Court Opinion

ID: 4637515
Source: CourtListenerOpinion
Date Created: 2020-11-25 20:17:12.833313+00
Date Added: 2024-06-11T07:58:41.705956
License: Public Domain

No. 20-0296 – State ex rel. Third-Party Defendant Health Plans, et. al. v. The Honorable
              Shawn D. Nines, et al.
and

No. 20-0297 – State ex rel. Blue Cross & Blue Shield of Kansas, Inc. v. The Honorable
             Shawn D. Nines
                                                                               FILED
                                                                          November 25, 2020
Hutchison, Justice, dissenting:                                             EDYTHE NASH GAISER, CLERK
                                                                            SUPREME COURT OF APPEALS
                                                                                OF WEST VIRGINIA

              I respectfully dissent from the majority’s opinion. I believe that sufficient

allegations were asserted that the foreign third-party-defendant “Blues” had a contractual

arrangement with Highmark of West Virginia (“Highmark”), such that Highmark was

acting as the agent of the Blues in West Virginia. The complaint also sufficiently alleged

that the Blues were conspiring with Highmark in West Virginia in a manner that caused

harm to MedTest in West Virginia. Given that the majority opinion was focused on the

lack of evidence regarding whether the Blues purposely availed themselves of West

Virginia’s jurisdiction through Highmark, they should have sent the case back to the circuit

court and allowed the parties to conduct jurisdictional discovery.

              The majority opinion is written to produce the impression that this is little

more than a West Virginia lawsuit between two West Virginia companies over a contract

executed and later breached in West Virginia. That is, Highmark and MedTest entered into

a contract, and MedTest breached the contract by overcharging Highmark to the tune of

$6.4 million. Highmark is just suing to collect the overcharge.

              What the majority opinion does not address is the motivation: why was

Highmark suing for the overcharge?        The majority opinion paints Highmark as an
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independent firm; in reality, Highmark is interconnected nationally with the other Blues by

way of the BlueCard program. The record shows that Highmark received a notification

from the Blues that MedTest was charging too much, and it was action from the Blues and

their interconnected BlueCard computer system that compelled Highmark to stop paying

MedTest. Using the BlueCard system, Highmark claims it calculated that MedTest had

billed the Blues – through Highmark – allegedly excessive amounts. So, the records before

this Court show that when Highmark sued, it was only asking for $3,192 for itself; as for

the remaining $6.3 plus million, Highmark was acting as a collection agent for the Blues.

              As the majority opinion relates, this case is about specific jurisdiction which

requires weighing three prongs (purposeful availment, arise or relate, and fairness) to see

if “minimum contacts” exist. It tests whether “maintenance of the suit [would] offend

traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326
U.S. 310, 316 (1945). Specific jurisdiction focuses on “the relationship among the

defendant, the forum, and the litigation.” Daimler AG v. Bauman, 571 U.S. 117, 126

(2014).

              1.     Purposeful availment: The defendant must “purposefully avail[] itself

of the privilege of conducting activities within the forum State,” such that the defendant

has “clear notice that it is subject to suit there.” World-Wide Volkswagen v. Woodson, 444
U.S. 286, 297 (1980). This is the primary issue challenged by the Blues. The purposeful

availment element considers how defendants have structured their affairs and where they

reasonably anticipate being sued. “The purposeful availment requirement of specific

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personal jurisdiction ensures that a defendant will not be haled into a jurisdiction as a result

of isolated, fortuitous, or random acts.” Syl. pt. 9, State ex rel. Ford Motor Co. v. McGraw,

237 W. Va. 573, 788 S.E.2d 319 (2016).

              2.      Arise or Relate: The controversy must “arise out of or relate to”

defendant’s activities in the forum; there must be “an affiliation between the forum and the

underlying controversy[.]” Bristol-Myers Squibb Co. v. Superior Court of California, 137
S. Ct. 1773, 1780 (2017).

              3.      Fairness: The exercise of jurisdiction must be “reasonable” and

comport with “fair play and substantial justice.” Asahi Metal Indus. Co. v. Superior Court

of California, Solano Cty., 480 U.S. 102, 113 (1987).

              The central question in this case is the first element, purposeful availment. I

believe it was established in MedTest’s complaint.

