The U.S. Court of Appeals for the Second Circuit has held that an out-of-state website operator cannot be sued in a New York court based solely on the posting of allegedly libelous material on a website. Best Van Lines, Inc. v. Tim Walker, Case No. 04-2934 (2nd Cir., June 26, 2007) (Sack, J.).
Defendant Timothy Walker, a resident of Waverly, Iowa, operates a website, MovingScam.com, out of his home. As its name suggests, the website provides consumer-related comments, most of them derogatory, about household movers in the United States. In August 2003, Walker posted statements on the site asserting that Best Van Lines was operating without legal authorization and without the proper cargo insurance required by law.
In response to the disparaging post, Best Van Lines instituted a lawsuit in the Southern District of New York alleging that it was defamed on Walker’s website. Walker moved to transfer the action to the Southern District of Iowa and alternatively to dismiss the action for lack of personal jurisdiction.
The district court granted Walker’s motion to dismiss on the ground that CPLR §302(a), New York’s "long-arm" statute, did not give the New York court personal jurisdiction over Walker. Best Van Lines appealed.
Addressing the issue of online defamation for the first time, the appeals court affirmed the district court’s dismissal, finding that New York case law establishes that making defamatory statements outside of New York about New York citizens does not, without more, provide a basis for jurisdiction, even when those statements are published in media accessible to New York readers. Specifically, the panel held that Best Van Lines failed to allege facts sufficient to show that Walker had transacted business in New York for purposes of CPLR §302(a)(1) or that its suit arose from such transactions for purposes of long-arm jurisdiction.
Practice Note: Even though New York’s "long-arm" jurisdiction statute (CPLR §302(a)), which governs out-of-state acts that injure a New York plaintiff, explicitly excludes defamation cases, the Second Circuit noted that a state court can claim jurisdiction over a non-domiciliary under CPLR §302(a)(1) if the defendant transacts any business within the state or contracts anywhere to supply goods or services to the state. To satisfy the "transacting business" requirement of New York’s long-arm statute, one would have to show that a defendant’s internet postings or other activities were the kind of activity by which the defendant purposely avails itself of the privilege of conducting activities within New York, thus invoking the benefits and protections of its laws, and over which the New York legislature intended New York courts to have jurisdiction.
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The bill defines "low-wage employees" as hourly employees making less than $15 per hour or the applicable state or local minimum wage, whichever is greater, or salaried employees making $31,200 per year or less.