News & Events

Tennessee Adopts New Personal Jurisdiction Standard for Internet Contacts

Courts across jurisdictions have grappled for years with reconciling the personal jurisdiction “minimum contacts” test with the fact that “the [I]nternet operates ‘in’ every state regardless of where the user is physically located, potentially rendering the territorial limits of personal jurisdiction meaningless.”  EnhanceWorks, Inc. v. Dropbox, Inc., No. M2018-01227-COA-R3-CV, 2019 WL 1220903, at *8 (Tenn. Ct. App. Mar. 14, 2019) (quoting Shrader v. Biddinger, 633 F.3d 1235 (10th Cir. 2011)).  Until recently, Tennessee courts had only skimmed the surface of this issue.

On March 14, 2019, the Tennessee Court of Appeals adopted a new standard in EnhanceWorks v. Dropbox for analyzing whether an Internet contact suffices to establish personal jurisdiction.  Tennessee common law already recognized that “[a] defendant’s contacts are sufficiently meaningful when they demonstrate that the defendant has purposefully targeted Tennessee to the extent that the defendant should reasonably anticipate being haled into court here.”  Id (quoting State v. NV Sumatra Tobacco Trading Co., 403 S.W.3d 726, 760 (Tenn. 2013)).  Applying this rationale to Internet contacts, the appellate court articulated the following test:

[F]or a defendant’s Internet contacts to be sufficiently meaningful, they must be more than “passive Internet activity” such that the defendant directs electronic activity into Tennessee “with the manifested intent of engaging business or other interactions in the State thus creating in a person within the State a potential cause of action cognizable in [Tennessee].”

Id. (quoting ALS Scan, Inc. v. Dig. Serv. Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002)).  In an apparent attempt to foreclose nominal Internet activity from qualifying as sufficient “minimum contacts,” the court further “conclude[d] that merely accessing a public website from the Internet does not, in itself, subject the individual accessing the site to personal jurisdiction wherever the website may be located.”  Id. (citation omitted).  “Observing a public website on the Internet is ‘passive Internet activity,’ which ‘does not generally include directing electronic activity into the State.’”  Id. (quoting ALS Scan, 293 F.3d at 714).

Additionally, the Court of Appeals found that a similar test, the Zippo test, “would be concordant with Tennessee case law concerning personal jurisdiction,” despite determining that the model did not apply to the facts in EnhanceWorks.  The appellate court adopted the Sixth Circuit’s explanation of the Zippo test:

The “operation of an Internet website can constitute the purposeful availment of the privilege of acting in a forum state . . . if the website is interactive to a degree that reveals specifically intended interaction with residents of the state.”  Bird v. Parsons, 289 F.3d 865, 874 (6th Cir. 2002) (internal quotations omitted).  In evaluating whether the defendant’s contact with the forum state constituted purposeful availment, this and other circuits have used the “Zippo sliding scale” approach, which distinguishes between interactive websites, where the defendant establishes repeated online contacts with residents of the forum state, and websites that are passive, where the defendant merely posts information on the site.  See, e.g., Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 890 (6th Cir. 2002) (citing Zippo Mfg. Co. [v. Zippo Dot Com, Inc.], 952 F. Supp. [1119,] 1124 [(W.D. Pa. 1997)]); Revell v. Lidov, 317 F.3d 467, 472 (5th Cir. 2002)).  Interactive websites can subject the defendant to specific personal jurisdiction, whereas passive websites are less likely to confer such jurisdiction.  Neogen Corp., 282 F.3d at 889-91.

Id. at *7 n.1 (quoting Cadle Co. v. Schlichtmann, 123 F. App’x 675, 678 (6th Cir. 2005)).  “The Zippo test is applicable when the defendant operates a website that can be accessed from any jurisdiction.”  Id. at *7 n.1.  (This test did not apply in EnhanceWorks because the plaintiff operated the website that the defendant allegedly accessed.)

The Tennessee Court of Appeals’s application of the facts in EnhanceWorks to these newly articulated standards indicates that establishing personal jurisdiction in Internet-based suits may become increasingly tricky and contested.  In EnhanceWorks, the appellate court determined that the defendant’s alleged contact—accessing the plaintiff’s website a few years after their initial contact via an email and telephone call—fell short of “purposefully creating significant contacts with Tennessee.”  Id. at *10 (citation omitted).  When relying on Internet contacts to claim personal jurisdiction, future litigants should take care to fully analyze each potential defendant’s Internet contacts before filing suit or otherwise risk early dismissal of their action.

Authored by: Hannah Kay Hunt Freeman