Post-Daimler, Courts are split on when foreign and domestic corporate defendants are subject to general in personam jurisdiction
August 31, 2016
Albert L. Piccerilli and Cora A. Dayon
Types : Alerts
The United States Supreme Court’s decision in Daimler AG v. Bauman has altered the legal landscape as to where a corporate defendant, foreign or domestic, may be sued. In Daimler, a case in which relevant events took place entirely outside the United States, the Court considered whether a defendant that was incorporated under the laws of Delaware and had its principal place of business in New Jersey was subject to the general (or all-purpose) in personam jurisdiction of the courts in California. The Court held that general in personam jurdisdiction over the defendant could not attach consistent with due process of law, despite the fact that the defendant operated multiple California-based facilities (including a regional office and two other centers) and that the defendant’s sales of new luxury vehicles to the California market accounted for 10% of all sales of new luxury vehicles in the United States and 2.4% of the defendant’s parent’s worldwide sales. Id. at 752. Pre-Daimler, the California court’s exercise of general in personam jurisdiction over this defendant seemed to have been entirely supportable. However, the Daimler Court concluded otherwise, warning that if the defendant’s “California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which [the defendant’s] sales are sizable.” Id. at 750.
According to the Daimler Court, for general in personam jurisdiction to attach, the corporate defendant’s “affiliations with the State [must be] so ‘continuous and systematic’ as to render [the defendant] essentially at home in the forum State.” Id. at 754 (emphasis added). The Court determined that for a corporation, the corporation’s “place of incorporation and principal place of business are “paradig[m] . . . bases for general jurisdiction.” Id. at 760. Nevertheless, the Court was unwilling to “foreclose the possibility that in an exceptional case . . . , a corporation’s operations in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render the corporation at home in that State.” Id. at 761 n. 19 (emphasis added). That said, in view of the insufficiency of the Daimler defendant’s extensive presence and sales in California to render the defendant “at home” there, it is difficult to envision a situation in which a defendant that is not incorporated in the forum and does not have its principal place of business in the forum would be subject to the general in personam jurisdiction of the forum State.
Now, post-Daimler, the lower courts are grappling with the issue of whether or not a corporate defendant that is not incorporated under the laws of the forum state, and does not have its principal place of business there, may nevertheless be subject to the forum’s general in personam jurisdiction if it is registered to do business in the forum state. On this issue there is a split of authority across multiple jurisdictions in the United States. A few examples are discussed below.
New Jersey and Delaware remain split on the proper standard
The U.S. District Court for the District of New Jersey is split on whether a corporation that has registered to do business in the forum has subjected itself to the general in personam jurisdiction of that forum. In Otsuka Pharm. Co. v. Mylan Inc., 106 F. Supp. 3d 456 (D.N.J. 2015), the court found that while “Daimler fundamentally altered the general jurisdiction analysis, [it] need not reach the ultimate issue of whether the . . . [d]efendants’ jurisdictional contacts render them ‘at home’ in this forum,” because the defendants “consented to the Court’s jurisdiction by registering to do business in New Jersey, by appointing an in-state agent for service of process in New Jersey, and by actually engaging in a substantial amount of business in this State.” On the other hand, in Display Works, LLC v. Bartley, No. CV 16-583, 2016 WL 1644451 (D.N.J. Apr. 25, 2016), the court found that to “permit the Court to exercise general jurisdiction over any corporation that completes the required registration and appointment procedures, regardless of whether the statute expressly discusses general jurisdiction” would replace “Daimler’s limitation on the exercise of general jurisdiction to those situations where the ‘corporation is essentially at home’” with a “single sweeping rule: registration equals general jurisdiction” and “that cannot be the law.” As such, the court in Display Works found that a corporation does not subject itself to general jurisdiction in a forum by registering to do business in that forum.
Similar to New Jersey, the U.S. District Court for the District of Delaware is split on whether a corporation subjects itself to general in personam jurisdiction in a forum by registering to do business in that forum. Compare Acorda Therapeutics, Inc. v. Mylan Pharm. Inc., 78 F. Supp. 3d 572, 588 (D. Del. 2015), aff’d, 817 F.3d 755 (Fed. Cir. 2016) (holding that “Daimler does not eliminate consent as a basis for a state to establish general jurisdiction over a corporation which has appointed an agent for service of process in that state, as is required as part of registering to do business in that state”), with AstraZeneca AB v. Mylan Pharm., Inc., 72 F. Supp. 3d 549 (D. Del. 2014), motion to certify appeal granted sub nom. AstraZeneca AB v. Aurobindo Pharma Ltd., No. CV 14-664-GMS, 2014 WL 7533913 (D. Del. Dec. 17, 2014), and aff’d sub nom. Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 817 F.3d 755 (Fed. Cir. 2016) (holding that based on the holding in Daimler, the defendant’s compliance with Delaware’s registration statutes, which are mandatory for doing business within the state, cannot establish consent to jurisdiction).
Some decisions in Pennsylvania and New York have embraced the new standard
The Eastern District of Pennsylvania and the Southern District of New York appear to be on the same page in that decisions of both courts have held that registering to do business in the forum is not enough to confer general in personam jurisdiction. The Southern District of New York has held that, “after Daimler,… being registered to do business is insufficient to confer general jurisdiction in a state that is neither its state of incorporation or its principal place of business.” Chatwal Hotels & Resorts LLC v. Dollywood Co., 90 F. Supp. 3d 97, 105 (S.D.N.Y. 2015). Likewise, where plaintiff alleged that defendants were registered to do business in the forum state and therefore should be subject to general jurisdiction, the Eastern District of Pennsylvania found that “applying the considerations of Daimler and Goodyear, the mere allegation that defendants operate in the State does not render defendants “at home” in Pennsylvania and subject it to general jurisdiction here.” Spear v. Marriott Hotel Servs., Inc., No. CV 15-6447, 2016 WL 194071, at *3 (E.D. Pa. Jan. 15, 2016). But, in the post-Daimler decision in Bradley v. Powell, No. 15-04025, 2015 WL 5544507, at *5 n.2 (E.D. Pa. Sept. 18, 2015), the court suggested that a foreign corporation’s registration to do business in Pennsylvania likely equated with its consent to general in personam jurisdiction in that forum.
Essentially, Daimler reduces the number of states in which a corporate defendant may be sued under general in personam jurisdiction, and shifts the emphasis to a consent analysis and a specific in personam jurisdiction analysis in those states where there are sufficient contacts under the law.