Please ensure Javascript is enabled for purposes of website accessibility

Va. company's Web site did not subject business to personal jurisdiction in S.C., appeals panel rules

By: greg.froom//June 30, 2008

Va. company's Web site did not subject business to personal jurisdiction in S.C., appeals panel rules

By: greg.froom//June 30, 2008

A Virginia-based nuclear decontamination company and its owners could not be haled into court in South Carolina to defend a trade secrets case, even though the company’s Web site allegedly targeted customers here, the appeals court ruled June 20.
The reason: The plaintiff — another Virginia company, but one with its primary place of business in Georgetown — failed to show that the anyone in South Carolina actually bought something because of the site or that it was particularly aimed at the Palmetto State.
The ruling helps flesh out precedent on when a Web site can serve as sufficient contacts for personal jurisdiction — a developing area of law in this state.
Columbia lawyer Robert L. Widener, who represented the defendants on appeal, said there is much more precedent on the issue in larger states such as New York and California.
But Widener said many of the same principles apply here as in cases dealing with more conventional forms of advertising.
“There is this general notion that merely advertising is not enough, and, really, a Web site is just advertising,” he told Lawyers Weekly.
“The court focused on the fact that there was no evidence of any sales in South Carolina or that the Web site generated any activity here that would make that Web site owner subject to personal jurisdiction under the minimum contacts analysis,” Widener said.
“The plaintiff was trying to get the courts to accept the notion that a holding-out of a willingness to do business with South Carolina residents was enough to create jurisdiction,” something the court rejected, he said.
The case is Power Products and Services Co., Inc. v. Kozma et al. (South Carolina Lawyers Weekly No. 011-133-08, 8 pages). Judge Thomas E. Huff wrote the opinion, and Judges Ralph King Anderson Jr. and John W. Kittredge concurred.
The suit arose after several former Power Products employees left the company and started their own competing business, River Technologies, LLC, based in Forest, Va.
The plaintiff contended that some of the former employees misappropriated trade secrets and conspired with the other defendants to use the secrets in their new business.
Since none of the defendants currently resided in South Carolina, and the defendant company was based out-of-state, the plaintiff relied on the long-arm statute and minimum contacts to bring the case in Georgetown County.
The trial court tossed the case based on lack of personal jurisdiction.
The plaintiff appealed. Among its arguments was that it had put forth evidence that the defendants were operating in South Carolina.
“Power Products relies on the printout of River Technologies’ Web site to show Rivers Technologies was currently doing business or attempting to do business in South Carolina. In particular, it points to language on the Web site which states, ‘Our relationships extend to every commercial nuclear plant in the United States and Canada….,'” the opinion states.
Citing a 1999 U.S. District Court order, the appellate panel said that such language was not enough, since there was no evidence that a South Carolinian purchased anything based on the Web site or that it was directed at S.C. customers.
In Brown v. Geha-Werke, GmbH, 69 F.Supp.2d 770 (D.S.C. 1999), the District Court ruled that a Web site did not meet the minimum contacts standard where no one in South Carolina had visited the site and the site did not target this state more than it did any other.
Said Widener, the defendants’ attorney, “The more interesting questions that have not yet been answered is what if there had been inquiries but no sales, or what if there had been only isolated sales. There are cases from other jurisdictions that say an isolated sale in and of itself generated by a Web site is not enough.”

By Gregory Froom
[email protected]
Case name:
Power Products and Services Co., Inc. v. Kozma et al. (South Carolina Lawyers Weekly No. 011-133-08, 8 pages)
Court: S.C. Court of Appeals
Judge: Judge Thomas E. Huff
Attorneys: Richard C. Detwiler and Ian D. McVey, Callison Tighe & Robinson, both of Columbia, for appellant-plaintiff. David J. Mills, McNair Law Firm, of Georgetown; and Robert L. Widener, McNair Law Firm, of Columbia, for respondents-defendants.
Issue: Could defendants in a misappropriation of trade secrets case be subject to personal jurisdiction in South Carolina based in part on their company’s Web site?
Holding: No. There was no evidence that the Web site ever attracted any inquiries from South Carolina, or that anything was ever sold into the state based on the site.
Potential impact: The ruling gives insight on how the court will view Web sites as minimum contacts for establishing personal jurisdiction in South Carolina an area where there currently is scant precedent.

Business Law

See all Business Law News


See all Commentary


How Is My Site?

View Results

Loading ... Loading ...