Co-authored by Elizabeth D. Langdale.
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).