Lively v. IJAM, Inc.
114 P.3d 487 (2005)
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Rule of Law:
A contract term, such as a forum selection clause, included inside product packaging is a proposal for addition that materially alters the contract and is not binding on the buyer under UCC § 2-207. Furthermore, personal jurisdiction over a non-resident e-commerce seller cannot be established solely on the basis of a single sale to a forum resident without additional evidence of the seller's purposeful availment of the forum state.
Facts:
- In April 1999, V.J. Lively, an Oklahoma resident, conducted an online search for a laptop computer for a client.
- Lively found a suitable computer on the website of IJAM, Inc., a Georgia corporation.
- Lively decided to place the order by telephone and spoke to a company representative, who confirmed the laptop came with a one-year warranty.
- Lively purchased the computer, and IJAM shipped it to him in Oklahoma along with an invoice.
- The back of the invoice contained a 'terms and conditions' section, which included a forum selection clause requiring any legal action to be filed in Georgia.
- In February 2000, the computer malfunctioned, and Lively returned it to IJAM for repair under the warranty.
- IJAM repaired and returned the computer in June 2000, but it failed again approximately two weeks later.
- Lively returned the computer a second time, but he never received it back, nor did he hear from IJAM again.
Procedural Posture:
- V.J. Lively filed a small claims affidavit against IJAM, Inc., and Monarch Computer Systems, Inc. in Tulsa County District Court, a trial court of first instance.
- The defendants filed a special appearance and a motion to transfer the case to the civil docket to contest jurisdiction.
- The defendants then filed a motion to quash service and dismiss the action for lack of in personam jurisdiction.
- The trial court held a trial and entered a judgment in favor of Lively.
- IJAM, Inc., and Monarch Computer Systems, Inc., as appellants, appealed the trial court's judgment to the Oklahoma Court of Civil Appeals.
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Issue:
Is a single sale of a computer, initiated by an Oklahoma resident after viewing a passive website and placing a telephone order, sufficient to establish the minimum contacts necessary for an Oklahoma court to exercise personal jurisdiction over a non-resident seller?
Opinions:
Majority - Goodman, J.
No, a single transaction, without more evidence of the defendant's contacts with the forum state, is insufficient to support personal jurisdiction. The court first determined that the forum selection clause on the invoice was not part of the contract. A contract was formed when Lively ordered and paid for the computer. Under UCC § 2-207, the clause, received after the contract was formed, was a 'proposal for addition.' If Lively is a consumer, he never expressly assented to it. If Lively is a merchant, the clause is a material alteration to the contract. In either case, it is not binding. Turning to personal jurisdiction, the court found no basis for general jurisdiction as the defendants lacked 'continuous and systematic' contacts with Oklahoma. For specific jurisdiction, the plaintiff must show the defendant has 'minimum contacts' with the forum. The court noted that a single, isolated sale initiated by a consumer from a website accessible anywhere is not enough to show the defendant purposefully availed itself of the forum state's laws. The plaintiff bears the burden of proving jurisdiction, and Lively failed to provide evidence about the nature of IJAM’s website, its level of interactivity, or the volume of its business in Oklahoma. Therefore, the record is insufficient to determine if minimum contacts exist.
Concurring in part and dissenting in part - Rapp, V.C.J.
Yes, a single sale resulting from a commercial website should be sufficient to establish personal jurisdiction. While concurring that the forum selection clause is unenforceable, this opinion dissents from the majority's personal jurisdiction analysis. The dissent argues that by posting a website offering merchandise for sale without geographical restrictions, the defendants intended to do business wherever the website was viewed and its offer was accepted. This act of offering to sell and then shipping a product to an Oklahoma resident constitutes sufficient minimum contacts to vest specific jurisdiction in Oklahoma courts. The dissent compares this to mass mailings and argues that modern long-arm statutes should protect citizens who respond to such solicitations. The dissent would find jurisdiction existed but would reverse the trial court's judgment on the merits, finding the plaintiff's evidence was insufficient.
Analysis:
This case illustrates the challenge of applying traditional personal jurisdiction doctrines, developed before the internet, to modern e-commerce. The court's decision emphasizes that the mere accessibility of a commercial website in a forum is not, by itself, purposeful availment. It establishes that the plaintiff has a significant evidentiary burden to demonstrate that an out-of-state seller has contacts with the forum beyond an isolated, consumer-initiated transaction. This holding requires a fact-specific inquiry into the 'nature and quality' of the defendant's online activities directed at the forum state, such as targeted advertising or a high volume of sales, rather than creating a broad rule that any online sale creates jurisdiction where the buyer resides.