              First, this record establishes the Blues purposely conducted activities in West

Virginia under the “agency theory of jurisdiction.” Under this theory, the acts of an agent

acting within the scope of its agency, and the resulting contacts therefrom, are imputable

to the principal for determining specific personal jurisdiction of the principal. In effect,

the principal may purposefully avail itself of a foreign forum through its agent’s actions.

The United States Supreme Court acknowledged that an agency relationship may create

sufficient in-state jurisdictional contacts:

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              Agency relationships, we have recognized, may be relevant to
              the existence of specific jurisdiction. “[T]he corporate
              personality,” International Shoe Co. v. Washington, 326 U.S.
310 (1945), observed, “is a fiction, although a fiction intended
              to be acted upon as though it were a fact.” Id., at 316. See
              generally 1 W. Fletcher, Cyclopedia of the Law of
              Corporations § 30, p. 30 (Supp. 2012–2013) (“A corporation is
              a distinct legal entity that can act only through its agents.”). As
              such, a corporation can purposefully avail itself of a forum by
              directing its agents or distributors to take action there. See,
              e.g., Asahi, 480 U.S. at 112 (opinion of O’Connor, J.)
              (defendant’s act of “marketing [a] product through a distributor
              who has agreed to serve as the sales agent in the forum State”
              may amount to purposeful availment); International Shoe, 326
U.S., at 318, 66 S. Ct. 154 (“the commission of some single or
              occasional acts of the corporate agent in a state” may
              sometimes “be deemed sufficient to render the corporation
              liable to suit” on related claims). See also Brief for Petitioner
              24 (acknowledging that “an agency relationship may be
              sufficient in some circumstances to give rise to specific
              jurisdiction”). . . .

Daimler AG v. Bauman, 571 U.S. at 135 n.13.

              The agency theory of jurisdiction is simply stated: “For purposes of personal

jurisdiction, the actions of an agent may be attributed to the principal.” Daynard v. Ness,

Motley, 290 F.3d 42, 55-56 (1st Cir. 2002). Numerous federal courts have adopted this

theory. See, e.g., Sher v. Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990) (“For purposes of

personal jurisdiction, the actions of an agent are attributable to the principal.”); E.I. duPont

de Nemours & Co. v. Rhodia Fiber, 197 F.R.D. 112, 122 (D. Del. 2000) (“Delaware law

allows a court to find jurisdiction over a parent corporation for the acts of its subsidiary

through either an alter ego theory or the agency theory.”); Wessels, Arnold & Henderson

v. Nat’l Med. Waste, Inc., 65 F.3d 1427, 1433 (8th Cir. 1995) (attributing contacts where

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the principal “supported, accepted, and followed through on the efforts initiated” by the

agent, regardless of whether the agent had authority to act on the principal’s behalf;

“Although contacts for personal jurisdiction are different from a principal’s liability for an

agent’s unauthorized conduct, the same analysis is applicable.”); Grand Entm’t Grp., Ltd.

v. Star Media Sales, Inc., 988 F.2d 476, 483 (3d Cir. 1993) (“Activities of a party’s agent

may count toward the minimum contacts necessary to support jurisdiction.”).

              In the instant case, the Blues entered into an associational contract with

Highmark, such that Highmark acted as the agent for the Blues in West Virginia.

Highmark routinely processes claims from providers, reviews them, audits them, and pays

them on behalf of the Blues. When a provider like MedTest is accused of overbilling the

Blues, or of fraudulently billing the Blues, Highmark is responsible for pursuing those

billing claims. You might even say that Highmark was acting as a collection agent for the

Blues in West Virginia.    Because the Blues have directed Highmark to act as its agent in

West Virginia, and/or supported and accepted Highmark’s actions in West Virginia on

behalf of the Blues, the Blues may fairly be haled before a West Virginia court for those

acts. For purposes of personal jurisdiction, the actions of Highmark may be attributed to

the Blues, and a court may find that the Blues purposely availed themselves of the benefits

of West Virginia’s jurisdiction.

              The second concept that supports personal jurisdiction in West Virginia is

the “conspiracy theory of jurisdiction.” This concept is nowhere near as nefarious as it

sounds. Conspiracy-based jurisdiction is simply a variation on the agency theory.

