Almost every business today has a website, which can be accessed by anyone in the world with an Internet connection. If the business provides for targeted advertising on its website, based upon the location of the person who accesses the website, does the business subject itself to personal jurisdiction in the state where the access user resides? The Wisconsin Court of Appeals recently confronted this issue and held that a court can exercise jurisdiction over a foreign defendant under these circumstances only if the defendant does "something more" that targets Wisconsin beyond simply maintaining a website that contains targeted advertisements.
In Salfinger v. Fairfax Media Limited, 2015AP150 (Jan. 20, 2016), a Wisconsin resident sued the owner of the Sydney Morning Herald newspaper, alleging that the defendant published a defamatory article on the newspaper's website. Salfinger claimed that his injury occurred in Wisconsin, that the newspaper's website was accessed from over 800,000 computers located in Wisconsin and contained advertisements targeted to Wisconsin users, and that the defendant had several subscribers in Wisconsin and a subsidiary that published a magazine in Wisconsin. Based on these contacts with Wisconsin, Salfinger claimed the court could exercise specific personal jurisdiction over the defendant. The circuit court dismissed the case for lack of personal jurisdiction. The Court of Appeals affirmed.
The Court of Appeals began its analysis by noting that it had jurisdiction over the defendant under Wisconsin's long-arm statute, which is to be "liberally construed." The statute provides for personal jurisdiction when the plaintiff suffers injury in Wisconsin and "products, material or things processed, serviced, or manufactured by the defendant" are consumed or used in Wisconsin. The court found that the term "processed" in the statute included the processing of news and advertisements for online consumption.
The Court of Appeals considered next whether exercising personal jurisdiction in this case would violate the constitutional due process requirement. The court explained that the due process component of a jurisdictional analysis requires the court to determine whether the defendant purposefully established certain "minimum contacts" in the forum state. Salfinger alleged that these minimum contacts were established in three ways:
- The defendant's subsidiary published a magazine targeted at Wisconsin residents
- The defendant provided yearly online subscriptions to Wisconsin residents
- The defendant raised revenue from advertisements that appeared on the website and targeted at Wisconsin users
The Court of Appeals quickly disposed of the first two arguments. The court noted that Salfinger failed to explain "how or why" a subsidiary's presence and actions in Wisconsin can establish that the defendant itself had sufficient minimum contacts in Wisconsin, recognizing that there is no legal authority to support the position that minimum contacts can be established through a subsidiary. The yearly subscriptions, the court found, also did not establish minimum contacts because the defendant did not begin offering the subscriptions until two years after the publication of the article at issue.
The Court of Appeals also rejected Salfinger's advertising revenue argument, even though the defendant put the article into worldwide circulation and profited from advertisements that appeared on the website and were targeted at Wisconsin users accessing the website. The court initially noted that the defendant did not open itself up to worldwide jurisdiction simply by placing content on its newspaper's website that was accessible anywhere in the world. The court said that foreseeability is critical to the due process analysis, and foreseeability requires that the defendant's connection to Wisconsin be such that he could "reasonably anticipate being haled into court there."
Simply placing an article into worldwide circulation through internet publication, the court found, is not sufficient — "something more" is needed. The court noted that the article did not mention Wisconsin and did not establish any connection with Wisconsin. Rather, the newspaper was an Australian publication with an Australian-targeted audience. Although it may have been "theoretically foreseeable" that the article would be accessed by Wisconsin users, the court held that this alone was not sufficient to establish any meaningful connection to Wisconsin because the defendant could not have reasonably anticipated being brought into a Wisconsin court.
Targeted advertisements that appeared on the newspaper's website when Wisconsin users accessed the site were not the necessary "something more" and did not establish a sufficient connection with Wisconsin. The court explained that, even though the advertisements were directed at Wisconsin users, there were a number of parties that played a role in which advertisements appeared to a user accessing the website. Expert testimony established that the defendant simply left blank advertising space on the newspaper's website, allowing a third party, such as Google or Adobe, to fill in those blank spaces with advertisements of local businesses that Google or Adobe had contracts with. The advertisements were based upon the user's geographic location and interests, obtained by the user's IP address and "cookies" stored in the memory of the user's computer.
The defendant itself, the court found, did not play a significant role in the advertisements that appeared to Wisconsin users because it did not take any "affirmative or purposeful steps" in targeting Wisconsin users or independently placing Wisconsin-based advertisements on the website. Without any meaningful connection to Wisconsin, the court found that due process considerations precluded the exercise of personal jurisdiction.
Salfinger provides an important reminder that simply satisfying the requirements of Wisconsin's long-arm statute are not enough for a court to exercise specific personal jurisdiction over a foreign defendant — any exercise of jurisdiction must also comport with the constitutional due process requirement. Due process requires some meaningful connection between Wisconsin and the foreign entity, evidenced by affirmative and purposeful steps taken by the foreign entity toward Wisconsin. For Wisconsin businesses considering suit in Wisconsin against a foreign entity based on Internet activity, it is important to have evidence of some conduct showing that the potential defendant is affirmatively and purposefully targeting the state of Wisconsin or Wisconsin residents through its online activity. That the potential defendant operates a website that is accessible from Wisconsin is not enough for a Wisconsin court to assert personal jurisdiction.
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