GATOR.COM CORP., Plaintiff-Appellant,
v.
L.L. BEAN, INC., Defendant-Appellee.
341 F.3d 1072 (9th Cir. 2003), vacated and rehearing en
banc granted, 366 F.3d 789
(9th Cir. 2005) (settlement agreement mooted merits controversy)
*1074 Before FERGUSON, BRUNETTI, and TASHIMA, Circuit Judges.
OPINION
FERGUSON, Circuit Judge.
This case presents the issue of whether the
District Court has personal jurisdiction over Defendant-Appellee
L.L. Bean, Inc. ("L.L. Bean"), either because L.L. Bean's contacts
with California as a result of its sales and other activities in California are
"substantial" or "continuous and systematic," or because
L.L. Bean sent a cease-and-desist letter to the Plaintiff, Gator.com Corp.
("Gator"), at its office in California. In response to L.L. Bean's motion for
dismissal, the District Court determined that it did not have in personam jurisdiction.
Because we determine that L.L. Bean's contacts with California, in
particular its substantial mail-order and internet-based commerce in the state, are sufficient to support
the assertion of general personal jurisdiction, we reverse the District Court's
decision and remand for further proceedings.
I.
A. Factual Background
Defendant/Appellee
L.L. Bean is a Maine corporation with its principal place of business in that
state. Its corporate offices,
distribution facilities, and manufacturing facilities are all located in
Maine. L.L. Bean sells clothing and
outdoor equipment and maintains stores in Maine, Delaware, New Hampshire,
Oregon, and Virginia. In total, L.L.
Bean sells over one billion dollars worth of merchandise annually to consumers
in 150 different countries.
A very large percentage of L.L. Bean's sales
come from mail-order and internet business.
The company ships approximately 200 million catalogs each year. In 2000, its website sales accounted for over
two hundred million, or about 16 percent, of its total sales. A September 2000 New York Times
article described L.L. Bean as "an e-commerce star that is out-performing
all but a few companies in its categories on the Web." Bob Tedeschi, L.L. Bean Beats the Current by Staying in
Midstream, N.Y. Times, Sept. 20, 2000, at H7. The same article quoted an
L.L. Bean senior executive as stating that "[t]he Web is the
fastest-growing, most profitable source of revenue for [L.L. Bean], ... [a]nd it's been the primary
area for generating new customers."
Id.
L.L. Bean is not authorized to do business in
California, has no agent for service of process in California, and is not
required to pay taxes in California.
However, in the year 2000 alone, L.L. Bean sold millions of dollars
worth of products in California (about six percent of its total sales) through
"its catalog, its toll-free telephone number, and its Internet
website." See Appellee's Br. at 41.
In the same year, L.L. Bean also mailed a substantial number of catalogs
and packages to California residents, targeted substantial numbers of
California residents for direct email solicitation, and maintained substantial
numbers of "on-line" accounts for California consumers. See id.
at 5. Like other internet customers, California
residents may view and purchase products on-line as well as interact with L.L.
Bean customer service representatives "live" over the internet if
they have questions or concerns with an L.L. Bean product. [FN1]
FN1. At an October 9,
2001 hearing, L.L. Bean conceded that its website was "interactive."
In addition, L.L. Bean conducts national print
and broadcast marketing efforts that include, but according to L.L. Bean do not
target, California. L.L. Bean also maintains relationships with numerous
California vendors from whom they purchase products. See Appellee's
Br. at 5. Other *1075 than for the
year 2000, L.L. Bean has not provided information regarding the contacts its
employees have had with California or any purchases of goods from California.
Plaintiff/Appellant Gator.com Corp. is a Delaware
corporation with its principal place of business in California. Gator develops and distributes software
("the Gator program") to consumers who purchase goods or services
over the internet. The Gator program
provides a "digital wallet" which stores computer user passwords to
various websites, user personal information, and credit card information. In addition, when a user visits a website on
the internet, the Gator program analyzes the Uniform Resource Locator ("URL")
associated with that web page. When it
recognizes certain URLs that have been pre-selected by Gator, the program
displays a pop-up window offering a coupon for a competitor. Gator users who visit L.L. Bean's website are
offered coupons for one of L.L. Bean's competitors, Eddie Bauer, via a pop-up
window that at least partially obscures L.L. Bean's website.
