Website With Link To Third-Party Distributor Sufficient To Create Personal Jurisdiction

by Varnum LLP
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In Mor-Dall Enterprises Inc. v. Dark Horse Distillery LLC, the United States District Court for the Western District of Michigan addressed the question when a company's website create sufficient contacts with the forum state to establish personal jurisdiction. The Honorable Robert Holmes Bell, relying on established Supreme Court and Sixth Circuit precedent, held that a website that solicits customers to buy its products and have those products shipped into the forum state is sufficient to establish personal jurisdiction in the forum state.

The case involves a trademark infringement dispute between the plaintiff, a Michigan company, who has used the marks DARK HORSE and DARK HORSE BREWING COMPANY in interstate commerce, and the defendant, who subsequently began using the marks DARK HORSE and DARK HORSE DISTILLERY. The defendant moved to dismiss for lack of personal jurisdiction, arguing that it did not have sufficient minimum contacts with Michigan, such that the defendant being sued in Michigan would offend "traditional notions of fair play and substantial justice."  Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

The court's decision turned on its analysis of the defendant's website. Sixth Circuit precedent holds that "a defendant purposely avails itself of the privilege of acting in a state through its website if the website is interactive to a degree that reveals specifically intended interactions with residents of the state." Neogen Corp. v. Neo Gen Screening Inc., 282 F.3d 883, 887 (6th Cir. 2002). In this case, the defendant's website not only provides information on its products, but also includes a link which, when clicked, takes the user to a third-party distributor's website (www.drinkupny.com), from which a customer can order the defendant's products to be shipped to them in any state.

The court concluded that the ability for Michigan residents to purchase the defendant's products through a link on the defendant's website was sufficient to create personal jurisdiction over the defendant.  The court held "that to allow a defendant to escape personal jurisdiction in a particular forum simply because its interactive website redirects customers to a third-party vendor's site to complete a sale would undermine the 'traditional notions of fair play and substantial justice' that protect both plaintiffs and defendants . . . . Here, defendant's website solicits customers from around the country, including Michigan, to buy its products and have those products shipped into the customer's state." Based on this, the court held that the defendant "clearly does business over the Internet, such that the defendant purposefully availed itself of the privilege of acting in Michigan."

The court also concluded that under the tests set forth in Calder v. Jones, 465 U.S. 783, 788–89 (1984), the defendant's contacts with Michigan were deemed to be "enhanced" for purposes of determining whether personal jurisdiction existed because (1) the defendant acted intentionally in choosing marks that it knew was being used by the plaintiff at the same time, (2) the defendant's action was expressly aimed at the state of Michigan because the defendant was on notice that the plaintiff was located in Michigan, and (3) the brunt of the injuries were felt in Michigan, as the plaintiff is based in Michigan.

Perhaps most interestingly, the court noted that the Northern District of Iowa reached the opposition conclusion under facts that "are nearly indistinguishable from the present case." The court disagreed with the reasoning and supporting authority cited by the Northern District of Iowa in Foreign Candy Co. Inc. v. Tropical Paradise Inc., 950 F. Supp. 2d 1017 (N.D. Iowa 2013), concluding that the supporting authority cited by Foreign Candy was "distinguishable for a variety of reasons," such that the court "does not find Foreign Candy's conclusions of law persuasive authority in this case."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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