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stating that "an Indiana court would likely determine whether under its formulation of civil conspiracy law, exercising jurisdiction over a non-resident co-conspirator based on the acts of another co-conspirator in the forum comports with due process"
Summary of this case from Best Chairs Inc. v. Factory Direct Wholesale, LLCOpinion
Cause No. IP98-0401-C-M/S
May 4, 2000
ORDER ON HILL AND KNOWLTON'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
This case is now before the Court on defendant Hill and Knowlton, Inc.'s ("HK's") motion to dismiss the claims brought against them by plaintiffs, Max E. Sumpter, Sr. ("Max") and Ella Mae Sumpter ("Ella Mae") (collectively the "Sumpters"), for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) ("Rule 12(b)(2)"). The issues having been fully briefed by the parties, the motion is now ready for resolution. For the reasons discussed below, the Court GRANTS H K's motion to dismiss for lack of personal jurisdiction.
The Court notes that in the event that the Court denies HK's motion, HK alternatively joins in the Defendants' Partial Motion to Dismiss Plaintiffs' Amended Complaint for Damages dated May 26, 1999. Because the Court grants this motion, there is no need to join HK in the remaining Defendants' Partial Motion to Dismiss.
I. FACTUAL AND PROCEDURAL BACKGROUND
For purposes of this motion to dismiss for lack of personal jurisdiction only the facts are as follows.
HK is an international public relations firm incorporated in Delaware with its principal place of business in New York. Sanson Aff. ¶¶ 3, 4. The firm has offices in the United States and around the world, however, does not have an office in Indiana. Am. Compl. ¶ 10; Sanson Aff. ¶ 4. HK also does not have property, an employee, or an agent based in Indiana. See id. Nevertheless, the firm has had clients in Indiana for which it performed investor relations work. See Sanson Aff. ¶ 4. Between the years 1995 and 1997 those clients included Emmis Broadcasting, Lincoln National and RCI. Id. Work HK performed for those clients involved a limited number of trips to Indiana. Id. ¶¶ 6(i), (iii), (iv).
In addition to that work, "[s]ince 1997, HK employees have made several trips to Indiana each year in connection with [an investor relations] assignment [for CTB, Inc. located in Milford]." Id. ¶ 6(ii). Even though employees have traveled to Indiana in connection with assignments for those clients specified here, HK did most of its work for these clients in New York and Chicago and the contacts associated with that work were directed to investment professionals and security analysts. Id. ¶ 8. Moreover, "[t]he aggregate revenue from these clients as a percentage of HK's annual United States revenue" for the years 1994 to 1998 was: 1994 — 0%; 1995 — 0.16%; 1996 — 0.25%; 1997 — 0.03%; and 1998 — 0.08%. Id. ¶ 7. None of the work HK performed or currently performs for these Indiana clients involved or involves tobacco or its use in cigarettes.Id. ¶ 5.
The Sumpters' part of the story begins when at the age of fourteen Max began smoking cigarettes. Am. Compl. ¶ 30. At that time, Max was not aware of the health risks associated with smoking. Id. ¶¶ 33-34, 307. During his long history of smoking, Max used brands of cigarettes made by the American Tobacco Company, Brown Williamson Tobacco Corporation, Liggett Meyers, Inc. and R.J. Reynolds Tobacco Company. See id. ¶ 32. Purportedly unaware of two studies published in 1951 and 1952, and widely reported thereafter, that linked the development of cancer to smoking tobacco, id. ¶¶ 54-57, Max continued smoking cigarettes until 1996 when he was diagnosed with throat and neck cancer. Id. ¶ 36. Max first learned that cigarettes could cause cancer when he received this diagnosis from his doctor. Id. ¶ 36.
The Sumpters allege that the reason Max never learned of the health risks associated with cigarette smoking was because the defendants, American Tobacco Company ("ATC"), American Brands, Inc. ("ABI"), B.A.T. Industries, PLC ("BAT Indus."), British-American Tobacco Company, Ltd. ("BATCO"), Brown Williamson Tobacco Corporation ("BW"), Liggett Myers, Inc. ("Liggett"), Lorillard Tobacco Company ("Lorillard"), Philip Morris Incorporated ("Philip Morris"), R.J. Reynolds Tobacco Company ("RJR."), RJR Nabisco Holdings Corporation ("RJR Holdings"), RJR Nabisco, Inc. ("RJR Nabisco"), United States Tobacco Company ("USTC"), HK, The Council for Tobacco Research U.S.A., Inc. ("CTR"), and The Tobacco Institute, Inc. ("TI") (collectively "Defendants") (the tobacco companies collectively "Tobacco Companies"), conspired to conceal the health risks associated with smoking, conspired to deceive consumers about the dangers of smoking and conspired to limit competition on the basis of health risk. Am Compl. ¶¶ 41-195, 312-23. The Sumpters describe several acts taken by the Tobacco Companies and HK that support these allegations. See Am. Compl. ¶¶ 41-195.
The Sumpters claim that HK's involvement with the alleged conspiracy started in 1953 when it was retained as public relations counsel to the Tobacco Industry Research Committee ("TIRC"). Am. Compl. ¶ 10; Sanson Aff. ¶ 9. In fact, HK served as public relations council for the TIRC from the inception of the committee in 1954 until 1963 when HK's contract terminated. See Sanson Aff. ¶ 9. The firm also served as contract public relations counsel to the TI between 1958 and 1968. See id. That contract expired in 1968. See id. The TIRC, its successor organization the CTR and the TI were founded to combat the negative press associated with medical studies that linked smoking tobacco to cancer. See Am. Compl. ¶¶ 11-12. The tobacco industry started the TIRC first. See id. ¶ 11.
TIRC was a non-profit organization established by a group of tobacco companies in 1954 for the purpose of managing public relations regarding the health concerns about cigarettes. Halter Aff. Ex. C at 1. TIRC became the Council for Tobacco Research ("CTR") in 1964. Am. Compl. ¶ 75. The inception of TIRC is described in the remainder of this section.
TI was a non-profit organization established by a group of tobacco companies for the purpose of operating as the tobacco companies' public relations and lobbying representative. Am. Compl. ¶ 12.
In December 1953, Paul Hahn ("Hahn"), President of ATC, called a meeting of his counterparts at other tobacco companies. See Halter Aff. Ex. B "Background Material on the Cigarette Industry Client," at 1 [hereinafter "Background Material"]. John Hill ("Hill") of HK apparently participated in that meeting. Id. at 1-2. The chief executive officers ("CEOs") from RJR, Philip Morris, Benson Hedges, USTC, and BW also participated in it (collectively the "Tobacco Clients").
The Sumpters claim that the meeting described here was precipitated by a memo from Timothy V. Hartnett ("Hartnett"), President of BW, to his counterparts at other cigarette manufacturers. Am. Compl. ¶ 58. Hartnett proposed that the industry offer its assistance in scientific research and hire a public relations firm to handle the health problem.Id. ¶¶ 59, 61. Allegedly, Hartnett described the most difficult part of the research effort as "how to handle significantly negative research results if, as, and when they develop." Id. ¶ 60 (quotations in original).
It is unclear whether a representative from Lorillard also attended the meeting because the HK document that lists the attendees has "________" in the place for an individual's name beside "P. Lorillard Company." Halter Aff. Background Material at 5. No other mention of Lorillard is made in the document; nor do the Sumpters convey that a representative from Lorillard participated in the December 1954 meeting. Whether Lorillard was at the meeting is not material to the motion before the Court, therefore, for purposes of this motion, that company is omitted from the list of "Tobacco Clients."
At the meeting, the CEOs and Hill discussed the effect of the medical studies that linked cigarette smoking to cancer, and those that labeled nicotine addictive. See id. at 2. Specifically, the CEOs were troubled by the negative press that had resulted from the release of those studies. See id. All of the CEOs agreed that a joint effort to combat negative public perception was necessary for survival of the industry.See id. at 1-2. At the end of the meeting, the Tobacco Clients asked HK to recommend a public relations strategy that included organizing an "informal committee" charged with carrying out the recommended plan.See id. at 1-2, 4.
