Consumer use of the Internet to make airline and hotel
reservations has risen dramatically in recent years. While
consumers remain cautious, travel shopping on the Web is
increasing. Besides the threat of replacing travel agents, the
Internet may expose foreign hotels and other travel suppliers to
greater risk of being hailed before U.S. courts to answer lawsuits
brought by aggrieved and injured travelers.
By Thomas A.
Dickerson|October 04, 2002 at 12:00 AM
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Consumer use of the Internet to make airline and hotel reservations has risen dramatically in recent years. While consumers remain cautious about the reliability of information, the prospect of hidden fees, and insecure credit card transactions, travel shopping on the Web is increasing, particularly as hotels and air carriers offer exclusive fares with 24-hour accessibility and retailers, such as Priceline.com, continue to develop creative ways to sell travel services. At the same time the Internet threatens to destabilize the existing retail distribution system by replacing travel agents. Unlimited and unlicensed access to the Internet threatens consumers by exposing them to complex travel scams and boiler room operators. And, lastly, the marketing of travel services on the Internet may expose foreign hotels and other travel suppliers to greater risk of being hailed before U.S. courts to answer lawsuits brought by aggrieved and injured travelers. PERSONAL JURISDICTION In adjudicating an injured traveler’s claim against a foreign hotel, the court must have jurisdiction over the subject matter as well as personal jurisdiction over the parties. Traditionally, personal jurisdiction has depended upon physical presence in the forum. For example, if a foreign hotel or air carrier conducted business through an agent, a wholly owned subsidiary, a parent corporation or joint venturer, or maintained an office, a bank account and a local telephone number, then jurisdiction would, generally, be appropriate. The rationale being that in return for the privilege of doing business in the forum, a foreign hotel or other travel supplier should be available to answer claims brought by injured travelers. In the absence of physical presence, however, the assertion of personal jurisdiction is more problematic. For example, instead of maintaining an office in the forum, a foreign hotel or other travel supplier may conduct business through an agent, independent contractor, travel agent or tour operator. Under these circumstances personal jurisdiction has been found if there was active solicitation of business plus contract formation in the forum. This concept, known as the “solicitation-plus” doctrine, is still followed with some exceptions by most U.S. courts. LONG-ARM JURISDICTION Most states have enacted statutes providing for personal jurisdiction based upon certain minimal contacts. For example, New York’s long-arm statute provides for personal jurisdiction over a non-resident if “in person or through an agent” he “transacts any business within the state” or “commits a tortious act within the state” as long as the particular cause of action asserted is one “arising from” any of such acts. A modern jurisdictional analysis should consider the extent to which a defendant purposefully avails itself of the privilege of conducting business in the forum, that the claim must arise out of defendant’s forum-related activities and the exercise of jurisdiction must be reasonable. What is reasonable may depend upon the extent of purposeful interjection, the burden on the defendant to defend in the chosen forum, the extent of the conflict with the sovereignty of the defendant’s state, the forum state’s interest in the dispute, the most efficient forum for judicial resolution of the dispute, the importance of the chosen forum to the plaintiff’s interest in convenient and effective relief, and the existence of an alternate forum. JURISDICTION AND THE WEB The extent to which a Web site confers personal jurisdiction in a forum in which the site is accessible to the general public and/or to customers has recently been addressed by several courts. A useful jurisdictional analysis appears in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., [FOOTNOTE 1]a trademark infringement action brought by the manufacturer of Zippo lighters against a computer news service using the domain name “zippo.com.” In Zippo, the defendant was a California-based news service with an interactive Web site through which it exchanged information with Pennsylvania residents “in hopes of using that information for commercial gain later.” The defendant had entered into news service contracts with 3,000 Pennsylvania residents and seven “contracts with Internet access providers to furnish services to their customers in Pennsylvania.” Since it was defendant’s “conscious choice to conduct