The legal arguments are thick on both sides, but Sony may face an uphill battle claiming that Hotz was aiming his actions towards California, or that his tenuous links to businesses and services residing in the state require California courts to have jurisdiction. In a case where much of the "action" in question took place virtually, with so many parties in play, there is no easy way to sort this out.
The case for California

Hotz' lawyer notes that a three-pronged test must be applied for personal jurisdiction, with all being satisfied in the eyes of the court. This is the concept of "purposeful direction" that came from Schwarzenegger v. Fred Martin Motor Co. What needs to be proved?

* The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
* The claim must be one which arises out of or results from the defendant's forum-related activities; and
* Exercise of jurisdiction must be reasonable.

"Under the first prong of a specific jurisdiction test, SCEA must demonstrate that Mr. Hotz 'purposefully availed' himself of the privilege of conducting activities in California, or purposefully directed its activities toward California," Kellar argued. That may be hard to prove on Sony's part. "Mr. Hotz maintains a passive website... The site merely makes information available and does not allow users to interact with the host computer or exchange information." Was the information included aimed specifically at California? Sony may have to prove that it was.

Kellar drives the point home. "In the present case, SCEA cannot demonstrate that Mr. Hotz's activity could even arguably be construed as expressly aimed at California. To the contrary, the sole alleged activity in this action involves Mr. Hotz—who is located in New Jersey—purportedly improperly accessing portions of his own Playstation computer—which is also located in New Jersey," he said. "The Playstation computer is not made by SCEA. It is made by Sony Inc. which is a Japanese corporation."

There is also the publication of a quote where Hotz allegedly extorted Sony by saying he should be contacted to help make future consoles more secure. Kellar stated that this quote was edited and taken out of context. The full quote, as presented in this latest motion, was: "If you want your next console to be secure, contact me, any of you."

The omission of the last section by Sony made it seem as if the comment was meant for them, when the unedited quote is more broadly meant for any business creating hardware. "The double-hearsay quote, derived from a screenshot within a forum post within a website... omits the full statement, which undermines SCEA's claim that Mr. Hotz directed any statement toward SCEA," Kellar wrote.
Trying the case in California would help Sony

George Hotz does not have the resources of Sony, and trying the case in California would be another way to increase his costs. Hotz is merely one defendant in the complaint, with multiple groups and individuals listed—many from outside the US. It's a tricky case, and Sony can definitely try to grind Hotz down with lengthy and costly litigation far from his home.

Sony's arguments for California-based jurisdiction rest entirely on the existence of Hotz' PayPal account and a line in the PlayStation Network's Terms of Service. Kellar is attacking those links to California on multiple fronts. Others are skeptical of Sony's tactics.

"The playing field is already stacked against an individual being attacked by an international corporation. For that reason, given the financial disparity, it is disturbing to see Sony trying so hard to keep the playing field so gravely tilted in its own direction," Groklaw noted. "If Hotz has done something illegal, Sony can crush him in New Jersey just as well as in California. But it would be a shame if they win simply by being able to sustain the expense of litigation until this kid gives out."