In addition, at the meeting the Tobacco Clients voluntarily admitted that their own advertising and competitive practices contributed to the "health problem," and agreed to "try to do something about it." Id. at 3. HK pointed out in its internal memorandum that this was "one important public relations activity that might very clearly fall within the purview of the anti-trust act. Accordingly, it [was] doubtful that [HK would] be able to make any formal recommendations with regard to advertising or selling practices and claims." Id. The Sumpters assert that, along with other evidence, this fact supports their claim of a conspiracy among the Tobacco Companies to cease competition "on the basis of relative health risks," and HK's knowledge of and consent to the conspiracy. Am. Compl. ¶¶ 67, 78.
In their amended complaint the Sumpters allege that an HK memorandum dated June 21, 1954 stated that "'[i]ndividual companies and monopolies have agreed to pool research on the health-question, thereby reducing it as a basis for competition.'" Am. Compl. ¶ 78 (emphasis added by the Sumpters). The Sumpters have not provided a copy of that memorandum. As a supplement to their reply brief, HK submitted an affidavit from their attorney, Bruce Ginsberg, who denies the existence of an internal memorandum dated June 21, 1954 and denies that this statement appears anywhere in an HK document. Ginsberg Aff. ¶¶ 2, 3. The Ginsberg Affidavit has as an attachment a copy of a memorandum dated June 10, 1954 that is entitled "PUBLIC RELATIONS REPORT AND RECOMMENDATIONS FOR TOBACCO INDUSTRY RESEARCH COMMITTEE." Ginsberg Aff. Ex. A. Ginsberg believes this is the internal memorandum the Sumpters refer to in their complaint. Id. ¶ 2. Although the June 21, 1954 memorandum discusses the work HK did for the Tobacco Clients, it does not contain the above-mentioned quote. Without a hearing, the Court must resolve all factual disputes in favor of the Sumpters. See Neiman v. Rudolf Wolff Co., Ltd., 619 F.2d 1189, 1190 (7th Cir. 1980); see also Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996) ("Because the case was dismissed without an evidentiary hearing, [the court] also must resolve all relevant factual disputes in [the non-movant's] favor."). Therefore, for purposes of this motion, the existence of another memo with the quoted language will be assumed.
Pursuant to the Tobacco Clients' request at the meeting, HK memorialized its public relations recommendations to them in a document dated December 24, 1953. See Halter Aff. Ex. C, "PRELIMINARY RECOMMENDATIONS FOR CIGARETTE MANUFACTURERS," [hereinafter "Preliminary Recommendations"]. The memorandum reiterated the purpose of the public relations program:
Because of the grave nature of a number of recently highly publicized research reports on the effects of cigarette smoking, wide-spread public interest has developed; causing great concern with and without the industry.
These developments have confronted the industry with a serious problem of public relations. Obviously, that problem would be quickly solved if the adverse publicity would cease and people would stop talking about the whole matter.
But there is no evidence that the publicity has abated, or is about to abate, or that the research workers who are critical of cigarettes are going to cease these criticisms. A check among national magazines indicates that other periodicals are considering articles on the subject. Among them are Woman's Home Companion, Look and Cosmopolitan. The February issue of Pageant has an article publicizing the Wynder researches.
There is nothing the manufacturers can say or refrain from saying that can stop people from being interested in their health, nor allay their fear of cancer. So long as the causes and cure of this dread disease remain unknown people will be subject to waves of fear regarding it.
It is important that the industry do nothing to appear in the light of being callous to considerations of health or of belittling medical research which goes against cigarettes.
The industry should lose no time in making it completely clear to the American people that it is not unmindful of the public health.
There is an evident urgency about the matter which makes it advisable to suggest certain immediate steps. . . .
The situation is one of extreme delicacy. There is much at stake and the industry group, in moving into the field of public relations, needs to exercise great care not to add fuel to the flames.
* * *
The underlying purpose of any activity at this stage should be reassurance of the public through wider communication of facts to the pubic. It is important that the public recognize the existence of weighty scientific views which hold there is no proof that cigarette smoking is a cause of lung cancer.
In connection with the proposed activity, it is impossible to overlook the fact that some of the industry's advertising has come in for serious public criticism because of emphasis on health aspects of smoking.
This, of course, is a problem for the individual companies and will not be included in this program. But it must be recognized that some of the advertising may have created a degree of skepticism in the public mind which at the start at least could affect the believability of any public relations effort.Id. at 1-2. The memo also recommended that any program be "conservative and long-range," or at a minimum, three years in duration. Id. at 1-2. In addition, HK also suggested a structure for a Committee, including specific positions within the organization, and described the Committee's objectives and reporting procedures. Id.
Perhaps most importantly, the HK memorandum recommended a public relations plan, which it would implement with the Committee. Id. at 4-9. Its plan included: (1) issuing a public statement as a press release and as an advertisement to clarify the health issues related to cigarette smoking and to reassure the public about the cigarette manufacturers concern for health, id. at 4; (2) establishing a research sub-committee to review scientific material assembled for public information and initiating research to be used by the Committee, id. at 4-5; (3) conducting continuing public relations research to "collect, coordinate and disseminate (where practical) available information on various medical research activities bearing on pertinent phases of cigarettes and health[,]" id. at 5; (4) conducting a national public opinion poll, id. at 6-7; (5) distributing a Committee produced "White Paper digesting current available opinion of authorities on cigarette smoking and lung cancer[,]" id. at 7; (6) developing and maintaining relations with the press, including radio and television commentators and film producers, using "the publicity staff of public relations counsel[,]" id.; (7) establishing the Committee as a source of industry facts about cigarette smoking and health risks, id. at 8; (8) issuing information on the subject to special interest groups, id.; (9) lobbying members of Congress and other interested government officials using HK staff, id.; (10) providing materials to the Tobacco Clients for distribution to "[e]mployees, stockholders, distributors, growers and others[,]" id.; (11) "keep[ing] abreast of programs of various medical associations and groups," id. at 9; and (12) exploring and developing cooperative programs with "allied groups such as growers, retailers and distributors." Id.
The Tobacco Clients began implementing HK's plan in January 1954 by forming the TIRC and appointing Hahn as Chairman for the first three months. Halter Aff. Ex. F "Tobacco Industry Research Committee: Hill and Knowlton Report of Activities through July 31, 1954," at 5 [hereinafter "1954 HK Activity Rep."]. HK provided a working staff and temporary office space for the TIRC in addition to having one of its executives, W.T. Hoyt ("Hoyt"), serve as executive secretary for the organization.Id. In a memo to the new Chairman of the TIRC, T.V. Hartnett ("Hartnett"), in August of 1954, HK described its role with the TIRC: "The functions of public relations counsel have been threefold: (1) [o]ver-all policy guidance and programming; (2) administration of [TIRC] affairs; and (3) public and press relations and contacts." Id. at 4.
The memorandum highlighted for Hartnett HK's activities on behalf of the Tobacco Clients from the inception of the TIRC through July 31, 1954. See generally id. During that period, HK developed and distributed eleven news stories and followed up on the stories using "direct personal contact . . . [to] major news outlets in the press, radio and magazine fields, through staff members in New York and field offices." Id. at 9-10.
One particular piece that HK developed was an advertisement entitled A Frank Statement to Cigarette Smokers that "appeared as a full-page ad in 448 newspapers, reaching a circulation of 43,245,00 in 258 cities" on January 4, 1954. Id. at 1. The Sumpters contend that this advertisement appeared in newspapers in Indiana. Am. Compl. ¶ 80.
The advertisement stated:
A Frank Statement to Cigarette Smokers
RECENT REPORTS on experiments with mice have given wide publicity to a theory that cigarette smoking is in some way linked with lung cancer in human beings.
Although conducted by doctors of professional standing, these experiments are not regarded as conclusive in the field of cancer research. However, we do not believe that any serious medical research, even though its results are inconclusive should be disregarded or lightly dismissed.
At the same time, we feel it is in the public interest to call attention to the fact that eminent doctors and research scientists have publicly questioned the claimed significance of these experiments.
