Thursday, March 18, 2004
‘Upsell’ by Telemarketer Justified Long-Arm Jurisdiction, C.A. Rules
By a MetNews Staff Writer
A California court has jurisdiction to hear a suit by a resident who called an 800 number in Virginia to order Tae-bo fitness tapes and was sold a membership in a “buying club,” the Fourth District Court of Appeal ruled yesterday.
By “upselling” the woman a different product, the telemarketing company purposefully availed itself of contacts with California, justifying personal jurisdiction, Div. One said.
Presiding Justice Judith McConnell rejected the argument of West Corporation and its subsidiary, West Telemarketing Corporation, that their agent’s action in selling Patricia Sanford a membership in the club serviced by Memberworks Inc. had no greater jurisdictional significance than if the agent had offered her the option of purchasing an additional tape or paying extra for expedited shipping.
Sanford filed her class action complaint, alleging unfair business practices and other causes of action, after charges for the buying club membership began appearing on her credit card statements. San Diego Superior Court Judge E. Mac Amos denied West’s motion to quash service.
McConnell said the telemarketing firm failed to distinguish its situation from that addressed by the U.S. District Court for the District of New Jersey in 1990 in American Telephone & Telegraph Co. v. MCI Communications Corp., 736 F.Supp. 1294. The fact that AT&T dealt with telephone calls placed by the marketer rather than by the customer was rendered irrelevant by the “upsell,” she explained.
She noted that the Federal Trade Commission’s telemarketing sales rules describe an upsell as “very much akin to an outbound telephone call.”
“We agree with the Federal Trade Commission; an upsell is like an outbound telephone call and therefore this case is similar to the AT&T case.”
West contended in papers filed with the Court of Appeal that, “taken to its logical end,” Sanford’s argument would justify jurisdiction if the agent made “any positive comment concerning the TAE-Bo tapes...which could be construed as an encouragement to purchase....”
McConnell called that argument “specious.”
“At issue here is a commercial transaction initiated by West and WTC. West, through WTC, intentionally aimed a sales pitch at a California resident; they did not merely ‘solicit’ shipping information, inquire whether the Tae-bo order was complete or ask any additional questions about the order.”
McConnell said West’s argument that upholding jurisdiction would not comport with fair play and substantial justice as required under Pavlovich v. Superior Court (2002) 29 Cal.4th 262 was “unpersuasive.”
“Companies, such as West and WTC that deliberately engage in nationwide or multi-state commercial activities, whether by phone, via the Internet, by mail, or by sending agents into forum states should reasonably expect to be subject to suit in the states where they solicit business.”
California, the justice said, “has an interest in providing a convenient forum for its residents who have been injured by telemarketing fraud committed by nonresident corporations.”
Because of the small amount of money at issue, Sanford would “essentially be denied an opportunity to seek redress” if she had to litigate in Virginia or in Nebraska, where West is based, she observed.
The case is West v. Superior Court (Sanford), 04 S.O.S. 1384.
Copyright 2004, Metropolitan News Company