Defense Digest

The Long Arm of the Law:  The "Sliding Scale" of Personal Jurisdiction In an Internet Age

The recent skyrocketing of technological advances in computers and the World Wide Web have created an interesting host of new issues for the courts.  In the recent case of Mar-Eco, Inc. t/d/b/a Keystone Ford v. Waldorf  Ford, Inc., 2003 Pa. Super. 444, the Pennsylvania Superior Court was faced with the question of whether a Maryland corporation's Internet website allowed Pennsylvania's long-arm statute to exercise personal jurisdiction over it. 

In the Mar-Eco ("Keystone Ford") case, the defendant Waldorf Ford appealed from an order which overruled its preliminary objections challenging Pennsylvania's jurisdiction over it.  Waldorf  Ford is a Maryland corporation in the business of buying and selling cars.  Keystone Ford, as the name implies, is a Pennsylvania corporation that is also in the automobile purchase and sales business.   Keystone Ford alleges that Waldorf Ford is liable under theories of negligence and unjust enrichment arising from a vehicle financing transaction.  Id. at 445.

The sale of the automobile in question occurred in Maryland.  The essence of Keystone Ford's claim is that because Waldorf Ford allegedly failed to timely record Keystone Ford's security interest in the vehicle, the buyers of the automobile were able to acquire the title to the car free and clear of any liens.  All documents completing the sale were executed in Maryland, and Maryland issued the title.  Keystone Ford contends that Pennsylvania has personal jurisdiction over Waldorf Ford because "Waldorf regularly conducts business in Pennsylvania through advertising at its world wide [website], www.waldorfford.net, where customers can order parts, schedule service, apply for financing, calculate payments, search Waldorf's new and used vehicle inventory and apply for employment…[t]he issue is whether this [website] provides sufficient basis for Pennsylvania to exercise personal jurisdiction over [Waldorf]."  Id. at 446. 

In deciding the jurisdiction issue, the Pennsylvania Superior Court discussed the "emerging case law" with respect to Internet jurisdiction.  The Third Circuit's district courts addressing of the relationship between personal jurisdiction and foreign Internet websites have established a "sliding scale" of jurisdiction based largely on the degree and type of interactivity on the website.  The court essentially mandated a three-tier scale, which consists of passive websites, interactive websites, and aggressive websites.  Id. at 449.  The distinctions are self-explanatory.  Passive websites simply make information available for those from other states who are interested, interactive websites allow a user to exchange information with the host computer, while aggressive websites enter into contracts with residents of other jurisdictions and are involved in the knowing and repeated transmission of computer files over the Internet.   Essentially, the sliding scale of jurisdiction is based predominantly on the degree and scope of the interactivity on the website. Id at 450.

The court in the Keystone Ford case found that the website fell in the middle ground of the sliding scale; however, because the website permitted Waldorf Ford to perform a significant amount of commercial business over the Internet, personal jurisdiction in Pennsylvania was proper.  Id. at 457.

As further discussed by the Pennsylvania Superior Court in the case of Taylor v. Fedra International, Ltd. 2003 Pa. Super. 233, 828 A.2d 378, 381 (Pa. Super 2003), there are two types of in personam jurisdiction over a non-resident defendant.  The first type of personal jurisdiction is general jurisdiction, which is derived from a defendant's general activities with the state.   The second type is specific jurisdiction, which is more specific and arises out of the defendant's actions in the underlying cause of action.  In the cases of both in personam and general jurisdiction, however, the exercise of jurisdiction must be in compliance with Pennsylvania's long-arm statute, which adopts the minimum requirements of the United States Constitution's due process clause contained in the Fourteenth Amendment.  Id.  Essentially, as was originally explained in the seminal case of Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985), in order to meet the due process requirement, it still must be shown that a defendant had meaningful contact with the forum and had availed itself to the forum's benefits and such that it also should be subjected to the forum's state laws and regulations.

*Jenifer is an associate in our Philadelphia office.  She can be reached at (215) 575-2792 or jsuplee@mdwcg.com.