10/18/16

It is probably impossible to square all of the judicial opinions on personal jurisdiction. Certainly, personal jurisdiction questions are highly fact dependent, but sometimes it seems that courts apply different standards or, at the very least, give different weight to different factors depending on the circumstances. Maybe it is just me, but I feel that an increasing number of motions recently have been attempting to apply a general jurisdiction analysis to what is unquestionably a specific jurisdiction case. These motions typically have a laundry list of contacts that do not exist (e.g., no office, address, employees, etc.), without acknowledging the intentional conduct directed at the forum state. While the broader array of factors certainly applies in a general jurisdiction analysis, and should not be completely dismissed in the specific jurisdiction analysis, the two approaches are vastly different as to what contacts are necessary to support jurisdiction.

Ordinarily, I would not write about a personal jurisdiction case, but I found the court’s analysis in Cook v. McQuate, No. Civ. A. 7:15-CV-00456, 2016 WL 579399 (E.D. Va. Sept. 30, 2016) (district court opinion) and Cook v. McQuate, No. Civ. A. 7:15-CV-00456 (E.D. Va. Aug. 18, 2016) (magistrate judge opinion) surprisingly refreshing. The underlying case involved a typical business tort suit with claims for fraud, conspiracy, conversion, breach of fiduciary duty and a violation of RICO. Specifically, the plaintiff alleged that the defendants conspired to deceive the plaintiff into making a $25,000 investment into an Ohio-based company. The individual defendants began the alleged conspiracy by contacting the plaintiff in Virginia, and sending her a prospectus and other written correspondence and emails to her in Virginia. In addition, there were a number of calls in which the defendants encouraged the plaintiff to make the investment. The complaint alleged that she wired the money to the Ohio company from an account in Virginia, but when she later checked with the company in which she invested, they had no record of her sending the money.

The defendants moved to dismiss for lack of personal jurisdiction and to dismiss the RICO claim under Rule 12(b)(6). The motion was referred to the magistrate judge who rejected the general jurisdiction-like analysis offered by the defendants, and instead focused on the intentional conduct of the defendants directed at Virginia. Noting that it was before the court on a motion to dismiss, the court accepted the allegations in the complaint as true and construed all inferences in the plaintiff's favor. Analyzing cases from the United States Supreme Court and the Fourth Circuit, the magistrate judge found that, in cases alleging an intentional tort, it was sufficient that the defendants purposefully directed contacts into Virginia with the purpose of committing the torts and causing harm in Virginia. The court found it sufficient that the defendants had initiated the contact, corresponding with the plaintiff in Virginia on a number of occasions, and accepted a wire transfer from Virginia, even though the defendants were never themselves present in Virginia. Applying the “effects test,” the court found sufficient minimum contacts for specific jurisdiction. The magistrate also recommended dismissing the RICO claim based on the failure to allege sufficient facts to establish the conduct and pattern elements of the claim.

The defendants objected to the magistrate’s recommendation, and the issue was sent back to the district court. The district court, however, agreed with the magistrate judge and adopted the report in its entirety.

Practitioners looking for decisions finding personal jurisdictional on limited contacts will find these opinions useful. Whether the analysis will apply in all cases, however, is unknown. The magistrate judge emphasized that the case involved intentional torts directed at Virginia. The magistrate judge did not indicate how the analysis would work with a contract claim, although logically it would seem that the same rules should apply, at least in some cases. Where a claim arises out of the contacts with the forum state and those contacts are intentional and more than de minimis, it should pass constitutional muster.

 

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