CONSUMER LAW : THE INTERNET AND ITS IMPACT UPON PERSONAL JURISDICTION
March 21, 2000By Judge Thomas A. Dickerson*
Consumer use of the Internet to make travel arrangements has risen dramatically every year 1. The marketing of travel services on the Internet through interactive Web sites may have dramatically changed the basis upon which personal jurisdiction may be asserted over foreign hotels and other travel suppliers in tort cases involving travelers injured abroad.
In adjudicating an injured traveler's claim against a foreign supplier or tour operator 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 hotel2 or air carrier3 conducted business through a wholly owned subsidiary4 or joint venturer5 or maintained an office with a staff, 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 travel supplier or tour operator should be available to answer claims brought by injured travelers.
In the absence of physical presence, however, the assertion of personal jurisdiction is more problematical. For example, instead of maintaining an office in the forum a foreign travel supplier may conduct business through an agent6, independent contractor7, travel agent8 or tour operator9. 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 by most U.S. Courts10 .
Long Arm Jurisdiction
Most States have enacted statutes providing for personal jurisdiction based upon certain minimal contacts11. For example, New York's long arm statute12 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 tortuous act within the state " as long as the particular cause of action asserted is one " arising from " any of such acts. While many Courts13 still follow the solicitation plus doctrine other Courts14 have found solicitation alone to be sufficient to exercise long arm jurisdiction over foreign travel suppliers.
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 defendant's forum related activities and the exercise of jurisdiction must be reasonable15. What is reasonable may depend upon (1) the extent of purposeful interjection, (2) the burden on defendant to defend in the chosen forum, (3) the extent of the conflict with the sovereignty of the defendant's state, (4) the forum state's interest in the dispute, (5) the most efficient forum for judicial resolution of the dispute, (6) the importance of the chosen forum to the plaintiff's interest in convenient and effective relief, and (7) the existence of an alternate forum16.
Jurisdiction And The Internet
The extent to which an Internet web site confers personal jurisdiction in a forum in which the web 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. ,17 a trademark infringement action brought by the manufacturer of " Zippo " lighters against a computer news service using the Internet domain name of " zippo.com ". In Zippo , the defendant was a Californiabased news service with an interactive web site
" through which it exchanges information with Pennsylvania residents in hopes of using that information for commercial gain later "18.The defendant had entered into news service contracts19 with 3,000 Pennsylvania residents and 7
" contracts with Internet access providers to furnish services to their customers in Pennsylvania "20.Since it was defendant's " conscious choice to conduct business ( in Pennsylvania ) 21" 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. 22"
Passive Web Sites
If a foreign travel supplier or tour operator maintains an informational web site accessible to the general public but which can not be used for making reservations then most23, but not all24, Courts would find it unreasonable to assert personal jurisdiction. For example, in Weber v. Jolly Hotels 25 a New Jersey resident purchased a tour packaged by a Massachusetts travel agent, not an exclusive selling agent26, which featured accommodations at a Sicilian hotel owned by an Italian corporation, Itajolly Compagnia Italiana Dei Jolly Hotels[ " Jolly Hotels " ]. Jolly Hotels conducted no business in New Jersey but had a subsidiary which owned a hotel in New York City which 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 which provided "'photographs of hotel rooms, descriptions of hotel facilities, information about numbers of rooms and telephone numbers '". The Web site could not be used to make reservations at any of Jolly Hotels. Finding the Web site to be passive in nature the Court dismissed 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 Hotels27.
Passive Web Sites Plus
However, passive Web sites combined with other business activity, e.g., providing trainees to a company doing business in the forum28, entering into a licensing agreement with a company in the forum and selling to three companies in the forum29, entering into a contract with a company in the forum which contained a forum selection clause and multiple e-mail communications to the forum30, sale of 3,000 passwords to residents in the forum and contracts with 7 service providers with customers in the forum31, e-mail, fax and telephone communications32, e-mail, fax, telephone and regular mail communications33 and 12 sales in the forum and plans to sell more34, may provide a reasonable basis for the assertion of personal jurisdiction over foreign travel suppliers.
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 on-line sales with the use of a credit card and sales are, in fact, made in this manner in the forum then most Courts35) would find the assertion of personal jurisdiction reasonable. However, at least one Court has held that the combination of an interactive web site with a forum selection clause negates any intent of being haled into a local court36.
