Opinion ID: 1354385
Heading Depth: 2
Heading Rank: 1

Heading: The Validity of the Conspiracy Theory

Text: The issue before us is whether the defendants' motion to dismiss for lack of personal jurisdiction should be granted. See Tenn. R. Civ. P. 12.02(2). The resolution of this issue depends on whether the conspiracy theory of personal jurisdiction should be adopted, which requires an interpretation of the Tennessee long-arm statute, Tenn.Code Ann. § 20-2-214(a), and the due process clause of the Fourteenth Amendment to the United States Constitution. As this is a question of law, our standard of review is de novo, without a presumption of correctness. See Nelson v. Wal-Mart Stores, Inc., 8 S.W.3d 625, 628 (Tenn.1999). The relevant portion of the Tennessee long-arm statute reads: (a) Persons who are nonresidents of Tennessee and residents of Tennessee who are outside the state and cannot be personally served with process within the state are subject to the jurisdiction of the courts of this state as to any action or claim for relief arising from:    (2) Any tortious act or omission within the state;    (6) Any basis not inconsistent with the constitution of this state or of the United States. Tenn.Code Ann. § 20-2-214. The statute provides that person includes corporations and other entities. Tenn.Code Ann. § 20-2-214(b). It also provides that [a]ny such person shall be deemed to have submitted to the jurisdiction of this state who acts in the manner above described through an agent or personal representative. Tenn.Code Ann. § 20-2-214(c). In 1997 the General Assembly added a new long-arm provision to the Tennessee Code, which provides: A court may exercise personal jurisdiction over a person, who acts directly or indirectly, as to a claim for relief arising from the person's.... [c]ausing tortious injury by an act or omission in this state.... Tenn.Code Ann. § 20-2-223(a), (a)(3). There is no doubt that Chenault has sufficiently alleged that Walker has committed a tortious act .... within the state, Tenn.Code Ann. § 20-2-214(a)(2), for the long-arm statute covers such wrongful conduct as fraud, misrepresentation, and civil conspiracy, and Walker allegedly committed such acts while in Tennessee. Moreover, if a tortious act is committed outside the state and the resulting injury is sustained within the state, the tortious act and the injury are inseparable, and jurisdiction lies in Tennessee. See Jasper Aviation, Inc. v. McCollum Aviation, Inc., 497 S.W.2d 240, 244 (Tenn.1972); Godwin Aircraft, Inc. v. Houston, 851 S.W.2d 816, 820 (Tenn.Ct.App.1992). The question in this case is whether appellants Ocean, Bursey, and Dimensionall of whom are Florida residentshave also done so. The trial court found that absent the alleged conspiracy these appellants had insufficient contacts with Tennessee. The Court of Appeals agreed and held that conspiracy was a proper basis on which to find jurisdiction, and that Chenault's allegations, supported by the affidavits in the record, were sufficient to allow the case to proceed under the conspiracy theory. We must decide whether the lower courts were correct, that is, whether by virtue of a civil conspiracy to defraud Chenault, Walker's contacts with Tennessee may be imputed to Ocean, Bursey, and Dimension. [2] The notion of the imputation of jurisdictional contacts is nothing new. Indeed, the long-arm statute itself provides that an agent's (or personal representative's) tortious acts in Tennessee on behalf of a principal will allow a court to exercise jurisdiction over that principal. See Tenn.Code Ann. § 20-2-214(c). That a principal can be subject to suit, or, in general, be made liable for the conduct of his agent finds its parallel in conspiracy law. It is firmly established in our law that a conspirator can be liable for the conduct of a co-conspirator. In Dale v. Thomas H. Temple Co. we stated: Since it is [a] basic principle that each conspirator is responsible for everything done by his confederate which the execution of the common design makes probable as a consequence, the law applying no gauge to ascertain relative activity in the production of that consequence, it follows that each is liable for all damages naturally flowing from any wrongful act of a coconspirator in carrying out such common design. 