Relevant Facts Our Client, Froogle (“Froogle”) has retained our firm to file suit againt Mary, a small manufacturer and retailer of downhill snow skis. Froogle and Mary signed an agreement in January of 2012. On or about March 15, 2012 Froogle discovered that Mary had breached several of the terms of their agreement. We filed suit in Superior Court for the County of Monterey in Salinas, California on behalf of Froogle on May 31,2012.
Mary, a resident of Vermont, responded by filing a motion for non-conveniens claiming that because her business and residence are in Vermont, California has no jurisdiction over her. Mary violated the terms of her agreement and should be brought to answer for her actions in a California court of law, as Froogle’s main place of business is Salinas, California. Issue Presented The issue is whether or not Froogle has jurisdiction over Mary who is an out of state resident and business owner.
Applicable Law Under the California Code of Civil Procedure “A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States. ” CCP §410. 10 Also known as California’s “Long Arm Statue” the law provides that the use is usually constitutional “where the defendant has certain minimum contacts with the forum state and there has been reasonable notice of the action against him or her. (Cite)
Additionally, under the ruling “Any person may maintain an action or proceeding in a court of this state against a foreign corporation or nonresident person where the action or proceeding arises out of or relates to any contract, agreement, or undertaking for which a choice of California law has been made in whole or in part by the parties thereto and which (a) is a contract, agreement, or undertaking, contingent or otherwise, relating to a transaction involving in the aggregate not less than one million dollars ($1,000,000), and (b) contains a provision or provisions under which the foreign corporation or nonresident agrees to submit to the jurisdiction of the courts of this state. ” In 9th Circuit Court of Appeals Gator. com Corp. , Plaintiff-appellant, v. L. L. Bean, Inc. , Defendant, appelee, L. L. Bean had an internet catalog and mail order site or a “virtual store”. Court held that LL Bean’s marketing and retail activities and “virtual store” created a “consistent and substantial pattern of business relations in California, sufficient to confer personal jurisdiction over the Maine-based company [Gator}. ” In Pavlovich v.
Superior Court, the court addressed the issue of internet and jurisdiction holding that “[t]he Internet, as a mode of communication and a system of information delivery is new, but the rules governing the protection of property rights, and how that protection may be enforced under the new technology, need not be. ” 2001 Cal. App. LEXIS 623 (Cal. Ct. App. August 7, 2001) However, in Zippo Mfg. Co. v. Zippo Dot Com, Inc. , the court determined that “A passive website that does little more than make information available is not generally grounds for the exercise of personal jurisdiction. ” It then goes on to say that “The middle ground is occupied by the interactive websites where a user can exchange information with the host computer.
(Zippo test cases) 957 F. Supp. 1119 (W. D. Pa. 1997). The middle ground definition cited above is key in Froogle’s case because Froogle was not simply a passive website. Users were able to click on the Froogle “store” and search for items. The store then quoted pricing and directed the user to the defendant’s website or alternatively they could purchase through Froogle, using their credit card or other financing available and Froogle would forward the order to the defendant to fulfill the order. In Frank Snowney v. Harrahs the plaintiff reserved a room by telephone from his California residence. He was told that the room would cost $50/night plus tax.
When he received the bill he paid a $3 energy surcharge. Plaintiff filed a class action against Harrahs alleging they charged him and other guests more than the advertised price…. ” The defendants filed a motion to quash for lack of personal jurisdiction, arguing that they were incorporated and based out of Nevada, they conducted no business in California and had no bank accounts in California. The plaintiff submitted that “the defendants 1-advertised extensively to California residents through billboards in California, newspapers and radio & television; 2) maintained an interactive website that accepted reservations from California residents. The Court concluded that defendants had sufficient contacts in California to justify jurisdiction in the state. 116 Cal. App. 4th 996, (2004). Application to Our Case Froogle is a California corporation with home offices in Salinas, California. Froogle’s contract was signed by the defendant and the defendant was well aware of Froogle’s location. Froogle’s software was developed in California and their servers are all located in various parts of California – Froogle is clearly a California product. As the defendant used online transactions through Froogle’s site to set up their account and perform other implementation functions it can be easily argued that this was a California based transaction.
Further to this, the defendant benefitted from Froogle’s high profile in California, expanding their customer base throughout the state and thus increasing their sales. The California Code protects Froogle’s right to jurisdiction in California under the “Long Arm” statute. Although there are rare circumstances where this can be overturned, the statute provides the ability for a California corporation that has entered under a contract or similar document with a non-resident partner to gain jurisdiction over that entity should breach of that contract occur. The Snowney case more than implies that if one enters into an agreement with a California entity, and a breach or other violation of the agreement occurs, the parties will more than likely be bringing their action to a California court.
The reservation can certainly be interpreted to be a contract as it binds both parties to an obligation and by acceptance of the terms of a reservation, the parties have entered into an agreement or contract. Froogle has the right as a California corporation to file their action in the state of California. The defendant knew it was entering into a contract with a California corporation based out of Salinas, CA. The defendant chose the website due to its power in the retail internet market. It also took advantage of the plaintiff’s website store which brought leads to the defendants store from prospective customers. The defendant’s business benefitted greatly from its presence in the plaintiff’s search engine and webstore. The defendant has no right to jurisdiction in this case and this proceeding should continue in California.