Conspiracy-Based Specific Jurisdiction Requires Twombly-Level Plausibility and Particularized Facts (Fourth Circuit)

1. Introduction

This published Fourth Circuit decision addresses whether a Florida-based general contractor, Westerfeld Construction by Glick, LLC (“Westerfeld”), can be sued in South Carolina when the underlying dispute arises from a Florida construction program (the “Rebuild Florida Project”) and Westerfeld allegedly did no business in South Carolina.

The litigation’s South Carolina connection came from financing arrangements: Mobilization Funding, LLC (“Mobilization Funding”)—a contract-financing company with a presence in South Carolina—loaned funds to a subcontractor (Jessup Construction, LLC) and obtained guarantees from GSH of Alabama, LLC and its members Barbara and Scott Stokes. Those “Loan Contracts” contained South Carolina choice-of-law and consent-to-venue provisions. Westerfeld, however, was not a signatory to those Loan Contracts.

After default was declared, GSH and the Stokeses brought third-party claims against Westerfeld in South Carolina federal court, alleging fraud and a civil conspiracy with Mobilization Funding to induce the financing and to divert project funds. The central issue on appeal was personal jurisdiction: whether South Carolina courts may exercise general or specific jurisdiction over Westerfeld under the Due Process Clause.

2. Summary of the Opinion

The Fourth Circuit affirmed dismissal of the third-party claims against Westerfeld for lack of personal jurisdiction in South Carolina.

• General jurisdiction: Not contested on appeal; the record contained no “continuous and systematic” South Carolina contacts by Westerfeld.
• Specific jurisdiction: Rejected on two theories:
  • Contract web theory: GSH could not rely on the Funds Control Agreement (which Westerfeld did not sign) or the Loan Contracts (which Westerfeld did not sign) to create forum contacts attributable to Westerfeld; those were the “unilateral activity” of third parties.
  • Conspiracy jurisdiction theory: Even assuming co-conspirator contacts can be imputed, GSH failed to plausibly and particularly allege that Westerfeld participated in a conspiracy with Mobilization Funding; the “referral partnership program” allegations were consistent with ordinary arms-length business conduct.
• Procedural rulings: No abuse of discretion in (i) denying as moot a motion to strike an affidavit the district court did not rely on and (ii) declining jurisdictional discovery where allegations were speculative or conclusory.

3. Analysis

3.1. Precedents Cited

The opinion is largely an application and synthesis of established personal-jurisdiction doctrine, but it is notable for (a) expressly aligning Rule 12(b)(2)’s prima facie approach with modern “plausibility” review and (b) tightly cabining “conspiracy theory of jurisdiction” to cases supported by particularized facts.

A. The “prima facie approach” and plausibility in Rule 12(b)(2) practice

• Hawkins v. i-TV Digitalis Tavkozlesi zrt.: The court adopts Hawkins’s framework: without an evidentiary hearing, the jurisdiction-proponent must make a prima facie showing; the analysis “resembles the plausibility inquiry” under Rule 12(b)(6), accepting proffered facts as true but requiring more than conclusory assertions. This case uses Hawkins to justify dismissing where allegations do not plausibly connect the defendant to the forum.

B. Baseline constitutional limits: minimum contacts and fairness

• Int'l Shoe Co. v. Washington: Supplies the “minimum contacts” and “fair play and substantial justice” baseline. The Fourth Circuit uses Int'l Shoe as the constitutional anchor for why mere association with others’ forum conduct is insufficient.
• Perdue Foods LLC v. BRF S.A.: Cited for the proposition that where the forum long-arm statute reaches due process limits, the inquiry collapses into the federal constitutional test.
• Cockrell v. Hillerich & Bradsby Co.: Used to establish South Carolina’s long-arm statute, S.C. Code § 36-2-803, extends to the outer limits of due process.

C. General jurisdiction (background, not disputed)

• Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc.: Cited by the district court (and referenced in the appellate narrative) for the “continuous and systematic” contacts concept. The appellate opinion notes GSH did not challenge the absence of general jurisdiction.

