Personal Jurisdiction and the Internet: Applying Old Principles to a “New” Medium
The Internet presents a new arena in which to apply old legal standards. Since its inception in the early 1990s, the Internet has allowed lawyers and judges to examine well-established principles in an age of rapidly changing technology. Most businesses with any level of sophistication now have the ability to reach people online in other states, either through e-mail or a website. Even sole proprietorships and small businesses can advertise their services on the Internet to reach a large number of potential customers. Accordingly, it has become increasingly important for attorneys to advise their clients on whether their online activities can subject them to personal jurisdiction in another state. Law firms also need to be concerned with their own online advertising and activities. The Internet has birthed difficult new issues in an old area of law: personal jurisdiction.
The law is well settled that in order for a state court to subject a nonresident defendant to an in personam judgment, due process requires the nonresident defendant to have made sufficient minimum contacts with the forum state, so that maintenance of the suit does not offend traditional notions of fair play and substantial justice.1 In particular, the nonresident defendant must have purposefully availed itself of the privilege of conducting business in the forum state, so that it could reasonably anticipate being hauled into court there.2
The first major case on Internet contacts and personal jurisdiction was heard by the Sixth Circuit Court of Appeals in 1996, and the number of cases since then has increased rapidly. Most of the federal circuits have ruled on this issue, although the 11th Circuit has not yet had the opportunity to hear such a case. Three general categories of Internet contacts have emerged from the case law: passive, interactive, and commercial. These categories represent a sliding scale that is directly proportionate to the nature and quality of the commercial activity that a nonresident defendant conducts over the Internet. See, e.g., Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997).
Categories of Internet Contacts
• Passive. “Passive” contacts exist where the defendant simply posts information on an Internet website that is accessible to users in a foreign jurisdiction. Passive contacts include registering a domain name, publishing a website, and posting a message on an electronic bulletin board. A passive Internet contact “does little more than make information available to those who are interested in it.”3 The courts have almost uniformly agreed that passive contacts are insufficient to establish personal jurisdiction, and that “something more” is necessary.4 For example, an additional non-Internet contact, such as the listing of a toll-free telephone number on the website, may be sufficient to establish jurisdiction.5
• Commercial. On the other end of the spectrum, “commercial” contacts exist when a defendant conducts business transactions over the Internet. The exercise of personal jurisdiction over a nonresident defendant is usually warranted if the defendant conducts a “direct commercial transaction with users in the forum district.”6 Often the commercial contact is accompanied by additional, non-Internet commercial contacts with the forum state. However, some courts have refused to exercise jurisdiction in cases with only commercial Internet contacts.7
• Interactive. Between the passive and commercial ends lies a murky area of “interactive” online contacts. Internet contacts are interactive when a user can exchange information with another Internet user through e-mail, online forms, file transfers, and the like. The courts are split as to whether jurisdiction can be exercised in interactive cases. Generally, courts look to the level of interactivity and the commercial nature of the exchange of information that occurs to determine if the interactive contacts are sufficient to establish jurisdiction.8
Application of Calder v. Jones
In attempting to anchor themselves to established Supreme Court precedent, many courts have found guidance in Calder v. Jones, 465 U.S. 783 (1984). In this case the Supreme Court found personal jurisdiction was appropriately exercised in California over a writer and editor of The National Enquirer publication in a defamation suit brought by actress Shirley Jones, even though the defendants resided in Florida. The publication was distributed nationally, with a substantial circulation in California. Moreover, Jones lived and worked in California. As such, California was the “focal point of the story and of the harm suffered,” so jurisdiction over Florida defendants was “proper in California based on the ‘effects’ of their Florida conduct in California.”9
The Calder decision was applied to the Internet context in a recent California case, Pavlovich v. Superior Court of Santa Clara Co. & DVD-CCA, 109 Cal. Rptr. 2d 909 (Cal. Ct. App. 2001). This case involved DeCSS, a type of illegal software that decrypts the content scrambling system in DVDs that prevents copying. Pavlovich was an engineering student at Purdue University who posted DeCSS on the Internet. Much as the tabloid article in Calder was directed to residents in California, the court found that Pavlovich’s actions in posting DeCSS had a direct effect on the movie and computing industry, which was largely located in California. Accordingly, the California court held that personal jurisdiction was proper.
However, in Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997), the Ninth Circuit applied Calder to reach a different conclusion. In Cybersell, the court found that a Florida company’s website did not reflect an intent to direct their efforts toward residents of the state of Arizona. Rather, the website could be viewed only by persons with access to the Internet who happened to browse across the site or locate it using a search engine. In essence, the website was no more expressly directed toward Arizona than it was toward any other state or country. Additionally, unlike The National Enquirer, the Florida company could not estimate how many Arizona visitors it had so as to determine the effects in that state. See Calder, 465 U.S. at 789–790. Thus, jurisdiction was not established in Arizona over the Florida company.
