Written by J. H. Revere, Esq.
Edited by William, J. Pfund, Esq.
It may seem axiomatic, but a Court’s jurisdiction is never unlimited. In Virginia, the extent to which a Virginia Court may exercise jurisdiction is found in the Virginia Code. In particular, Virginia Code §8.01-328.1 (Code of Virginia, 1950, as amended). The code section lists no less than twelve (12) instances where jurisdiction may be exercised over a person by a Virginia Court. For the purposes of this article we are really only concerned with one (1) of those instances. Virginia Code §8.01-328.1A.1. holds that a Virginia Court my exercise jurisdiction over a defendant when that defendant “directly or by an agent…[t]ransact[s] any business in this Commonwealth[.] The code section further makes it clear that “[w]hen jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him”. Va. Code §8.01-328.1C.
This is a fairly easy section to apply in many cases, but much more difficult in the age of the internet. Fortunately Virginia’s Federal Courts have interpreted what it means to conduct “business” in the Commonwealth of Virginia using the internet. The United States Court for the Eastern District of Virginia recently addressed this issue in the case of Thousand Oaks Barrel Co., LLC v. Deep South Barrels LLC, 241 F. Supp. 3d 708 (2017).
In Thousand Oaks the question for the Court was whether or not a Texas Company could be hauled into a Virginia Court based upon their internet presence and some sales (non-targeted) in Virginia via their website. The plaintiff Thousand Oaks and a manufacturer of miniature bourbon barrels alleged that defendant Deep South Barrels had infringed upon their design and intellectual property. Id. at 711-12. (Who knew the world of miniature bourbon barrels was so cut-throat).
The defendants filed a motion to dismiss for a lack of personal jurisdiction, asserting that they do not do business in Virginia and that therefore they cannot be hauled into a Virginia Court and that they are not subject to jurisdiction in Virginia under the long arm statute (Va. Code 8.01-328.1). Id. at 714. Citing long held principals of Constitutional law the Court noted:
The Due Process Clause requires a nonresident defendant to have “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945) (internal quotation marks omitted).
While the defendants asserted they lacked sufficient contacts with Virginia to be subject to personal jurisdiction, the plaintiffs asserted that the defendants: 1) sold “barrels throughout the United States, including Virginia” 2) “has an interactive e-commerce website which allows customers to select products, order them, and have them shipped to the customer, and” 3) maintains an ongoing relationship with customers by requiring them to register with the website.” Id. at 715. Further, “Virginia customers account for 1.21% of its total number of customers. Deep South Barrels has also made 99 shipments to Virginia, which is 1.17% of the company’s total number of shipments.” Id.
The Court held that this activity was sufficient to meet the minimum contacts requirements and subject defendant Deep South Barrels to jurisdiction in Virginia. The Court noted:
Deep South Barrels directed electronic activity into Virginia with the manifest intent to do business with Virginia residents when it set up an interactive ecommerce website accessible to Virginia residents and used that website to fulfill Virginia customers’ Internet purchases. Contrary to defendants’ argument, Deep South Barrels’ interactive e-commerce website is not “passive” or “semi-interactive”; the website is plainly interactive, and as the Zippo analysis makes clear, there is no doubt that such websites satisfy the purposeful availment requirement of specific jurisdiction.
Id. at 716 (citations omitted).
There is no doubt that this is a broad interpretation of contacts for the purpose of jurisdiction and suggests that almost any internet based business could be subject to jurisdiction in any state where they make sales, even if they don’t actually advertise or target that state.