In a significant ruling, the U.S. Court of Appeals for the Second Circuit has made it easier to sue e-retailers based in New York. The decision comes in the context of a legal case involving American Girl dolls, a popular brand owned by Mattel. The case centers around claims that the dolls were being sold in New York through various e-commerce platforms without proper authorization.
The plaintiffs argue that these unauthorized sales violate state and federal laws. The district court judge had previously concluded that online retailer Zembrka refunding orders without shipping products meant it hadn’t transacted business in New York.
Second Circuit’s e-commerce ruling clarified
However, the Second Circuit overturned this, stating that the company had accepted payment on orders listing New York shipping addresses, and refunds and cancellations mainly occurred after American Girl LLC had already filed the lawsuit. The Second Circuit emphasized that under New York’s long-arm statute, a completed sale is not required, only a “transaction.” The court’s decision allows the lawsuit to proceed in New York. American Girl dolls, cherished by many for their diversity and historical character representations, have been a significant part of Mattel’s portfolio.
The ruling could potentially impact how e-retailers conduct cross-state sales and handle products that are subject to strict licensing agreements. The court’s decision underscores the importance of compliance for e-retailers when selling products with specific licensing and distribution terms. As online commerce continues to grow, this ruling may set a precedent for other similar cases, shaping the future of e-commerce regulations.
