Butler v. Beer Across America

Citation: Butler v. Beer Across America, 83 F.Supp.2d 1261 (N.D. Ala. 2000).

Factual Background
In April 1999, a minor armed with a credit card issued in his name ordered beer from the defendants through the Beer Across America's website. The minor's mother, Lynda Butler, filed suit in the Circuit Court of Shelby County, Alabama, which was removed to the U.S. District Court for the Northern District of Alabama based on diversity of citizenship.

The plaintiff asserted a claim under the Civil Damages Act § 6-5-70 of the Alabama Code, which allows the parent or guardian of a minor to sue anyone who knowingly and illegally sells or furnishes liquor to the minor.

Trial Court Decision
Deciding that the sale of beer by Illinois defendants to an Alabama minor on the Internet occurred in Illinois, the federal court held that a single sale was insufficient minimum contacts to establish personal jurisdiction over the defendants in Alabama. The court found that the place of sale of the beer was Illinois. The sales invoice and shipping document indicated that the beer was sold F.O.B. seller and ownership of the goods passed to the buyer upon tender to the carrier. The invoice also charged Illinois sales tax, not Alabama beer tax.

The court then examined whether minimum contacts existed between the defendant and the jurisdiction. The plaintiff pointed out that the defendants had sold beer to three Alabama residents and to two Alabama brewers through a non-party Illinois wholesaler.

The court held that the plaintiff had not offered “competent evidence to seriously controvert the defendants' averments that they are not registered to do business in Alabama; that they own no property in the state; that they maintain no offices in the state; that they have no agents in Alabama; that their key personnel have never even visited the state; and that they do not place advertisement[s] with Alabama media outlets (except for what nationally placed advertisements may reach the state) or engage in any other significant promotions targeting the state, which would rise to such a level as would justify an exercise of general jurisdiction by this state's courts.”

Turning to the sliding scale test in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997), the court noted there was a gray area where a defendant has a website that allows a user to exchange information with a host computer: “Applying these principles to the present case, clearly Beer Across America's site does not even anticipate the regular exchange of information across the Internet, much less provide for such interaction. Rather, it is closer to an electronic version of a postal reply card; the limited degree of interactivity available on the defendants' Web site is certainly insufficient to satisfy the minimum contacts requirements of due process for this Court to exercise personal jurisdiction over these defendants.”

The court concluded that considerations of fair play and substantial justice also did not support personal jurisdiction over the non-resident defendants. The plaintiff alleged no actual injuries, but only sought to punish and deter the defendants. “[The] state of Illinois has criminal and administrative procedures in place to accomplish the same task.”

The court noted that “the fact that many companies have established virtual beach-heads on the Internet and the fact that the Internet is now accessible from almost any point on the globe have created complex, new considerations in counting minimum contact for purposes of determining personal jurisdiction.” But, the court added, “simply because this Court lacks jurisdiction does not mean that the defendants are completely immune from plaintiff's suit. The evidence offered both in support and in opposition to Beer Across America's motion to dismiss leads the Court to find that personal jurisdiction would be proper in the Northern District of Illinois.” As a result, the court transferred the case to Illinois for further proceedings.