On March 16, 2001, L.L. Bean's counsel mailed
Gator a cease-and-desist letter requesting that Gator stop its pop-up windows
from appearing when customers visited L.L. Bean's website. Although the letter stated that "L.L.
Bean has no particular desire to engage in costly and time-consuming
litigation," it stated that "if necessary, [L.L. Bean] will undertake
all means available to prevent this activity from continuing." The letter also stated L.L. Bean's counsel's opinion that the pop-up windows
"unlawfully appropriate[d] the good will associated with L.L. Bean's
famous trademark, create[d] confusion about the source of the products and
services offered at llbean.com, and suggest[ed] an affiliation or connection
between or among L.L. Bean, Gator.com, and Eddie Bauer that does not in fact
exist." In addition, the letter
stated that "[u]nder applicable federal and
state law, L.L. Bean is entitled to an injunction against such unlawful
conduct."
B. Procedural History
On March 19, 2001, Gator filed a declaratory
judgment action in the District Court for the Northern District of California,
requesting a judgment that the Gator program "does not infringe, or
dilute, directly or contributorily, any trademark
held by [L.L. Bean] and does not constitute unfair competition, a deceptive or
unfair trade or sales practice, false advertising, fraud, or any other
violation of either federal or state law."
On July 16, 2001, L.L. Bean filed a Motion to Dismiss, along with a
Declaration of Support, alleging that the District Court lacked personal
jurisdiction. On November 21, 2001,
after a hearing, the District Court granted L.L. Bean's motion, finding that
neither general nor specific jurisdiction existed. On December 21, 2001, Gator filed this timely
appeal.
II.
A district
court's determination of whether personal jurisdiction
exists is reviewed de novo. Sher v. Johnson,
911 F.2d 1357, 1360 (9th Cir.1990).
The factual findings underlying the jurisdiction determination are
reviewed for clear error. Panavision Int'l, L.P. v. Toeppen,
141 F.3d 1316, 1320 (9th Cir.1998). It
is the plaintiff's burden to establish that a district court has
jurisdiction. Doe
v. Unocal Corp.,
248 F.3d 915, 922 (9th Cir.2001) (citation
omitted). For purposes of a Motion to Dismiss, the
plaintiff's version of the facts are assumed to be
true unless directly controverted. Id. " '[C]onflicts
between the facts contained in the parties' affidavits must be resolved in
[plaintiffs'] favor for purposes of deciding whether a *1076 prima facie
case for personal jurisdiction exists.' " Id.
(quoting AT & T
v. Compagnie Bruxelles
Lambert,
94 F.3d 586, 588 (9th Cir.1996)).
III.
Since
there is no applicable federal statute governing jurisdiction in the instant
case, we apply the law of the state in which the district court sits, i.e.,
California. Panavision,
141 F.3d at 1320 (citing Core-Vent
Corp. v. Nobel Indus. AB,
11 F.3d 1482, 1484 (9th Cir.1993)). "California permits the exercise of
personal jurisdiction to the full extent permitted by due process." Bancroft
& Masters, Inc. v. Augusta Nat'l Inc.,
223 F.3d 1082, 1086 (9th Cir.2000).
The assertion of personal jurisdiction
satisfies due process so long as there are
"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) (quoting Milliken
v. Meyer,
311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). These requirements "give[ ] a degree of
predictability to the legal system that allows potential defendants to
structure their primary conduct with some minimum assurance as to where that
conduct will and will not render them liable to suit." World-Wide
Volkswagen Corp. v. Woodson,
444 U.S. 286, 297, 100 S.Ct. 559 (1980).
Personal
jurisdiction may be either general or specific. Panavision,
141 F.3d at 1320. General jurisdiction exists when there are
"substantial" or "continuous and systematic" contacts with
the forum state, even if the cause of action is unrelated to those
contacts. Bancroft,
223 F.3d at 1086 (citing Helicopteros Nacionales
de Colombia, S.A. v. Hall,
466 U.S. 408, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404
(1984)). Specific jurisdiction may be asserted "if
the case arises out of certain forum-related acts." Id.
