In a Lawsuit Arising from an Online Transaction,
Where Should an Unhappy Buyer File Suit?
When the car that a Tucson man purchased on eBay
didn’t live up to its description, his lawsuit
against the Michigan seller was dismissed because
Arizona courts lacked jurisdiction
In 2007, Tucson resident
Jimmie Holland bought a 1976 Cadillac on eBay from a Michigan resident. Holland
paid $15,100 for the car, sight unseen, and paid an additional fee to have the
car transported from Michigan to Tucson. His only contacts with the seller were
via emails (through eBay) and telephone calls that Holland initiated.
When the car arrived in
Arizona, Holland discovered that it needed repairs and otherwise fell short of
the seller’s description in the eBay listing. In an attempt to get his money
back, Holland sued the seller in Pima County Superior Court.
The seller asked that
Holland’s suit be dismissed on the grounds that the Arizona court did not have
“personal jurisdiction” over him because he lacked “sufficient contact”
with Arizona. After a hearing, the court granted his motion to dismiss, and
Holland appealed, resulting in an Arizona Court of Appeals ruling in
Holland v. Hurley.
This case touched on two
types of personal jurisdiction: general and specific. “General” jurisdiction
applies only when the defendant has “substantial” or “continuous and systematic”
contacts with the state, while “specific” jurisdiction focuses on the scope and
nature of the relationship between the defendant and the state arising from the
transaction or event underlying plaintiff’s claims. The Michigan seller did not
have an Arizona office or other physical presence, nor was anyone in Arizona
acting on his behalf. Consequently, he was not subject to Arizona’s general
While Holland conceded
that general jurisdiction was not an issue, he asserted that Arizona courts did
indeed have specific jurisdiction over the Michigan seller. He claimed support
for his argument in the Arizona Supreme Court’s Cybersell ruling, which
states, in part, that:
When [a defendant is not subject] to
general jurisdiction, the court may still find specific jurisdiction if: (1)
the defendant purposefully avails himself [emphasis added] of the
privilege of conducting business in the forum; (2) the claim arises out of
or relates to the defendant’s contact with the forum; and (3) the exercise
of jurisdiction is reasonable.
With regard to
“purposeful availment,” Holland argued that the seller did not have to
“purposely direct his actions toward Arizona” to be subject to Arizona’s
jurisdiction; rather, it was sufficient that the seller “directed his actions
toward each and every state when he placed the Cadillac for sale on eBay.” In
other words, according to Holland, the seller’s use of eBay to sell the car
should have subjected him to specific jurisdiction in all 50 states.
The Court disagreed.
The seller did not market
and sell the car via his own website; rather he sold it on eBay, a massive
third-party website over which the seller could exercise no control as to scope
of communication or degree of interactivity. Further, since eBay is an auction
site where sales are generally made to the highest bidder, the seller could not
even dictate to whom he would sell the car or where the buyer might be located.
Holland’s argument that the seller was subject to Arizona courts’ jurisdiction
was the fact that the sale of the Cadillac was a one-time contract for sale of a
good that involved Arizona only because that is where Holland happened to live.
The seller did not make any marketing efforts in Arizona or that were
specifically directed at Arizona. Thus, the Court concluded, the relationship,
if any, between the seller and Arizona was irrelevant to this particular sale.
In reaching that
conclusion, the Court looked to the U.S. Ninth Circuit Court of Appeals decision
in Boschetto, a case in which the facts were very similar to this one. In
Boschetto, the Court concluded that “the lone transaction for the sale of
one item [also an automobile on eBay] does not establish that [the nonresident
defendant seller] purposefully availed [himself] of the privilege of doing
business in California. Because the seller’s interaction with California was
merely a 'one-shot affair,' it was insufficient to establish minimum contacts.”
That the ruling was
specific to “this particular sale” is significant, as the Court’s opinion
conceded the possibility that “an out-of-state eBay seller could be subject to
Arizona’s jurisdiction.” In this case, however, Holland failed to meet his
burden ‘to come forward with facts, by affidavit or otherwise, supporting
In the end, one could
argue that, because the car was (a) sold in Michigan, (b) by a Michigan seller
who apparently was in Michigan when he allegedly misrepresented the car’s
condition in his eBay product description, and (c) delivered to Arizona from
Michigan, Holland should have sued the seller in Michigan. There would have
been little question as to jurisdiction, and when all the dust had settled,
Holland might have gotten his money back.
However, he chose to
fight his legal battle in Arizona, where he was left empty-handed and where
future Arizona buyers and sellers were given additional legal guidance as to
jurisdictional issues when an internet auction deal goes bad.