In an Online Auction Case Which Revolve Around a Single Online Purchase, Courts also Consider Buyer's Actions Surrounding the Purchase to Determine Whether the Forum State Exercises Jurisdiction Over the Online Buyer

In Attaway v. Omega, 903 N.E.2d 73, 75 (Ind. Ct. App. 2009), the Indiana Court of Appeals discussed the issue of jurisdiction in an online auction purchase via eBay.  The Court in this case held that it had jurisdiction over an out of state buyer who purchased a car through eBay.  The Court found that the Defendant purchasers had purposefully availed themselves of the privilege of conducting activities within the State of Indiana, the Plaintiff’s state of residence.  Therefore, it was reasonable for them to expect defending a lawsuit in Indiana related to its online purchase.   

In this case, Plaintiffs Llexcyiss Omega and D. Dale York (“Plaintiffs”) jointly listed a Porsche (“car”) for sale on eBay, a popular auction website.  Both the Plaintiffs were Indiana residents.  The eBay auction was open to any registered eBay user in the U.S.  The listing stated that the successful bidder would be responsible for arranging and paying for delivery of the car.  The listing also informed bidders that the car was located in Indiana.  The Attaways (“Defendants”) were the highest successful bidders.  They were Idaho residents.  On being notified that they won the bid, the Defendants submitted payment to the Plaintiffs through PayPal, eBay’s online payment service.  PayPal charged the amount to the Attaways' MasterCard account. 

After that, the Defendants arranged for an auto transporter, to pick up the car in Indiana and deliver it to their Idaho residence.  After taking delivery of the car, the Defendants filed a claim with PayPal seeking to refund the payment it made to the Plaintiffs because the car was not as described in its eBay listing.  Shortly after the PayPal denied their claim, the buyers convinced the credit card company to rescind the payment that was made to the Plaintiff. 

The Plaintiffs moved against the Defendants in small claims court.  The Defendants responded with an answer and a motion to dismiss with prejudice.  Among other things, the Defendants contended lack of personal jurisdiction.  The trial court denied the motion and the Defendants filed a motion to certify order for appeal.   After that the Defendants filed a motion to stay proceedings pending appeal, which the trial court granted. This interlocutory appeal followed. 

The Court stated that the case at hand is one of first impression in the state of Indiana and perhaps in the country. Id. at 77.  The court noted that many court, both state and federal, have addressed jurisdictional issues in eBay transactions where dissatisfied buyers have sued sellers, alleging misrepresentation. Id.  This Court, however, did not hear of any cases in which an eBay seller has sued a buyer for rescission of payment after the buyer has picked up the item in the seller's state. Id.

The Court discussed similar cases where jurisdictional questions were involved.  Some of the cases discussed were:  

Dedvukaj v. Maloney, 447 F.Supp.2d 813 (E.D.Mich. 2006):  The court concluded that the seller had purposely availed itself of acting in Michigan.  The court considered several factors including the following in reaching at its decision: “the seller's use of eBay was "regular and systemic"; the seller required a warehouse for its goods to be sold on eBay; the seller offered a toll-free telephone number and appeared to have several employees; and the seller placed extensive photographs, detailed descriptions, logos, slogans, and other marketing materials on the auction listings.” Id. (quoting Dedvukaj)

Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008):  In this case, a resident of California resident purchased a car from a Wisconsin seller through eBay. Id.  The buyer also arranged a transporter to pick up the car in Wisconsin and deliver it to him in California.  After delivery, the purchaser found the car was not as represented on eBay and filed a suit in California against the seller. Id.   The court noted that the transaction did not create any ongoing obligation between the parties. Id. at 78.  There was no continuing commitment assumed by the seller in the contract, and the performance of the contract did not require the seller to engage in any substantial business in California. Id.   The court noted that eBay was a conduit for a one-time transaction to the California buyer; the seller never directed his sale to California residents. Id.   Considering the above discussed facts, the Ninth Circuit Court determined that the seller did not have sufficient minimum contacts with the buyer's state to support personal jurisdiction. Id.   