"Whether dealing with specific or general jurisdiction, the touchstone
remains 'purposeful availment' ... [to] ensure[ ]
that 'a defendant will not be haled into a jurisdiction solely as a result of
"random," "fortuitous," or "attenuated"
contacts.' " Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain
Co.,
284 F.3d 1114, 1123 (9th Cir.2002) (quoting Burger
King Corp. v.
Rudzewicz,
471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528
(1985)) (other citations omitted). The goal of the "purposeful availment" requirement is to give the corporation
"clear notice that it is subject to suit [in the forum State]" so
that it "can act to alleviate the risk of burdensome litigation by
procuring insurance, passing the expected costs on to customers, or, if the
risks are too great, severing its connection with the State." World-Wide
Volkswagen,
444 U.S. at 297, 100 S.Ct. 559.
We begin with
an analysis of whether L.L. Bean's contacts with California were sufficient to
confer general jurisdiction. [FN2] "The standard
for establishing general jurisdiction is 'fairly high....' " Bancroft,
223 F.3d at 1086 (quoting Brand
v. Menlove Dodge,
796 F.2d 1070, 1073 (9th Cir.1986)). The contacts with the forum state must be of
a sort that "approximate physical presence." Id. (citing Gates
Learjet Corp. v. Jensen,
743 F.2d 1325, 1331 (9th Cir.1984)); but see Int'l
Shoe,
326 U.S. at 316-17, 66 S.Ct. 154 ("[T]he terms 'present' or 'presence' are used merely
to symbolize those activities of the corporation's agent within the state which
courts will deem to be sufficient to satisfy the demands of due
process."). "Factors to be *1077
taken into consideration are whether the defendant makes sales, solicits or
engages in business in the state, serves the state's markets, designates an
agent for service of process, holds a license, or is incorporated
there." Bancroft,
223 F.3d at 1086 (citing Hirsch
v. Blue
Cross, Blue Shield,
800 F.2d 1474, 1478 (9th Cir.1986)). "We ... focus upon the 'economic
reality' of the defendants' activities rather than a mechanical
checklist." Gates
Learjet,
743 F.2d at 1331. Even if substantial, or continuous and
systematic, contacts exist, the assertion of general jurisdiction must be
reasonable. Amoco
Egypt Oil Co. v. Leonis Navigation Co., Inc.,
1 F.3d 848, 852-53 (9th Cir.1993).
FN2. Because we hold
that there is general jurisdiction in this case, we do not address whether
specific jurisdiction is present on the basis of L.L. Bean's cease-and-desist
letter.
A. Substantial or Continuous and Systematic
Contacts Test
In applying the "substantial" or
"continuous and systematic" contacts test, courts have focused
primarily on two areas. First, they look
for some kind of deliberate "presence" in the forum state, including
physical facilities, bank accounts, agents, registration, or
incorporation. See Perkins
v. Benguet Consol. Mining Co.,
342 U.S. 437, 72 S.Ct. 413, 96 L.Ed.
485 (1952) (finding general jurisdiction
when president of Phillipines-based corporation
maintained office, kept company files, held director meetings, distributed
salaries, and conducted other company business in the forum state). In addition, courts have looked at whether
the company has engaged in active solicitation toward and participation in the state's markets, i.e., the
economic reality of the defendant's activities in the state. [FN3]
FN3. Compare Theo.
