AMZN

Column: 'No circuit split' — Herbal Brands exhorts Supreme Court to skip Amazon reseller case

Credit: REUTERS/RALPH ORLOWSKI

By Alison Frankel

Dec 15 (Reuters) - I’ve said it before: When it comes to petitions asking the U.S. Supreme Court to take a case – or briefs urging the justices not to grant review – framing makes all the difference.

A new Supreme Court brief by Herbal Brands, an Arizona health and wellness company, is a perfect example of that truism.

Herbal Brands opposes Supreme Court review of a 9th Circuit Court of Appeals decision allowing the company to sue five Amazon AMZN.O resellers in Arizona for alleged trademark infringement. Its primary argument: The Amazon resellers are asking the justices to decide a question that the case does not present.

Last month, when the resellers filed their petition asking the Supreme Court to revisit the 9th Circuit's decision, their lawyers at Bochner emphasized what they characterized as a divide in the federal circuits.

The 5th and 8th Circuits, the resellers argued, have said that an internet merchant’s sale and delivery of a single product into a particular forum is not sufficient to establish that forum’s jurisdiction. But the 9th Circuit, according to the Amazon resellers, sided with the 2nd and 7th Circuits to conclude that the sale and delivery of just one product means nationwide online retailers can be hauled into litigation in that forum.

The resellers told the Supreme Court that the question presented in their petition is “whether a seller whose products ship nationwide is subject to personal jurisdiction in every forum into which even one of its products is shipped.”

Herbal Brands disputed that characterization of the case in the opposition brief it filed on Thursday.

Perhaps there is division among some of the circuits on the extremely narrow question of whether a single sale into a forum gives that forum jurisdiction over claims arising from the sale, wrote Herbal Brands’ counsel from Vorys, Sater, Seymour and Pease. And someday, Herbal Brands said, the Supreme Court may decide to resolve the single-sale issue.

That is not, however, the question posed by this case, Herbal Brands said: The 9th Circuit did not base its ruling on the sale and delivery of a single allegedly infringing product into Arizona and did not say that a single sale sufficed to establish jurisdiction.

The key to the 9th Circuit ruling, according to Herbal Brands' counsel, were concessions by the Amazon resellers, who did not dispute that they regularly distributed products to Arizona purchasers and that they received cease-and-desist letters citing Herbal Brands’ Arizona headquarters and asserting an injury from the resellers’ distribution of products in Arizona. Herbal Brands argued that Arizona’s jurisdiction in this case was not based on the sale and delivery of just one product but on conduct aimed at Arizona.

Moreover, Herbal Brands argued, the 9th Circuit did not say that jurisdiction hinged on a particular number of sales into a forum. Ultimately, Herbal Brands said, the appeals court called on trial judges to heed the Supreme Court’s admonition in 1980’s World-Wide Volkswagen Corp. v. Woodson that jurisdictional decisions must be fair and reasonable for defendants. The 9th Circuit, Herbal Brands said, explicitly left open the possibility that trial courts might find it unreasonable to exercise jurisdiction over a nationwide merchant based on a single sale and shipment.

“A plain reading of the 9th Circuit’s decision shows that it does not remotely confer personal jurisdiction over sellers ‘in every forum into which [they] ship even a single product,’” Herbal Brands argued in its brief.

The real question presented in the 9th Circuit ruling, Herbal Brands said, is whether an out-of-state defendant is subject to jurisdiction when it is on notice that its regular sale of physical products to purchasers in the state is causing alleged harm. The 9th Circuit’s entirely unremarkable conclusion that the answer is yes, Herbal Brands said, does not warrant the Supreme Court’s attention.

Amazon resellers’ counsel Serge Krimnus of Bochner said Herbal Brands wrongly minimized the circuit split on where online merchants can be sued. “The 9th Circuit expressly recognized a five-circuit split on the important question of whether e-commerce sellers should be subject to, in effect, nationwide personal jurisdiction,” Krimnus said. “The 9th Circuit’s decision, if allowed to stand, affects nearly every online seller.”

It's easy to understand why the Amazon resellers emphasized the single-sale issue in their depiction of the case in their Supreme Court petition: Even Herbal Brands, after all, conceded in its opposition brief, there is unquestionably a divide in the circuits on that point. (It’s worth pointing out that the defendant in the 7th Circuit case alerted the justices to that split earlier this year, but the Supreme Court denied review.)

And at least two members of the court – Chief Justice John Roberts and Justice Samuel Alito – have previously expressed concerns about throwing open the jurisdictional gates for suits against online sellers. In a 2020 oral argument, Roberts, in particular, questioned the fairness of allowing a Maine duck decoy carver who advertised his products on the internet to be sued wherever the decoys are sold.

Interestingly, two business-friendly groups, the Atlantic Legal Foundation and the DRI Center for Law and Public Policy, filed amicus briefs backing the Amazon reseller’s plea for clarity in the jurisdictional rules for online sellers but did not emphasize the one-sale issue. Their briefs took a wider approach, arguing that the 9th Circuit decision left nationwide ecommerce retailers exposed to suits in nearly every venue where they sell and ship.

The amici, in other words, seem to be suggesting that the real question for the Supreme Court lies somewhere between the framing proposed by the parties.

The case is not yet scheduled for conference by the justices.

Read more:

Amazon resellers ask Supreme Court to clarify where online businesses can be sued

It's getting easier for plaintiffs to pick where to sue internet retailers

(Reporting By Alison Frankel)

((alison.frankel@thomsonreuters.com; 646-223-6491 (o) 917-848-7493 (c);))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.