1-1 Discussion: Jurisdiction and Venue in Cyberspace
JBRADDEN
NewMicrosoftWordDocument3.docxHISTORY AND DEVELOPMENT OF THE INTERNET
The history of the Internet can be traced back to a military research network established in 1968 called the Arpanet, which was sponsored by the Advanced Research Projects Agency (ARPA) of the U.S. Department of Defense.2 The original purpose of ARPA was to connect government computers across the country to exchange information during wartime without interruption.3 In 1962, J.C.R. Licklider wrote about his Intergalactic Network concept, where everyone on the globe is interconnected and can access programs and data at any site from anywhere. Licklider became the first head of the computer research program at ARPA, which he called the Information Processing Techniques Office (IPTO).4
The Internet was later used by the private sector for exchanging research between universities. Now the Internet is a complex series of interconnected computer networks that communicate via telephone lines, fiber optics, copper wires, satellite transmissions, and other dedicated data connections. The Internet has grown exponentially to the ubiquitous and ever-present mass medium it is today. Over one billion people worldwide and 79 percent of adults in the United States now use the Internet.5
INTRODUCTION TO CYBERLAW
Black’s Law Dictionary defines “cyberlaw” as “the field of law dealing with the Internet, encompassing cases, statutes, regulations, and disputes that affect people and businesses interacting through computers.”6 With the ever-expanding role of the Internet and technology in people’s lives, cyberlaw is at the heart of many legal and policy issues today, including jurisdictional questions, intellectual property rights, tort actions, privacy rights, e-commerce, cybercrimes, and online speech. Since the Internet is a fluid and dynamic medium, cyberlaw is a field of law that changes rapidly and it is important to stay current with recent trends.
Who controls the Internet? No single government or organization controls the Internet. The global nature of the Internet creates insurmountable challenges in having a general governmental regulatory body regulate it. This difficulty comes in part from the nature of the Internet itself. Unlike a television or radio broadcasts localized in a particular jurisdiction, the Internet has a global reach. Courts, government agencies, and other entities all have some function in governing the Internet. This book will focus on laws within the United States, but a number of international issues exist with governing the Internet. Without a central body in place to regulate a borderless medium like the Internet, the result is a complex system of laws governing a variety of different legal issues such as jurisdictional questions, intellectual property law, contract law, tort law, and numerous federal and state statutes.
Because so many laws govern the Internet, compliance can be a challenge for many companies. Heather Killen, former Yahoo! senior vice president of international operations, stated this challenge best when she said “It is very difficult to do business if you have to wake up every day and say ‘Okay, whose laws do I follow?’ . . . We have many countries and many laws and just one Internet.”7
JURISDICTION IN CYBERSPACE
One of the first questions in any case or controversy that involves the Internet is whether or not a particular court has jurisdiction to determine a certain case. Jurisdiction is a court’s power to decide a particular case. There are several different types of jurisdiction, including subject matter jurisdiction, in rem jurisdiction, and rsonal jurisdiction. Many of the contested cases involving e-commerce and online transactions involve questions of personal jurisdiction.
Black’s Law Dictionary defines subject matter jurisdiction as “jurisdiction over the nature of the case and the type of relief sought; the extent to which a court can rule on the conduct of persons or the status of things.” In essence, subject matter jurisdiction is the authority of a particular court to hear a certain type of case. For example, the U.S. courts or federal courts have exclusive subject matter jurisdiction over patent infringement cases. If a plaintiff files a patent infringement case in state court, the case will likely be transferred to federal court or dismissed. Similarly, U.S. Bankruptcy Courts have exclusive jurisdiction over bankruptcy petitions. State courts have exclusive subject matter jurisdiction over other matters such as family law.
In rem jurisdiction involves jurisdiction over a particular thing or property. In rem jurisdiction claims are most often found in probate and land title cases.
Personal jurisdiction is a court’s power to bring a person into its adjudicative process; jurisdiction over a defendant’s personal rights, rather than merely over property interests. Personal jurisdiction is also called in personam jurisdiction, jurisdiction in personam, jurisdiction of the person, or jurisdiction over the person.
