Opinion
No. 4:99CV3169.
January 28, 2000.
MEMORANDUM AND ORDER ON THE DEFENDANT'S MOTION TO DISMISS
The defendant Trojan Battery Company has filed a motion to dismiss for lack of personal jurisdiction, filing 9, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. In particular, the defendant argues in its motion that the plaintiffs are not able to demonstrate that it had systematic and continuous contacts with the forum state, Nebraska, to support jurisdiction. For the following reasons, I shall grant the motion.
Analysis
A federal court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution. See Minnesota Mining Mfg. Co. v. Nippon Carbide Indus. Co., Inc., 63 F.3d 694, 696-97 (8th Cir. 1995). Because Nebraska's long-arm statute has been interpreted to extend to the limits of due process, I only need to determine whether subjecting the defendant to suit in Nebraska would be consistent with the Due Process Clause of the Fourteenth Amendment. See Wessels, Arnold Henderson v. National Medical Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995).
The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has purposefully availed himself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend "traditional notions of fair play and substantial justice." See International Shoe Co. v. State of Washington, 326 U.S. 310, 316 (1945). In other words, a nonresident defendant's conduct and connection with the forum state must be such that "[it] should reasonably anticipate being haled into court there." See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
In this circuit, the standard of due process with respect to personal jurisdiction has evolved into a consideration of five factors: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum; (3) the relation of the cause of action to the contacts; and to a lesser degree, (4) the interest of the forum state; and (5) the convenience of the parties. See id. at 1432 (citations omitted). The first three of the factors listed are said to be of primary concern in deciding whether jurisdiction may reasonably be asserted, while the last two are of secondary importance and not determinative. See Land-O-Nod Co. v. Bassett Furniture Indust., Inc., 708 F.2d 1338, 1340 (8th Cir. 1983).
The third factor is crucial as it distinguishes whether the jurisdiction is specific or general. See id. at 1432 n. 4 (citing Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 819 (8th Cir. 1994)). Specific jurisdiction exists when the nonresident defendant's contacts with the forum state arise from, or are directly related to, the cause of action. See id. General jurisdiction, on the other hand, exists when a nonresident defendant's contacts with the forum state are unrelated to the cause of action but are "continuous and systematic." See id. In this case, the plaintiffs do not allege that this court has specific jurisdiction. Indeed, the complaint itself fails to set out a prima facie case of specific jurisdiction, as the plaintiffs do not allege a single contact within the forum state, Nebraska, by the defendant that relates to the causes of action therein. Instead, the plaintiffs allege that this court has general jurisdiction over the defendant. I now turn to this question.
Since general jurisdiction is not related to the events that gave rise to the action, a more stringent minimum contacts test is imposed. As I alluded to above, the test requires that the plaintiffs demonstrate that the defendant's general business contacts with the forum state are "continuous and systematic." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984). The focus is on the degree to which the defendant's general business contacts with the forum state are central to the conduct of its business. Some of the contacts that should be considered in such a determination include "whether the defendant makes sales, solicits or engages in business, serves the state's markets, designates an agent for service of process, holds a license, has employees, or is incorporated there." Dunham By and Trhough Dunham v. Hunt Midwest Entertainment, Inc., 2 Neb. App. 969, 974, 520 N.W.2d 216 (1994) (citation omitted).
Here, the plaintiffs' strongest argument for personal jurisdiction concerns the defendant's Internet site. In particular, the plaintiffs allege that the site solicits Nebraska residents to transact business with the defendant or dealers that sell its product.
The popularity of the World Wide Web is providing courts the opportunity to examine their traditional reaches based on a corporation's computer-based contacts. To date, the case law in this area is limited. Indeed, "[w]ith this global revolution looming on the horizon, the development of the law concerning the permissible scope of personal jurisdiction based on Internet use is in its infant stages." Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1123 (W.D.Pa. 1997). A review of the cases involving the World Wide Web and personal jurisdiction reveals that the courts that have addressed this issue are reaching conflicting results. See Gwenn M. Kalow, From the Internet to Court: Exercising Jurisdiction Over World Wide Web Communications, 65 Fordham L.R. 2241 (1997); David L. Stott, Personal Jurisdiction in Cyberspace: The Constitutional Boundary of Minimum Contacts Limited to a Web Site, 15 J. Marshall J. Computer Info. L. 819 (1997).
. . .
In cases where the courts have conferred jurisdiction, they seem to rely upon facts other than the Web site in making their determination. However, it also appears from the case law that courts are in dispute as to what type of additional activity, other than the Web site, is necessary to avail a defendant of a forum's laws.
Some courts have relied upon contracts between the two parties. For instance, in Digital Equip. Corp. v. Altavista Tech., 960 F. Supp. 456 (D.Mass. 1997), Judge Gertner focused upon the fact that defendant had a licensing agreement with the plaintiff, a Massachusetts corporation, and had made sales to at least three Massachusetts residents in her decision to exercise jurisdiction. Judge Gertner highlighted these additional, non-Web contacts, emphasizing that "[t]here is no issue of parties being haled into courts of a given jurisdiction solely by virtue of a Web-site, without meaningful notice that such an outcome was likely." Id. at 463.
