Genuine Parts Co. v. Cepec , 137 A.3d 123 ( 2016 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
GENUINE PARTS COMPANY, §
§ No. 528, 2015
Defendant Below-Appellant, §
§ Court Below: Superior Court
v. § of the State of Delaware
§
RALPH ALLAN CEPEC and § C.A. No. N15C-02-184
SANDRA FAYE CEPEC, §
§
Plaintiffs Below-Appellees. §
Submitted: March 9, 2016
Decided: April 18, 2016
Before STRINE, Chief Justice; HOLLAND, VALIHURA, VAUGHN, and
SEITZ, Justices, constituting the Court en Banc.
Upon appeal from the Superior Court. REVERSED.
Paul A. Bradley, Esquire, Stephanie A. Fox, Esquire, Maron Marvel Bradley &
Anderson LLC, Wilmington, Delaware; James C. Grant, Esquire (Argued),
Jonathan D. Parente, Esquire, Alston & Bird LLP, Atlanta, Georgia, for Appellant.
Jeffrey S. Goddess, Esquire (Argued), Rosenthal, Monhait & Goddess, P.A.,
Wilmington, Delaware; Lisa W. Shirley, Esquire, Charles E. Soechting, Jr.,
Esquire, Simon, Greenstone, Panatier & Bartlett, Dallas, Texas, for Appellees.
Kathaleen St. J. McCormick, Esquire, Nicholas J. Rohrer, Esquire, Julia B. Ripple,
Esquire, Young Conaway Stargatt & Taylor, LLP, Wilmington, Delaware; Andrew
J. Pincus, Esquire, Archis A. Parasharami, Esquire, Mayer Brown LLP,
Washington, D.C.; Kathryn Comerford Todd, Esquire, Warren Postman, Esquire,
U.S. Chamber Litigation Center, Inc., Washington, D.C., Amicus Curaie for The
Chamber of Commerce of the United States of America.
William W. Erhart, Esquire, Estate and Elder Law Services, Wilmington,
Delaware; David W. deBruin, Esquire, The deBruin Firm LLC, Wilmington,
Delaware; Meghan Butters Houser, Esquire, Weiss & Saville, P.A., Wilmington,
Delaware, Amicus Curaie for Delaware Trial Lawyers Association.
John C. Phillips, Jr., Esquire, David A. Bilson, Esquire, Phillips, Goldman,
McLaughlin & Hall, P.A., Wilmington, Delaware; Robert L. Willmore, Esquire,
Thomas Kinney, Esquire, Crowell & Moring LLP, Washington, D.C., Amicus
Curiae for Coalition for Litigation Justice, Inc. and American Insurance
Association.
STRINE, Chief Justice, for the Majority:
I. INTRODUCTION
Like every other state in our republic,1 Delaware requires a foreign
corporation that sells any product or service in the state to register to do business
and agree to the appointment of a registered agent to receive service of process. In
this case, a large Georgia corporation that properly registered to do business in
Delaware has been sued in Delaware over claims having nothing to do with its
activities in Delaware. Adhering to the interpretation given to our registration
statutes—8 Del. C. §§ 371 and 376—in Sternberg v. O’Neil,2 our Superior Court
held that, notwithstanding the U.S. Supreme Court‘s decision in Daimler AG v.
Bauman,3 the foreign corporation consented to Delaware‘s general jurisdiction
merely by registering to do business in Delaware. This interlocutory appeal raises
the singular issue of whether Delaware may exercise general jurisdiction over a
foreign corporation for claims having nothing to do with Delaware, as a price for
the corporation agreeing simply to be able to do business in Delaware.
1
See Tanya J. Monestier, Registration Statutes, General Jurisdiction, and the Fallacy of
Consent, 36 CARDOZO L. REV. 1343, 1363 (2015) (―Every state has a registration statute that
requires corporations doing business in the state to register with the state and appoint an agent
for service of process.‖ (footnote omitted)); Matthew Kipp, Inferring Express Consent: The
Paradox of Permitting Registration Statutes to Confer General Jurisdiction, 9 REV. LITIG. 1, 1
(1990) (―As a condition for doing business within their borders, all states require a foreign
corporation to designate a local resident for service of process. This requirement is embodied in
what commonly are known as registration statutes.‖ (footnote omitted)).
