The Subrogation Strategist

In Allied Ins. Co. of Am. v. Jpauljones L.P. & Tek Elec. Co., 1:19-CV-00237-SNLJ, 2020 U.S. Dist LEXIS 179225, the United States District Court for the Eastern District of Missouri considered whether defendant Jpauljones, L.P. (JPJ) was subject to specific personal jurisdiction in Missouri because its website sold products to Missouri residents. The court held that the defendant’s nationwide retail website, with no particular focus or target on Missouri, does not in itself subject the defendant to specific jurisdiction in Missouri. This case further narrows the reach of specific jurisdiction based solely on the defendant’s direct internet-based sales into the forum.

The plaintiff, Allied Insurance Company of America (Allied), provided property insurance to a Missouri-based hair salon, Gloss Roots Boutique, which sustained damages as a result of a fire in 2018. Allied paid its insured for the damage and then brought the above-captioned subrogation action against defendants, JPJ and Tek Electric Co., Ltd. (Tek), on the grounds that an EyeVac vacuum – imported from China by defendant Tek and sold and distributed under the JPJ name and brand – caused the fire. Defendant JPJ, a Texas company, sold and distributed the vacuum to Gloss Roots Boutique in Missouri through its website, www.eyevac.com.

JPJ filed a motion to dismiss for lack of personal jurisdiction, claiming that Missouri did not have jurisdiction over JPJ since it did not have any physical locations, employees or assets in Missouri. The plaintiff argued that Missouri had jurisdiction over JPJ because its website allowed Missourians to purchase products and have them shipped to Missouri. The plaintiff provided evidence that JPJ’s website allows a purchaser to select Missouri (as well as any other state in the United States) as a shipping location from a dropdown box when checking out.

The District Court began its analysis by considering Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997), which is frequently cited in cases where jurisdiction based on internet sales is challenged. In Zippo, the court examined the level of website interactivity and the commercial nature of information exchanged with customers in determining whether the defendant’s internet presence established personal jurisdiction. Based on the Zippo analysis, if a defendant enters into online contracts with customers or repeatedly transmits computer files to customers, then jurisdiction is proper. However, if a website merely makes information available to those who are interested, then exercising personal jurisdiction over the company is improper.

The Allied court also considered several post-Zippo court opinions that further narrowed the analysis by also requiring that the defendant intentionally interact with, or target the forum state through its website. One of those post-Zippo cases was Fidrych v. Marriott International, Inc., 952 F.3d 124, 141 (4th Cir. 2020), in which the court held that jurisdiction cannot be applied to a business whose website offered services to anyone who sought it out, without targeting any specific state over another.

In Allied, the court found that JPJ’s website did not subject the defendant to personal jurisdiction in Missouri. The court noted that the website offered one-off transactions to anyone in the country, without any specific focus on Missouri. While the website accepted purchases from Missouri residents, the website did not target Missouri residents. Also, the website was not designed to create long-term, back-and-forth, interactive relationships with its customers. The court likened JPJ’s website to nationwide intermediary websites such as Amazon or Ebay, which are not subject to personal jurisdiction merely for selling products to individuals within a state. The court noted that in order to form the basis for specific jurisdiction, a plaintiff would need to establish that the defendant took action to maximize usage of the website within the forum, such as marketing the website within the forum or including forum-specific content in the website. The court held that specific jurisdiction does not attach merely because a defendant operates a commercial website which allows for direct sales into the forum state.

The Allied case establishes that, in Missouri, a national online retailer may not be subject to specific personal jurisdiction unless the entity targets the state or has other contacts with the forum. The court in Allied suggested that ruling otherwise would establish that a plaintiff could sue everywhere, so long as the defendant has a website that sells products nationwide. Subrogation professionals practicing in Missouri should be mindful of this decision when evaluating where to sue a defendant.