In American Girl dolls case, US appeals court makes it easy to sue e-retailers in N.Y.

Sept 19 (Reuters) - Remember the debate last year in U.S. Supreme Court briefings about whether an online merchant’s delivery of a single product in a particular state is enough to establish that state’s jurisdiction over the e-retailer?

Here's a quick refresher.

Federal circuits have reached different conclusions about jurisdictional requirements for lawsuits against internet businesses that operate across the country and the world. The 7th U.S. Circuit Court of Appeals has said that courts in its ambit can hear cases against internet sellers that have delivered a single product into the venue. The 9th Circuit hasn’t set a particular number but has also ruled that the delivery of a small number of physical products can establish a state's jurisdiction against an online retailer.

The 5th and 8th Circuits, meanwhile, have voiced skepticism that the delivery of a single product can satisfy jurisdictional requirements.

The 2nd Circuit has long been counted in the single-product camp. In 2010, the court held in Chloe v. Queen Bee of Beverly Hills that Manhattan federal courts had jurisdiction to hear the French luxury handbag company’s trademark infringement claims against a website operator that sold allegedly counterfeit handbags, because the defendant accepted an order from and then shipped a handbag to a New York resident. (The resident was a legal assistant at the law firm representing Chloe.)

The 2nd Circuit’s Chloe precedent is routinely cited, along with the 7th Circuit’s similar 2022 ruling in a case involving allegedly counterfeit NBA-branded clothing, for the proposition that the delivery of a single product could trigger jurisdiction.

But it turns out that New York’s jurisdictional test is even more lenient than that: The appeals court ruled on Tuesday that dollmaker American Girl can proceed with a lawsuit in New York federal court against Zembrka, a China-based company that allegedly sold counterfeit American Girl dolls through its international website, even though American Girl offered no evidence that Zembrka delivered a counterfeit doll in New York.

At the trial court, U.S. District Judge Mary Kay Vyskocil of Manhattan dismissed the lawsuit for lack of jurisdiction, ruling that American Girl's failure to show that the defendant shipped even a single infringing product into New York distinguished its case from Chloe's.

The 2nd Circuit said in Tuesday's ruling that Vyskocil misunderstood its Chloe precedent.

The key fact in that case, wrote Judge Barrington Parker for a panel that also included Judges Jose Cabranes and Maria Araújo Kahn, was not that the defendant had shipped a physical product – an allegedly counterfeit handbag – to a purchaser in New York. Instead, the 2nd Circuit said, the critical question was whether the defendant purposefully conducted business in New York and engaged in at least one transaction in the state.