Mackey v. Compass

• Citation: 391 Md. 117,892 A.2d 479
• Decision Date: 09 February 2006
• Docket Number: Misc. No. 4, September Term, 2005.
• Parties: James J. MACKEY, et al. v. COMPASS MARKETING, INC.
• Court: Court of Special Appeals of Maryland

Page 479

892 A.2d 479

391 Md. 117

James J. MACKEY, et al. v. COMPASS MARKETING, INC.

Misc. No. 4, September Term, 2005.

Court of Appeals of Maryland.

February 9, 2006.

COPYRIGHT MATERIAL OMITTED

Anthony Herman (Robert J. Lundman, Covington & Burling, Washington, DC), Lawrence S. Robbins (Alison C. Barnes, Max Huffman, Robbins, Russell, Englert, Orseck & Untereiner, LLP, Washington, DC, Herbert Better, Sean Vitrano, Zuckerman Spaeder, LLP, Baltimore, on brief), for appellants.

Jeffrey Jacobovitz (Schiff Hardin, Washington, DC), Ellen S. Cooper, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on brief as amicus), for appellee.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

RAKER, J.

In this Certified Question case, pursuant to the Maryland Uniform Certification of Questions of Law Act, Maryland Code (1974, 2002 Repl.Vol., 2004 Cum.Supp.), §§ 12-601 through 12-613 of the Courts and Judicial Proceedings Article, and Maryland Rule 8-305, the United States District Court for the District of Maryland has certified the following questions of Maryland law:

"(1) Whether Maryland recognizes the conspiracy theory of jurisdiction as a matter of state law?"

"(2) If Maryland recognizes the conspiracy theory of jurisdiction, what elements must a plaintiff allege for a court to have jurisdiction over the out-of-state defendant under that theory?"

Our answer to the first question shall be YES, and we shall answer the second question by adopting the standard articulated in Cawley v. Bloch, 544 F.Supp. 133 (D.Md.1982).

I.

We recite the facts as set out in the certification order.

"This action arises from an alleged conspiracy between Defendants to cut Plaintiff Compass Marketing Inc.'s brokerage commissions and otherwise interfere with Compass' business. Compass filed a complaint against defendants Schering-Plough Corp., Schering-Plough Health Care Products, Inc., Schering-Plough Health Care Products Sales Corp. (sometimes referred collectively as Schering-Plough), Wyeth (Wyeth was previously known [as] the Whitehall-Robins Healthcare Division of American Home Products Corporation, but is referred to herein as Wyeth), James J. Mackey, and Samuel Severino.

"Plaintiff's complaint was filed in May 2004 in the U.S. District Court for the District of Maryland. Schering-Plough and Wyeth answered denying liability. Defendants Severino and Mackey each moved to dismiss the Complaint against them claiming, among other grounds, lack of jurisdiction over them personally under the Maryland long arm statute. On March 25, 2005, this Court granted the motion in part, with leave for Plaintiff to file an amended complaint, but denied the motion without prejudice on the issue of personal jurisdiction, deciding to certify the issue of whether Maryland recognizes the conspiracy theory of jurisdiction as a matter of state law to the Maryland Court of Appeals.

"The allegations stated below are taken from plaintiff's First Amended Complaint. At this preliminary stage, this Court has not made any findings of fact regarding the alleged conspiracy or any other facts set forth in the First Amended Complaint. Defendants Schering-Plough and Wyeth deny the existence of any conspiracy or liability and deny many of the specific allegations set forth below, and defendants Mackey and Severino have not answered the complaint because they contest this Court's jurisdiction over them.

"Schering-Plough and Wyeth are in the business of manufacturing and distributing pharmaceutical and other consumer health care products in the United States and throughout the world. Schering-Plough and Wyeth do not dispute that they are each subject to jurisdiction in Maryland. Compass is a Maryland based broker in the business of marketing and brokering consumer health care products and other products. Some but not all of Schering-Plough and Wyeth goods brokered by Compass are delivered by those companies to customers in Maryland. Sam Severino was, at the time, Director, Special Markets, of what is now Wyeth; James Mackey was and is Senior Vice President of Sales of Schering-Plough. At the time of relevant events, and for several years previously, Compass brokered consumer health care products for both Schering-Plough and Wyeth pursuant to separate agreements.

