Kenneth M. Argentieri
Yuanyou (Sunny) Yang
The American Tort Reform Foundation (ATRF) recently published its 2015–2016 Judicial Hellholes® report. In this latest report, California and New York City top the list of jurisdictions where ATRF believes that judges in civil cases systematically and unfairly treat corporate defendants. Perhaps not surprisingly, plaintiffs tend to flock to Judicial Hellhole jurisdictions to file lawsuits, even when the events giving rise to the claim or the underlying injury did not occur there. In personal injury or toxic tort cases, plaintiffs will often select a favorable forum and sue numerous defendants that allegedly have responsibility for the injuries. Under the traditional “minimum contacts” analysis applied by most courts, defendants rarely could get dismissed from these cases on jurisdictional grounds because they regularly conduct business or had other significant contacts in the state.
However, in 2014 the U.S. Supreme Court ruled in Daimler AG v. Bauman, (2014), that a court may exercise general personal jurisdiction over an entity only when its “affiliations with the state are so ‘continuous and systematic’ as to render the entity essentially at home in the forum state,” as held in Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014). The Supreme Court indicated that the paradigm forum for the exercise of general personal jurisdiction over a corporation is its state of incorporation or its principal place of business. The Daimler decision significantly narrowed the scope of when it is constitutionally permissible to exercise general personal jurisdiction over a corporation.
Following Daimler, it has been widely accepted that merely because a defendant regularly conducts business in the state; advertises in the state; has employees, offices or agents in the state; has traveled to the state; has entered into contracts in the state; or has generated substantial revenues in the state; these factors are insufficient to render the defendant “at home” in the state. The Daimler ruling has provided defendants a basis to challenge personal jurisdiction in jurisdictions where the conduct giving rise to the injury did not occur and where the defendant was not incorporated and did not have its principal place of business. A dismissal for lack of general personal jurisdiction would not prevent another lawsuit from being filed against that defendant in a jurisdiction where the injury occurred or where the defendant is deemed to be at home. However, the available jurisdictions may not be one of the plaintiff’s magical jurisdictions.
Based on the Daimler decision, courts have been willing to dismiss defendants from cases brought in jurisdictions that are not related to where the alleged injury occurred. For example, very recently, a Pennsylvania court dismissed a Jamaican and a Bahamian corporation from a personal-injury claim brought in the Middle District of Pennsylvania for injuries that occurred at a resort in Jamaica. The vacation package was purchased through the Bahamian company. After jurisdictional discovery, the court found, in Melaragni v. Sandals Resorts International, (2015 U.S. Dist. LEXIS 164038 M.D. Pa., Dec. 8, 2015), that there was no evidence to demonstrate that the defendant companies were at home in Pennsylvania. Other Pennsylvania courts have reached similar results.
Rulings like the one in Melaragni have led plaintiffs to develop arguments to obtain general personal jurisdiction over defendants in preferred jurisdictions. Notably, many states require companies to register to do business in that state or require licenses or permits to do business. Plaintiffs have contended that registration constitutes consent to personal jurisdiction in that state.
Since Daimler, the courts are split on whether registration by a company in a state justifies the exercise of general personal jurisdiction over the company. Courts in some states hold that registration, licenses or permits to do business subject the corporation to general personal jurisdiction in that state because the corporation is deemed to have consented to general personal jurisdiction, as in Hudson v. International Paper, (In re Asbestos Litigation), (Del. Super. Ct. Aug. 25, 2015), a corporation has consented to the general jurisdiction by registering to do business in the state; in Vera v. Republic of Cuba, 91 F. Supp. 3d 561, 570, (S.D.N.Y. 2015), obtaining a license to do business in New York subjects the bank to general personal jurisdiction in the state; in New York subjects the bank to general personal jurisdiction in the state); Boehringer Ingelheim Pharma GmbH v. Teva Pharms. USA, Inc., 2015 U.S. Dist. LEXIS 92921, *6 (D.N.J. July 16, 2015) defendant “consented to personal jurisdiction by complying with the State of New Jersey’s registration requirements and appointing an in-state agent to accept service of process”; Perrigo Co. v. Merial., 2015 U.S. Dist. LEXIS 45214, *16 (D. Neb. Apr. 7, 2015) registration to do business in a state subjects the corporation to general personal jurisdiction in the state); Acorda Therapeutics, Inc. v. Mylan Pharms., Inc., 78 F. Supp. 3d 572, 2015 WL 186833, **7-14 (D. Del. 2015) (same);Matter of B&M Kingstone v. Mega International Commercial Bank 131 A.D.3d 259, 267 (N.Y. App. Div. 1st Dep’t 2015) (same).
