One of the primary concerns of dealers doing business on the internet should be where problems with a sale are resolved. Can the dealer be sued in some court in a faraway state where a customer claiming problems with the sale lives?
Generally, courts around the country have split on this issue, some saying that a dealer can be subject to jurisdiction of remote courts and others saying it cannot. Recently, a circuit court in Goochland County, Virginia weighed in on this issue.
A dealer in that county sold a used vehicle to an Oregon resident through eBay. The buyer sued the dealer in Oregon and served the lawsuit on the dealer in Virginia.
When the dealer did not respond to the Oregon lawsuit, a default was entered, and the buyer filed an action in Virginia to record its judgment and commence collection against the dealer. The dealer responded in the Virginia action by claiming the court in Oregon had no jurisdiction over it.
In holding that the Oregon court had no jurisdiction over the dealer, the Virginia court observed that there was no evidence that the dealer did anything to purposefully avail itself of jurisdiction by doing business in Oregon. The court noted that the vehicle was located in Virginia and the buyer was responsible for transporting it from Virginia location to Oregon. The court also noted that there was no evidence that the dealer had ever sold a car by eBay auction to any other resident of Oregon.
While one can chalk this up as a win for the good guys, this decision was very fact specific. The decision left open the possibility of a different result if the facts had been different. For example if the buyer was in a state where the dealer regularly sold vehicles over the internet, then the dealer may well have found himself fighting the case there.
This case should serve as a reminder to dealers that when doing business on the internet, one of the potential costs is the defense of a case in another state unless your deal documents clearly and conspicuously provide that any case must be filed in the dealer’s locale.