The "Amish Mafia", Underage Drinking and Host Liability

The new television show, “Amish Mafia,” is creating quite a stir in both the Plain and English communities. Reports indicate that this is the most successful show ever launched by the Discovery Channel and that there are now in excess of 3 million viewers per episode.

A small group of Amish and Mennonite men and women are portrayed as an organized crime family, with “Lebanon Levi” heading the operation and directing its activities. Levi Stoltzfus, the son of an actual Amish Deacon (David Peachey), has a number of henchmen, including Alvin, John and Jolin. In an initial episode, Alan Beiler, (the adopted son of a Lancaster Mennonite family and described by his colleagues on the show as “Schwarz Amish”) was indicated to have been a key associate of Levi’s, but criminal charges landed him in hot water with both the gang and the Pennsylvania State Police. He disappeared from subsequent episodes but just reappeared at the end of the season, being shown leaving prison. Levi also has a love interest, Esther Schmucker, a woman portrayed in what is described as Amish garb, who is the sister of John Schmucker, both in the show and in real life. Alvin Lantz, described and portrayed as Amish, acts as Levi’s right hand man. He is second in command and takes over when Levi travels to a Florida beach for a get away with Esther.

John and Esther express dissatisfaction with John’s limited role in Levi’s operation. Their father had headed this organized crime operation prior to his death. For some reason, John was unable or unprepared to step up and take over. Levi stepped in to fill the void. John is also frustrated by the limited income he receives for his efforts. He is the only gang member who has yet to have enough money to buy a car. This is a source of significant conflict between John and the others. As a result, John becomes an easy recruit for Merlin, an Amish-man from Holmes County, Ohio who is looking to extend his criminal enterprise to Lancaster County. He has plans to force Levi out and take over his operation in Lancaster.

Merlin, who explains that he became tough while serving a sentence after a criminal conviction as the only Amish inmate in an Ohio prison, comes to Lancaster to compete in what Levi describes as a “Pimp Your Buggy” competition. This event takes place in conjunction with a small car show and includes a number of buggies. Merlin arrives in his very fancy buggy and, based on a prior understanding with John, expects to win the money that goes along with first prize. That plan goes awry when a ringer, a friend of Levi, shows up in a hot rod t-bucket type buggy. At that point Merlin realizes he has been outmaneuvered. He becomes very angry and describes how he will get even.

The final episodes of the first season depict Merlin’s efforts to make this happen. He recruits John to arrange and stage buggy races. The show indicates that such races are very popular in Ohio and a source of revenue for Merlin’s operation. Levi does not allow such races in Lancaster. John is successful in putting a race together. There is much betting on the several entries. Alvin and Jolin find out about the race, show up, and proceed to destroy John’s buggy at the conclusion of the race. Merlin, unhappy with this show of strength by Levi’s guys, follows Levi and Alvin to a bar in Lancaster. While Levi and Alvin are inside drinking, one of Merlin’s strongmen smashes out the front window of Levi’s Cadillac with an ax. To be sure that Levi understands who was behind this act, a business card with the name “Merlin” is left under the driver’s side windshield wiper. Subsequently, Merlin’s associates destroy Levi’s office and then torch the temporary trailer he was using as an office.

Levi and Alvin then drive to Ohio to meet with Merlin’s Bishop. When Merlin goes to collect protection money from one of his “customers”, the client will not deal with him. It is said that Merlin is being shunned at the Bishop’s direction and that it can take up to six months to be reinstated into the community. Merlin is angry and he vows to get even. About the same time, Alan Beiler is being released from prison. He borrows a cell phone to call Levi. He tells Levi that he is mad because he spent four months in prison after Levi called the cops on him. He warns Levi to “watch his back.”

The stage is set for the drama to continue in the second season.

A key question being raised among viewers (evidenced by numerous message board posts in response to newspaper articles about the show), bloggers and the media is whether or not this show is portraying actual events or if the show is a total fabrication.

