The exercise of court jurisdiction in the Internet age

B. Sonny Bal

Lawrence H. Brenner

When lawsuits are initiated, one prerequisite relates to whether or not the court can properly exert jurisdiction over the party. In other words, the party filing the lawsuit has to set forth the technical reasons why the court has jurisdiction over the dispute and the disputants, and why venue is therefore proper in the particular court.

In the first article of a three-part series, we introduce the concepts that are relevant to understanding the principles that guide the exercise of jurisdiction. These principles will help readers understand the next two articles that will relate to physician liability as it relates to the information age and particularly, to participation in social media and online activities, such as physician websites.

Minimum contacts and forum states

As a general rule, if jurisdiction in a legal case is asserted over a person (“in personam”) or over a debt owed by a person (“quasi in rem”), then a court cannot exercise that jurisdiction unless the defendant has made “minimum contacts” with the state in which the court sits (the forum state). Minimum contacts is a term used in the United States law of civil procedure to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state. Minimum contacts are required to avoid arbitrary exercise of judicial power by courts, consistent with the defendant’s Fourteenth Amendment federal constitutional right to due process. The U.S. Supreme Court has refined the principle relating to minimum contacts, namely that a court cannot assert jurisdiction over a party unless that party’s contacts with the forum state are of such as nature that the party “could reasonably expect to be haled into court” in that state. In addition, the exercise of jurisdiction must “not offend traditional notions of fair play and substantial justice” according to the Supreme Court.

In practice, a defendant must have taken actions that were purposefully directed towards the forum state; mere incidental contact with the forum state is insufficient. Defendants are said to have established the requisite minimum contacts by actions that could include, among others, selling goods in the state, being incorporated in the state, repeatedly visiting the state, advertising in the state, or bringing property into the state. However, even if a party’s actions are arguably sufficient to establish jurisdiction, as a further safeguard, the court will not exercise jurisdiction if considerations of “fair play and substantial justice” mentioned above would require making the party defend in the forum state so unreasonable as to constitute a due process violation.

In addition to the defendant’s actions, minimum contacts can be established by consent whereby a party signs a contract with a forum selection clause, agreeing to litigate disputes in a specified forum. This is usually a clause inserted into contracts such that parties agree to bring all disputes before a court in a selected state. Alternatively, a party can elect to waive the right to having a court hear the case; legal rules usually require that if a party is to object to the court’s assertion of personal jurisdiction, such objection must be raised at the beginning of the legal proceeding, otherwise the ability to raise such an objection is lost.

Types of minimum contacts

Minimum contacts can consist of either some type of systematic and continuous contact with the forum (“general jurisdiction”), or isolated or occasional contacts purposefully directed toward the forum (“specific jurisdiction”). A single contact can suffice to establish personal jurisdiction, but in such cases, the nature and quality of the contact should be determinative. The test of foreseeability in a due process analysis is that the defendant’s conduct and connection with the forum state are such that he should reasonably anticipate the possibility of defending a suit in the forum. Out-of-state litigation is reasonably foreseeable if a defendant has purposefully availed himself “of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.”

If the litigants are from foreign countries, a court must also consider the policies of the foreign countries, as well as U.S. foreign policy, in determining whether exercising jurisdiction would be fair. For example, In Helicopteros Nacionales De Colombia v. Hall, a helicopter crash caused the death of four Americans in Peru. The Supreme Court found that the state of Texas could not assert general jurisdiction over the defendant company that had negotiated the purchase of helicopters and trained its pilots in Texas, because its activities in that forum were not of a continuous and systematic nature; instead they were isolated and limited.

To summarize, determinative factors that can establish minimum contacts include:

1. the quantity of contacts with the state;
2. the nature and quality of those contacts;
3. the connection or relationship between the contacts and the cause of action;
4. the state’s interest in providing a forum; and
5. the relative convenience of the parties.

Examples that usually are considered to be minimum contacts include any kind of contract or business practice with a member within the territory, such as insurance contracts sold in a particular locale. Those that are not considered of interest would be advertising. The important exception has been Internet advertising which some courts have found sufficient to apply the minimum contacts principle.

Property and commercial activity

Mere fact of ownership of property within a state is not sufficient to provide minimum contacts for a court to hear cases unrelated to that property. However, the property alone provides a sufficient contact for a court having jurisdiction over that geographic area to adjudicate claims relating to the ownership of the property, or relating to injuries which occurred there. The U.S. Congress has enacted legislation which declares Internet domain names to be property for the purposes of such jurisdiction. Therefore, when a webpage infringes a trademark, the owner of the trademark can sue in any jurisdiction where the webpage can be viewed, but only for the remedy of transferring ownership of the webpage to the trademark-holder.

