In a recent case in a Maryland based federal court, Ripoff Report’s corporate parent – Xcentric Ventures – tried to avoid having to defend a case in Maryland, arguing the Maryland court lacked jurisdiction over it. Xcentric is an Arizona based company. It apparently was not keen on travelling across the country to participate in the lawsuit.

The case arose when Ripoff Report ran a post from a disgruntled user of Large Art Company. The user complained that Large Art sold a piece of art it claimed was manufactured in the USA. But when the customer got it, there was a “Made in Mexico” sticker on the bottom. Richard Rist, the owner of Large Art contacted Ripoff about responding. Ripoff offered its fee-based arbitration service, but Rist instead opted for the no cost option of posting his own rebuttal. To do so, Rist had to check a box agreeing Arizona would have exclusive jurisdiction “over any disputes between [Rist] and the operators of Ripoff Report arising out of this posting.”

Rist posted his rebuttal, but when another critical review got posted on Ripoff, Rist filed a defamation suit in Maryland federal court.

Ripoff argued that Rist’s agreement to the exclusive jurisdiction provision denied the Maryland court of jurisdiction. It argued that “exclusive” meant only an Arizona court could hear the case. But the court disagreed, noting the exclusive jurisdiction provision applied only to cases “arising out of this posting.” The court held the only reasonable interpretation of “this posting” was Rist’s rebuttal, not the postings that criticized Large Art. And it was those postings – not Rist’s rebuttal – that were the basis of the defamation suit.

Ripoff also argued that apart from the jurisdiction provision, it had no “minimum contacts” with Maryland to support jurisdiction there. Minimum contacts means pretty much what it says – a company that does not actively do business in a state can’t be sued there. In the online world, courts generally recognize that the mere fact that a Web site can be viewed from anywhere doesn’t mean that the site operator is subject to a lawsuit anywhere in the world. The site has to be more interactive and in some way target its activities to what courts call the “forum state.”

Rist argued that Ripoff was not exactly passive. It contended that Ripoff required users to select from categories such as “Liars” and “Con Artists.” He also argued that Ripoff created meta tags and surrounded posts with commentary like, “Don't let them get away with it … let the truth be known!” Rist contended, finally, that Ripoff offered targets of gripe site posts the opportunity to participate in its fee-based arbitration service.

The court found if Rist could prove those allegations, he could establish jurisdiction. Accordingly, the court denied Xcentric’s motion to dismiss.

There is no indication if Xcentric posted a piece on Ripoff report complaining about this ruling.