The promotional material on Discovery’s website states that for many years the Amish, “due to a distrust of outside law enforcement,” have turned to this gang in order to maintain peace and order within the Lancaster County Amish community. The site provides the following description.

“This is a side of Amish society that exists under the radar, and the Amish church denies the group’s existence. Amish Mafia provides eyewitness accounts of the incidents, misdeeds and wrongdoings within the Amish community, as well as a rare look at Levi and his team members who work together to maintain harmony. To protect participants and their family members, some identifying information and property has been changed. Some scenes have been reenacted.”

There are many scenes in which members of the gang are shown engaging in violence, using profanity and acting in ways many may think do not show the Amish community in a positive light. In a scene in one episode, the gang responds to the report of an Amish Bishop in a motel room with a prostitute. In another, Esther, now infatuated with Jolin, accompanies him to a gun range and is shown shooting Jolin’s AR-15 rifle. Esther is shown attending a fair with a girlfriend and riding a mechanical bull. She comments that both of these activities are not permitted for Amish women.

The show suggests that these gangs collect money for “fixing” problems, from business owners paying protection money, from gambling, by holding barn fights and hut parties and other illegal activities. Regrettably, the promoters of the show even use the tragedy of the Nickel Mines School incident to promote the show, writing on their website:

“The 2006 School shootings in Lancaster County during which five young Amish girls were killed and five more seriously injured by a non-Amish milk truck driver brought to the nation’s attention the vulnerabilities of the Amish community, and their need for continued protection.”

Archangel Investigations is currently conducting an in-depth investigation into the show, its actors and the events shown to determine if there is any truth at all to either the existence of this organized crime operation or the incidents portrayed. The results of that investigation will be shared with readers in a subsequent issue.

In this issue, we want to address a very delicate and somewhat controversial topic – that being the tradition of drinking by youth. This underage drinking raises a number of concerns, including the risk of criminal charges for the children and their hosts, the severe financial consequences the hosts of the party will face if one of the attendees at party where alcohol is being served is involved in an accident with non-Plain community members and the potential for starting the alcohol abuse ball rolling for our children. And many believe that alcohol is a gateway substance, that can lead to the use and abuse of more serious illegal drugs. The purpose of this article is not to address the social, religious or community issues surrounding this issue. Rather, as business people who on a regular basis evaluate the risks involved in business transactions, it is important to also evaluate the risks you may be unwittingly exposing your business assets to by way of actions in your personal life.

Several times in the first season episodes of the show, scenes are shown of Amish, Mennonite and English young men and women attending “hut” parties. The suggestion given by the show is that these parties occur regularly and are an important source of revenue for the gang member promoters. While we are not, at this point, confirming the existence of parties hosted by Lancaster’s supposed Amish Mafia, it has been a long tradition for Plain community youth to attend parties at which alcohol is served. As businessmen and property owners, it is important for you to have an understanding of the risk to both your liberty and assets that you assume by hosting, or allowing these parties to be hosted, on your property.

Some parents may feel that underage drinking is something akin to a “rite of passage” and that it is better to let their minor children and their friends indulge in the consumption of alcohol on their own property, under adult supervision, rather than for the kids to be out drinking somewhere else. This is a completely understandable sentiment, but unfortunately it is also completely wrong, legally speaking, and may result in very severe criminal and costly financial consequences for you. The fact is that furnishing alcohol to minors is against the law in nearly every circumstance and the police will arrest you if they discover that it has occurred (by the way, in case you were wondering, there is a limited exception that is intended to exclude traditional religious communion service. The aforementioned criminal statute does not apply to any religious service or ceremony which may be conducted in a private home or a place of worship where the amount of wine served does not exceed the amount reasonably, customarily and traditionally required for the ceremony.

While a Plain community parent is very unlikely to report underage drinking parties to the police, it appears that these parties are also frequently attended by non-Plain young men and women. If one of these kids arrive home drunk and the parents find out, it is very likely that the police will be called. If that happens, the police will come calling and it won’t be for a social visit. You may find yourself under arrest even though you were acting with the best of intentions.

