E-Alert Case Updates

No Personal Jurisdiction Over Out-of-State Defendant Who Hosted Website and Accepted Dues from Maryland Residents

Allcarrier Worldwide Servs. v. United Network Equipment Dealer Ass’n
No. AW-11-cv-01714 (U.S. District Court for D. Md., September 22, 2011)
by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

The seminal issue in this case focused on whether the Court had personal jurisdiction over the Defendant, a non-profit organization that hosted a website and accepted dues from members worldwide, including those residing in the State of Maryland. In holding that there was no personal jurisdiction, the Court granted the Defendants’ Motion to Dismiss.

The cause of action arose from a membership agreement between Plaintiff and Defendant United Network Equipment Dealer Association (“UNEDA”). Plaintiff is a Maryland corporation, and Defendant is based in Nebraska. Defendant had no offices or employees in Maryland. It ran a website where members could post information to buy and sell used computer equipment. The Plaintiff was a member of UNEDA in good standing until Defendant decided to remove him based on allegations that he disseminated a UNEDA posting to a non-member. After Defendant terminated Plaintiff’s membership, Plaintiff brought the instant action, and then the Defendant moved to dismiss the Complaint for lack of personal jurisdiction.

The Plaintiff had the burden to prove that jurisdiction was authorized by Maryland’s long-arm statute and was consistent with constitutional due process requirements. In order to exercise personal jurisdiction over a Defendant, “minimum contacts” with the forum are required.

The Court found that Defendant merely provided its members access to a website in which the members, not Defendant, engaged in business transactions related to buying and selling computer equipment. Although it granted access to members internationally, including in Maryland, its role was only “passive.” The Court declined to hold that because Defendant accepted membership dues from Plaintiff and thirteen (13) other Maryland residents that it was subject to personal jurisdiction in Maryland. To find personal jurisdiction in Maryland would require a finding of personal jurisdiction in all states in which members resided and would eviscerate the personal jurisdiction requirements of the long arm statute and the due process clause. Defendant’s ties with Maryland, i.e., the fact that it had 15 Maryland members who signed membership agreements and paid annual dues, was insufficient to support a finding of either specific or general jurisdiction. Consequently, the case was dismissed.