Distinguished authorities point out:
1. That medical research of recent years indicates many possible causes of lung cancer.
2. That there is no agreement among the authorities regarding what the cause is.
3. That there is no proof that cigarette smoking is one of the causes.
4. That statistics purporting to link cigarette smoking with the disease could apply with equal force to any one of many other aspects of modern life. Indeed the validity of the statistics themselves is questioned by numerous scientists.
We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business.
We believe the products we make are not injurious to health.
We always have and always will cooperate closely with those whose task it is to safeguard the public health.
For more than 300 years tobacco has given solace, relaxation, and enjoyment to mankind. At one time or another during those years critics have held it responsible for practically every disease of the human body. One by one these charges have been abandoned for lack of evidence.
Regardless of the record of the past, the fact that cigarette smoking today should even be suspected as a cause of a serious disease is a matter of deep concern to us.
Many people have asked us what we are doing to meet the public's concern aroused by the recent reports. Here is the answer:
1. We are pledging aid and assistance to the research effort into all phases of tobacco use and health. This joint financial aid will of course be in addition to what is already being contributed by individual companies.
2. For this purpose we are establishing a joint industry group consisting initially of the undersigned. This group will be known as TOBACCO INDUSTRY RESEARCH COMMITTEE.
3. In charge of the research activities of the Committee will be a scientist of unimpeachable integrity and national repute. In addition there will be an Advisory Board of scientists disinterested in the cigarette industry. A group of distinguished men from medicine, science, and education will be invited to serve on this Board. These scientists will advise the Committee on its research activities.
This statement is being issued because we believe the people are entitled to know where we stand on this matter and what we intend to do about it.
Halter Aff. Ex. A "A Frank Statement to Cigarette Smokers," [hereinafter "Frank Statement"]. Several cigarette companies affixed their names to the advertisement. See id.; Am. Compl. ¶ 81. ATC, BW, Lorillard, Philip Morris, RJR and USTC were among them. See Frank Statement.
In a similar vein, other press releases that HK developed purported that the cigarette manufacturers were interested in determining the truth about the health risks of tobacco through the use of independent researchers. See Am. Compl. ¶ 85; see also id. ¶¶ 86-88. Still others reported that independent scientists' research results cast doubt on the link between tobacco and cancer. See id. ¶ 85; see also id. ¶¶ 86-88. Further, individual Tobacco Clients made other, similar representations in their own press releases. See id. ¶¶ 104-10.
HK also actively worked to influence journalists who were working on stories about the health effects of smoking at nationally circulated magazines, at radio stations and at television stations. See Halter Aff. 1954 HK Activity Rep., at 11-15. Some of its efforts were successful as evidenced by its report that several journalists revised their work after talking with an HK or a TIRC employee. See, e.g., id. at 12 (stating that information HK supplied to Bob Considine for his article in Cosmopolitan magazine resulted in "seven revisions and five qualifying additions to the story . . ."); id. (stating that Donald G. Cooley received assistance for factual revisions to his story in True magazine and additional assistance assembling material for a short book entitled Smoke Without Fear that was "angled at the idea 'You don't have to give up smoking'"); id. (stating that personal discussions and materials supplied to editors resulted in positive editorials in The New York Daily News); id. (stating that Hal Boyle used HK provided facts for his column distributed nationwide by the Associated Press); id. at 13 (stating that HK prepared "[t]wo editorials widely used in 'home town' dailies and weeklies throughout the country . . . and then distributed by the U.S. Press Association"); id. (listing television and radio programs that used the TIRC facts developed by H K); id. (reporting that "[o]ne negatively-aimed program (WNBT) which was being scheduled on the cigarette controversy was postponed after discussion of TIRC facts");id. (describing a special script HK prepared for Hartnett's radio interview on a Louisville, Kentucky station); id. at 13-15 (listing stories in The New Yorker magazine, The New York Times, Sunday Magazine, The Louisville Courier-Journal, Today's Woman magazine, Real magazine, and The N.Y. Post as some of those influenced by HK's personal follow-up). HK also kept its Tobacco Clients informed about pending smoking related health news in whatever form, be it written article, radio talk show, television broadcast, scientific report at a medical or other conference or a survey. See id. at 17-19. The memorandum also highlights HK's activities that "helped lead to selection of several members of the Scientific Advisory Board" that was part of the TIRC.Id. at 19. Generally, all of HK's activities were aimed at providing the best public relations service possible to its Tobacco Clients. See id. at 25 (ending its memorandum summarizing HK activities on behalf of the TIRC with the statement that HK would "constantly evaluat[e] the progress and activities to assure maximum effectiveness and new approaches and action as developments warrant[ed]").
The Sumpters allege that through all of the materials developed by HK or influenced by HK, the Tobacco Defendants "intended that the public and government regulators, including [Max], believe and rely upon" them. Am. Compl. ¶ 82. Further, the Sumpters allege that the Tobacco Defendants continued "to misinform the American public in general and Indiana residents, including [Max], as to the effects of smoking and nicotine" even after the initial reports linking smoking to cancer, and nicotine to addiction were confirmed. Id. ¶ 234.
Along with the relevant public relations efforts of the Tobacco Companies and HK, the Sumpters allege that the Tobacco Companies furthered the alleged conspiracy to limit competition on the basis of health risk by suppressing disclosure of internal research on the effects of smoking and by restricting research and development of new cigarette products with lower tar and nicotine. Id. ¶¶ 159-95. The tobacco companies that allegedly suppressed and restricted such product development included Phillip Morris, Imperial Tobacco Company, USTC, BW, Liggett, RJR and B.A.T. See id. ¶¶ 162, 165, 169, 175, 178, 186, 189, 194. Even though Max did not smoke brands made by each of these manufacturers, he did smoke brands made by BW, Liggett and RJR.See id. ¶ 32.
According to the Sumpters the conspiracy described above affected Max because he learned of smoking's health risks too late and because he was addicted to nicotine. Id. ¶ 34. As a result, Max continued smoking until he developed cancer. See id. ¶¶ 33-35. In order to treat his cancer, Max underwent extensive radiation treatment that resulted in loss of his lower teeth and other disfigurement. See id. ¶¶ 34-38. In addition, Ella Mae has suffered the loss of Max's services. See id. ¶ 39.
The Sumpters filed a claim in state court on February 26, 1998 against the Tobacco Companies, HK, the CRT and the TI. Pls.' Corrected Resp. To HK's Mot. to Dismiss for Lack of Personal Juris. and Alt. Mot. For Cert. at 1 [hereinafter "Pls.' Corrected Resp."]. The complaint alleged that the Defendants had conspired to fraudulently conceal the health risks of smoking, by which the Defendants had engaged in a pattern of racketeering in violation of Indiana Code § 35-45-6-2(1) that resulted in serious bodily injury. Am. Compl. ¶¶ 324-38; 387-93. In addition, the complaint alleged that the Defendants had conspired to suppress competition in violation of state and federal antitrust laws.Id. ¶¶ 392-402. Finally, according to the complaint, the Defendants conspired to misrepresent the characteristics of cigarettes in violation of the Indiana Deceptive Sales Practices Act. Id. ¶¶ 403-10. On March 20, 1998, the Defendants removed the Sumpter's complaint to federal court and on May 26, 1999, HK filed the current motion to dismiss for lack of personal jurisdiction.
Having reviewed the relevant facts, the Court will now turn to the standards that govern its decision.
II. STANDARDS A. Personal Jurisdiction
A federal district court may exercise personal jurisdiction over a nonresident defendant only if a court of the state in which the district court sits would have such jurisdiction. Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996); Nucor v. Aceros Y Maquilas de Occidente, S.A. de C.V., 28 F.3d 572, 580 (7th Cir. 1994);Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1243 (7th Cir. 1990),cert. denied, 499 U.S. 947 (1991); Fed.R.Civ.P. 4(e)(1) (A federal court sitting in diversity can exercise personal jurisdiction only so far as allowed by the law of the state in which it sits). In the case of a nonresident defendant, or a defendant corporation that does not have its principal place of business in Indiana, an Indiana court may exercise personal jurisdiction over the defendant where both Indiana's long-arm statute authorizes the exercise of such jurisdiction and exercise of such jurisdiction complies with the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution. Nucor, 28 F.3d at 580; Wilson, 916 F.2d at 1243. The scope of Indiana's long-arm statute, found at Indiana Trial Rule 4.4(A), has been deemed to extend the State's personal jurisdiction to the constitutional limit. Nucor, 28 F.3d at 580 (quotingWilson, 916 F.2d at 1243); Brokemond v. Marshall Field Co., 612 N.E.2d 143, 145 (Ind.App. 1993). Thus, a personal jurisdiction inquiry in this case would rest on the scope of jurisdiction under the Due Process Clause.
