You most certainly can file a claim against an out-of-state party, as I've been one of the parties in such a suit. People can not avoid liability by operating out of state. If the defendant is out of state, they will be given more time to respond, but not an absurd amount of time - in CA, the dates are generally set at less than 70 days for out of state defendants. The defendant cannot have legal counsel at the hearing - this is to even the playing field for individuals and small businesses. In the case of a corporation, a representative of the company must come to court, and that representative has to be an employee not hired specifically to represent them in the case. An appeal will likely not be heard if the defendant does not show up. During the appeal, legal counsel can attend, and attorneys fees and interest can be recovered by the plaintiff for the appeal. Appeals are generally heard within 30 days of the case, which again brings swift justice. The judge will not produce a written opinion as higher courts will do, but you can certainly ask a judge to make a judgement on a statement of fact, and ask for a transcript of the case. Now-back to my original piece of advice... You can sue the company based on fraud - if in fact their statements to your host that are causing you to get taken down are fraudulent. Obviously, that fraud is causing you harm, and as a result you've had to pay out of pocket for setup fees at another provider. When you go to court, prove that those statements are fraudulent. Regardless of whether you win or lose, get the judge to agree that the statements are fraudulent on the record. The next time a hosting company threatens you, produce the transcript of your case where the judge is stating that the information provided the host by this company is fraudulent. You would hope that they at least will hesitate to boot your site at that point. Don't just sue for fraud based on a forum post, talk to an attorney for 20 minutes and get some real advice. And like I said originally - talking to the company directly is probably the best solution, but if they are not reasonable, then you have no choice but to take it on legally. If you have to do that, small claims is the easiest, most risk free route. You won't get rich on small claims, but it is quick, inexpensive, and low risk. Besides, if they are getting you booted for no good reason, then why wouldn't you try to at least recover your new setup fees?
"If a defendant has no contact with your state, you'll generally have to sue in the state where the defendant lives or does business. Because of the distance involved, out-of-state small claims lawsuits tend to be expensive and unwieldy." findlaw The party must be from the same State with (2) exceptions: Code of Civil Procedure 116.340 (d) Requires that service must be made within the State. There are (2) exceptions that involve real estate and motor vehicle accidents. "Appeals are generally heard within 30 days of the case, which again brings swift justice." You have 30 days to file the appeal, not have it heard. This is moot, because small claims court is not an option.
If you are providing MMORPG hacks then I applaude the company for doing something positive for it's paying customers and getting your site taken offline. Hacks damage the players experience, the companies and the games reputation which in turn causes a loss in revenue for the company. It's not a surprise that they want your site offline.