Simply placing products in the “stream of commerce” is insufficient to provide minimum contacts with the states where the products end up. The defendant must make an effort to market in the forum state or otherwise purposefully avail himself of the resources of that state. Since the beginning of the information revolution and emergence of the Internet, courts have struggled with the question of whether websites can be a source of minimum contacts. Many courts use the Zippo test, which examines the kind of use to which a defendant’s website is being put.

Minimum contacts and websites

The Zippo test came from a legal case titled Zippo Manufacturing Co. v. Zippo Dot Com, Inc. This is a landmark opinion regarding Internet jurisdiction, issued in 1997 by a U.S. District Court. Zippo Manufacturing, the maker of well-known pocket lighters, sued Zippo Dot Com, a California-based corporation that operated an Internet website, and had registered several domain names related to the Zippo name. The California-based company did not have any offices or employees in Pennsylvania, but advertised its services through its website to potential customers in Pennsylvania and other states. Some customers had downloaded sexually explicit messages, and Zippo Manufacturing filed suit alleging trademark dilution. In response, Zippo Dot Com moved to dismiss for lack of jurisdiction. The Internet company asserted that it lacked minimum contacts with the forum state of Pennsylvania.

The Court established a three-prong test for determining whether a court has jurisdiction over a website, stating that “the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of the commercial activity that an entity conducts over the Internet.” Here, given that Zippo Dot Com had contracted with approximately 3,000 individuals and seven Internet access providers in Pennsylvania in order to further its business interest, the Court had no trouble denying Zippo Dot Com’s motion to dismiss. The case was eventually settled, and the “zippo.com” name now resolves to the manufacturing company’s website.

Under the Zippo test, which constitutes a sliding scale to judge website activity, and which has been adopted by at least five federal appellate courts, websites are divided into three categories:

1. passive websites, which merely provide information, will almost never provide sufficient contacts for jurisdiction. Such a website will only provide a basis for jurisdiction if the website itself constitutes an intentional tort such as slander or defamation, and if it is directed at the jurisdiction in question;
2. interactive websites, which permit the exchange of information between website owner and visitors, may be enough for jurisdiction, depending on the website’s level of interactivity and commerciality, and the amount of contacts which the website owner has developed with the forum due to the presence of the website; and
3. commercial websites, which clearly do a substantial volume of business over the Internet, and through which customers in any location can immediately engage in business with the website owner, definitely provide a basis for jurisdiction.

Case example

A physician website details surgeon qualifications, office hours, directions to the office, and advertises a new minimally invasive knee replacement implant that no other surgeon yet offers. The surgeon’s office is in a state that borders two other states. Patients come from all three states to be treated at the office, at a surgery center, and a hospital located close to the only physical office of the surgeon. Since beginning practice several years ago, according to the website, the surgeon has done “thousands of minimally invasive total knee replacements” on patients who come from “out of town, and other states.”

1. A disgruntled patient who traveled from the neighboring state after locating the surgeon wants to file suit in his own state, where the venue is more plaintiff-friendly. Does the trial court in that state have jurisdiction over the surgeon based on the above facts?
2. The surgeon initiates a “Ask the Doctor” section on his website, designed to invite patient queries that would be answered briefly before encouraging a visit to the office for further consultation. Assume the above disgruntled patient had made contact through the “Ask the Doctor” section of the physician website while in his own state, and had then made a preoperative visit for his surgery. Have minimum contacts been established by the surgeon for jurisdiction to be proper in the patient’s state?
3. Assume the surgeon has given patient seminars every 6 months in all three contiguous states (seminar announcements posted on the physician’s website), extolling the virtues of the new knee operation, and handing out information brochures and business cards. Has the surgeon now established minimum contacts with both adjacent states such that jurisdiction is proper in any of the three states?

What do you think? Join your partners in the discussion of these questions on www.OrthoMind.com.

Editors’ note:

Joseph McMenamin, MD, JD, will expand on liability, especially as it relates to physicians engaging in social media, in next month’s Orthopedic Medical Legal Advisor column. In the third article, Jon Hyman, MD will present safe avenues for physician participation in social media and communicating with peers. As always, your insights are welcome. Please join your colleagues with your thoughts on www.OrthoMind.com.

• B. Sonny Bal, MD, JD, MBA, is associate professor of hip and knee replacement in the department of orthopedic surgery, University of Missouri School of Medicine.
• Lawrence H. Brenner, JD, is on the faculties of orthopedics at Yale University and the University of Southern California and practices in Chapel Hill, N.C. Address all correspondence to Brenner at lb@lawrencebrennerlaw.com.