X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
On June 26, the U.S. Court of Appeals for the Second Circuit confirmed that a purportedly defamatory statement on a Web site against a New York resident is an inadequate predicate for New York “long-arm” jurisdiction. In Best Van Lines, Inc. v. Walker, 1 the defendant was an Iowa resident and the proprietor of a not-for-profit site that provided information and opinions about household movers. The circuit’s decision in this case and other recent federal and state court decisions interpreting and applying CPLR �302(a), New York’s long-arm statute, in the context of Internet activity have helped to clarify how traditional jurisdictional analysis will be applied to Internet activities. It is well established that New York will not exercise general jurisdiction over a defendant merely because the defendant’s site may be accessed on the Internet by New York residents. 2 Thus, long-arm jurisdiction is the most commonly asserted basis for jurisdiction in New York over out-of-state defendants acting on the Internet. To determine the existence of long-arm jurisdiction under CPLR �302(a)(1), a court must decide (1) whether the defendant “transacts any business” in New York and, if so, (2) whether the cause of action arises from such a business transaction. 3 Courts look to the totality of the defendant’s activities within the state to determine whether a defendant has transacted business in such a way that it constitutes “purposeful activity” satisfying the first part of the test. 4 As for the second part of the test, a suit will be deemed to have arisen out of a party’s activities in New York if there is an articulable nexus, or a substantial relationship, between the claim asserted and the actions that occurred in New York. 5 Best Van Lines involved Tim Walker, the proprietor of MovingScam.com, which he operates in Iowa. The site provides consumer-related comments about household movers in the United States. Walker allegedly posted statements about Best Van Lines (BVL), a New York-based moving company, in the section called “The Black List Report.” Under the heading “Editor’s Comments,” Walker wrote that “as of 8/5/2003 [BVL] was performing interstate moving services without legal authority from the Federal Motor Carrier Safety Administration, and did not carry Cargo insurance as required by law.” He also apparently made similar factual assertions in response to a question about BVL that was posted on the message-board section of the site by a person whose whereabouts were not disclosed. BVL thereafter brought suit against Walker in the U.S. District Court for the Southern District of New York. In its complaint, BVL alleged that the statements about it on the site were false, defamatory, and made with an intention to harm it, and it sought compensatory and punitive damages totaling $1.5 million. Walker argued that �302(a) did not give New York courts jurisdiction over him for purposes of BVL’s lawsuit. 6 The district court agreed with Walker, finding that BVL had failed to allege facts sufficient to show that Walker had transacted business for purposes of �302(a)(1), or that its suit arose from any such transaction, and BVL appealed. On appeal, to support its argument that the district court had jurisdiction over Walker, BVL argued that there were three activities by Walker – his statements about BVL, a New York company, (1) in the Black List Report and (2) in his response to the message board question, and (3) his collection of contributions to support the site – that supported the claim that Walker had purposefully availed himself “of the privilege of conducting activities within” New York. The Second Circuit rejected the claims on the grounds that those Internet activities were not adequate predicate for long-arm jurisdiction under New York law. In reaching this conclusion, the circuit discussed the lengthy history of long-arm jurisdiction and the choice made by the New York Legislature not to extend long-arm jurisdiction in New York to the full extent permitted under constitutional due process. The court thereafter analyzed existing jurisdictional law regarding sites. Although no New York state court had explicitly addressed site defamation as a basis for long-arm jurisdiction, the court cited to several federal district court decisions that concluded that the posting of “defamatory material on a website accessible in New York does not, without more, constitute ‘transacting business’ for the purposes” of CPLR 302(a)(1). 