Can You Sue an Internet-Based Company?

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Can You Sue an Internet-Based Company?

Since so many of us live our lives online now — banking, paying bills, shopping, and working — it is not unusual to have conflicts arise that involve online businesses. If a dispute rises to the level of considering litigation, you may be wondering if or how you can sue a company that exists only on the Internet.

Before you decide to pursue a lawsuit against an online business, you need to take a couple of things into consideration. First, you need to determine if you will be able to prove that you have suffered sufficient harm to result in a potential judgment. Second, you need to determine if you will be able to collect any damages you may be awarded in a lawsuit. Without sufficient proof or ability to collect, it makes no sense to sue any defendant.

Next, you will need to find the proper venue in which to file suit. A court must have jurisdiction over the parties involved in a lawsuit; in general, that includes a district where a defendant lives or does business, where the dispute took place, where a contract was executed or performed, or where major events occurred that led to the claim.

In suits against online businesses, courts have typically applied the “active vs. passive test” in determining venue. An “active” website is one where a user interacts with the business by providing personal information and/or payment in exchange for products or services. A “passive” website is one that a user visits but there is no interaction between the user and the website. Courts will also examine whether an online company regularly does business in the plaintiff’s home state.

It is much easier to pursue a claim against an active website because the online entity is actively doing business in your state and can, therefore, be sued there. However, if the online company has a clause in its user contract that specifies where disputes are to be resolved, you will likely be bound by that contract and will have to pursue litigation in the venue specified in the contract.

Before you sue a business — online or offline — you should talk with a business litigation attorney who can review the facts of your case and advise you on the best course of action.

Williams Mestaz, L.L.P., is a law firm with decades of experience in commercial litigation, including IP infringement, employee lawsuits, business divorce, aviation, and high stakes litigation. Contact us at (602) 256-9400 and schedule a time to meet with us today.

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