ARGUING THAT THE UNITED STATES SUPREME COURT SHOULD GRANT CERTIORARI AND DECIDE THAT THE SECOND CIRCUIT’S TEST FOR “CIVIL CONSPIRACY JURSIDICTION” VIOLATES THE DUE PROCESS CLAUSE, BECAUSE IT SUBJECTS A NONRESIDENT DEFENDANT TO SPECIFIC PERSONAL JURISDICTION BASED ON SOMEONE ELSE’S FORUM CONTACTS, BUT WITHOUT EVEN REQUIRING THE PLAINTIFF TO SHOW THAT THE DEFENDANT PURPOSEFULLY AVAILED ITSELF OF THE FORUM THROUGH THAT THIRD PARTY, BY DIRECTING OR CONTROLLING THEIR FORUM CONDUCT.
BASF Metals Limited and ICBC Standard Bank PLC v. KPFF Investment, Inc., et al. (United States Supreme Court, on certiorari)
NELF has filed a brief in this case, arguing that the Court should grant certiorari and decide that the Second Circuit’s test for “civil conspiracy jurisdiction” violates due process. That test imposes specific (case-linked) personal jurisdiction on a nonresident defendant that has no or insufficient case-related contacts of its own in the forum, by automatically attributing to the defendant a co-conspirator’s forum acts undertaken to advance the conspiracy. The test offends due process because it takes the extraordinary step of imputing a third party’s forum contacts to the defendant, but without even requiring the plaintiff to show that the defendant purposefully availed itself of the forum through that third party, by directing or controlling its forum conduct. The test wrongfully imposes personal jurisdiction based solely on the parties’ alleged conspiratorial relationship.
The Second Circuit bases its test on the mistaken assumption that the expansive and plaintiff-centered standard of vicarious liability among co-conspirators can establish “vicarious” personal jurisdiction among them too. However, the Supreme Court recognized, in International Shoe Co. v. Washington, 326 U.S. 310 (1945), that due process draws a bright line between imputing liability and imputing jurisdictional contacts among associated parties. Accordingly, due process prohibits a court from attributing a third party’s forum contacts to a nonresident defendant, unless the defendant was “at least . . . a primary participant in the enterprise and has acted purposefully in directing those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. at 479 n.22 (cleaned up) (emphasis added). See also Daimler AG v. Bauman, 571 U.S. 117, 135 n.13 (2014) (“Agency relationships . . . may be relevant to the existence of specific jurisdiction. . . . [A] corporation can purposefully avail itself of a forum by directing its agents or distributors to take action there.”) (emphasis added and supplied by Court).
This case arrives in an unusual posture because the Second Circuit has all but asked the Supreme Court to take the case and strike down its test under the Due Process Clause. In the opinion below, the court has discussed at length its test’s constitutional failings. However, the court has stated that its hands are tied by its own entrenched precedent, unless the Supreme Court decides otherwise.
In particular, the Second Circuit has essentially conceded that its test abandons the core purposeful availment requirement, because the test is not limited by traditional agency principles. Therefore, the test does not require the foreign defendant to direct, control, or even supervise an alleged co-conspirator’s forum conduct.
The court has also discussed, in detail, prominent scholarly criticism of “conspiracy jurisdiction” for its misapplication of the plaintiff-centered standard of vicarious liability to the defendant-centered standard for establishing personal jurisdiction under the Due Process Clause. In so doing, the court appears to have endorsed this body of legal criticism.
After all, the purpose of civil conspiracy law is to protect the plaintiff’s interests, by attributing freely the acts of one co-conspiring “agent” to another, to increase the number of implicated parties and the recoverable damages for the plaintiff. This expansive standard of vicarious conspiratorial liability en masse is diametrically opposed to the individualized due process inquiry, which carefully determines whether each foreign defendant has purposefully established minimum contacts with the forum.
The Second Circuit’s detailed coverage of the legal criticism also indicates an awareness that its test fails the due process requirement that the foreign defendant must purposefully establish its own contacts with the forum to be amenable to suit there. Ordinarily, this requirement is satisfied only if the defendant has created those forum contacts by itself, and not by its association with a third party that happens to have forum contacts of its own. This direct purposeful availment requirement protects the defendant’s liberty interest in not being subject to the binding judgments of a forum with which the defendant has not created a meaningful relationship of its own.
The Court has recognized a limited exception when the nonresident defendant has purposefully reached out to the forum through a third party, by directing or controlling that third party’s forum activities. However, the Second Circuit has essentially conceded that its test far exceeds this narrow exception because it does not require the defendant to direct, control, or even supervise the alleged co-conspirator’s forum conduct. Absent proof that the defendant purposefully availed itself of the forum through the alleged co-conspirator, due process should require that third party’s jurisdictional contacts to remain its own.
The Second Circuit’s test is not only unconstitutional. It is also entirely unnecessary. The International Shoe purposeful availment test is perfectly capable of determining whether or not personal jurisdiction can lie against a nonresident defendant based on its relationship with a third party. That test remains essentially the same in each case, regardless of the circumstances in which it is applied. As applied here, the nonresident defendant must purposefully avail itself of the forum through a third party, by directing or controlling their forum activities.
Nor would it make sense to “cure” the Second Circuit’s test by adding a purposeful availment requirement. That would merely transform a deficient theory into an application of the unitary International Shoe test to the issue of attributing a third party’s forum contacts to the foreign defendant. A separate category of “civil conspiracy jurisdiction” is therefore both unnecessary and confusing. Its recognition would only distract courts from enforcing the essential purposeful availment requirement under the Due Process Clause.