Views from Florida Courts
For the most part, the federal courts in Florida have adopted the framework established in Zippo. See Nida Corp. v. Nida, 118 F. Supp. 2d 1223, 1229–1230 (M.D. Fla. 2000); JB Oxford Holdings, Inc. v. Net Trade, Inc., 76 F. Supp. 2d 1363, 1367 (S.D. Fla. 1999). In Nida, personal jurisdiction was established over a Connecticut corporation in a trademark infringement action, where it maintained a website accessible by Florida residents (among other activities). In discussing the Internet contacts, the court stated that “[a]ctive Internet solicitation may subject a defendant to personal jurisdiction,” and then applied both Zippo and the underlying principles of Calder. Nida, 118 F. Supp. 2d at 1230. Given the number of other non-Internet contacts, the court did not decide conclusively whether the website alone provided sufficient contacts.
In Net Trade, the court declined to exercise jurisdiction over a brokerage company that had three interactive websites accessible to Florida residents and a toll-free telephone number listed on websites. The court rejected the line of Internet jurisdiction cases led by Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D. Conn. 1996), and instead adopted the rationale of the Zippo decision, requiring more than the mere presence of a website.10 The court found that Net Trade had not purposefully availed itself of the privilege of doing business in Florida, nor could it have reasonably anticipated being hauled into court in Florida, where its websites were directed at 17 other states in which it was registered to do business. At the time, Net Trade prohibited the sale of its services to Florida residents because it was not yet registered in Florida. Moreover, the court stated that the fact that the website was interactive (visitors could e-mail questions, download trading demonstrations, and receive free information about day trading) was an important factor but was not itself determinative.11 Thus, this case suggests reluctance by Florida district courts to exercise jurisdiction even when passive contacts are coupled with interactive contacts.
The case of Kim v. Keenan, 71 F. Supp. 2d 1228 (M.D. Fla. 1999), provides an interesting scenario for attorneys, as it involved a law firm’s website. The court found personal jurisdiction was established over Georgia attorneys who contracted with a Florida resident and Florida co-counsel to bring an action against the State of Georgia. In the opinion, the court examined whether the Georgia attorneys’ website provided additional support for personal jurisdiction. The website appeared to actively solicit clients outside of Georgia, as it included a statement: “We would like to hear about your case. Please take the time to fill out the following form and one of our attorneys will review your material and respond quickly.”12 In addition to an interactive form, the website also featured the firm’s toll-free telephone number and a statement that the firm handled cases in over 40 states. In dicta, the court recognized authorities reinforcing active Internet solicitation as a means of establishing personal jurisdiction, suggesting that the Internet contacts in this case could subject the law firm to jurisdiction in Florida. However, the court ultimately dismissed the argument because the plaintiffs had failed to show that the website existed (and what information was online at the time) during the relevant period. In addition to the difficulty of applying old principles to a new technology, this case also illustrates the particular difficulty of proof that parties may encounter when litigating Internet cases. The constantly changing nature of the World Wide Web requires litigants to prove, in retrospect, what content a particular website featured at some point in the past.
To date, no published Florida state court opinion has dealt with this issue in detail. However, from the dicta of state court opinions, it appears that Florida courts are reluctant to find Internet contacts—whether passive, interactive, or even commercial to some extent—sufficient on their own to establish jurisdiction. For example, in Pres-Kap, Inc. v. System One, Direct Access, Inc., 636 So. 2d 1351 (Fla. 3d DCA 1994), the court found no jurisdiction in Florida over a New York corporation that contracted to use an online airline reservation system that maintained its primary database in Florida, even though users of the system were solicited, engaged, and entirely within Florida. The decision includes discussion on the “far-reaching implications” of holding otherwise:
Across the nation, in every state, customers of “on-line” computer information networks have contractual arrangements with out-of-state supplier companies. . . . Lawyers, journalists, teachers, physicians, courts, universities and business people throughout the country daily conduct various types of computer-assisted research over telephone lines linked to supplier databases located in other states. Based on the trial court’s decision below, users of such “on-line” services could be hauled into court in the state in which supplier’s billing office and database happen to be located. . . . Such a result, in our view, is wildly beyond the reasonable expectations of such computer-information users, and, accordingly, the result offends traditional notions of fair play and substantial justice.
Id. at 1353.
Similarly, a dissenting opinion in Travel Opportunities of Ft. Lauderdale, Inc. v. Walter Karl List Mgmt., Inc., 726 So. 2d 313, (Fla. 4th DCA 1998), indicates an unwillingness to apply old standards to the Internet, absent legislative input on the matter. In Travel Opportunities, the majority found that broadcasting “infomercials” on cable television channels was a substantial activity within the state and supplied sufficient minimum contacts for personal jurisdiction. The dissenting opinion expressed concern that such a holding could have unwarranted application to the Internet:
The wonders of modern technology allow all manner of communication within Florida from places very far away. . . . [I]f television advertisers are amenable to suit, so too probably are Internet users whose websites prove attractive to Floridians. . . . The amenability to suit does not rest on shifting judicial construction of statutory provisions drafted when such media marvels were only a dream. If Florida is to assert judicial jurisdiction over any person who employs the miracles of modern electronic communication to reach viewers in Florida, I think the authority for the assertion of such jurisdiction must come from the legislature. . . . I do not think that out-of-state commercials on Florida cable television systems amounts to the purposeful availing of Florida’s business opportunities as required in the Supreme Court decisions, any more than advertising on the part of the Internet accessible in Florida would be.
