In a recent case, Doe v. WebGroup Czech Republic, A.S., No. 22-55315 (9th Cir. 2024), the U.S. Court of Appeals for the Ninth Circuit answered a question that is frequently asked by U.S. litigants: “Is a foreign defendant subject to personal jurisdiction in a U.S. federal court where the defendant operates a website directed at the U.S. market?” For the first time, the Ninth Circuit provided a pragmatic standard for a critical issue in a world of globalized e-commerce and cloud computing.
The facts underlying WebGroup are grisly. The plaintiff is a California resident who, as a minor, was a sex trafficking victim. Plaintiff sued two related Czech entities—WebGroup Czech Republic, A.S. and NKL Associates, S.R.O.—which operate two pornographic websites featuring at least four videos showing the plaintiff, one of which generated more than 160,000 views. The defendants are based in Prague, Czech Republic, and do not conduct any business operation in the United States. Their websites, however, are accessible in the United States. Further, defendants’ websites are hosted on servers in the Netherlands that are operated by a U.S.-based company.
The Ninth Circuit reversed the District Court’s ruling granting the defendants’ motion to dismiss for lack of personal jurisdiction. In doing so, the Ninth Circuit added more granularity to the traditional “minimum contacts” rule set forth in the landmark U.S. Supreme Court case International Shoe Co. v. Washington, 326 U.S. 310 (1945).
The Ninth Circuit began its analysis with the well-established, three part test for exercising specific jurisdiction over a foreign defendant: (1) the defendant either purposely directed its activities toward the United States or purposefully availed itself of the privilege of conducting business in the United States; (2) the claim arose from the defendant’s forum-related activities, and; (3) the exercise of jurisdiction is reasonable, comporting with fair play and substantial justice.
In the context of operating a website, the Ninth Circuit reiterated its previous holding in Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218 (9th Cir. 2011) that maintaining a passive website alone is not a purposeful direction of activities. However, the Court found that a passive website that nevertheless involves conduct directly targeting the forum may be considered to be engaging in a purposeful direction of activities towards the United States.
The Court noted that the WebGroup defendants had contracted with content delivery network services (“CDNs”) based in the U.S., which allows faster and smoother replay of online videos by temporarily storing videos from the Netherlands to U.S.-based CDN facilities. The Ninth Circuit compared this activity to a foreign seller of goods contracting with a fulfillment center within the United States to make faster and easier delivery of products to U.S. customers. The Ninth Circuit also found it relevant that the websites derived between 12% to 19% of their traffic from the United States, notwithstanding that the websites did not necessarily feature advertisements specifically targeted to the U.S. audience.
Practice Tips
In an era of globalized commerce, a website that is accessible from California, standing alone, is not enough to confer jurisdiction over that website’s foreign operator. But as the Ninth Circuit explained in WebGroup, it is possible to sue a foreign defendant in California if the website-related activities featured “something more.”
In his concurring opinion, Judge Kenneth Lee noted that jurisdictional discovery is a useful tool for determining whether there is “something more.” Although Judge Lee found that the defendants in WebGroup were plainly directing their activities to the United States, he explained that there may be “other less obvious cases,” in which “it may behoove a district court to allow jurisdictional discovery, especially if the pleadings are imprecise.” Prospective plaintiffs who do not yet have the information for “something more” should leverage Judge Lee’s concurrence and use jurisdictional discovery to find a hook that may subject foreign defendants to jurisdiction in the United States.
For questions or comments on the content of this post, please email Nathan Park at [email protected].