Under the familiar due process analysis enunciated by the Supreme Court in International Shoe Co. v. Washington, a court must determine whether a nonresident defendant has sufficient "minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). See also Wilson, 916 F.2d at 1243. These minimum contacts must be established by a defendant's purposeful acts. See International Shoe, 326 U.S. at 316. As the Supreme Court explained in Hanson v. Denckla:
The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws.357 U.S. 235, 253 (1958). Accord Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985). In short, exercising jurisdiction over a defendant will comply with due process only if the defendant "reasonably should have anticipated 'being haled into court' in Indiana" and "purposefully . . . availed itself of the 'privilege of conducting activities' in Indiana." Wilson, 916 F.2d at 1244 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) and Hanson, 357 U.S. at 253). Once minimum contacts have been established, a court must "determine whether the assertion of personal jurisdiction would comport with 'fair play and substantial justice.'" Burger King, 471 U.S. at 476 (quoting International Shoe, 326 U.S. at 320).
The Supreme Court has recognized two separate forms of personal jurisdiction that will satisfy this "minimum contacts" requirement: general and specific. See Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984); Wilson, 916 F.2d at 1244-45. "General jurisdiction" allows a court to exercise its jurisdiction over a defendant who has had such "continuous and systematic" contacts with the forum state that the court's exercise of jurisdiction over the defendant is reasonable and just, even if those contacts bear no relation to the underlying controversy. Helicopteros, 466 U.S. at 414-15 and n. 9; RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1277 (7th Cir. 1997);Protective Ins. Co. v. Cody, 882 F. Supp. 782, 785 (S.D.Ind. 1995). The standard for establishing general jurisdiction is fairly high. See Wilson, 916 F.2d at 1245.
By contrast, "specific jurisdiction" exists where the defendant has had only "minimum contacts" with the forum state but the cause of action arises from those contacts. Helicopteros, 466 U.S. at 414 and n. 8;RAR, 107 F.3d at 1277; Protective Ins., 882 F. Supp. at 785. "[T]he defendant's conduct and connection with the forum state [must be] such that he should reasonably anticipate being haled into court there" to answer for his conduct. World-Wide Volkswagen, 444 U.S. at 297. See also RAR, 107 F.3d at 1277 (stating that the court must consider "whether, by traditional standards, [a defendant's contacts with the forum] would make personal jurisdiction reasonable and fair under the circumstances"). Random, fortuitous or attenuated contacts will not suffice to support a finding of specific personal jurisdiction. See Burger King, 471 U.S. at 475; RAR, 107 F.3d at 1277-78 (discussing what constitutes "purposeful availment" such that litigating in the forum is foreseeable to the defendant).
B. Rule 12(b)(2)
Generally, in determining whether either form of personal jurisdiction exists, a court must look at the facts and circumstances of the case and determine the nature and quality of the defendant's contacts with the forum. See Hanson, 357 U.S. at 253; Honeywell, Inc. v. Metz Apparatewerke, 509 F.2d 1137, 1143 (7th Cir. 1975); Miller Pipeline Corp. v. British Gas plc, 901 F. Supp. 1416, 1423 (S.D.Ind. 1995); Enviroplan, Inc., 900 F. Supp. at 1059. To assist the court in determining relevant jurisdictional facts, it may accept affidavits, exhibits and other evidentiary material from either party before a trial on the merits. See Nelson by Carson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983), cert. denied, 465 U.S. 1024 (1983); see also Steel Warehouse of Wis., Inc. v. Leach, 154 F.3d 712, 715 (7th Cir. 1998) (finding that the non-moving party "failed to establish a prima facie case for personal jurisdiction, through either the allegations in its complaint or other evidence in the record, in response to the affidavits of [the moving party]"). "During this preliminary proceeding, although the burden of proof rests on the party asserting jurisdiction, if the district court's decision is based on the submission of written materials the burden of proof is met by a prima facie showing that personal jurisdiction is conferred under the relevant jurisdictional statute." Id. at 1123.Accord Steel Warehouse of Wis., 154 F.3d at 715. In addition, the district court must accept all undenied factual allegations made by the non-moving party and resolve in its favor all disputes about relevant facts. See Neiman v. Rudolf Wolff Co., Ltd., 619 F.2d 1189, 1190 (7th Cir. 1980); see also Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996) ("Because the case was dismissed without an evidentiary hearing, [the court] also must resolve all relevant factual disputes in [the non-movant's] favor.").
II. DISCUSSION A. GENERAL JURISDICTION
A discussion of "general jurisdiction" in this case is warranted because the Sumpters briefly argue that this Court has jurisdiction over HK because it has enough "continuous and systematic" business contacts with Indiana that it should be subject to general jurisdiction. This Court may exercise "general jurisdiction" over non-resident defendant HK only if it had sufficient "minimum contacts" with Indiana and, in light of the nature and quality of the contacts, they were "continuous and systematic." International Shoe, 326 U.S. at 316, 318; Helicopteros, 466 U.S. at 414-15 and n. 9; Hanson, 357 U.S. at 253; RAR, 107 F.3d at 1277;Protective Ins., 882 F. Supp. at 785. Even if HK's contacts with the forum meet the minimum contacts test, assertion of jurisdiction must still comport with "'traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (19__)).
The Sumpters briefly assert that general jurisdiction would be proper because HK is one of the largest public relations firms in the United States, therefore, it must continuously solicit business in the state. Pls.' Corrected Resp. at 7 n. 1. That allegation in combination with HK's current clients in the state, would justify its being haled into an Indiana court. The Sumpters request that the Court allow them more discovery on this issue if it decides it lacks specific jurisdiction over HK. Id.
Although at this stage of the proceedings the Court must view the facts in the light most favorable to the Sumpters, they present no evidence to contradict the facts presented by HK about the amount of business it does in Indiana. HK's business in the state is not so continuous and systematic that it would be on notice that it could be subject to suit in Indiana for any reason. Moreover, the contacts the company has with the state are simply not of a quality and nature necessary to comport with due process.
The affidavit presented by HK is forthcoming about the business HK does in Indiana. See generally Sanson Aff. The company does not have a certificate of authority to transact business in the state. See id. ¶ 4. Nor does it have an office, property, employees or agents in the state. See id. However, HK has had four Indiana clients during the 1990s, one of which is an ongoing client. See id. ¶¶ 6(i)-(iv). Some HK employees regularly visit the ongoing client, CTB, in Milford. See id. ¶ 6(ii). Nevertheless, HK's total annual revenue from all of its Indiana clients was less than one percent from the years 1994 to 1998. See id. ¶ 7. Therefore, even if its employees visit CTB several times per year in connection with the investor relations work it performs for that company, those contacts are continuous and systematic only as to that one client and generate very little income for the company. Further, there is neither an allegation nor evidence that HK used its visits to Indiana as a method to expand its business in the state; it simply serviced its existing client.
Finally, it would be unreasonable to hail HK into an Indiana court to defend itself against allegations completely unrelated to its investor relations work for four companies. Although HK avails itself of the protection of the state's laws in those cases, those contacts are limited in scope and short in duration. In other words, those contacts do not have the substance of "doing business" in Indiana such that the exercise of jurisdiction over HK for an unrelated cause of action is just. See Helicopteros, 466 U.S. at 414-15 and n. 9; RAR, 107 F.3d at 1277;Protective Ins., 882 F. Supp. at 785.
