In Crummey v. Morgan, ____ So.2d ____ (La. App. 1 Cir. 8/8/07), the Louisiana Court of Appeals affirmed the trial court’s exercise of personal jurisdiction over Texas citizens who sold an allegedly defective recreational vehicle (RV) on eBay.
The plaintiff discovered the availability of the RV by viewing it on eBay and called the defendants to inquiry about the condition and price of the vehicle. He later made an $800 down payment on his credit card and picked up the RV in Texas (though the defendants had offered to deliver the vehicle to him in Louisiana). Several miles into his return trip to Louisiana, the RV stopped running and the plaintiff discovered several other alleged defects. When the defendants refused to rescind the sales transaction, the plaintiff filed suit. The defendants asserted a lack of personal jurisdiction in defense of his claims.
The Court’s jurisdictional analysis began, predictably, with a review of the Louisiana Long-Arm Statute (which is substantively similar to the Long-Arm Statutes of many other states) and constitutional due process requirements. In affirming the trial court’s ruling, the Court applied the Zippo sliding scale analysis to the defendants, even though they were not the operators of the eBay website, and found that eBay was an "active website" which established the necessary "minimum contacts" with the forum, when used by a purchaser to research, communicate about, and ultimately purchase the vehicle at issue. In particular, the Court found that
[t]he defendants entered into a contract to sell a vehicle-alleged to be defective-to a Louisiana resident utilizing the website, eBay, which greatly expanded their market. They accepted the original down payment, securing the sale with a credit card sent from Louisiana through the Internet. Defendants also provided Crummey with a telephone number which allowed him to engage in additional conversations with the sellers while he was in Louisiana. This was not an "information only" situation. Defendants used a variety of means of electronic communication to advertise, puff, negotiate, and accept payment for its product directed to a Louisiana consumer. Thus, sufficient minimum contacts, effectuated by electronic communications, have been established to maintain personal jurisdiction. See Hunter v. Meyers, 96-1075, p. 5 (La.App. 1st Cir.3/27/97), 691 So.2d 318, 323. To hold to the contrary would have a chilling effect on e-commerce in that buyers, wary of being haled into the home courts of out-of-state sellers, will refrain from purchasing goods on eBay and other similar internet websites should the merchandise they considered purchasing be defective or otherwise not conform to the advertised online representations.
In reviewing the opinion, two issues become apparent:
- The Court states its intention to protect eBay buyers from being haled into the home courts of out-of-state sellers but the decision in this case does little to reduce that risk. The ruling would do nothing to protect the buyer where he is the party being sued. Presumably, under the same analysis applied by the Court, a Texas court could have exercised jurisdiction over the plaintiff in a suit brought by the defendants. After all, the plaintiff in the case: (1) used the "active" eBay website to search for vehicles to purchase, which greatly expanded the inventory of available vehicles and probably permitted him to obtain a lower price than would be possible with a smaller "supply"; (2) contracted to purchase an RV from the Texas-based sellers, knowing they were selling the vehicle from Texas; (3) communicated directly with the Texas-based sellers about the subject vehicle; and (4) took delivery of the purchased vehicle in Texas, even though he was given the opportunity to have the vehicle delivered to him in Louisiana. It would seem that the plaintiff, then, has transacted business in Texas and might, therefore, be subject to personal jurisdiction in that state under Texas’s Long-Arm Statute.
- Notwithstanding the fact that the Court's ruling does little to reduce a potential eBay buyer's fears of being haled into court in a foreign jurisdiction, the Court seems to ignore the potential "chilling effect" which may result when potential eBay sellers, fearful that they will be dragged into the home forum of any potential buyer, refrain from selling goods on eBay and other similar websites. It seems that the Court has merely exchanged one "chilling effect" for another. Admittedly, deciding that the jurisdictional burden should follow the money (that is, determining that an eBay seller, who stands to gain financially from the use of the website, should be subject to personal jurisdiction in a buyer's home forum under the facts in Crummey where the converse would not necessarily be true) has the advantage of placing the burden with the party who has the financial incentive to shoulder it, thus limiting its "chilling effect."
If nothing else, the decision in Crummey should serve as a reminder to Internet businesses that they must include choice of forum language in their terms of use and and other contracts or risk being haled into court in the home jurisdictions of their customers.
Technorati Tags: personal jurisdiction, fraud, Internet
