by: Jason S. Feinstein

The proliferation of the Internet and company web sites have created new issues for courts to consider in the personal jurisdiction analysis. the Internet has been transformed into a global vehicle to transact business and for the exchange of information. Companies that once sold their products and services in a limited geographic area have, in many instances, now found a national or international market on the Internet. However, the opening of doors for these new business opportunities has, at the same time, created the real possibility that a company can be dragged into court in a foreign jurisdiction.

This relatively new, yet rapidly expanding area of law, has been broadly identified by a number of courts as the law of "Internet Jurisdiction." Internet Jurisdiction encompasses cases in which jurisdictional issues arise out of Internet contacts of any and all kinds. Within it, there are many subcategories, including on-line defamation cases, on-line copyright/infringement cases, and on-line purchasing of goods and services.

For example, consider the following scenario. While surfing travel related web sites on the Internet, a man from New Jersey clicks on a "pop-up" advertisement for a Las Vegas hotel and casino. From the hotel's web site, he books a hotel room. During his stay in Las Vegas, the man injures his knee when a casino change cart operator accidentally bumps into him. in addition, he suffers food poisoning after eating a box of imitation salt water taffy purchased from a candy store on the Las Vegas Strip. the candy store maintains a web site whereby they ship salt water taffy to all locations, including New Jersey. Can the New Jersey resident successfully sue the hotel and candy store in New Jersey? Does the fact that both companies maintain web sites impact the personal jurisdiction analysis?

Under well-settled principles of due process, an action in our state courts may only be maintained when a party has sufficient minimum contacts with the State of New Jersey such "that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Serbin v. Walt Disney World, 159 N.J. Super. 88, 90 (App. Div. 1978) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). When the requisite minimum contacts do not exist, the action must be dismissed for lack of in personam (personal) jurisdiction.

The personal jurisdiction analysis involves a two-step inquiry: first, the court must examine the foreign defendant's "minimum contacts" with New Jersey and, second, must examine the concept of "fair play and substantial justice." Lebel v. Everglades Marina, Inc., 115 N.J. 317, 322 (1989).

Under the "minimum contacts" analysis, there are two types of jurisdiction: specific jurisdiction and general jurisdiction. Where the cause of action is directly related to the defendant's contacts with the forum state, then the case is one of specific jurisdiction. Id. at 322. On the other hand, general jurisdiction involves lawsuits that do not arise out of the defendant's contacts with New Jersey. Id. in the fact pattern presented in this article, the New Jersey plaintiff's action against the hotel might be considered a case of specific jurisdiction if the hotel's "pop-up" advertisement was intended or directed to the New Jersey resident, akin to a direct mail solicitation. On the other hand, the fact pattern involving the candy store would more likely be considered a case of general jurisdiction because the action does not arise out of the candy store's "contacts" with the plaintiff in New Jersey, but instead arises out of the plaintiff's contacts with the candy store in the State of Nevada.

In order to establish minimum contacts by way of general jurisdiction, a plaintiff must demonstrate that the foreign defendant's activities in New Jersey are "continuous and systematic." Id. at 323, quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984). the foreign defendant's contacts with New Jersey must be so continuous and substantial as to justify subjecting the foreign defendant to defending a lawsuit in New Jersey. Charles Gendler & Co. v. Telecom Equipment Co., 102 N.J. 460, 472 (1986).

Whether a foreign defendant's contacts with the State of New Jersey are continuous and systematic has traditionally depended upon whether the defendant: (1) is qualified to do business in New Jersey; (2) has incurred or paid taxes to New Jersey; (3) has appointed an agent for service of process in New Jersey; (4) is listed in any New Jersey telephone directories; (5) has any bank accounts or assets in New Jersey; (6) has an office or place of business in New Jersey; (7) has officers or employees who live in New Jersey; and (8) advertises in New Jersey.

A relatively new consideration courts now also include in the personal jurisdiction analysis is the nature and scope of a foreign defendant's web site, i.e., Internet Jurisdiction. in one of the leading Internet Jurisdiction decisions, Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 951 F.Supp. 1115 (W.D. Pa. 1997), the United States District Court for the Western District of Pennsylvania divided Internet Jurisdiction cases into three categories:

(i)"Substantive Web Sites" consisting of businesses or persons who clearly conduct substantive business over the Internet and have repeated contacts with the forum state (i.e., the state where the lawsuit is filed). in such cases, personal jurisdiction typically will be imposed without regard to other contacts with the forum state;

(ii)"Passive Web Sites" consisting of businesses or persons who merely post information on a web site that is accessible to users in the forum state. in such cases, personal jurisdiction typically will not be imposed based upon the web site alone; and

(iii)"Interactive Web Sites" that are somewhere in the middle between substantive and passive web sites. Cases involving interactive web sites are the most difficult and the most common types of cases presented. in these cases, the exercise of personal jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the web site. If the activity between the web site operator and the customer is substantial, it becomes more likely that a court will conclude that the foreign defendant purposefully directed its activities at the forum state and should reasonably have foreseen having to defend itself in the forum jurisdiction.