H. Davies & Co. v. Republic of the Marshall Islands,
174 F.3d 969, 974-75 (9th Cir.1998) (finding
general jurisdiction over two foreign corporations engaged in substantial
commercial activity in the United States, including purchase and solicitation
of bids for generators in Hawaii), with Gates
Learjet,
743 F.2d 1325, 1331 (finding no general
jurisdiction where defendant solicited distributorship in state, made several
visits to state, agreed to state choice of law and forum selection clauses in
contract, purchased parts from state, and sent numerous letters and telexes to
state), and Helicopteros,
466 U.S. at 417, 104 S.Ct. 1868 (approving Rosenberg
Bros. & Co. v. Curtis Brown Co.,
260 U.S. 516, 43 S.Ct. 170, 67 L.Ed.
372 (1923), in which the Court found no general
jurisdiction over "small retailer" from Oklahoma who "never
regularly carried on business" in New York and whose "only connection
with New York was [purchasing] ... a large portion of the merchandise [from New
York wholesalers].").
In Helicopteros,
the Supreme Court considered both of these factors and found no general
jurisdiction in Texas. The case involved
a defendant whose contacts consisted of
sending its CEO to Houston for meetings, drawing checks on a Houston bank, and
purchasing large quantities of helicopters and training for the helicopters
from a Texas supplier. Helicopteros,
466 U.S. at 416, 104 S.Ct. 1868. After noting the absence of traditional presence
factors--an agent, license to do business, incorporation, or physical
facilities--the Supreme Court also noted that the defendant "never ...
performed ... operations in Texas or sold any product that reached Texas,[and] never solicited business in Texas." Id.
at 411, 104 S.Ct. 1868.
No Supreme Court cases and only a handful of
Ninth Circuit cases have addressed the issue of when and whether general
jurisdiction may be asserted over a company that does business on the internet. The most relevant of our cases, Bancroft,
held that the defendant's contacts were insufficient to confer general
jurisdiction. In addition to not being
registered or licensed to do business in California, the defendant in Bancroft
did not pay taxes or maintain a bank account in California and "target[ed]
no print, television, or radio advertising toward California." 223
F.3d at 1086. In
addition, the court found that *1078 the defendant's website was "
'passive,' i.e., consumers cannot use it to make purchases." Id. Finally, the court found that
neither the defendant's "occasional, unsolicited sales of tournament
tickets and merchandise to California residents" nor a few licensing
agreements that the defendant had made with California vendors were sufficient
to create general jurisdiction, as these
contacts "constitute doing business with California, but do not constitute
doing business in California." Id.
[FN4]
FN4. Other Ninth
Circuit cases explicitly considering the significance of exerting jurisdiction
because of internet related contacts are not particularly instructive as the
facts in each case involve considerably less contact than what was present in Bancroft,
let alone the instant case. Cybersell involved jurisdiction over a Florida
corporation which had directed "no commercial activity over the Internet
in Arizona. All that [the defendant] did
was post an essentially passive home page on the web...." Cybersell, Inc. v. Cybersell,
Inc.,
130 F.3d 414, 419 (9th Cir.1997). The parties conceded that general
jurisdiction did not exist. 130
F.3d at 416. See also Rio
Properties, Inc. v. Rio Int'l Interlink,
284 F.3d 1007, 1019 (9th Cir.2002) (addressing
specific jurisdiction but not general jurisdiction issues). In Panavision,
the Court dismissed the general jurisdiction question in a sentence, holding
that the defendant's contact activity was not continuous and systematic where
the defendant was domiciled in Illinois and his activity consisted only of
registering domain names of major companies and then trying to sell the domains
to those companies. 141
F.3d at 1320.
Given the high
standard the Ninth Circuit has set, [FN5] the presence of general jurisdiction in the instant case
is a close question. Admittedly, L.L. Bean has few of the factors traditionally
associated with physical presence, such as an official agent or
incorporation. Nevertheless, we find
that there is general jurisdiction in light of L.L. Bean's extensive marketing
and sales in California, its extensive contacts with California vendors, and
the fact that, as alleged by Gator, its website is clearly and deliberately
structured to operate as a sophisticated virtual store in California.
FN5. See Shute v. Carnival Cruise Lines,
897 F.2d 377, 380-81 (9th Cir.1990) (collecting
cases), rev'd on other grounds, 499
U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991).
