Raser Tech. v. Morgan Stanley
449 P.3d 150
Utah
2019

Background

  • Plaintiffs (Raser Technologies and several Utah shareholders/entities) alleged a multi-defendant naked short-selling and stock-manipulation conspiracy that devastated Raser and Utah residents, asserting claims under the Utah Pattern of Unlawful Activity Act.
  • The core factual allegations: Merrill and Goldman entities shorted Raser stock (some allegedly naked), moved shares among affiliates and clearing firms, and used shareholder stock (including shares delivered in Utah) in transactions tied to a Merrill-structured Convertible Bond Offering.
  • Plaintiffs sued multiple out-of-state defendants; the district court dismissed for lack of specific personal jurisdiction after concluding defendants’ conduct was not expressly aimed at Utah and rejecting the conspiracy theory of jurisdiction.
  • On appeal, the Utah Supreme Court examined whether the effects test (as framed in ClearOne/Pohl) survives Supreme Court decisions (Walden and Bristol-Myers Squibb) and whether a due-process-compatible conspiracy theory of jurisdiction should be adopted under the Utah Nonresident Jurisdiction Act.
  • The Court held that (1) the district court erred by analyzing plaintiffs’ claims and defendants’ contacts collectively rather than on a plaintiff-by-plaintiff and defendant-by-defendant basis, (2) a carefully defined conspiracy theory of jurisdiction can be consistent with due process, and (3) remand is required for the district court to reassess specific jurisdiction under the clarified standards.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether defendants’ out-of-state conduct was "expressly aimed" at Utah under the effects test Defendants committed intentional acts aimed at Raser (headquartered in Utah) causing harms primarily felt in Utah Knowledge of plaintiff’s Utah ties and foreseeable effects in Utah are insufficient; conduct must connect defendant to forum The Court: Walden limits the effects test; mere foreseeability or harm in Utah is insufficient—defendant’s own forum-related contacts are required; district court must analyze claims individually
Whether the district court erred by treating multiple plaintiffs/defendants collectively in jurisdictional analysis Collective analysis is appropriate because the alleged scheme affected all plaintiffs similarly Jurisdiction must be analyzed for each plaintiff’s claim against each defendant Held: Court must assess specific jurisdiction claim-by-claim and defendant-by-defendant; collective analysis was error
Whether contract-based or other contacts (e.g., Merrill’s Utah dealings) can support jurisdiction over other co-defendants Plaintiffs: Merrill’s Utah contacts (e.g., stock agreements, Provo office dealings) can be imputed to co-defendants via conspiracy theory Defendants: Contacts of one co-conspirator cannot be attributed to others without the defendant’s own forum contacts Held: Contacts tied to contractual or agency relationships may support jurisdiction for related tort claims in some circumstances; district court should evaluate relevance and relation to each claim
Whether Utah should recognize a conspiracy theory of jurisdiction consistent with due process Plaintiffs: Yes—if a co-conspirator knew or should have known overt acts would occur in the forum, contacts can be imputed Defendants: No—attribution of third-party acts to a defendant violates Walden and due process; jurisdiction must rest on defendant’s own contacts Held: Utah adopts a limited conspiracy theory: plaintiffs must plead with particularity (1) conspiracy membership, (2) co-conspirators’ acts create forum contacts, and (3) defendant could reasonably anticipate being haled into court in the forum because of the conspiracy

Key Cases Cited

  • Int’l Shoe Co. v. Wash. Office of Unemployment Comp. & Placement, 326 U.S. 310 (minimum contacts standard)
  • Walden v. Fiore, 571 U.S. 277 (2014) (jurisdiction requires defendant’s own forum-related contacts; plaintiff’s forum ties are not enough)
  • Calder v. Jones, 465 U.S. 783 (1984) (effects-based jurisdiction where defendant expressly aimed tortious conduct at forum via relationship and knowledge of harm)
  • Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017) (specific-jurisdiction requires connection between forum and each plaintiff’s claim)
  • Daimler AG v. Bauman, 571 U.S. 117 (2014) (limits on general jurisdiction)
  • World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (foreseeability of being haled into court must be reasonable)
  • ClearOne, Inc. v. Revolabs, Inc., 369 P.3d 1269 (Utah 2016) (effects test as applied in Utah post-Pohl)
  • Pohl, Inc. of Am. v. Webelhuth, 201 P.3d 944 (Utah 2008) (declined to adopt conspiracy theory earlier; effects test discussed)
  • Mackey v. Compass Mktg., Inc., 892 A.2d 479 (Md. 2006) (formulation of conspiracy-jurisdiction test)
  • Tricarichi v. Cooperative Rabobank, U.A., 440 P.3d 645 (Nev. 2019) (post-Walden adoption of conspiracy theory test)
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