In an action challenging the accessibility of a website to blind and visually impaired people, the Court of Appeals of the State of California, Fourth Appellate District, recently held that a California court may exercise specific jurisdiction over a Georgia LLC where the LLC purposefully availed itself of the privilege of conducting business in California by sending catalogs and selling over $300,000 worth of goods to California residents.
A copy of the opinion is available at: Link to the Opinion
A California consumer filed a complaint in California court against a Georgia collectibles seller alleging a violation of the Unruh Civil Rights Act because the Georgia company's website allegedly was not fully accessible by the blind and the visually impaired.
As you may recall, California's Unruh Civil Rights Act provides that "[a] violation of the right of any individual under the federal [ADA] shall also constitute a violation of this section." (Civ. Code, § 51, subd. (f).) The consumer here was blind and alleged the collectibles seller's website had access barriers which prevented blind people from having "full and equal access" to the website and did not comply with the most recent "Web Content Accessibility Guidelines" promulgated by the World Wide Web Consortium (W3C).
The collectibles seller was the largest retail seller of diecast models via catalogs and the internet in America. The seller is a Georgia LLC, with its principal place of business in Georgia, and no office or employees in California. The seller's only contact with California was through sales made via its catalogs and website, which totaled about $320-375k per year and comprised about 8% of its total sales.
The seller filed a motion to quash the consumer's complaint based on lack of personal jurisdiction. The trial court granted the seller's motion in part because the seller "did not direct its website toward California."
The consumer appealed.
Initially on appeal, the seller argued that the appeal was taken from a nonappealable order. The Appellate Court disagreed noting that "an order granting a motion to quash service of summons" is appealable. (Code Civ. Proc., § 904.1, subd. (a)(3).) The particular order appealed from here was an unsigned minute order. The Appellate Court held that an unsigned minute order granting a motion to quash is appealable because it is final; it contemplates no further action. (Gould, Inc. v. Health Sciences, Inc. (1976) 54 Cal.App.3d 687, 690, fn. 1.)
Next the seller argued that the action was moot because the federal Department of Justice (Department) officially took the position that noncompliance with the Guidelines does not necessarily establish noncompliance with the Americans with Disabilities Act (ADA). The Appellate Court rejected this argument noting that even assuming the Department's position was binding on this court, it only meant that noncompliance with the Guidelines does not necessarily establish noncompliance with the ADA, but it can in particular cases.
The Appellate Court then examined the actual jurisdictional argument at issue noting the "two types of personal jurisdiction: 'general' (sometimes called 'allpurpose') jurisdiction and 'specific' (sometimes called 'case-linked') jurisdiction. [Citation.]" (Bristol-Myers Squibb Co. v. Superior Court (2017) ___ U.S. ___, ___ [137 S.Ct. 1773, 1779-1780].) Here, the consumer disclaimed any reliance on general jurisdiction, thus the Appellate Court focused solely on specific jurisdiction.
A court may exercise specific jurisdiction over a nonresident defendant only if: (1) "the defendant has purposefully availed himself or herself of forum benefits" [citation]; (2) "the 'controversy is related to or "arises out of" [the] defendant's contacts with the forum'" [citation]; and (3) "'the assertion of personal jurisdiction would comport with "fair play and substantial justice'." (Snowney v. Harrah's Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062; accord, In re Boon Global Limited (9th Cir. 2019) 923 F.3d 643, 651.)
"'When a defendant moves to quash service of process' for lack of specific jurisdiction, 'the plaintiff has the initial burden of demonstrating facts justifying the exercise of jurisdiction.' 'If the plaintiff meets this initial burden, then the defendant has the burden of demonstrating "that the exercise of jurisdiction would be unreasonable.'" (Snowney v. Harrah's Entertainment, Inc., supra, 35 Cal.4th at p. 1062.)
The Appellate Court relied on the sliding scale analysis created in Snowney to determine whether a website is sufficient to establish purposeful availment.
"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 are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.'" (Snowney v. Harrah's Entertainment, Inc., supra, 35 Cal.4th at p. 1063.)
In Snowney itself, a California resident filed a putative class action against Nevada hotel owners, alleging that they accepted reservations without disclosing an energy surcharge. (Snowney v. Harrah's Entertainment, Inc., supra, 35 Cal.4th at p. 1059.)
The Supreme Court of California held that the trial court had specific jurisdiction, holding that: "By touting the proximity of their hotels to California and providing driving directions from California to their hotels, defendants' Web site specifically targeted residents of California. In doing so, defendants have 'purposefully availed [themselves] of the privilege of conducting business in' California 'via the Internet.' [Citation.]" (Id. at pp. 1064-1065.)
The Appellate Court noted that here, "much as in Snowney, many of [seller's] customers are California residents. And all of these - not just some - necessarily purchased through either [seller's] website or its catalog. On the other hand, unlike in Snowney, there is no evidence that [seller's] website "targeted" Californians (any more than residents of other states, or indeed other countries)."
The Appellate Court, relying on As You Sow v. Crawford Laboratories, Inc. (1996) 50 Cal.App.4th 1859 found that this distinction did not make a difference. In As You Sow, a nonprofit organization sued an Illinois paint manufacturer alleging that the manufacturer had made sales to California residents without providing warnings required by Proposition 65. (Id. at pp. 1863-1864.) Over six years, the manufacturer had made 16 sales to California distributors. These sales were never more than one percent of its annual sales. (Id. at p. 1864.) The appellate court held that this was sufficient to show purposeful availment. (As You Sow v. Crawford Laboratories, Inc., supra, 50 Cal.App.4th at p. 1869.)
It explained: "'[A]n enterprise obtains the benefits and protection of our laws if as a matter of commercial reality it has engaged in economic activity within this state." (Id. at p. 1870.) "Instead of focusing on the quantity of activity, we must look to see if the defendant purposefully availed itself of the benefits and protections of California law to make it reasonably foreseeable to be 'haled into the court in the forum State' to defend itself in an action relating to its products. When a manufacturer makes a direct effort to serve the market for its product in the forum state, the requisite level of foreseeability is met." (Id.)
In sum, under California case law, making a substantial number of sales of goods or services to California residents via one's own website constitutes purposeful availment. Here, the seller made 8 percent of its sales to California residents which totaled $320-$375k per year, or about the equivalent of a brick and mortar store in California.
Finally, the Appellate Court noted that the seller sent out 1.4 million catalogs a year, and while the exact number that were sent to California was unknown, the Appellate Court felt "the only reasonable inference is that [seller] sent a substantial number of catalogs to residents of California" which was evidence that the seller "targeted" Californians.
Accordingly, the Appellate Court concluded that the seller purposefully availed itself of the benefits of the California market.
The Appellate Court also addressed the remaining two elements of specific jurisdiction.
First, the Court concluded that under any standard the controversy arises out of seller's contacts with California, (See David L. v. Superior Court (2018) 29 Cal.App.5th 359, 374, fn. 8, and cases cited.) Those contacts consist of maintaining a virtual store on the Internet that makes substantial sales to Californians.
Second, the Court concluded that the exercise of jurisdiction by California in this case would not be unreasonable, noting that the seller made no effort to show that the exercise of jurisdiction would be unreasonable and if the seller found it too burdensome to be sued in California, it can simply decline to sell to Californians.
In sum, the Appellate Court held the trial court could and should have exercised personal jurisdiction over the seller. Accordingly, the order appealed from was reversed, with the trial court directed to deny the motion to quash.
Ralph T. Wutscher
Maurice Wutscher LLP
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