Unless you are an attorney -- and quite possibly even if you are -- there is nothing particularly riveting about "long-arm" statutes, which address the extent to which the courts of one state can exercise jurisdiction over out-of-state litigants without violating the Constitution. We last reported on this topic here. Two new Court of Appeal decisions address the extent of "contacts" with California -- or "purposeful availment" of some benefit within California -- that will support jurisdiction over non-California-based businesses.
♣ In an action against a group of Las Vegas casinos, the Court of Appeal reversed a trial court dismissing the case for lack of jurisdiction over the defendants. The casinos advertised within California via billboards, print ads and broadcast advertisements, and utilized the services of an independent California company for the purpose of attracting a limited number of "high-end" customers from California. The appellate court found a sufficient connection between the hotels' California-focused activities and the claims asserted by the plaintiff:
Snowney’s alleged causes of action for violation of the unfair competition law, breach of contract, unjust enrichment, and false advertising all arise from or are substantially connected to the Hotel Defendants’ efforts to solicit California patrons. The false advertising count arises directly from the defendants’ local advertising in California in that the complaint, liberally construed [citation omitted], alleges that the advertising was false or misleading.The counts for violation of the unfair competition law also arise directly from the Hotel Defendants’ forum contacts to the extent the counts are based on a violation of the false advertising law [citation omitted]. To the extent those counts are based on alleged unfair or fraudulent business practices apart from false advertising in California, we conclude that the counts are substantially connected to the defendants’ California contacts. Many of the California residents who visited the hotels presumably did so as a result of the defendants’ advertising in California, or made their reservations via electronic or telephonic communications that were purposefully directed at California residents. We conclude that those California contacts are substantially connected to causes of action that challenge an alleged mandatory surcharge imposed on all hotel guests. We need not detect a causal connection between the defendants’ California contacts and the alleged charging of a nightly energy surcharge without prior notice. [Citation omitted.] Rather, we conclude, in light of the nature and intensity of the contacts, that the contacts are sufficiently related to the alleged causes of action to justify the exercise of personal jurisdiction. Our conclusion also applies to the breach of contract and unjust enrichment counts, which are based on essentially the same alleged wrongdoing.
♣ In another case, the Court of Appeal has concluded that there is a sufficient basis for jurisdiction in California for purposes of a suit against a Nebraska-based telemarketing firm arising from transactions in which "a California resident initiates a phone call to buy a product, reaches a telemarketer who handles the order, the telemarketer then initiates a sale of a separate product and allegedly makes misrepresentations during the sales pitch for the separate product."
Because the original transaction began with the California resident calling out of the state, the usual rules of jurisdiction would not permit suit in California if the claim arose solely from that call. The appellate court reasons, however, that the nature of the allegedly unlawful transaction -- in which the Nebraska telemarketer initiates an "upsell" transaction, offering additional products and services unrelated to those that the California customer had called to order -- was the equivalent of a new marketing call in to California, thus providing the necessary contact to support the exercise of jurisdiction.
The court's decision in the casino case, Snowney v. Harrah's Entertainment, Inc. (March 11, 2004), Case No. B164118, can be found at these links in PDF and Word formats. The telemarketing case, West Corporation v. Superior Court (March 17, 2004), Case No. D042633, can be found at these links in PDF and Word formats.
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