PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RICHARD D. STOVER,

Plaintiff-Appellant,

v.

No. 94-1309

O'CONNELL ASSOCIATES,

INCORPORATED,

Defendant-Appellee.

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

John R. Hargrove, Senior District Judge.

(CA-93-1936-HAR)

Argued: January 29, 1996

Decided: May 14, 1996

Before HALL, NIEMEYER, and LUTTIG, Circuit JUDGES.

_________________________________________________________________

Affirmed by published opinion. Judge Niemeyer wrote the opinion,

in which Judge Hall and Judge Luttig joined.

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COUNSEL

ARGUED: William Thomas Fitzhugh, BEDDOW, MARLEY, BURGESS & ASSOCIATES, Chesterfield, Virginia, for Appellant.

Andrew Jay Graham, KRAMON & GRAHAM, P.A., Baltimore,

Maryland, for Appellee. ON BRIEF: Kevin F. Arthur, KRAMON &

GRAHAM, P.A., Baltimore, Maryland, for Appellee.

_________________________________________________________________
OPINION

NIEMEYER, Circuit Judge:

In this case, we revisit the statutory and constitutional limits of

Maryland's long-arm statute, Md. Code Ann., Cts. & Jud. Proc.

§ 6-103. Assuming that the statute extends jurisdiction to the limits of

due process, we hold that Maryland courts may, nonetheless, not

exercise personal jurisdiction over a New York private investigation

firm whose only connection with Maryland was its occasional retention by telephone of Maryland investigation companies to provide it

with information about Maryland subjects, including the plaintiff in

this case. Accordingly, we affirm the judgment of the district court

dismissing the case for lack of personal jurisdiction over the defendant.

I

When Richard D. Stover, a Maryland resident, obtained a copy of

his consumer credit file in September 1992, he discovered that

O'Connell Associates, Inc., a New York private investigation company, had requested and obtained information about him from Equifax Corporation. While Stover suspects that O'Connell Associates

requested the information because of his work with Ross Perot's presidential campaign, he acknowledges that he has never been informed

of O'Connell's reason for requesting the information and makes no

allegations concerning O'Connell's purpose for requesting the information or the persons to whom the information was submitted. He

claims, however, that because consumer reports may be furnished

only for limited purposes, O'Connell violated the federal Fair Credit

Reporting Act, 15 U.S.C. § 1681 et seq., its Maryland analog, Md.

Code Ann., Com. Law II § 14-1201 et seq ., and his common law right

to privacy. He alleges that O'Connell's conduct caused him injury in

Maryland, for which he demands $50,000 in compensatory damages

and $100,000 in punitive damages.

O'Connell filed a motion under Federal Rule of Civil Procedure

12(b)(2) to dismiss the complaint, contending that it was not subject

to personal jurisdiction in Maryland. While representing that it had

never had property or agents in Maryland, O'Connell acknowledged

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that it had occasionally used Maryland investigation firms to obtain

information about Maryland subjects.

In connection with its investigation of Stover, O'Connell states

that, through use of a computer terminal in its New York office, it

obtained Stover's name, address, birthdate, social security number,

and place of employment from Equifax. O'Connell also acknowledges that it telephoned Montgomery Investigative Services, Ltd., a

licensed private investigation firm in Rockville, Maryland, and

retained that firm to conduct a "criminal check" on Stover and determine whether Stover had "any ties to KKK or any known white

supremist [sic] group." O'Connell maintains that from Montgomery

Investigative Services it received information only from public court

records. It asserts that it provided the information procured from

Equifax and Montgomery Investigative Services to its client in California.

On O'Connell's motion to dismiss, the district court concluded that

O'Connell's "intermittent historical contacts" with Maryland were not

sufficiently "extensive, continuous and systematic" to sustain general

jurisdiction over O'Connell. The court also concluded that it did not

have specific jurisdiction over O'Connell because Stover's claims did

not arise out of any conduct by O'Connell in Maryland; all of

O'Connell's conduct had occurred in New York. Accordingly, the

district court granted O'Connell's motion to dismiss the complaint for

lack of personal jurisdiction.

From the district court's dismissal order, this appeal was taken.

II

In analyzing a challenge to a court's exercise of personal jurisdiction, we first consider whether the state's long-arm statute authorizes

the exercise of jurisdiction over the defendant, and if we conclude that

it does, we then determine whether the exercise of jurisdiction comports with the Fourteenth Amendment due process requirements. See

Ellicott Mach. Corp. v. John Holland Party, Ltd., 995 F.2d 474, 477

(4th Cir. 1993); First American First, Inc. v. National Ass'n of Bank

Women, 802 F.2d 1511, 1513-14 (4th Cir. 1986).

