The United States of America ("the Government") seeks recovery of health care expenses under the Medical Care Recovery Act, 42 U.S.C. § 2651 et seq., and the Medicare Secondary Payment provisions of the Social Security Act, 42 U.S.C. § 1395y, and disgorgement under the Racketeer Influenced Corrupt Organization Act, 18 U.S.C. §§ 1961-1968, ("RICO") from nine companies *fn1 and two affiliated organizations *fn2 involved in the cigarette industry.
This matter is now before the Court upon the motion of one of the eleven Defendants, British American Tobacco Industries p.l.c. ("BAT Ind."), to dismiss the Government's complaint for lack of personal jurisdiction. *fn3 The Government argues that it is proper for this Court to exercise personal jurisdiction over BAT Ind. under the District of Columbia Long-Arm Statute, D.C. Code § 13-423(a), while BAT Ind. responds that it has no minimum contacts with this forum and that this Court cannot exercise personal jurisdiction over it based on the actions of any other Defendant.
The Court has fully considered the parties' extensive filings, the representations of counsel in open court at oral argument, and the entire record. As more fully explained herein, the Court concludes that the Government has failed (1) to make the prima facie showing of a conspiracy between BAT Ind. and its subsidiaries B&W and BATCO or between BAT Ind. and its non-affiliated co-Defendants which would justify assertion of personal jurisdiction under the District of Columbia long-arm statute, and (2) to make the prima facie showing that BAT Ind. had those minimum contacts with the District of Columbia which constitutional due process requires. For these reasons, BAT Ind's Motion to Dismiss is granted.
II. Factual Background *fn4
The history of BAT Ind. and its subsidiaries and co-Defendants, British American Tobacco Company ("BATCO") and Brown & Williamson Tobacco Corporation ("B&W"), is one of significant change over a period of 98 years. Each of the three corporations claims to have "scrupulously maintained all corporate formalities" throughout the transformations in their corporate structures and their relationships to each other. Affidavit of Philip M. Cook In Support of Defendant B.A.T. Industries p.l.c.'s Motion To Dismiss ("Cook Aff.") at ¶ 12. BATCO, an English company that conducts tobacco-related research and owns subsidiaries which manufacture and market tobacco products, was incorporated in 1902. Reply Affidavit of Philip M. Cook In Support of Defendant B.A.T. Industries p.l.c.'s Motion To Dismiss ("Cook Reply Aff.") at ¶ 4. In 1927, BATCO acquired the stock of B&W, an American cigarette manufacturer, which "operated as a subsidiary directly or indirectly owned by" BATCO until 1979. Id.
In 1928, Tobacco Securities Trust Company Limited ("TST"), predecessor to BAT Ind., was incorporated as an investment company in England. Cook Aff. at ¶¶ 4-5. TST "never manufactured, marketed, packaged, sold, promoted, advertised or distributed tobacco products, or any other goods or products." Cook Aff. at ¶ 4. BATCO partially owned TST, while TST owned "approximately 0.21 percent of [BATCO'S] publicly held ordinary shares." Id. at ¶ 5. "No shareholder held a controlling interest in" BATCO before 1976. Id.
On July 23, 1976, TST changed its name to B.A.T. Industries Limited, which "became the sole ordinary shareholder of [BATCO]" in a "reverse takeover." "The former public shareholders of ordinary shares of [BATCO] became shareholders of [TST/B.A.T. Industries Limited]." Id. at ¶ 5. In 1979, BATCO went from being a parent company of Brown & Williamson to being its sister company. Id. at ¶ 4. On July 8, 1981, B.A.T. Industries Limited changed its name to B.A.T. Industries p.l.c. ("BAT Ind."). Id. at ¶ 5. Since the reverse takeover, BAT Ind. has "been a holding company of both Brown & Williamson and [BATCO]." Id. at ¶ 4.
After the July 23, 1976, transaction and continuing until the present, BATCO has "continued its operations and continued to retain its separate corporate existence and identity," as has BAT Ind. Id. at ¶ 6. BAT Ind. remains an intermediate holding company of Brown & Williamson and BATCO; their ultimate parent company is British American Tobacco p.l.c. *fn5 , which was created in September 1998. Id. at ¶ 9. Like its predecessor, TST, BAT Ind. "remains a holding company that does not manufacture, market, package, sell, promote, advertise or distribute tobacco products." Id.
