Internet Transactions and Personal Jurisdiction

Jardim v. Overley, ___ N.J. Super. ___ (App. Div. 2019). This opinion yesterday, by Judge Sabatino, applied a venerable doctrine in a new context. As Judge Sabatino put it, the issue was “the application of traditional constitutional principles of personal jurisdiction and due process in the context of a retail sale contract made over the Internet.”

Defendant, a California citizen, had advertised, on a website that features thousands of ads offering cars for sale, a vintage automobile for sale “to whomever was willing to purchase it, wherever they may be.” His ad expressly appealed to collectors and left the impression that the car was in pristine condition. Defendant was not a professional seller of cars. This was the only time he sought to sell a vehicle.

Plaintiff, who ran a New Jersey used car business, saw the ad and was interested. His business associate and defendant exchanged a few e-mails, and plaintiff or his associate had a phone call with defendant. They reached an agreement on terms of a sale. Plaintiff sent defendant a $500 deposit check via Paypal. Plaintiff financed the purchase through a New Jersey credit union to whom defendant, having completed the necessary title transfer paperwork in California, sent that paperwork. The credit union then mailed defendant a check for the balance of the purchase price.

Plaintiff or his colleague hired a company to pick up the vehicle in California and transport it to New Jersey. When the car arrived, plaintiff saw that it was not at all pristine but instead had a “litany of problems” that plaintiff spent thousands of dollars to address.

Plaintiff sued defendant in New Jersey Superior Court. Defendant moved to dismiss for lack of personal jurisdiction. The Law Division granted that motion, with prejudice. Plaintiff appealed, but the Appellate Division affirmed, applying de novo review but observing that “plaintiff bears the burden of showing sufficient facts to establish jurisdiction.”

The issue was whether there was specific jurisdiction over defendant. That required an inquiry into whether defendant “purposefully directed” his conduct into New Jersey, whether plaintiff’s claim “arise[s] out of or relate[s] to” defendant’s forum-related activity, and whether asserting jurisdiction was reasonable under the circumstances and consonant with “fair play and substantial justice.”

After exhaustively canvassing United States Supreme court cases from 1877 through 2017, key New Jersey personal jurisdiction cases, and decisions elsewhere that addressed personal jurisdiction in the context of internet sales in differing ways, using differing standards, Judge Sabatino held that there was no jurisdiction. He found no need to “opine in the abstract” about “the ideal analytic approach for our courts to use in Internet sale cases.”

Instead, citing a Law Division case and a ruling of the Ninth Circuit, Judge Sabatino found a few key facts dispositive. This was a “one-shot affair,” not involving a professional seller. This was also the only time that the parties dealt with each other. Defendant did not direct any activity toward New Jersey. Instead, he advertised on a website that was able to be seen everywhere, by “whomever was willing to purchase,” in whatever location. Finally, plaintiff, not defendant, arranged for shipment of the car to New Jersey. Defendant did nothing more than make the vehicle available for transport.

On those facts, New Jersey lacked jurisdiction. Defendant would not reasonably have anticipated that he was submitting to jurisdiction in “a state court on the other side of the country.” Though defendant must have known that he was dealing with a New Jersey buyer, “mere awareness of the other party’s domicile is not the equivalent of personal availment.”

Accordingly, the panel affirmed the dismissal of the case. But the dismissal was changed from “with prejudice” to “without prejudice,” to enable plaintiff to sue in California if he chose. The provocative question of whether, and if so how, to treat internet transactions in some unique way was left for another day.