Supreme Court mulls where to sue for internet defamation

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.