Cawley v. Bloch, Civ. No. Y-81-2523.

CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)
Writing for the CourtJOSEPH H. YOUNG
Citation544 F. Supp. 133
PartiesLinda C. CAWLEY, et al. v. Henry W. BLOCH, et al.
Docket NumberCiv. No. Y-81-2523.
Decision Date29 July 1982

544 F. Supp. 133

Linda C. CAWLEY, et al.
Henry W. BLOCH, et al.

Civ. No. Y-81-2523.

United States District Court, D. Maryland.

July 29, 1982.

Arnold M. Weiner and Richard V. Falcon, Baltimore, Md., for plaintiffs.

Paul V. Niemeyer and David H. Bamberger, Baltimore, Md., for defendants.


JOSEPH H. YOUNG, District Judge.

Plaintiffs, Linda C. Cawley and William R. Schmidt, III, are citizens and residents of Maryland. They formed and operated one of the first legal clinics in the United States in 1976 and currently operate six clinics. Defendant H & R Block, Inc. ("H & R Block") is a Missouri corporation with its principal place of business in Missouri, and is qualified to do business in Maryland. Block Management Company ("Block Management") is a subsidiary of H & R Block, Inc., and was incorporated in Missouri and has its principal place of business there. Henry W. Bloch ("Bloch") is a citizen and resident of Missouri and is president and chief executive officer of H & R Block. I. J. Mnookin ("Mnookin") is a citizen and resident of Missouri and is assistant to the president of H & R Block.

Plaintiffs allege that H & R Block, through an agent, contacted plaintiffs to discuss the possibility of having plaintiffs operate legal clinics for H & R Block. Plaintiffs allege they were twice invited to

544 F. Supp. 134
H & R Block's headquarters to discuss the plan that they provided defendants with detailed information concerning plaintiffs' clinics, after Bloch represented that, if H & R Block decided to establish legal clinics, it would do so only with plaintiffs. Plaintiffs also allege that they opened their books in Maryland for inspection by a consultant of H & R Block, H & R Block's general counsel and Mnookin. The complaint alleges that H & R Block subsequently entered into an agreement with Hyatt Legal Services under which H & R Block manages legal clinics using plaintiffs' administrative scheme

Plaintiffs sue in contract and quantum meruit and for fraudulent and negligent misrepresentation and concealment, seeking $3.2 million in compensatory damages and $9.6 million in punitive damages. Defendants Mnookin and Bloch have moved to dismiss for lack of personal jurisdiction and defendant Block Management has moved to dismiss for failure to state a claim.


Plaintiffs' attempt to base personal jurisdiction over Bloch and Mnookin upon the conspiracy theory of jurisdiction. That doctrine is based on two principles: (1) that the acts of one co-conspirator are attributable to all co-conspirators, McLaughlin v. Copeland, 435 F.Supp. 513, 530 (D.Md.1977) ("McLaughlin"); and (2) that the constitutional requirement of minimum contacts between non-resident defendants and the forum can be met if there is a substantial connection between the forum and a conspiracy entered into by such defendants. Vermont Castings, Inc. v. Evans Products Co., 510 F.Supp. 940, 944 (D.Vt.1981). The conspiracy theory of jurisdiction as developed in the cases, holds that when several individuals (1) conspire to do something (2) that they could reasonably expect to have consequences in a particular forum, if one co-conspirator (3) who is subject to personal jurisdiction in the forum (4) commits overt acts in furtherance of the conspiracy,1 those acts are attributable to the other co-conspirators, who thus become subject to personal jurisdiction even if they have no other contacts with the forum. See Vermont Castings, supra, 510 F.Supp. at 944; National Egg Co. v. Bank Leumi le-Israel B. M., 504 F.Supp. 305, 313 (D.Ga.1980); Gemini Enterprises, Inc. v. WFMY Television Corp., 470 F.Supp. 559, 564 (D.N.C.1979); McLaughlin at 529-30; Leasco Data Processing Equipment Corp. v. Maxwell, 319 F.Supp. 1256, 1261-62 (S.D.N.Y.1970), aff'd, 468 F.2d 1326, 1343 (2d Cir. 1972).

There is some ambiguity surrounding the interaction between the third and fourth elements. Where, as here, the co-conspirator who commits the overt acts is not a resident of the forum, the overt acts must be sufficient to establish jurisdiction over that co-conspirator under the state's long-arm statute. See, e.g., National Egg, supra, 504 F.Supp. at 313-14; McLaughlin, supra, 435 F.Supp. at 529-30. The reasoning behind this position is that only if the overt acts are sufficient to establish long-arm jurisdiction over the conspirator who committed the acts would it be fair to subject to personal jurisdiction the other co-conspirators who are merely "deemed" to have committed the overt acts.

However, in several cases in which the conspirator who committed the overt acts was a resident of the forum, courts have required only that "substantial acts" in furtherance of the conspiracy be committed in the forum.2 See Vermont Castings, supra,

544 F. Supp. 135
510 F.Supp. at 944; Gemini Enterprises, supra, 470 F.Supp. at 564. While these courts did not address the point explicitly, the only reasonable interpretation of this standard is that the acts committed in furtherance of the conspiracy must be of a type that, if committed by the non-resident co-conspirators themselves, they would have provided a basis for subjecting the non-residents to personal jurisdiction under the forum's long-arm statute. If the overt acts do not meet this standard, it would be patently unfair to subject those non-residents to personal jurisdiction via the conspiracy theory, under which the non-residents' contacts with the forum are less direct

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    • United States District Courts. 4th Circuit. United States District Court (Maryland)
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    ...This statement has been relied on by the federal courts in Maryland as Maryland's construction of its long arm statute. Cawley v. Bloch, 544 F.Supp. 133 (D.Md.1982). Under a statute whose reach does not extend to the limits of Due Process, as in Montreal Trust, the fiduciary shield doctrine......
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    ...over an individual who acted solely as a representative of a corporation, rather than on his or her own behalf. See Cawley v. Bloch, 544 F.Supp. 133, 135 (D.Md.1982). Courts discussing the doctrine have sometimes identified two exceptions: (1) when the individual is the alter ego of the cor......
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    ...that Plaintiffs failed to allege an underlying tort in association with "conspiracy." 6. Defendants also cite to Cawley v. Bloch, 544 F.Supp. 133, 135 (D.Md.1982), for the concept that corporate officers have a "fiduciary shield" with respect to jurisdiction when undertaking acts on behalf ......
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