Law

That leaves general jurisdiction.  As we discussed, the “at home” test as applied in Bauman cut such jurisdiction to little more than state of incorporation or principal place of business (a little more, but not much).  After Bauman it has become “incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.”  Monkton Insurance Services., Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014).  In the intervening period, litigation tourist plaintiffs in mass torts from asbestos to Zyprexa have been casting about for something, anything, to keep non-resident defendants bogged down in the hellholes with litigation against equally non-resident plaintiffs.

One gambit we’ve seen from plaintiffs seeking to hold onto jurisdiction over non-resident corporations is to try to take a hitherto uncommon (outside of contractual forum selection clauses) form of general personal jurisdiction – by “consent” – and interpret “consent” so broadly that Bauman becomes meaningless in practice.  Their argument is that, merely by registering to do business in a state and/or appointing an agent for service of process, a company impliedly consents to general jurisdiction.  Since most large corporations are registered to do business in many, if not all, states this approach strikes us as invalid at the outset for the same reason stated by the Supreme Court in Bauman:

Holding that registering to do business/appointing an agent for service of process is enough to create general personal jurisdiction is every bit as  “grasping” and “exorbitant” as the theory rejected in Bauman – and for the same reasons.  Since Bauman – indeed, all modern personal jurisdiction decisions – applied constitutional due process principles, we doubt that any theory of general personal jurisdiction producing the result contemned in Bauman can pass constitutional muster, whether called “consent” or anything else.  Bauman confirms that it is a violation of due process for personal jurisdiction to have the effect of letting anybody sue a corporation anywhere.  As the elided ending to the block quote above points out, due process “permit[s] out-of-state defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.”  Id. at 761-62.

 

We repeat what the Supreme Court held, because it’s critical:  businesses may “structure” their activities so that they are only “liable to suit” for anything in locations of their choosing.

We decided to take a look at this consent argument.  As far as we can tell it has not yet prevailed in any product liability action.  A “consent” theory based on the mere fact of being registered to do business in the state did succeed in Acorda Therapeutics, Inc. v. Mylan Pharmaceuticals, Inc., 2015 WL 186833 (D. Del.  Jan. 14, 2015), a patent case.  Based on 1920s era Supreme Court decisions (that is to say, based on the now-repudiated Pennoyer v. Neff, 95 U.S. 714 (1878), and not on International Shoe Co. v. Washington, 326 U.S. 310 (1945)) and pre-Bauman –  thus constitutionally suspect – Delaware state decisions, the district court concluded that personal jurisdiction could lie on the basis of “consent” – even though neither general nor specific personal jurisdiction over the action existed:

Another Delaware district court, thus, has reached the opposite conclusion – in a case involving the same defendant – concluding that to read “consent” in this fashion would subject corporations “with a national presence” to general jurisdiction “all over the country, a result specifically at odds with” Bauman.  AstraZeneca AB v. Mylan Pharmaceutical, Inc., ___ F. Supp.3d ___, 2014 WL 5778016, at *5 (D. Del. Nov. 5, 2014).

The issue has arisen in New York as well.  In Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221 (2d Cir. 2014), the court noted that Bauman cast doubt on that state’s previous personal jurisdiction jurisprudence.

Most other post-Bauman courts have also agreed with AztraZeneca rather than Acorda.  This issue has already been litigated several times in asbestos cases.  In Brown v. CBS Corp., 19 F. Supp.3d 390 (D. Conn. 2014), the court ruled that, regardless of the effect of the defendant’s registration to do business on Connecticut statutes conferring personal jurisdiction, “the requirements of the due process clause must also be met.”  Id. at 394.  A non-resident asbestos plaintiff could not obtain jurisdiction over a non-resident defendant over exposure that was likewise out of state:

The court in Shrum v. Big Lots Stores, Inc., 2014 WL 68884467 (C.D. Ill. Dec. 8, 2014), no doubt bolstered by supportive pre-Bauman precedent, held that a defendant’s “maintenance of an agent for the service of process does not rise to the level of continuous and systematic contacts needed for the court to exercise general jurisdiction.”  Id. at *7 (quoting Rawlins v. Select Specialty Hospital, 2014 WL 1647182, at *5 (N.D. Ill. April 23, 2014)), and citing several pre-Bauman decisions).  In another Illinois case, the “[p]laintiffs . . . failed to carry their burden of establishing that [defendant] is subject to general jurisdiction in Illinois” simply “because it is registered to do business in Illinois [and] maintains a registered agent for service of process in the state.”  Sullivan v. Sony Music Entertainment, 2014 WL 5473142, at *3 (N.D. Ill. Oct. 29, 2014).+

Similarly, the defendant’s maintenance of debt collection licenses in various “states requiring such licensure” was insufficient to support general jurisdiction in Cutcher v. Midland Funding, LLC, 2014 WL 2109916, at *7 (D. Md. May 19, 2014).  A foreign bank’s registration of a subsidiary subject to American law did not constitute “consent” to jurisdiction anywhere in the United States in AM Trust v. UBS AG, 2015 WL 395465, at *8 (N.D. Cal. Jan. 29, 2015).  A law firm’s status as a “registered lobbyist” in a state is insufficient to create general jurisdiction.  Fulbright & Jaworski v. Eighth Judicial District Court, ___ P.3d ___, 2015 WL 481177, at *4 (Nev. Feb. 5, 2015).  See U.S. ex rel. Imco General Construction, Inc. v. Insurance Co. of Pennsylvania, 2014 WL 4364854, at *3 (W.D. Wash. Sept. 3, 2014) (although “defendant is registered to do business here” “has been registered to do business here since 1909,” and “has 217 agents registered” in the state, “these facts . . . considered individually or together . . . do not establish that defendant is ‘at home’”); NExTT Solutions, LLC v. XOS Technologies, Inc., 2014 WL 6674619, at *6-7 (N.D. Ind. Nov. 25, 2014) (plaintiff “failed to make a prima facie showing of general jurisdiction” although defendant was “registered as a foreign corporation doing business in the state”).  Thus, it appears that most post-Bauman precedent, and all product liability precedent that we’ve seen, rejects the plaintiffs’ argument that registration to do business and the concomitant appointment of statutory agents to receive process can be a foundation for the maintenance of litigation hellholes.

Finally, a lot of pre-Bauman law also appears to reject general jurisdiction based on nothing more than these facts.  A complete review of that law would be a massive undertaking, and we think unnecessary in light of the post-Bauman trend.  Nonetheless, for the good of the defense order,  here are the favorable appellate pre-Bauman cases that we ran across in the course of researching this post.  Merely registering to do business was rejected as a basis for general personal jurisdiction in Washington Equipment Manufacturing Co. v. Concrete Placing Co., 931 P.2d 170 (Wash App. 1997):

Several federal courts of appeal also reached the same result before Bauman.  In Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239 (7th Cir. 1990), the court refused to recognize general jurisdiction over a franchisor otherwise lacking “continuous and substantial” contact, solely because it was registered to do business in the forum state: