Thursday, June 28, 2007

Second Circuit Discusses Its View of Zippo and Jurisdiciton Based on Internet Activity

Per Best Van Lines, Inc. v. Walker, --- F.3d ----, 2007 WL 1815511 (2d Cir. June 26, 2007):

Several federal district courts in New York have applied the Zippo formulation to website defamation cases in analyzing personal jurisdiction under section 302(a)(1). See Citigroup, 97 F.Supp.2d at 565 (“At the very least, the interactivity of the [defendant's] site brings this case within the middle category of internet commercial activity. Moreover, the interaction is both significant and unqualifiedly commercial in nature and thus rises to the level of transacting business required under CPLR § 302(a)(1).”); Realuyo, 2003 WL 21537754, at *6-*7, 2003 U.S. Dist. LEXIS 11529, at *20-*22 (declining to exercise jurisdiction over defendant newspaper/website proprietor because its website, on which alleged libel was posted, was “passive”; having 332 non-paying email registrants in New York was insufficient to establish jurisdiction under Section 302(a)(1)). In Lenahan Law Offices, LLC v. Hibbs, 04-cv-6376, 2004 WL 2966926, at *6 (W.D.N.Y. Dec. 22, 2004), the plaintiff argued that the defendant's website, which contained allegedly defamatory material about the plaintiff, fell into the “middle range” of the Zippo sliding scale because the website permitted the defendant to answer questions posted by users. The court rejected that argument, concluding that such low-level interactivity was insufficient to support jurisdiction. “Absent an allegation that Hibbs is projecting himself into New York, this Court cannot exercise specific personal jurisdiction over him.” Id. Even if such interactivity could constitute “transacting business” under section 302(a)(1), the court concluded, the plaintiff had failed to show that its cause of action “arose” from such transactions since the allegedly defamatory material was posted on a passive portion of the website. Id.

While analyzing a defendant's conduct under the Zippo sliding scale of interactivity may help frame the jurisdictional inquiry in some cases, as the district court here pointed out, “it does not amount to a separate framework for analyzing internet-based jurisdiction.” Best Van Lines, 2004 WL 964009, at *3, 2004 U.S. Dist. LEXIS 7830, at *9. Instead, “traditional statutory and constitutional principles remain the touchstone of the inquiry.” Id. As the Zippo court itself noted, personal jurisdiction analysis applies traditional principles to new situations. Zippo, 952 F.Supp. at 1123 (“[A]s technological progress has increased the flow of commerce between States, the need for jurisdiction has undergone a similar increase.” (quoting Hanson, 357 U.S. at 250-51) (internal quotation marks omitted)). We think that a website's interactivity may be useful for analyzing personal jurisdiction under section 302(a)(1), but only insofar as it helps to decide whether the defendant “transacts any business” in New York-that is, whether the defendant, through the website, “purposefully avail[ed] himself of the privilege of conducting activities within New York, thus invoking the benefits and protections of its laws.” Cutco Indus. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986); see also Deutsche Bank, 7 N.Y.3d at 71-72, 850 N.E.2d at 1143, 818 N.Y.S.2d at 167 (determining that there was jurisdiction over a sophisticated institutional trader from Montana who “knowingly initiat[ed] and pursu[ed] a negotiation with [plaintiff] in New York [via instant messaging] that culminated in the sale of $15 million in bonds,” thus “enter[ing] New York to transact business”).FN13

FN13. The spectrum may also be helpful in analyzing whether jurisdiction is permissible under due process principles. We note that the court in Zippo and most, if not all, of the courts that subsequently adopted the Zippo sliding scale were evaluating whether jurisdiction in those cases comported with due process, under state long-arm statutes that recognized jurisdiction coterminous with the extent allowed by the federal Constitution. See, e.g., Young, 315 F.3d at 261. We make no comment at this point on the relevance of the Zippo sliding scale in New York in evaluating whether the exercise of jurisdiction would be consistent with due process.


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