Furnishing alcohol to a minor is a crime. The definition of furnishing alcohol to minors can be found in the Pennsylvania Crimes Code at 18 Pa.C.S. Section 6310.1. The Statute is entitled “Selling or Furnishing Liquor or Malt or Brewed Beverages to Minors.” In order to be convicted of furnishing alcohol to minors, the Commonwealth must prove the following beyond a reasonable doubt:

(1) you intentionally or knowingly;

(2) sold, furnished or purchased with the intent to furnish;

(3) any liquor or malt or brewed beverage (i.e. any alcoholic beverage;

(4) to a person who is less than 21 years of age.

If the Commonwealth meets its burden of proof as to all of the elements of this crime, a misdemeanor of the third degree will be on your record and you will be required to pay a mandatory fine of not less than $1000 for a first offense and $2500 for each subsequent offense. A misdemeanor of the third degree carries a maximum sentence of 1 year incarceration. This means the maximum probationary term for a conviction of furnishing alcohol to minors is 1 year. One year probation and a mandatory $1000 fine would be a typical sentence for the first offense of this crime.

The criminal sanctions set forth above, as unpleasant as they are, can almost be considered mild compared to the financial consequences that may result if one of the minors you “hosted” and furnished with alcohol should become intoxicated and cause serious injury to himself or others. Pennsylvania courts hold all persons liable under social host liability laws if they knowingly serve a minor alcohol.

The Pennsylvania Supreme Court case of Congini vs. Porterville Value Company, 504 PA. 157, 470 A.2d 515 (1983) held that social hosts may be liable for supplying minors with alcohol. In this case, the Court determined that social hosts serving alcohol to minors to the point of intoxication are negligent per se and can be held liable for injuries resulting from the minor’s intoxication. The Court explained the reason for having a different rule for minors as opposed to adults served alcohol by a social host is that “… our legislature has made a legislative judgment that persons under twenty-one years of age are incompetent to handle alcohol.” Later cases have expanded the ruling to hold that the service of intoxicating liquors to a minor by a social host is negligence” per se”, even if the liquors are not served to the point of intoxication.

Naturally, certain elements must be proven to hold a social host liable for damages caused by the minor drinker. The key factors are knowledge and intent. The Pennsylvania Courts have established the following three part test to determine whether a social host would be subject to liability for injuries arising out of a minor’s intoxication.

1 the defendant must have intended to act in such a way as to furnish, agree to furnish or promote the furnishing of alcohol to a minor;

2 the defendant must have acted in a way which did furnish, or promote the furnishing of alcohol to a minor; and

3 the defendants act must have been a substantial factor in furnishing, agreement to furnish, or promotion of furnishing alcohol to the minor.

What this all means, in layman’s terms, is that if you furnish alcohol to minors you run a great risk of suffering arrest and criminal punishment, including a possible jail sentence and a heavy fine and/or perhaps more significantly, civil liability for the damages caused by the minor to whom you have furnished alcohol. Certainly, if the intoxicated youth causes a mere fender bender with little property damage and no injuries or minor injuries, the financial consequences may not be earthshaking and perhaps little more than a nuisance. Consider, however, the situation where the accident is not so insignificant and where a third party received permanent injuries such as paralysis, requiring long term, life time care of the injured party. Under America’s tort system the injured party and his family are going to seek compensation from every conceivable person and the “social host” will be a prime target. Your financial assets, including personal and real property, along with your business holdings, could very well be targeted by the plaintiff in a lawsuit.

The consequences of a well intentioned desire to allow minors to enjoy a rite of passage on your property, where they will be safe and supervised while imbibing alcoholic beverages, could be cataclysmic. The decision to allow such an event could cost you dearly. Fortunately, this is a rather easy problem to avoid. No matter what the traditions, simply do not furnish alcohol to minors and do not allow them to drink alcohol on your property.

Fabulous! Carnival in Venice

In about 1985, I saw a photo of Venice during Carnival (Carnevale), which included the masked and costumed revelers, it has been on my “Top 10” visit list ever since.