2
550 A.2d 1105 (Del. 1988).
3
134 S. Ct. 746 (2014).
1
We conclude that after Daimler, it is not tenable to read Delaware‘s
registration statutes as Sternberg did. Sternberg‘s interpretation was heavily
influenced by a prior reading given to § 376 by our U.S. District Court,4 and like
that District Court decision, rested on a view of federal jurisprudence that has now
been fundamentally undermined by Daimler and its predecessor Goodyear Dunlop
Tires Operations, S.A. v. Brown.5 Not only that, Sternberg was a case where the
exercise of personal jurisdiction over the foreign corporation was proper under the
minimum-contacts test, anyway,6 and where the corporate governance claims at
issue were closely connected to the internal affairs of a Delaware corporation.7
Most important, Sternberg represented just one plausible way to read a statute that
on its face does not refer explicitly to personal jurisdiction, much less to consent to
personal jurisdiction.
4
See Sternberg, 550 A.2d at 1115 (―‗Section 376 does not in [its] terms limit the amenability of
service of a qualified corporation to one which does business in Delaware or with respect to a
cause of action arising in Delaware. By the generality of its terms, a foreign corporation
qualified in Delaware is subject to service of process in Delaware on any transitory cause of
action.‘‖ (quoting D’Angelo v. Petroleos Mexicanos, 378 F. Supp. 1034, 1039 (D. Del. 1974))).
5
131 S. Ct. 2846 (2011).
6
See Sternberg, 550 A.2d at 1122 (―For more than thirty years, [the foreign parent corporation]
has benefited from the protections of the Delaware law in operating [its Delaware subsidiary] for
commercial gain, including the benefits afforded to it directly as a shareholder of a Delaware
corporation. We conclude that [the foreign corporation] intentionally established and maintained
minimum contacts with Delaware by its decision to continue to operate its wholly owned
subsidiary . . . as a Delaware corporation.‖ (footnote omitted)).
7
See id. at 1107 (noting that the Ohio corporation‘s ―alleged mismanagement‖ of its Delaware
subsidiary ―is the subject of the double derivative suit‖).
2
Our duty under our law is to give as much effect as possible to a state
statute, where it is constitutional to do so.8 After Daimler, we hold that Delaware‘s
registration statutes must be read as a requirement that a foreign corporation must
appoint a registered agent to accept service of process, but not as a broad consent
to personal jurisdiction in any cause of action, however unrelated to the foreign
corporation‘s activities in Delaware. Rather, any use of the service of process
provision for registered foreign corporations must involve an exercise of personal
jurisdiction consistent with the Due Process Clause of the Fourteenth Amendment.
In most situations where the foreign corporation does not have its principal
place of business in Delaware, that will mean that Delaware cannot exercise
general jurisdiction over the foreign corporation.9 In that circumstance, the core
8
See, e.g., Gonzales v. Carhart, 550 U.S. 124, 153 (2007) (―‗[T]he elementary rule is that every
reasonable construction must be resorted to, in order to save a statute from unconstitutionality.‘‖
(quoting Edward J. DeBartolo Corp. v. Fla. Gulf Bldg. & Constr. Trades Council, 485 U.S. 568,
575 (1988))); I.N.S. v. St. Cyr, 533 U.S. 289, 299–300 (2001) (―[I]f an otherwise acceptable
construction of a statute would raise serious constitutional problems, and where an alternative
interpretation of the statute is fairly possible, [courts] are obligated to construe the statute to
avoid such problems.‖ (internal citations omitted) (internal quotation marks omitted));
Richardson v. Wile, 535 A.2d 1346, 1350 (Del. 1988) (citing Atlantis I Condo. Ass’n v. Bryson,
403 A.2d 711 (Del. 1979)) (―[W]here a possible infringement of a constitutional guarantee
exists, the interpreting court should strive to construe the legislative intent so as to avoid
unnecessary constitutional infirmities.‖); Maxwell v. Vetter, 311 A.2d 864, 867 (Del. 1973)
(―The Legislature is deemed to have intended to enact a valid and constitutional statute, and the
statute will be so construed whenever that construction is possible without doing violence to the
legislative intent.‖); In re Opinion of the Justices, 177 A.2d 205, 211 (Del. 1962) (―When [] two
constructions of a statute are possible and one of them is unconstitutional, the courts are bound to
accept the one which is constitutional.‖); Fouracre v. White, 102 A. 186, 200 (Del. Super. 1917)
(―It is the duty of the court to give a statute such a construction as will render it constitutional
and operative if it can be done without violence to the language of the statute.‖).
