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Businesses Beware: Websites Viewed as “Virtual Stores” in California

With the current Coronavirus pandemic scaring the majority of the population into isolation, confined within their own homes, it is no surprise that online shopping has become the new norm. In fact, long before this situation we are in, Amazon had already developed into not simply an online store, but THE online store. Now most every retailer has followed suit and as residents of the United States, we can purchase nearly everything we could ever need from our living room, kitchen, and disgustingly enough, the bathroom. Some of the retailers we can contact through the internet don't have a single "brick and mortar" location on this side of the Pacific or Atlantic Ocean. However, as the world's largest consumer of goods, it is not unlikely that consumers in the U.S. make up a substantial portion of purchasers for retailers in places they've never been.

In a recent decision, California’s Court of Appeal for the Fourth Appellate District heard the appeal of a trial court’s determination that it lacked personal jurisdiction over a Georgia-based limited liability company. The underlying claim was brought pursuant to the Unruh Civil Rights Act alleging the LLC’s website does not have sufficient accommodations for access by blind and visually impaired consumers. The company does not have physical locations within the state of California, but did report that approximately 8 percent of its gross revenue is from sales to Californians. When viewing this information in light of the decision in Stomp, Inc. v. NeatO, LLC, the Court determined it was the equivalent to maintaining a “virtual store” in California. Following such determination, the court’s next move reasoned that Snowney v. Harrah’s Entertainment, Inc. applied and stated that exercising personal jurisdiction over the company “would comport with fair play and substantial justice.”

What does it all mean? Well, it should be noted that the U.S. population is estimated to be 331 million, with roughly 39.5 million (approximately 11.9 percent) residing in California. Based on this information, we can anticipate that numerous other U.S. businesses today would also fall subject to a finding that “by making a substantial number of sales of goods or services to California residents via [their] own website[s] constitutes purposeful availment.” Another important note is that the decision in this case was not unanimous. In fact, a dissenting opinion by Justice Menetrez argues that the court’s assertion of personal jurisdiction is too broad. Specifically, the dissent contends that because the plaintiff’s underlying claim is not connected to or derivative of the company’s limited activities which may even remotely be considered to target Californians (selling and shipping to Californians and sending catalogues to Californians who elect to receive them) the exercise of personal jurisdiction is unwarranted.


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