186 Tenn. 69, 90-91, 208 S.W.2d 344, 354 (1948). Accord Huckeby v. Spangler, 521 S.W.2d 568, 573-74 (Tenn.1975). Moreover, Chenault has sufficiently alleged that the defendants have engaged in a civil conspiracy to defraud. This tort has been defined as a combination between two or more persons to accomplish by concert an unlawful purpose, or to accomplish a purpose not in itself unlawful by unlawful means. Dale, 186 Tenn. at 90, 208 S.W.2d at 353. See also Huckeby, 521 S.W.2d at 573; Braswell v. Carothers, 863 S.W.2d 722, 727 (Tenn.Ct.App.1993); Kirksey v. Overton Pub, Inc., 739 S.W.2d 230, 236 (Tenn.Ct.App.1987). This Court in Dale further explained that a conspiracy to defraud means a common purpose, supported by a concerted action to defraud, that each [conspirator] has the intent to do it, and that it is common to each of them, and that each has the understanding that the other has that purpose. Dale, 186 Tenn. at 90, 208 S.W.2d at 353-54. Also, the agreement need not be formal, the understanding may be a tacit one, and it is not essential that each conspirator have knowledge of the details of the conspiracy. Id. There is no question that Chenault's complaint, which contains specific, detailed allegations, sufficiently charges the defendants with a conspiracy to defraud him. Therefore, under section 20-2-214(a)(2) and section 20-2-223(3), Chenault's complaint alleges causes of action which would allow a Tennessee court to assert long-arm jurisdiction over the defendants. Even if this were not the case, however, section 20-2-214(a)(6) permits a Tennessee court to obtain personal jurisdiction over a defendant on any basis not inconsistent with the state or federal constitutions. See J.I. Case Corp. v. Williams, 832 S.W.2d 530, 531 (Tenn.1992) (This statute reaches as far as the Due Process Clause of the Fourteenth Amendment permits.). But whichever section of the long-arm statute is employed, the exercise of jurisdiction must comport with the United States Constitution. Before addressing the constitutional standards, however, it will be useful to state the conspiracy theory of personal jurisdiction succinctly. This has been done in Cawley v. Bloch, 544 F.Supp. 133 (D.Md.1982), where the court articulated the theory as follows: Under [this] doctrine, when (1) two or more individuals conspire to do something, (2) that they could reasonably expect to lead to consequences in a particular forum, if (3) one co-conspirator commits overt acts in furtherance of the conspiracy, and (4) those acts are of a type which, if committed by a non-resident, would subject the non-resident to personal jurisdiction under the long-arm statute of the forum state, then those overt acts are attributable to the other co-conspirators, who thus become subject to personal jurisdiction in the forum, even if they have no direct contacts with the forum. Cawley, 544 F.Supp. at 135. Is this test constitutional? Due process requires that an out-of-state defendant can be subject to personal jurisdiction only if he has such minimum contacts with the forum state that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. J.I. Case, 832 S.W.2d at 531-33 (citing International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-78, 105 S.Ct. 2174, 2181-84, 85 L.Ed.2d 528 (1985); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-94, 100 S.Ct. 559, 564-66, 62 L.Ed.2d 490 (1980). In the absence of continuous and systematic contacts with the forum state, personal jurisdiction exists if a commercial actor purposely directs his activities toward citizens of the forum state and litigation results from injuries arising out of or relating to those activities. J.I. Case, 832 S.W.2d at 532 (citing Burger King, 471 U.S. at 472-73, 105 S.Ct. at 2182). In such a case, the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there. Masada Investment Corp. v. Allen, 697 S.W.2d 332, 334 (Tenn.1985) (quoting World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567); see also Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958) ([I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.). This standard ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts. Burger King, 471 U.S. at 475-76, 105 S.Ct. at 2184 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984)). In addition to an evaluation of the defendant's contacts and their connection to the plaintiff's cause of action, courts consider two lesser factors: the forum state's interest in exercising jurisdiction and the convenience to the parties. See J.I. Case, 832 S.W.2d at 532; Masada, 697 S.W.2d at 334. This well-established constitutional framework for evaluating personal jurisdiction can be difficult to apply depending on the strength of the