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

Nonetheless, the initial response to Goodyear from many courts and commentators was to resist this reading and to adopt a narrow interpretation of Goodyear's holding. See, e.g., J.B. v. Abbott Labs., Inc., No. 12-385, 2013 U.S. Dist. LEXIS 15768, at *9 (N.D. Ill. 2013) (rejecting the defendant's claim that “Goodyear created a 'new standard'” under which “general jurisdiction exists only in a forum where the corporation is 'essentially at home'”); Meir Feder, Goodyear, “Home,” and the Uncertain Future of Doing Business Jurisdiction, 63 S.C. L. Rev. 671, 672 (2012) (noting that it had “been suggested” in some quarters “that the Court's apparent restriction of general jurisdiction to corporations that are 'essentially at home' should be dismissed as 'loose language,' and that Goodyear should be limited to its 'particular facts.'”).

Any doubt about the meaning of the Supreme Court's “at-home” formulation for general jurisdiction was nonetheless resolved two years later in Daimler. The case arose out of Argentina's “Dirty War,” during which workers at a Mercedes Benz auto plant were allegedly targeted by the country's military dictatorship as “subversives.” In 2004, the workers and their representatives filed suit in the Northern District of California against Daimler AG, the parent corporation of Mercedes Benz Argentina, for wrongs perpetrated against these workers in Argentina. Daimler, 134 S. Ct. at 751-52. The plaintiffs claimed that Daimler was properly subject to suit in California on a theory of general jurisdiction. While Daimler, a German corporation with headquarters in Stuttgart, lacked the “systematic and continuous contacts” with California needed to support general jurisdiction, its New Jersey-based subsidiary, Mercedes-Benz USA, maintained several offices in California and distributed Daimler-manufactured automobiles throughout the state.

Daimler had conceded in the lower courts that Mercedes-Benz USA was “subject to general jurisdiction in California.” Id. at 758. Initially, then, the key issue was whether the activities of Daimler's American subsidiary could be imputed to the German parent for jurisdictional purposes. Id. at 758-59. However, Justice Ginsburg's opinion for an eight-Justice majority avoided that question and assumed that Mercedes-Benz USA's activities were attributable to Daimler AG. The Court then held that, even taking into account the subsidiary's contacts with California, the exercise of general jurisdiction over Daimler did not comport with due process, because Daimler was in no sense “at home” in California. Id.' “[O]nly a limited set of affiliations with a forum,” the Supreme Court stated, “will render a defendant amenable to all-purpose jurisdiction there.” Id. at 760. The Court explained that, for a corporation, the kinds of affiliations that give rise to general jurisdiction are limited to the defendant's “place of incorporation,” “principal place of business,” and perhaps, “in an exceptional case,” an equivalent forum where a corporation may fairly be regarded as “at home.” Id. at 760-61 & n.19.

In announcing and applying this standard, the Court expressly disapproved of the expansive view of general jurisdiction applied in many lower courts. A corporation
“operat[ing] in many places,” the Court noted, “can scarcely be deemed at home in all of them.” Id. at 762 & n.20. As a result, a standard that would permit the exercise of general jurisdiction in every state in which a corporation “engages in a substantial, continuous, and systematic course of business” would be “unacceptably grasping.” Id. at 761.

The Daimler Backlash

The decisions in Goodyear and Daimler certainly seemed to have put the final nail in the coffin of “doing business” jurisdiction. But in the aftermath of Daimler, a number of litigants and courts have resurrected the theory under the rubric of consent. These courts have ruled that, even if application of the Daimler test would preclude general jurisdiction, a corporation that registers to do business in a state and appoints an agent for service of process ' as is typically required by state statute in order to do business within a state ' thereby consents to the exercise of general personal jurisdiction by the forum state's courts.

