Georgia has joined the long list of states and foreign countries that have exerted personal jurisdiction over faraway individuals and businesses that transact business over the Internet.
Georgia has joined the long list of states and foreign countries that have exerted personal jurisdiction over faraway individuals and businesses that transact business over the Internet. Only last year, the Georgia Supreme Court greatly expanded Georgia’s ability to assert jurisdiction over businesses whose sole contact with the state was merely through postal mail and telephone calls. (Innovative Clinical &Consulting Services v. First National Bank, 279 Ga. 672 (2005)).
In Grieves, the Court was faced with the sale of a used automobile through eBay. The Seller had advertised the automobile on eBay’s website.
Applying the traditional factors in the “minimum contacts” analysis, the Court found that the Seller did not have a single business office, asset, agent, or employee in Georgia. The court found that the Seller’s percentage of revenue derived from sales in Georgia was insignificant (only two consummated sales in Georgia in the previous two years) when compared to the Seller’s overall revenue (over $500 million).
One non-traditional factor that the Court found particularly important was that the automobile was shipped to Georgia by the Seller rather than retrieved by the Buyer through some other means (a third-party carrier or pick-up in Florida by the Buyer). Perhaps the Court, without explicitly stating it, found it crucial that the Seller, in delivering the car, had actually entered the State of Georgia at some stage in the fulfillment of the contract. Interestingly, in a media interview following the decision, the Seller disputed the Court’s finding on this ground stating that the Buyer had paid a transport company to deliver the car to Georgia. Regardless of the true facts in the Grieves case, the Court’s reliance on this factor provides some guidance to Internet and eBay sellers who would rather not submit to the jurisdiction of every state or country in which potential buyers are located. Potential jurisdiction of faraway states may be avoided by use of third party carriers for delivery.
The Court also noted that the website through which the transaction was conducted was “interactive” and allowed communication between the parties, rather than a more static Internet web page that merely acted like an “electronic bulletin board”. This “new” factor is not particularly enlightening. First, virtually all eBay listings can be considered “interactive” in the manner described by the Court. More important, however, is the fact that it is difficult to envision an instance where a mere “electronic bulletin board” posted on the Internet (which solicits business or sales) will not result in some form of communication, electronic or otherwise, that will provide a basis for jurisdiction in Georgia (see the Innovative Clinical & Consulting Services case, above, which expands jurisdiction to include contact with Georgia through U.S. mail and phone calls).
Finally, it should be noted that the purchase agreement furnished by the Seller purportedly included a “Choice of Law” clause listing Florida as the applicable law and forum for any dispute. However, the buyer claimed that, due to a “fax” error, he never received the “back” of the purchase agreement, which was where the Choice of Law provision was located. The Court of Appeals upheld the lower court’s factual finding that the buyer had not, in fact, received that portion of the agreement and therefore the choice of law provision was not part of the contract between the parties.
The fact that, in Grieves, the purchase of an expensive automobile (a BMW) was at issue should not have effected the analysis of the Court. However, it did.
In recent years, there is no question that courts have found it difficult to apply state long-arm statutes that were established decades (or more) before the Internet was created. Courts in Georgia have now exerted jurisdiction over out-of-state businesses based solely upon contact over the Internet despite the fact that every single traditional rationale for such jurisdiction was inapplicable. These decisions of the courts in Georgia and elsewhere have resulted in individuals and businesses being hauled into courtrooms across state lines and even national boundaries that those businesses had never intended to cross.