The Internet Has Expanded Jurisdiction
The Internet has dramatically changed the way in which the Courts decide what types of business contacts justify the assertion of personal jurisdiction. To establish personal jurisdiction over foreign travel suppliers and tour operators 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 travel suppliers or their reservations' services entered into contracts at distant locations, the Courts, invariably, 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. The 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 which has dramatically increased the reach of personal jurisdiction over foreign travel suppliers and tour operators.
* Thomas A. Dickerson is a Judge on the Westchester County Court with a Web Page at http://members.aol.com/judgetad/index.html .Judge Dickerson is the author of Travel Law , Law Journal Press, 1981-2000, updated biannually, approx. 750 pages, Web Page at http://members.aol.com/travellaw/index.html and Class Actions: The Law of 50 States , Law Journal Press, 1988-2000, updated annually, approx. 450 pages, Web Page at http://members.aol.com/class50/index.html and over 170 articles on consumer law, travel law and class actions.
1. See Travel Weekly, August 12, 1999, p. 23.
" Survey reveals user satisfaction with Internet sites is on the rise...NPD Online Research...said 31% of Web users who visited airline sites this year made a booking, up from 21% in 1998. NPD said 28% of visitors to hotel sites booked on line in 1999, compared with 21% last year, and 28% of visitors to car rental sites booked on line, compared with 19% in 1998. "
2. See e.g.,
Second Circuit: Darby v. Compagnie National Air France,735 F. Supp. 555 ( S.D.N.Y. 1990 )( Brazilian hotel where guest drowned subject to New York jurisdiction because of actions of subsidiary in the forum ).
New York: Frummer v. Hilton Hotels International, Inc., 19 N.Y. 2d 933, 281 N.Y.S. 2d 41, 227 N.E. 2d 851 ( 1967 ) ( subsidiary's reservations' service in the forum ).
3. See e.g., Bryant v. Finnish National Airline, 15 N.Y. 2d 426, 260 N.Y.S. 2d 625, 208 N.E. 2d 439 ( 1965).
4. See e.g., Taca Intl. Airlines v. Rolls-Royce of England, 15 N.Y. 2d 97, 256 N.Y.S. 2d 129, 204 N.E. 2d 329 ( 1965 ). Compare: Schenck v. Walt Disney Co., 742 F. Supp. 838 ( S.D.N.Y. 1990 )( Walt Disney World not doing business in New York because of activities of parent company in forum ).
5. See e.g., Rait v. Jacobs Brothers, 49 Misc. 2d 903, 268 N.Y.S. 2d 750 ( 1966 ).
6. See e.g.,
Kentucky: Mohler v. Dorado Wings, Inc., 675 S.W. 2d 404 ( Ky. Ct. App. 1984 ).
New York: Berner v. United Airlines, Inc., 3 N.Y. 2d 1003, 170 N.Y.S. 2d 340, 147 N.E. 2d 732 ( 1957 ).
7. See e.g., Gelfand v. Tanner Motor Tours, Ltd., 385 F. 2d 116 ( 2d Cir. 1987 ); Guile v. Sea Island Co., Inc., 11 Misc. 2d 496, 66 N.Y.S. 2d 467 ( 1946 ), aff'd 272 App. Div. 881, 71 N.Y.S. 2d 911 ( 1947 ).
8. See e.g.,
Third Circuit: Romero v. Argentinas, 1993 WL 416547 ( D.N.J. 1993 ).
Tenth Circuit: Afflerbach v. Cunard Line, Ltd., 11 F. Supp. 2d 1260 ( D. Wyo. 1998 ).
New York: Savoleo v. Couples Hotel, 136 A.D. 2d 692, 524 N.Y.S. 2d 52 ( 1988 ).
9. See e.g.,
Sixth Circuit: Hughes v. Cabanas del Caribe Hotel, 744 F. Supp. 788 ( E.D. Mich. 1990 ).
Seventh Circuit: Wilson v. Humphreys, 916 F. 2d 1239 ( 7th Cir. 1990 ).