The rise of the Internet has led courts to examine personal jurisdiction doctrines. Courts faced with the application of new technologies, including the Internet, to personal jurisdiction issues have used traditional analysis of personal jurisdiction to these new communication tools.
In International Shoe Co. v. Washington, 326 U.S. 310 (1945), the U.S. Supreme Court established “minimum contacts” as the basic jurisdictional test in the United States for establishing personal jurisdiction. In International Shoe, the Supreme Court held that a state could exercise personal jurisdiction over a defendant if the defendant had minimum contacts with the state and it was fair for the defendant to defend the lawsuit there. In Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008) (Case 1.1), the U.S. Court
CASE 1.1
The Case of the Lemon 1964 Ford Galaxie Sold on eBay
Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008)
This appeal presents a question that remains surprisingly unanswered by the circuit courts: Does the sale of an item via the eBay Internet auction site provide sufficient “minimum contacts” to support personal jurisdiction over a nonresident defendant in the buyer’s forum state? Plaintiff- Appellant Paul Boschetto (“Boschetto”) was the winning bidder for a 1964 Ford Galaxie sold on eBay by the Defendant-Appellee, Jeffrey Hansing (“Hansing”) for $34,106. Boschetto arranged for the car to be shipped from Wisconsin to California, but upon arrival it failed to meet his expectations or the advertised description. Boschetto sued in federal court; his complaint was dismissed for lack of personal jurisdiction. We now affirm.
All Defendants moved to dismiss based on lack of personal jurisdiction. On July 13, 2006, the district court granted the motion. The district court reasoned that the lone jurisdictionally relevant contact with California, an eBay sale consummated with a California purchaser, was insufficient to establish jurisdiction over any of the Defendants. Although Hansing used eBay to market the automobile, the district court observed that “eBay acted not as a ‘distribution center’ but rather as a virtual forum for the exchange of goods,” and that in a standard eBay transaction—like the one at issue in this appeal—the item goes to whomever is the highest bidder, and so “the eBay seller does not purposefully avail himself of the privilege of doing business in a forum state absent some additional conduct directed at the forum state.”
II Personal Jurisdiction
When no federal statute governs personal jurisdiction, the district court applies the law of the forum state. California’s long-arm statute is co-extensive with federal standards, so a federal court may exercise personal jurisdiction if doing so comports with federal constitutional due process. “For a court to exercise personal jurisdiction over a nonresident defendant, that defendant must have at least ‘minimum contacts’ with the relevant forum such that the exercise of jurisdiction ‘does not offend traditional notions of fair play and substantial justice.’” Schwarzenegger, 374 F.3d at 801 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). There are two forms of personal jurisdiction that a forum state may exercise over a nonres- ident defendant-general jurisdiction and specific jurisdiction. We deal here only with the latter.
A. The district court correctly dismissed Boschetto’s complaint for lack of personal jurisdiction. We apply a three-part test to determine whether the exercise of specific jurisdiction over a
nonresident defendant is appropriate:
1. The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
2. the claim must be one which arises out of or relates to the defendant’s forum- related activities; and
3. theexerciseofjurisdictionmustcomportwithfairplayandsubstantialjustice,i.e.itmust be reasonable.
For part one of this three-part test, we have typically analyzed cases that sound primarily in contract-as Boschetto’s case does-under a “purposeful availment” standard. To have purposefully availed itself of the privilege of doing business in the forum, a defendant must have “performed some type of affirmative conduct which allows or promotes the transaction of business within the forum state.” Sher, 911 F.2d at 1362 (internal quotation marks and citation omitted).
Here, Boschetto fails at step one of the test for specific jurisdiction, as the lone transaction for the sale of one item does not establish that the Defendants purposefully availed themselves of the privilege of doing business in California. The arrangement between Boschetto and Hansing which is, at bottom, a contract for the sale of a good, is insufficient to have created a substantial connection with California. Hansing did not create any ongoing obligations with Boschetto in California; once the car was sold the parties were to go their separate ways.
In Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 419 (9th Cir.1997), we discussed with approval a sliding scale analysis that looks to how interactive an Internet website is for purposes of determining its jurisdictional effect. (“In sum, the common thread, well stated by the district court in Zippo, is that the ‘likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of the commercial activity that an entity conducts over the Internet.’”) (quoting Zippo Mfg. Co. v. Zippo Dot Com, 952 F.Supp. 1119, 1124 (W.D.Pa.1997)). The plaintiff in Cybersell relied on the fact that the defendant operated a website, accessible in the forum state, that contained allegedly infringing trademarks. 130 F.3d at 416. The defendant’s website advertised its services but did not allow parties to transact business via the site. Id. at 419. Noting the lack of interactivity on the defendant’s website, the court concluded that the defendant had “done no act and [ ] consummated no transaction, nor has it performed any act by which it purposefully availed itself of the privilege of conducting activities, in Arizona, thereby invoking the benefits and protections of Arizona law.” Id.
This was a one-time contract for the sale of a good that involved the forum state only because that is where the purchaser happened to reside, but otherwise created no “substantial connection” or ongoing obligations there. Where eBay is used as a means for establishing regular business with a remote forum such that a finding of personal jurisdiction comports with “traditional notions of fair play and substantial justice,” International Shoe Co., 326 U.S. at 316, 66 S.Ct. 154, then a defendant’s use of eBay may be properly taken into account for purposes of establishing personal jurisdiction. But on the facts of this case—a one-time transaction—the use of eBay as the conduit for that transaction does not have any dispositive effect on jurisdiction.
se Questions
1. In opposition to a defendant’s motion to dismiss for lack of personal jurisdiction, which party bears the burden of establishing that jurisdiction is proper?
2. According to the holding of the U.S. Supreme Court in International Shoe Co. v. Washington cited in Boschetto v. Hansing, what level of contacts are needed to exercise personal jurisdiction over a nonresident defendant?
3. What is the three-part test used by the U.S. Court of Appeals for the Ninth Circuit (a federal appeals court) in Boschetto v. Hansing to determine whether the exercise of specific jurisdiction over a nonresident defendant is appropriate?
4. Do you agree with the court’s holding that the seller was not subject to specific personal jurisdiction? Why or why not?
of Appeals for the Ninth Circuit, a federal appeals court, applied the minimum contacts test set forth in International Shoe and dismissed a California lawsuit brought by a California-based plaintiff who purchased an automobile on eBay from a private Wisconsin-based seller because the Wisconsin seller defendant did not have sufficient minimum contacts with the State of California based on the eBay sale to a California purchaser.
LONG-ARM STATUTES AND DUE PROCESS
Each state has a long-arm statute that allows a state court to exercise jurisdiction over a particular defendant. For example, the Minnesota long-arm statute permits Minnesota courts to assert personal jurisdiction over defendants to the extent permitted by the federal constitution.8 To determine whether a court may exercise jurisdiction over a nonresident defendant, a court determines whether jurisdiction in the forum state satisfies the federal requirements of due process. (See Figure 1.1.)
Finding the Long-Arm Statute in a Particular State
A paralegal, legal assistant, or other professional may need to locate the long-arm statute in a particular state. Usually the text of the long-arm statute will not expressly include the phrase “long-arm” but rather use the language similar to the Minnesota statute in Figure 1.1 that states “exercise personal jurisdiction over any foreign corporation or any nonresident individual.” To find the long-arm statute in a particular state, one option is to run a search in state cases for “long-arm” and find the relevant statute cited in the judicial opinion. Another option is to search for the phrase “jurisdiction over nonresident” in either a natural language search or a terms and connectors search. On Westlaw, searching with the West Key Number 106k12(2), which relates to long-arm jurisdiction, can be helpful. Westlaw (whose main competitor is Lexis-Nexis) is a popular fee-based online legal research service used by many judges, lawyers, and paralegals. West’s Key Number System is a comprehensive and widely used indexing system for caselaw materials to assist in legal research. (See Figure 1.2.)
Constitutional Protections of Due Process
