Delaware's Long-Arm Statute and the Conspiracy Theory of Personal Jurisdiction
In a previous article, I discussed Delaware’s long-arm statute which allows the Court, under certain circumstances, to take jurisdiction over a person or a company that is not a resident of Delaware. In that article, I showed how the non-resident defendant would have to be engaged in conduct that falls within at least one of the activities described in the statute, and the plaintiff’s cause of action has to arise from defendant’s acts. In this article, let’s examine a case where the plaintiff cannot prove that the non-resident defendant performed acts which would make him subject to personal jurisdiction in Delaware, but the plaintiff argues that under a conspiracy theory, the Court can still exercise jurisdiction over the defendant.
Here’s how the conspiracy theory works. The plaintiff tries to show that there was a conspiracy, and that one of the conspirators transacted business in Delaware. The theory is that the transaction of business in Delaware by the conspirator is attributable to the non-resident defendant. The Court considers a co-conspirator to be an agent of the non-resident conspirator.
The Delaware Supreme Court has established a 5-part test for applying the conspiracy theory of personal jurisdiction over non-residents. The Court said:
“We therefore hold that a conspirator who is absent from the forum state is subject to the jurisdiction of the court, assuming he is properly served under state law, if the plaintiff can 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 action, or effect on, the forum state was a direct and foreseeable result of the conduct in furtherance of the conspiracy.”
All 5 elements of the test must be met. If, for example, there was no conduct in Delaware in furtherance of a conspiracy, the long-arm statute will not give the Court personal jurisdiction over the non-resident defendant.
