Wednesday, May 23, 2012

direct targeting of ads confers personal jurisdiction

Man-D-Tec, Inc. v. Nylube Products Co., LLC, 2012 WL 1831521 (D. Ariz.)

Man-D-Tec is an Arizona corporation, and Nylube is a Michigan corporation.  They compete in the market for elevator light fixtures and replacement lamps.  Man-D-Tec sued for false advertising, and Nylube arged that there was no personal jurisdiction in Arizona. 

Nylube sells throughout the US, but doesn’t regularly advertise in Arizona.  About 0.5% of its total sales over the past two years were to Arizona customers.  The challenged material was an ad circular attached to the invoices of nine of Nylube’s Arizona customers.

Nylube’s contacts with Arizona were not sufficiently continuous and systematic to subject it to general jurisdiction in Arizona.  Having its website hosted on an Arizona server was merely fortuitous, nor did the fact that its interactive website was accessible in Arizona create general jurisdiction.  A small number of Arizona residents receiving ads was also insufficient.  Though Nylube maintained at least 14 customers in Arizona over the last two years, continuous activity alone is insufficient.  Nylube wasn’t licensed to do business in Arizona, didn’t maintain offices, telephone numbers, or bank accounts here, and had no sales personnel or agents for service of process in Arizona. Arizona customers represented only about 0.5% of Nylube’s total sales. Nylube’s small Arizona customer base was insufficient to justify suit against it for unrelated activities.

Specific jurisdiction, by contrast, was present.  Nylube argued that the ad flyers went to customers throughout the US and thus weren’t purposely directed to Arizona or any particular forum.  But because the flyers were directed to particular prior customers, and Nylube apparently knew that some were Arizona residents, there was purposeful direction to Arizona (as well as other states).  Nationwide ads in journals or magazines that happen to be read in a forum state may not constitute purposeful direction.  But cases so holding involved defendants who didn’t thesmselves direct ads to particular forum residents, but rather advertised in national periodicals that happened to be received in the forum state. Direct targeting of particular consumers in a known forum, by contrast, is purposeful direction.

The claim here also arose out of Nylube’s forum-related activities: the ads.  And Nylube did not show that the exercise of jurisdiction was otherwise unreasonable.  The court also denied Nylube’s motion to transfer.

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