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              [A]gency concepts have been used to enlarge long-arm
              jurisdiction. If a non-resident defendant has directed another
              person to act for his benefit and under his control in the forum
              state, the other party’s act may supply the minimum contact
              needed to support jurisdiction over the non-resident in an
              action arising out of the act. . . .

              As a matter of substantive law, a conspirator who performs an
              act in furtherance of the conspiracy does so as an agent for his
              co-conspirators.

              At a minimum, most courts require a plaintiff to allege facts
              which, if proven, show: 1) that a conspiracy existed; 2) that the
              defendant over whom jurisdiction is sought became a member
              of the conspiracy; and 3) that a co-conspirator committed an
              act—or a “substantial act”—in furtherance of the conspiracy in
              the forum state.

Ann Althouse, The Use of Conspiracy Theory to Establish in Personam Jurisdiction: A

Due Process Analysis, 52 Fordham L. Rev. 234, 234-35, 243 (1983). One federal court,

acknowledging the theory had been adopted in Delaware, described it thusly:

              The conspiracy theory subjects a conspirator who is absent
              from the forum to the jurisdiction of the court if five
              requirements are met. Specifically, the plaintiff must make a
              factual showing that:

              (1) a conspiracy to defraud existed; (2) the defendant was a
              member of that conspiracy; (3) a substantial act or substantial
              effect in furtherance of the conspiracy occurred in the forum
              state; (4) the defendant knew or had reason to know of the act
              in the forum state or that acts outside the forum state would
              have an effect in the forum state; and (5) the act in, or effect
              on, the forum state was a direct and foreseeable result of the
              conduct in furtherance of the conspiracy.

G & G LLC v. White, 535 F. Supp. 2d 452, 464 (D. Del. 2008). See also Charles Schwab

Corp. v. Bank of Am. Corp., 883 F.3d 68, 87 (2d Cir. 2018) (Under the “conspiracy theory

of jurisdiction: the plaintiff must allege that (1) a conspiracy existed; (2) the defendant

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participated in the conspiracy; and (3) a co-conspirator’s overt acts in furtherance of the

conspiracy had sufficient contacts with a state to subject that co-conspirator to jurisdiction

in that state. To allow jurisdiction absent a showing that a co-conspirator’s minimum

contacts were in furtherance of the conspiracy would be inconsistent with the ‘purposeful

availment’ requirement.”); In re Blue Cross Blue Shield Antitrust Litig., 225 F. Supp. 3d
1269, 1302 (N.D. Ala. 2016) (“Under a conspiracy theory, a defendant who otherwise may

not be subject to personal jurisdiction might be hailed into court if the plaintiff ‘plead[s]

with particularity the conspiracy as well at the overt acts within the forum taken in

furtherance of the conspiracy.’”); Unspam Techs., Inc. v. Chernuk, 716 F.3d 322, 329 (4th

Cir. 2013) (Under the “conspiracy theory of jurisdiction,” “the plaintiffs would have to

make a plausible claim (1) that a conspiracy existed; (2) that the four bank defendants

participated in the conspiracy; and (3) that a coconspirator’s activities in furtherance of the

conspiracy had sufficient contacts with Virginia to subject that conspirator to jurisdiction

in Virginia.”); Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020, 1031

(D.C. Cir. 1997) (When asserting conspiracy theory of jurisdiction, “the plaintiff must

plead with particularity ‘the conspiracy as well as the overt acts within the forum taken in

furtherance of the conspiracy.’”); Textor v. Bd. of Regents of N. Illinois Univ., 711 F.2d
1387, 1392 (7th Cir. 1983) (“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.”); Gemini Enterprises, Inc. v. WFMY

Television Corp., 470 F. Supp. 559, 564 (M.D.N.C. 1979) (“The conspiracy theory of

jurisdiction . . . seems to be based on the time honored notion that the acts of conspirator

                                              7
in furtherance of a conspiracy may be attributed to the other members of the conspiracy.”);

Raser Techs., Inc. v. Morgan Stanley & Co., LLC, 449 P.3d 150, 166 (Utah 2019) (“[A]

conspiracy theory of jurisdiction can satisfy due process concerns.”); Yoost v. Caspari, 813
N.W.2d 783, 792 (Mich. App. 2012) (“Under the ‘conspiracy theory’ of jurisdiction, a

conspirator not within the forum state may nevertheless be subject to the jurisdiction of the

forum state on the basis of the acts a coconspirator committed there. The rationale for this

rule is that when one member of a conspiracy inflicts an actionable wrong in one

jurisdiction, the other member should not be allowed to escape being sued there by hiding

in another jurisdiction.” (Cleaned up)); Gibbs v. PrimeLending, 381 S.W.3d 829, 834 (Ark.

