Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A.
290 F.3d 42 (2002)
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Rule of Law:
For the purpose of establishing specific personal jurisdiction, the in-forum contacts of an agent or joint venturer may be imputed to a non-resident principal, particularly where the principal has ratified the agent's conduct by knowingly accepting the benefits of the agent's in-forum activities.
Facts:
- Richard A. Daynard is a law professor and expert on tobacco litigation residing and working in Massachusetts.
- In the fall of 1993, Charles Patrick, a partner at the South Carolina law firm Ness, Motley, Loadholt, Richardson & Poole ('Ness Motley'), traveled to Boston, Massachusetts, to meet with Daynard.
- Daynard alleges Patrick retained his services on behalf of a joint venture between Ness Motley and the Mississippi law firm Scruggs, Millette, Bozeman & Dent ('Scruggs defendants').
- Daynard performed work for both firms from Massachusetts, providing legal theories, strategies, and advice through meetings in Boston as well as phone and fax communications.
- Daynard alleges that after initially being paid hourly by Ness Motley, both firms promised he would be compensated with a share of the fees recovered from the national tobacco litigation.
- In August 1996, in Chicago, Richard Scruggs allegedly told Daynard he was speaking for both firms and promised him 5% of any fees recovered, a deal upon which they shook hands.
- Relying on this agreement, Daynard continued to provide services and incurred personal expenses to make himself available for trial.
- After the firms secured massive settlements in the tobacco litigation, they disavowed the 5% fee arrangement and refused to pay Daynard.
Procedural Posture:
- Richard Daynard sued the Motley defendants and the Scruggs defendants in the Superior Court for Suffolk County, Massachusetts.
- The Scruggs defendants, with the consent of the Motley defendants, removed the case to the U.S. District Court for the District of Massachusetts.
- The Motley defendants conceded to personal jurisdiction in Massachusetts.
- The Scruggs defendants filed a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2).
- The U.S. District Court granted the Scruggs defendants' motion, dismissing the complaint against them for lack of personal jurisdiction.
- Daynard, as appellant, appealed the dismissal to the U.S. Court of Appeals for the First Circuit.
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Issue:
Does a federal court in Massachusetts have specific personal jurisdiction over a non-resident law firm based on the in-forum contacts of its alleged agent or joint venturer, where the non-resident firm allegedly ratified the agent's conduct and accepted the benefits of a contract formed in the forum state?
Opinions:
Majority - Lynch, Circuit Judge.
Yes. A federal court in Massachusetts has specific personal jurisdiction over the non-resident Scruggs defendants because the in-forum contacts of their alleged agent, the Motley defendants, can be properly attributed to them. The district court erred by applying the 'substantial influence' test from Donatelli, a general jurisdiction case, to this specific jurisdiction inquiry. Instead, the court found that Daynard made a sufficient prima facie showing of an agency relationship or joint venture by estoppel. The Scruggs defendants ratified the Motley defendants' act of retaining Daynard in Massachusetts by knowingly accepting the benefits of Daynard's work, repeatedly promising him compensation, and engaging with him directly regarding the litigation. These imputed contacts, combined with the Scruggs defendants' own communications into the forum, satisfy the constitutional requirements of relatedness, purposeful availment, and reasonableness for exercising specific personal jurisdiction.
Analysis:
This decision clarifies the standard for attributing an agent's contacts to a principal for specific personal jurisdiction purposes. It distinguishes the stringent 'substantial influence' test required in some general jurisdiction cases, making it clear that a more flexible analysis based on agency, joint venture by estoppel, or ratification applies in specific jurisdiction cases. The ruling makes it more difficult for a member of a business partnership or joint venture to avoid jurisdiction in a forum where another member acted on the venture's behalf, especially when the lawsuit arises directly from that activity. It reinforces the principle that knowingly accepting the benefits of a transaction in a forum state can subject a defendant to that state's jurisdiction.
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