Vice Chancellor Parsons released his opinion in Microsoft Corp. v. Patent Revenue Partners, et al, on October 15th, and the topic of personal jurisdiction was once again front and center.
The Vice Chancellor writes:
To show a basis for personal jurisdiction over a nonresident defendant in Delaware, the plaintiff must demonstrate: (1) a statutory basis for service of process; and (2) the requisite ‘minimum contacts’ with the forum to satisfy constitutional due process. Microsoft avers that this Court may exercise personal jurisdiction over [Defendant] under subsection (c)(1) of Delaware’s Long Arm Statute, which provides: As to a cause of action brought by any person arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident, or a personal representative, who in person or through an agent: (1) [t]ransacts any business or performs any character of work or service in the State. Forming a Delaware entity as part of a wrongful scheme constitutes a ‘transaction of business’ within the meaning of Section 3104(c)(1). Further, ‘a party that forms a Delaware entity as part of a wrongful scheme has constitutionally sufficient ‘minimum contacts’ with Delaware for the purposes of personal jurisdiction.’ Perhaps the most critical question here is whether [Defendant] caused [Delaware Entity] to be formed as a Delaware corporation to further his allegedly wrongful scheme, and thereby transacted business in this state. This Court has stated that to satisfy the transacting business requirement for personal jurisdiction, a defendant’s participation in the ‘formation’ of a Delaware entity must constitute something beyond ‘just creating [the entity] in Delaware.’ Moreover, ‘a corporate director or officer of a foreign corporation cannot be haled into a Delaware court for an act of the corporation simply because the officer or director has directed the corporation to take that act.’ In this case, Microsoft needs to establish that [Defendant] had a ‘particularly meaningful role in bringing about [Delaware Entity’s] formation’.
The Vice Chancellor then thoughtfully explained his fact intensive review in coming to the conclusion that the Defendant did not form his Delaware entity as part of a wrongful scheme. Read the full opinion here.