B. SPECIFIC JURISDICTION
The Sumpters primarily rely upon facts supporting specific jurisdiction over HK. Specifically, the Sumpters argue that HK developed advertising and public relations pieces for the TIRC, the CTR and the TI that had deleterious effects within the state. Thus, under the "effects" test set out in Calder v. Jones, 465 U.S. 783 (1984), the requirements for specific jurisdiction are met. In addition, the Sumpters contend that as a co-conspirator, HK is amenable to suit in Indiana based on the acts within the state by the Tobacco Companies in furtherance of the conspiracy.
In contrast, HK argues that the communications HK produced for the TIRC, the CTR and the TI were not directed to a particular person or forum. Therefore, the due process prong of the jurisdictional inquiry is not satisfied because HK's contacts were not directed at Indiana or the Sumpters, but to a larger, more un-focused audience. Further, HK contends that an Indiana court would reject the conspiracy theory of jurisdiction because it does not comport with due process requirements.
As discussed above, the jurisdictional analysis in this case will focus on whether assertion of jurisdiction complies with due process requirements. See Wilson, 916 F.2d at 1243 (stating that the usual two-part inquiry "collapse[s] into one, because . . . Indiana's long-arm statute extends personal jurisdiction to the limit allowed under the [D]ue [P]rocess [C]lause of the [F]ourteenth [A]mendment"). In a specific jurisdiction analysis, the cause of action must arise out of or be related to HK's contacts with Indiana. Helicopteros, 466 U.S. at 414 and n. 8; RAR, 107 F.3d at 1277; Protective Ins., 882 F. Supp. At 785. The Sumpters allege that the Defendants conspired to fraudulently conceal the defective design of cigarettes by disseminating false information about the health effects of smoking, to violate the Indiana Racketeer Influenced and Corrupt Organizations act ("I-RICO"), to violate state and federal antitrust laws, and to violate the Indiana Deceptive Sales Practices Act ("IDSPA"). Therefore, HK's contacts with Indiana must relate to those causes of action for this Court to exercise jurisdiction over it. The Sumpters assert two arguments that jurisdiction is proper; the Court will address each in turn.
1. The "Effects" Test
The Sumpters' first argument is that under the test enunciated by the Supreme Court in Calder v. Jones, 465 U.S. 783, 791 (1984), HK's public relations activities in New York had the requisite effect in Indiana to subject HK to the jurisdiction of an Indiana court on their claims. HK's activity included developing public relations materials, distributing those materials to publications and influencing stories written about the health effects of smoking for the tobacco industry. A brief review of Calder will frame the discussion.
In Calder, an entertainer sued a magazine reporter and his editor for libel, invasion of privacy, and intentional infliction of emotional distress in California. Id. at 785. The reporter and the editor were residents of Florida and worked for the National Enquirer, a Florida corporation with its principal place of business in Florida. See id. The editor had no contacts with California; the reporter had travelled to California a few times in connection with his work, however, did most of the research for the story in dispute over the phone. See id. Both the reporter and the editor challenged the California court's jurisdiction over them. See id. at 785-86.
The reporter and the editor argued that holding them accountable for articles they worked on in any forum in which their story appeared would have a chilling effect on reporting, therefore neither should be subject to California's jurisdiction. See id. at 786. They also argued that they could not be held accountable for their employer's circulation of the article in California because neither of them had a stake in the outcome. See id. at 789.
The Supreme Court held that jurisdiction was proper because the reporter's and the editor's "intentional, and allegedly tortious, actions were expressly aimed at California." Id. at 789. The Court reasoned:
The allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. The article was drawn from California sources, and the brunt of the harm, in terms of both [the entertainer's] emotional distress and the injury to her professional reputation, was suffered in California. In sum, California [was] the focal point both of the story and of the harm suffered. Jurisdiction over petitioners [was] therefore proper in California based on the "effects" of their Florida conduct in California.Id. at 788-89 (emphasis in original) (citations omitted). Moreover, the reporter and the editor knew that the article would have its greatest effect in California because the article's subject lived there and the National Enquirer had its largest circulation there. See id. at 790. The two National Enquirer employees could not use their status as employees to shield them from liability because they were "primary participants in an alleged wrongdoing intentionally directed at a California resident, . . . [thus] jurisdiction over them [was] proper on that basis." Id.
The Supreme Court also applied the "effects" test in a companion case,Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984). In Keeton, an editor of Hustler Magazine sued the magazine for five separate acts of libel in a New Hampshire court. Id. at 772. Hustler Magazine was an Ohio corporation with its principle place of business in California. See id. However, the magazine sold between 10,000 and 15,000 copies of its magazine in New Hampshire each month. See id.
Hustler Magazine argued that a New Hampshire court's exercise of jurisdiction over it would be unfair because its only contact with the forum was circulation of its magazine. See id. at 770. The Supreme Court disagreed. The Court stated that Hustler Magazine's "regular circulation of magazines in [New Hampshire was] sufficient to support an assertion of jurisdiction in a libel action based on the contents of the magazine."Id. at 773-74. In addition, the Court agreed with the lower court that Hustler Magazine's circulation of its publication throughout New Hampshire was purposeful activity that "'inevitably affected persons in the state.'" Id. at 774 (quoting App. to Pet. for Cert. 5a). Furthermore, "[s]uch regular monthly sales of thousands of magazines cannot by any stretch of the imagination be characterized as random, isolated, or fortuitous." Id. Thus, the minimum contact requirements of due process were met and jurisdiction over Hustler Magazine was proper. Id.
This was not the primary holding of the Keeton case, however, the Court's analysis of the jurisdiction issue is instructive. The more primary issues were whether the "single publication rule," New Hampshire's unusually long statute of limitations, and the editor's lack of physical contact with the forum defeated otherwise proper jurisdiction. See Keeton, 456 U.S. at 775. The Court held that none of these things could affect otherwise proper jurisdiction. Id. at 775-81.
In the case at bar, the Sumpters argue that these two cases support the exercise of jurisdiction over HK because its activities on behalf of the TIRC, the CTR and the TI had the effect of misinforming the public, of which Max was a part, on the health issues related to cigarette smoking. Further, the publications spanned many years, therefore, HK's contacts cannot be characterized as random, isolated or fortuitous. The Sumpters allege in particular that the advertisement entitled "A Frank Statement to Cigarette Smokers" appeared in Indiana newspapers and was directed at the smoking public, including Max. Therefore, like the reporter and the editor in Calder and the magazine in Keeton whose activities from another state had an effect on a target within the forum state, HK's activities to publicize its Tobacco Clients' viewpoint had the intended effect of deluding cigarette smokers about the health effects of tobacco; Max in particular.
The Sumpters read the requirements of the Calder effects test too broadly. Although the Sumpters have made a prima facie case that HK developed much of the publicity the Tobacco Companies used in their effort to counteract the cancer and addiction studies, the couple has failed to show the requisite minimum contacts between HK and this forum — the State of Indiana.
At this stage of the litigation, the Court must accept as true the Sumpter's conclusory allegation that the "A Frank Statement to Cigarette Smoker's" advertisement was published in Indiana newspapers. In addition, although it is unclear on its face that HK adopted a belief in the content of the advertisement, the Sumpters have presented enough evidence to entitle them to the inference that HK was so persuaded. The statement itself was endorsed by the TIRC. See Halter Aff. Frank Statement. In 1954, when the statement was published, the Sumpters' evidence shows that HK more probably than not controlled the activities of the TIRC. See Halter Aff. Background Material (stating that "[t]he current plans are for [HK] to serve as the operating agency of the companies, hiring all the staff and disbursing all funds").
But, by implication, a single "Frank Statement to Cigarette Smokers" advertisement was not enough to have the requisite effect in Indiana. The Sumpters allege that Max and other Hoosiers relied upon numerous publications by HK and the Tobacco Companies over a period of many years. See Am. Compl. ¶¶ 10, 54-113. However, the Sumpters offer no evidence that HK, either through its role with the TIRC or through its own initiatives, made any other extensive contacts with publications either circulated or written in Indiana. Nor do the Sumpters offer evidence that any of the press releases it issued through the TIRC, the CTR or the TI resulted in coverage in Indiana.
