Opinion handed down Feb. 24, 2015
The plaintiff, Issiah Andra, purchased a vehicle through an eBay online auction service on July 15, 2011. The defendant, Left Gate Property Holding, Inc. (“Left Gate”) was the seller of the vehicle. Left Gate was a “top-rated” seller on eBay and headquartered at a seventy-acre facility in Stafford, Texas.
Upon taking delivery of the vehicle, Mr. Andra noticed several inconsistencies between the vehicle’s actual state and what the eBay listing had described. Left Gate agreed to pay for the necessary repairs, but failed to do so. Mr. Andra ultimately filed suit against Left Gate in the Circuit Court of St. Louis County. Left Gate argued that the Missouri trial court did not have personal jurisdiction to hear the case. The trial court agreed with Left Gate and dismissed the action for lack of personal jurisdiction.
The Supreme Court of Missouri[1] reversed the trial court’s decision and remanded the case, holding that because of “Left Gate’s substantial, long-term business transactions in Missouri as well as its alleged fraudulent misrepresentations, telephone and mail correspondence, and continuing warranty obligations directed toward a Missouri resident[,] . . . Missouri may assert personal jurisdiction over Left Gate.”[2]
I. Facts and Holding
Mr. Andra purchased the 2007 GMC Yukon Denali XL in question from Left Gate for $32,639.20.[3] Left Gate has between 1800 and 2100 vehicles listed on eBay at any given time, and it is the largest eBay vehicle dealership in the world.[4] Left Gate expressly stated on its website that it would deliver a vehicle purchased through an eBay auction anywhere in the United States.[5] The company does not employ “any other form of advertising [specific to] Missouri to drive potential customers to its eBay website or its specific eBay auctions.”[6] And while it is unknown precisely how much of Left Gate’s total revenue is derived from Missouri buyers, sales to Missouri residents make up roughly 0.86 percent of the company’s total transactions.[7]
In his petition, Mr. Andra alleged that upon taking delivery of the vehicle in Missouri, he noticed it lacked many of the features Left Gate had represented on its eBay auction.[8] Additionally,, Mr. Andra had to take the vehicle in for repairs.[9] When it failed to pass the Missouri state safety inspection, further repairs were required.[10] When Left Gate refused to cover the costs of these repairs, Mr. Andra filed suit in the Circuit Court of St. Louis County, alleging negligent misrepresentation and violations of the Missouri Merchandising Practices Act.[11] Left Gate filed a motion to dismiss for lack of personal jurisdiction, which the trial court granted after finding that Left Gate had not engaged in conduct that would constitute a purposeful availment of Missouri law.[12]
II. Legal Background
Prior to a court’s exercise of power over any party, there is a constitutional requirement that the party have a certain amount of minimum contact with the venue.[13] Regarding out-of-state defendants, most jurisdictions have special statutes, referred to as “long-arm” statutes, that allow for courts of that state to exercise personal jurisdiction on non-resident defendants on the conditions that the defendant is alleged to have committed a specified type of act and that the defendant has a sufficient connection with that state.[14]
Missouri courts have established a standard two-prong test for use in evaluation of whether personal jurisdiction may be properly asserted over non-resident defendant parties.[15] Under the first prong, “the defendant’s conduct must fall within Missouri’s long-arm statute, Section 506.500.”[16] Then, “the defendant must have sufficient minimum contacts with Missouri to satisfy due process.”[17]
III. Instant Decision
The Supreme Court of Missouri unanimously held, en banc, that the state of Missouri could assert personal jurisdiction over Left Gate after utilizing the two-prong test. As for the first prong, “The parties d[id] not dispute that Left Gate’s conduct satisfies Missouri’s long-arm statute.”[18] Under the second prong, it was determined that “Left Gate ha[d] sufficient minimum contacts with Missouri to satisfy the due process clause of the Fourteenth Amendment, and an assertion of jurisdiction is reasonable and does not offend traditional notions of fair play and substantial justice.”[19]
Left Gate made intentional and continuing contacts directed towards Andra in Missouri. To complete the sale, the company had to reach out to Missouri to mail the purchase order and federal buyer’s guide to Andra’s Missouri address, to receive Andra’s signature from Missouri on these legal documents, and to arrange shipping of the vehicle into Missouri.[20]
The decision of the trial court was reversed and remanded.
IV. Comment
Personal jurisdiction is a power, not a right. Courts have a big responsibility to citizens to correctly address issues of jurisdiction to ensure fair and enforceable judgments and uphold the integrity of the American justice system. With more and more business transactions being conducted online, a whole new area of case law is evolving surrounding the issue of personal jurisdiction in Internet enterprise.
This case involved an individual buying a single used vehicle from an eBay auction on one side, and a corporation with over four billion dollars in sales[21] on the other. Aside from the legal issues of minimum contacts and purposeful availment, the question of which party is more likely to have the means to defend an out-of-state case is fairly obvious, and one which companies who conduct such extensive business online should always consider in their sales negotiations as well as bottom lines.
[1] All judges concurred in the opinion. Issiah Andra v. Left Gate Property Holding, Inc., 453 S.W.3d 216, 234 (Mo. 2015) (en banc).
[2] Id. at 221.
[3] Id. at 222.
[4] Id.
[5] Id. See Texas Direct Auto, http://www.texasdirectauto.com/ (last visited Sept. 22, 2015).
[6] Andra, 453 S.W.3d at 216.
[7] Id. On its website, Left Gate states it has served over 100,000 customers to date. See Texas Direct Auto,http://www.texasdirectauto.com/ (last visited Sept. 22, 2015).
[8] Andra, 453 S.W.3d at 223. Among the features Mr. Andra alleged the car was supposed to possess but did not were a rear camera, overhead console, rear door pockets, leather and wood steering trim, in-dash six-CD layer and multi-level heated rear seats. Id. “Moreover, despite representations that the vehicle was in excellent condition, Mr. Andra contend[ed] the interior cloth was water stained; the dash was scratched; the remote start, heated seats, windshield fluid sprayer, moon roof, and DVD overhead screen did not function[] properly; and the navigational system did not work.” Id.
[9] Id. These problems included, among other things, defective ball joints, loud noises from the engine, a dented frame, and several dashboard lights indicating problems all illuminated upon delivery. Id.
[10] Id.
[11] Id.
[12] Id.
[13] “Personal Jurisdiction,” Legal Information Institute, https://www.law.cornell.edu/wex/personal_jurisdiction (last visited Sept. 22, 2015). See also Fed. R. Civ. Pro. 12(a)(4).
[14] “Long-arm statute,” Legal Information Institute, https://www.law.cornell.edu/wex/long-arm_statute (last visited Sept. 22, 2015).
[15]Andra, 453 S.W.3d at 225.
[16] Id. See also Mo. Rev. Stat. § 506.500.1, available athttp://www.moga.mo.gov/mostatutes/stathtml/50600005001.html.
[17]Andra, 453 S.W.3d at 225.
[18] Id. at 221.
[19] Id. at 234.
[20] Id. at 232.
[21] See Texas Direct Auto, http://www.texasdirectauto.com/ (last visited Sept. 22, 2015).