Sayeedi v. Walser, 15 Misc. 3d 621, 835 N.Y.S.2d 840, 845-46 (N.Y. City Civ. Ct. 2007): In this case, the court summarized the trends on the jurisdictional issue in online transactions as below:

[T]he majority of … courts [that have considered the issue of jurisdiction in online auction cases] have held that the usual online auction process does not rise to the level of purposeful conduct required to assert specific jurisdiction. … The courts finding no jurisdiction often have focused on the logistics germane to an on-line auction where the choice of the highest bidder is beyond the control of the seller, and similarly that the only intent manifested by the eBay seller is to sell to the highest bidder, regardless of identity or location. These courts have reasoned [that] where the eBay seller has no authority over the audience to which the listing of their good(s) are disseminated, such sales are merely random and attenuated contacts and do not raise to the level of purposeful availment required to meet due process.

The few courts that have found personal jurisdiction over purely on-line auction sales have focused primarily on the sophistication of the seller.  Traditionally, courts have applied the "sliding scale" test in internet jurisdiction cases, which seeks to distinguish interactive from passive websites (see Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa., 1997)). Under the Zippo sliding scale test, proper exercise of personal jurisdiction in a claim involving Internet contact is directly proportional to the commercial interactivity of the website over which the contact is made. However, this mode of analysis makes little sense in the eBay context since eBay, and not the user, controls the interactivity and marketing efforts of the website. As noted in Action Tapes [Inc. v. Weaver, 2005 U.S. Dist. LEXIS 29312, 2005 WL 3199706 (N.D. Tex. 2005)], the sellers and buyers who connect through eBay cannot be said themselves to control eBay's degree of commercial interactivity any more than a buyer and seller at Sotheby's can be said to be responsible for the premises or to control the auctioneer. Accordingly, the sliding scale standard is not applicable in the current case. Courts such as Dedvukaj appear to be applying a modified Zippo analysis, aimed not at determining the interactivity or passivity of the eBay internet site itself, but instead seeking  to distinguish between the purposeful activity and the impressions created by the activity and representations of the individual eBay user from the standard content, templates, and general structure provided to all eBay users. Regardless of whether such a sliding scale analysis is employed or not, the crucial question remains whether the quality of the New York contact was of such a nature that the defendant can be said to have purposefully invoked the benefits and protections of New York law.

Id. (quoting Sayeedi v. Walser, 835 N.Y.S.2d 840, 845-46 (N.Y. City Civ. Ct. 2007) (some citations and quotations omitted).

The Defendants cited to the case of Machulsky v. Hall, 210 F. Supp. 2d 531 (D.N.J. 2002) in which an Oregon resident purchased a U.S. mint coin set from the seller, a New Jersey resident, via eBay. Id. at 79.  On receiving the coin that the seller shipped, the buyer found that it was not the one that he requested and shipped it back to seller. Id.  However, the seller did not refund the amount. Id.  After that, the buyer posted negative comments on the seller's eBay "feedback" page. Id.  The seller filed an action against the buyer in the new Jersey court alleging violation of RICO along with other claims. Id.  The court found that "this single purchase, without more, is not a sufficient premise upon which the Court can exercise personal jurisdiction [over the Oregon buyer]." Id. (quoting Machulsky at 542).

The Court in this case stated that although this case also revolves around a single eBay purchase, Defendant purchasers’ actions surrounding the purchase tip the scale in favor of personal jurisdiction. Id.  The Court in this case noted that the Defendants were aware of the sellers' location before they bid on the car. Id.  Additionally in this case, the seller had notified that the buyer will be responsible for arranging delivery of the vehicle and will have to bear the related costs incurred. Id.  Presumably, in this scenario, a person considering placing a bid in an online auto auction would note the vehicle's location. Id.
 
Further, the Court noted that by submitting a bid, the Defendants agreed to appear, in person or by representative, in Indiana to pick up the vehicle.  After being the highest successful bidder they won the car, they hired a Washington transporter to enter the state of Indiana as their representative, pick up the vehicle, and deliver it to them in Idaho.

Therefore the Court concluded that, in the present case, the business transaction involved more than just a single online purchase to satisfy the personal jurisdiction requirements of the federal due process clause. Therefore, the Court found that the Defendants purposefully availed themselves of the privilege of conducting activities within the State of Indiana.  Hence they could reasonably anticipate defending a lawsuit in Indiana related to the said eBay purchase.

The Court affirmed the trial court’s denial of Defendants’ motion.