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Stover contends that O'Connell's conduct in obtaining "a copy of

Stover's consumer credit report" from Equifax and in retaining Montgomery Investigative Services to determine whether Stover had "any

ties to [the] KKK" or similar groups violated federal and state consumer protection laws and his common law right to privacy. Stover

maintains that because O'Connell invaded his privacy in Maryland,

causing tortious injury in the state by acts in the state, the requirements of Md. Code Ann., Cts. & Jud. Proc. § 6-103(b)(3) are satisfied. Focusing on "O'Connell's other investigations of Maryland

residents," however, Stover rests his principal jurisdictional claim on

§ 6-103(b)(4), which subjects a defendant to jurisdiction for conduct

outside the state if the defendant has engaged in a "persistent course

of conduct" in Maryland. On the federal due process issue, Stover

argues that O'Connell "purposefully directed its tortious activity" at

him, thereby causing him injury within Maryland. He maintains that

tortious activity conducted outside a state that causes injury within the

state "is a sufficient contact to comport with federal due process"

under Calder v. Jones, 465 U.S. 783 (1984).

Section 6-103(b)(3) of Maryland's long-arm statute provides that

a Maryland court may exercise jurisdiction over a person outside the

state who "[c]auses tortious injury in the State by an act or omission

in the State." (Emphasis added). While Stover may be able to establish that O'Connell caused injury in Maryland, he cannot sustain his

claim that O'Connell's injury-causing acts occurred in the state. The

evidence demonstrates that O'Connell's conduct occurred entirely in

New York State where O'Connell used a computer terminal to obtain

information from Equifax and telephoned a licensed Maryland private

investigation company to retain the firm to conduct a "criminal

check." Although Montgomery Investigative Services did operate in

Maryland, Stover cannot impute any of that firm's activities to

O'Connell on an agency theory because there is no evidence that

O'Connell controlled those activities. See Mylan Lab., Inc. v. Akzo,

N.V., 2 F.3d 56, 61 (4th Cir. 1993). O'Connell simply asked Montgomery Investigative Services to provide certain information. The

Maryland firm selected the means and method of the investigation

and used its own employees to fulfill O'Connell's request.

The statutory provision upon which Stover must rely, therefore, is

§ 6-103(b)(4), which authorizes a Maryland court to exercise personal

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jurisdiction over any person who "[c]auses tortious injury in the State

or outside of the State by an act or omission outside the State if he

regularly . . . engages in any other persistent course of conduct in the

State." Stover argues that even though O'Connell is not present in

Maryland, its admitted prior investigatory efforts in Maryland constitute a "persistent course of conduct in the State."

In defining the reach of Maryland's long-arm statute, Maryland

courts have concluded that the state legislature intended to expand

Maryland's exercise of personal jurisdiction to the limits allowed by

the Due Process Clause of the Fourteenth Amendment. See

Camelback Ski Corp. v. Behning, 513 A.2d 874, 876 (Md. 1986),

vacated and remanded on other grounds, 480 U.S. 901 (1987).*

Because the limits of Maryland's statutory authorization for the exercise of personal jurisdiction are coterminous with the limits of the

Due Process Clause, the statutory inquiry necessarily merges with the

constitutional inquiry, and the two inquiries essentially become one.

See Ellicott Mach. Corp., 995 F.2d at 477; see also Mohamed v.

Michael, 370 A.2d 551, 553 (Md. 1977). Accordingly, we direct our

inquiry to whether O'Connell's activities in Maryland constituted sufficient minimum contacts with Maryland such that maintenance of

suit against O'Connell in Maryland comports with the demands of

due process.

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*Were we to read Maryland's long-arm statute naturally, we might

question the Maryland courts' interpretation, at least with respect to the

constitutional limits of specific jurisdiction. Cf. Beaty v. M.S. Steel Co.,

401 F.2d 157 (4th Cir. 1968), cert. denied, 393 U.S. 1049 (1969). Section

6-103(b)(3) reaches persons whose actions take place in the state and

cause tortious injury in the state; it does not reach persons whose actions

outside the state cause tortious injury in the state. Cf. Calder v. Jones,

465 U.S. 783 (1984) (upholding exercise of personal jurisdiction over

defendants whose out-of-state activities caused injury in forum state).

While § 6-103(b)(4) covers out-of-state conduct that causes injury in the

forum state, its plain language would appear to require greater contacts

than the specific jurisdiction jurisprudence requires. In any event, we

shall assume that Maryland's long-arm statute reaches the limits of due

process.

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III

A state's sovereign authority over persons, property, and activities

extends only to its territorial limits, and its laws have no operation in

other states except as allowed by those states or by comity. See

Pennoyer v. Neff, 95 U.S. 714, 720-22 (1877); Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 941 (4th Cir. 1994), cert. denied, 115

S.Ct. 1103 (1995). And a state's assertion of power beyond its borders

violates the Due Process Clause of the Fourteenth Amendment.

Pennoyer, 95 U.S. at 733.

