Boschetto v. Hansing

Last updated
Boschetta v. Hansing
Seal of the United States Courts, Ninth Judicial Circuit.svg
Court United States Court of Appeals for the Ninth Circuit
Citation(s)539 F.3d 1011
Case history
Prior action(s) United States District Court for the Northern District of California granted the defendants' motion for dismissal for lack of personal jurisdiction.
Court membership
Judge(s) sitting Betty Binns Fletcher, Pamela Ann Rymer
Case opinions
Decision by Betty Binns Fletcher
Concurrence Pamela Ann Rymer

Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008) [1] [2] is a diversity jurisdiction case brought by California resident, Paul Boschetto ("Boschetto") against certain private corporations with their principal place of business in Wisconsin. The case involved the determination of the question whether the sale of an item via the internet consumer-to-consumer trading portal, eBay, by the defendants in Wisconsin to the plaintiff in California, was sufficient to confer personal jurisdiction over a non-resident defendant in the buyer's forum state. At the first instance, the United States District Court for the Northern District of California decided against Boschetto and held that a lone “eBay sale consummated with a California purchaser, was insufficient to establish jurisdiction over any of the defendants.” [3] Boschetto appealed against the decision to the United States Court of Appeals for the Ninth Circuit. The appellate court affirmed the decision of the district court and denied relief to Boschetto. The Court became the first federal appellate court to address whether personal jurisdiction in a forum state could be established when an out-of-state resident makes use of an intermediary website accessible by forum-state citizens. [4]

Contents

Background

Parties to the dispute and relevant facts

The plaintiff in the case, Paul Boschetto, was a resident of San Francisco, California. The defendants Frank-Boucher Chrysler Dodge-Jeep, Gordie Boucher Ford and Boucher Automotive Group ("Boucher defendants") were private corporations with their principal place of business in Wisconsin. Defendant, Hansing, was an employee of one of the Boucher defendants. The Boucher defendants were automobile dealers.

Boschetto alleged, that on August 1, 2005, defendant Hansing posted a listing for auction on eBay.com advertising a 1964 Ford Galaxie car as an "R Code" in "awesome condition," "recently rebuilt" and "ready to be driven." The Boucher defendants also operated a website that advertised their auto dealership. However, this website was not referred to or connected to the transaction at issue. In response to the listing, Boschetto bid $34,106 and on the same day received a notification from eBay informing him that his bid had succeeded. Boschetto paid for the car and was told that he could pick up the car from the Wisconsin dealership where Hansing worked. He hired a delivery company to transport the vehicle to California and received it on September 15, 2005. Upon delivery, Boschetto discovered that the car was not an "R Code" as advertised and had several other problems too. He tried contacting eBay and the defendants to rescind the purchase but his efforts failed. Consequently, he filed a complaint in the United States District Court, Northern District of California on February 23, 2006. In his complaint, he alleged four state law causes of action (violation of the California Consumer Protection Act; breach of contract; misrepresentation; and fraud). He pleaded diversity jurisdiction pursuant to the federal statute, 28 U.S.C.   § 1332(a).

The Boucher defendants moved to dismiss the complaint for lack of personal jurisdiction. The district court granted the defendant’s motion and held that a single "eBay sale consummated with a California purchaser, was insufficient to establish jurisdiction over any of the defendants." Boschetto also requested the district court to permit additional discovery relevant to jurisdiction. But, the court exercised its discretion and denied the request stating that Boschetto's request was premised on "speculation without any support". Following these findings, Boschetto timely appealed to the United States Court of Appeals for the Ninth Circuit.

Issues before the Appellate Court

There were two issues before the Appellate Court:

  1. Whether the sale of an item via the eBay Internet auction site provided sufficient "minimum contacts" to support personal jurisdiction over a non-resident defendant in the buyer’s forum state?
  2. Whether the district court abused its discretion by denying Boschetto's request for jurisdictional discovery?

Appellate Court's holding

The Court of Appeals decided both the issues in favor of the Boucher defendants. With regard to the first issue the court held that the "sale of one automobile via the eBay website, without more, does not establish jurisdiction over a non-resident defendant in the forum state". And with regard to the second issue the court decided that since Boschetto did not submit any evidence or allegation that the defendants were involved in more than just one sale, "the district court did not abuse its discretion by refusing to allow jurisdictional discovery."

Court’s rationale

Personal jurisdiction over non-resident defendant

Purposeful availment standard

In reaching its conclusion about the lack of personal jurisdiction, the court applied a three-part test from Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004), [5] which stated that to determine whether the exercise of specific personal jurisdiction is appropriate, "the non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws". [6] Further, "the claim must be one which arises out of or relates to the defendant's forum-related activities"; and "the exercise of jurisdiction must comport with fair play and substantial justice". [6] The court further observed that the plaintiff had the burden of proving the first two prongs of the foregoing test and only then the defendant was required to come forward and show that the "exercise of jurisdiction would not be reasonable". [6]

The court while clarifying the standard of "purposeful availment" as stated in first prong of the Scharzenegger test, stated that “to have purposefully availed itself of the privilege of doing business in the forum, a defendant must have performed some type of affirmative conduct which allows or promotes the transaction of business within the forum state.” The court also noted that "a contract alone does not establish minimum contacts in the plaintiff’s home forum". [7] Applying the "purposeful availment" standard to the facts of the case, the court noted that the arrangement between Boschetto and Hansing was a contract for a sale of a good and was "insufficient to have created a substantial connection with California". Further, "the Boucher Defendants did not create any ongoing obligations with Boschetto in California; once the car was sold the parties were to go their separate ways". [8] Based on this reasoning, the court held that the Boucher defendants did not purposefully avail themselves of the privilege of doing business in California and therefore were not subject to the jurisdiction of the courts in California.

Interactive websites

The court also discussed Cybersell, Inc. v. Cybersell, Inc. 130 F.3d 414 (9th Cir. 1997), [9] wherein the court had looked at the level of interactivity of a website for the purposes of determining its jurisdictional effect. That court noted the lack of interactivity in Cybersell and concluded that the defendant had "done no act and consummated no transaction, nor has it performed any act by which it purposefully availed itself of the privilege of conducting activities, in Arizona, thereby invoking the benefits and protections of Arizona law". [10] In Boschetto, the court observed that "where the Internet site actually belongs to and is operated by the defendant, the nature of the website has jurisdictional significance because the website allows the defendant to maintain some ongoing contact with the forum state". [10] The Boucher defendants temporarily used the listing on eBay to "advertise a good for sale and that listing closed once the item was sold, thereby extinguishing the Internet contact for this transaction within the forum state". [10]

However, the court distinguished the conduct of the Boucher defendants with cases where the defendants were using eBay platform as a "broader vehicle for commercial activity". [11] The court held, quoting from International Shoe Co. v. Washington, 326 U.S. 310, [12] that "where eBay is used as a means for establishing regular business with a remote forum such that a finding of personal jurisdiction comports with traditional notions of fair play and substantial justice.., then a defendant's use of eBay may be properly taken into account for purposes of establishing personal jurisdiction."

Exercise of the discretion by the District Court in denying jurisdictional discovery

The court discussed the standard of reviewing the exercise of discretion by the district court in permitting or denying jurisdictional discovery and observed that the district court’s decision “will not be reversed except upon the clearest showing that denial of discovery results in actual and substantial prejudice to the complaining litigant. [13] ” The court further observed that the fact whether the Boucher defendants had used eBay to conduct significant quantities of sales of automobiles to California residents might have been jurisdictionally relevant, but Boschetto neither presented any evidence of such sales nor made any such allegation in his complaint. Therefore, "the denial of Boschetto's request for discovery, which was based on little more than a hunch that it might yield jurisdictionally relevant facts, was not an abuse of discretion."”

Circuit Judge Pamela Ann Rymer’s concurrence

Judge Rhymer concurred with the opinion written by Judge B. Fletcher, but wrote separately to highlight her disagreement with Boschetto’s argument that the Boucher defendants, as sellers on ebay, necessarily availed themselves of the privilege of doing business in each state across the United States of America.