9
See Daimler, 134 S. Ct. at 761 (―[A nonresident corporation will be subject to general
jurisdiction where its] affiliations with the State are so ‗continuous and systematic‘ as to render
3
statute to evaluate whether the foreign corporation is subject to specific jurisdiction
is Delaware‘s long-arm statute, 10 Del. C. § 3104. The long-arm statute operates
smoothly in tandem with § 376, which provides that a foreign corporation can be
served via its registered agent in the state. Under the long-arm statute, a foreign
corporation ―submits to the jurisdiction of the Delaware courts‖ as to any cause of
action that arises out of certain enumerated acts by the corporation in this state
such as ―transact[ing] any business or perform[ing] any character of work or
service,‖ or ―contract[ing] to supply services or things.‖10 Moreover, a plaintiff
who brings a cause of action fitting under the long-arm statute against a registered
foreign corporation need not use cumbersome means of service of process, but
instead can serve the foreign corporation‘s registered agent, as contemplated in the
long-arm statute.11
We believe Sternberg‘s more far-reaching interpretation of § 376 collides
directly with the U.S. Supreme Court‘s holding in Daimler, and subjects § 376 to
invalidation. In our republic, it is critical to the efficient conduct of business, and
therefore to job- and wealth-creation, that individual states not exact unreasonable
tolls simply for the right to do business. Businesses select their states of
[it] essentially at home in the forum State.‖ (quoting Goodyear, 131 S. Ct. at 2851)); id. at 761
n.19 (noting 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‖ (internal citation
omitted)).
10
10 Del. C. § 3104.
11
Id. § 3104(k).
4
incorporation and principal places of business with care, because they know that
those jurisdictions are in fact ―home‖ and places where they can be sued
generally.12 An incentive scheme where every state can claim general jurisdiction
over every business that does any business within its borders for any claim would
reduce the certainty of the law and subject businesses to capricious litigation
treatment as a cost of operating on a national scale or entering any state‘s market. 13
Daimler makes plain that it is inconsistent with principles of due process to
exercise general jurisdiction over a foreign corporation that is not ―essentially at
home‖ in a state for claims having no rational connection to the state.14 The
foreign corporation in this case does not have its principal place of business in
Delaware; nor is there any other plausible basis on which Delaware is essentially
its home. Hence, Delaware cannot exercise general jurisdiction over it consistent
with principles of due process. Furthermore, the plaintiffs concede that they
cannot establish specific jurisdiction over the nonresident defendant under the
long-arm statute or principles of due process. Therefore, the plaintiffs‘ claim must
12
See Daimler, 134 S. Ct. at 760–62. Daimler relied on Burger King Corp. v. Rudzewicz, 471
U.S. 462 (1985), which in turn relied on World-Wide Volkswagen Corp. v. Woodson, for the
proposition that ―the Due Process Clause . . . gives a degree of predictability to the legal system
that allows potential defendants to structure their primary conduct with some minimum
assurance as to where that conduct will and will not render them liable to suit.‖ 444 U.S. 286,
297 (1980).
13
See id.14
Id. at 761.
5
be dismissed for lack of personal jurisdiction. Accordingly, we reverse the
Superior Court‘s judgment.
II. BACKGROUND15
The personal jurisdiction issue before us arises out of claims for wrongful
exposure to asbestos. The plaintiffs-appellants, Ralph and Sandra Cepec, are
residents of Georgia. The seven defendants are companies associated with the
manufacture, distribution, or installation of products containing asbestos. One of
the defendants is Genuine Parts Company. Between approximately 1988 and
1991, Ralph worked for Genuine Parts in a warehouse in Jacksonville, Florida.