Two other courts relied upon the existence of contracts between the defendants and residents of the forum state for the assertion of jurisdiction. In CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), the Sixth Circuit found that the defendant's contract with the plaintiff, although created and executed electronically, created sufficient contact to satisfy the requirements of personal jurisdiction. The court found that the defendant had indeed "purposefully availed" himself of the privilege of doing business in the forum state when he agreed that forum state law would govern the contract. In addition, defendant exchanged multiple Internet communications with and marketed his product solely through plaintiff's service, located in the forum state.
In Zippo, the defendant used a Web site to advertise and supply applications for its Internet news service. Although the court recognized that defendant's contacts were "almost exclusively over the Internet," it still found them sufficient to allow jurisdiction. With reasoning similar to that in CompuServe, the court noted that by entering into contracts with seven Internet access providers in Pennsylvania (the forum state), and selling passwords to 3,000 forum state residents, Zippo, 952 F. Supp. at 1123, defendant made a conscious choice to conduct business in Pennsylvania, and thus purposefully availed itself of the forum's laws. Id. at 1126.
The existence of a contract touching the forum state has not been found necessary for the assertion of personal jurisdiction in other World Wide Web cases. Instead, courts rely upon different contacts. For example, in EDIAS Software Int'l v. BASIS Int'l Ltd., 947 F. Supp. 413 (D.Ariz. 1996) and Resuscitation Tech., Inc. v. Continental Health Care Corp., 65 USLW 2694, 1997 WL 148567 (S.D.Ind. 1997), the defendants' sustained interactions with the resident plaintiffs satisfied jurisdictional requirements. The defendant in EDIAS, in addition to creating an allegedly defamatory web page, regularly emailed, faxed and phoned the plaintiff. Similarly, in Resuscitation Technologies, although contacts between the parties began over the Internet, the defendant emailed, telephoned, sent regular mail and faxed the plaintiff. Under the circumstances in these two cases, the existence of a Web site is simply another piece of evidence demonstrating the defendants' purposeful availment of other states.
In Panavision Int'l, L.P. v. Toeppen, 938 F. Supp. 616 (C.D.Cal. 1996), when defendant intended to scam the plaintiff and knew that the "effects" of the harm would be felt in the forum state, the court based jurisdiction on a Web site contact alone. The court stated that defendant's actions, anything but "random, fortuitous or attenuated" justified personal jurisdiction. Id. at 621-22 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). In Panavision, the defendant, a "cyber-squatter," had registered for many trademarked domain names, including "eddiebauer.com," "aircanada.com," "camdenyards.com," "frenchopen.com," and "panavision.com." The court found that the defendants' allegedly tortious activities were expressly aimed at the plaintiff and its state, noting that conduct "was intended to, and did, result in harmful effects in California." Panavision, 938 F. Supp. at 622.
A few courts have held that the existence of a World Wide Web site alone is enough to allow for exercise of personal jurisdiction. In Inset Sys., Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D.Conn. 1996), the court concluded that "advertising via the Internet is solicitation of a sufficient repetitive nature" to allow jurisdiction. Id. at 164. The defendant, a nearby Massachusetts corporation, used its Web site and a toll-free number to solicit business from the forum state. In a similar case, a District of Columbia District Court found that a Web page soliciting business, along with a toll-free number, and a local newspaper advertisement provided enough grounds to allow for assertion of jurisdiction. Heroes, Inc. v. Heroes Found., 958 F. Supp. 1 (D.D.C. 1996). The court in Heroes, accusing the defendant of "soft-pedal[ing]" the significance of its Web site, suggested that the existence of a Web site alone would have provided the necessary contact. Id. at 4. In Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328 (E.D.Mo. 1996), the plaintiff claimed, in a trademark infringement case, that the defendant, through its interactive Web site, invited jurisdiction by other states. The court noted that defendant electronically responded "automatically and indiscriminately" to users of the site regardless of their originating location. Id. at 1333. The court agreed that the defendant, by creating a Web site that provided information and solicited business to individuals in other states, subjected itself to cases in other states.
Yet, other cases have not accepted the proposition that the existence of a World Wide Web site automatically confers jurisdiction upon a state. In Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996), a New York plaintiff brought a trademark infringement case against a Missouri jazz club. The defendant's Web site, advertising the night club, was found to be insufficient contact with the forum state to allow jurisdiction. The defendant, although using the Internet for advertising, only intended to reach a local audience. The record contained no evidence of any business from New York. In reaching its conclusion, the court evaluated the Web site in relation to traditional due process factors. Indeed, the court likened the case to Asahi Metal Indus. Co. v. Superior Ct. of Cal., 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987): "Creating a site, like placing a product into the stream of commerce, may be felt nationwide — or even worldwide — but, without more, it is not an act purposefully directed toward the forum state." Bensusan, 937 F. Supp. at 301.
