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April 19, 2014

Court Finds Personal Jurisdiction over Foreign Business Under a Conspiracy Theory

The Delaware Supreme Court recently held that a foreign business entity was subject to personal jurisdiction in the state of Delaware under a conspiracy theory. The foreign defendant allegedly conspired with other defendants to divest the plaintiff of his interest in a joint venture, which plan was accomplished, in part, by causing the dissolution of a Delaware limited liability company (LLC) co-founded by the plaintiff. The Delaware Supreme Court held that in order to establish personal jurisdiction over a foreign entity under a civil conspiracy theory, facts must be alleged from which the court can infer that the foreign defendant knew or should have known that the conspiracy would have a Delaware nexus. The lower court found this requirement lacking, and held that the foreign defendant did not know about the Delaware connection until after the Delaware LLC had been dissolved. The Delaware Supreme Court disagreed with the trial court’s analysis as to both the foreign defendant’s knowledge and the overall scope of the conspiracy, reasoning that even if there was no direct evidence that the foreign defendant knew about the dissolution before it occurred, the facts established that the defendant should have known it was dealing with a Delaware company. Further, the Delaware Supreme Court found that the conspiracy did not begin or end with the dissolution of the Delaware company and that the foreign defendant knew that its business partner had been a Delaware entity shortly after the dissolution, while the conspiracy was still ongoing. On these bases, the Delaware Supreme Court reversed the lower court’s dismissal of the action for lack of personal jurisdiction.

Matthew v. Flakt Woods Group SA, C.A. No. 5957-VCN (Del. Supr. Nov. 20, 2012).

©2014 Katten Muchin Rosenman LLP

About the Author

Michael S. Gordon, Katten Muchin Law Firm, Litigation Attorney
Partner

Michael S. Gordon has a broad range of commercial litigation experience, and regularly represents clients in state and federal courts, as well as in arbitration and mediation proceedings, in New York, New Jersey and throughout the United States. Mr. Gordon has substantial experience in real estate and secured lending litigation, representing developers, management and hospitality companies, banks and private equity funds. Mr. Gordon also has extensive experience handling all types of business disputes including breach of contract, business torts, partnership and corporate shareholder...

212-940-6666

About the Author

Elizabeth D. Langdale, Litigation Attorney, Katten Muchin Law Firm
Associate

Elizabeth D. Langdale concentrates her practice in litigation and dispute resolution matters.

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