10. See e.g.,
First Circuit: Rosich v. Circus & Circus Enterprises, Inc., 1998 WL 234582 ( D.P.R. 1998 )( advertising through travel guide and brochures insufficient contact ); Clark v. Cit of St. Augustine, Florida, 977 F. Supp. 541 ( D. Mass. 1997 )( advertising in forum insufficient contact ); Bennett v. Jack Dennis Whitewater Trips, 1996 WL 277384 ( D. Mass. 1996 )( brochures insufficient contact with forum ).
Second Circuit: Lane v. Vacations Charters, Ltd., 750 F. Supp. 120 ( S.D.N.Y. 1990 )( ads and toll free number insufficient contact with forum ).
Third Circuit: Fields v. Ramada Inn, 816 F. Supp. 1033 ( E.D. Pa. 1993 )( 800 reservations number and brochures insufficient contact with forum ).
Fifth Circuit: Luna v. Compagnie Paramena de Aviacion, 1994 WL 173369 ( S.D. Tex. 1994 )( 800 reservations number and solicitation insufficient contact with forum ).
Sixth Circuit: Denham v. Sampson Investments, 1998 WL 129958 ( E.D. Mich. 1998 )( sending brochures to forum and reserving rooms at hotels insufficient contact with forum ).
Tenth Circuit: Afflerbach v. Cunard Line, Ltd., 14 F. Supp. 2d 1260 ( D. Wyo. 1998 )( national advertising and selling tours through travel agents insufficient contact with forum ).
New York: Sedig v. Okem Mountain, 204 A.D. 2d 709, 612 N.Y.S. 2d 643 ( 1994 )( mere solicitation insufficient contact with forum ).
11. See e.g., Burger King Corp. v. Rudewicz, 471 U.S. 462, 476, 105 S. Ct. 2174, 85 L. Ed. 2d 528 ( 1985 ).
12. New York C.P.L.R. Section 302(a).
13. See N. 10, supra.
14. See e.g.,
First Circuit: Nowak v. Tak How Inc. Ltd., 1995 WL 521874 ( D. Mass. 1995 ).
Sixth Circuit: Raferty v. Blake's Wilderness Outpost Camps, 1997 WL 14795 ( E.D. Mich. 1997 ).
15. See e.g., Shute v. Carnival Cruise Lines, 863 F. 2d 1437, 1440-1441 ( 9th Cir. 1988 ), superceded 897 F. 2d 377 ( 9th Cir. 1990 ), rev'd 499 U.S. 585, 111 S. Ct. 1522, 113 L. Ed. 2d 622 ( 1991 ) ( forum selection clause enforced ).
16. Id. See also: Federal Deposit Ins. Corp. v. British American Insurance Co., Ltd., 838 F. 2d 1439, 1442 ( 9th Cir. 1987 ).
17. Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 ( W.D. Pa. 1997 ). Compare: Millenium Enterprises v. Millenium Music, 49 USPQ2d 1878, 1885 ( Oregon Jan. 4, 1998 )
( " the trend has shifted away from finding jurisdiction based solely on the existence of Web site advertising. Instead, ' something more ' is required to show that the defendant purposefully directed its activities at the forum " ).
18. Id. at 952 F. Supp. 1125.
19. Id. at 952 F. Supp. 1121
( " Dot Com's Web Site contains information about the company, advertisements and an application for its Internet news service...A customer who wants to subscribe..fills out an on-line application ..Payment is made by credit card over the Internet or the telephone. The application is then processed and the subscriber is assigned a password which permits the subscriber to view and/or download Internet news group messages that are stored on the defendant's server in California" ).
20. Id. at 952 F. Supp. 1126.
22. Id. at 952 F. Supp. 1123.
23. See e.g.,
Second Circuit: American Homecare Federation, Inc. v. Paragon Scientific Corp., 1998 WL 790590 ( D. Conn. 1998 )
( " The Website does not list...products which are sold nor does it provide any process for ordering..No sales..occur through the Website and an individual accessing the site cannot order..It does not provide anyone with files to download nor does it link to anyone else's Website ");Edberg v. Neogen Corp., 17 F. Supp. 2d 104 ( D. Conn. 1998 )
( " there is no evidence that any user in Connecticut accessed Neogen's Web site or purchased products based upon the Web site advertisement...Internet users could not order products directly from the Web site...it required them to call an ' 800 ' number in Michigan or write Neogen in Michigan or Kentucky " );Hearst Corp. v. Goldberger, 1997 WL 97097 ( S.D.N.Y. 1997 )( Web site with E-mail contact ); Benusan Restaurant Corp. v. King, 937 F. Supp. 295, 301 ( S.D.N.Y. 1996 ), aff'd 126 F. 3d 25 ( 2d Cir. 1997 ) ( Missouri nightclub's passive web site ).