2011) (“[W]e find nothing that prohibits the use of the conspiracy theory of jurisdiction.”);

Mackey v. Compass Mktg., Inc., 892 A.2d 479, 487 (Md. 2006) (“[T]he 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.”).

              Federal district courts in West Virginia, applying West Virginia’s long-arm

statute, have applied the theory to assess whether a claim of civil conspiracy in a complaint

adequately established the court’s personal jurisdiction over a corporate agent. See HSBC

Bank USA, Nat. Ass’n v. Resh, No. 3:12-CV-00668, 2015 WL 4772524, at *4 (S.D.W. Va.

Aug. 12, 2015) (“To prevail using this theory of jurisdiction, a plaintiff must [show] . . .

that (1) a conspiracy existed, (2) the out-of-state defendant participated in the conspiracy,

                                              8
and (3) a coconspirator’s activity in furtherance of the conspiracy created sufficient

minimum contacts with West Virginia such that the coconspirator is subject to personal

jurisdiction in West Virginia. . . . A plaintiff must . . . make a prima facie case

demonstrating that the out-of-state defendant participated in a conspiracy, and that at least

one coconspirator is subject to personal jurisdiction in the forum.”); Cline v. Hanby, No.

CIVA 2:05-0885, 2006 WL 3692647, at *7 (S.D.W. Va. Dec. 13, 2006) (“Under this theory

when individuals conspire to do something that they could reasonably expect to have

consequences in a particular forum, if one coconspirator who is subject to personal

jurisdiction in the forum commits overt acts in furtherance of the conspiracy, those acts are

attributable to the other co-conspirators, who thus become subject to personal jurisdiction

even if they have no other contacts with the forum.”); Southeastern Const., Inc. v.

Tanknology-NDE Int’l, Inc., No. CIV.A. 3:05-210, 2005 WL 3536239, at *9 (S.D.W. Va.

Dec. 22, 2005) (“The conspiracy theory of jurisdiction as developed in the cases, holds that

when several individuals (1) conspire to do something (2) that they could reasonably expect

to have consequences in a particular forum, if one co-conspirator (3) who is subject to

personal jurisdiction in the forum (4) commits overt acts in furtherance of the conspiracy,

those acts are attributable to the other co-conspirators, who thus become subject to personal

jurisdiction even if they have no other contacts with the forum.”).

              MedTest alleges Highmark and the Blues “conspired to misrepresent to

MedTest, other health care providers and their health insurance plan members that MedTest

was an in-network provider[.]” MedTest also alleges that Highmark and the Blues

                                             9
“combined, through concerted action, to accomplish an unlawful purpose by devising and

perpetrating a fraudulent scheme to induce MedTest to provide laboratory testing services

. . . without paying for them.” Finally, MedTest contends Highmark and the Blues

“colluded and combined their property, money, skill, and knowledge to carry out their

scheme, misleading MedTest into performing millions of dollars of laboratory testing

services for their members without compensation.”

              I believe these allegations were sufficient to allege a civil conspiracy claim

and to support personal jurisdiction, because they indicate the existence of a civil

conspiracy between the Blues and Highmark to inflict harm upon MedTest, harm that was

caused in West Virginia by acts carried out in West Virginia by Highmark. The Blues

should not be allowed to hide in other jurisdictions for harm they caused in West Virginia.

              Finally, I am dismayed by the majority opinion’s refusal to permit

jurisdictional discovery to occur. Our law plainly permits jurisdictional discovery if a court

has doubts about jurisdiction. See Bowers v. Worzberg, 202 W. Va. 43, 51, 501 S.E.2d
479, 487 (1998). The agency and conspiracy theories of jurisdiction are certainly fact-

intensive approaches to showing purposeful availment. Without conducting any analysis,

the majority opinion brusquely declares that jurisdiction over the Blues is inappropriate.

At a minimum, I would have permitted the parties to conduct discovery.

              I therefore respectfully dissent.

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