In 2015, the Georgia plaintiffs sued the defendants in Delaware. Five of the
seven defendants are Delaware corporations. Genuine Parts, however, is a Georgia
corporation whose principal place of business is in Atlanta. That is, Genuine Parts
is, like the Cepecs, at home in Georgia, not in Delaware. Nationally, Genuine
Parts is known for operating NAPA auto-parts stores. It has never had a corporate
office in Delaware, does not conduct its board or shareholder meetings in this state,
and does not have any officers here. According to Genuine Parts, fewer than 1%
of its employees work in Delaware, fewer than 1% of its auto-parts stores are here,
and less than 1% of its revenue comes from our state. Genuine Parts is properly
15
Because of the procedural posture of this case, we rely on the version of events set forth in the
Cepecs‘ complaint, which the Superior Court relied on in addressing the motion to dismiss for
lack of personal jurisdiction.
6
registered to do business in Delaware under § 371 and has a designated agent for
service of process in Wilmington in accordance with § 376.
In their complaint, the Cepecs allege that Genuine Parts acted negligently,
willfully and wantonly, and with reckless indifference to Ralph‘s health and safety
by wrongfully exposing Ralph to asbestos during the three years that he worked for
the company in Florida, which, combined with other asbestos exposure, caused
him to develop malignant mesothelioma and other asbestos-related ailments. They
also pled that Genuine Parts ―is a foreign corporation doing business in the state of
Delaware whose registered agent for service of process is: The Corporation Trust
Company.‖16
On June 30, 2015, Genuine Parts moved to dismiss the claims against it for
lack of general and specific personal jurisdiction. In response, the Cepecs did not
argue that our Superior Court had specific jurisdiction over Genuine Parts under
the long-arm statute,17 but argued that Genuine Parts had consented to Delaware‘s
general jurisdiction by registering to do business in this state and appointing an
in-state agent for service of process.
In its August 31, 2015 order denying Genuine Parts‘ motion to dismiss, the
Superior Court agreed with the Cepecs‘ position that Genuine Parts had consented
16
App. to Opening Br. at 29 (Compl. ¶ 4).
17
10 Del. C. § 3104.
7
to general jurisdiction in Delaware merely by complying with § 376.18 In reaching
that result, the Superior Court relied on this Court‘s decision in Sternberg.
Although the Superior Court did not discuss Sternberg in its order, it expressly
incorporated its analysis from an oral ruling and an order on a motion for
reargument for a different case, where the court explained in greater detail that it
was persuaded to adhere to Sternberg by three decisions from the U.S. District
Court for the District of Delaware issued after Daimler, which determined that
―express consent—by registering to do business in a state in accordance with state
statutes—remains a valid basis for personal jurisdiction.‖19 Because the Superior
Court based its finding of general jurisdiction over Genuine Parts on a theory of
express consent, it did not conduct a due-process inquiry. Genuine Parts submitted
an interlocutory appeal of the Superior Court‘s ruling, which we accepted.
18
Exhibit A to Opening Br. (In re: Asbestos Litig., C.A. No. N15C-02-184, at 3 (Del. Super.
Aug. 31, 2015)).
19
See In re: Asbestos Litig., 2015 WL 5016493, at *2 (Del. Super. Aug. 25, 2015) (citing
Novartis Pharm. Corp. v. Mylan Inc., 2015 WL 1246285 (D. Del. Mar. 16, 2015); Forest Labs.,
Inc. v. Amneal Pharm. LLC, 2015 WL 880599 (D. Del. Feb. 26, 2015); Acorda Therapeutics,
Inc. v. Mylan Pharm. Inc., 78 F. Supp. 3d 572 (D. Del. 2015), aff’d on other grounds, __ F.3d
__, 2016 WL 1077048 (Fed. Cir. Mar. 18, 2016)); see also App. to Answering Br. at 29–30
(Hearing Transcript at 40–41, Hudson v. Int’l Paper Co., No. N14C-03-247 (Del. Super. July 9,
2015)) (―On the facts of the complaint here and what I believe to be more persuasive decisions
by the District of Delaware, the fact is that Sternberg v. O’Neil is still good law here in
Delaware.‖).
