Interactive Web Sites and New York Jurisdiction

, New York Law Journal

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In today's global economy based on electronic communications, Web sites present invaluable opportunities for sales and marketing. As technology continues to evolve and Web sites become more sophisticated in their reach and design, plaintiffs will seek to establish jurisdiction in New York over out-of-state defendants under Civil Practice Law and Rules §§ 301 and 302(a)(1) on the grounds that a site's existence and content are sufficient to demonstrate doing business or transacting business in New York.

Under certain circumstances, communications with a Web site may be enough to confer jurisdiction on an out-of-state defendant. Recent cases have examined this issue, with emerging themes being the degree of interaction with a site, as well as an analysis of whether a site specifically targets a New York audience in a systematic and continuous way. The conclusion being reached is that the more deliberate the New York interaction, the more likely it is that an out-of-state defendant will find itself being compelled to litigate in New York.

Although the New York Court of Appeals has not yet fully examined Web site advertising and solicitation, it briefly addressed the issue of whether certain Internet activity suffices to establish jurisdiction. In Ehrenfeld v. Mahfouz,[FOOTNOTE 1] the Court examined whether, among other things, a defendant's "monitoring of [plaintiff's] activities in New York," by reviewing a paperback edition of her book published in the United States, and surveying a site maintained by a New York-based organization in which plaintiff served as director, constituted doing business in New York.

Holding that it does not, the Court stated that "[i]n an age where information about many New Yorkers can be accessed by those outside our state through a simple 'Google' search, we decline to find that such 'monitoring,' without more, constitutes the transaction of business in New York under CPLR 302(a)(1)."[FOOTNOTE 2]

INTERACTIVE SITES

The plaintiff in Bossey v. Camelback Ski Corp.,[FOOTNOTE 3] a New York resident, sought to establish jurisdiction under CPLR § 301 predicated on a Pennsylvania defendant's interactive Web site, and that defendant placed advertising fliers in New York ski shops. The Suffolk County Supreme Court instructed:

Engagement in occasional or casual business in New York does not suffice under CPLR 301, nor does mere solicitation of New York customers ... [i]nstead, a finding of 'doing business' under CPLR 301 is dependent upon the traditional indicia from which the court may conclude that the foreign defendant has sufficient contacts in New York to warrant a finding that it is present here. Such indicia include whether the corporation has employees, agents, offices or property within the state; whether it is authorized to do business here and the volume of business it conducts with New York residents.

The Camelback defendant had no New York employees, and its principal traveled to New York only occasionally to attend trade shows. The court examined the "solicitation-plus" rule, which provides for a finding of jurisdiction where foreign defendants solicit business that is substantial, continuous and representative of an undertaking of other activities in New York. The court held that jurisdiction did not lie where a claim rests on allegations of solicitation and marketing by a non-New York agent through a Web-based reservation system "not located" in New York. Specifically,

The record adduced ... reveals only that the defendant solicits business through its interactive Web site which allows customers, including those in New York, to book reservations for accommodations and to purchase tickets to ski lifts and other recreational events at the defendant's ski resort in Pennsylvania. Even if this court were to conclude that the constant availability of the defendant's interactive web-site constitutes substantial solicitation so as to trigger application of the 'solicitation-plus' rule, there has been no showing of other factors such as, its engagement in financial or commercial dealings or other activities of substance here in New York.

Similarly, in New World Sourcing Group v. SGS SA,[FOOTNOTE 4] where one foreign defendant was listed as an affiliate and subsidiary on another foreign defendant's Web site, the court held that the existence of such listing did not specifically target New York and was not interactive, which mitigated against finding jurisdiction under CPLR § 301.

Applying CPLR § 302, no jurisdiction was found where the only evidence offered to establish jurisdiction consisted of three inspection reports e-mailed from China from the foreign defendant, which "were not sent on a consistent basis over a period of one year and no telephone calls or other modes of communication were used."

In Klein v. Education Loan Servicing, LLC,[FOOTNOTE 5] the court found that a loan servicing company's Web site was not sufficiently interactive upon which to base jurisdiction, despite students' ability to make payments through it. The court noted that there was insufficient evidence to establish that defendants had New York customers from whom they derived substantial revenue or that their business with New York customers was of a continuous nature.

None of the defendants, including the graduate loan service companies and their employees; the Web site itself, through which students could make payments; and the university and its dean and its loan service officers, were located in New York, nor did they have employees in New York.

The court in Calvert v. Cove[FOOTNOTE 6] held that "courts must look to the nature and quality of commercial activity that an entity conducts over the internet."

Calvert was a landlord-tenant matter in which plaintiffs, New York residents, negotiated a lease over the phone to rent an apartment in Tennessee with a Tennessee-based defendant.

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