Opinion ID: 1925621
Heading Depth: 2
Heading Rank: 1

Heading: Due Process and the Conspiracy Theory of Personal Jurisdiction

Text: We conclude that the conspiracy theory of personal jurisdiction is consistent with the Due Process Clause of the Fourteenth Amendment. The central due process issue raised by the conspiracy theory is whether the relationship between co-conspirators specified by the conspiracy theory is sufficient to justify the attribution contemplated by the theory. The legal relationship of one party to another may affect the jurisdictional balance; under the attribution method, the legal relationship between two or more persons may be such that it is reasonable to attribute the jurisdictional contacts of one party to the other. The effect of attribution is that the contacts that permit jurisdiction over the first party may be used against the second, thereby establishing jurisdiction over that party also. Applied to the conspiracy theory of jurisdiction, the acts of a co-conspirator in furtherance of the conspiracy may be attributed to other co-conspirators if the requirements of the conspiracy theory are met. The attribution principle enables a court to exercise jurisdiction over nonresidents involved in a conspiracy when a co-conspirator performs jurisdictionally sufficient acts in furtherance of the conspiracy. The use of contact attribution for purposes of establishing personal jurisdiction over nonresident defendants is well-established in the Supreme Court's minimum contacts due process jurisprudence. As discussed, supra, International Shoe itself established that attribution of the acts of an agent for personal jurisdiction purposes is consistent with due process. Likewise, courts applying the International Shoe standard have held that actions of a partner in the scope of the partnership's business may be attributed to a partnership. See, e.g., Sher v. Johnson, 911 F.2d 1357, 1362 (9th Cir.1990) (holding that, because [f]or purposes of personal jurisdiction, the actions of an agent are attributable to the principal, the acts of a partner are treated as acts of the partnership for purposes of determining whether personal jurisdiction is proper over the partnership if the acts are treated as acts of the partnership under applicable state partnership law). Courts applying International Shoe and its progeny have held also that the actions of a subsidiary corporation may be attributed to a parent corporation under some circumstances, even if it would not necessarily be appropriate to pierce the corporate veil between the parent and the subsidiary. See, e.g., Gallagher v. Mazda Motor of Am., Inc., 781 F.Supp. 1079, 1085 (E.D.Pa.1992) (holding that the acts of a subsidiary may be attributed to a parent for jurisdictional purposes if the parent would have done these acts itself if the subsidiary did not exist); Bulova Watch Co., Inc., v. K. Hattori & Co., Ltd., 508 F.Supp. 1322, 1342 (E.D.N.Y.1981) (same). Finally, in World-Wide Volkswagen, the Supreme Court addressed the issue of when the actions of distributors of a manufacturer's goods may be attributed to a manufacturer for jurisdictional purposes. In World-Wide Volkswagen, the defendant, World-Wide, was a regional distributor of Volkswagen automobiles, selling to dealerships in New York, New Jersey, and Connecticut that then sold the cars to residents of those states. World-Wide Volkswagen, 444 U.S. at 298, 100 S.Ct. at 567. Given that its products were not distributed to retailers who sold into Oklahoma, the forum at issue, World-Wide did not place its cars into the stream of commerce with the expectation that they would be purchased by Oklahoma consumers. Id. at 297-98, 100 S.Ct. at 567. Consequently, the Court concluded that World-Wide could not have reasonably anticipated facing a suit in Oklahoma based upon allegations that these automobiles were defective. Id. at 296-97, 100 S.Ct. at 566-67 (rejecting this view because under it [e]very seller of chattels would in effect appoint the chattel his agent for service of process). The World-Wide Volkswagen Court, however, held that a manufacturer could be subject to jurisdiction in a forum state if it delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. Id. at 298, 100 S.Ct. at 567. Thus, the Court effectively held that the acts distributors take in distributing a manufacturer's products into a particular forum state may be attributed to the manufacturer for purposes of obtaining personal jurisdiction over the manufacturer in the state if the manufacturer placed its products into the stream of commerce with the expectation that they would eventually be purchased in the state. We conclude that the conspiracy theory of jurisdiction does not violate due process. We find that the relationship between co-conspirators contemplated by the conspiracy theory is similar to the relationship that the Supreme Court deemed sufficient in World-Wide Volkswagen to warrant attribution of the acts of a distributor of goods to the manufacturer of the goods. We further conclude that the relationship between co-conspirators contemplated by the conspiracy theory is different than the relationships that the Supreme Court has found insufficient for attribution. In Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), Justice Brennan provided a helpful synthesis of the Supreme Court's due process personal jurisdiction jurisprudence. Justice Brennan explained that a central purpose behind the due process minimum contacts requirement of International Shoe is to ensure that individuals have `fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign.' Id. at 471-72, 105 S.Ct. at 2181-82 (quoting Shaffer v. Heitner, 433 U.S. 186, 218, 97 S.Ct. 2569, 2587, 53 L.Ed.2d 683 (1977) (Stevens, J., concurring)). This fair warning requirement serves the further purpose of ensuring that potential defendants can with reasonable certainty predict the fora in which they may be forced to defend suits if they engage in certain types of conduct. See id. at 472, 105 S.Ct. at 2182. This in turn permits `potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.' Id. (quoting