BULLETIN NO. 03-11
NOVEMBER 12, 2003
INTERACTIVE WEBSITE SALES SUFFICIENT TO
ESTABLISH GENERAL JURISDICTION
A Maine corporation not registered to do business in
suit in the District Court for the Northern District of California
California, and with no physical presence or agent for service of
seeking a declaratory judgment that its activities did not infringe
process in California, may nonetheless be sued in California
or dilute L.L.Bean trademarks or violate any other applicable
courts based on its interactive e-commerce website, sales to
laws. The court granted L.L.Bean’s motion to dismiss the case,
California residents, national email and catalog advertising, and
finding that it did not have general jurisdiction over L.L.Bean.
contacts with California vendors, the United States Court of
Gator.com appealed to the Ninth Circuit, which reversed the
Appeals for the Ninth Circuit recently held in Gator.com
lower court’s decision, concluding that, despite the absence of
Corp., v. L.L.Bean, Inc., 03 C.D.O.S. 7986, 2003 U.S. App.
factors traditionally supporting a finding of physical presence,
LEXIS 18115 (9th Cir. September 2, 2003).
L.L.Bean could still be sued in California based on its
The dispute began when L.L.Bean sent Gator.com a cease
and desist letter requesting that Gator.com stop displaying pop-
substantial, continuous and systematic contacts with California,
including, in particular, through its on-line store.
up ads on L.L.Bean’s website. Gator.com responded by filing
OVERALL CONTACTS WITH CALIFORNIA
WERE SUBSTANTIAL, CONTINUOUS AND SYSTEMATIC
Focusing on the economic reality of L.L.Bean’s overall
L.L.Bean products and interact “live” with L.L.Bean customer
activities in, and contacts with, California, the Ninth Circuit
service representatives; (b) L.L.Bean’s California sales during
concluded that those activities and contacts were not random or
2000 accounted for about 6% of total catalog and website sales;
attenuated, but had been consistent and substantial over a
(c) L.L.Bean sends a large number of catalogs to California
number of years. Accordingly, the court found that L.L.Bean
residents and targets California residents through direct email
had purposefully availed itself of the benefit of doing business
solicitation; (d) L.L.Bean conducts national print and broadcast
in California. The court emphasized the following factors in
marketing efforts that include California; and (e) L.L.Bean
support of its finding of general jurisdiction: (a) L.L.Bean
maintains ongoing contact with numerous California vendors
maintains a highly interactive and extensive internet website
for the purchase of its products.
through which California residents can view and purchase
INTERNET ACTIVITIES ALONE
SUPPORTED A FINDING OF GENERAL JURISDICTION
After reviewing L.L.Bean’s overall commercial activities, the
jurisdiction. The court applied the sliding-scale test first set
court focused solely on L.L.Bean’s internet-based activities and
forth in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp.
found that those activities alone supported a finding of general
1119, 1124 (W.D. PA 1997), which requires courts to review
the “nature and quality of commercial activity that an entity
and extensive website, L.L.Bean clearly conducts business in
conducts over the Internet.” Under the Zippo test, the more
California over the internet by generating large numbers of
interactive the website, the likelier it is that a court will assert
sales, and that such activities alone are sufficient to support a
general jurisdiction.
finding of general jurisdiction over L.L.Bean.
The Ninth Circuit found that, through its highly interactive
ASSERTION OF GENERAL JURISDICTION WAS REASONABLE
For a court to assert general jurisdiction over an out-of state
substantial, continuous and systematic contacts. Second, the
defendant, not only must the defendant maintain sufficient
court found that L.L.Bean, a multi-million dollar company with
contacts with the forum state, but also the assertion of
agents regularly doing business around the country, would not
jurisdiction must be reasonable. The Ninth Circuit focused on
be unduly burdened by having to defend a suit in California.
three factors – the extent of “purposeful interjection,” the
Lastly, although the court sided with L.L.Bean in finding that
burden on L.L.Bean of litigating in California, and the
there was an alternative forum available (since Gator.com had
availability of an alternative forum – and found that the
filed a similar action in the District Court of Oregon), the court
assertion of jurisdiction over L.L.Bean was reasonable.
concluded that this factor alone did not make assertion of
First, the court found that L.L.Bean had purposefully
jurisdiction unreasonable.
interjected itself in the California market, based on its
CASE EMPHASIZES THE NEW NATURE
OF MODERN BUSINESS ACTIVITIES
This decision is significant because no Supreme Court case
“realities of the modern marketplace.”
and only a few Ninth Circuit cases have addressed the extent to
Not all circuits have adopted the Zippo test. Some have
which internet business activities may support a finding of
applied the so-called “effects test,” established by the Supreme
general jurisdiction. The application of traditional jurisdictional
Court in Calder v. Jones, 465 US 783 (1984), which requires an
principles to cyberspace activities is relatively novel, and courts
evaluation of the effects intentionally caused within the forum
have sought to apply these principles in ways that protect
state by a defendant’s online conduct in another state. Thus,
consumers but without unduly impeding the development of
without guidance from the Supreme Court, courts may reach
internet commerce. Emphasizing the new nature of modern
different results on similar facts. With the spread and growing
business activities, which may have effects in states in which a
sophistication of internet commerce, this area of the law will
company has no physical presence, the Ninth Circuit
continue to evolve.
recommended a flexible approach to jurisdiction to reflect the
Marla Hoehn
650.233.4720
mhoehn@pillsburywinthrop.com
Delphine Guerre-Larrouilh
650.233.4634
delphine.larrouilh@pillsburywinthrop.com
www.pillsburywinthrop.com
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The Bulletin is only a general review of the subjects covered and does not constitute an opinion or legal advice. © 2003 Pillsbury Winthrop LLP