D. Specific jurisdiction: purposeful availment and “defendant’s own conduct”

• UMG Recordings, Inc. v. Kurbanov: Supplies the Fourth Circuit’s three-prong specific jurisdiction test—purposeful availment, relatedness, and constitutional reasonableness. The court resolves the appeal at prong one (purposeful availment), consistent with later cited authority.
• Consulting Eng'rs Corp. v. Geometric Ltd.: Cited for the sequencing principle: courts address prongs two and three only if purposeful availment is satisfied.
• Walden v. Fiore: Central to the opinion’s reasoning. Walden requires jurisdiction to rest on the defendant’s own affiliation with the forum, not “attenuated contacts” created by interacting with persons affiliated with the state. The court uses Walden to reject attempts to bootstrap jurisdiction from Jessup/Mobilization Funding agreements.
• Helicopteros Nacionales de Colombia, S.A. v. Hall: Quoted for the “unilateral activity of another party or a third person” rule. This is the key doctrinal weapon against GSH’s “web of agreements” approach: even if those contracts anchor others in South Carolina, they do not create Westerfeld’s South Carolina contacts.

E. Conspiracy theory of jurisdiction: particularity and Twombly alignment

• Unspam Techs., Inc. v. Chernuk: The controlling Fourth Circuit precedent on “conspiracy theory of jurisdiction.” The opinion applies Unspam’s three requirements: (1) a conspiracy, (2) defendant participation, and (3) sufficient forum contacts by a co-conspirator in furtherance of the conspiracy. Critically, Unspam demands pleading “with particularity” and rejects allegations that merely describe conduct equally consistent with arms-length transactions.
• Bell Atl. Corp. v. Twombly: Used as an analogy: just as a “naked assertion of conspiracy” fails under Rule 12(b)(6), it likewise fails to establish jurisdiction under Rule 12(b)(2). The court imports Twombly’s “possibility vs. plausibility” boundary into jurisdictional pleading/proffer.

F. Appeal preservation and discretionary matters

• United States v. Ebert: Cited to support the panel’s decision not to resolve the case on waiver grounds where the appellee did not raise waiver and the district court addressed the allegations in a related way.
• Jennings v. Univ. of N.C. and Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc.: Cited for abuse-of-discretion review of procedural decisions (motion to strike; jurisdictional discovery) and for the principle that speculation does not entitle a party to jurisdictional discovery.

3.2. Legal Reasoning

A. The court’s tight focus on “purposeful availment”

The Fourth Circuit resolves the specific jurisdiction inquiry at the first prong: whether Westerfeld “purposefully availed” itself of South Carolina. It emphasizes that the forum connection must be the product of the defendant’s own conduct directed at the forum, not downstream consequences of other parties’ choices or contracts.

B. Rejection of the “web of agreements” theory

GSH attempted to establish South Carolina jurisdiction by chaining together: (1) the Funds Control Agreement (between Jessup and Mobilization Funding) and (2) the Loan Contracts (between Jessup, GSH, the Stokeses, and Mobilization Funding), which contained South Carolina choice-of-law and venue provisions, and then (3) attributing those forum-facing provisions to Westerfeld because Westerfeld purportedly benefited from and had “control” referenced in the Funds Control Agreement.

The court rejects this chain for a simple constitutional reason: even if those agreements strongly connect their signatories to South Carolina, they do not constitute Westerfeld’s “minimum contacts” because Westerfeld did not create them (it did not sign them, and the complaint did not allege Westerfeld requested the indemnity/release language). Under Helicopteros Nacionales de Colombia, S.A. v. Hall and Walden v. Fiore, the unilateral contracting activity of Jessup and Mobilization Funding cannot be repackaged as Westerfeld’s purposeful forum conduct.

C. Conspiracy jurisdiction: plausible participation is the gatekeeping requirement

GSH’s appellate pivot was to argue that Mobilization Funding’s South Carolina contacts (notably, South Carolina-centered Loan Contracts) could be imputed to Westerfeld under the “conspiracy theory of jurisdiction.” The Fourth Circuit treats this as doctrinally available in principle (per Unspam Techs., Inc. v. Chernuk), but unavailable on these pleadings/proffers.