First, L.L. Bean's overall commercial contacts
with California meet the continuous and systematic contacts test applied in Davies,
Bancroft and Helicopteros. The facts as alleged by Gator indicate that
L.L. Bean meets the first set of factors set out in these cases: it makes sales, solicits business in the
state, and serves the state's markets. See
Davies,
174 F.3d at 975;
see also Richmark Corp. v. Timber Falling Consultants,
Inc.,
937 F.2d
1444, 1447 (9th Cir.1991). In addition, unlike the defendant in Bancroft,
Gator alleges that L.L. Bean "targets" its
electronic advertising at California and maintains a highly interactive, as
opposed to "passive," website from which very large numbers of
California consumers regularly make purchases and interact with L.L. Bean sales
representatives. Cf. Bancroft,
223 F.3d at 1086. Unlike the defendant in Helicopteros,
L.L. Bean has not merely made a single "package" purchase from a
forum vendor or cashed a check on a forum bank; instead, it ships very large numbers
of products to California and maintains ongoing contacts with numerous
California vendors. Nor are any of L.L. Bean's contacts occasional or
infrequent. See Gates
Learjet,
743 F.2d at 1331. L.L. Bean's contacts are part of a
consistent, ongoing, and sophisticated sales effort that has included
California for a number of years.
In short, even under the heightened standard
applied to general jurisdiction, the "consistent and substantial pattern
of business relations" represented by these facts is sufficient to confer
general jurisdiction. See Davies,
174 F.3d at 975. There is nothing "random, fortuitous, or
*1079 attenuated" about subjecting L.L. Bean to the authority of
the court as L.L. Bean has deliberately and purposefully availed itself, on a
very large scale, of the benefits of doing business within the state. See Burger
King,
471 U.S. at 475, 105 S.Ct. 2174; Asahi
Metal Indus. Co., Ltd. v. Superior Court,
480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92
(1987); [FN6] accord Metro.
Life Ins. Co. v. Robertson-Ceco Corp.,
84 F.3d 560, 572 (2d Cir.1996) (noting that
extensive mail order and telephone sales alone could support general
jurisdiction if sufficiently "continuous and systematic."); Mich.
Nat'l Bank v. Quality Dinette, Inc.,
888 F.2d 462, 466 (6th Cir.1989) (finding pattern
of continuous and systematic contacts sufficient for general jurisdiction given
mail order solicitations to Michigan businesses and presence of at least one
sale in Michigan every month for two years). [FN7]
FN6. Discussing
purposefully directed activity as potentially including "an intent or
purpose to serve the market in the forum State," including
"advertising in the forum State, establishing channels for providing
regular advice to customers in the forum State, or marketing the product
through a distributor ... in the forum State" or "creat[ing], control[ing], or employ[ing a] distribution system [to bring products to the forum State]." 480 U.S. at 112, 107 S.Ct.
1026.
FN7. Gator also
points to the Supreme Court's decision in Quill Corp. v. North Dakota as
supportive of its position. Quill
involved a state's request for a declaratory judgment that an out-of-state
mail-order company with no physical presence in the state had sufficient
"minimum contacts" with the state
to justify the imposition of a sales tax.
See Quill
Corp. v. North Dakota,
504 U.S. 298, 112 S.Ct. 1904, 119 L.Ed.2d 91 (1992). Although the Court eventually concluded that
the imposition of a tax would violate the "substantial nexus"
requirement of the Commerce Clause, it also concluded, applying the reasoning
of International Shoe and Burger King, that "the imposition
of the collection duty on a mail-order house that is engaged in continuous and
widespread solicitation of business within a State [would not violate Due
Process]." Id.
at 308, 312, 112
S.Ct. 1904.