What is not to like about this event:

  • The beautiful city of Venice
  • A really big 10 day party through the streets
  • Fantastic costumes
  • Italian food

Carnival (Carnevale) is the annual event in Venice for the ten days leading up to Lent, the last night is Shrove Tuesday on which there are several big balls. Of course this is not just a Venetian tradition; think Mardi Gras in Rio or Trinidad during the same time of year, but my interest in fancy masked balls and beautiful costumes is much greater than watching dancers in dental floss bikinis. The origin of the word carnevale is Latin (carnem levare or carnelevarium) and suggests a “farewell to meat”, which was traditionally given up in the weeks of self-denial, during the period of Lent.

The history of the masks and the masquerade dates back to Roman times, there are records of the festival as far back as 1162. The Romans celebrated the early part of the year with a fertility festival where masks were used by all levels of society including slaves. The Carnevale di Venezia enjoyed a long period of infamy and notoriety through the 1600s, up until the time of Napoleon’s conquer in 1797. At the peak of this event, the party started on December 26th and ended sometime in the spring. This period of gambling and partying coincided with the loss of prominence and wealth in the region, as the power centers of Holland and Britain expanded their trading reaches. The celebration continued to decline and was actually banned in 1930 by Mussolini. A group of Venetians, and Venice lovers restarted the tradition in 1979.

Today the Carnevale is limited to the ten-day period before Lent and it is an enormous tourist draw. The city is really crowded, hotels are expensive, restaurants full and the streets are at times simply bottlenecked. There are websites and tour groups fully dedicated to the event. The range of party events caters to the rich and sophisticated (balls and music), to the families with kids (chocolate and puppets) and to the college crowd (pub crawls).

You can choose to participate in the carnival celebrations in several ways depending on your tastes, energy level and budget. You can simply walk around the streets or sit in a cafe and watch the incredible costumed characters that are wondering the streets. Spend some time in Piazzo San Marco, there are all sorts of special performances throughout the day and night. Choose to get your face painted and have some fun. Or you can buy tickets to any number events, that range from very affordable to very expensive.

We booked two nights in a great hotel right near Piazza San Marco. Arrival in Venice was actually easier than anticipated; there is lots of signage, big car parks and a central arrival point for the aqua-transit system. The vaporetti (water buses) are very efficient, there are multiple routes and destinations available, at a very minimum every visitor will end up on the #1 or #2 at some point, running in the Grande Canal and Canale delle Giudecca (respectively). Buy a multi-day unlimited ticket; you will end up using the system.

Venice at any time of the year is beautiful; there are endless museums, galleries and historical buildings to engage all types of interests. Two things that I would highly recommend;

  1. A visit to the island of Murano where the glass factories are located. You can take the “scenic” boat tour that we did in error and really see all the islands or go direct. In either case, Murano is filled with glass and restaurants and is a nice break from the crowds in Venice.
  2. The Secret Itineraries Tour of the Doge’s Palace. This tour as something beyond the normal tour and it is really fun!

Pick 4 Lottery Strategy System Picks the Right Pick 4 Strategies to Win

A good Pick 4 Lottery System has more than just one Strategy; it has a number of Pick 4 Strategies to offer the lottery players multiple ways to find the next winning number.

These multiple Pick 4 Strategies open the door for the players to take advantage of various number trends that can take place at any given time during this lottery game.

In March 2010 there seems to be an overabundance of Pick 4 Triples and Double-Doubles based on the low percentage for these types of Pick 4 numbers to be drawn over a period of time. These two groups of numbers represent just 6.3% of all 10,000 Pick 4 numbers. Their collective combinations total 135 of 715 combinations for all Pick 4 numbers. There were approximately 125 of these types of numbers drawn in the U.S. and Canadian Pick 4 Lotteries in March 2010.

Another Pick 4 lottery anomaly is the current amount — over twenty — of traveling numbers that began in March 2010 and is carrying over into April 2010. A traveling number is the same set of four digits that make up a winning Pick 4 number that is drawn two or more times over a short period of time in more than one State. The perfect definition of a traveling number includes that the same number being redrawn in the exact order. But the traveling Pick 4 Box form is quite acceptable for the purposes of winning free money.

