Jan. 16, 2015 – Wisconsin courts do not have personal jurisdiction over an out-of-state car dealer even though the car dealer advertised cars on a third-party website accessible by Wisconsin residents, a state appeals court has ruled.
Eric Carlson, who purchased a BMW after seeing an online ad, commenced a lawsuit in Ozaukee County, alleging auto dealer Fidelity Motor Group LLC engaged in fraud by wire and negligent representation. Fidelity, based in Illinois, advertised the BMW on cars.com, a website that allows users to purchase or sell vehicles located nationwide.
After seeing the advertisement, Carlson called Fidelity and spoke with a representative who said the car was in excellent condition with no known mechanical defects. Carlson went to Fidelity in Illinois and bought the car on the condition that Fidelity change the oil.
Five months later, the car experienced problems. A mechanic said the problems arose because the oil had not been changed for “tens of thousands of miles.” Carlson sued, but the circuit court granted Fidelity’s motion to dismiss for lack of personal jurisdiction.
On appeal, Carlson argued that Wisconsin courts have personal jurisdiction over Fidelity because the dealer advertised cars to Wisconsin residents through online ads and a Fidelity representative had phone conversations with Carlson about the BMW.
But in Carlson v. Fidelity Motor Group LLC, 2014AP695 (Jan. 14, 2014), a three-judge panel for the District II Appeals Court affirmed, concluding that the online ad and phone conversations did not meet the minimum contacts requirement for personal jurisdiction.
The panel noted that no Wisconsin Supreme Court case determines the effect “of Internet websites on the question of personal jurisdiction over out-of-state defendants, and our review has uncovered no helpful cases,” wrote Judge Mark Gundrum.
Instead, the panel looked to Hy Cite Corp. v. badbusinessbureau.com, LLC, 297 F. Supp 2d 1154 (W.D. Wis. 2004), a case dismissed for lack of personal jurisdiction because the defendant website did not expressly target Internet users in Wisconsin.
The panel also noted a case decided by the South Dakota Supreme Court – Marschke v. Wratislaw, 743 N.W.2d 402 (S.D. 2007) – which decided that personal jurisdiction was lacking despite an auto sale prompted by an online advertisement.
“Carlson has neither alleged nor shown facts suggesting Fidelity targeted Wisconsin residents with its Internet advertisements any more than any other state’s residents; instead, the advertisements were ‘accessible to everyone regardless of location,’” wrote Gundrum, noting that Fidelity did not send unsolicited communications into Wisconsin.
The court noted Fidelity cannot control who responds to website ads, Carlson initiated the phone conversations with Fidelity, and the sale to Carlson was a “one shot deal.”
Fidelity did not “purposefully avail itself of the privilege of conducting activities in Wisconsin” and could not reasonably expect to be haled into court in Wisconsin based on advertisements on third-party websites accessed here, the panel noted.