May 2004
Ninth Circuit To Re-Examine Personal Jurisdiction Over Internet
Sellers
On September 2, 2003, in a controversial decision, a three-
Courts have traditionally relied on actual physical pres-
judge panel of the Ninth Circuit Court of Appeals in California
ence in, or contacts with, the forum in order to determine
held that L.L. Bean’s sales via the Internet were sufficient to
whether personal jurisdiction exists in that jurisdiction. With
establish general personal jurisdiction in California over the
Internet sellers, the fundamental element of actual physical
famous catalog clothing retailer. Gator.com Corp. v. L.L. Bean,
presence is usually lacking unless the seller happens to be lo-
Inc., 341 F.3d 1072 (9th Cir. 2003). The court reached this
cated in that state or has other physical connections with the
conclusion despite the fact that L.L. Bean is incorporated in
state to which the court can point, such as a warehouse, bank
Maine and has all of its facilities and employees in that state,
account, or sales representative in the jurisdiction. Similarly,
and despite the fact that the allegations in the lawsuit were
incorporating in a state or designating an agent for service of
unrelated to L.L. Bean’s sales via the Internet to customers in
process may provide the court with a sufficient basis to find
California. The Ninth Circuit panel held that L.L. Bean’s In-
personal jurisdiction. These are the easy cases.
ternet sales in California were sufficient to allow Gator.com to
The difficult cases are those in which the Internet seller
sue L.L. Bean in California seeking a judicial declaration that
markets its product or service to no particular geographic
Gator.com’s computer pop-up software did not infringe any
location but attempts to capture as much electronic market
L.L. Bean trademark or constitute an unfair trade practice.
share as possible. The only contact between the parties is
On April 29, 2004, the Ninth Circuit decided to rehear
an electronic agreement and perhaps a product mailed to
the case en banc, meaning that all of the Ninth Circuit judges
the buyer’s jurisdiction. When actual physical presence is
will participate in reevaluating the case. The decision to
lacking, courts have traditionally looked to concepts such as
rehear the case results in immediate (although potentially
“purposeful availment” as a proxy, meaning, Did the individual
temporary) decertification of the previously published opin-
purposively engage in conduct that might result in litigation
ion. The Ninth Circuit’s action has thus raised the hopes of
in the state?
those companies that do business over the Internet that this
There are two kinds of personal jurisdiction—general
act alone will not subject the companies to personal jurisdic-
and specific. General jurisdiction exists when a defendant has
tion in the California courts.
engaged in activities that are sufficiently “substantial, continu-
L.L. Bean’s Web site allows individuals to make direct pur-
ous, and systematic” to allow a court to exercise jurisdiction
chases or engage in transactions via the Web site (as opposed
over any cause of action, even unrelated to the defendant’s
to simply reviewing materials posted on the Web site). The
specific activities in the state. Perkins v. Benguet Consolidated
operation of such “interactive” Web sites has grown rapidly in
Mining Co., 342 U.S. 437, 445 (1952). As a result, a finding
the past few years as the Internet has allowed sellers to reach a
of general jurisdiction requires a high level of contact by the
global marketplace for their goods. As a result, sales routinely
defendant with the forum state. By contrast, specific jurisdic-
take place over the Internet without the seller ever having set
tion can arise based only on the defendant’s specific conduct
foot in the buyer’s state or country.
in the state.
©2004 Jones Day. All rights reserved.
While some federal courts have weighed in on the subject,
Aktiegesellschaft, 729 F. 2d 1240 (9th Cir. 1984). It is unclear
no other court has found that Internet sales could subject a
how Internet sales that probably involve even less contact with
seller to general jurisdiction. Some federal courts have found
the forum state would, therefore, subject the seller to general
more limited specific jurisdiction based on use of the Web site
jurisdiction.
itself.
In all events, by voting to rehear the case en banc, the
The three-judge panel in L.L. Bean characterized its
Ninth Circuit will now issue a more definitive opinion on the
analysis of general jurisdiction as whether L.L. Bean’s conduct
subject, perhaps as soon as later this year.
was “substantial,” or “continuous and systematic.” L.L. Bean,
The United States Supreme Court has yet to rule in a case
Inc., supra, 341 F.3d at 1077. The panel focused on both the
involving general personal jurisdiction over an Internet seller.
volume of sales made by the company in California and the
Therefore, irrespective of how the Ninth Circuit ultimately
“virtual store” nature of the L.L. Bean Web site, complete
rules in the L.L. Bean litigation, there will in the near term
with live operators ready to respond to instant messages sent
be no simple answer to the question: Where can I be sued
by potential buyers on the site. The panel seemed impressed
because of my Internet operations?
with the apparently large number of sales made in the state
Further Information
and concluded without citation to any evidence that L.L.
Bean’s “millions of dollars in sales, driven by an extensive,
Jones Day Commentaries are a publication of Jones Day and
ongoing, and sophisticated sales effort involving very large
should not be construed as legal advice on any specific facts
numbers of direct email solicitations and millions of catalog
or circumstances. The contents are intended for general in-
sales, qualifies as ‘substantial’ or ‘continuous and systematic’
formation purposes only and may not be quoted or referred
commercial activity.” Id. at 1080.
to in any other publication or proceeding without the prior
There are some problems with the panel’s logic. In the
written consent of the Firm, to be given or withheld at its
past, the Ninth Circuit has held that advertising alone directed
discretion. The mailing of this publication is not intended
at the forum state was insufficient to establish general juris-
to create, and receipt of it does not constitute, an attorney-
diction. Cubbage v. Merchent, 744 F. 2d 665, 668-69 (9th Cir.
client relationship.
1984); Forsyth v. Overmyer, 576 F. 2d 779, 783 (9th Cir. 1978).
For further information, readers are encouraged to con-
As a result, L.L. Bean’s “sophisticated sales effort” alone would
tact their regular Jones Day attorney or the principal authors of
not appear to serve as a basis for general jurisdiction.
this Commentaries, Jeffrey A. LeVee (telephone: 213.243.2572;
Similarly, the Ninth Circuit has previously held that sales
e-mail: jlevee@jonesday.com) and Mark Fall (telephone:
of products in the forum state through independent sales
213.243.2436; e-mail: markfall@jonesday.com). General e-
representatives were insufficient to establish general jurisdic-
mail messages may be sent using our Web site feedback form,
tion over an out-of-state company. Congoleum Corp. v. DLW
which can be found at www.jonesday.com.
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