Conspiracy Contacts: The Supreme Court’s Next Frontier in Personal Jurisdiction?

The Supreme Court has shown great interest in personal jurisdiction issues of late. Last term, in Mallory, the Court upheld a state corporate registration law that requires companies to consent to personal jurisdiction as a condition to conducting business in the state.[1] In 2021, in Ford, the Court held that it is not a violation of due process for a state to assert personal jurisdiction over a defendant even though the defendant’s contacts with the state are not the cause of the plaintiff’s injuries.[2]

This term, defendants in a Second Circuit case are asking the High Court to take on another personal jurisdiction issue that has long divided lower courts. In BASF Metals Limited and ICBC Standard Bank PLC v. KPFF Investment, Inc., et. al., the Court is being asked to tackle so-called “conspiracy personal jurisdiction.”

In BASF, precious metal investors have asserted a class action in New York against defendant companies engaged in precious metal trading. The investors allege that the companies conspired to artificially push the price of those metals below market value. Some of the defendant companies are overseas, with little to no contact with New York.[3] Nevertheless, a federal court in New York exercised personal jurisdiction over two of the companies under a conspiracy theory of personal jurisdiction, and the Second Circuit affirmed.[4] The Second Circuit reasoned that conspiracy personal jurisdiction is proper where (1) plaintiffs have alleged a conspiracy; (2) the defendant contesting personal jurisdiction is part of the alleged conspiracy; and (3) at least one of the co-conspirators have sufficient contacts with the forum state.[5]

Court watchers are waiting to see if the Supreme Court takes the case. If the Court’s recent interest in personal jurisdiction issues is any indication, there is a good chance it may.

The question of “conspiracy personal jurisdiction” circles back to a first principle of personal jurisdiction: contacts. Constitutional due process requires that in order for a defendant to be subject to personal jurisdiction in a particular forum, the plaintiff must demonstrate that the defendant had at least “minimum contacts” with a forum state, such that the “maintenance of suit” is “reasonable” (i.e., comports with traditional notions of fair play and substantial justice).[6] Put another way, the validity of personal jurisdiction depends on the “nature and extent of ‘the defendant’s relationship to the forum [s]tate.’”[7]

Every first-year law student learns the two forms of personal jurisdiction: general jurisdiction and specific jurisdiction.[8] A court has “general jurisdiction” when a defendant’s contacts with the forum are so extensive that the defendant is essentially “at home” there (for example, where it maintains its principal place of business).[9] A court may exercise general jurisdiction regardless of whether the plaintiffs’ claims arise from defendant’s contacts with the forum.[10] This is different from “specific jurisdiction,” which may exist even where a defendant is far from “at home”—but only if the forum state authorizes jurisdiction, the defendant has at least “minimum contacts” with the forum state,[11] and those contacts directly relate to plaintiff’s claims.[12] Whether the forum state authorizes jurisdiction is a question of state law; whether the defendant has sufficient contacts that relate to the cause of action are questions that emanate from the U.S. Supreme Court’s interpretation of what federal “due process” requires.

The theory of “conspiracy personal jurisdiction” grows out of the law of specific jurisdiction. The theory posits that “‘one conspirator’s minimum contacts allow for personal jurisdiction over a co-conspirator,’ even when the co-conspirator lacks such contacts itself.”[13] The theory grounds itself in the premise that one co-conspirator’s contacts with a forum may be “imputed” to another co-conspirator who has no direct contacts with a forum because both participate in the same conspiracy underpinning plaintiff’s lawsuit.[14]

One of the first cases to apply conspiracy personal jurisdiction arose in California.[15] There, a plaintiff who ran a firework business brought a conspiratorial price-fixing claim against defendant entities in California and other states.[16] A Delaware-based entity disputed service under California law because the complaint only alleged business transacted by the alleged co-conspirators while the Delaware entity had done “nothing in California.”[17] The district court sided with the Delaware entity.[18] But on appeal, the Ninth Circuit reversed, holding that the “continued acts of the conspirators in California” was sufficient to establish personal jurisdiction over the Delaware entity, notwithstanding the Delaware entity’s lack of direct contacts with the state.[19] The court explained that the actions of co-conspirators were analogous to the actions of employed agents and could be imputed to the out-of-state entity.[20]

Courts including the Second, Fourth, Tenth, Eleventh, and D.C. Circuits have also embraced the theory of conspiracy jurisdiction. These courts reason that, similar to substantive conspiracy law, where the acts of one conspirator are attributable to all, forum contacts may be imputed across co-conspirators where a bona fide conspiracy is alleged.[21] But other courts, like the Seventh and Fifth Circuits, appear to disagree. To those courts, constitutional due process governs personal jurisdiction, and it demands that “minimum contacts” be established for each individual defendant.[22] “Imputation” by way of consipracy is not allowed.

Petitioners in BASF are asking the Supreme Court to review the theory of conspiracy personal jurisdiction and reject it. The split among the federal circuit courts on the issue, and the Court’s recent appetite for personal jurisdiction cases, elevate the profile of BASF and make it one to watch. The Court is expected to consider the petition at conference in early to mid-January. Crowell & Moring will continue monitor this case, and (if the High Court does not take it up) the trends toward application or rejection of the conspiracy jurisdiction doctrine across the courts.