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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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