Does your business have customers in multiple states? Does it operate a website? If the answer to either of these questions is yes, then you should consider whether your business operations could subject you to the jurisdiction of states other than where your business is based.
Have you wondered if you could be sued in another state just because someone in that state was using your website? The question of when and how a party’s actions on the Internet subject it to suit in a different state has largely been left to individual state and federal courts, with jurisdictions making their own rules. Recently, the Nebraska Court of Appeals encountered this issue and ruled that the “interactivity” of a specific website must be analyzed to determine whether a company can be sued in Nebraska based solely on its Internet activity.
In Wheelbarger vs. Detroit Diesel ECM, LLCthe Nebraska Court of Appeals applied the widely used method Zippo “sliding scale” test to answer this question in the context of a party that used its website to act as a matchmaker that matched software developers with tractor-trailer mechanics in need of software services. The court determined that the Nebraska courts were powerless to hear a lawsuit involving claims against various Michigan defendants who only acted as “middlemen” to connect software designers to tractor-trailer mechanics requiring such software . The appeals court determined that because the Michigan defendants had not actively solicited business in Nebraska through their website and had not directly contracted or sold the impugned software themselves, the courts of Nebraska did not have personal jurisdiction over the defendants.
Personal jurisdiction refers to the power of a court to bind a defendant to the judgment of the court. In order to have personal jurisdiction over a defendant, the Constitution and law of Nebraska require the plaintiff to first show that the defendant has sufficient “contact” or connection with the state where the lawsuit was filed to warrant to compel the defendant to appear. court of that state.
The most widely recognized test for determining whether a court has personal jurisdiction over a defendant based on the defendant’s Internet conduct is the Zippo test. This “sliding scale” test takes into account the “interactivity” of a website and the nature of the defendant’s business activities on the Internet to determine whether a court’s exercise of personal jurisdiction would be lawful. At one end of the ‘sliding scale’, the answer is clear: for passive, non-interactive websites, ‘digital billboards’, a court does not have personal jurisdiction over the potential defendant. At the other end of the scale are highly interactive websites that target advertising in a particular state and from which the potential defendant actively enters into contracts with residents of a state; there, an exercise in personal skill is appropriate. The Bartender The case provides guidance on intermediary websites – those that employ some interactivity but do not involve targeted advertising or direct contractual relationships with residents of the relevant state. The Bartender explains that the mere “interactivity” of a website is insufficient if the defendant has done nothing to deliberately direct business to the state in question.
In Bartender, plaintiff alleged that the Michigan defendants were liable for damage to plaintiff’s tractor-trailers resulting from the installation of certain engine software. The mechanics who would eventually do the work on the trucks had contacted the Michigan defendants after finding their website online. The Michigan defendants, who act as “intermediaries” between the software designers and the mechanics, then put the mechanics in touch with a software designer, who then worked directly with the mechanics.
The Bartender Court observed that the Zippo the criterion of the “sliding scale of interactivity” was only a starting point for the investigation of personal competence; a plaintiff must always demonstrate that the defendant has sufficient “contacts” with the state to warrant the exercise of personal jurisdiction by the court. Nevertheless, the Bartender The Court, citing the United States Court of Appeals for the Eighth Circuit, noted that whether a defendant has sufficient “contact” with the state in question is “directly proportional to the nature and quality commercial activity which [the defendant] conduct on the Internet.
Because the Michigan Defendants did not actively solicit, negotiate, or conduct business in Nebraska, they did not have the necessary “contacts” with Nebraska to support the exercise of personal jurisdiction by a court. of Nebraska towards them. Similarly, the court noted that since none of the plaintiff’s claims related to the Michigan defendants’ role as an intermediary, relaying information between mechanics and software developers, but instead related to the products (of third parties ) themselves, the exercise of personal jurisdiction may be inappropriate.
The Bartender The case is consistent with decisions in other states that find that simply having a website with which potential customers can interact in Nebraska is insufficient, without more, to subject a business to the personal jurisdiction of Nebraska. This type of activity will not constitute sufficient “contacts” or ties with Nebraska to warrant arraignment in a Nebraska court. Businesses outside of Nebraska should consider the “interactivity” of their respective websites, whether the websites use advertisements specifically aimed at Nebraska customers, and the volume of information actively exchanged between Nebraskans and the company. .