Furthermore, the work HK performed was directed at a national audience, not a particularized "victim" like that described in Calder orKeeton. In Calder, the acts of the writer and the editor were directed to an individual and her behavior in a particular forum. Calder 465 U.S. at 788-89. In Keeton, the libelous language was also directed at a particular individual. Keeton, 465 U.S. at 772. In addition, in both of those cases the single act of publication created a cause of action.See Calder, 465 U.S. at 784-85 (discussing the cause of action of libel stemming from publication of the information); Keeton, 465 U.S. at 776-77 ("The tort of libel is generally held to occur wherever the offending material is circulated."). The "effect" was particularized to an individual in a forum. In the Sumpter's case, HK's acts were not particularized either to Max or to a specific forum. In effect those contacts were random and fortuitous because HK did not control where or when the information got published, or who among the public received it. Without more, HK's efforts were simply too diffuse and un-focused to subject it to jurisdiction in this Court.
In essence, the Sumpters argue that jurisdiction is proper in this Court because HK wrote the "Frank Statement" advertisement and other press releases, then put them into the stream of commerce on its clients' behalf. Thus, it should be haled into an Indiana court to answer for the perception the pieces created there. Even under this theory, the Sumpters' have failed to establish minimum contacts.
The Sumpters have not shown that any piece HK created or influenced, other than the advertisement, ended up in Indiana. Their allegations imply that the pro-tobacco communications permeated the public such that thousands of people were deceived despite widely publicized views to the contrary. See Am. Compl. ¶¶ 21, 55-57, 58-113. It is not persuasive to assert that the single advertisement "A Frank Statement to Cigarette Smokers" was enough to delude either the general public or Max. As a result, the Sumpters cannot rely upon the single advertisement to establish minimum contacts with Indiana.
In conclusion, although the Supreme Court has "consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction," the defendants acts must have been "'purposefully directed' toward residents of another [s]tate." Burger King, 471 U.S. at 476 (citing Keeton, 465 U.S. at 774-75; Calder, 465 U.S. at 788-90; McGee v. International Life Ins. Co., 355 U.S. 220, 222-23 (1957)). Without evidence that HK purposefully directed more than "A Frank Statement to Cigarette Smokers" to Indiana and its residents, the Sumpters have not shown minimum contacts sufficient to support jurisdiction. See Asahi Metal Indus. Co., Ltd. v. Superior Court of Calif., 480 U.S. 102, 112 (1987) (O'Connor, J.) ("The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State.")
The Seventh Circuit in Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Ltd. Partnership, 34 F.3d 410 (7th Cir. 1994) interpreted the Calder "effects" test similarly. In that case, a football team in Baltimore had adopted the name "Baltimore Colts." See id. at 411. The Indianapolis Colts sought an injunction preventing the Baltimore team's use of the name "Colts" because consumers would confuse the trademarks. See id. The Seventh Circuit held that jurisdiction in Indiana was proper because the Indianapolis Colt trademark that the Indianapolis Colts sought to protect was used primarily in Indiana, therefore, if the trademark was impaired, "the injury [would] be felt mainly in Indiana. [Thus, b]y choosing a name that might be found to be confusingly similar to that of the Indianapolis Colts, the defendants assumed the risk of injuring valuable property located in Indiana." Id. The court reasoned that "someone who commits a tort in Indiana should . . . be amenable to suit there." Id. at 412 (citing Calder, 465 U.S. at 783).
In the case at bar, the thrust of the alleged tort is fraud. In addition, the Sumpters allege that the fraud was perpetrated over a long period of time, not with the single publication of a "A Frank Statement to Cigarette Smokers." Thus, the Sumpters' case is unlike that inIndianapolis Colts because the effect was wrought over a long period of time requiring more than the single act of publishing an advertisement.
2. Conspiracy Theory of Personal Jurisdiction
The Sumpters also rely upon a conspiracy theory to show that this Court's exercise of personal jurisdiction over HK comports with due process. The couple argues that Indiana would adopt the conspiracy theory of jurisdiction because its long-arm statute extends to the reach of the Due Process Clause. Further, conspiracy jurisdiction comports with due process because "'a defendant who voluntarily participates in a conspiracy with knowledge of its acts in or effects in the forum state can be said to have purposefully availed himself of the privilege of conducting activities in the forum state.'" Pls.' Corrected Resp. at 15 (quotingExecu-Tech Bus. Sys., Inc. v. New OJI Paper Co., 708 So.2d 599, 600 (Fla.Ct.App. 1998)). As for the conspiracy itself, the Sumpters contend that HK and the Tobacco Companies "conspired to suppress the marketing of cigarettes with less cancer-causing or addictive properties, [to] suppress information regarding the health risks of cigarettes and to suppress competition between the [T]obacco [C]ompanies on the health-related qualities of cigarettes." Id. at 22 (citing Am. Compl. ¶¶ 312-23). Therefore, any act by the Tobacco Companies to sell or market cigarettes within the state was an act in furtherance of the conspiracy.
In contrast, HK argues that Indiana would not adopt the conspiracy theory of jurisdiction because it does not comport with due process. Even if Indiana would adopt such a theory in any form, HK argues that the Sumpters have not shown either minimum contacts with the state sufficient to satisfy due process or that HK entered any alleged conspiracy.
The Court agrees with HK that regardless of whether Indiana would adopt the conspiracy theory of personal jurisdiction, the Sumpters have failed to show HK entered the alleged conspiracies. Nevertheless, a brief overview of the conspiracy theory of personal jurisdiction is warranted.
According to the Seventh Circuit "[t]he 'conspiracy theory' of personal jurisdiction is based on the 'time honored notion that the acts of [a] conspirator in furtherance of a conspiracy may be attributed to the other members of the conspiracy.'" Textor v. Board of Regents of N. Ill. Univ., 711 F.2d 1387, 1392 (7th Cir. 1983) (alteration in original) (quoting Gemini Enters., Inc. v. WFMY Tele. Corp., 470 F. Supp. 559, 564 (M.D.N.C. 1979)). Using an analogy to agency jurisdiction, the Seventh Circuit has opined that "[i]f through one of its members a conspiracy inflicts an actionable wrong in one jurisdiction, the other members should not be allowed to escape being sued there by hiding in another jurisdiction." Stauffacher v. Bennett, 969 F.2d 455, 459 (7th Cir. 1992). Further, the court in Stauffacher found unpersuasive the argument that the Due Process Clause does not permit a state to assert personal jurisdiction over a non-resident defendant "who did not foresee that the conspiracy which he joined would commit acts within that state." Id. But, the court did not present that as a holding and made its ruling on other grounds. Id. at 459-60. In addition, according to the Seventh Circuit, "[w]hether personal jurisdiction can be obtained under a state long-arm statute on a conspiracy rationale at all is a question of state law." Id. at 460 (limiting its holding in Textor on the ground that the court in that case was specifically addressing the reach of the Illinois long-arm statute that specifically grants jurisdiction over co-conspirators for overt acts of another in furtherance of the conspiracy within the forum) (citing Davis v. AJ Elecs., 792 F.2d 74, 76 (7th Cir. 1986); Textor, 711 F.2d 1387, 1392-93 (7th Cir. 1983)). Thus, to determine whether or not, and how the theory would apply in this case, the Court must turn to Indiana's personal jurisdiction jurisprudence for guidance.