8
III. DISCUSSION AND ANALYSIS
We review the Superior Court‘s denial of Genuine Parts‘ motion to dismiss
for lack of personal jurisdiction de novo.20
A. Basic Principles Of Personal Jurisdiction
Personal jurisdiction refers to the court‘s power over the parties in the
dispute.21 There are two bases a state can use to exercise personal jurisdiction over
a nonresident defendant. The first is general jurisdiction, which grants authority to
a state‘s courts to ―assert[] jurisdiction over a nonresident defendant on the basis of
wholly unrelated contacts with the forum.‖22 This all-purpose jurisdiction exists
where a corporation‘s ―continuous corporate operations within a state [are] so
substantial and of such a nature as to justify suit against it on causes of action
arising from dealings entirely distinct from those activities.‖23 Until recently, a
foreign corporation could be subject to general jurisdiction if it had ―continuous
and systematic‖ business contacts in the forum state.24 That is, merely doing
20
See AeroGlobal Capital Mgmt., LLC v. Cirrus Indus., Inc., 871 A.2d 428, 437 (Del. 2005).
21
See, e.g., Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577 (1999) (―Jurisdiction to resolve
cases on the merits requires both authority over the category of claim in suit (subject-matter
jurisdiction) and authority over the parties (personal jurisdiction), so that the court‘s decision will
bind them.‖).
22
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 426 (1984) (Brennan, J.,
dissenting).
23
Int’l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310,
318 (1945).
24
See, e.g., Perkins v. Benguet Consol. Min. Co., 342 U.S. 437, 448 (1952) (finding that
―continuous and systematic‖ corporate activities with Ohio subjected a foreign corporation to
general jurisdiction there); Helicopteros, 466 U.S. at 415–16 (holding that a CEO‘s trip to the
forum state to negotiate a services contract did not constitute the ―continuous and systematic
9
business in a state was a basis for general jurisdiction there. But as we will later
discuss, two recent decisions of the U.S. Supreme Court established that that is no
longer enough. Courts can also exercise specific jurisdiction over a corporate
defendant where the ―suit aris[es] out of or relate[s] to the [corporation‘s] contacts
with the forum.‖25
Further, ―[b]ecause the requirement of personal jurisdiction represents first
of all an individual right, it can, like other such rights, be waived.‖26 And
―[b]ecause the personal jurisdiction requirement is a waivable right, there are a
‗variety of legal arrangements‘ by which a litigant may give ‗express or implied
consent to the personal jurisdiction of the court.‘‖27
B. Delaware’s Registration Statutes
To understand this dispute, the Delaware statutes upon which the Cepecs
rely for their contention that Genuine Parts is subject to Delaware‘s general
jurisdiction must be understood. Critical to their argument is this Court‘s 1988
Sternberg decision, which first interpreted Delaware‘s statute for service of process
on a foreign corporation‘s registered agent as conferring general jurisdiction over
the corporation. We therefore begin by discussing the registration statutes that
general business contacts‖ required to subject the corporation to general jurisdiction in the state);
see also Monestier, supra note 1, at 1352 (―It was thought that if a corporation was doing
business in the forum, in the sense of having continuous and systematic contacts with the forum,
it would be subject to general jurisdiction there.‖).
25
Helicopteros, 466 U.S. at 414 n.8.
26
Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982).
27
Burger King, 471 U.S. at 472 n.14 (citing Ins. Corp. of Ireland, 456 U.S. at 703).
10
Genuine Parts was required to comply with as the cost of doing any business in
Delaware, and the context in which Sternberg interpreted them as a basis for
general jurisdiction.