To prevail on a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing of pertinent jurisdictional facts. See Edmond v. United States Postal Serv. Gen. Counsel, 949 F.2d 415, 424 (D.C. Cir. 1991); Naartex Consulting Corp. v. Watt, 722 F.2d 779, 787 (D.C. Cir. 1983). A plaintiff makes such a showing by alleging specific acts connecting the defendant with the forum; mere allegations of a conspiracy will not suffice. See Naartex at 787.
In determining whether a basis for the exercise of personal jurisdiction exists, "factual discrepancies appearing in the record must be resolved in favor of the plaintiff." Crane v. New York Zoological Soc., 894 F.2d 454, 456 (D.C. Cir. 1990) ( citing Reuber v. United States, 750 F.2d 1039, 1052 (D.C. Cir. 1984)). In this case, the facts central to the Motion's disposition are not disputed. Indeed, the Government did not submit any reply to BAT Ind.'s Response to the Government's Proffer of Publicly Available Evidence ("Proffer" or "Prof.").
The Government offers four separate rationales to justify the exercise of personal jurisdiction over BAT Ind. under the District of Columbia long-arm statute, two of which are based on conspiracy allegations. To prevail on this Motion, the Government must make a prima facie showing that under at least one of its rationales, BAT Ind. falls within the coverage of the long-arm statute, and that exercising jurisdiction over it in this case would not violate its due process rights. The Government has not made either showing.
A. The Government Has Failed To Make A Prima Facie Showing Of A Conspiracy
The Government argues that BAT Ind. is subject to personal jurisdiction in the District of Columbia pursuant to the District of Columbia long-arm statute, D.C. Code § 13-423(a), based on the conspiracy theory of jurisdiction. The D.C. long-arm statute provides:
[a] District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's
(1) transacting any business in the District of Columbia;
(3) causing tortious injury in the District of Columbia by an act or omission in the District of Columbia;
(4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia. D.C. Code § 13-423(a).
The conspiracy theory of jurisdiction provides that where a court has personal jurisdiction over the co-conspirator of a non-resident defendant, such as BAT Ind., due to overt acts committed by the co-conspirator in the forum in furtherance of the conspiracy, the co-conspirator is deemed the non-resident defendant's "agent" for purposes of the long-arm statute. Junquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1021, 1031 (D.C. Cir. 1997). While conspiracy-based jurisdiction has been approved as a general principle in the District of Columbia, such approval has been given only in cases where the defendant has not contested the existence of the conspiracy. See, e.g., Mandelkorn v. Patrick, 359 F. Supp. 692, 695 (D.D.C. 1973); Dooley v. United Tech. Group, 786 F. Supp. 65 (D.D.C. 1992). However, by the same token, no District of Columbia court has ruled that conspiracy jurisdiction is unavailable in a factual setting where a defendant has contested the existence of a conspiracy. See Eric T. v. National Med. Enterprises, Inc., 700 A.2d 749, 756 n.12 (D.C. 1997). The Government asserts two distinct theories for the exercise of personal jurisdiction over BAT Ind. under a conspiracy-based argument. As its first theory, the Government argues that under D.C. Code § 13-423(a)(1), BAT Ind.'s co-conspirators transacted business in the District of Columbia and committed numerous overt acts in furtherance of the conspiracy in the District of Columbia. As its second theory, the Government argues that under D.C. Code § 13-423(a)(3), BAT Ind.'s co-conspirators committed tortious acts in the District of Columbia in furtherance of the conspiracy that caused tortious injury in the District of Columbia. As a threshold issue, the Government must first make a prima facie showing that BAT Ind. participated in the conspiracy.
To make such a showing, the Government must make a prima facie showing of all four elements of a civil conspiracy:
(1) an agreement between two or more persons; (2) to participate in an unlawful act, or in a lawful act in an unlawful manner; and (3) an injury caused by an unlawful overt act performed by one of the parties to the agreement (4) pursuant to, and in furtherance of, the common scheme. Griva v. Davison, 637 A.2d 830, 848 (D.C. 1994).
In addition, because the Government accuses BAT Ind. of participating in a conspiracy under RICO, an additional element is added to the above-cited definition of a common law civil conspiracy. Under RICO, each defendant must have committed "at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years . . . after the commission of a prior act of racketeering activity." 18 U.S.C. § 1961(5). The Government has failed to make a prima facie showing of the four elements of a civil conspiracy as well as the fifth element necessary to its claim that BAT Ind. participated in a RICO conspiracy either with the ...