A Utah Federal District Court has determined that Vitacost.com has sufficient contacts with the state of Utah for the exercize of personal jurisdiction over them in a suit brought by supplement brand leader, Nutraceutical.
Based in Park City, Utah, Nutraceutical sells dietary supplement products under a variety of popular brand names including Solaray®,
Ultimate Nutrition® and
Vitacost.com, based in Boynton Beach, Florida, is a leading on-line discount retailer of supplement products.
The dispute stems from Vitacost?.com’s persistent attempts to obtain the right to sell all of Nutraceutical?’s products, and Nutraceutical’s persistent refusals. When Nutraceutical refused to sell to Vitacost.com, Vitacost.com’s general counsel sent a letter to Nutraceutical accusing it of violating federal and/or state antitrust laws. A week later, Vitacost.com sent another letter threatening litigation if Nutraceutical refused to do business with Vitacost.com.
Nutraceutical responded with a letter detailing why it believed it was not violating antitrust laws, one of which was that Nutraceutical requires all its customers to have a retail store. Since Vitacost.com is strictly and on-line retailer, Nutraceutical refused to do business with them.
Nutraceutical followed-up with a suit in Federal District Court in Utah seeking a declaratory judgment that it did not violate federal and/or state antitrust laws. Vitacost.com moved to dismiss claiming that the Utah court lacked jurisdiction over them.
The Utah court disagreed and found that Vitacost?’s website falls within the category of ?clearly doing business over the Internet to permit the exercize of personal jurisdiction over them in Utah. The court observed:
Vitacost?’s website allows an internet user to purchase Vitacost?’s products online.
Consumers can search for specific products; place items in virtual shopping carts; view product descriptions, price and pictures; sign up for EZShip, Vitacost?’s automatic shipment program to reorder products; and purchase products through ?Check-Out? by providing credit card and shipping information. The court concludes that Vitacost purposefully and deliberately set up and operated a website with a high level of interactivity, which encourages customers accessing its website to order its products from which Vitacost receives economic benefits from the product sales. As such, such Vitacost?’s website falls within the sliding scale category of website that allows a defendant to ?do business? and ?enter into contracts with residents of foreign jurisdictions over the Internet.? As Nutraceutical has established that Vitacost?’s website constitutes a commercial web site, Nutraceutical has demonstrated that Vitacost has purposefully availed itself of the privilege of doing business in the jurisdiction.
In light of Vitacost.com’s extensive Internet business, this was the right decision. In the age of the Internet, avoiding jurisdiction just about anywhere is extremely difficult for any company that does business on-line.
Memorandum Decision and Order, Nutraceutical Corporation v. Vitacost.com, Inc., D. Utah, Case No. 2:05CV222DAK, May 25, 2006.