Legal Update: April 2023

In terms of interesting cases, April offered a respite after a busy March. Thank goodness because other work at Converge has been going crazy!

Purely Online Companies are Vulnerable to Lawsuits (Especially in New York)

Okay, the headline here is a little misleading but it does capture the point. Looking through the deep archives of web accessibility lawsuits, NetFlix was sued back in 2012 in California and Massachusetts because for website accessibility. The California case was tossed out because NetFlix had no stores—and thus the plaintiff’s claim failed the nexus test. The Massachusetts case went forward because Massachusetts doesn’t require a nexus between an online entity and a physical establishment. NetFlix, however, is a multi-billion dollar company had deep financial connections everywhere in the United States.

But what if you’re a relatively tiny online California-based company? And what if you were sued in the Southern District of New York, which I recently noted has all but formally abandoned the nexus requirement? That’s exactly the scenario that happened this month in Dicks v. Cooks Junction, Inc., 2023 U.S. Dist. LEXIS 59384 (S.D.N.Y. 2023), where the court held that having made 163 sales to New York customers in five years (just a little over 5% of their total sales of 3,079 in that same time period) was enough to confer personal jurisdiction over the California company.

This outcome shouldn’t come as a surprise to followers of this blog as I’ve talked about personal jurisdiction plenty of times. The point is that, if you’re an online company which includes New York online customers, you may soon be in the crosshairs of a web accessibility lawsuit.  After all, the Southern District of New York has become the friendliest place for plaintiffs to bring web accessibility lawsuits—especially now that its courts (mostly) do not require a physical place of business.

And, remember, it doesn’t take a lot of sales in New York to establish personal jurisdiction. This month, Herbs and Arts Intergalactic, Inc., a Colorado-based company that operated one retail location but also sold products through its website, was sued by Chris Loadholt in the Southern District of New York because he could not shop for and purchase products from the Herbs and Arts website. In this case, the defendant’s website wasn’t very active -- over 97% of its business was transacted in its store and it made only 14 sales to New York—accounting for 0.014% of its annual revenue. Nonetheless, that was sufficient for it to be hauled in court in New York to defend itself as the magistrate judge ruled that the court had personal jurisdiction over the Colorado company. Loadholt v. Herb and Arts Intergalactic, Inc., 2023 U.S. Dist. LEXIS 59116 (S.D.N.Y. 2023).

Marketing Videos and Website Accessibility

I’ve held a grudge against the nexus requirement for web accessibility cases because it leads to unpredictable and illogical outcomes. The travails of two deaf plaintiffs—Megan Erasmus and Chris Langer—in their lawsuits against companies that failed to caption their videos highlights why the wheels start to fall off the nexus cart as soon as its put to the test in borderline cases like theirs.

Both Ms. Erasmus’s and Mr. Langer’s claims are roughly the same. They both go to the websites of the defendants and try to watch videos in order to allegedly determine if they want to visit the defendant’s company. Each has their own niche—Ms. Erasmus tends to like establishments focused on dental and cosmetic services while Mr. Langer tends to like fast cars and car racing—and they have both celebrated and suffered their up’s and down’s in litigation. In some cases, the courts decide that they have standing to sue and sometimes they toss the case out because they don’t have standing to sue.

This month, Megan Erasmus’s luck ran out as her complaint against Fresno Oral Maxillofacial Surgery & Dental Implant Center was dismissed. Erasmus v. Chien, 2023 U.S. Dist. LEXIS 65854 (E.D. Cal. 2023). While she asserted that was a prospective customer. However, “before expending additional time and money to visit the defendant's physical store and to contract for goods or services at the defendant's physical  store, [she] perused the advertising and information content provided by the defendant to customers and prospective customers via the ... website," but was unable to understand the defendant’s services because its videos were not captioned. Id. at *2-3. The court, however, didn’t find that this created enough of a nexus with the Center’s physical offices.

Erasmus does not allege the Center offered goods or dental services for purchase on its website. Erasmus also does not assert she was unable to visit the Center—or avail herself of the dental implant services offered at the center—as result of the lack of captioning on the website. Instead, Erasmus indicates  she would return to the website and, at most, contends she was deterred from use of the website's services. Thus, Erasmus fails to connect the website to services offered at the Center's physical place.

Id. at *18-19. As I mentioned in my July 2022 Legal Update, I think this the wrong answer. As Ms. Erasmus makes clear, there’s little reason for her to visit the Center without understanding the services that they offer--- and the defendant chose to do that through videos on its website. Had it captioned the videos—or even provided a text transcript or blog article that explained the same contents as the video—patients like Ms. Erasmus would be able to make an informed choice.

There’s a very fine line between generic advertisements or marketing videos (which don’t create a nexus) and explanatory videos designed to educate customers and make informed decisions about visiting a studio. The line is fine enough that reasonable judges can look at exactly the same fact pattern and come to opposite conclusions. And, again, this is why I think that the nexus standard is unworkable and should be abandoned.

Serial Plaintiff Attorneys Gets Their Hands Slapped

Closing out the month is the funny-and-weird opinion in Zinnamon v. Satya Jewelry II LLC, 2023 U.S. Dist. LEXIS 74479 (S.D.N.Y. 2023) where one federal court judge makes plain her dislike for serial plaintiff attorneys. In this case, Mark Rozenberg and his firm Stein Saks PLLC represented Warren Zinnamon in his lawsuit against Satya Jewelry alleging that their website was inaccessible. The allegations were roughly similar to the over 500 other web accessibility lawsuits that Mr. Rozenberg filed. After several warnings from the court, Judge Valerie Caproni apparently just had enough—and fined the attorney and his firm each $1,000,000! However, the court offer to stay its order if neither the attorney nor his firm filed a similar cookie-cutter web accessibility lawsuit for the next two years.

No doubt, web accessibility lawsuits filed by serial litigants are a real problem in this country. When attorneys file the exact same complaint against dozens of organizations at the same time for the same plaintiff, it’s clear that neither the attorney nor his client have a strong, genuine interest in the goods or services of the company that they are suing. This is the first time, however, that I’ve seen a judge go this far and fine an attorney $1,000,000 to get him to change his ways.

Disclaimer

Nothing in this post should be interpreted as legal advice or as forming an attorney-client relationship. It is offered for educational purposes only. You should always contact a qualified attorney in your area to discuss your legal rights and responsibilities.

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