Due process and websites: fair play and substantial justice with Internet business.

• Author: Waller, Jeff
• Position: Legal Speak

As more businesses of all sizes use the Internet to expand their markets to out-of-state customers, a local business' website can become the deciding factor in whether the business can be required to defend an out-of-state lawsuit. Advertising and conducting business through a company's website may create sufficient contacts with another state to the extent the business could be required to defend a lawsuit if sued in another state.

While states have various methods to bring an out-of-state defendant into that state's court, which is called exercising jurisdiction over a defendant, those methods are limited by the Due Process requirements in United States Constitution and state constitutions. If Due Process is not satisfied, then normally that court may not exercise jurisdiction over the out-of-state business.

For the purposes of this discussion, Due Process involves what courts call "fair play" and "substantial justice," which is basically whether a business would be surprised if it were called in another state to defend a lawsuit. For example, if an Alaska company has never conducted any business with anyone in Florida, then the Alaska company would be surprised if it had to defend a lawsuit in Florida. Alternatively, if the Alaska company regularly conducted business in Georgia, then it would not be surprised if required to defend a lawsuit in Georgia.

PASSIVE VERSUS ACTIVE

With more and more business being conducted through the Internet, one factor a court examines to determine if it is proper to exercise jurisdiction over an out-of-state business is whether the business has continuous and systematic contacts with the state through the business' website. Courts typically use a sliding scale approach when examining a website. At one end of the scale are passive websites; at the other end are fully interactive websites.

A passive website provides information and does not include a process where products or services can be ordered or purchased over the Internet, and therefore typically does not support exercising jurisdiction over an out-of-state business. A passive website usually provides information about the business and how the business can be contacted by mail or phone. There is no interaction between the customer and the business through the website.

A fully interactive website allows a customer to interact with the business through the Internet just as if the customer were physically present at the business, and therefore typically...