Illinois v. Hemi Grp. LLC

622 F.3d 754 (7th Cir. 2010)

 

RULE:

Under the current state of the constitutional dimension of personal jurisdiction, a defendant must have minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Those contacts may not be fortuitous. Instead, the defendant must have purposefully established minimum contacts within the forum State before personal jurisdiction will be found to be reasonable and fair. Crucial to the minimum contacts analysis is a showing that the defendant should reasonably anticipate being haled into court in the forum State, because the defendant has purposefully availed itself of the privilege of conducting activities there.

FACTS:

A New Mexico company sold discount cigarettes through its websites. The State of Illinois sued the company for selling cigarettes to Illinois residents in violation of state laws and for failing to report sales in violation of federal law. The only specific sales to an Illinois resident that were identified in the complaint were instigated by a revenue agent. The company did not have the continuous and systematic general business contacts with Illinois to justify exercising general jurisdiction over it; thus, only the exercise of specific jurisdiction over the company was considered. The company filed a motion to dismiss for lack of personal jurisdiction. The District Court denied the company's motion to dismiss for lack of personal jurisdiction, finding that Internet transactions sufficed to establish personal jurisdiction over the company. The case was appealed. 

ISSUE:

Does a company's "reaching out" to state residents, calculating shipping costs, and allowing them to open accounts amount to minimum contacts sufficient for the company to be subject to courts in that state?

ANSWER:

Yes

CONCLUSION:

The court affirmed the district court's denial of defendant's motion to dismiss for lack of personal jurisdiction and remanded for further proceedings. The company's contacts with Illinois were sufficient to satisfy due process. Evidence showed that the company maintained commercial websites through which customers could purchase cigarettes, calculate their shipping charges using their zip codes, and create accounts. The company's reaching out to residents of Illinois, not the residents' reaching back, created the sufficient minimum contacts to justify the exercise of personal jurisdiction over the company in Illinois. Illinois's claims arose out of the company's contacts with Illinois. Jurisdiction over the company did not offend traditional notions of fair play and substantial justice. Personal jurisdiction was found, not merely because defendant operated several "interactive" websites, but because it had sufficient voluntary contacts with Illinois.

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