Triples and double-doubles are the highest paying Pick 4 Box numbers. Triple numbers, such as 1112, pay $1200 for one single $1 investment. The dollar investment on the double-double number, such as 1122, returns $800.

The key to being a successful winning Pick 4 player is to have a multiple Lottery Strategy System. It provides the right Pick 4 Strategies which enable Pick 4 players to have strategies to create and play these ongoing number trends as they occur.

Combining strategies for playing triples and double-doubles with the traveling number strategy gives the player the right Pick 4 strategies to win some very nice payoffs. A perfect example of the double-double traveling number occurred with the combination draws of 8877 first in the Delaware Pick 4 Midday draw, March 22, 2010, and the April 4, 2010, Evening draw in the Kentucky Pick 4 Lottery. Players of this lottery game using both these strategies have put the 8877 on the watch list. The New York Win 4 lead the way with the evening drawing on March 30, 2010, of 0660 and followed up with this same number being drawn in the evening draw in the West Virginia Pick 4 Lottery.

The Indiana Hoosier Lottery Daily 4 began this imperfect trip, but nevertheless a profitable one for the New York Win 4 players when the third box form of 5757 was drawn in the midday draw on March 31, 2010. The Indiana Daily 4 first drew 7755 on March 18, 2010, midday draw. Traveling east to the Ohio Pick 4 Lottery, the OH Pick 4 drew 7557 in the evening draw on March 22, 2010.

The Big Apple State continued to provide big winning slices of cash for their Big Apple Win 4 players when it drew the third box form of the triple 7111 on the evening of April 4, 2010.

Previously, again starting out in the Indiana Daily 4 on the evening of March 16, 2010, the first triple box form was drawn as 1171. Then, traveling southeast to the Georgia Cash 4 was 1711 which was drawn in the evening draw on March 30, 2010. Like the New Year’s Eve Times Square countdown it gave New Yorkers one more thing to celebrate, another pocketful of NY Win 4 Lottery Free Money.

In a rare return home Pick 4 traveling number, trend players keeping an eye open for these two strategies to converge once again, Oregonians in the Oregon Pick 4 Lottery were glad to welcome back the 0400 on March 18, 2010, in the 7pm drawing. It was first drawn here in the 1pm Pick 4 drawing on March 8, 2010. It then traveled to Florida and was drawn in the Florida Play 4 as 4000 on the evening of March 16, 2010 before boarding the flight home to the Oregon Pick 4.

To be a Pick 4 Winner you need a Pick 4 Lottery Strategy System with multiple Pick 4 strategies. It is the only way that Pick 4 players around the country and around the world have a real chance to win some big money. Systems that offer just one strategy to play or recommended to play just the single Pick 4 type numbers do not give you the same chance to win. Often times the reality is that the one strategy or the recommended “Pick 4 Single Number Pick 4 Systems” create “automatic losers” for both the numbers and the players.

All Pick 4 players need to keep their eyes open for these traveling numbers in all forms, 0660, 7755, 1711, and 0400, that could travel to the remaining Pick 4 U.S. Lotteries, the Caribbean Pick 4 Lottery, Ontario Pick 4 and La Quotidienne 4, the two Canadian Lottery Pick 4 Games. One or more of the other strategies in the Pick 4 System may just predict the arrival of one of these traveling numbers to your local favorite Daily 4 Lottery game.

Where Internet Jurisdiction Can Get Your Business Sued!

The concept of Internet jurisdiction can be complicated and unclear. What happens when a dispute arises over an item or service purchased from your business through the internet? If that dispute turns into a lawsuit, it could be with an individual residing across the country from your business. What happens then? If you live in California, could your business actually be dragged into a state court in Maine?

Any business with an Internet presence should understand how courts gain authority to hear claims made against out-of-state businesses. The bottom line is that establishing Internet jurisdiction over your business can potentially end up being very costly!