To date, an Indiana court has not addressed the question of conspiracy jurisdiction. Other states that have addressed the issue are split. In some states the courts have ruled that the conspiracy theory of jurisdiction does not comport with due process because it evades the requirement that the individual defendant have minimum contacts with the forum. See, e.g., Insolia v. Philip Morris Inc., 31 F. Supp.2d 660, 672 (W.D.Wis. 1998) (stating "it is clear that jurisdiction under [the conspiracy] theory would not comport with due process"); Karsten Mfg. Corp. v. United States Golf Ass'n, 728 F. Supp. 1429, 1434 (D.Ariz. 1990) (declining to apply the conspiracy theory of jurisdiction because each individual's connection with the forum state should be analyzed independently). In other states, the courts have decided that traditional principles of conspiracy theory should apply to personal jurisdiction. See, e.g., Stauffacher, 969 F.2d at 460 (applying Illinois law); Edmond v. United States Postal Serv. Gen'l Counsel, 949 F.2d 415, 424-47 (D.C. Cir. 1991) (applying District of Columbia jurisdictional statute); Grove Press, Inc. v. Angleton, 649 F.2d 121, 122-23 (2d Cir. 1981) (applying New York law); Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1236-37 (6th Cir. 1981) (applying Michigan law); Glaros v. Perse, 628 F.2d 679, 682 n. 4 (1st Cir. 1980) (applying Massachusetts law); Lehigh Valley Indus., Inc. v. Birenbaum, 527 F.2d 87, 92-94 (2d Cir. 1975) (applying New York law); Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326, 1343 (2d Cir. 1972); Cawley v. Block, 544 F. Supp. 133, 135 (D.Md. 1982) (applying Maryland law). Therefore, because each co-conspirator is the agent of the other, the acts of one co-conspirator in the forum in furtherance of the conspiracy is imputed to the others and will satisfy the minimum contacts requirements of due process. See Stauffacher, 969 F.2d at 459. Nonetheless, even in those jurisdictions "a bare allegation of a conspiracy between the defendant and a person within the personal jurisdiction of the court is not enough." Id. at 460. Courts "diverge, however, on how much more than a nakedly conclusory allegation of conspiracy is required." Id. Some courts require that a plaintiff show nearly enough evidence for the trial judge to make a pretrial determination that there really was a conspiracy; others require only a minimal factual showing or specific allegations. Compare Cawley, 544 F. Supp. at 135 with Edmond, 949 F.2d at 425.
As discussed above, Indiana's long-arm statute has been interpreted to extend to the limits of due process. See Nucor, 28 F.3d at 580 (quotingWilson, 916 F.2d at 1243); Brokemond v. Marshall Field Co., 612 N.E.2d 143, 145 (Ind.App. 1993). Therefore, an Indiana court would likely determine whether under its formulation of civil conspiracy law, exercising jurisdiction over a non-resident co-conspirator based on the acts of another co-conspirator in the forum comports with due process. Using the familiar Supreme Court precedents, the Indiana Court of Appeals has described the due process requirement as follows:
Due process requires that the defendant have certain minimum contacts with the forum state such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Minimum contacts are required to assure that a defendant has purposefully availed itself to the jurisdiction of the forum state.Brokemond v. Marshall Field Co., 612 N.E.2d 143, 145 (Ind.App. 1993) (citing Hanson v. Denckla, 357 U.S. 235, 253 (1958)). In any form, the conspiracy theory of personal jurisdiction requires an understanding of the individual state's formulation of civil conspiracy.
Civil conspiracy is not a separate cause of action in Indiana. See Durakool v. Mercury Displacements, Etc., 422 N.E.2d 680, 682 (Ind.Ct.App. 1981) (citing Indianapolis Horse Patrol, Inc. v. Ward, 217 N.E.2d 626, 628 (Ind. 1966); Miller v. Ortman, 136 N.E.2d 17, 33 (Ind. 1956)). Instead, in order to state a claim for civil conspiracy a plaintiff must allege that two or more defendants, by concerted action, sought "to accomplish an unlawful purpose or to accomplish some lawful purpose by unlawful means." Id. "It is not necessary in order to establish a conspiracy that there be direct evidence of an agreement. Rather, a civil conspiracy may be asserted through circumstantial evidence or by averment of isolated or independent facts susceptible of an inference of concurrence of sentiment." Lake Mortgage Co. v. Federal Nat'l Mortgage Ass'n, 308 N.E.2d 739, 744 (Ind.Ct.App. 1974) (citingTucker v. Hyatt, 51 N.E. 469 (Ind. 1898); Moore v. Fletcher, 196 N.E.2d 422 (Ind.Ct.App. 1964), reh'g denied).
In the Sumpters case, the couple alleges that HK and the Tobacco Companies entered into a conspiracy to fraudulently conceal the health risks of tobacco and suppress competition thereby violating I-RICO, Indiana and federal antitrust laws, and the IDSPA. The Sumpters rely upon the "lawful purpose by unlawful means" prong of the conspiracy definition; the lawful purpose was the sale of cigarettes, the unlawful means fraud, suppression of data and suppression of competition. To support this theory, the Sumpters allege that HK aided the Tobacco Companies in their effort to misrepresent the health risks of smoking and knew the representations were false. See Am. Compl. ¶ 10. HK allegedly "failed to disclose the truth because the [Tobacco Companies] and its agents had promised [it] enormous fees to help publicize and circulate the false information necessary to conceal the truth and to continue the tobacco industry's fraud. . . ." Id. Further, the Sumpters offer as evidence of the agreement the two memorandums HK prepared after the Tobacco Clients met. Specifically, the Sumpters rely upon HK's recommendation that the Tobacco Clients form the TIRC and HK's management of that organization at its inception to prove HK entered the conspiracy. In addition, the Sumpters argue that those memoranda implied and another memorandum not produced specifically referenced the Tobacco Companies' agreement to limit competition on the basis of health risk. Therefore, HK adopted a belief in that cause because it continued to develop materials for the Tobacco Clients.
The Sumpters' evidence does not create a reasonable inference that HK entered the alleged conspiracies. If anything, their allegations, in conjunction with evidence of the contractual nature of the relationship between HK and its Tobacco Clients, show that HK was employed by the Tobacco Clients to provide a service. The contract itself does not create a conspiracy and does not subject HK to jurisdiction in this Court under the conspiracy theory of jurisdiction in any of its forms.
With respect to the allegation of fraudulent concealment of the health risks of smoking, the memoranda the Sumpters offer reveal that HK was committed to a plan that would provide sound scientific support for the tobacco industry's position. In fact, HK recommended, over the objections of its Tobacco Clients, that the TIRC fund independent research into the health risks of smoking. Specifically, the memoranda stated:
The industry is strongly convinced that there is no sound scientific basis for the charges that have been made. They believe that the more sensational accusations in the recent papers were premature and in some cases represent publicity issued in the hopes of attracting funds and support for further research.
They point out that the National Cancer Institute of the U.S. Public Health Administration, which is a government agency and supported by Congressional appropriations, has officially refuted the tie-up between cigarette smoking and cancer.
* * *
The companies' answers to questions put [sic] them by John Hill and [Bert C. Goss] provide valuable background. . . .
* * *
Will the companies agree to sponsor new research which will provide definite answers to the charges?
A clear-cut answer to this question was deferred for the time being. The companies all say that they are carrying on much more research in their own laboratories and are sponsoring more research at hospitals and universities than is generally recognized. They believe that when we are acquainted with all of the scientific and factual material in the hands of the companies, we will agree that the major problem is to disseminate information on hand rather than to conduct new research.
However, John Hill did not agree to this and emphatically warned the companies that they should probably expect to sponsor additional research.
Halter Aff. Background Material at 2-3. Further:
The recommended approach is conservative and long-range. We do not believe the industry should indulge in any flashy or spectacular ballyhoo. There is no public relations nostrum, known to us at least, which will cure the ills of the industry with one swallow. The need is for a soundly conceived and effectively executed program based upon continuing research and factual information.
It would be a mistake for the industry group to inaugurate the contemplated program unless it is prepared to maintain it for a minimum of three years. The results of some of the medical research suggested could hardly be in hand short of that period of time.
The underlying purpose of any activity at this state should be reassurance of the public through wider communication of facts to the public. It is important that the public recognize the existence of weighty scientific views which hold there is no proof that cigarette smoking is a cause of lung cancer.
* * *
The following recommendations are submitted for consideration by the manufacturers:
* * *
3. Set-up and function of the [TIRC]. The word "research should be included in the name of the [TIRC] to establish the fact that the group will carry on or sponsor fundamental scientific research and will not be solely an information agency. The [TIRC's] research should be of two kinds:
(a) scientific, medical research
(b) editorial and statistical research into pertinent phases of the current controversy.
