Georgia Court of Appeals: Long Arm Statute Reaches Large Internet Transactions

    The Georgia Court of Appeals made headlines on May 23 when it ruled that a Georgia court has jurisdiction over a foreign company that sold and delivered a $31,000 BMW to a Georgia resident through Ebay, an internet auction website.  Judge Phipps, writing for the court in Aero Toy Store LLC v. Grieves, #A06A0741, held that Gordon Grieves' Georgia grievance was proper because Ebay is an "interactive website," the transaction was "worth thousands of dollars," and the transaction "involv[ed] shipment of an automobile to be operated in Georgia."  Gone are the days when telephone, mail, and Internet contacts are insufficient in Georgia to confer jurisdiction over a non-resident.  At least under Section 1 of the Georgia Long-Arm statute (authorizing jurisdiction over a foreign company that "transacts any business" within the state so long as the claim arises out of those business transactions), foreign companies may be haled into Georgia's courts even if they've limited their contacts with Georgia residents to interstate phone, fax, and internet communications.

    Aero is a much-welcomed (or, for out-of-state defendants, much-feared) application of the Georgia Supreme Court's 2005 decision in Innovative Clinical & Consulting Services v. First National Bank of Ames, Iowa, which held that Section 1 of Georgia's Long-Arm Statute applies to the maximum extent allowed by the Due Process clause of the U.S. Constitution.  Innovative Clinical held that internet, mail, and fax communications should be considered in Georgia's minimum-contacts analysis, effectively overruling a long line of cases holding the opposite.  The result in Mayacamas Corp. v. Gulfstream Aerospace Corp., for example, which declined jurisdiction over a dispute arising out of a Georgia resident's purchase of a private jet after a series of telephone and fax communications and partial performance of the purchase agreement, would likely be different today.

    While Aero provides fertile ground for Georgia consumers to bring claims for interstate transactions gone awry, it left some questions unanswered.  Aero emphasized the high value of the transaction at issue, for example.  Will a court entertain a significantly less valuable claim?

    Aero also emphasized that that the defendant itself delivered the good (a fact which the defendant has apparently disputed after the appeal).  Can companies avoid Georgia's long arm by requiring the purchaser to arrange for delivery?  What if they outsource delivery?