Hockerson-Halberstadt, Inc. v. Costco Wholesale Corp.
2000 U.S. Dist. LEXIS 8290

Summary prepared by Devashish Bharuka
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Plaintiff Hockerson-Halberstadt, Inc. (HHI), a Louisiana corporation, filed this suit alleging patent infringement by defendant Costco. HHI asserts that costco has infringed the patent through the sale or offer for sale of footwear emboyding the patented invention.

Defendant Costco, a Washington corporation, operates an international chain of membership warehouses that offer merchandise for sale to businesses and individuals are reduced wholesale and retail prices. It has never operated any warehouse locations in Louisiana and has not bank accounts, property, offices, agents or employees in Louisiana. It is not registered to do business in Louisiana and does not have an agent for service of process. Costco operated a website that allowed website visitors to make online purchases, regardless of whether or not the purchase has a Costco membership. Costco shipped a total of $32,252.32 worth of merchandise into Louisiana pursiant to orders made throughthe website which represents less than .0000008 of Costco's total sales during that time period.

The issue is whether this volume of e-commerce sales into a forum state by a non-resident corporate defendant, without more, constitute sufficient contacts to justify the exercise of general personal jurisdiction over that defendant.

A court may exercise personal jurisdiction over an out-of-state defendant only when doing so would be (1) permitted by the forum state's long-arm statute, and (2) consistent with due process.

Because Costco has no traditional contacts with Louisiana, the e-commerce sales of products by Costco to Louisiana residents are only activities upon which personal jurisdiction could be established. The court was unable to conclude that the volume of online sales are substantial enought to establish general jurisdiction. Costco's e-commerce activities in Louisiana are incidental or fortuitous contacts that are both unrelated to the alleged infringement and insufficient in nature and number to constitute purposeful availment.

The Court observed that to subject a non-resident corporate defendnat to suit in Louisiana solely on the basis of a minuscule number of internet sales that are unrelated to the cause of plaintiff's alleged injury would render established jurisdictional boundaries meaningless. Further, defendants that operate website accessible to online purchasers would be deprived of the ability to predict with any certainty where they may be subject to suit. The Court concludes that defendant Costco's contacts with Louisiana are insufficient to support the exercise of personal jurisdiction by this Court.

Held, there is no personal jurisdiction.