"In January 2001, Severino met with Compass in Maryland to negotiate a cut in the brokerage commission paid by Wyeth to Compass, but upon learning that Schering-Plough was paying Compass an even higher brokerage fee, Severino decided not to cut Compass' brokerage fee at that time. Shortly thereafter, Severino and Mackey communicated concerning cutting Compass' brokerage commissions. Mackey and Severino were long-time friends and/or business colleagues, and just prior to his employment at Schering-Plough, Mackey worked at Wyeth and was Severino's superior. Mackey told Severino to meet with Thomas Moeller, Vice President of Sales at Schering-Plough responsible for the division which included Compass, to discuss jointly cutting the brokerage fees that Wyeth and Schering-Plough were paying to Compass; and that Mackey told Moeller to meet with Severino, to discuss jointly cutting the brokerage fees that Wyeth and Schering-Plough were paying to Compass. Sometime prior to March 30, 2001, Severino and Moeller met at a trade event, held at a location other than in Maryland, and reached an agreement for Wyeth and Schering-Plough to jointly cut the brokerage fees that Wyeth and Schering-Plough were paying to Compass.

"On March 30, 2001, Compass received a telephone call from Peggy Smith of Schering-Plough, informing Compass that its commissions from Schering-Plough were being cut to four percent for Compass' largest account only. Thereafter, Compass received a letter from Schering-Plough, dated April 5, 2001, confirming that Compass' commissions from Schering-Plough were cut to four percent, effective April 2, 2001, not only for Compass' largest account, but for all of Compass' business (excluding new customers for the first 6 months). On or about April 2, 2001, Compass received a letter from Wyeth, signed by Severino and dated March 30, 2001, informing Compass that its commissions from Wyeth were being cut to three percent for its largest account, effective May 1, 2001 (Compass' commissions on other existing Wyeth's [sic] accounts would be five percent).

"Compass sought to have Schering-Plough not put the commission cuts into effect, but was unsuccessful. The cuts went into effect in June and July 2001, when Compass received in Maryland the first reduced commission payments from Wyeth and Schering-Plough respectively."

II.

Appellants Mackey and Severino argue before this Court that Maryland law does not recognize the conspiracy theory of jurisdiction because it is inconsistent with the plain language of the Maryland "longarm" statute, Md.Code (1974, 2002 Repl. Vol., 2005 Cum.Supp.), § 6-103(b) of the Courts and Judicial Proceedings Article.¹ They argue further that the conspiracy theory violates the Due Process Clause of the Fourteenth Amendment to the United States Constitution by not satisfying the minimum contacts test required by Int'l Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny because it permits the contacts of one person with the forum state to serve as the contacts of another person for purposes of the minimum contacts test.

Appellee Compass Marketing urges this Court to recognize the conspiracy theory. In response to appellants' arguments, appellee notes that the majority of jurisdictions that have considered this issue have recognized the conspiracy theory of jurisdiction. Appellee recommends that we adopt the standard set out in Cawley v. Bloch, 544 F.Supp. 133 (D.Md.1982). Appellee contends that Cawley's requirement that it be reasonable for the co-conspirators to expect that their contemplated conspiracy will lead to consequences in a particular forum gives the co-conspirators fair warning sufficient to satisfy due process concerns that they could be subject to the forum's jurisdiction because of acts done in furtherance of the conspiracy.

III.

The question of whether Maryland recognizes the conspiracy theory of jurisdiction as a matter of state law presents an issue of first impression for this Court. It is clear today that physical presence within a state is not a necessary prerequisite to the proper assertion of personal jurisdiction and that under most states' long-arm statutes, certain acts and effects of those acts may be the basis for a court to exercise jurisdiction of a nonresident as well as a person who has not physically entered within the territorial borders of the state.

Courts have drawn routinely from the substantive law of agency to justify the exercise of personal jurisdiction over nonresident defendants. Imputation, or attribution, of jurisdictional contacts is not a new notion. It is long-established that personal jurisdiction may be exercised over a nonresident defendant on the basis of the actions of the nonresident defendant's agent. Maryland's long-arm statute explicitly grants jurisdiction over a principal based on acts performed through an agent. See § 6-103(b) (providing for exercise of personal jurisdiction over someone who performs acts enumerated in statute personally or "by an agent").² Since the inception of the International Shoe line of jurisprudence, the Supreme Court has not expressed any doubt that the acts of corporate agents may be attributed to a corporation for purposes of determining whether personal jurisdiction is proper over the principal. See Int'l Shoe, 326 U.S. at 316-19, 66 S.Ct. at 158-60 (holding that, because "the corporate personality is a fiction," whether a corporation's contacts with a forum are sufficient to subject it to suit in that forum is determined by reference to the "activities carried on in its behalf by those who are authorized to act for it").

...