Opinion ID: 2291663
Heading Depth: 1
Heading Rank: 6

Heading: Reasonableness of Jurisdiction in Kentucky

Text: The final prong of the Mohasco test considers whether the defendant's connections to the state are such so as to make jurisdiction reasonable. While Internet commerce is, relatively speaking, a new method of transacting commercial activity, nevertheless, traditional federal due process standards remain applicable to the review process: The [I]nternet, which is a worldwide interconnected computer network, undoubtedly challenges the `territorial-based concepts' that courts have traditionally applied to problems of personal jurisdiction. ... At the same time, it is equally true that traditional constitutional requirements of foreseeability, minimum contacts, purposeful availment, and fundamental fairness must continue to be satisfied before any activity-including [IJnternet activity-can support an exercise of personal jurisdiction. Dagesse v. Plant Hotel N.V., 113 F.Supp.2d 211, 221-222 (D.N.H.2000); Metcalf v. Lawson, 148 N.H. 35, 802 A.2d 1221, 1225 (2002). In analyzing the significance of Internet contacts, therefore, most courts hold that the constitutionality of a State's exercise of jurisdiction is proportionate to the nature and quality of the commercial activity the defendant conducts over the Internet. Metcalf, 802 A.2d at 1225; Sports Authority Michigan, Inc. v. Justballs, Inc., 97 F.Supp.2d 806, 812-13 (E.D.Mich. 2000). For assistance in analyzing the nature and quality of a defendant's Internet activity, many courts have adopted the framework developed by the federal district court in Zippo, 952 F.Supp. at 1119. This test reads as follows: ... the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. This sliding scale is consistent with well developed personal jurisdiction principles. 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. E.g. CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir.1996). 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 personal jurisdiction. E.g. Bensusan Restaurant Corp. v. King, 937 F.Supp. 295 (S.D.N.Y.1996). 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. E.g. Maritz, Inc. v. Cybergold, Inc., 947 F.Supp. 1328 (E.D.Mo.1996). Zippo, 952 F.Supp. at 1124; see also, e.g., Dagesse, 113 F.Supp.2d at 219-24; Sports Authority Michigan, Inc., 97 F.Supp.2d at 812-14; Metcalf, 802 A.2d at 1226. Upon application of the Zippo test, a typical single eBay transaction occupies the section of the scale where the defendant has simply posted information on a passive Internet website which is accessible to users in foreign jurisdictions and which does little more than make information available to those who are interested. In such cases, it is presumed that there is no jurisdiction over the defendant, and thus application of the Zippo test points in the direction that Kentucky will not have jurisdiction over this transaction. As made clear in Zippo, it bears emphasis that a single listing, as is typical in an eBay sale, is to be distinguished from situations where a dealer maintains an ongoing commercial website. Such a single listing is not part of broader e-commerce activity; the listing temporarily advertises a good for sale and that listing is closed once the item is sold, thereby extinguishing the Internet contact for this transaction within the forum state (and every other forum). Boschetto v. Hansing, 539 F.3d 1011, 1018 (9th Cir.2008). It follows from this 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. Id. (citing Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 419 (9th Cir.1997)); Zippo, 952 F.Supp. at 1124. Accordingly, the maintaining of a large-scale website which is intended to, and does, regularly attract Kentucky business is not at all like the case we address here. Traditional due process principles relating to the formation of a single contract touching upon the forum state likewise point in the direction that jurisdiction in Kentucky is not permissible because of a single eBay sale. Not surprisingly, forum state jurisdiction has been considered in other cases involving a single contract between a resident buyer and a nonresident seller, albeit in other contexts. These cases have resulted in the development of the well-settled point that a single contract touching upon the forum state will not, standing alone, subject the defendant to jurisdiction. Burger King, 471 U.S. at 478, 105 S.Ct. 2174. (If the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum, we believe the answer clearly is that it cannot.). Thus, in the usual case, a single contract with a nonresident, whether buyer or seller, and regardless of their method of interaction, will not justify jurisdiction over