This three-pronged approach to the web site personal jurisdiction analysis was followed by a New Jersey court in Ragonese v. Rosenfeld, 318 N.J. Super. 63 (Law Div. 1998). There, the plaintiff brought suit in New Jersey against a foreign airline concerning a ticket she purchased for travel from New York to Argentina. the airline moved to dismiss the case alleging that the New Jersey court lacked personal jurisdiction over it. Although the plaintiff did not purchase her ticket over the Internet, she argued that personal jurisdiction nevertheless existed over the airline by virtue of the airline's web site.

In holding that the web site could not confer personal jurisdiction over the airline, the court made the following pertinent observations about the web site:

There was no direct solicitation for services to New Jersey residents.

The web site mainly described the history of the defendant and the type of services it provided.

There was no information aimed specifically at New Jersey or its residents nor any interactive site to book airline tickets in the United States.

The court dismissed the action for lack of personal jurisdiction because the airline did not purposely avail itself to New Jersey business opportunities; instead, it simply maintained an informational web site. The web site was deemed to be "passive" because it was predominantly informational in nature. the court did not consider whether a more "interactive" web site would confer personal jurisdiction.

More recently, our Supreme Court provided additional guidance on Internet Jurisdiction in the context of sexual harassment and defamation based solely upon statements made and distributed over the Internet. in Blakey v. Continental Airlines, 164 N.J. 38 (2000), the plaintiff alleged that the New Jersey court should exercise jurisdiction over the defendant employer based upon the posting of remarks on a web site "bulletin board" sponsored by the company.

The Supreme Court observed that "[a]lthough advances in electronic and Internet technology have created new ways to communicate, the sources of personal jurisdiction remain constant." Id. at 46. "Rather than to create a new order of jurisdictional analysis adapted to the Internet, we prefer in this case to adhere to the basics." Ibid. Applying traditional notions of personal jurisdiction, the Court determined that a defendant "who published defamatory electronic messages, with knowledge that the messages would be published in New Jersey and could influence a claimant's efforts to seek a remedy under New Jersey, may properly be subject to the State's jurisdiction." Ibid.

Significantly, the Supreme Court determined that, like many emerging areas of the law, traditional concepts are simply applied to new situations. the Court declined to create a new rule of law for Internet Jurisdiction cases, but instead determined that the operation of a web site would serve as an additional consideration in the personal jurisdiction framework. Thus, although operation of a web site may by itself serve as sufficient minimum contacts to confer personal jurisdiction over a foreign defendant, it will not be so in all cases. Courts must conduct a fact specific inquiry into the nature of the web site and the level of interactivity between the web site operator and the out-of-state customer.

As for the hotel and candy store, their chances of prevailing on a motion to dismiss a New Jersey lawsuit for lack of personal jurisdiction will depend, in part, upon the level of commercial activity conducted over their web sites with New Jersey residents. Assuming that these companies have no other contacts with New Jersey, for personal jurisdiction purposes our courts will typically evaluate the amount of revenue generated over the Internet from New Jersey residents, the number of "hits" or "visits" the web sites receive from New Jersey residents, whether New Jersey residents are solicited to visit their web sites from other sites, etc.

For example, if the hotel solicits visits to its web site through "pop-up" advertisements on sites generally visited by New Jersey residents, allows hotel rooms and tickets to shows to be booked on its web site, allows merchandise to be purchased on its web site, permits web site visitors to register their e-mail addresses and sends out promotional material to these e-mail addresses, and otherwise generates substantial revenue from these Internet activities, the interactive nature of the web site may support a finding of personal jurisdiction. On the other hand, if the candy store's contacts with New Jersey are limited to occasional sales made over the Internet to New Jersey residents, a finding of personal jurisdiction would be less likely.

Businesses seeking to weigh the business opportunities presented by the Internet against the risks of litigation in a remote and unfamiliar location should find some comfort in understanding that Internet Jurisdiction concepts have not replaced the traditional notions of fair play and substantial justice inherent in the personal jurisdiction equation. in the final analysis, a foreign defendant's operation of a web site is only one factor in determining whether the defendant has continuous and systematic contacts with the forum state. Web site operators must give careful consideration, however, to the interactive nature of their web sites and the possibility of being compelled to defend lawsuits in foreign states.