The Supreme Court is expected to decide on Friday whether or not
to hear an appeal in the case that was brought against
HealthGrades, a company that runs a site rating the quality of
healthcare providers throughout the US. One provider, Northwest
Healthcare Alliance, took exception to its rating of "average" and
sued HealthGrades for defamation.
The first court to hear the case – in Washington – dismissed it.
HealthGrades argued that it could not be sued in a Washington
court, being a Colorada-based company. The court agreed,
recognising its web site as merely a passive provider of
information.
In the US, when a web site of a party in one state is sued by a
party in another state, the courts will often consider whether the
site is active or passive, and only allow interstate actions
against active sites – being sites that trade across state borders
by means of e-commerce, as opposed to passive sites that merely
provide information to anyone visiting.
On appeal, however, the 9th Circuit Court of Appeals applied
what is known as the "effects test." This test requires that the
defendant intentionally engaged in an act that was expressly aimed
at the state in which the court action is raised. The act has to
cause harm in that state and the defendant has to know that it will
cause harm in that state.
Applying the effects test, the appeal court determined that
HealthGrades had deliberately directed its conduct at Washington by
grading a Washington healthcare provider and obtaining information
from Washington sources. Therefore, the court reasoned that there
was jurisdiction and that the defamation case could be heard.
HealthGrades has appealed the decision to the Supreme Court. If
heard, the case could alter the US rules for cases of internet
jurisdiction. If it is not heard, the case is unlikely to be
influential because the appeal court did not publish its decision –
which leaves it unbinding on lower courts.
