Can’t Catch a “Brake” – Woman Injured on Foreign Bicycle Tour Forced to Litigate Away from Home (PA)

by

Steinfeld v. EMPG International (Pennsylvania)

The Pennsylvania plaintiffs were injured during a trip to Costa Rica.  Prior to leaving for Costa Rica, the plaintiffs visited the website of defendant EMPG International, LLC (a Colorado limited liability company) and consummated an online transaction to rent bicycles and sign up for a bicycle tour while in Costa Rica.  The bicycle equipment was allegedly not in the condition originally promised by the defendant, and one of the plaintiffs was injured during the tour due to faulty brakes on the bicycle.  The plaintiffs filed a federal lawsuit in the U.S. District Court for the Eastern District of Pennsylvania, alleging negligence, negligent hiring and retention, vicarious liability, joint enterprise, agency, breach of contract, violation of the Pennsylvania Consumer Protection Law, fraud, negligent misrepresentation, and loss of consortium.

The defendant filed a motion to dismiss the action based on a lack of personal jurisdiction and a failure to state a claim under which relief could be granted.  Following a pretrial conference, the Court entered an order permitting the parties to conduct discovery regarding jurisdiction, and the court required the parties to submit a joint stipulation of facts with respect to jurisdiction so that it could rule on the defendant’s motion to dismiss.  After reviewing the evidence and stipulated facts, the Court found that the “plaintiffs’ cause of action did not arise out of or relate to the company’s contacts with Pennsylvania.”  However, because the defendant was subject to general personal jurisdiction in Colorado, the Court transferred the case to the U.S. District Court for the District of Colorado.

During argument, nether party argued that there was a sufficient basis for Pennsylvania to have general jurisdiction over the defendant.  As a result, the Court needed to find specific jurisdiction through the “existence of minimum contacts between the defendant and the forum state.”  This analysis depended on three issues: (1) whether the defendant “has purposefully directed its activities” at the forum state; (2) whether the litigations arises out of or relates to at least one of those activities; and (3) whether the exercise of jurisdiction would “comport with fair play and substantial justice.”  Looking at those issues, the Court noted that the defendant did not have any specific ties to Pennsylvania.  As a result, the plaintiffs were forced to rely on the defendant’s online activities to establish jurisdiction.  While the defendant had made seventeen (17) other online sales to residents of Pennsylvania, the Court explained that the defendant had not engaged in any advertising or marketing directed to Pennsylvania residents, and the Court specifically noted that the plaintiffs had initiated the contact with the defendant that lead to the sale of the tour.  The plaintiffs argued that the defendant’s website was “commercially interactive enough to show that it purposefully availed itself of doing business in Pennsylvania,” but the Court stated that the defendant’s website did not target Pennsylvania.

Considering the increasing volume of commercial transactions occurring online and the rising prevalence of the execution of contracts online, including waiver and release, express assumption of risk, and indemnity agreements, this issues of this case (and the Court’s analysis) will increase in importance as corporations look to avoid litigating matters all around the country.  This case also highlights the need to consider the possibilities related to utilizing choice of venue clauses.

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