Establishing Internet Jurisdiction Over Your Business

No matter what the subject of the dispute is about, a court must have what is known as “personal jurisdiction” over all the parties involved. This applies to all courts, including state and federal district courts. Establishing personal jurisdiction means that the court has the legal power to make a binding decision over the plaintiff and the defendant in a given dispute. State and federal courts always have personal jurisdiction over state residents. But, when the defendant’s principal residence or place of business is not in the state where the lawsuit is filed (often called the “forum state”), matters are much more complex. This is often the case with suits involving e-commerce.

(Note: A corporation is treated as a citizen of the state in which it is incorporated and the state in which its principal place of business is located. A partnership or limited liability company is considered to assume the citizenship of each jurisdiction of its partners/members. If you understand the nature of how a court can gain jurisdiction to hear a claim filed against your business, you can avoid certain practices that may expose you to out-of-state claims.)

The Concept of Minimum Contacts

One way a foreign court can claim personal jurisdiction over your business is by establishing that some sort of meaningful connection exists with the state in question and your business. States can exercise jurisdiction over your business through their “long-arm statutes” (which I discuss separately). However, the Due Process Clause of the U.S. Constitution mandates that certain “minimum contacts” must exist between the forum state and the defendant in order for a state to assert jurisdiction over the defendant. This basically means that activities which are deemed to establish substantially sufficient contacts with the residents or businesses of a particular state can be used by its courts to establish jurisdiction over your business. For example, you are not subject to the personal jurisdiction of an out-of-state court simply because you are involved in an automobile accident with a resident of that state where you live. All the events necessary to give rise to the claim occur outside the state of the other resident.

Activities establishing minimum contacts with another state are not always clear, but usually any substantial presence in the state will justify personal jurisdiction. Regularly soliciting business in that state, deriving substantial revenue from goods or services sold in that state, or engaging in some other persistent and continuous course of business conduct in the state are all examples of activities that would establish minimum contacts with that state.

Minimum Contacts Define Internet Jurisdiction

As stated, the concept of minimum contacts becomes more complicated when it involves the Internet. The courts have recognized that exposing the owners of a website to personal jurisdiction simply because the website can be viewed nationally is not enough to establish minimum contacts in a given state. Personal jurisdiction is “directly proportionate to the nature and quality of commercial activity that a business conducts over the Internet.” Businesses that enter into contracts or subscriptions with residents of another state that involve the “knowing and repeated transmission of computer files over the Internet will be subject to the jurisdiction of out-of-state courts. But, websites that only post information without making active sales are unlikely to establish personal jurisdiction in a foreign state (except in the state where the owner(s) resides or conducts other business).

The ‘Zippo’ Sliding Scale Guide

Generally speaking, minimum contacts for Internet retailers and marketers are directly related to the nature and quality of electronic contacts they establish with residents of another state. In other words, mere advertising alone is not enough to establish jurisdiction. Most courts across the nation have adopted the “sliding scale” approach used in Zippo Manufacturing Co. v. Zippo Dot Com, Inc. (1997). The court in Zippo determined that the act of processing the applications from Pennsylvania residents and assigning passwords was sufficient to demonstrate sufficient minimum contacts with the state. But, the Court held that jurisdiction is not proper when a website passively posts information on the Internet which may or may not be viewed by residents of that particular jurisdiction.

In the Zippo case, the district court described a spectrum consisting of three categories websites fall under. This spectrum ranges from: 1) businesses clearly conducting commercial activities over the Internet by entering into contracts with residents of the forum state; 2) interactive web sites with which a user in the forum state can exchange information and jurisdiction is proper if the level of interactivity is sufficient and there is a commercial component to the web site and 3) web sites which are “passive” by merely allowing users to post information accessible nationwide or globally that do not target a particular plaintiff in a particular forum (i.e. by intentional trademark or copyright infringement or in cases of defamation). Basically, under the Zippo sliding scale jurisdiction is more likely to be established when your Internet business engages in commercial activities directed at residents of a given state.