The court’s key move is evidentiary and inferential: it demands particularized facts that make conspiracy involvement plausible, not merely conceivable. A “referral partnership program” promising commissions for referrals may suggest a business relationship, but—without more—can “equally describe” ordinary arms-length commercial conduct, which Unspam Techs., Inc. v. Chernuk treats as insufficient. Further, the complaint itself undermined the referral-based inference because it alleged Mobilization Funding introduced GSH and Jessup to Westerfeld (not vice versa), and it failed to allege even a single specific representation by Westerfeld about the loan.

By explicitly analogizing to Bell Atl. Corp. v. Twombly, the court makes clear that conspiracy allegations used to establish jurisdiction face a “possibility vs. plausibility” screen: a “naked assertion of conspiracy” cannot carry a Rule 12(b)(2) burden any more than it can survive Rule 12(b)(6).

D. Jurisdictional discovery and affidavit practice

The court affirms denial of jurisdictional discovery because GSH offered only speculation and conclusory assertions about South Carolina contacts. It also affirms the district court’s mootness ruling on a motion to strike an affidavit where the court did not rely on it—underscoring that jurisdiction must be established by the proponent’s concrete proffer, not by trying to exclude immaterial defense materials.

3.3. Impact

• Higher pleading/proffer discipline for conspiracy jurisdiction in the Fourth Circuit: The opinion reinforces that “conspiracy theory of jurisdiction” is not a shortcut around Walden’s defendant-focused contacts requirement. Plaintiffs must allege specific, non-neutral facts supporting the conspiracy and the defendant’s participation—especially where the alleged conduct could be ordinary commerce.
• Limits on “contractual bootstrapping”: Parties frequently try to drag non-signatories into favorable forums by pointing to choice-of-law/venue clauses in related agreements. This opinion is a clear warning: absent the nonresident’s own forum-directed conduct (or a plausibly alleged basis for imputation), South Carolina-centered provisions in others’ contracts will not create jurisdiction.
• Practical litigation effects: Third-party practice (impleader) will not cure personal jurisdiction deficiencies. Even when a dispute is already properly in a forum as to some parties, each additional defendant must independently satisfy due process limits.
• Discovery is not automatic: The opinion supports early dismissal without jurisdictional discovery where the jurisdictional theory is speculative—encouraging defendants to move early under Rule 12(b)(2) and discouraging plaintiffs from using discovery to “find” jurisdiction.

4. Complex Concepts Simplified

• Personal jurisdiction: A court’s constitutional power to require a defendant to litigate in that forum.
• General vs. specific jurisdiction:
  • General: the defendant is “at home” in the state (typically place of incorporation/principal place of business), allowing suit on any claim.
  • Specific: the lawsuit must arise out of the defendant’s forum-directed conduct.
• Purposeful availment: The defendant must deliberately reach into the forum state (not just have effects felt there) so it is fair to expect being sued there.
• “Unilateral activity” rule: One party’s decision to do forum-related acts (like signing a South Carolina contract) cannot, by itself, create jurisdiction over a different defendant who did not do those acts.
• Conspiracy theory of jurisdiction: A doctrine (recognized in the Fourth Circuit) allowing a defendant’s forum contacts to be “imputed” from a co-conspirator—but only if a real conspiracy and participation are plausibly and particularly alleged, and the co-conspirator’s forum contacts were in furtherance of that conspiracy.
• Prima facie showing under Rule 12(b)(2): When there is no evidentiary hearing, the plaintiff must come forward with specific facts that, if accepted, establish jurisdiction. Conclusory statements are not enough.
• Jurisdictional discovery: Limited discovery aimed at uncovering facts supporting jurisdiction. Courts may deny it when the requesting party offers only speculation rather than a concrete, nonconclusory jurisdictional theory.

5. Conclusion

The Fourth Circuit’s decision affirms a strict, defendant-centered approach to specific personal jurisdiction: South Carolina may not exercise jurisdiction over a nonresident contractor based on financing and funds-control agreements it did not sign, even if those agreements are governed by South Carolina law and select South Carolina as a venue.

Most importantly, the court reinforces that “conspiracy theory of jurisdiction” is available only on a strong factual foundation. To impute a co-conspirator’s forum contacts, a plaintiff must plead and proffer particularized facts making conspiracy participation plausible—consistent with the Twombly line between possibility and plausibility. In practice, this opinion meaningfully limits forum bootstrapping through conclusory conspiracy allegations and interlocking contracts signed by others.