In McDonough v. Fallon McElligott, Inc., 40 U.S.P.Q.2d 1826, 1996 WL 753991, *3 (S.D.Cal. 1996), the court found that the "fact that [defendant] has a Web site used by [forum state residents] cannot establish jurisdiction by itself." The court also rejected the proposition that a World Wide Web site is purposefully directed at a national audience per se. The defendant in McDonough, a Minnesota advertising agency, had clients who sold products to California, but did not do direct business with the state. On that basis, the court granted a motion to dismiss.
Similarly, in Hearst Corp. v. Goldberger, 1997 WL 97097 (S.D.N Y 1997), the court found a lack of personal jurisdiction where a defendant's forum state contacts were limited to a Web site, which allegedly violated trademark law. The Web site advertised future services available in a business the defendant planned to create. In addition, the court discounted defendant's email messages sent to New York in conjunction with the Web site. The court found them analogous to telephone or letter communications, and therefore "not sufficient to establish personal jurisdiction." Id. at *13. The court noted that
Upholding personal jurisdiction over Goldberger in the present case would, in effect, create national (or even worldwide) jurisdiction, so that every plaintiff could sue in plaintiff's home court every out-of-state defendant who established an Internet web site. The Court declines to reach such a far-reaching result in the absence of a Congressional enactment of Internet specific trademark infringement personal jurisdictional legislation.Id. at *20.
[I]n Smith v. Hobby Lobby Stores, 968 F. Supp. 1356 (W.D.Ark. 1997), the court dismissed a case against a Hong Kong defendant who maintained a Web site. The court found that the defendant did not contract to sell any goods or services to any citizens of Arkansas over the Internet, and at most advertisements appear on the Internet. However, such advertising was not directed at the state of Arkansas. As such, the court held that the defendant had insufficient contact with the state to support a lawsuit against them in the state.
Hasbro, Inc. v. Clue Computing, Inc., 994 F. Supp. 34, 39-42 (D.Mass. 1997).
With this in mind, I turn now to analyze the first factor articulated by the Eighth Circuit — the nature and quality of the defendant's contacts with the forum state of Nebraska. The defendant's Internet site is more than a simple advertisement that posts information about its products and services on the web for a national audience. The defendant's site is tailored to the forum state of Nebraska (as well as others, I assume). In fact, it targets the State of Nebraska and its residents who desire its product. In particular, the dealer locator feature of the site is designed to lead a Nebraska resident to the nearest dealer in the state, and there are several. A reasonable conclusion is that the defendant maintained the site for the purpose of, and in anticipation that, Nebraska residents, searching the Internet for sites, would access the defendant's site and locate a local dealer in the state to purchase its products. Therefore, I find that the defendant made a conscious choice to solicit business in Nebraska; the defendant's maintenance of an Internet site that targets the forum state and its residents is of such a quality and nature that it favors the exercise of personal jurisdiction over defendant.
Of course, the defendant's intent to solicit business in Nebraska is not meaningful in the personal jurisdiction context unless its efforts reached, or bore fruit in, the state. To focus on this, I turn to analyze the second factor — the quantity of contacts. As I do so, I am mindful of the more stringent minimum contacts test of general jurisdiction. The defendants contacts do not meet this test. There is no evidence that a single resident of the State of Nebraska accessed the site, or used the site to locate a product. In other words, there is no evidence that the defendant transferred a single file from its site to a Nebraska resident. Thus, I find no basis to conclude that the defendant has had "continuous and systematic" business contacts in the forum state, or that the defendant had reason to anticipate being haled into court in Nebraska based on its Internet activity.
In fact, there is no evidence before me to establish that the defendant has done much of anything in the forum state. For example, there is no evidence that indicates that the defendant is licensed to do business in Nebraska; that it maintains a bank account, phone number, or mailing address in Nebraska; that it owns real or personal property in Nebraska; or that it has a single office, agent or other employee that is subject to process in Nebraska. Moreover, there is no evidence that the defendant makes sales or engages in business in Nebraska, or that the defendant directs the sale of its products to the State of Nebraska. Although there are several retailers in Nebraska that sell the defendant's products, the fact is that the defendant sells its products to independent distributors and original equipment manufacturers, not one of which is located inside the forum state. There is no evidence that the defendant exerts control over the distribution of its products once in the hands of the distributors and original equipment manufacturers. It appears that the distributors and original equipment manufacturers make the decisions about the ultimate distribution of product, not the defendant. At least, there is no evidence before me to suggest otherwise. So, it is up to them whether the defendant's products end up in Nebraska. Without more, the defendant is not subject to the jurisdiction of the state in which its products ends up.
IT IS THEREFORE ORDERED that the defendant's Motion to Dismiss for Lack of Personal Jurisdiction, filing 9, is granted.
JUDGMENT
In accordance with my Memorandum and Order on the Defendant's Motion to Dismiss of today,
IT IS ORDERED that the action is dismissed for want of personal jurisdiction.