Second,
even if the only contacts L.L. Bean had with California were through its
virtual store, a finding of general jurisdiction in the instant case would be
consistent with the "sliding scale" test that both our own and other
circuits have applied to internet-based companies. See, e.g., Cybersell,
130 F.3d at 417-19.
This test requires both that the party in question "clearly [do]
business over the Internet," Zippo
Mfg. Co. v. Zippo Dot Com, Inc.,
952 F.Supp. 1119, 1124 (W.D.Pa.1997), [FN8] and that the
internet business contacts with the forum state be substantial or continuous
and systematic. See Revell v. Lidov,
317 F.3d 467, 470-71 (5th Cir.2002); accord Coastal
Video Communications Corp. v. Staywell Corp.,
59 F.Supp.2d 562, 571 (E.D.Va.1999). Recognizing that an online store can operate
as the functional equivalent of a physical
store, the test does not require an actual presence in the state. Rather, the nature of the commercial activity
must be of a substantial enough nature that it "approximate[s]
physical presence." *1080
Bancroft,
223 F.3d at 1086 (citing Gates
Learjet,
743 F.2d at 1331).
FN8. Zippo
described the test as follows:
[T]he likelihood that personal
jurisdiction can be constitutionally exercised is directly proportionate to the
nature and quality of commercial activity that an entity conducts over the
Internet.... At one end of the spectrum are situations where a defendant
clearly does business over the Internet.
If the defendant enters into contracts with residents of a foreign
jurisdiction that involve the knowing and repeated transmission of computer files
over the Internet, personal jurisdiction is proper. At the opposite end ... a defendant has
simply posted information on an Internet Web site which is accessible to [forum
resident] users.... The middle ground is occupied by interactive Web sites where
a user can exchange information with the host computer.
Zippo, 952 F.Supp.
at 1124 (citations omitted).
Applying this test, the District of Columbia
Circuit recently found general jurisdiction
after finding that a defendant online brokerage firm was "through its
website ... doing business in the District of Columbia" where customers
could use the website to open accounts, transmit funds to those accounts
electronically, use the accounts to buy and sell securities, and enter into
binding contracts with the defendant. Gorman
v. Ameritrade Holding Corp.,
293 F.3d 506, 512-13 (D.C.Cir.2002) (citing Zippo,
952 F.Supp. at 1124); see
also Cybersell,
130 F.3d at 417 (discussing CompuServe,
Inc. v. Patterson,
89 F.3d 1257 (6th Cir.1996), as a case finding
general jurisdiction in Ohio where defendant knowingly used Ohio online
computer service provider "as a distribution center to market his
software."). The Fourth Circuit has
also adopted the "sliding scale" test without explicitly applying it
in the general jurisdiction context, noting that "something more"
than systematic transmission of electronic signals would be required in order
to assert general jurisdiction. See ALS
Scan, Inc. v. Digital Serv. Consultants, Inc.,
293 F.3d 707, 713-15 (4th Cir.2002); see also Cybersell,
130 F.3d at 418 (requiring, in the specific
jurisdiction context, "something more" than "mere advertisement
or solicitation ... on the Internet ... to indicate that the defendant
purposefully (albeit electronically) directed his activity in a substantial way
to the forum state").
Under the sliding-scale analysis, L.L. Bean's
contacts with California are sufficient to confer general jurisdiction. L.L. Bean's website is highly interactive and very extensive: L.L. Bean "clearly does business over
the Internet." See Zippo,
952 F.Supp. at 1124. Moreover, millions of dollars
in sales, driven by an extensive, ongoing, and sophisticated sales effort
involving very large numbers of direct email solicitations and millions of
catalog sales, qualifies as "substantial" or "continuous and
systematic" commercial activity. Accord
Coastal
Video,
59 F.Supp.2d at 572 ("As with traditional
business contacts, the most reliable indicator of the nature and extent of ...
Internet contact with the forum state will be the amount of sales generated in
the state by or through the interactive website."); cf. Bancroft,
223 F.3d at 1086 (rejecting general jurisdiction
on basis of occasional, unsolicited sales of tournament tickets and merchandise
to California residents); Revell,
317 F.3d at 471 (finding that, although "the
maintenance of a website is, in a sense, a continuous presence everywhere in
the world," the contacts of an online journal were not
"substantial" because it received only 17 and then 18 subscriptions
from forum state residents).
The District Court erred in concluding that
there was no general jurisdiction in this case.
We now proceed to consider whether assertion of general jurisdiction
over L.L. Bean is reasonable.
