In yesterday’s post, I began discussing how and when an ExpertPreneur can be sued in a courts in a state where they don’t live or have an office.
Specifically, I started to write about the concept of “long arm jurisdiction”, allowing courts sitting in other states to assert authority over out of state businesses when they had what were determined to be sufficient contacts with the target state and where the claims arose out of those contacts.
So, in the age of the Internet, what exactly is enough?
Interestingly, cases vary from state to state because the specific wording of a particular state’s statute on the subject and the interpretation of that state’s courts, varies and is often shaded on a case by case basis.
A recent case, interpreting New York’s long arm jurisdiction statute, serves as an example of what is NOT enough – at least in New York.
The case, Best Van Lines, Inc. V. Walker, was a defamation case in which a New York moving company sought to sue an out of state web site owner that posted consumer comments about moving companies for allowing and making allegedly defamatory statements about the company on its website.
The nature of the case is important here because New York’s statute allows long arm jurisdiction when, among other things, the out of state defendant “transacts business” within the state.
Despite claims that the Defendant took specific acts to post and highlight the alleged defamatory statements about the Plaintiff, essentially claiming that the New York Company was carrying on its business without legal compliance and required insured.
Even if defamatory, the New York court held that this was not enough to “transact business” in New York.
And this was true even if people could exchange comments and other information with the website from New York.
What would have been enough?
Other cases point to actual commerce being done through the website, such as the taking and processing of actual orders, so long as the claim is somehow connected to the overall transaction.
For ExpertPreneurs, there are two important lessons.
First, if and when you are sued by an out of state party, one of your first considerations should be to determine that, under the prevailing laws of that state, you are properly under that court’s power.
Second, as a planning tool, keep in mind that the more actual business done from your site, the greater the chances that jurisdiction over you may be found.
