Opposing Nationwide Long-Arm General Jurisdiction Based on “Significant” Internet Presence
Gator.com Corp. (“Gator.com”), a California-based software company, received a cease-and-desist letter in March, 2001, from L.L. Bean, a Maine corporation, demanding that Gator.com cease using its “pop-up” internet software to cause advertisements offering a coupon for one of L.L. Bean’s competitors to pop up each time one of Gator.com’s users visited the L.L. Bean website. Gator.com then instituted a declaratory judgment action in the federal district court in California, requesting a judgment that its actions did not violate state or federal law. The district court dismissed Gator.com’s complaint on the ground that it did not have personal jurisdiction over L.L. Bean, which has its principal place of business in Maine, has a limited number of retail stores, and has no retail stores in California. L.L. Bean’s only contacts with California are its catalog sales, a toll-free telephone number, and an interactive website which produces about 16% of L.L. Bean’s total sales. Gator.com appealed to the Ninth Circuit, a panel of which found, based on these facts, that L.L. Bean has sufficient contacts with California to permit the court to exercise general personal jurisdiction. See Gator.com Corp. v. L.L. Bean, Inc., 341 F.3d 1072 (9th Cir. 2003).This finding was based on the panel’s view that, in particular, L.L. Bean’s substantial mail-order and internet-based commerce in the state are sufficient to support the assertion of general personal jurisdiction. In addition, the panel noted that, even if L.L. Bean’s only contacts with California had been through its “virtual store,” i.e., its interactive website, a finding of general jurisdiction would be warranted.
On April 29, 2004, the Ninth Circuit granted L.L. Bean’s petition for a rehearing en banc, Gator.com Corp. v. L.L. Bean, 366 F.3d 789 (9th Cir. 2004), and on July 27, 2004, NELF filed an amicus letter in support of L.L. Bean on its own behalf and on behalf of Associated Industries of Massachusetts. The letter sought to apprise the Ninth Circuit of two issues that it should consider. First, the letter discussed the potentially adverse impact of the panel’s decision not only on the business community as a whole but especially on small businesses that use interactive internet sites, who would be devastated by the costs of defending a lawsuit in a distant state. Second, the letter addressed a issue not reached by the panel, arguing that, not only should the panel’s decision on general jurisdiction be reversed, but there should also be no finding of specific personal jurisdiction in California based on L.L. Bean’s cease and desist letter. If Gator.com were to obtain specific personal jurisdiction, based on that single letter, for litigation relating to any internet activities, it would have obtained through the back door of specific jurisdiction what NELF and AIM contend it cannot obtain through general personal jurisdiction. The dispute in this case is whether Gator.com infringed L.L. Bean’s Maine-based trademark rights, which is not an appropriate basis for specific personal jurisdiction in California.
As an anticlimactic conclusion to this closely watched case, in a decision issued on February 15, 2005, the Ninth Circuit en banc panel dismissed the appeal as moot, based on the parties’ settlement of their dispute. Although the parties had sought to structure their settlement so as to keep alive the hotly contested jurisdictional issue, the Ninth Circuit determined that the matter was no longer an actual case or controversy, as required by Article III of the Constitution. The upshot of the dismissal is that the only decision in this matter that remains valid is the District Court’s holding that it did not have personal jurisdiction over L.L. Bean.
Gator.com Corp. (“Gator.com”), a California-based software company, received a cease-and-desist letter in March, 2001, from L.L. Bean, a Maine corporation, demanding that Gator.com cease using its “pop-up” internet software to cause advertisements offering a coupon for one of L.L. Bean’s competitors to pop up each time one of Gator.com’s users visited the L.L. Bean website. Gator.com then instituted a declaratory judgment action in the federal district court in California, requesting a judgment that its actions did not violate state or federal law. The district court dismissed Gator.com’s complaint on the ground that it did not have personal jurisdiction over L.L. Bean, which has its principal place of business in Maine, has a limited number of retail stores, and has no retail stores in California. L.L. Bean’s only contacts with California are its catalog sales, a toll-free telephone number, and an interactive website which produces about 16% of L.L. Bean’s total sales. Gator.com appealed to the Ninth Circuit, a panel of which found, based on these facts, that L.L. Bean has sufficient contacts with California to permit the court to exercise general personal jurisdiction. See Gator.com Corp. v. L.L. Bean, Inc., 341 F.3d 1072 (9th Cir. 2003).This finding was based on the panel’s view that, in particular, L.L. Bean’s substantial mail-order and internet-based commerce in the state are sufficient to support the assertion of general personal jurisdiction. In addition, the panel noted that, even if L.L. Bean’s only contacts with California had been through its “virtual store,” i.e., its interactive website, a finding of general jurisdiction would be warranted.
On April 29, 2004, the Ninth Circuit granted L.L. Bean’s petition for a rehearing en banc, Gator.com Corp. v. L.L. Bean, 366 F.3d 789 (9th Cir. 2004), and on July 27, 2004, NELF filed an amicus letter in support of L.L. Bean on its own behalf and on behalf of Associated Industries of Massachusetts. The letter sought to apprise the Ninth Circuit of two issues that it should consider. First, the letter discussed the potentially adverse impact of the panel’s decision not only on the business community as a whole but especially on small businesses that use interactive internet sites, who would be devastated by the costs of defending a lawsuit in a distant state. Second, the letter addressed a issue not reached by the panel, arguing that, not only should the panel’s decision on general jurisdiction be reversed, but there should also be no finding of specific personal jurisdiction in California based on L.L. Bean’s cease and desist letter. If Gator.com were to obtain specific personal jurisdiction, based on that single letter, for litigation relating to any internet activities, it would have obtained through the back door of specific jurisdiction what NELF and AIM contend it cannot obtain through general personal jurisdiction. The dispute in this case is whether Gator.com infringed L.L. Bean’s Maine-based trademark rights, which is not an appropriate basis for specific personal jurisdiction in California.
As an anticlimactic conclusion to this closely watched case, in a decision issued on February 15, 2005, the Ninth Circuit en banc panel dismissed the appeal as moot, based on the parties’ settlement of their dispute. Although the parties had sought to structure their settlement so as to keep alive the hotly contested jurisdictional issue, the Ninth Circuit determined that the matter was no longer an actual case or controversy, as required by Article III of the Constitution. The upshot of the dismissal is that the only decision in this matter that remains valid is the District Court’s holding that it did not have personal jurisdiction over L.L. Bean.
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