However, courts in other states have found that registration or licenses to do business are insufficient to establish general personal jurisdiction over a corporation and would violate the defendant’s due process rights. In Surita v. AM General, No. 15-7164, N.D. Ill. (Nov. 4, 2015, Doc. 118), the fact of registering to do business in Illinois cannot be deemed as the consent to the general personal jurisdiction; in Lanham v. Pilot Travel Centers, (D. Or. Sept. 2, 2015), the registration statue does not grant jurisdiction over the court by the fact of registration itself; in Mullen v. Bell Helicopter Textron, (S.D. Miss. Aug. 17, 2015), the mere “business registration in Mississippi does not establish that it is ‘at home’ in Mississippi”; in AstraZeneca AB v. Mylan Pharmaceuticals, ,(D. Del. Nov. 5, 2014), the compliance of administrative registration requirement that outlines the procedure of doing business “does not amount to consent to jurisdiction or waiver of due process”; in Brown v. CBS, (D. Conn. 2014), conferring personal jurisdiction on a registered foreign corporation would violate due process which was also held in Gliklad v. Bank Hapoalim B.M., (N.Y. Sup. Ct. Aug. 4, 2014)
Similarly, certain states require corporations to designate an agent to accept service of legal process in the state. Plaintiffs assert that where a company has a registered agent for service in the state then it has consented to personal jurisdiction in that state. Since Daimler, the courts have also split on this issue. Some courts hold that the designation of an agent is sufficient to be treated as consent of a corporation for the court to exercise general personal jurisdiction. Some examples include Grubb v. Day to Day Logistics, 2015 U.S. Dist. LEXIS 86543, *18 (S.D. Ohio July 2, 2015), “service upon an agent designated by a statute ... constitutes consent”; Perrigo; Senju Pharmaceutical Company v. Metrics, U.S. Dist. LEXIS 45214, at *16 (same)(D.N.J. Mar. 31, 2015) the defendant consented to be sued in that forum by accepting service in the state through a registered agent; in Forest Labs v. Amneal Pharmaceuticals, No. CV-14-508, 2015 WL 880599, at *13-14 (D. Del. Feb. 26, 2015), “a corporation could validly consent to personal jurisdiction in a state’s courts by complying with a state registration statute requiring designation of an agent for service of process.”
However, other courts have held that the designation of agents in accordance with any registration statute by itself is insufficient for consent, unless there is specific statutory language in the states’ statute conferring general personal jurisdiction, as in Surita. In Surita, merely having a registered agent in Illinois cannot be deemed as consent to the general jurisdiction; in Lanham; in In re Plavix Related Cases and in Gliklad.
Pennsylvania requires foreign companies to register to do business in the commonwealth and maintain a registered office. However, the Pennsylvania courts have not ruled on whether these statutes confer general personal jurisdiction over companies.
Given the split in rulings on whether registering to do business or having a registered agent constitutes consent to general personal jurisdiction, the ability to obtain a dismissal based on lack of personal jurisdiction will depend on the jurisdiction where the lawsuit is filed. However, this is an area of development in the law as state appellate courts and federal circuit courts have not tackled these issues. Ultimately, the Supreme Court may have occasion to address the parameters of general personal jurisdiction again if the divide in the lower courts continues.
Reprinted with permission from The Legal Intelligencer, © ALM Media Properties LLC. All rights reserved.