Third Circuit: Remich v. Manfredy, 1999 WL 257754 ( E.D. Pa. 1999 )( passive web site offering general information and advertising insufficient contact with forum ); Molnlycke Health Care AB v. Dumex Medical Surgical Products Ltd., 1999 WL 695579 ( E.D. Pa. 1999 )( passive website does not confer jurisdiction ).
Fourth Circuit: Esab Group, Inc. v. Centricut, LLC, 1999 WL 27514 ( D.S.C. 1999 )( web page which provides information but requires customer to place an order through an 800 telephone number is insufficient for assertion of personal jurisdiction ).
Fifth Circuit: Broussard v. Deauville Hotel Resorts, Inc., 1999 WL 62152 ( E.D. La. 1999 )( slip and fall in Florida hotel; no long arm jurisdiction based upon passive website ); Mid-City Bowling Lanes & Sports Palace, Inc. v. Ivercrest, Inc., 35 F. Supp. 507 ( E.D. La. 1999 )( no personal jurisdiction based upon passive website ).
Ninth Circuit: Cybersell, Inc. v. Cybersell, Inc., 130 F. 3d 414, 419 ( 9th Cir. 1997 )( " conducted no commercial activity over the Internet in Arizona. All that it did was post an essentially passive home page on the Web " ); McDonough v. Fallon McElligott, Inc., 1996 WL 753991 ( S.D. Cal. 1996 )( " fact that ( defendant ) has a web site used by ( forum state residents ) cannot establish jurisdiction by itself " ).
Tenth Circuit: SF Hotel Company, L.P. v. Energy Investments, Inc., 985 F. Supp. 1032, 1035 ( D. Kan. 1997)
( " Boto's advertisement in a trade publication appears on the Internet. Boto did not contract to sell any goods or services...over the Internet site ").
Eleventh Circuit: JB Oxford Holdings, Inc., 1999 WL 1068444 ( S.D. Fla. 1999 )( web site providing connections to Internet, listing of national toll free telephone number and a pending application to do business in Florida provided insufficient contacts with Florida to permit exercise of personal jurisdiction ).
District of Columbia Circuit: Mallinckrodt Medical, Inc. v. Sonus Pharmaceuticals, Inc., 989 F. Supp. 265, 272 ( D.C.D.C. 1998 )
( " The act of posting a message on an AOL electronic bulletin board-which certain AOL subscribers may or may not choose to access ( is not sufficient for personal jurisdiction ) " ).
California: Jewish Defense Organization, Inc. v. Superior Court, 85 Cal. Rptr. 2d 611 ( Cal. App. 1999 )( defamation action; a passive web site delivering only information insufficient contact with forum for assertion of personal jurisdiction ).
New York: Nationwide Insurance Co. v. Holiday Inn, New York Law Journal, Jan. 27, 2000 ( N.Y. Sup. ); Messelia v. Costa, New York Law Journal, Feb. 14, 2000 ( N.Y. Civ. )( passive web site providing information insufficient for assertion of personal jurisdiction ).
Oregon: Millenium Enterprises v. Millenium Music, 49 USPQ2d 1878 ( Oregon Jan. 4, 1999 ).
24. See e.g.,
Second Circuit: Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161, 164 ( D. Conn. 1996 )( Web site and toll free number; " advertising via the Internet is solicitation of a sufficient repetitive nature " ).
Fourth Circuit: Bochan v. La Fontaine, 1999 WL 343780 ( E.D. Va. 1999 )( posting of libelous messages on the Internet by Texas and New Mexico residents sufficient grounds for the assertion of personal jurisdiction in Virginia where web site was accessed ).
Ninth Circuit: Panavision Int'l, L.P. v. Toeppen, 938 F. Supp. 616 ( C.D. Cal. 1996 )( fraud claims; jurisdiction based upon Web site contact alone ).
District of Columbia Circuit: Heroes, Inc. v. Heroes Found, 958 F. Supp. 1 ( D.C.D.C. 1996 )( Web site, toll free number and local newspaper ad ).