Because the requirement that a person be physically present in a

state before he may be subjected to that state's exercise of judicial

power was too restrictive to serve the increasing demands of interstate

commerce and the multi-state activities of corporations, the Supreme

Court has established that a person is thought to be"present" in a

state, not only when he is physically there, but also when he conducts

meaningful activity there. In International Shoe Co. v. Washington,

326 U.S. 310 (1945), the Supreme Court explained that a person's

activity in a state, conducted directly or through agents, may serve as

an analog for his physical presence there, as long as the in-state activity creates "certain minimum contacts [with the forum state] such that

maintenance of the suit [there] does not offend `traditional notions of

fair play and substantial justice.'" Id. at 316 (citation omitted). That

analog for physical presence was further defined in Hanson v.

Denckla, 357 U.S. 235, 253 (1958), as activity by which "the defendant purposefully avails itself of the privilege of conducting activities

within the forum State." To create a basis for the exercise of in

personam jurisdiction, however, the defendant's activities must in any

event create a "substantial connection" between himself and the forum

state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)

(quoting McGee v. International Life Ins. Co., 355 U.S. 220, 223

(1957)).

The jurisprudence of surrogate presence in a state, articulated for

pragmatic reasons, was never intended to reorder the concepts of state

sovereignty which form the basis of the Constitution's due process

guarantee. A state's sovereignty remains territorial, and its judicial

power extends over only those persons, property, and activities within

its borders. The linchpin for long-arm jurisdiction, therefore, is the

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quantity and quality of the defendant's activity in the forum state. As

we explained in Lesnick:

While the jurisprudence of personal jurisdiction has focused

on fixing the minimum measurement of a person's contact

with a state necessary to substitute for the person's presence

in the state and thus to justify that state's imposing an in

personam judgment over the person, the immediate concept

of "presence" is no longer part of the language. Nevertheless, the establishment of a surrogate for presence has been

the core task in defining the due process boundaries of a

state's legitimate exercise of sovereignty over a person

beyond its borders.

35 F.3d at 941.

In this case, O'Connell, using only its computer terminal in New

York, obtained information about Stover from Equifax. The record

does not disclose where Equifax stored that information or where

Equifax is located. O'Connell also made a telephone call to a private

investigation firm in Maryland to retain it to conduct a "criminal

check." When the Maryland firm completed its search of the public

court records, it supplied the information to O'Connell in New York.

O'Connell passed the information that it obtained from both Equifax

and the Maryland investigation firm to its client in California. Finally,

O'Connell acknowledges that "on occasion over the last several

years" it has engaged Maryland investigation agencies to review public documents concerning other individuals.

Ordering a product or service by telephone from a company in a

different state does not subject the customer to that state's jurisdiction. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408,

417-18 (1984); Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U.S.

516, 518 (1923). While it is true that the electronic connection transports the customer's order for the product or service into the forum

state, thereby prompting a response, such conduct does not establish

the customer's "presence" in that jurisdiction. On the contrary, the use

of a telephone to facilitate transactions between remote locations

serves as an alternative to presence. To conclude that such activity

establishes presence in a state would upset generally held expecta-

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tions, see Craig v. General Finance Corp., 504 F. Supp. 1033, 1038-

39 (D. Md. 1981) (in personam jurisdiction does not exist over person

who placed various telephone calls and mailed letters to forum state),

and redefine the nature of state sovereignty.

Stover's reliance on Calder v. Jones does not persuade us to reach

a different conclusion because in that case the magnitude of the

defendants' activities amounted to an analog for the defendants' presence in the forum state. In Calder, Shirley Jones filed a libel suit in

California against the National Enquirer, one of its reporters, and one

of its editors. The reporter and the editor challenged the California

court's personal jurisdiction over them because they were Florida residents and had prepared the article primarily in Florida. The Supreme

Court rejected the challenge, noting that the article about Jones was

researched from California sources, the National Enquirer has its largest circulation in California, and both the reporter and the editor knew

that the article would appear in 600,000 copies circulated in California. The Court concluded that California was both the focal point of

the Jones story and of the alleged defamation. The defendants' "intentional, and allegedly tortious, actions were expressly aimed at California," and Jones suffered the "brunt of the harm" there. The defendants

therefore must have "`reasonably anticipate[d] being haled into court

there.'" Id. at 789-90 (citations omitted).

In this case, we cannot conclude that from O'Connell's occasional

telephonic requests for information from Maryland-based investigation services over a period of years and its furnishing of that information to clients in other states, it could reasonably have anticipated

being "haled into court" in Maryland. The magnitude of the Calder

defendants' activities in California distinguishes that case from the

one before us.

Because O'Connell's only contacts with Maryland were its occasional placement of telephonic orders for, and the consequent receipt

of, investigation services from Maryland, we hold that it would contravene the Due Process Clause to apply Maryland's long-arm statute

to grant Maryland courts in personam jurisdiction over O'Connell in

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New York. Accordingly the district court's order dismissing this case

for lack of personal jurisdiction over O'Connell is

AFFIRMED.

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