business (in Pennsylvania )” the court asserted personal jurisdiction based upon the following analysis: 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 where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site. PASSIVE WEB SITES If a foreign hotel or other travel supplier maintains an informational Web site accessible to the general public but which cannot be used for making reservations then most courts would find it unreasonable to assert personal jurisdiction. For example, in Weber v. Jolly Hotels, [FOOTNOTE 2]a New Jersey resident purchased a tour packaged by a Massachusetts travel agent, not an exclusive selling agent, which featured accommodations at a Sicilian hotel owned by an Italian corporation, Itajolly Compagnia Italiana Dei Jolly Hotels. Jolly Hotels conducted no business in New Jersey but had a subsidiary that owned a New York City hotel that could make reservations at all of its hotels. The plaintiff sustained injuries at defendant’s Sicilian hotel and brought suit against Jolly Hotels in New Jersey. Jolly Hotels maintained a Web site accessible in New Jersey that provided “photographs of hotel rooms, descriptions of hotel facilities, information about numbers of rooms and telephone numbers.” But the site could not be used to make reservations at any Jolly Hotels. Finding the site to be passive in nature, the court dismissed the complaint for a lack of personal jurisdiction but transferred the case to New York because defendant’s subsidiary’s New York City hotel could make reservations at all Jolly Hotels. INTERACTIVE WEB SITES If the Web site provides information, e-mail communication, describes the goods or services offered, downloads a printed order form or allows online sales with the use of a credit card and sales are, in fact, made in this manner in the forum, then most courts would find the assertion of personal jurisdiction reasonable. In Brown v. Grand Hotel Eden-A Summit Hotel, [FOOTNOTE 3]a case in which a guest was injured at a Swiss hotel the services of which were marketed through a joint reservation Web site, the court found that “Hotel Eden’s presence on the Summit Hotels website, which also permits reservations to be confirmed automatically supports our finding that Hotel Eden is ‘doing business’ in the State of New York.” An interesting twist to this analysis is when a forum selection clause is contained in a reservation form. For example, in Decker v. Circus Circus Hotel, [FOOTNOTE 4]New Jersey consumers made reservations at a Nevada hotel using an interactive Web site. The reservation form appearing on the computer screen contained a forum selection clause informing guests that should they wish to commence a lawsuit against the hotel it could only be brought in Nevada. In Decker, the court decided to enforce the Nevada forum selection clause. The court also found that the combination of an interactive Web site with a forum selection clause negates any intent of being haled into a local courtroom. Forum selection clauses typically appear in travel or passenger contracts used by cruise lines, hotels and tour operators as a means of discouraging consumer litigation by requiring that lawsuits to be brought in a forum far distant from the consumer’s home. This usually increases the costs of litigation, thus chilling the injured traveler’s enthusiasm to pursue his or her claim. CONCLUSION The Internet may have changed the way courts decide what types of business contacts justify the assertion of personal jurisdiction. To establish personal jurisdiction over foreign hotels and other travel suppliers under the traditional solicitation-plus doctrine, it was necessary to find both solicitation of business and the entering into of reservations’ contracts in the forum. Because foreign hotels and other travel suppliers or their reservations’ services entered into contracts at distant locations, the courts, more often than not, found local solicitation of business through travel agents but no contract formation in the forum. This meant that injured travelers were denied a local forum in which to bring a lawsuit against a foreign travel supplier. The Internet may have changed all that. Most courts that have addressed the issue seem to agree that when an interactive Web site is used to take orders and make reservations that contract formation takes place in the consumer’s forum and not at the location of foreign travel supplier’s home computer. Although the courts have applied the solicitation-plus doctrine to Internet marketing they have done so in a manner that may have increased the reach of personal jurisdiction over foreign hotels and other travel suppliers. Thomas A. Dickerson is a Westchester County Court judge in New York and the author of“Travel Law.” ::::FOOTNOTES::::
FN1Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997).
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