25. Weber v. Jolly Hotels, 977 F. Supp. 327 ( D.N.J. 1997 ).
26. See e.g.,
Third Circuit: Rutherford v. Sherburne Corp., 616 F. Supp. 1456 ( D.N.J. 1985 ).
New Jersey: Van Eeuwen v. Heidelberg Eastern, Inc., 124 N.J. Super. 251, 306 A. 2d 79 ( 1973 ).
27. See N. 2, supra.
28. In Hasbro, Inc. v. Clue Computing, Inc., 994 F. Supp. 34, 38 ( D. Mass. 1997 ) the defendant, a Colorado corporation, maintained a passive Web site.
" The company uses the Web site to advertise its business, including Internet consulting, training, system administration and network design and implementation. On its Web site, Clue states ' Clue will go to any customers site '..those Internet users who view the site can instantly email the company by clicking on the page ".However, the defendant was found to be conducting business in Massachusetts by providing trainees for a company that had a contract with a Massachusetts company ).
29. See Digital Equipment Corp. v. Altavista Tech, 960 F. Supp. 456 ( D. Mass. 1997 ).
30. See Compuserve, Inc. v. Patterson, 89 F. 3d 1257 ( 6th Cir. 1996 ).
31. See Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 ( W.D. Pa. 1997 ).
32. See EDIAS Software Int'l v. BASIS Int'l Ltd., 947 F. Supp. 413 ( D. Ariz. 1996 ).
33. See Resuscitation Tech., Inc. v. Continental Health Care Corp., 1997 WL 148567 ( S.D. Ind. 1997 ).
34. See Gary Scott International, Inc. v. Baroudi, 981 F. Supp. 714 ( D. Mass. 1997 ).
35. See e.g.,
Second Circuit: American Network, Inc. v. Access America/Connect Atlanta, Inc., 975 F. Supp. 494 ( S.D.N.Y. 1997 )( subscriptions for Internet services sold to customers in the forum through contracts entered into on Web site ).
Third Circuit: Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 ( W.D. Pa. 1997 ).
Fourth Circuit: Easb Group, Inc. v. Centricut, LLC, 1999 WL 27514 ( D.S.C. 1999 )( web page which provides information but requires customer to place an order using an 800 telephone number is insufficient to confer jurisdiction ).
Fifth Circuit: Origin Instruments v. Adaptive Computer Systems, 1999 U.S. Dist. LEXIS 1451 ( N.D. Texas 1999 )( no jurisdiction; failure to show sales in forum through interactive Web site ); Thompson v. Handa-Lopez, Inc., 1998 WL 142300 ( W.D. Tex. 1998 )( Californiacorporation subject to personal jurisdiction in Texas based upon entering into contracts to play casino games with Texas citizens ); Mieczkowski v. Masco Corp., 997 F. Supp. 782, 785 ( E.D. Texas 1998 )
( " Web site lists various categories...individuals can view various furniture selections..individual pieces of furniture can be viewed..as well as price information..an order form can be printed..(customers may) check the status of their purchases.. information is available regarding freight costs..communicate directly with ' on-line ' sales representatives " ).
Ninth Circuit: Park Inns International v. Pacific Plaza Hotels, Inc., 5 F. Supp. 2d 762, 764-65 ( D. Ariz. 1998 ) ( interactive Web site accepted seven hotel reservations from customers in the forum ).
District of Columbia Circuit: Blumenthal v. Drudge, 992 F. Supp. 44, 56 ( D.C.D.C. 1998 )
( " The Drudge Report's web site allows browsers..to directly e-mail defendant..thus allowing an exchange of information..browsers who access the website may request subscriptions to the Drudge Report, again by directly e- mailing their requests to Drudge's host computer..the Drudge Report is..sent..to every e-mail address on his subscription list..constant exchange of information and direct communication " ).
Oregon: Millunium Enterprises v. Millenium Music, 49 USPQ2d 1878 ( Oregon, Jan. 4, 1999 ).
36. Third Circuit: Decker v. Circus Circus Hotel, 1999 WL 319056 ( D.N.J. 1999 )( New Jersey consumers sue Nevada hotel; hotel web site allowed guests to make reservations but web site also contained a forum selection clause whereby guests agreed to be sue hotel only in Nevada; forum selection clause enforced ).