General Jurisdiction After <i>Daimler AG v. Bauman</i>

Often, when patients are injured by pharmaceutical products, the plaintiff and the product's manufacturer are located in different jurisdictions, making jurisdictional questions the first issue to resolve when choosing where to file suit.

The Supreme Court's decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), announced a sweeping change to the law of personal jurisdiction. The Daimler Court held that a corporate defendant is subject to general personal jurisdiction ' that over suits unrelated to the defendant's contacts with the forum ' only where the corporation may fairly be “regarded as at home,” which is generally limited to the defendant's state of incorporation and the state where it has its principal place of business. Id. at 760-61 & n.19. In announcing this strict standard, the Daimler Court rejected the rule, long applied by many lower courts, permitting the exercise of general jurisdiction in any forum where a corporate defendant maintained an office or was otherwise “doing business.” Id. at 761-62 & n.20.

Background

At least initially, Daimler was understood by many to have signaled the end of “doing business” as a basis for general, “all-purpose” jurisdiction. But since Daimler, a number of courts have issued decisions that, if widely adopted, would resurrect the “doing business” standard under another name, and would reduce the Supreme Court's “at home” requirement to a nullity. According to these courts, whenever an out-of-state corporation registers to do business with a secretary of state and appoints an agent for service of process, that defendant consents to general jurisdiction over all disputes brought in the courts of the forum state, regardless of whether the corporation is “at home” in that state. This sort of reasoning is, in our view, both foreclosed by Daimler and based on a theory of consent that is at odds with decades of personal-jurisdiction jurisprudence under International Shoe Co. v. Washington. As a result, and as explained below, courts should reject this consent-based theory of general jurisdiction and instead apply the “at home” standard expressly adopted in Daimler.

General Jurisdiction Under International Shoe

For 70 years, it has been settled law that due process permits a state court to exercise jurisdiction over an out-of-state defendant only when that defendant has certain “minimum contacts” with the forum such that the maintenance of the suit comports with “traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1945)). The cases applying International Shoe's “minimum contacs” standard have long recognized two categories of personal jurisdiction: specific and general. Helicopteros Nacionales De Colombia v. Hall , 466 U.S. 408, 413-415 & nn. 8-9 (1984). Specific jurisdiction is dispute-specific; it applies when the plaintiff's cause of action “aris[es] out of or relate[s] to” the defendant's forum-directed contacts. Id. at 414 n.8. General jurisdiction, by contrast, is dispute-blind. It arises only where the defendant's relationship to the forum is so extensive as to warrant the exercise of jurisdiction over any and all cases involving that defendant. Id. at 415 n.9.

In the first 65 years after International Shoe was decided, the Supreme Court decided just two general jurisdiction cases ' Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), and Helicopteros Nacionales De Colombia v. Hall, 466 U.S. 408 (1984). Neither Perkins nor Helicopteros, however, provided any bright-line test for determining when an out-of-state corporation's contacts with a forum support general jurisdiction, and as a result lower courts were largely left “to their own devices in determining when a corporation would or would not be subject to general jurisdiction.” Tanya J. Monestier, Where Is Home Depot “At Home”?: Daimler v. Bauman and the End of Doing Business Jurisdiction, 66 Hastings L.J., 233, 241-42 (2014).

In the absence of any clear standard, lower courts typically held that general jurisdiction was proper in any forum where an out-of-state corporation was “doing business,” either by maintaining a staffed office in-state or by otherwise conducting “continuous and systematic” sales or advertising activity within the forum. See, e.g., Thomason v. Chemical Bank, 234 Conn. 281, 300 (1995). Under this line of cases, it was generally believed that large national manufacturers and retailers, with substantial operations all over the country, were properly subject to general jurisdiction in all 50 states. Todd David Peterson, The Timing of Minimum Contacts, 80 Geo. Wash. L. Rev. 202, 213-14 (2011). That understanding would begin to change, though, when the Supreme Court decided to take up the question of general jurisdiction in the first of two recent cases.

The Goodyear Decision and the Introduction of the 'At Home' Standard

After more than 25 years of silence on the standard for general jurisdiction, the Supreme Court initially returned to the issue in 2011, with its decision in Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011). The defendants in Goodyear were European tire manufacturers ' foreign subsidiaries of the Goodyear Tire and Rubber Company ' that had been sued as a result of a fatal bus crash in France allegedly caused by the manufacturers' tires. Two vacationing North Carolinians were killed in the crash, and their families elected to bring suit against the foreign tire manufacturers in a North Carolina state court. The defendants' only contact with North Carolina was the fact that a small percentage of their tires had proceeded through the “stream of commerce” and had been distributed in the state by affiliates. Reversing the judgment of an intermediate North Carolina appellate court, the Supreme Court unanimously concluded that this “stream of commerce” analysis ' typically used as a basis for specific jurisdiction ' was insufficient to support general, “all purpose” jurisdiction over a suit unrelated to the defendants' forum contacts. Id. at 2851-52, 2855.

The result in Goodyear was unsurprising, as the expansive “stream of commerce” theory of general jurisdiction embraced by the North Carolina court went far beyond any plausible theory of general jurisdiction. More significant than the result was the Court's reasoning. Justice Ginsburg's opinion for the unanimous Court repeatedly invoked a new formulation of the kinds of contacts that properly give rise to general jurisdiction. The Court stated, several times, that general jurisdiction lies only in a forum where the defendant's “affiliations ' are so 'continuous and systematic' as to render [the defendant] essentially at home.” Id. at 2851 (emphasis added). The Court explained that, under this standard, the “paradigm forum for the exercise of general jurisdiction” over an individual is “the individual's domicile.” Id. at 2853-54 (citing Int'l Shoe Co., 95 U.S. at 317). The Court also suggested that, for a corporation, the paradigm forum would be “an equivalent place,” such as the corporation's “place of incorporation and principal place of business.” Id. (citing Brilmayer et al., A General Look at General Jurisdiction, 66 Texas L. Rev. 721, 728 (1988).)

We will continue our discussion in next month's newsletter.

James Rotondo , John Cerreta and David W.S. Lieberman are with Day Pitney.