The mechanics of the website were important in the minimum contacts analysis. The site expressly said that the company would sell to consumers in any state except those in New York. The court interpreted this to relate to the personal jurisdiction question in two ways. First, such a statement implicitly said that the defendant would do business in Illinois. Second, it revealed that the defendant knew that it could be subject to the jurisdiction of out-of-state courts (i.e., New York) and also knew how to prevent such an exercise (by not selling there).

In this analysis, the court expressly declined to adopt the well-known Zippo sliding scale test, which evaluates the interactivity of a website in the personal jurisdiction analysis.

Restating a hesitancy “to fashion a special jurisdictional test for Internet-based cases,” the court applied the traditional constitutional approach of the “effects test” found in Calder v. Jones. It made the interesting observation, as it did in Jennings v. AC Hydraulic A/S, that “although technological advances may alter the analysis of personal jurisdiction, those advances may not eviscerate the constitutional limits on a state’s power to exercise jurisdiction over nonresident defendants.”

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