The Sixth Circuit recently reversed the Southern District of Ohio and found personal jurisdiction over an out-of-state attorney in Schneider v. Hardesty, Case No. 09-3892. Michael Hardesty, a resident of Utah, solicited David Schneider, a resident of Ohio, to participate in an investment program with London Reinsurance. Schneider’s premium was pooled with other premiums and would be invested with Vavsseur. However, when it became apparent that the Vavasseur was a Ponzi scheme being investigated by the SEC, the assets were frozen by a bank in Europe. To assist with the recovery of London Reinsurance’s frozen assets, Hardesty hired Thomas Nelson, an attorney licensed to practice in Utah. Nelson drafted two letters addressed to the individuals whose premiums were invested in London Reinsurance. The letters introduced Nelson as an attorney “retained by Mike Hardesty . . . to assist in recovering the funds that were invested” and were drafted with Nelson’s signature block. In one letter, Nelson summarized the efforts to recover the assets and stated that “the name, address, and contact information for each insured” had been provided to the bank in aid of return of the funds. Both letters included statements that “every effort is being made to obtain a 100% return of your funds. Nelson gave the letters to Hardesty and did not mail the letters himself.
Schneider filed a lawsuit against Hardesty and Nelson alleging that the letters were false and misleading and that he had detrimentally relied on Nelson’s representation that he was acting on behalf of the insureds. Nelson moved to dismiss Schneider’s claims against him for lack of personal jurisdiction. Schneider deposed Nelson on the issue of jurisdiction, but neither party requested a hearing. While the court noted the difficulty of determining standard to apply where discovery was taken but no hearing was had, it declined to rule on the standard because Schneider had nevertheless met the more exacting “preponderance of the evidence” standard.
First, the Court held that Ohio’s long-arm statute had been satisfied because the letters drafted by Nelson caused “reasonably expected tortious injury” within the meaning of Ohio Rev. Code Ann. § 2307.382(A)(6). Although Nelson claimed to have no knowledge of the locations of investors, Nelson explicitly acknowledged that he was involved in the transmission of the investors’ names and addresses to the bank in Europe. The Court noted that it would “defies logic that Nelson participated in this transmission, but remained ignorant of the investors’ geographic locations.” The Court held that there were sufficient facts to conclude that Nelson should have reasonably expected that the letters would cause injury in Ohio. In doing so, the Court endorsed the district courts’ holdings that fraudulent communications or misrepresentations directed at Ohio residents satisfy § 2307.382(A)(6)’s requirements.
The Court then held that the Schneider’s claim of specific jurisdiction also accorded with due process. Nelson purposefully availed himself of the benefits and burdens of Ohio when he drafted the letters knowing that Hardesty would then mail the letters to investors. The representations in the letters showed an intent to establish an ongoing contact with the investors – the exact kind of conduct recognized by Burger King to constitute purposeful availment. The fact that Nelson himself did not mail the letters himself did not make Nelson’s actions any less purposeful. The dispute clearly arose from the two letters Nelson wrote and Schneider received, and the exercise of jurisdiction was not unreasonable. The Court therefore remanded the case for further proceedings.