Nov 16 (Reuters) – Should online retailers face the prospect of being sued in every jurisdiction where they have delivered even a single product?

Right now, internet businesses that ship products nationwide can be sued on that basis in the 2nd, 7th and 9th Circuits, home to four of the five biggest cities in the U.S. But plaintiffs in the 5th and 8th Circuits, by contrast, can’t establish jurisdiction solely by showing that an online retailer delivered a single product within the court’s geographical boundaries.

That divide, according to several small companies that operate virtual storefronts on Amazon’s website, is untenable in an era of explosive growth in online commerce. The companies’ lawyers at Bochner have asked the U.S. Supreme Court to step in to resolve the circuit split and provide clear guidance on where internet retailers can be sued.

Specifically, Bochner’s clients are seeking Supreme Court review of a ruling last summer by the 9th U.S. Circuit Court of Appeals, which held that Arizona had jurisdiction over trademark infringement claims against the Amazon (AMZN.O) storefronts because the online retailers sold and delivered products to purchasers in Arizona.

Bochner’s clients, led by a company called Photoplaza, framed the question presented in their petition as whether a seller whose products ship across the country “is subject to personal jurisdiction in every forum into which even one of its products is shipped.” But to be fair, the 9th Circuit, as I told you when the ruling came down, did not specifically say that the delivery of a single product is sufficient to establish jurisdiction.

The appeals court instead instructed trial judges to focus on whether the sale and delivery of physical products within the plaintiff’s chosen jurisdiction are a routine part of the online retailer’s business. In the trademark case against the Amazon resellers, the appeals court said, the plaintiff — health and wellness company Herbal Brands — adequately alleged that the Amazon storefronts routinely shipped allegedly infringing products to Arizona customers.

It’s even easier for plaintiffs in the 2nd and 7th Circuits to establish jurisdiction for lawsuits against internet retailers. The 2nd Circuit explicitly held in 2010’s Chloe v. Queen Bee of Beverly Hills LLC that the single act of shipping an allegedly counterfeit handbag to New York was sufficient to give New York courts jurisdiction. The 7th Circuit’s 2022 ruling on the jurisdictional issue, in NBA Properties, Incorporated v. HANWJH, also centered on the delivery of a single product, a pair of allegedly counterfeit NBA shorts.

Neither the 2nd Circuit nor the 7th Circuit was swayed by defense arguments that the plaintiffs themselves had manufactured jurisdiction by ordering the allegedly infringing products whose delivery established their right to sue.

On the other side of the circuit divide, the 8th Circuit held in 2022 that the delivery of a single T-shirt with an allegedly infringing logo was not enough to give Missouri courts jurisdiction over a trademark case. The 5th Circuit expressed the same view, albeit in dicta, in a 2021 decision describing the shipment of a lone product as “the type of isolated act that does not create minimum contact.”

The Amazon resellers’ certiorari petition argued that the 5th and 8th Circuits’ analysis is faithful to Supreme Court precedent — and that the reasoning of the 2nd, 7th and 9th Circuits is not.

The petition homed in on a pair of Supreme Court cases decided on the same day in 1984: Keeton v. Hustler Magazine, Inc., and Calder v. Jones.

Both cases involved jurisdictional challenges in libel suits against publications with nationwide circulations. In Keeton, the Supreme Court allowed a New York resident to sue Hustler magazine in New Hampshire (which has an unusually long statute of limitations for libel claims) because Hustler “continuously and deliberately exploited the New Hampshire market” by circulating the magazine in the state. In Calder, the justices ruled that actress Shirley Jones could sue the Florida-based National Enquirer in California because California, where Jones lived and worked, was the “focal point” of the alleged libel.

The two decisions, in tandem, offer “clear rules” on personal jurisdiction against non-resident defendants, the Amazon resellers said in their Supreme Court petition. When a defendant routinely ships thousands of products into a particular forum, that forum’s courts have jurisdiction under Keeton. Otherwise, the petition said, courts must apply the Calder “effects test” to determine if the defendant’s conduct was specifically aimed at the jurisdiction in which it has been sued.

The Amazon storefronts’ petition asserted that isolated sales and deliveries are insufficient to establish jurisdiction under either Keeton or Calder precedent.

Herbal Brands counsel Daniel Wucherer of Vorys Sater, who argued for the company at the 9th Circuit, did not respond to my email query on the Supreme Court petition. But the 9th Circuit, in applying the Calder test, said Herbal Brands demonstrated that the Amazon storefronts had “expressly aimed” conduct at Arizona by routinely selling and delivering products in the state.

The Amazon resellers’ petition is not the first to ask the Supreme Court to resolve the circuit split on where online retailers can be sued. The China-based online retailer in the 7th Circuit’s NBA case filed a petition for certiorari last November. NBA Properties did not file a response. The Supreme Court declined to hear the case in January.

The Amazon storefronts argued in the new petition that the 9th Circuit’s ruling widened and deepened the divide among the circuits on the issue of jurisdiction for claims against online retailers. They also emphasized the urgency of the issue as e-commerce becomes increasingly popular.

“Considering that Amazon and other e-commerce websites offer nationwide shipping, the 9th Circuit’s rule extinguishes e-commerce sellers’ due process rights and subjects them to jurisdiction in every state in the Union,” said Serge Krimnus of Bochner, counsel of record for the storefronts, in an email statement. “We hope the Supreme Court grants certiorari; applies the rule of the 5th and 8th Circuits; and reaffirms its decision in Calder v. Jones.”

Read more:

It’s getting easier for plaintiffs to pick where to sue internet retailers

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