If you're an out-of-state company being sued in California courts, you may have solid defenses to strike back at the case before it even begins. One of the most powerful weapons is a motion to quash or motion to dismiss on grounds of lack of personal jurisdiction.
Can Out-of-State Businesses Be Sued in California?
Plaintiffs often attempt to sue in California because it has plaintiff-friendly laws and a large consumer base. But the fact that a resident of California bought a product or came to your site is not a guarantee that you can be sued in California courts.
Under both California case law and U.S. Supreme Court law, a court must determine whether or not the defendant has "minimum contacts" with the state. Those contacts must be continuous, substantial, or specific. Random, single, or accidental sales are too weak to maintain jurisdiction. International Shoe Co. v. Washington, 326 U.S. 310 (1945).
What Is Personal Jurisdiction?
There are two types of personal jurisdiction:
- General Jurisdiction: A corporation can be sued in a state where it is "at home," typically where it is incorporated or headquartered.
- Specific Jurisdiction: A corporation can be sued in a state if it has purposefully aimed its activities at that forum, and the suit is the result of them.
Most foreign defendants' California suits hinge on whether specific jurisdiction exists.
Jurisdiction and Internet Sales
While the business of e-commerce has grown, plaintiffs have indicated that an internet sales site or website of a company gives jurisdiction. The courts, however, have repeatedly denied the implication that simply having a California-accessible web site is enough.
- When sales to Californians are incidental as opposed to actively solicited, courts typically find jurisdiction lacking.
- If a company sells or advertises directly to California consumers, that can be jurisdictional.
- Judges look at the totality of the circumstances including the number of sales that were made, whether they were directed towards California residents, and whether or not the claims in the lawsuit are directly connected to those sales.
Why a Motion to Quash Is Important
A motion to quash service for lack of personal jurisdiction asks the court to quash the case because the defendant is not appropriate for California courts.
The primary benefits of this defense are:
- Early resolution– It is capable of ending the case before litigation expenses pile up.
- Cost savings – Defending in California is expensive; winning a motion to quash avoids unnecessary fees.
- Leverage – Even if the case is refiled in another jurisdiction, you may be in a stronger negotiating position.
Recent Court Holdings Support Defendants
California, as well as Ninth Circuit courts have held that incidental or "fortuitous" sales are insufficient to establish jurisdiction. In Briskin v. Shopify and Thurston v. Fairfield Collectibles, courts ruled that isolated online sales were not enough to force out-of-state businesses into California courts.
This trend supports defenses for businesses sued on negligible ties to California.
Defending Out-of-State Defendants
If your business has been sued in California but lacks the substantial or targeted business activity there, you may likely have good cause to resist jurisdiction. A well drafted motion to quash can eliminate the time, money, and resources that are required for lengthy lawsuit.
Why Choose Cohen IP Law Group
At Cohen IP Law Group, our firm has extensive experience in federal and state courts defending clients against unjust lawsuits in California. Our lawyers frequently represent businesses in:
- Intellectual property disputes (trademarks, patents, copyrights).
- Unfair competition and advertisement claims.
- Commercial business lawsuits.
We understand how to utilize jurisdictional defenses to protect out-of-state companies from being unfairly brought into California courts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
