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Court Addresses Jurisdiction Over Alleged Tortious Internet Conduct

By dramatically lowering the cost of disseminating information, the internet has made it possible for companies to "cybersmear" their competitors before a large potential audience at very little cost.  The internet also allows companies to disguise the source of the attack.  In Dinar Corp. v. Sterling Currency Group, LLC, 2014 U.S. Dist. LEXIS 114528 (D. Nev. Aug. 15, 2014), for example, the plaintiff alleged:

Defendants posed as customers and posted poor reviews and disparaging comments about Dinar Corp to a website called "dinarreview.com," a site purporting to be a neutral platform where customers of online currency exchange companies can post reviews, comment about their experiences, and research companies' reputations. Plaintiffs further allege that Sterling's employees sent emails with false and disparaging information to two of Dinar Corp's advertisers and a prospective client.

The internet creates one more problem for victims of cybersmear attacks - where should they file their lawsuit?  A court will not hear a case if it lacks jurisdiction over the defendants.

In Dinar, the plaintiff was a Nevada corporation while the defendant company was a Georgia limited liability company headquartered in Georgia.  The individual defendants were residents of Georgia.  Although the defendants had allegedly committed intentional acts (posting information) and those acts foreseeably harmed the plaintiff in Nevada, the Court found that the defendants did not expressly aim their conduct at Nevada.  Thus, the Court found that the plaintiff had failed to make a prima facie case of personal jurisdiction.

The Court was applying what is known as the "effects" test for specific jurisdiction, which is a subsidiary test to one of the three more general requirements for personal jurisdiction which require a plaintiff to show:

  • the defendant performed some act or consummated some transaction with Nevada or otherwise purposefully availed itself of the privileges of conducting activities in Nevada,
  • the claims arise out of or result from that Nevada-related activity, and
  • the exercise of jurisdiction would be reasonable.

According to the Court, to determine purposeful availment in the context of alleged tortious internet conduct, "courts are to inquire whether a defendant 'purposefully directed his activities' at the forum state, applying the 'effects' test based on the Supreme Court's decision in Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984). Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1228 (9th Cir. 2011)."  The "effects" test requires that the defendant has (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.  As noted above, the Court found that the plaintiff had adequately alleged the first and third elements, but not the second.

 

 

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