defendant's contacts with the forum state. But, in the abstract, we find nothing explicit or implicit in these constitutional principles that would prohibit the exercise of jurisdiction based on the imputation of a co-conspirator's minimum contacts. To the contrary, we think that the conspiracy theory follows plainly from the very definition of conspiracy and the meaning of co-conspirator liability: the acts of a conspirator in furtherance of an illegal agreement with his co-conspirator are attributed to that co-conspirator. See Dale, 186 Tenn. at 90-91, 208 S.W.2d at 353-54. If due process does not prevent that co-conspirator from being held civilly or criminally responsible based on the principle of imputed conduct, it is difficult to see why it should prevent the exercise of jurisdiction based on that same principle. Rather, given the notion of conspiracy liability, the conspiracy theory of jurisdiction is premised on principles of common sense and basic fairness. As one court has put it, [i]f through one of its members a conspiracy inflicts an actionable wrong in one jurisdiction, the other members should not be allowed to escape being sued there by hiding in another jurisdiction. Stauffacher v. Bennett, 969 F.2d 455, 459 (7th Cir.1992) (Posner, J.). Moreover, we think that the articulation of the conspiracy theory in Cawley v. Bloch accurately reflects the due process standards discussed above. Under that articulation, for the principle of imputed conduct to apply the co-conspirator must commit an overt act in furtherance of the conspiracy which, if committed by the out-of-state defendant, would subject that defendant to personal jurisdiction under the long-arm statute of the forum state. See Cawley, 544 F.Supp. at 135. In other words, a court must always determine that it could exercise jurisdiction over the conspirator whose conduct is to be attributed to the defendant consistently with International Shoe and its progeny. As is true of personal jurisdiction generally, there will be hard cases presented under the conspiracy theory, and these must be decided based on a careful consideration of the record. But we are aware of no good reason to bar the application of this theory as a matter of law where the plaintiff has made specific, credible allegations which are supported by the evidence. We recognize that this theory has been criticized in various jurisdictions. For example, a Georgia court has noted that [t]o hold that a non-resident who personally has conducted no activity in or with Georgia is subject to our jurisdiction based solely upon the theory of a conspiracy would eliminate the requirement for a `minimum contact' between the defendant and this forum. Without the `minimum contact' there would be no due process limitation on this state's extra territorial power over non-residents. Coopers & Lybrand v. Cocklereece, 157 Ga.App. 240, 276 S.E.2d 845, 850 (1981) (internal citations omitted). But see Rudo v. Stubbs, 221 Ga.App. 702, 472 S.E.2d 515, 517 (1996) (allowing for the application of the conspiracy theory where the alleged conspiracy is specifically targeted at a state resident). Similarly, the Supreme Court of Texas has held that personal jurisdiction may not be asserted over a non-resident based solely upon effects or consequences of an alleged conspiracy with residents of the forum state. National Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769 (Tex.1995) (restricting its inquiry to whether the nonresident himself purposefully established minimum contacts with the forum). Nevertheless, a number of jurisdictions have adopted the conspiracy theory. See, e.g., Textor v. Board of Regents, 711 F.2d 1387, 1392 (7th Cir.1983) ([I]f plaintiff's complaint alleges an actionable conspiracy then the minimum contacts test has been met. The `conspiracy theory' of personal jurisdiction is based on the `time honored notion that the acts of [a] conspirator in furtherance of a conspiracy may be attributed to the other members of the conspiracy.') (citation omitted); General Motors Corp. v. Ignacio Lopez de Arriortua, 948 F.Supp. 656, 664-66 (E.D.Mich.1996); Dooley v. United Technologies Corp., 786 F.Supp. 65, 78-80 (D.D.C.1992); Cawley, 544 F.Supp. at 134-35. Thus, there is a difference of opinion in the case law. For the reasons discussed above, however, we hold that the conspiracy theory of personal jurisdiction, premised on the basic principle of conspiracy liability, fits within the Tennessee long-arm statute and comports with due process.