The committee should be prepared on competent scientific advice from outside the industry to give substantial support to objective non-duplicating medical research that is most likely to be productive promptly of convincing results.Id. Preliminary Recommendations, at 1-3. It is clear from these statements that HK believed that its Tobacco Clients were interested in setting up an industry advisory committee that would provide independent, truthful information about the health effects of smoking. The company specifically stated that new and definitive research would be necessary and that the companies should "expect to sponsor more research." Id. Background Material at 3. This is not a recommendation that a co-conspirator involved in a scheme to defraud the public would make to the decision-makers.
Moreover, the Sumpters make only one allegation in their complaint that would support an inference that HK knew its Tobacco Clients or the Tobacco companies generally had their own data that confirmed the health risks of smoking. In paragraph 199 of their amended complaint the Sumpters allege:
In the 1950's [sic], [HK] interviewed the research directors of each company and forwarded their comments in a memorandum to the TIRC planning committee. In HK's memorandum, summarizing the interviews, the research directors revealed their knowledge of the relationship between smoking and health and addiction:
"One of the men said, 'It's fortunate for us that cigarettes are a habit they can't break.' Said another: 'Boy, wouldn't it be wonderful if our company was first to produce a cancer-free cigarette.'"
Am. Compl. ¶ 199. Arguably, this creates an inference that HK knew the Tobacco Companies had information about the health risks of smoking that they were attempting to conceal. However, HK's memoranda after those interviews belie that inference. In its report to the new TIRC chairman dated August 17, 1954, HK said the following in connection with the new Scientific Director, Dr. Clarence Cook Little, former director of the American Cancer Society: "Because of his scientific approach, Dr. Little correctly feels that the industry must make no controversial statement on scientific matters unless fully supported by facts and approved by the Scientific Advisory Board." Id. 1954 HK Activity Rep., at 6-7. Regardless of what Dr. Little actually felt, HK clearly felt that statements made by the Tobacco Companies through TIRC should be "supported by facts." Id. The logical inference from this statement is that HK did not know of any alleged deception by its Tobacco Clients or the Tobacco Companies generally, the Sumpters conclusory allegation of such notwithstanding. The fact that HK developed advertising and press releases that presented its Tobacco Client's perspective cannot be evidence that it entered a conspiracy to defraud the public unless it knew of facts to the contrary and continued, voluntarily, to present the information. See Moore, 196 N.E.2d at 435 (defining fraud as "all acts, omissions, and concealments involving a breach of legal or equitable duty and resulting in damages to another"). Accord Sample v. Kinser Ins. Agency, Inc., 700 N.E.2d 802, 804 (Ind.Ct.App. 1998). The totality of the evidence provided by the Sumpters does not support the inference that HK knew the falsity of any "facts" it was hired to publicize.
HK's "Background Material" memorandum dates those interviews on and near December 15, 1953: "It was arranged for [HK] to interview the scientific directors of all the leading companies. Three interviews are being held today, December 15, at 12:30, 2:30 and 4 p.m. respectively. Another will be held on Wednesday." Halter Aff., Background Material at 4.
Similarly, the Sumpters' allegation that HK was part of a conspiracy to limit competition between the Tobacco Companies fails because there is no evidence that HK entered into such a conspiracy. To support their theory that HK conspired with the Tobacco Companies to limit competition on the basis of health risk the Sumpters again point to statements the company made in memoranda. First, in its memorandum summarizing the December meeting of it Tobacco Clients, HK stated:
Because of the anti-trust background, the companies do not favor the incorporation of a formal association. Instead, they prefer strongly the organization of an informal committee which will be specifically charged with the public relations function and readily identified as such.
* * *
The companies' answers to the questions put [sic] them by John Hill and [Bert C. Goss] provide valuable background. They are as follows:
Do the companies consider that their own advertising and competitive practices have been a principal factor in creating a health problem?
The companies voluntarily admitted this to be the case even before the question was asked. They have informally talked over the problem and will try to do something about it. They do, however, point out that this is the one important public relations activity that might very clearly fall within the purview of the anti-trust act. Accordingly, it is doubtful that [HK] will be able to make any formal recommendation with regard to advertising or selling practices and claims.
Halter Aff. Background Material at 1-3. Second, in its proposal for the TIRC, HK stated:
In connection with the proposed activity, it is impossible to overlook the fact that some of the industry's advertising has come in for serious public criticism because of emphasis on health aspects of smoking.
This, of course, is a problem for the individual companies and will not be included in this program. But it must be recognized that some of the advertising may have created a degree of skepticism in the public mind which at the start at least could affect the believability of any public relations effort.Id. Preliminary Recommendations, at 2-3. Furthermore, in setting up the TIRC HK was "to serve as the operating agency of the companies, hiring all the staff and disbursing all funds." Id. Background Material at 4.
Finally, the Sumpters allege that an HK internal memorandum dated June 21, 1954 stated:
Early in the life of the [TIRC], it was accepted as a basic principle that every effort should be made to avoid stimulating more adverse publicity and controversy on the subject of tobacco and health.
The principle has been and will continue to be carefully adhered to in the work carried on for the [TIRC].
* * *
Individual companies and monopolies have agreed to pool research on the health-question, thereby reducing it as a basis for competition.
Am. Compl. ¶¶ 76, 78. HK disputes that a memorandum dated June 21, 1954 exists and provides a memorandum dated June 10, 1954. That memorandum stated:
Early in the life of the [TIRC], it was accepted as a basic principle that every effort should be made to avoid stimulating more adverse publicity and controversy on the subject of tobacco and health.
That principle has been and will continue to be carefully adhered to in the work carried on for the [TIRC]. . . .
* * *
. . . [T]he [TIRC] now has the basis needed for carrying on a long-range plan of public relations activities aimed at keeping the following facts before the public:
1. That there is no proof that smoking is a cause of lung cancer;
2. That an impartial and independent Board of scientists, doctors and educators is advising the TIRC, as a public service, on all problems of tobacco use and health;
3. That the TIRC is determined, through a long-range program, to make every possible effort to help get the facts through laboratory and statistical research;
4. That initial funds for research have been appropriated and more will be provided as warranted to help in getting the answers by scientific means;
5. That all of the laboratory research recommended by the Advisory Board and financed by the TIRC will be carried on by recognized and independent laboratories, institutions and hospitals.
Ginsberg Aff. Ex. A, PUBLIC RELATIONS REPORT AND RECOMMENDATIONS FOR TOBACCO INDUSTRY RESEARCH COMMITTEE, 1-2 (June 10, 1954) [hereinafter "PR Report"]. The Sumpters argue that these statements by HK evidence its agreement to limit competition between the tobacco companies through pooled research and publicity on the health risks of smoking.
Although this Court is inclined to accept HK's version of the memo as the accurate document because the Sumpters have not produced their version, the Court is constrained by the procedural rules that require the Court to resolve all disputed issues of fact in the non-movant's favor, therefore, it must accept the Sumpters' version. See Neiman v. Rudolf Wolff Co., Ltd., 619 F.2d 1189, 1190 (7th Cir. 1980); see also Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996) ("Because the case was dismissed without an evidentiary hearing, [the court] also must resolve all relevant factual disputes in [the non-movant's] favor."). However, even accepting the Sumpters version as the accurate one, the statement that the Tobacco Companies have agreed to something does not mean that HK agreed to it as well, notwithstanding its involvement as operating agency for the Tobacco Companies at the TIRC. These memoranda merely further the implication that HK was hired by the Tobacco Companies to perform services under contract. The Tobacco Companies were making the decisions on how to spend the pooled research money as part of the TIRC board, not HK. Furthermore, HK could not agree to discontinue research into the health risks of tobacco because it was not a competitor in the cigarette market and correspondingly did no independent research on the issue. The Sumpters have failed to present evidence that HK entered into a conspiracy with the Tobacco Companies to limit independent research into healthier cigarettes thereby reducing the health question as a basis for competition in the cigarette market.
IV. CONCLUSION
The Sumpters have failed to make a prima facie case that this Court has jurisdiction over non-resident defendant HK. Therefore, for the reasons discussed above, defendant HK's motion to dismiss for lack of personal jurisdiction is GRANTED.
IT IS SO ORDERED.