Of course, many cases fall in the middle of the Zippo sliding scale. In these instances, the courts generally have determined that “the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the website.” Making multiple sales to state residents is likely to expose an Internet-based business to personal jurisdiction in that state. A single sale may also be enough, provided it is accompanied by numerous intentional communications with a resident customers so that the transaction can be said to be purposefully aimed at the residents (or businesses) of that state.

Typically, the courts require “something more” than passive Internet advertising or more than just a single sale for jurisdiction to exist over a non-resident Internet business. Jurisdiction is often triggered by repeated or commercially significant sales to out-of-state residents, deliberate target marketing to out-of-state residents or significant non-Internet based contacts with the state.

State Long Arm Statutes

All states have enacted “long-arm statutes” setting forth what will be considered sufficient contacts with that state. In a nutshell, the long-arm statute allows that state’s courts to gain personal jurisdiction over Internet businesses. These statutes form the legal basis allowing the courts to exercise personal jurisdiction over your business. Under these statutes, service of process outside the state on nonresident individuals and businesses is allowed for claims generally arising out of: (1) the transaction of any business in the state; (2) the commission of a tortious act within the state; (3) the ownership, use, or possession of real estate in the state; or (4) contracting to supply goods or services to any person or business in the state; or 5) causing injury or damage in this state to any person by breach of warranty expressly or impliedly made in the sale of goods; 6) contracting to insure any person, property, or risk located within this state at the time of contracting; 7) an act or omission outside the state causing injury in the state.

State courts typically exercise personal jurisdiction over Internet businesses under the “transacting business” provision of the long-arm statute. Like the Zippo court, state courts will look at jurisdiction in an Internet setting by looking at the “nature and quality” of the contacts with the state. Some Long-arm statutes set forth factual situations likely to satisfy the minimum-contacts test. Others contain much broader provisions not inconsistent with constitutional restrictions.

Helpful Case Summaries

Here is a summary of some decisions that have helped shape the law regarding internet jurisdiction. Hopefully, these summaries can provide some guidance.

  • Thompson v. Handa-Lopez, Inc. (1998): A Texas court gained personal jurisdiction over an out-of-state online gambling enterprise because the gambling operation entered into contracts with Texas residents to play online gambling games, sent emails to the Texas residents, and sent winnings to Texas residents;
  • ChloĆ© NA v Queen Bee of Beverly Hills LLC (2010): The US Second Circuit Court of Appeals held that specific personal jurisdiction over an out-of-state website operator located in California may exist based on a single act of shipping a handbag into New York, along with other substantial business activity in the state. The single act of shipping an infringing handbag to New York combined with other substantial contacts, such as the shipment of several other items in-state and operating a commercial interactive website available to New York residents was sufficient to obtain specific personal jurisdiction;
  • Verizon Online Services, Inc. v. Ralksky (2002): The court held that nonresident defendants’ transmission of spam emails through plaintiff’s servers, located in Virginia, to nonresident Internet subscribers created a substantial connection to forum sufficient for exercise of personal jurisdiction on a claim of trespass to chattel;
  • Gates v. Royal Palace Hotel (1998): The court decided that the combination of a concentrated advertising effort within the state of Connecticut, active booking of reservations for Connecticut citizens through state travel agents, and an invitation to Connecticut citizens to make reservations through the Internet, constituted the transaction of business within the state such that exercise of personal jurisdiction was proper.

Causing an Injury within a State

Your Internet business can also be subject to jurisdiction in another state for purposefully causing a physical or economic injury (i.e. a “tort”) to a business or resident of that state. This is a separate avenue of liability outside of a breach of contract claim where your business is dragged into court by one of your unhappy customers. If you use the Internet to cause an injury in one state, you or your business may be brought into court in the state where the injury occurred. For example, under state long arm statutes, committing a tortious act within the state is a basis of jurisdiction.

