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Cloud courts: Where can online retailers be sued?

online retailers
online retailers

Online retailers have turned to the Supreme Court to give guidance on an urgent matter. It has the potential to determine where internet resellers can be sued if facing legal action. The geographical location of the court determines the laws under which the defendant is judged. 

Reuters is covering a landmark case between Herbal Brands and Photoplaza, which could give better guidance on this conundrum. The 9th US Circuit Court of Appeals has now ruled that Arizona courts have “specific personal jurisdiction” to hear the infringement claims against several internet retailers based in New York. The defendants “routinely” sell and deliver products to Arizona purchasers. 

For now, online retailers are sued in different jurisdictions. This is based on the area they deliver the product. But the matter is more complex than what meets the eye, and only some agree. Online retailers argue that the 9th Circuit Court’s decision creates an untenable situation for e-commerce sellers and violates due process rights. 

The e-commerce industry is expanding rapidly, requiring urgent resolution of the matter.

Suing as a buyer

A “user agreement” is binding on a buyer. Customers sign this document when they open a new account, says Find Law. If you have a dispute with Amazon, you can sue only in a court in King County in Washington. “You waive any right to a jury trial. In most cases, that makes filing a lawsuit impractical at best — a lawsuit could cost much more than the item’s price.”

A buyer can sue for a breach of contract, in case of a dispute with third-party sellers. This include if an item is undelivered or is different from the image depicted. 

“The biggest problem is finding [the seller] and bringing your claim in a court with power over [the seller]. The only place you can sue is in the seller’s home state. That may be inconvenient or prohibitively expensive. Make sure you check with a contract attorney if you plan to take action against a third-party seller,” states Find Law. 

Suing as a seller

The terms of Amazon’s Services Business Solutions Agreement bind a third-party seller if they have a dispute, according to Find Law.

The seller can sue Amazon in small claims court in King County, Washington, or submit the dispute to arbitration.

“Arbitration is a process by which the parties to a dispute hire a neutral third party (an arbitrator) to resolve it without going to court. That person hears both sides of the dispute and makes a binding decision. You generally cannot appeal an arbitrator’s award,” explains Find Law.

An arbitration process speeds up the process and doesn’t cost an arm and a leg, but it’s not always the desired outcome. “Arbitrations can be as lengthy and expensive as full-blown jury trials.”

About the author

Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.

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