In order to reach this result, these courts have expressly relied on precedents and principles decided under the old, pre- International Shoe (Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)) personal-jurisdiction doctrine of Pennoyer v. Neff, 95 U.S. 714 (1878). Under the Pennoyer regime, state-court jurisdiction to render judgment was grounded in territorial power based on the presence of a person or property within the jurisdiction of a court. Courts sought to determine whether a corporate defendant was “doing business within the State in such manner and to such extent as to warrant the inference that it [was] present there.” Phila. and Reading RR v. McKibbin, 243 U.S. 264, 265 (1917). In addition, cases under Pennoyer also held that jurisdiction could be founded on express or implied consent, which included compliance with a state statute requiring appointment of an agent for service of process as a condition of conducting in-state business. See, e.g., Pa. Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93, 95-96 (1917). Since Daimler was handed down, a number of courts have redged up this old case law in order to distinguish the Supreme Court's recent “at-home” precedent.

For example, in Perrigo Co. v. Merial Ltd., No. 14-403, 2015 U.S. Dist. LEXIS 45214 (D. Neb. Apr. 7, 2015), a Nebraska-based plaintiff brought suit in Nebraska federal court for an alleged breach of a settlement agreement by several European-based entities. The court acknowledged that any exercise of general jurisdiction would be improper under Daimler, because the European defendants were not “at home” in Nebraska. Id. at *15-16. Nevertheless, the court, relying on U.S. Court of Appeals for the Eighth Circuit precedent and pre- International Shoe Supreme Court jurisprudence, held that appointment of an agent for service of process constitutes binding consent to general personal jurisdiction in the forum state. Id. at *17-18.

A number of other recent district court decisions have reached similar conclusions, holding that statutes mandating registration by out-of-state corporations and appointment of an agent for service of process warrant the exercise of general jurisdiction based on a theory of consent. See, e.g., Acorda Therapeutics, Inc. v. Mylan Pharms. Inc., 78 F. Supp. 3d 572 (D. Del. 2015); Senju Pharm. Co., Ltd. v. Metrics, Inc., No. 14-3962, 2015 U.S. Dist. LEXIS 41504 (D.N.J. Mar. 31, 2015); Vera v. Republic of Cuba, No. 12-1596, 2015 U.S. Dist. LEXIS 32846, at *25 (S.D.N.Y. Mar. 17, 2015); Forest Labs., Inc. v. Amneal Pharms. LLC, No. 14-508, 2015 U.S. Dist. LEXIS 23215, at *46 (D. Del. Feb. 26, 2015).

Not every post- Daimler decision, however, has accepted this theory of consent by registration to do business. See Pub. Impact, LLC v. Bos. Consulting Grp., Inc., No. 15-464, 2015 U.S. Dist. LEXIS 101398 (M.D.N.C. Aug. 4, 2015); Astrazeneca AB v. Mylan Pharms., Inc., 72 F. Supp. 3d 549 (D. Del. 2014). These decisions have held that “registration to do business in [a] state” and “designation of a statutory agent for service” cannot be construed as consent to general, all-purpose jurisdiction over any and all disputes. Public Impact, 2015 U.S. Dist. LEXIS 101398, at *11-14. And these decisions have also recognized that any contrary rule treating “mere compliance with such statutes” as consent would be directly “at odds with Daimler,” as it would impose no meaningful limits on general jurisdiction and would continue to “expose companies with a national presence ' to suit all over the country.” Astrazeneca, 72 F. Supp. 3d at 554-57.

The Flaws in the General Jurisdiction-By-Consent Regime

Appeals presenting the viability of the registration-as-consent rule are currently pending before the Court of Appeals for the Federal Circuit. See Acordia Therapeutics Inc. v. Mylan Pharms. Inc., appeal docketed, No. 15-1456 (Fed. Cir. March 17, 2015); Astrazeneca AB v. Mylan Pharms., Inc., appeal docketed, No. 15-1460 (Fed. Cir. March 17, 2015). Other appeals are sure to follow, and it seems likely that the issue will eventually have to be resolved by the Supreme Court. When that time comes, the Supreme Court should ' and, in our view, likely will ' reject the registration-as-consent rule as contrary to not just Daimler, but also decades of settled jurisprudence under International Shoe.