To legally do any business in our state, Genuine Parts first had to comply
with § 371, which provides in relevant part that:
No foreign corporation shall do any business in this State, through or
by branch offices, agents or representatives located in this State, until
it shall have . . . filed in the office of the Secretary of State . . . [a]
statement . . . setting forth [] the name and address of its registered
agent in this State . . . .‖28
Genuine Parts also had to agree to have its registered in-state agent accept service
of process on its behalf under § 376, which provides in relevant part that:
All process issued out of any court of this State, all orders made by
any court of this State, all rules and notices of any kind required to be
served on any foreign corporation which has qualified to do business
in this State may be served on the registered agent of the corporation
designated in accordance with § 371 of this title, or, if there be no
such agent, then on any officer, director or other agent of the
corporation then in this State.29
In addition to §§ 371 and 376, the Sternberg Court‘s analysis of whether
compliance with those statutes conferred general jurisdiction over a foreign
corporation involved comparing them to the statutes that apply to foreign
corporations that have not registered to do business in Delaware, §§ 382 and 383.
Section 382 provides in pertinent part that:
28
8 Del. C. § 371(b).
29
Id. § 376(a).
11
Any foreign corporation which shall transact business in this State
without having qualified to do business under § 371 of this title shall
be deemed to have thereby appointed and constituted the Secretary of
State of this State its agent for the acceptance of legal process in any
civil action, suit or proceeding against it in any state or federal court
in this State arising or growing out of any business transacted by it
within this State.30
And under § 383, unqualified foreign corporations are required to pay
certain fees and penalties before maintaining any action or special proceeding in
Delaware:
A foreign corporation which is required to comply with §§ 371
and 372 of this title and which has done business in this State without
authority shall not maintain any action or special proceeding in this
State unless and until such corporation has been authorized to do
business in this State and has paid to the State all fees, penalties and
franchise taxes for the years or parts thereof during which it did
business in this State without authority.31
Those four statutes served as the basis for the Sternberg Court‘s holding that
the defendant foreign corporation consented to Delaware‘s general jurisdiction by
registering to do business in Delaware and appointing an in-state agent for service
of process.32
We also note a fifth statute that was not addressed in Sternberg, § 381,
which provides that once a registered foreign corporation withdraws its
registration, its appointment of a designated agent for service of process ―shall be
revoked, and the corporation shall be deemed to have consented that service of
30
Id. § 382(a).
31
Id. § 383(a).
32
See Sternberg, 550 A.2d at 1113–16.
12
process in any action, suit or proceeding based upon any cause of action arising in
this State, during the time the corporation was authorized to transact business in
this State, may thereafter be made by service upon the Secretary of State.‖33
And although Delaware‘s long-arm statute, § 3104, was not a part of the
analysis in Sternberg, it informs our construction of the registration statutes today.
The long-arm statute provides in pertinent part that:
(a) The term ―person‖ in this section includes any natural person,
association, partnership or corporation.
(b) The following acts constitute legal presence within the State. Any
person who commits any of the acts hereinafter enumerated thereby
submits to the jurisdiction of the Delaware courts.
(c) As to a cause of action brought by any person arising from any of
the acts enumerated in this section, a court may exercise personal
jurisdiction over any nonresident, or a personal representative, who in
person or through an agent:
(1) Transacts any business or performs any character of work or
service in the State;
(2) Contracts to supply services or things in this State;
(3) Causes tortious injury in the State by an act or omission in
this State;
(4) Causes tortious injury in the State or outside of the State by
an act or omission outside the State if the person regularly does
or solicits business, engages in any other persistent course of
conduct in the State or derives substantial revenue from
services, or things used or consumed in the State;
(5) Has an interest in, uses or possesses real property in the
State; or
(6) Contracts to insure or act as surety for, or on, any person,
property, risk, contract, obligation or agreement located,
executed or to be performed within the State at the time the
contract is made, unless the parties otherwise provide in
writing.
