Bensusan Restaurant Corp. v. King

The case of Bensusan Restaurant Corp. v. King is a pivotal decision in American jurisprudence that clarified the limits of personal jurisdiction in the context of Internet activity. At the time of this case in the mid-1990s, courts were beginning to grapple with the question of whether maintaining a website accessible nationwide could expose an out-of-state defendant to litigation in distant jurisdictions.

This decision established an important distinction between passive, informational websites and active business operations conducted online. The ruling reaffirmed that personal jurisdiction must comply with both the forum state’s long-arm statute and constitutional due process.

What's Covered

Facts of Bensusan Restaurant Corp. v. King

Bensusan Restaurant Corporation (“Bensusan”) was a New York corporation that owned and operated The Blue Note, a well-known jazz club in Greenwich Village, New York. Bensusan also held the federally registered trademark “The Blue Note,” which it had owned since 1985.

The defendant, Richard B. King (“King”), was a Missouri resident who had operated a music club in Columbia, Missouri, also called “The Blue Note,” since 1980. In April 1996, King permitted another company to create a website for his Missouri club. The site was hosted on a server located in Missouri and contained information about the club, including a calendar of events and instructions for purchasing tickets. To buy tickets, customers were instructed to call a Missouri phone number, and tickets had to be collected in Missouri.

The website also contained a disclaimer, explicitly noting that King’s club should not be confused with Blue Note Records or the Blue Note club in New York. The disclaimer stated: “The Blue Note, Columbia, Missouri should not be confused in any way, shape, or form with Blue Note Records or the jazz club, Blue Note, located in New York. The CyberSpot is created to provide information for Columbia, Missouri area individuals only, any other assumptions are purely coincidental.”

Bensusan filed suit in the United States District Court for the Southern District of New York, claiming trademark infringement, trademark dilution, and unfair competition. Bensusan sought damages as well as injunctive relief to stop King from using “The Blue Note” name on the website. King moved to dismiss the complaint on the grounds that New York courts lacked personal jurisdiction over him.

Procedural History

District Court: The Southern District of New York dismissed the complaint, holding that New York did not have personal jurisdiction over King. The court relied on New York’s Civil Practice Law and Rules (CPLR) § 302, New York’s long-arm statute. The court also noted that even if the statute applied, asserting jurisdiction would violate due process under the U.S. Constitution.
Court of Appeals: Bensusan appealed. The United States Court of Appeals for the Second Circuit affirmed the district court’s decision, though it focused its analysis solely on New York’s long-arm statute and declined to address the due process issue.

Issues

Whether New York had personal jurisdiction over King under CPLR § 302(a)(2), which allows jurisdiction when a defendant commits a tortious act within the state.
Whether New York had personal jurisdiction over King under CPLR § 302(a)(3)(ii), which permits jurisdiction over a defendant who commits a tortious act outside the state that causes injury within New York, provided the defendant should reasonably expect consequences in New York and derives substantial revenue from interstate commerce.
Whether asserting jurisdiction over King would be consistent with the Due Process Clause of the U.S. Constitution.

Rules of Law

CPLR § 302(a)(2): Grants personal jurisdiction over a non-domiciliary who commits a tortious act within the state.
CPLR § 302(a)(3)(ii): Grants personal jurisdiction over a non-domiciliary who commits a tortious act outside the state causing injury within New York, if the defendant expects or should reasonably expect the act to have consequences in New York and derives substantial revenue from interstate or international commerce.
Due Process Clause: Requires that a defendant have “minimum contacts” with the forum state and that exercising jurisdiction does not offend “traditional notions of fair play and substantial justice.”

Court’s Analysis in Bensusan Restaurant Corp. v. King

1. Application of § 302(a)(2)

The court determined that Bensusan’s reliance on § 302(a)(2) was misplaced. The statutory language required that the tortious act be committed “within the state.” Here, the creation of the website occurred entirely in Missouri. The fact that Bensusan allegedly suffered harm in New York did not transform the out-of-state act into one occurring “within New York.” Thus, § 302(a)(2) could not serve as a basis for jurisdiction.

2. Application of § 302(a)(3)(ii)

Bensusan also invoked § 302(a)(3)(ii), arguing that King’s website caused injury in New York and that King should have foreseen this consequence. The court rejected this argument, emphasizing that King’s website was designed to serve Missouri residents only. The website provided only a Missouri phone number and required ticket pick-up in Missouri. There was no evidence of sales or shipments into New York. Furthermore, King did not derive substantial revenue from interstate commerce, which was an essential requirement of the statute. The court concluded that King’s knowledge of Bensusan’s New York club was insufficient to establish jurisdiction.

3. Due Process Considerations (District Court)

Although the Second Circuit did not reach the due process issue, the district court had addressed it. The lower court found that even if jurisdiction were authorized by New York’s long-arm statute, it would still violate due process. For due process to be satisfied, the defendant must purposefully avail himself of conducting activities in the forum state. King had not directed any activity toward New York. His website was purely informational, with no targeting of or transactions with New York residents. The district court contrasted this case with CompuServe, Inc. v. Patterson, where jurisdiction was upheld because the defendant deliberately conducted business in the forum state.

Holding in Bensusan Restaurant Corp. v. King

The Court of Appeals held that New York’s long-arm statute did not authorize personal jurisdiction over King. Specifically:

King did not commit a tortious act “within the state” as required by § 302(a)(2).
King did not engage in conduct satisfying § 302(a)(3)(ii) because he neither expected consequences in New York nor derived substantial revenue from interstate commerce.
Because the long-arm statute did not confer jurisdiction, the Second Circuit did not need to address the due process issue. The district court’s dismissal was affirmed.