World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567). It was this due process concern that, without fair warning that a potential defendant may be subject to suit in a particular forum, the potential defendant would be unable to plan its activities so as to take into account the possibility of defending a suit in that forum that led the World-Wide Volkswagen Court to delineate the scope of the stream of commerce theory as it did. In Burger King, Justice Brennan explained that the fair warning requirement is satisfied if a defendant purposefully directs activities at the forum state and litigation arises out of those activities. See id. at 472-73, 105 S.Ct. at 2182. He then applied that principle to the Court's holding in World-Wide Volkswagen, noting that the fair warning requirement explains the Court's conclusion in World-Wide Volkswagen that a manufacturer must expect that its products will be distributed in a particular forum when it places them in the stream of commerce in order to be subject to suits related to those products in that forum. See id. As the World-Wide Volkswagen Court noted, World-Wide's lack of fair warning that it may face suit in Oklahoma by selling cars to dealerships in the Northeast left it unable to act to alleviate the risk of ... litigation by procuring insurance, passing the expected costs on to customers, or ... severing its connection with the State. World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. The relationship between co-conspirators required by the conspiracy theory ensures that a co-conspirator subjected to the personal jurisdiction of a forum state under the theory has fair warning that he or she could be subjected to suit in the forum state sufficient to satisfy the due process concerns about fair warning of the possibility of suit that motivated the World-Wide Volkswagen Court. According to the conspiracy theory, a co-conspirator can be subjected to the personal jurisdiction of a particular forum only if the co-conspirator had a reasonable expectation, at the time the co-conspirator agreed to participate in the conspiracy, that acts to be done in furtherance of the conspiracy by another co-conspirator would be sufficient to subject that other co-conspirator to personal jurisdiction in the forum. Civil co-conspirators can be held liable for the acts of other co-conspirators done in furtherance of their conspiracy. See Hoffman v. Stamper, 385 Md. 1, 24-25, 867 A.2d 276, 290 (2005). Thus, a co-conspirator who agrees to participate in a conspiracy that the co-conspirator reasonably anticipated or could be said to have reasonably anticipated at the time of agreeing to enter it will result in acts done in furtherance of the conspiracy sufficient to subject another co-conspirator to the personal jurisdiction of a particular forum can also reasonably anticipate being subject to suit in that forum by entering into the conspiracy. It is important to note that under the conspiracy theory, acts of one co-conspirator done in the course of the conspiracy that subject that co-conspirator to personal jurisdiction in a particular forum are attributed to another co-conspirator only if the other co-conspirator reasonably expects at the time the other conspirator agreed to participate in the conspiracy that such acts will be done and that such acts will subject the co-conspirator who performs them to the personal jurisdiction of the forum state. This requirement, that the reasonable expectation be present at the time the co-conspirator agrees to the conspiracy, satisfies the World-Wide Volkswagen requirement that personal jurisdiction is proper over a person in a particular forum. If a person contemplating entering into a conspiracy wishes to avoid being subject to the personal jurisdiction of a particular forum based on the forum-related actions of another co-conspirator, that person can simply refrain from entering into the conspiracy, or can agree to enter into the conspiracy only if it is modified so that it does not contemplate actions directed at the forum the person wishes to avoid. Because the conspiracy theory gives one subject to personal jurisdiction in a forum the ability to avoid in advance being subject to suit in the forum, it satisfies the fundamental due process requirement that a defendant can be involuntarily subjected to the personal jurisdiction of a forum only if the defendant purposefully avails itself of the privilege of conducting activities in the forum state. Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958); see Burger King, 471 U.S. at 474, 105 S.Ct. at 2183 (the constitutional touchstone remains whether the defendant purposefully established `minimum contacts' with the forum state). World-Wide Volkswagen recognized that if a defendant's activities are such that the defendant can reasonably anticipate being subject to suit in a forum by virtue of his or her intentional acts, the defendant has purposefully availed itself of privilege of conducting activities within the forum: When a corporation `purposefully avails itself of the privilege of conducting activities within the forum State,' it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State. Hence if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others. World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567 (citations omitted). The conspiracy theory satisfies the World-Wide Volkswagen fair warning requirement, and therefore, it also satisfies the purposeful availment requirement as well. Our conclusion that the conspiracy theory is consistent with due process is reinforced by comparison of the relation between co-conspirators required under the theory with the situations in which the Court has held that a relation between two parties is insufficient to warrant attribution of the acts of one party to the other for purposes of obtaining personal jurisdiction over the other party. The Supreme Court has held consistently that a person cannot be subject to personal jurisdiction in a particular forum based on the unilateral forum-related activities of a third party. