Stover v. O'Connell Associates, Inc.

• Decision Date: 14 May 1996
• Docket Number: No. 94-1309,94-1309
• Citation: 84 F.3d 132
• Parties: Richard D. STOVER, Plaintiff-Appellant, v. O'CONNELL ASSOCIATES, INCORPORATED, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 132

84 F.3d 132

Richard D. STOVER, Plaintiff-Appellant, v. O'CONNELL ASSOCIATES, INCORPORATED, Defendant-Appellee.

No. 94-1309.

United States Court of Appeals Fourth Circuit.

Argued Jan. 29, 1996.

Decided May 14, 1996.

ARGUED: William Thomas Fitzhugh, Beddow, Marley, Burgess & Associates, Chesterfield, Virginia, for Appellant. Andrew Jay Graham, Kramon & Graham, P.A., Baltimore, Maryland, for Appellee. ON BRIEF: Kevin F. Arthur, Kramon & Graham, P.A., Baltimore, Maryland, for Appellee.

Before HALL, NIEMEYER, and LUTTIG, Circuit Judges.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Judge HALL and Judge LUTTIG joined.

OPINION

NIEMEYER, Circuit Judge:

In this case, we revisit the statutory and constitutional limits of Maryland's long-arm statute, Md.Code Ann., Cts. & Jud.Proc. § 6-103. Assuming that the statute extends jurisdiction to the limits of due process, we hold that Maryland courts may, nonetheless, not exercise personal jurisdiction over a New York private investigation firm whose only connection with Maryland was its occasional retention by telephone of Maryland investigation companies to provide it with information about Maryland subjects, including the plaintiff in this case. Accordingly, we affirm the judgment of the district court dismissing the case for lack of personal jurisdiction over the defendant.

I

When Richard D. Stover, a Maryland resident, obtained a copy of his consumer credit file in September 1992, he discovered that O'Connell Associates, Inc., a New York private investigation company, had requested and obtained information about him from Equifax Corporation. While Stover suspects that O'Connell Associates requested the information because of his work with Ross Perot's presidential campaign, he acknowledges that he has never been informed of O'Connell's reason for requesting the information and makes no allegations concerning O'Connell's purpose for requesting the information or the persons to whom the information was submitted. He claims, however, that because consumer reports may be furnished only for limited purposes, O'Connell violated the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., its Maryland analog, Md.Code Ann., Com.Law II § 14-1201 et seq., and his common law right to privacy. He alleges that O'Connell's conduct caused him injury in Maryland, for which he demands $50,000 in compensatory damages and $100,000 in punitive damages.

O'Connell filed a motion under Federal Rule of Civil Procedure 12(b)(2) to dismiss the complaint, contending that it was not subject to personal jurisdiction in Maryland. While representing that it had never had property or agents in Maryland, O'Connell acknowledged that it had occasionally used Maryland investigation firms to obtain information about Maryland subjects.

In connection with its investigation of Stover, O'Connell states that, through use of a computer terminal in its New York office, it obtained Stover's name, address, birthdate, social security number, and place of employment from Equifax. O'Connell also acknowledges that it telephoned Montgomery Investigative Services, Ltd., a licensed private investigation firm in Rockville, Maryland, and retained that firm to conduct a "criminal check" on Stover and determine whether Stover had "any ties to KKK or any known white supremist [sic] group." O'Connell maintains that from Montgomery Investigative Services it received information only from public court records. It asserts that it provided the information procured from Equifax and Montgomery Investigative Services to its client in California.

On O'Connell's motion to dismiss, the district court concluded that O'Connell's "intermittent historical contacts" with Maryland were not sufficiently "extensive, continuous and systematic" to sustain general jurisdiction over O'Connell. The court also concluded that it did not have specific jurisdiction over O'Connell because Stover's claims did not arise out of any conduct by O'Connell in Maryland; all of O'Connell's conduct had occurred in New York. Accordingly, the district court granted O'Connell's motion to dismiss the complaint for lack of personal jurisdiction.

From the district court's dismissal order, this appeal was taken.

II

In analyzing a challenge to a court's exercise of personal jurisdiction, we first consider whether the state's long-arm statute authorizes the exercise of jurisdiction over the defendant, and if we conclude that it does, we then determine whether the exercise of jurisdiction comports with the Fourteenth Amendment due process requirements. See Ellicott Mach. Corp. v. John Holland Party, Ltd., 995 F.2d 474, 477 (4th Cir.1993); First American First, Inc. v. National Ass'n of Bank Women, 802 F.2d 1511, 1513-14 (4th Cir.1986).

