Internet Sales To Forum Residents Processed By Forum-Based Payment Processing Service Not Enough To Establish Personal Jurisdiction Over Retailer
On June 7, 2021, Judge Christina A. Snyder of the United States District Court for the Central District of California granted defendant’s motion to dismiss plaintiff’s complaint for lack of personal jurisdiction. Trustee of the Summers Family Trust TA Neak Products Buff WA Pty, Ltd v. National Distribution Warehouse, Inc. d/b/a Teacher's Choice, case no. 2:20-cv-10741-CAS-Ex. Judge Snyder specifically found that plaintiff had not carried its burden to establish purposeful direction targeted at California or a nexus to a forum-related activity.
Plaintiff, a supplier of educational clocks designed to help children learn how to tell time, filed a complaint in California against defendant, a New York corporation with its principal place of business in New York. The complaint alleges that defendant makes and offers for sale, through its website and on Amazon.com, educational clocks that unlawfully copy the designs of plaintiff’s clocks. Plaintiff’s claims against defendant include trademark and trade dress infringement, design patent infringement, and common law unfair competition and tortious interference with prospective economic advantage.
Defendant moved to dismiss the suit under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and on other grounds.
California’s long-arm statute is co-extensive with federal standards, so Judge Snyder proceeded by analyzing whether plaintiff had provided sufficient facts to support an exercise of general or specific jurisdiction comporting with federal constitutional due process.
Judge Snyder first concluded that the Court could not exercise general jurisdiction over defendant because defendant cannot fairly be regarded as “at home” in California. Rather, defendant is a New York corporation with its principal place of business in New York, is not licensed to do business in California, and does not maintain any office in California. There was also no evidence suggesting that defendant engaged in continuous and systematic general business contacts in California.
Judge Snyder next analyzed whether the court could exercise specific jurisdiction over defendant. Under the first prong of the specific jurisdiction analysis, plaintiff must establish that defendant either purposefully availed itself of the privilege of conducting activities in the forum, or purposefully directed its activities toward the forum, the latter requirement generally being applied in tort cases. The second and third prongs require that the claim arise out of or result from the defendant’s forum-related activities, and that the exercise of jurisdiction be reasonable.
Because plaintiff asserted claims for infringement, unfair competition, and tortious interference, each of which is a tort-like cause of action, Judge Snyder applied the “purposeful direction” test. To establish purposeful direction in the Ninth Circuit, the defendant must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.
Plaintiff contended that purposeful direction was established by defendant’s interactive website through which consumers are offered the opportunity to purchase and pay for the accused products. Plaintiffs specifically alleged that, through its website, defendant has placed accused products into the stream of commerce with the intent that Internet users, including those from California, would purchase them, and that defendant has accepted orders and shipped accused products directly to the residence of known California residents.
Courts in the Ninth Circuit consider the “level of interactivity and commercial nature of the exchange of information” in determining whether the operation of a website supports the exercise of personal jurisdiction. Applying this standard, Judge Snyder observed that plaintiff did not put forward any actual evidence demonstrating that defendant has ever targeted advertising or sales through its website directly at California residents, or that any California resident has in fact purchased goods from defendant’s website. To the contrary, plaintiff put forward only a group of exhibits that demonstrate that defendant maintains an interactive website that offers certain products for sale.
Plaintiff also argued that the inclusion of a Google Pay payment option on defendant’s website further supports an exercise of specific jurisdiction on the grounds that Google, LLC, a California company, has a substantial involvement in defendant’s internet-based operation. Judge Snyder found this argument unavailing for the same reasons that not every seller on eBay.com, a website operated by a California company, is subject to personal jurisdiction in California.
Based on the foregoing, Judge Snyder concluded that plaintiff had not made an adequate showing that defendant purposely directed its activities towards California, and granted defendant’s motion to dismiss for lack personal jurisdiction.