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416-17, 104 S.Ct. 1868, 1873, 80 L.Ed.2d 404 (1984) (holding that acceptance of a check from a third party drawn on a bank located in the forum state cannot be considered in determining whether the acceptor of the check can be subjected to the personal jurisdiction of the forum state because it is the unilateral activity of a ... third person); Kulko v. Super. Ct., 436 U.S. 84, 93-94, 98 S.Ct. 1690, 1697-98, 56 L.Ed.2d 132 (1978) (holding that a forum state could not obtain personal jurisdiction over a parent in a custody action simply because the parent agreed to a visitation arrangement with the other parent and the other parent took the child to the forum state and initiated suit, as this would arbitrarily subject one parent to suit in any State of the Union where the other parent chose to spend time while having custody of their offspring pursuant to a separation agreement); Hanson v. Denckla, 357 U.S. at 253, 78 S.Ct. at 1239-40 (holding that Florida courts could not obtain personal jurisdiction over Delaware trust simply because powers of appointment under trust were executed in Florida because [t]he unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State). Unlike the situations in Helicopteros, Kulko, and Hanson, basing personal jurisdiction on the actions of a co-conspirator according to the requirements of the conspiracy theory does not result in personal jurisdiction based on the unilateral forum-related actions of a third party. By the terms of the conspiracy theory, a co-conspirator to whom the acts of another co-conspirator are attributed must have agreed to participate in a conspiracy that he or she could reasonably have expected at the time of agreement to involve the forum-related actions attributed to him or her. The acts attributed are not simply unilateral acts of the co-conspirator who literally performed them, but are also the acts of the other co-conspirator. The Supreme Court has stated also that an exercise of personal jurisdiction is inconsistent with due process if a defendant is haled into a jurisdiction solely as a result of `random,' `fortuitous,' or `attenuated' contacts. See Burger King, 471 U.S. at 475, 105 S.Ct. at 2183 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984) (random and fortuitous), and World-Wide Volkswagen, 444 U.S. at 299, 100 S.Ct. at 568 (attenuated)). An exercise of personal jurisdiction over a co-conspirator based on the relationship between co-conspirators required under the conspiracy theory is not random, fortuitous, or attenuated. It is neither random nor fortuitous because it is based on the co-conspirator's deliberate choice to enter into the conspiracy. Nor is it too attenuated, as the co-conspirator must reasonably expect at the time of entering into the conspiracy that acts in furtherance of the conspiracy upon which jurisdiction is based will be directed against the forum state. Compare World-Wide Volkswagen, 444 U.S. at 299, 100 S.Ct. at 568 (holding that revenues World-Wide may have derived from the fact that automobiles they sold to dealers who then sold to customers in New York, New Jersey, and Connecticut were able to be used in Oklahoma was far too attenuated a contact to justify [Oklahoma's] exercise of in personam jurisdiction). Our conclusion that the conspiracy theory is consistent with due process is also reinforced by the fact that many courts that have considered the issue have reached the same conclusion as we do today. [4] Five state supreme courts, four state intermediate appellate courts, and numerous federal courts have recognized the conspiracy theory. The Minnesota Supreme Court, in Hunt v. Nevada State Bank, 285 Minn. 77, 172 N.W.2d 292 (1969), held that the conspiracy theory was permitted both under Minnesota's long-arm statute and consistent with due process. Considering the due process issue, the court concluded that assertion of personal jurisdiction over out-of-state co-conspirators under the conspiracy theory does not offend our notions of fundamental fairness. Hunt, 172 N.W.2d at 312. The court's holding was based in part on the asymmetry that would result if co-conspirators are permitted to enjoy the benefits and protections of the law of a forum, but are not subject to the personal jurisdiction of that forum: With respect to any of the [co-conspirator] defendants, to suggest that it is unfair to require them to respond to an action in this jurisdiction would seem to say that they may rely on our contract law to uphold the terms of lawful agreements but that they may not be required to defend an action based on injury to our citizens as a result of an unlawful agreement. Id. Judge Posner, in Stauffacher v. Bennett, 969 F.2d 455 (7th Cir.1992), echoed this rationale. Finding it difficult to understand why personal jurisdiction should be exempted from the general rule that the acts of co-conspirators are attributed to one another, he concluded that [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. Id. at 459. Because the plaintiffs in Stauffacher failed to allege that the defendant at issue was a member of the conspiracy, the court did not need to decide whether the conspiracy theory was consistent with due process. Id. at 460. The Delaware Supreme Court, in holding that the conspiracy theory is consistent with due process, emphasized that the awareness of actions in furtherance of the conspiracy directed at the forum state that a co-conspirator must have when that person agrees to participate in the conspiracy permits the conclusion that the act of agreeing to the conspiracy is an act of purposeful availment: [A] defendant who has so voluntarily participated in a conspiracy with knowledge of its acts or effects in the forum state can be said to have purposefully availed himself of the privilege of conducting activities in the forum state, thereby fairly invoking the benefits and burdens of its laws. Istituto Bancario, 449 A.2d at 225 (citations omitted); see also Santa Fe Technologies, 42 P.3d at 1234 (following Istituto Bancario ).