Delaware Court Of Chancery Finds Personal Jurisdiction Over Foreign Entities Under “Conspiracy Theory”

In an opinion dated October 9, 2015, Chancellor Bouchard held that the Court of Chancery had personal jurisdiction over three foreign co-defendants under the “Conspiracy Theory” of personal jurisdiction.

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Chancellor Bouchard wrote:

The conspiracy theory of jurisdiction ‘is based on the legal principle that one conspirator’s acts are attributable to the other conspirators.’ Thus, ‘if the purposeful act or acts of one conspirator are of a nature and quality that would subject the actor to the jurisdiction of the court, all of the conspirators are subject to the jurisdiction of the court.’  The conspiracy theory is not an independent basis for jurisdiction, but rather an alternative way to satisfy the requirements of the long-arm statute, 10 Del. C. § 3104.

In reaching his opinion, the Chancellor examined the following five elements of the Instituto Bancario test:

(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 act in, or effect on, the forum state was a direct and foreseeable result of the conduct in furtherance of the conspiracy.

Upon application of the elements to the facts in this matter, the Chancellor concluded that the [Third-Party] Plaintiff made a prima facie showing that all elements of the Instituto Bancario test were met.

Read the opinion here.

Chris Lee

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