While elaborating on the concept of "purposeful availment", she observed quoting from Burger King Corp. v. Rudzewicz, 471 U.S. 462, [14] that “the purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts. [15] ” Dealing with Boschetto's argument that the Boucher defendants could foresee that California residents would bid on their auction, and that they would benefit from their participation, she observed that "foreseeable participation by Californians [was] not enough. Hansing must have done something more to aim his auction expressly at the state, such as individually targeting California residents". [16]

Related Research Articles

Personal jurisdiction is a court's jurisdiction over the parties, as determined by the facts in evidence, which bind the parties to a lawsuit, as opposed to subject-matter jurisdiction, which is jurisdiction over the law involved in the suit. Without personal jurisdiction over a party, a court’s rulings or decrees cannot be enforced upon that party, except by comity; i.e., to the extent that the sovereign which has jurisdiction over the party allows the court to enforce them upon that party. A court that has personal jurisdiction has both the authority to rule on the law and facts of a suit and the power to enforce its decision upon a party to the suit. In some cases, territorial jurisdiction may also constrain a court's reach, such as preventing hearing of a case concerning events occurring on foreign territory between two citizens of the home jurisdiction. A similar principle is that of standing or locus standi, which is the ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that party's participation in the case.

Minimum contacts

Minimum contacts is a term used in the United States law of civil procedure to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state. The United States Supreme Court has decided a number of cases that have established and refined the principle that it is unfair for a court to assert jurisdiction over a party unless that party's contacts with the state in which that court sits are such that the party "could reasonably expect to be haled into court" in that state. This jurisdiction must "not offend traditional notions of fair play and substantial justice". A non-resident defendant may have minimum contacts with the forum state if they 1) have direct contact with the state; 2) have a contract with a resident of the state; 3) have placed their product into the stream of commerce such that it reaches the forum state; 4) seek to serve residents of the forum state; 5) have satisfied the Calder effects test; or 6) have a non-passive website viewed within the forum state.

Forum selection clause

A forum selection clause in a contract with a conflict of laws element allows the parties to agree that any disputes relating to that contract will be resolved in a specific forum. They usually operate in conjunction with a choice of law clause which determines the proper law of the relevant contract.

Calder v. Jones, 465 U.S. 783 (1984), was a case in which the United States Supreme Court held that a court within a state could assert personal jurisdiction over the author and editor of a national magazine which published an allegedly libelous article about a resident of that state, and where the magazine had wide circulation in that state.

Ligue contre le racisme et l'antisémitisme et Union des étudiants juifs de France c. Yahoo! Inc. et Société Yahoo! France is a French court case decided by the Tribunal de grande instance of Paris in 2000. The case concerned the sale of memorabilia from the Nazi period by Internet auction and the application of national laws to the Internet. Some observers have claimed that the judgement creates a universal competence for French courts to decide Internet cases.

Burger King v. Rudzewicz, 471 U.S. 462 (1985), is a notable case in United States civil procedure that came before the Supreme Court of the United States addressing personal jurisdiction.

Personal jurisdiction in Internet cases refers to a growing set of judicial precedents in American courts where personal jurisdiction has been asserted upon defendants based solely on their Internet activities. Personal jurisdiction in American civil procedure law is premised on the notion that a defendant should not be subject to the decisions of a foreign or out of state court, without having "purposely availed" himself of the benefits that the forum state has to offer. Generally, the doctrine is grounded on two main principles: courts should protect defendants from the undue burden of facing litigation in an unlimited number of possibly remote jurisdictions, and courts should prevent states from infringing on the sovereignty of other states by limiting the circumstances under which defendants can be "haled" into court.

Burnham v. Superior Court of California, 495 U.S. 604 (1990), was a United States Supreme Court case addressing whether a state court may, consistent with the Due Process Clause of the Fourteenth Amendment, exercise personal jurisdiction over a non-resident of the state who is served with process while temporarily visiting the state. All nine justices unanimously agreed that this basis for personal jurisdiction—known as "transient jurisdiction"—is constitutionally permissible. However, the Court failed to produce a majority opinion, as the members were sharply divided on the reasons for the decision, reflecting two fundamentally different approaches to how due-process issues are to be analyzed. Justice Scalia wrote the lead opinion, joined in whole or part by three other Justices. Justice Brennan wrote an opinion joined by three other Justices. Justices White and Stevens wrote separate opinions.