7 The circuit also analyzed the concept of “sliding scale of Internet activity,” which was introduced in the seminal case addressing jurisdiction on the Internet, Zippo Mfg. Co. v. Zippo Dot Com. 8 Zippo Mfg. offered an analytical model that examined the level of interactivity of a site to determine whether jurisdiction was appropriately exercised. For purposes of New York long-arm jurisdiction, the Second Circuit concluded that “a website’s interactivity may be useful for analyzing personal jurisdiction under �302(a)(1) but only insofar as it helps to decide whether the defendant ‘transacts any business’ in New York.” Applying these standards to the case at bar, the circuit found that Walker’s allegedly defamatory statements outside of New York about a New York company did not, without more, provide a basis for jurisdiction, even though the statements were published in media accessible to New York readers. Moreover, the circuit said, the nature of Walker’s comments did not suggest they were purposefully directed to New Yorkers rather than to a nationwide audience. Accordingly, it held that posting the “Black List Report” did not constitute “transact[ing] business” under �302(a)(1). In regard to Walker’s response to a user’s question, the circuit stated that it did not “perceive” why the fact that a statement was in response to a question from someone somewhere else would, alone, make a difference. Prompted or otherwise, it stated, New York courts require more than “the mere utterance of the libelous material,” to constitute “transact[ing] business” under �302(a)(1). Finally, the court rejected BVL’s claim for jurisdiction over Walker due to the site’s use to solicit and accept donations. This feature, the circuit noted, was the most “interactive” on the site. The circuit declared, however, that even if it was enough to render it “transact[ing] any business within the state” under �302(a)(1), BVL’s claim did not “arise from” the site’s acceptance of donations. Since, there was no “articulable nexus, or a substantial relationship” between the donations and the allegedly defamatory conduct, the donations could not serve as a basis for the district court to assert personal jurisdiction over Walker. Other Rulings The Second Circuit’s decision is not the only recent ruling on personal jurisdiction stemming from Internet activity. For example, in January, in Competitive Technologies, Inc. v. Pross, 9 a Supreme Court in Suffolk County ruled that allegedly libelous statements posted on a Yahoo! Internet message board concerning the plaintiff corporation and its officers and directors were insufficient for it to assert personal jurisdiction over a Florida resident and domiciliary. The plaintiffs attempted to rely on the defendant’s alleged business transactions within the state, i.e., purchasing and selling securities using a broker located in New York, coupled with the allegedly libelous statements posted on the Internet, as a basis for long-arm jurisdiction. The court, however, rejected that argument because the allegedly libelous statements in question were not in connection with any business transactions. It said that to exercise personal jurisdiction over a non-resident defendant, “something more than the mere posting of information on a passive web site is required to indicate that the defendant purposefully directed his activities at the forum state.” Then, about one month later, in Sayeedi v. Walser, 10 a New York City Civil Court judge found that a non-resident defendant was not subject to New York jurisdiction on the basis of a single online auction for goods on eBay. In this case, the plaintiff brought suit against a resident of Missouri for breach of contract resulting from the Internet sale of an automobile engine that the plaintiff had purchased on eBay. 11 The defendant had created a username, posted the engine for sale on eBay, and shipped the item to the plaintiff, who was the highest bidder. The court found that this online auction process did not rise to the level of purposeful conduct required to assert specific jurisdiction, joining the majority of courts that have held that the usual online auction process does not rise to the level of purposeful conduct required to assert specific jurisdiction. 