Stover contends that O'Connell's conduct in obtaining "a copy of Stover's consumer credit report" from Equifax and in retaining Montgomery Investigative Services to determine whether Stover had "any ties to [the] KKK" or similar groups violated federal and state consumer protection laws and his common law right to privacy. Stover maintains that because O'Connell invaded his privacy in Maryland, causing tortious injury in the state by acts in the state, the requirements of Md.Code Ann., Cts. & Jud.Proc. § 6-103(b)(3) are satisfied. Focusing on "O'Connell's other investigations of Maryland residents," however, Stover rests his principal jurisdictional claim on § 6-103(b)(4), which subjects a defendant to jurisdiction for conduct outside the state if the defendant has engaged in a "persistent course of conduct" in Maryland. On the federal due process issue, Stover argues that O'Connell "purposefully directed its tortious activity" at him, thereby causing him injury within Maryland. He maintains that tortious activity conducted outside a state that causes injury within the state "is a sufficient contact to comport with federal due process" under Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984).

Section 6-103(b)(3) of Maryland's long-arm statute provides that a Maryland court may exercise jurisdiction over a person outside the state who "[c]auses tortious injury in the State by an act or omission in the State." (Emphasis added). While Stover may be able to establish that O'Connell caused injury in Maryland, he cannot sustain his claim that O'Connell's injury-causing acts occurred in the state. The evidence demonstrates that O'Connell's conduct occurred entirely in New York State where O'Connell used a computer terminal to obtain information from Equifax and telephoned a licensed Maryland private investigation company to retain the firm to conduct a "criminal check." Although Montgomery Investigative Services did operate in Maryland, Stover cannot impute any of that firm's activities to O'Connell on an agency theory because there is no evidence that O'Connell controlled those activities. See Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 61 (4th Cir.1993). O'Connell simply asked Montgomery Investigative Services to provide certain information. The Maryland firm selected the means and method of the investigation and used its own employees to fulfill O'Connell's request.

The statutory provision upon which Stover must rely, therefore, is § 6-103(b)(4), which authorizes a Maryland court to exercise personal jurisdiction over any person who "[c]auses tortious injury in the State or outside of the State by an act or omission outside the State if he regularly ... engages in any other persistent course of conduct in the State." Stover argues that even though O'Connell is not present in Maryland, its admitted prior investigatory efforts in Maryland constitute a "persistent course of conduct in the State."

In defining the reach of Maryland's long-arm statute, Maryland courts have concluded that the state legislature intended to expand Maryland's exercise of personal jurisdiction to the limits allowed by the Due Process Clause of the Fourteenth Amendment. See Camelback Ski Corp. v. Behning, 307 Md. 270, 513 A.2d 874, 876 (1986), vacated and remanded on other grounds, 480 U.S. 901, 107 S.Ct. 1341, 94 L.Ed.2d 512 (1987). ^* Because the limits of Maryland's statutory authorization for the exercise of personal jurisdiction are coterminous with the limits of the Due Process Clause, the statutory inquiry necessarily merges with the constitutional inquiry, and the two inquiries essentially become one. See Ellicott Mach. Corp., 995 F.2d at 477; see also Mohamed v. Michael, 279 Md. 653, 370 A.2d 551, 553 (1977). Accordingly, we direct our inquiry to whether O'Connell's activities in Maryland constituted sufficient minimum contacts with Maryland such that maintenance of suit against O'Connell in Maryland comports with the demands of due process.

III

A state's sovereign authority over persons, property, and activities extends only to its territorial limits, and its laws have no operation in other states except as allowed by those states or by comity. See Pennoyer v. Neff, 95 U.S. 714, 720-22, 24 L.Ed. 565 (1877); Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 941 (4th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1103, 130 L.Ed.2d 1070 (1995). And a state's assertion of power beyond its borders violates the Due Process Clause of the Fourteenth Amendment. Pennoyer, 95 U.S. at 733.

Because the requirement that a person be physically present in a state before he may be subjected to that state's exercise of judicial power was too restrictive to serve the increasing demands of interstate commerce and the multi-state activities of corporations, the Supreme Court has established that a person is thought to be "present" in a state, not only when he is...