<i>Dudnikov v. Chalk & Vermilion Fine Arts, Inc.</i>

Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, was decided by the Tenth Circuit in January 2008. The Tenth Circuit overturned a dismissal granted by the District Court upon a motion to dismiss for lack of personal jurisdiction under FRCP12(b)(2). Dudnikov addresses the issues that arise regarding personal jurisdiction and the internet, applying standards set by the Supreme Court of the United States in a line of cases that progressively defined the doctrine and its scope in light of the Fourteenth Amendment.

<i>Zippo Manufacturing Co. v. Zippo Dot Com, Inc.</i> U.S. District Court ruling establishing the Zippo "Sliding Scale" test

Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, was a decision by the United States District Court for the Western District of Pennsylvania in which the Court found personal jurisdiction over a defendant providing Internet services. The case is a landmark opinion regarding Internet jurisdiction, and it is one of the most frequently cited Cyberlaw opinions.

<i>Cybersell, Inc. v. Cybersell, Inc.</i>

Cybersell, Inc. v. Cybersell, Inc. was a trademark infringement case based on the use of an internet service mark. The United States District Court for the District of Arizona was asked to review whether the allegedly infringing use of a service mark in a home page on the World Wide Web suffices for personal jurisdiction in the state where the holder of the mark has its principal place of business. The Cybersell holding illustrated that passive websites do not establish personal jurisdiction outside the state in which they are based.

Attaway v. Omega, 903 N.E.2d 73, was a decision by the Indiana Court of Appeals in which the Court found personal jurisdiction over an out-of-state defendant who bought a car on eBay then rescinded payment but returned the automobile at buyer's expense.

<i>Bensusan Restaurant Corp. v. King</i> American legal case

Bensusan Restaurant Corp. v. King, 126 F.3d 25, is a 1997 United States Court of Appeals for the Second Circuit case that helped define the parameters of personal jurisdiction in the Internet context, specifically for passive websites that only advertise local services. The opinion, written by Judge Ellsworth Van Graafeiland, affirmed the United States District Court for the Southern District of New York's holding that defendant Richard B. King's Internet website did not satisfy New York's long-arm statute requirements for plaintiff Bensusan Restaurant Corporation to bring a trademark infringement suit in New York. The District Court's decision also likened creating a website to merely placing a product into the stream of commerce, and held that such an act was insufficient to satisfy due process and personal jurisdiction requirements.

<i>Jones v. Dirty World Entertainment Recordings LLC</i> US legal case

Jones v. Dirty World Entertainment Recordings LLC, 755 F.3d 398, is case in which the United States Sixth Circuit Court of Appeals adopted the Roommates material development test for limiting immunity under section 230 of the Communications Decency Act (CDA). A libel suit was pursued by Sarah Jones, formerly a high school teacher and Cincinnati Ben–Gals cheerleader, against Dirty World, LLC, operator of the celebrity gossip web site TheDirty.com, concerning two postings on TheDirty.com that Dirty World refused to remove.

Pavlovich v. Superior Court, 29 Cal. 4th 262, is a California Supreme Court case in which the court declined to find personal jurisdiction over a non-resident defendant who had no personal contacts with California. The Court found that the posting of a misappropriated trade secret on a Web site which could result in harm to California residents was not sufficient to show he had purposely availed himself of the forum state by expressly aiming his conduct at residents of California.

<i>Mavrix Photo, Inc. v. Brand Technologies, Inc.</i> Case in American intellectual property law

Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218, is a case in American intellectual property law involving personal jurisdiction in the context of internet contacts.

<i>CompuServe, Inc. v. Patterson</i>

CompuServe, Inc. v. Patterson was a court case heard before the Sixth Circuit Court of Appeals which held that contacts and contracts negotiated through the Internet with a party in a different state were sufficient to grant personal jurisdiction in that state. In particular, the court held that Patterson's use of storage, electronic transmission of files, and advertisement through CompuServe's network in Ohio were sufficient to grant Ohio personal jurisdiction over Patterson.