33
8 Del. C. § 381(c).
13
* * *
(k) This section does not invalidate any other section of the Code that
provides for service of summons on nonresidents. This section
applies only to the extent that the other statutes that already grant
personal jurisdiction over nonresidents do not cover any of the acts
enumerated in this section.34
C. Sternberg’s Interpretation Of Delaware’s Registration Statutes
Our prior decision in Sternberg is heavily relied upon by the Cepecs to argue
that Genuine Parts is subject to Delaware‘s general jurisdiction, so an
understanding of what was at stake in that decision and what it held is also critical
to our analysis of the core question at issue on this appeal. In Sternberg, this Court
interpreted § 376 as conferring general jurisdiction over a registered foreign
corporation via express consent.35 But, it is important to view that holding in the
context of the rest of the decision. In Sternberg, a stockholder of an Ohio parent
corporation brought a double-derivative suit against the corporation, claiming that
it was mismanaging its wholly owned Delaware subsidiary—i.e., breaching
fiduciary duties it allegedly owed as a result of acting as a controlling stockholder
of a Delaware corporation.36 On appeal from the Court of Chancery‘s dismissal of
the complaint, this Court analyzed whether Delaware had personal jurisdiction
over the nonresident parent company whose affiliations with our state consisted of
managing its Delaware subsidiary for over thirty years, and whose management of
34
10 Del. C. § 3104(a)–(c), (k).
35
See Sternberg, 550 A.2d at 1116.
36
Id. at 1107.
14
the Delaware corporation was the central issue in the dispute.37 So Sternberg was
about the internal affairs of one of our corporate residents and its relationship with
its parent corporation—issues that turned on an application of Delaware corporate
law.
On those facts, this Court found two alternative bases for personal
jurisdiction over the Ohio parent corporation. Its first ruling, and the one the
Cepecs rely on to press their position, is that the foreign corporation consented to
the exercise of general jurisdiction by the Delaware courts when it qualified to do
business in this state and appointed an in-state agent for service of process, in
accordance with Delaware‘s registration statutes.38 In so ruling, Sternberg adopted
a reading given to § 376 by our U.S. District Court in D’Angelo v. Petroleos
Mexicanos,39 and relied on a line of federal case law, including Neirbo Co. v.
Bethlehem Shipbuilding Corp.40 and Pennsylvania Fire Insurance Co. of
Philadelphia v. Gold Issue Mining & Milling Co.,41 which held that a foreign
corporation that appoints an agent to receive service of process on its behalf in
compliance with a state registration statute thereby consents to general jurisdiction
37
Id.
38
Id. at 1116.
39
D’Angelo, 378 F. Supp. at 1035–42; Sternberg, 550 A.2d at 1116 (―We agree with the
Delaware District Court‘s interpretation in D’Angelo of the effect of registration as a foreign
corporation in Delaware.‖).
40
308 U.S. 165 (1939).
41
243 U.S. 93 (1917).
15
in the state.42 To wit, the Neirbo Court held that ―[a] statute calling for [the]
designation [of an in-state agent for service of process] is constitutional, and the
designation of the agent [is] ‗a voluntary act[]‘‖ that constituted ―actual consent‖ to
general jurisdiction in the state.43 Based on the reasoning of those cases, Sternberg
made an interpretative choice to construe § 376 as a basis for express consent to
Delaware‘s general jurisdiction and to conclude that there was no due-process
problem with that construction.44 In the alternative, this Court held that the Ohio
parent corporation ―intentionally established and maintained minimum contacts
with Delaware by its decision to continue to operate its wholly owned
subsidiary . . . as a Delaware corporation.‖45
Sternberg‘s holding that a foreign corporation expressly consents to general
jurisdiction by agreeing to have its designated in-state agent accept service of
process has been the law in Delaware since the late 1980s. But two recent U.S.
Supreme Court decisions, Goodyear and Daimler, made a major shift in our
nation‘s personal jurisdiction jurisprudence—a shift that undermines the key
42
See Neirbo, 308 U.S. at 171–75; Pa. Fire, 243 U.S. at 95.
43
Neirbo, 308 U.S. at 175 (quoting Pa. Fire, 243 U.S. at 96).
