Personal jurisdiction in the digital age
By Peter S. Selvin, Ervin Cohen & Jessup LLP
The concept of “presence” for jurisdictional purposes has evolved with the widespread use of websites, social media and other digital platforms. A company or individual may have no physical presence in a forum, but may nevertheless be subject to personal jurisdiction in that forum, as a consequence of their activities on these digital platforms.
Importantly, general jurisdiction does not necessarily follow from the defendant’s maintenance and use of an “interactive” website.
Thus, “[t]he level of interactivity of a non-resident defendant’s website provides limited help in answering the distinct question whether the defendant’s forum contacts are suffciently substantial, continuous, and systematic to justify general jurisdiction.” Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F. 3d 1218, 1227 (9th Cir. 2011); see also Fidrych v. Marriott Inter’l, Inc., 952 F. 3d 124, 141-42 (4th Cir. 2020).
Indeed, the “sliding scale” test for interactive websites that was first articulated in Zippo Mfg. Co. v. Zipper Dot Com, Inc., 952 F. Supp. 1119 (W. D. Pa. 1997) was formulated in the context of a specific jurisdiction inquiry. Id. at 1122.
On the other hand, specific jurisdiction has been found to be based on some or all of the following activities:
- The use of words or phrases on a website that are designed to attract forum-specific customers (Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th (9th Cir. 2021));
- The use of Google Adwords that are designed to attract forumspecific customers (CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066 (9th Cir. 2011));
- Selling space on a website to third-party advertisers who use forum-specific words or phrases to attract customers (Marvix Photo v. Brand Technologies, 647 F.3d 1218 (9th Cir. 2011));
- Maintenance of a website whose subject matter is connected with the forum state (Marvix Photo, supra); and
- The linking of a non-resident’s website with a forum-based website (Swenberg v. Dmarcian, Inc., 68 Cal. App. 5th 280 (2021)).
Two recent cases, both of which were decided in August of this year, illustrate some of these principles.
In Ayla, LLC vs. Alya Skin Pty. Ltd., 11 F. 4th 972 (9th Cir. 2021), the court addressed an action by an American company (Ayla) against an Australian competitor (Alya Skin) involving claims for trademark infringement, false designation of origin and unfair competition. Alya Skin had no physical presence in California, but it did have an extensive presence on a number of digital platforms. Nevertheless, the district court granted Alya Skin’s motion to dismiss and Ayla appealed.
The Ninth Circuit reversed and remanded. In finding that the exercise of specific jurisdiction over Alya Skin was supported, the court focused largely on Alya Skin’s digital activities. The court found that notwithstanding its lack of physical presence in California, Alya Skin’s digital marketing campaign was especially focused on US customers and justified the exercise of personal jurisdiction. In this regard, the court noted that on its website, Alya Skin had the promotional post, “ATTENTION USA BABES WE NOW ACCEPT afterpay”. The court noted that the post was “an intentional, explicit appeal to American consumers and no others”. Id. at 980. See also CollegeSource, Inc. v. AcademyOne, Inc., supra, 653 F. 3d at 1080 (9th Cir. 2011) – use of Californiaspecific Google AdWords constituted “purposeful injection” and supported the exercise of personal jurisdiction.
The court also found to be significant Alya Skin’s website’s advertising for “Black Friday” sales – i.e., sales on the day after the Thanksgiving holiday distinctive to the United States. Although Alya Skin presented evidence that Black Friday is “slowing catching on in Australia”, the court noted that Black Friday originated in the US and remains “America’s biggest shopping day”. The court held that “[t]aken together with Alya Skin’s other advertising aimed at Americans, the company’s Black Friday advertising provides further support for the conclusion that Alya Skin’s marketing targeted the United States”. Id. at 980.
Finally, the court noted Alya Skin’s use of social media platforms to sell its products. It observed that some of its sales to the United States may have occurred through third-party websites such as Facebook and Instagram, and that specific jurisdiction was supported because Alya Skin operated those social media accounts. Id. at 981.
There was a similar focus on digital presence in Swenberg vs. Dmarcian, 68 Cal. App, 5th 280 (2021). There the plaintiff (Swenberg) was a minority shareholder of a company (dmarcian) headquartered in California. He brought an action against the majority shareholder and a non-resident defendant, Groeneweg, who was a resident and citizen of the Netherlands. The plaintiff alleged, among other things, that he had been promised an ownership interest in dmarcian’s European affliate, dmarcian EU.
In moving to dismiss for lack of personal jurisdiction, Groeneweg stated that he was a Dutch citizen and had lived in the Netherlands all his life. He further stated that he did not own or operate a business in California, did not conduct business or personally direct any business activities in California and did not own property in California. On the strength of these assertions, the trial court granted Groeneweg’s motion to dismiss for lack of personal jurisdiction. The appellate court reversed.
In finding that personal jurisdiction over Groeneweg could properly be exercised, the court noted that although Groeneweg was formally affliated with dmarcian EU – dmarcian’s related European company – dmarcian’s Californiabased website identified Groeneweg as one of its leaders, with no hint that he was affliated with any other entity.
The court also found significant the fact that dmarcian and dmarcian EU shared a website, so that “anyone who attempted to access a Web site for dmarcian EU would be redirected to the dmarcian Web site”. Id. at 479. Thus, “dmarican’s EU Internet presence was a shared Web site, administered by dmarcian in California, where a dmarcian employee would assign prospective customers to dmarcian EU.” Id. at 480. These digital interconnections between Groeneweg and California-based dmarcian led the court to conclude that Groeneweg had “purposefully availed” himself of the benefits of conducting business in California.
Peter S. SelvinGGI member firm
Ervin Cohen & Jessup LLP
Law Firm Services
Beverly Hills (CA), USA
T: +1 310 273 63 33
Published: GGI Insider, No. 116, November 2021 l Photo: DD25 - stock.adobe.com