The principal problem with the registration-as-consent rule is that it is explicitly predicated upon outmoded pre- International Shoe notions of “consent” that were long ago discarded. Indeed, International Shoe criticized expansive caselaw on “consent” as a “legal fiction.” 326 U.S. at 318-19; see generally Philip B. Kurland, The Supreme Court, the Due Process Clause, and the In Personam Jurisdiction of State Courts ' from Pennoyer to Denckla: A Review, 25 U. Chi. L. Rev. 569 (1958).

In the years since International Shoe, moreover, the Supreme Court has instructed that “[a]ll assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny,” not the discarded regime of Pennoyer. See Shaffer v. Heitner, 433 U.S. 186, 212 (1977). Indeed, the Court has made it clear that “to the extent that prior decisions are inconsistent” with rule of International Shoe, “they are overruled.” Id. at 212 n.39. And Daimler itself expressly stated that case law “decided in the era dominated by Pennoyer's territorial thinking ' should not attract heavy reliance today.” Daimler, 134 S. Ct, at 761 n.18. These instructions casts significant doubt on any decision that would adopt a rule at odds with the result in Daimler based upon century-old, pre- International Shoe precedent.

Nor is there any real question that acceptance of a registration-as-consent rule would amount to a de-facto overruling of Daimler. Every state maintains a mandatory registration statute requiring “a corporation doing business in the state to register ' and appoint an agent for service of process.” See Tanya J. Monestier, Registration Statutes, General Jurisdiction, and the Fallacy of Consent, 36 Cardozo L. Rev. 1343, 1345 (2015). Moreover, states have historically sought to expand their statutory application of personal jurisdiction to the farthest extent constitutionally permitted. For example, in the wake of Daimler, the New York State legislature has introduced a bill that would explicitly require consent to general jurisdiction for all corporations doing business in the state. See Lanier Saperstein, Geoffrey Sant and T. Augustine Lo, New York State Legislature Seeks to Overturn 'Daimler,' N.Y.L.J., May 20, 2015, at 4. Additional legislation may well follow in other jurisdictions.

Further, because the only way a defendant could withhold this so-called “consent” would be to refuse to do business within a forum, the submission to jurisdiction under a registration-as-consent rule is in no sense a voluntary submission to general jurisdiction. Compelled registration is not voluntary consent in any meaningful sense. See Leonard v. USA Petroleum Corp., 829 F. Supp. 882, 891 (S.D. Tex. 1993) (“Consent requires more than legislatively mandated compliance with state laws.”). In fact, this type of forced or “extorted” consent may well be independently unconstitutional as a matter of due process or dormant Commerce Clause principles. See, e.g., Monestier, 36 Cardozo L. Rev. at 1347 (arguing consent by registration violates the Due Process Clause); Carol Andrews, Another Look at General Personal Jurisdiction, 47 Wake Forest L. Rev. 999, 1073-74 (2012) (arguing consent by registration violates the Dormant Commerce Clause); Br. of Amicus Chamber of Commerce at 18-21, Acordia Therapeutics, Inc. v. Mylan Pharms. Inc., No. 15-1456 (Fed. Cir. May 26, 2015) (arguing consent by registration violates the unconstitutional conditions doctrine).

For all of these reasons, the resurrection of nationwide doing-business jurisdiction under a consent-by-registration rule is contrary to both Daimler and modern personal-jurisdiction case law generally. When the time comes, we think the Supreme Court should (and likely will) reject the rule and reaffirm Daimler's “at-home” standard.

James Rotondo represents corporate clients in product liability, negligence, insurance coverage, and commercial litigation matters at Day Pitney. John Cerreta is a Partner and David Lieberman is an Associate at the firm.