HY Cite Corp. v. Badbusinessbureau.com, L.L.C.
297 F.Supp.2d 1154, 2004 U.S. Dist. LEXIS 206, 70 U.S.P.Q. 2d (BNA) 1266 (2004)
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Rule of Law:
A federal court cannot exercise personal jurisdiction over an out-of-state defendant whose website is merely accessible in the forum state, unless the defendant has engaged in continuous and systematic contacts with the forum, or has purposefully directed its activities towards the forum state, and the lawsuit arises directly from those specific contacts, and the plaintiff demonstrates that the brunt of the injury was suffered in the forum state.
Facts:
- Hy Cite Corporation, a Wisconsin corporation with its principal place of business in Madison, Wisconsin, markets and sells dinnerware, beverageware, and cookware under its Royal Prestige trademark.
- badbusinessbureau.com is a limited liability company organized under the laws of St. Kitts/Nevis, West Indies, and does not own assets, offices, or employees in Wisconsin.
- badbusinessbureau.com operates a website, "The Rip-Off Report," which serves as a forum for consumers to post complaints ("rip-off reports") about various businesses.
- Between 30 and 40 consumer complaints about Hy Cite Corporation's products have been posted on badbusinessbureau.com's website.
- On June 24, 2003, Hy Cite Corporation contacted badbusinessbureau.com via email to inquire about resolving the consumer complaints on the website.
- On July 11, 2003, badbusinessbureau.com responded via email, informing Hy Cite Corporation about its "Corporate Customer Advocacy Program" and quoted initial and later fees of $30,000 and $20,000, respectively, for enrollment.
- Hy Cite Corporation did not enroll in the advocacy program, and no other Wisconsin company has enrolled or purchased ad space on badbusinessbureau.com's website.
- One Wisconsin resident purchased a book, "Rip-Off Revenge Guide," advertised on badbusinessbureau.com's website.
Procedural Posture:
- Hy Cite Corporation filed a civil action in the United States District Court for the Western District of Wisconsin against badbusinessbureau.com, alleging unfair competition, false advertising, disparagement, and trademark infringement under state and federal law.
- badbusinessbureau.com filed a motion to dismiss the case for lack of personal jurisdiction.
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Issue:
Does a federal court in Wisconsin have personal jurisdiction over a foreign limited liability company that operates a consumer complaint website accessible in Wisconsin, when the company has minimal, untargeted contacts with the state, and the alleged harm from the website's content is not specifically aimed at or primarily suffered in Wisconsin?
Opinions:
Majority - Crabb, Chief Judge
No, the federal court in Wisconsin does not have personal jurisdiction over badbusinessbureau.com because the plaintiff failed to show sufficient minimum contacts with Wisconsin to satisfy the Fourteenth Amendment's due process clause. The court explicitly rejected specialized internet personal jurisdiction tests like Zippo's sliding scale, instead relying on traditional due process analysis requiring "minimum contacts" that demonstrate purposeful availment of the forum state's laws. For general jurisdiction, badbusinessbureau.com lacked continuous and systematic contacts, as it had no physical presence, offices, or employees in Wisconsin, and its website, while globally accessible, did not actively target Wisconsin residents in a "continuous and systematic" manner. The one book sale and limited communications did not amount to such extensive contacts. For specific jurisdiction, the court found no purposeful availment because Hy Cite initiated the communication, and the consumer complaints were posted by third-party consumers, not actively created or directed by badbusinessbureau.com towards Wisconsin. Furthermore, the single book sale had no direct nexus to the alleged trademark infringement or defamation claims. Applying the "effects test" from Calder v. Jones, the court found no evidence that badbusinessbureau.com expressly aimed its activities at Wisconsin or knew that the brunt of any harm would be suffered primarily there. Simply identifying the plaintiff's principal place of business as Wisconsin is insufficient to prove that the "brunt of injury" to a corporation occurred in that specific state, especially when the defendant did not control the content or actively target the forum.
Analysis:
This case is significant for its explicit rejection of the Zippo sliding scale test for internet personal jurisdiction, instead affirming that traditional due process minimum contacts analysis remains sufficient and necessary. It clarifies that mere website accessibility or even passive interactivity is not enough to establish jurisdiction; rather, defendants must purposefully direct their activities towards the forum state. The ruling reinforces that corporations, unlike individuals, cannot rely solely on their principal place of business to establish that the "brunt of injury" was suffered in a particular state, requiring more specific evidence of targeted harm. This decision provides a strong precedent for limiting personal jurisdiction over online entities that do not actively target specific states, protecting them from being haled into court in any jurisdiction where their globally accessible website might be viewed.