B. Reasonableness Test
Even if
there are sufficient contacts to support general jurisdiction in a particular
case, it is still limited by a reasonableness analysis. Amoco,
1 F.3d at 851.
The reasonableness test set out by Amoco is the same as the test
for reasonableness in the specific jurisdiction context, requiring an analysis
of seven factors:
[T]he extent of purposeful interjection, the burden on the
defendant to defend the suit in the chosen forum, the extent of conflict with
the sovereignty of the defendant's state, the forum state's interest in the
dispute; the
most efficient forum for judicial resolution of the dispute; the importance of the chosen forum to the
plaintiff's interest in *1081 convenient and effective relief; and the existence of an alternative forum.
Id. (quoting Shute,
897 F.2d at 386). The
burden is on the defendant to present a "compelling case" that the
assertion of jurisdiction is not reasonable.
Id. at 851-52. Although L.L. Bean did not specifically
address the issue of reasonableness in the general jurisdiction context, with
the exception of the "purposeful interjection" factor, its arguments
in the specific jurisdiction context are germane since the same standard
applies.
L.L. Bean
asserts that three of the above factors cut in its favor: the extent of purposeful interjection, the
burden on L.L. Bean of litigating in California, and the availability of an
alternative forum. L.L. Bean concedes
that the remaining factors are either neutral or cut in Gator's favor.
In the general jurisdiction context, the
purposeful interjection standard
"parallels the question of minimum contacts." Id. at 852. As discussed above, there is substantial
evidence that L.L. Bean has purposefully interjected itself into the California
market. Even conceding that this may be
a close case for general jurisdiction, this factor does not create a
"compelling case" for unreasonableness. To the contrary, the extensive nature of L.L.
Bean's interjection cuts in Gator's favor.
L.L. Bean also argues that defending this
litigation would impose a substantial burden on it because its principal place
of business and its corporate records and personnel are all located in
Maine. This argument lends little
support to L.L. Bean's case, given that it is a multi-million dollar company
that concedes that its agents regularly do business around the country,
including flying to California to meet with vendors. Nor does this case present
issues whose disposition will rely on access to L.L. Bean's facilities
or records. Moreover, the burden on
Gator if it were forced to proceed in Maine would be at least equal to, if not
more severe, than the burden faced by L.L. Bean. In short, L.L. Bean presents
no evidence that the " 'inconvenience is so great as to constitute a
deprivation of due process[.]' " Panavision,
141 F.3d at 1323 (quoting Caruth v. Int'l Psychoanalytical Ass'n,
59 F.3d 126, 128-29 (9th Cir.1995)).
Finally, L.L. Bean asserts that because Gator
has filed an almost identical declaratory action in the District Court of
Oregon, Gator has failed to show that there
is no alternative forum available. While
this factor does cut in L.L. Bean's favor, it does not make assertion of
jurisdiction unreasonable. We therefore
find that L.L. Bean has not presented a compelling case that general
jurisdiction is unreasonable.
IV.
It is increasingly clear that modern
businesses no longer require an actual physical presence in a state in order to
engage in commercial activity there. With the advent of "e-commerce,"
businesses may set up shop, so to speak, without ever actually setting foot in
the state where they intend to sell their wares. Our conceptions of jurisdiction must be
flexible enough to respond to the realities of the modern marketplace. "As technological progress ...
increase[s] the flow of commerce between States, the need for jurisdiction over
nonresidents [undergoes] a similar increase.... In response to these changes,
the requirements for personal jurisdiction over nonresidents [evolve]." Hanson
v. Denckla,
357 U.S. 235, 250-251, 78 S.Ct. 1228, 2 L.Ed.2d 1283
(1958).
Businesses who structure their activities to take full advantage of the
opportunities that virtual commerce offers can reasonably anticipate that these
same activities will potentially subject them to suit in the locales that they
have targeted.
*1082 We find
that the facts as alleged by Gator demonstrate that L.L. Bean has substantial
or continuous and systematic contacts with California sufficient to support a finding of general
jurisdiction. The decision of the
District Court is reversed and we remand for further proceedings consistent
with this opinion.
REVERSED and REMANDED.