Although the Internet is a new medium seemingly without boundaries, California courts are likely to limit the reach of the long-arm statute based on the application of the traditional jurisdictional analysis. Recently, the California Court of Appeal tackled the issue of jurisdiction arising from defamatory statements posted on the World Wide Web in Jewish Defense Org. v. Superior Court (Rambam), 72 Cal. App. 4th 1045 (Cal. Ct. App. 1999).
The court, while noting that the law regulating personal jurisdiction based on Internet use is in its infancy, analyzed the issue using both traditional jurisdictional case law to reach the same result. Jurisdiction based on Internet contacts could have implications for other tort claims, such as product liability actions. If a product liability plaintiff sues a defendant in a state where the defendant’s contacts are limited to Internet communication, the courts will still likely analyze jurisdiction under the categories of Internet contacts discussed in JDO. If the defendant in any way targeted the plaintiff’s state as a potential point of sale or use of the product, jurisdiction would likely be established.
Steve Rambam, a non-resident of California, filed a complaint in California for defamation, alleging that Mordechai Levy and his Jewish Defense Organization had posted a Web site in which they labeled Rambam a "government informant," a "dangerous psychopath who tried to kill his mother," a Nazi admirer and an "anti-Semite" who has been known to entrap Jews.
Levy and JDO filed a motion to quash service of the summons or, in the alternative, a motion to stay or dismiss the action as brought in an inconvenient forum because they had virtually no contact with California.
The issue for review was whether California can properly assert jurisdiction over non-resident defendants based on their contracts with several Internet service providers with offices in California when the contracts were to operate possible Web sites from New York.
Levy contended that he had been a resident of New York since 1985. He conducted no commercial activities in California and owned no property in the state. The last time Levy was in California was in 1989 to make a speech.
From 1982 to 1984, Levy had lived in California as an undergraduate student at California State University, Los Angeles. At that time, Levy was associated with the Jewish Defense League, a militant Jewish activist organization. After being "kicked out" (according to the plaintiff) or leaving "voluntarily" (according to the defendant) in 1981, Levy founded the JDO. The JDO held meetings, conducted self-defense education classes, prepared political literature, participated in and conducted demonstrations and wrote articles. When Levy left Los Angeles in 1984, JDO no longer maintained any presence in Los Angeles.
Levy described JDO as an organization dedicated to fighting anti-Semitism that conducts no commercial activities or services anywhere. Its only operation is to disseminate information concerning the status of Jewish affairs, including a Web site that is available to anyone in the world with Internet access. The site is "passive," in that JDO does not seek to attract readers to the site and does not capture or receive any information from those who visit the site.
To set up the Web site, JDO contracted with Network Solutions Inc., which established JDO’s domain names. While Network Solutions had offices in Virginia, JDO’s negotiations and activities with Network Solutions were conducted in New York.
After Rambam filed the lawsuit against Levy and the JDO, defamatory information similar to that on the JDO Web site appeared on several "mirror" Web pages served by providers Xoom Inc., Geocities Inc. and Whowhere? Inc., all of which are located in California. Rambam alleged, but Levy denied, that these mirror sites were established by JDO.
After granting a continuance so that the plaintiff could conduct more discovery on the issue, the trial court denied the motion to quash with no explanation.
The Court of Appeal inferred from the trial court’s ruling that it had rejected the claim of general jurisdiction and, therefore, framed the issue as whether specific jurisdiction was established based on the location of the Internet servers in California. Using a traditional jurisdictional analysis for defamation cases, the court held that there was an "insufficient basis to conclude that California is Mr. Rambam’s principal place of business, or that the alleged defamation was targeted at California or would cause the brunt of the harm in California."
However, the court then approached the issue using recent Internet case law. The exercise of jurisdiction in these cases is determined by examining the level of interactivity and the commercial nature of the exchange of information that occurs on the Web site. Zippo Mfg. Co. v. Zippo Dot Com Inc., 952 F. Supp. 1119 (W.D. Pa. 1997).
The court first held that the registration of a domain name and the posting and operation of 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. As in traditional jurisdictional analysis, the creation of a Web site, like placing a product into the stream of commerce, may be felt nationwide — or even worldwide — but, without more, is not an act purposefully directed toward the forum state. Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996).
The court pointed to a Florida appellate case entitled Pres-Kap Inc. v. System One Direct Access Inc., 636 So. 2d 1351 (Fl. App. 1994), where a state appeals court refused to exercise jurisdiction over a consumer of an online airline ticketing service. Pres-Kap involved a contract dispute in a Florida court by a Delaware corporation against its New York customer. In Pres-Kap, the contract at issue was solicited, negotiated, executed and serviced in New York, while the defendant’s only contact with Florida consisted of logging onto the computer located in Florida and mailing its bills to Florida.
The Florida court found that when a consumer logs onto a server in a foreign jurisdiction, he is engaged in a fundamentally different type of contract than an entity that is using the Internet to sell or market products or services to residents of foreign jurisdictions.
The Pres-Kap court raised concerns that users of online services could be haled into court in the state in which the supplier’s billing office and database happen to be located, even if such users, as here, are solicited, engaged and serviced entirely instate by the supplier’s local representatives. The court held that such a result "is wildly beyond the reasonable expectations of such computer-information users and, accordingly, the result offends traditional notions of fair play and substantial justice."
Other jurisdictions have established three categories of Internet contacts that govern jurisdiction: doing business over the Internet, operating interactive Web sites and operating passive Web sites. Under the first type of conduct, when the defendant clearly does business over the Internet, including entering into contacts and knowing and repeated transmission of computer files, personal jurisdiction is established.
Under the second type of conduct, when a user can exchange information with the host computer, the court looks at the level of interactivity and the commercial nature of the exchange of information occurring on the Web site to determine whether jurisdiction is proper. The third type of conduct involves the posting of information of advertisements on a Web site. This "passive" conduct does not confer personal jurisdiction. Blackburn v. Walker Oriental Rug Galleries Inc., 999 F. Supp. 636 (E.D. Pa. 1998).
A recent case in the U.S. District Court for the Northern District of Texas, in analyzing jurisdiction under the "interactive" category, stated that although the defendant’s Web site had a moderate level of interactivity, there was no evidence to establish that the defendant had been interacting with anyone in Texas, and it was disputed that the defendant had made no sales in Texas. The court held that despite the Web site’s interactivity, personal jurisdiction should not be premised on the mere possibility that a defendant may be able to do business with Texans over its Web site. Origin Instruments Corp. v. Adaptive Computer Sys. Inc., 1999 WL 76794 (N.D. Texas Feb. 3, 1999).
In the JDO case, the court considered the jurisdiction question under the "passive" conduct analysis and held that the defendants were "mere" customers of Internet service providers who happen to maintain offices or databases in California. The service providers were engaged by JDO from its computer in New York. This was insufficient to satisfy the "purposeful availment" requirement for specific jurisdiction.