<i>Illinois v. Hemi Group LLC</i> 2010 personal jurisdiction case

Illinois v. Hemi Group, LLC, 622 F.3d 754, was a personal jurisdiction case in which the United States Court of Appeals for the Seventh Circuit affirmed the United States District Court for the Central District of Illinois' ruling finding personal jurisdiction based on Internet transactions. In the initial filing, the state of Illinois sued Hemi Group LLC (Hemi) for selling cigarettes to Illinois residents over the Internet in violation of state law and for failing to report those sales in violation of federal law. Hemi moved to dismiss the suit for lack of personal jurisdiction, but the district court found that the Internet transactions provided a basis for Hemi to be sued in Illinois.

<i>Hearst Corp. v. Goldberger</i>

Hearst Corp. v. Goldberger was a case out of the U.S. District Court for the Southern District of New York in which the court developed a reasoned framework to determine the proper exercise of personal jurisdiction in cases involving activity in cyberspace. The court determined that it lacked jurisdiction over an out-of-state defendant whose website was accessible to New York residents.

Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 582 U.S. ___ (2017), was a United States Supreme Court case in which the Court held that California courts lacked personal jurisdiction over the defendant on claims brought by plaintiffs who are not California residents and did not suffer their alleged injury in California. It is part of a group of six cases decided since 2011 that have greatly changed the application of personal jurisdiction. It was praised by legal scholars for properly applying the Fourteenth Amendment's Due Process Clause.

References

  1. ↑ "Opinion of the United States Court of Appeals for the Ninth Circuit in Boschetto v. Hansing". Archived from the original on 6 March 2014. Retrieved 3 March 2014.
  2. ↑ UScourts.gov. "Boschetto v. Hansing decision for publication" (PDF). UScourts.gov. Retrieved 6 March 2014.
  3. ↑ USCourts.gov. "Decision for publication, pg. 11125" (PDF). UScourts.gov. Retrieved 6 March 2014.
  4. ↑ DeVries, Douglas. "Jurisdiction and the Internet". California Lawyer. Archived from the original on 16 April 2014. Retrieved 14 April 2014.
  5. ↑ "Opinion of the United States Court of Appeals for the Ninth Circuit in Schwarzenegger v. Fred Martin Motor Co" . Retrieved 3 March 2014.[ permanent dead link ]
  6. 1 2 3 UScourts.gov. "decision for publication, pg.11127" (PDF). UScourts.gov. Retrieved 6 March 2014.
  7. ↑ UScourts.gov. "decision for publication, pg. 11128" (PDF). Retrieved 6 March 2014.
  8. ↑ UScourts.gov. "decision for publication, pg.11129" (PDF). UScourts.gov. Retrieved 6 March 2014.
  9. ↑ "Opinion of the United States Court of Appeals for the Ninth Circuit in Cybersell, Inc. v. Cybersell, Inc". Archived from the original on 6 March 2014. Retrieved 3 March 2014.
  10. 1 2 3 UScourts.gov. "decision for publication, pg. 11131" (PDF). UScourts. Retrieved 6 March 2014.
  11. ↑ UScourts.gov. "decision for publication, pg. 11132" (PDF). UScourts.gov. Retrieved 6 March 2014.
  12. ↑ "Opinion of the United States Supreme Court in International Shoe Co. v. Washington" . Retrieved 3 March 2014.
  13. ↑ UScourts.gov. "decision for publication, pg. 11134" (PDF). UScourts.gov. Retrieved 6 March 2014.
  14. ↑ "Opinion of the United States Supreme Court in Burger King Corp. v. Rudzewicz". Archived from the original on 7 March 2014. Retrieved 3 March 2014.
  15. ↑ UScourts.gov. "decision for publication, pg.11136" (PDF). UScourts. Retrieved 6 March 2014.
  16. ↑ UScourts.gov. "decision for publication, pg. 11135" (PDF). UScourts.gov. Retrieved 6 March 2014.
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