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By: J. D. Obenberger, Esq.


When you publish your web site on the Internet, you open yourself to lawsuits in places you never imagined. Many adult Internet businesses are shocked to learn that they can be sued in a state other than the one in which they are based if they don't take precautions. Even worse, the cost of defending these lawsuits is extreme because of the travel and time expenses involved not to mention the additional fees demanded by attorneys to represent an out-of-state client. In short, these lawsuits can quickly cripple a business.

The process of determining where a lawsuit can be filed centers around a legal concept known as "personal jurisdiction." To be sued in a state, the person suing a defendant must establish that the defendant has "minimum contacts" with the state and have "purposefully availed" itself to the privilege of doing business in the state in question. Courts have created a "sliding scale" in determining whether a web site can be sued in a particular state.

The first stage is where a web site is conducting sales through the site. Such a site is almost always considered to have submitted itself to personal jurisdiction in the state. For instance, if you are a pay site, you can be sued wherever individuals are signing up for your site. So if a client signs up for membership in Wyoming, you can be sued there even if your business is in Texas.

The second stage of the sliding scale is where a web site is only providing. For instance a free site that simply provides pictures, at first glance should not be pulled into lawsuits all over the nation. Not so fast. A variety of cases have established that a free site that uses banners to make money on click through programs, can be brought into court wherever the click through program is doing business. In short, you are in the same position as the pay site.

Is there anything you can do to avoid being dragged into court all over the United States? The answer is to put a disclaimer on your site.

In Decker v. Circus Circus Hotel, 49 F. Supp. 2d 743 (1999), the court held that where the hotel reservation web site had a disclaimer requiring all lawsuits to take place in Nevada, Circus Circus Hotel could not be forced into court in other states. Of importance to the adult industry, the court ruled that the restriction to Nevada was valid even though the hotel effectively placed itself into "an endless stream of commerce" by allowing customers to make reservations through the site. Adult sites conduct business by putting themselves into such an "endless stream of commerce" making the court's decision an effective guide for protecting yourself from a variety of lawsuits.

What Should You Do?

Adult sites should evaluate whether they are raising revenues through membership or banner methods. If so, a disclaimer should be used. While no business practice will entirely insulate companies from the reach of an out-of-state court, as a general rule, the use of a disclaimer will greatly reduce the threat of being hauled into court in some distant state. Take the nominal steps necessary to protect yourself from a future litigation nightmare!

For more information, contact:

J. D. Obenberger, Esq. - AdultInternetLaw.com                

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