Of course, in cases where the connection between the activity and the injury is not clear, courts have looked for evidence that the activity was “purposefully directed” at the resident(s) of the forum state, or that the person causing the injury had substantial contacts with the state. Most courts are less inclined to exercise personal jurisdiction over non-residents in cases involving tort claims arising from Internet use. Generally speaking, an Internet business must direct its activities at an in-state resident, or have a continuing obligation with that resident, in order reasonably to anticipate being hauled into court in the state.

But, not all torts or injuries will expose your business to the personal jurisdiction of another state. Even if a plaintiff claims to feel the effects of the harm caused by an act causing injury in his or her forum state, there must still be “something more” than mere Internet use to satisfy due process under the Constitution. Purposeful conduct may still be insufficient in jurisdictions where the activity must be directed at the plaintiff in his or her capacity as a resident of that particular state.

More case examples:

  • EDIAS Software International v. BASIS International Ltd. (1996): A New Mexico company was sued for sending defamatory email and making defamatory postings about an Arizona business. The court claimed personal jurisdiction because the defamatory statements intentionally targeted the Arizona business and actually caused an injury (defamation) within the state.
  • Pavlovich v. Superior Court (Cal. 2002): Under the “effects test”, the trial court did not have jurisdiction over a foreign resident in a corporation’s suit alleging the resident misappropriated its trade secrets by posting the corporation’s program’s source code on his website. The website was accessible to any person with Internet access and the resident merely posted information and had no interactive features. The court determined that the resident could not have known that his tortious conduct would hurt the corporation in California when the misappropriated code was first posted and this did not establish express targeting of California residents.
  • Blumenthal v. Drudge (1998): In another early decision, Matt Drudge of The Drudge Report made alleged defamatory statements about a Washington, D.C. resident on his website and the resident filed suit in the District of Columbia. Although Matt Drudge lived and worked in California at the time of the suit, a court ruled that he was subject to personal jurisdiction in the District because the injury occurred in the District. The court also determined that the Drudge Report had substantial contacts in D. C. since Drudge personally emailed his column to a list of emails belonging to D.C. residents, solicited contributions and collected money from D. C. residents and he traveled to D. C. on two occasions to promote his column. All of this was enough for the court in that case to determine that Matt Drudge had substantial contacts with the District;
  • Cybersell, Inc. v. Cybersell, Inc. (1997): An Arizona plaintiff suing for trademark infringement argued that a Florida defendant’s mere use of the same trademark in its home page was sufficient for personal jurisdiction. The Florida defendant had “no contacts with Arizona other than maintaining a home page that was accessible to anyone over the Internet.” The court declined to exercise jurisdiction, noting the Florida defendant “did nothing to encourage residents of Arizona to access its site, and there [was] no evidence that any part of its business (let alone a continuous part of its business) was sought or achieved in Arizona.” The circumstances lacked the “something more” necessary “to indicate that the defendant purposefully… directed his activity in a substantial way to the forum state.”

Consenting to Jurisdiction over Your Business

A court can obtain personal jurisdiction if both parties consent to such jurisdiction. The most common type of consent is where a company is required to consent, in advance, to personal jurisdiction in a state for incorporating or organizing a business under the laws of that state. State business organization statutes require that a business provide the secretary of state with an agent to accept service of process. An Internet business can also consent to the court’s jurisdiction by filing a response to a lawsuit filed with that court.

Similarly, you may grant consent by signing a contract that has a provision requiring you agree in advance to be subject to the personal jurisdiction of a state. For example, a California website developer may sign an agreement with an Illinois service provider containing a clause stating: “The parties consent to the exclusive jurisdiction of the federal and state courts located in Cook County, Illinois, in any action arising out of or relating to this agreement. The parties waive any other venue to which either party might be entitled by domicile or otherwise.” (However, the States of Montana and Idaho do refuse to recognize such clauses).

You have now been introduced to the catch 22 of e-commerce! The Internet provides a great way for small businesses to operate and achieve massive growth. Unfortunately, such growth will inevitably expose your business to foreign jurisdiction and the ability to be hauled into court in some distant State. If you want to guarantee that you will avoid this risk and you plan on operating a commercial website, you will surely sacrifice sales and growth.