the defendant. Tube Turns Div. of Chemetron v. Patterson Co., 562 S.W.2d 99 (Ky. App.1978) (Jurisdiction over a nonresident purchaser is not obtained where the nonresident's only contact within the state was negotiation by telephone and mail culminating in a single transaction). [13] A transaction such as the one between Robey and Hinners falls squarely within this rule. Moreover, as emphasized by the Court of Appeals, a defendant may not be haled into the court of a foreign jurisdiction solely as a result of random, fortuitous, or attenuated contacts, Keeton, 465 U.S. at 774, 104 S.Ct. 1473; World-Wide Volkswagen, 444 U.S. at 299, 100 S.Ct. 559, or because of the unilateral activity of another party or a third person, Helicopteros Nacionales de Colombia, S.A., 466 U.S. at 417, 104 S.Ct. 1868; Burger King, 471 U.S. at 475, 105 S.Ct. 2174. A single eBay sale such as in the present case represents a quintessential example of a random, fortuitous, and attenuated contact. Accordingly, this well-established principle weighs against jurisdiction. In view of the above authorities, we conclude that under traditional principles of federal due process review, in the case of a single contract formed over the Internet and touching upon this Commonwealth, and when the sale is completed and thereafter each party goes his own way, federal due process rules do not permit a resident buyer to summon the nonresident seller into this Commonwealth to litigate the transaction. [14] Our conclusion is supported by decisions from other jurisdictions which have reached a similar result under comparable facts, and is the majority view. See, e.g., Boschetto v. Hansing, 539 F.3d 1011, 1017 (9th Cir.2008) (purchase by California plaintiff of vehicle through eBay from Wisconsin sellers did not permit jurisdiction of defendants because 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 and was insufficient to have created a substantial connection with California because it was a one-shot affair.); Sayeedi v. Walser, 15 Misc.3d 621, 835 N.Y.S.2d 840 (N.Y.Civ.Ct.2007) (No evidence was provided by plaintiff as to defendant's overall eBay statistics, experience, or any marketing directed at potential customers, designed to welcome bids from New Yorkers or any other acts that indicate defendant may be purposely availing himself specifically to the business of New Yorkers or any desire to take advantage of New York law.); Karstetter v. Voss, 184 S.W.3d 396, 405 (Tex.App.2006) (Action in Texas to enforce a Kansas judgment-There was no evidence that Appellees traveled to Kansas or engaged in other transactions with appellant or other Kansas residents either through the eBay service or otherwise); Metcalf, 802 A.2d at 1227 (The isolated nature of this transaction and the absence of any evidence that the defendant was a commercial seller militate against a finding of jurisdiction.); Choice Auto Brokers, Inc. v. Dawson, 274 S.W.3d 172 (Tex.App.2008) (In action brought by Texas buyer against Florida-based Internet automobile dealer, held that dealer's potential liability for sale did not arise from nor was it related to an activity conducted within Texas, and therefore dealer did not have minimum contacts necessary to support exercise of personal jurisdiction.) As pointed out by Hinners, there are cases holding the other way in Internet transaction cases. See, for example, Dedvukaj v. Moloney, 447 F.Supp.2d 813, 820 (E.D.Mich.2006) (When a commercial transaction formed over and through the Internet does not meet a buyer's expectations, sellers should not be surprised that they might be called upon to respond in a legal forum in the buyer's home state); First Tennessee Nat. Corp. v. Horizon Nat. Bank, 225 F.Supp.2d 816, 820-21 (W.D.Tenn.2002) (holding limited personal jurisdiction in Tennessee existed over a Kansas bank, where the bank's website stated that it was approved to lend in All 50 States, and permitted United States residents to obtain mortgage loans, obtain expert loan advise, and receive daily commentary); Erwin v. Piscitello, 627 F.Supp.2d 855 (E.D.Tenn.2007) (Exercise of personal jurisdiction over Texas seller on Tennessee buyer's claims for breach of contract and misrepresentation of condition of automobile sold though eBay comported with federal due process.). Nevertheless, upon review of such cases, we find them to be either factually distinguishable or based upon less persuasive analysis than the countervailing cases upon which we base our conclusion. Accordingly, we conclude that the extension of long-arm jurisdiction over Robey under the circumstances of this case exceeds the limits of in personam jurisdiction allowed under the Due Process Clause of the federal Constitution.