Id. at 317.
It is only a matter of time before the Florida Supreme Court, the 11th Circuit, and the U.S. Supreme Court render opinions on Internet contacts and personal jurisdiction. Given the unique ability of the Internet to cross not only state lines but also international borders, it will be necessary for the courts of this nation to adopt a uniform framework. In the meantime, it is both necessary and fascinating to observe the efforts of the state and federal courts in Florida as they grapple with applying textbook civil procedure principles to the “new” medium of the Internet.
1 See Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); International Shoe Co. v. Washington, 326 U.S. 310 (1945); Venetian Salami Co. v. Parthenais, 554 So. 2d 499, 500 (Fla. 1989).
2 See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); Venetian Salami, 554 So. 2d at 500.
3 Zippo, 952 F. Supp. at 1124.
4 Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 418 (9th Cir. 1997).
5 See Inset Sys., Inc. v. Instruction Set, Inc., 937 F. Supp. 161, 164–165 (D. Conn. 1996). Other cases on passive Internet contacts include GTE New Media Serv. Inc. v. BellSouth Corp., 199 F.3d 1343 (D.C. Cir. 2000); Mink v. AAAA Development LLC, 190 F.3d 333 (5th Cir. 1999); Graphic Controls v. Utah Medic. Prod., 149 F.3d 1382 (Fed. Cir. 1998); Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998); Hornell Brewing v. Rosebud Sioux Tribal Court, 133 F.3d 1087 (8th Cir. 1998); Bensunsan Rest. Corp. v. King, 126 F.3d 25 (2d Cir. 1997); CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996); Edberg v. Neogen Corp., 17 F. Supp. 2d 104 (D. Conn. 1998); Park Inns Int’l, Inc. v. Pacific Plaza Hotels, Inc., 5 F. Supp. 2d 762 (D. Ariz. 1998); Clipp Designs, Inc. v. Tag Bags, Inc., 996 F. Supp. 766 (N.D. Ill. 1998); Quality Solutions, Inc. v. Zupanc, 993 F. Supp. 621 (N.D. Ohio 1997); Mallinckrodt Medic., Inc. v. Sonus Pharmaceuticals, Inc., 989 F. Supp. 265 (D.D.C. 1998).
6 GTE New Media Serv. Inc. v. Ameritech Corp., 21 F. Supp. 2d 27, 38 (D.D.C. 1998).
7 See, e.g., E-Data Corp. v. Micropatent Corp., 989 F. Supp. 173 (D. Conn. 1997). Other cases that discuss commercial contacts include Systemation, Inc. v. Engel Industries, Inc. (Fed. Cir. 1999); Patriot Sys., Inc. v. C-Cubed Corp., 21 F. Supp. 2d 1318 (D. Utah 1998); Blumenthal v. Drudge, 992 F. Supp. 44 (D.D.C. 1998); Telco Comm. Group, Inc. v. An Apple a Day, Inc., 977 F. Supp. 404 (E.D. Va. 1997); CD Solutions, Inc. v. Tooker, 965 F. Supp. 17 (N.D. Tex. 1997); Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997); Maritz, Inc. v. Cybergold Inc., 947 F. Supp. 1328 (E.D. Mo. 1996).
8 See Zippo, 952 F. Supp. at 1124. Other cases that discuss interactive contacts include Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997); CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996); GTE New Media Serv. Inc. v. Ameritech Corp., 21 F. Supp. 2d 27 (D.D.C. 1998); Patriot Sys., Inc. v. C-Cubed Corp., 21 F. Supp. 2d 1318 (D. Utah 1998); Blumenthal v. Drudge, 992 F. Supp. 44 (D.D.C. 1998); Hasbro v. Clue Computing, Inc., 994 F. Supp. 34 (D. Mass. 1997).
9 Calder, 465 U.S. at 789.
10 See Net Trade, 76 F. Supp. 2d at 1367.
11 See id. at 1368.
12 Keenan, 71 F. Supp. 2d at 1234.
Rhoda J. Yen is an associate with the firm of Jones, Foster, Johnston & Stubbs, P.A., West Palm Beach, where she practices employment law and commercial litigation. She received her law degree from Georgetown University Law Center in 1999. Ms. Yen also holds a B.A. in government and politics and a B.A. in mathematics from the University of Maryland. She is a published author of a number of legal articles and an adjunct professor at the Florida Atlantic University Honors College.
This column is submitted on behalf of the Trial Lawyers Section, Thomas P. Scarritt, Jr., chair, and Thomas P. Barber, editor.