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Cyber Squabbles: Where Do You Sue?

Causing an Injury Within the State

An Internet business can be subject to jurisdiction for purposefully causing an injury in the state. If someone uses the Internet to cause an injury in one state, the person causing the damage may be hauled into court in the state where the injury occurred. In cases where the connection between the activity and the injury is not completely clear, courts also look for evidence that the activity was "purposefully directed" at the resident of the forum state or that the person causing the injury had contacts with the state.

 

EXAMPLES

In one case, a New Mexico software company sent defamatory email and made defamatory Web postings about an Arizona company. An Arizona court claimed personal jurisdiction because the defamatory statements were intentionally aimed at an Arizona business and caused an injury (defamation) within the state. EDIAS Software Intern. v. BASIS Intern., Ltd. 947 F. Supp. 412 (D. Ariz. 1996).

In another incident, Matt Drudge of The Drudge Report, a news and gossip website, made allegedly defamatory statements about a Washington, D.C. resident on the Drudge Report website. Although Drudge lives and writes his column in California, a court ruled that he was subject to personal jurisdiction in the District of Columbia because the injury occurred in the District of Columbia and Drudge had the following contacts with the state: Drudge personally emailed his column to a list of District of Columbia email addresses; Drudge solicited contributions and collected money from District of Columbia residents; Drudge traveled to the District of Columbia twice to promote his column; and D.C. residents systematically supplied Drudge with the fodder for his business -- news and gossip. Blumenthal v. Drudge, 992 F. Supp. 44 (D. DC 1998).

"Gotcha" Jurisdiction

A court can obtain personal jurisdiction over an out-of-state defendant who visits the state provided that, during the visit, the defendant is properly served with a summons and complaint (the documents that provide notice of the lawsuit). Also known as "gotcha" jurisdiction, this method of acquiring personal jurisdiction is somewhat similar to playing tag.

 

EXAMPLE

Sam, a Nevada disc jockey who operates a rock memorabilia site, defrauded Alice, a resident of Buffalo, New York. She learns that Sam is visiting New York City for an Internet convention, so she hires a process server who hands Sam the summons and complaint while he is standing at his sales booth at the convention.

Consent

A court can obtain personal jurisdiction if both parties consent to it. For example, a defendant may consent to the court's jurisdiction by filing a response to the lawsuit with that court. As a condition of incorporating or doing business in the state, a company is often required to consent, in advance, to personal jurisdiction in the state and to provide the secretary of state with an agent to accept service of process.

Along these same lines, you may grant consent by signing a contract that has a provision requiring you to agree in advance to the personal jurisdiction of a state. For example, a California website developer may sign an agreement with a New York company that contains a clause stating: "The parties consent to the exclusive jurisdiction of the federal and state courts located in Nassau County, New York, in any action arising out of or relating to this agreement. The parties waive any other venue to which either party might be entitled by domicile or otherwise." Just two states -- Montana and Idaho -- refuse to recognize such clauses.

You might unknowingly grant such consent to jurisdiction when transacting business at a website or when purchasing software. Many sites and software manufacturers insert jurisdiction provisions in a "click-through" or "click-wrap" agreement -- the terms that a customer accepts by clicking "I accept" or "I agree" when placing an order or installing software.

What If a Cyberspace Merchant Sues You?

The rule that you can be sued in a remote state if you have certain minimum contacts with it applies to a shopper or Web user just as it does for businesses. But courts have ruled that if your only contact with an out-of-state online catalog company is an occasional purchase, that by itself is not enough to permit the catalog company to drag you to the distant state's court. For example, a company based in Florida operated an airline reservation website. When a New York user defaulted on an airline ticket purchase, the company sued the user in Florida. A court ruled that the user's only contact with Florida was this one electronic purchase, which was not enough to establish personal jurisdiction in Florida. In short, if the Florida company wanted to sue the New York resident, they would have to do it in New York. Pres-Kap, Inc.v. Sys. One, Direct Access, 636 So.2d 1351 (Fla. App. 1994), review denied, 645 So.2d 455 (Fla. Sup. Ct. 1994).

Copyright 2007 Nolo

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