In the Age of Internet and Personal Jurisdiction

superior court sealJudge LeGrow of the Delaware Superior Court recently addressed an issue facing courts across the nation: Does one submit themselves to personal jurisdiction within a state based simply on statements made over the World Wide Web?

In the case at bar, UBO Trading v. Terrapinn, Plaintiffs brought a defamation lawsuit against the author of a web-article, the author’s employer, and the website’s “host” for the following post:

Because Jef Rotblut’s trading firm once lost $40 million in about 20 minutes, he highlighted the essential roles of mitigating risk through the software development and testing process.

Being a trading firm, the company’s ability to raise new capital was stifled after the article was released. The author was, at all relevant times, in Illinois and is currently a citizen of Washington DC. The employer is a Delaware corporation and the host is incorporated under the laws of the United Kingdom with its principal place of business in London, England. The author and host moved for dismissal pursuant to Del. Super. Ct. Civ. R. 12(b)(2) based on a lack of personal jurisdiction.    

When a non-resident defendant brings a challenge to personal jurisdiction the court conducts a two-step analysis.  First, the court must consider whether Delaware’s long-arm statute, 10 Del. C. § 3104(c), confers jurisdiction.  If so, the court must then assure that Due Process safeguards are met.

Delaware’s long-arm statute allows for both general and specific jurisdiction over non-resident defendants.  Subsection 3 provides for specific jurisdiction when a person causes injury in the state by an act or omission in the state, while subsection 4 provides for general jurisdiction where the person regularly conducts business within the state.

The question of Due Process was not reached by the Court as Judge Legrow dismissed the author and website host from the litigation without prejudice based on Plaintiffs’ failure to show that personal jurisdiction was proper under Delaware’s long-arm statute.  Under 3104(c)(3), specific jurisdiction failed because the Plaintiffs did not show that the injury was caused by an act within Delaware.  Similarly, under (c)(4), general jurisdiction failed because Plaintiffs did not produce evidence that either the author or the website host regularly conducted business in Delaware.  There was no showing that Defendants sought out Delaware as their market any more than they did the United States as a whole.  Actions such as these are insufficient to establish “regularly conducted business” in the state.

Judge LeGrow was sympathetic to Plaintiffs’ argument that this holding will require them to litigate in different jurisdictions with the possibility of inconsistent results and assuredly higher costs; however, such an argument cannot overcome constitutional requirements in establishing personal jurisdiction.

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