Websites and Jurisdiction

• Publication year: 2000
• Pages: 59
• Citation: Vol. 29 No. 11 Pg. 59

29 Colo.Law. 59 Colorado Lawyer 2000.

2000, November, Pg. 59. Websites and Jurisdiction

---

59

Vol. 29, No. 11, Pg. 59

The Colorado Lawyer
November 2000
Vol. 29, No. 11 [Page 59]

Specialty Law Columns
Business Law Newsletter
Websites and Jurisdiction
by Stephen A. Hess

"The World Wide Web or "Web" allows an individual sitting at his computer in New York to visit sites anywhere in the world. Conversely, an individual who maintains a Web site in California can profit in various ways from visits to the site by people in distant places. While millions of people communicate in this way every day, it is doubtful that many of them give any thought to the question of whether their conduct will make them subject to the jurisdiction of a distant court."1

A long-standing client calls his attorney to report that he finally unloaded the last of those pesky bird-eating spiders that sat in the corner of his pet store, quite beyond hope of sale until he discovered the wonders of Internet marketing.2 Thanks to his new Web page, eager buyers from throughout the United States found their way to him. Unfortunately, he was just served with a suit brought by a disgruntled buyer in Bangor, Maine. The client has never set foot east of the Mississippi

Now the attorney must answer, as courts only recently began answering, questions that many business people never thought to ask before conducting business in the cyberworld: When does use of the Internet subject a person to the jurisdiction of courts in foreign states? How can a business tailor its Internet presence so as to minimize its exposure to suit in distant places

Attorneys now have the benefit of several dozen opinions that outline the broad contours of the law in sufficient detail to advise clients, with at least a modicum of confidence concerning the jurisdictional ramifications of a business’s use of the Internet and also have some strategies to minimize a business’s exposure to suit in a foreign jurisdiction. This article summarizes the broad principles governing the exercise of in personam jurisdiction, discusses the application of those principles to cases involving a business’s use of the Internet, and concludes by addressing some of the means by which a business can limit its susceptibility to suit in another jurisdiction.

General Jurisdictional Principles

A court cannot exercise jurisdiction over a resident of another state unless the state’s "long-arm" statute invests the court with jurisdiction, and a long-arm statute can extend a state’s jurisdiction no further than the limits of the due process clause of the Fourteenth Amendment.3 In the words of the court in International Shoe Co. v. Washington, due process permits a court to exercise jurisdiction over a nonresident defendant only if the nonresident has engaged in "minimum contacts with the forum state such that the exercise of jurisdiction over him does not offend traditional notions of fair play and substantial justice."4 A court’s inquiry in this regard will assess whether a nonresident’s contacts are such that the nonresident "should reasonably anticipate being haled into court" in the foreign state. When a person "purposefully avails itself of the privilege of conducting activities within the forum state," the forum’s exercise of jurisdiction is proper.5

The U.S. Supreme Court made it clear in several cases following International Shoe that communications intentionally directed into a state could constitute sufficient "minimum contacts" to satisfy due process, even without the nonresident’s physical presence in the state:

. . . [I]t is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. So long as a commercial actor’s efforts are "purposefully directed" toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.6

A business’s contacts with a state may be so substantial that a court may exercise "general" jurisdiction over the business by entertaining suits that are wholly unrelated to the business’s presence in the state.7 On the other hand, a business’s limited presence in a state may permit it to be sued only when its "minimum contacts" are closely related to the dispute being litigated. In such cases, a court may exercise "specific jurisdiction" over a defendant only when:

First, the defendant must purposefully avail himself of the privilege of acting in the forum state or of causing important consequences in that state. Second, the cause of action must arise from the consequences in the forum state of the defendant’s activities. Finally, the activities of the defendant or the consequences of those activities must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.8

With some exceptions noted below, cases discussing Internet contacts usually arise in the application of specific—rather than general—jurisdiction. In the application of this three-prong test, the first criterion is ordinarily decided by measuring the nature and level of the person’s contacts with the forum state; the second criterion focuses on the relationship between those contacts and the dispute before the court; and the third criterion involves application of a number of pragmatic considerations. Because the third criterion is nearly always satisfied where the first two are satisfied, the focus of most courts’ attention is on the first two criteria.

Jurisdictional Effects Of Internet Sites

One of the earliest and most often-cited cases discussing jurisdiction over Internet business contacts involved a contest over the defendant’s use of the tradename "Zippo."9 In Zippo Mfg. Co. v. Zippo Dot Com, the court was faced with the task of determining whether the propriety of the defendant’s use of "www.zippo.com" as a Web address could be contested in a state in which the defendant did not have typical business contacts. To answer the question, the court surveyed the law and summarized it in what is now called the Zippo sliding scale test:

[T]he likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. This sliding scale is consistent with well developed personal jurisdiction principles. At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites...