BENCH BLOG: Does long arm of Wisconsin law extend down under?

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The Court of Appeals has ruled that a Wisconsin resident cannot obtain long-arm jurisdiction over the Sydney Morning Herald without offending the Due Process Clause.

A few months after Roderick Salfinger moved to a Milwaukee suburb from Australia, the Sydney Morning Herald published an article, available on its globally accessible website, concerning the Australian family behind the Yellow Tail wine label.

Part of the article was about the family’s relationship with Salfinger and quoted people who made unflattering remarks about him. One specific statement riled Salfinger – that he “faces prosecution in the US after allegedly producing a revolver at his daughter’s wedding.”

He denied the conduct, and since the Herald refused to print a retraction, he brought suit for defamation in Milwaukee County Circuit Court. The suit named the newspaper’s media company and related entities, such as Fairfax Media, as defendants.

The defendants responded by moving to dismiss the case for lack of jurisdiction.

Trial court decision

The legal framework for determining whether the court has personal jurisdiction over a nonresident defendant is a two-part inquiry.

First, does Wisconsin’s long-arm statute, sec. 801.05(4)(b), apply? The statute is to be liberally construed in favor of jurisdiction.

Looking to the dictionary definitions of the statutory words “products” and “processed,” Milwaukee County Circuit Judge Richard Sankovitz found that information processing performed by a newspaper, not just processes such as manufacturing tangible things, is captured within a liberal reading of the statute.

The second part of the inquiry is over whether due process requirements are met, especially over whether there are sufficient minimum contacts — in number and nature — with Wisconsin to establish that the defendants “should reasonably anticipate being haled into court” here.

More particularly, did the Fairfax Media defendants purposefully avail themselves of the privilege of conducting activities in Wisconsin, or were the contacts random, fortuitous or attenuated, or the unilateral activity of another party or third person?

The Herald’s contacts with Wisconsin are its globally accessible website. Wisconsinites need to initiate access to the website, and then, triggered by IP addresses and computer cookies, ads generally directed at Wisconsin residents appear near and around the newspaper page.

Sankovitz found that these contacts were attenuated, and were initiated not by the defendants but by Wisconsin residents visiting the Herald’s website. As such, these contacts did not comport with due process requirements for exercising long-arm jurisdiction, and accordingly, he dismissed the case.

Court of Appeals opinion

The District 1 Court of Appeals unanimously affirmed the dismissal.

The court took up “the unique question of whether a Wisconsin court may exercise jurisdiction over foreign defendants whose only real connection to the State of Wisconsin is in having published an article online that is ostensibly available to anyone in the world and that also provides for targeted advertising based upon the user’s location and interests.”

First, it determined that an article published online fell within the broad definition of “processed” in Wisconsin’s long-arm statute.

Specifically, the Herald’s “process of preparing and arranging news and blank spaces for advertising content for the market and subjecting it to information processing so that users in Wisconsin can access articles placed on its website” is well within the statute’s ambit.

Minimum contacts: website

The bulk of the decision concerned the second step of the long-arm jurisdiction inquiry — whether extending jurisdiction over a nonresident is consistent with due process.

The minimum contacts analysis “ultimately looks to the defendant’s relationship with and connection to the forum through some type of conduct that the defendant purposefully undertook and whether the defendant would understand that conduct to open the door to jurisdiction in that forum.”

Applying this standard, the court noted that there was absolutely nothing in the Herald’s article that mentioned Wisconsin or Salfinger’s presence here. The court concluded that “merely placing an article online on an Australian newspaper’s website, particularly where the article does not even mention Wisconsin, fails to evince any connection with or conduct in Wisconsin.”

Ads on the website

Next the court considered Salfinger’s argument that business ads on the Herald’s website targeted Wisconsin residents and therefore satisfied the minimum-contacts requirement. The court examined an affidavit from Salfinger’s IT expert, which was part of the record in the case.

The expert testified that the Herald’s software allowed the website to display ads tailored to the user’s geographic location. Thus, a Wisconsin user accessing the Herald’s website would see ads for Wisconsin businesses, and a German user would see ads for German businesses.

In addition, the software could incorporate other sites that users had visited on their computer. So a Wisconsinite who had visited a health information website might see an ad for Aurora Health Care on the Herald’s website. Thus, cookies entirely unrelated to the Herald helped populate the ad space on its website.

Moreover, Google, Adobe and Double Click also influenced which ads populated the website by virtue of those third parties’ contracts with local businesses and with the Herald.

Accordingly, “it appears that numerous parties — the user, businesses that purchase advertisement space, third parties such as Google and Adobe, and the Fairfax parties — ultimately play a role in which advertisements appear to a user accessing the Sydney Morning Herald website.”

Since the record did not sufficiently establish that Fairfax Media actually controlled the placement of the ads to Wisconsin users, the court concluded that the defendants had not engaged in activity that either targeted or was connected with Wisconsin. It would therefore violate due process to extend long-arm jurisdiction over them.

Commentary

Although recommended for publication, the court’s opinion is a slog given the writing and the subject matter, including various IT terms.

Nonetheless, it brings Wisconsin’s long-arm statute into the digital age by determining that a nonresident’s newspaper website is within the reach of the long-arm statute.

And it establishes that without anything more, the mere accessibility of such a newspaper website is insufficient to satisfy due process for the purposes of conveying long-arm jurisdiction.

The part of the decision concerning the website’s ads is more complicated, and here depended on the interaction of the geographic location and interests of the user, the website’s software, businesses who buy ad space, and third-party (e.g., Google and Adobe) involvement in ad placements.

The court appeared to hedge its bet by repeatedly stating that the IT expert “seems to suggest” that the affidavit provided only a “limited” explanation of targeted advertising, and that Salfinger had not “clearly and sufficiently” established that the defendants actually controlled the placement of targeted ads.

It thus left the door open for the possibility that a more detailed and definitive record might be made before a trial court that could warrant a different conclusion on the due process aspect of long-arm jurisdiction.