Online Evolution:   Where Can You Sue    And Where Can You be Sued?

When you have a legal dispute with a local business or customer, you can usually settle it down at the local courthouse. But where do you sue vendors or customers relating to products or services purchased online? This

If you sue a business based in your area, the case will generally go a court in your state. However, cyber-businesses are likely to be operating in other states and possibly even out of the country. So if you have a dispute with an out-of-town online business, the general rule is it can only be filed in your state court if the other party has a meaningful connection or certain minimum contacts in the state.

can be a problem if the other party is physically located halfway across the country. After all, there are no cyber courthouses.

Where a cyber lawsuit should be filed depends on the complex set of laws concerning “jurisdiction.” The determination generally boils down to the exact nature of the dispute and whether the court has authority over the parties in the case. Remember that not every court can hear every type of case.

Two highly-publicized cases provide some insights into determining jurisdiction for cyber-disputes:

Case #1: In an internet domain name dispute, a Pennsylvania court obtained jurisdiction over a California Internet service provider that had thousands of subscribers from Pennsylvania. The process of accepting the applications for these subscribers and assigning passwords was sufficient to show the “minimum contacts” needed for personal jurisdiction.
 
The court noted: If the defendant "had not wanted to be amenable to jurisdiction in Pennsylvania, the solution would have been simple — it could have chosen not to sell its services to Pennsylvania residents." (Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F, Supp 1119, 1997)

Case #2:  The defendant was the operator of an online gambling Web site based in California. A Texas court was able to claim jurisdiction over the company that entered into contracts with Texas residents to play online games. The company sent e-mails and provided winnings to Texas residents. (Thompson v. Handa-Lopez, Inc., 998 F. Supp. 738, 1998)

Obviously, establishing the minimum contacts needed for jurisdiction can be tricky, especially when it involves the Internet. Having just a handful of customers in a state may not be sufficient to obtain jurisdiction over a national provider. On the other hand, you probably don’t have to travel cross-country if you’re sued by an online vendor. The laws in this area are evolving. Consult with your attorney for specific situations involving cyber-disputes.