12 Jurisdiction Found It should be noted that two courts recently found jurisdiction in Internet-activity cases. In March, in Rubin v. City of New York, 13 the U.S. District Court for the Southern District of New York held that a party’s Internet sales of allegedly trademark-infringing merchandise to consumers in the Southern District provided a sufficient basis for its exercise of long-arm jurisdiction over that party. The court emphasized that that party had transacted business with New York residents over an “active” Web site and customers from New York had purchased allegedly infringing merchandise. Then, on June 28, the Eastern District of New York in New Angle Pet Products, Inc. v. MacWillie’s Golf Products, Inc., 14 held that “interactive” sites operated by a California company provided a sufficient basis for the exercise of long-arm jurisdiction over the defendant. In this case, the defendant’s sites enabled viewers to purchase its products online by providing payment and shipping information and also provided an e-mail address, phone number, and fax number as contact information. The court found that these sites were interactive as they permitted the exchange of information between users in another state and the defendant. Moreover, the defendant conceded that its California facility had filled orders for its products submitted by New York residents generating $8,000 in gross revenue, including two Internet sales consisting of a total of $32.97, and that there was an “articulable nexus” between the plaintiff’s claims of false advertising and the defendant’s online business because the allegedly false advertising was displayed on the defendant’s sites, where the online orders were submitted. Under these circumstances, the court found that the defendant’s Internet sales of its products to consumers in New York provided a sufficient basis for the exercise of long-arm jurisdiction over the defendant pursuant to �302(a)(1). 15 Conclusion As one of the essential elements necessary to evaluate prior to, and at the initial stages of, a lawsuit, personal jurisdiction is a well-known doctrine. The recent cases exploring whether a court can assert personal jurisdiction in cases involving Web activity require applying settled law to modern technological dilemmas. As made clear from the Second Circuit’s ruling in Best Van Lines and the other recent decisions, the nature of a defendant’s Internet activity, including the interactivity of the defendant’s Web site, remains the key issues in determining the likelihood of a court asserting long-arm jurisdiction over a foreign defendant based on online conduct. Shari Claire Lewis, a partner at Rivkin Radler in Uniondale, specializes in litigation in the areas of Internet, domain name, and computer law as well as professional liability and medical device and product liability. She can be reached at [email protected]. Endnotes: 1. 2007 U.S. App. Lexis 15152 (2d Cir. June 26, 2007). 2. Indem. Ins. Co. of N. Am. v. K-Line Am., Inc., 2007 U.S. Dist. Lexis 43567, 24-25 (S.D.N.Y. 2007). 3. See, e.g., Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65 (2006). 4. See, e.g., Sterling Nat’l Bank & Trust Co. of N.Y. v. Fidelity Mortgage Investors, 510 F.2d 870 (2d Cir. 1975). 5. See, e.g., Yanouskiy v. Eldorado Logistics Sys., 2006 U.S. Dist. Lexis 76604 (E.D.N.Y. 2006). 6. CPLR ��302(a)(2) and (3), which permit jurisdiction over tortious acts committed in New York and those committed outside New York that cause injuries in the state, respectively, explicitly exempt causes of action for the tort of defamation from their scope and were not at issue in Best Van Lines. 7. See, Realuyo v. Villa Abrillo, 01 Civ. 10158, 2003 U.S. Dist. Lexis 11529 *20-21 (S.D.N.Y. 2003). 8. 952 F.Supp. 119 (W.D. Pa. 1997). 9. 14 Misc. 3d 1224A (Sup. Ct. Suffolk Co. 2007). 10. 15 Misc. 3d 621 (N.Y.C. Civ. Ct. 2007). 11. �404 of the New York Civil Court Act is New York City’s long-arm statute, modeled after CPLR �302. 12. See, e.g., United Cutlery Corp. v. NFZ, Inc., 2003 U.S. Dist. Lexis 21664 (D. Md. 2003); Machulsky v. Hall, 210 F. Supp. 2d 531 (D.N.J. 2002); Winfield Collection, Ltd. v. McCauley, 105 F. Supp. 2d 746 (E.D. Mich. 2000); cf. Jones v. Munroe, 2 Misc. 3d 24 (2003) (upholding dismissal for failure to meet the requirements of Civil Court Act �404 where Florida resident defendant sold automobile through eBay to plaintiff but automobile was retrieved by plaintiff from Florida rather than shipped to New York). The few courts that have found personal jurisdiction over purely online auction sales have focused primarily on the sophistication of the seller. See, e.g., Dedvukaj v. Maloney, 447 F. Supp. 2d 813 (D. Mich. 2006). 13. 2007 U.S. Dist. Lexis 23003 (S.D.N.Y. March 30, 2007). 14. 2007 U.S. Dist. Lexis 46952 (E.D.N.Y. June 28, 2007). 15. On Aug. 2, 2007, an appellate court in New Jersey, which permits long-arm jurisdiction to be exercised to the fullest extent permitted by due process, found that New Jersey could exercise jurisdiction over a California resident with no contacts in New Jersey who allegedly posted defamatory messages about a New Jersey resident on an online news group. Goldhaber v. Kohlenberg, No. A-5114-05T25114-05T2 (N.J. App. Div.).

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.