44
See Sternberg, 550 A.2d at 1113 (citing Pa. Fire, 243 U.S. at 95) (―If a foreign corporation has
expressly consented to the jurisdiction of a state by registration, due process is satisfied and an
examination of ‗minimum contacts‘ to find implied consent is unnecessary.‖); id. at 1116 (citing
Neirbo, 308 U.S. at 170–71; Pa. Fire, 243 U.S. at 95; RESTATEMENT (SECOND) OF CONFLICT OF
LAWS § 44 (1971)) (―Express consent to jurisdiction by a foreign corporation takes the form of
an appointment of a statutory agent to receive service of process in compliance with the statutory
requirements of the state in which the corporation desires to do business.‖).
45
Id. at 1122.
16
foundation upon which prior federal cases like Neirbo and Pennsylvania Fire
relied.
D. Goodyear And Daimler Set Due-Process Limits On States’ Exercise Of
General Jurisdiction Over Non-Residents
The first recent case to cast doubt on the idea that a state could require a
foreign corporation—as a mere price of doing any business in a state in our
fifty-state republic—to be subject to its general jurisdiction for any claim, however
unrelated to its activities in the forum state, was the U.S. Supreme Court‘s 2011
Goodyear decision. The sad circumstances that led to that case involved the death
of two teenage boys in a bus accident outside of Paris, France.46 The boys‘
parents, who were residents of North Carolina, filed suit in North Carolina against
tire manufacturer Goodyear USA and three of Goodyear‘s indirect European
subsidiaries.47 Goodyear was an Ohio corporation and the three foreign
subsidiaries were organized and based in France, Turkey, and Luxembourg.48 The
plaintiffs alleged that the accident was caused by a defective tire that was
manufactured at the plant of Goodyear‘s Turkish subsidiary. 49 Goodyear did not
contest North Carolina‘s personal jurisdiction over it,50 but the foreign subsidiaries
46
Goodyear, 131 S. Ct. at 2850.
47
Id.48
Id.49
Id.50
Id.17
argued that they were not subject to the state‘s general jurisdiction.51 The North
Carolina Court of Appeals found that North Carolina had general jurisdiction over
the foreign subsidiaries because some of the tires the subsidiaries manufactured
had reached North Carolina through ―the stream of commerce.‖ 52 It was
undisputed that the type of tire involved in the accident was not distributed in
North Carolina.53
In considering whether the defendants were subject to general jurisdiction in
North Carolina, the U.S. Supreme Court explained that ―[a] court may assert
general jurisdiction over foreign (sister-state or foreign-country) corporations to
hear any and all claims against them when their affiliations with the State are so
‗continuous and systematic‘ as to render them essentially at home in the forum
State.‖54 The Court also stated that ―[t]he Due Process Clause of the Fourteenth
Amendment sets the outer boundaries of a state tribunal‘s authority to proceed
against a defendant.‖55
The U.S. Supreme Court then found that ―the North Carolina court‘s
stream-of-commerce analysis elided the essential difference between case-specific
and all-purpose (general) jurisdiction.‖56 The Court further explained that ―[f]low
51
Id.52
Id. at 2851.
53
Id. at 2852.
54
Id. at 2851 (citing Int’l Shoe, 326 U.S. at 317).
55
Id. at 2853 (citing Shaffer v. Heitner, 433 U.S. 186, 207 (1977)).
56
Id. at 2855.
18
of a manufacturer‘s products into the forum . . . may bolster an affiliation germane
to specific jurisdiction. . . . But ties serving to bolster the exercise of specific
jurisdiction do not warrant a determination that, based on those ties, the forum has
general jurisdiction over a defendant.‖57 It also stated that ―[a] corporation‘s
‗continuous activity of some sorts within a state,‘ International Shoe instructed, ‗is
not enough to support the demand that the corporation be amenable to suits
unrelated to that activity.‘‖58 The Court thus concluded that Goodyear‘s foreign
subsidiaries ―are in no sense at home in North Carolina‖ and that ―[t]heir
attenuated connections to the State fall far short of the ‗the continuous and
systematic general business contacts‘ necessary to empower North Carolina to
entertain suit against them on claims unrelated to anything that connects them to
the State.‖59
Goodyear‘s logic was followed in a number of federal personal jurisdiction
cases,60 the most important of which was the U.S. Supreme Court‘s own 2014
Daimler decision. In Daimler, the Court confirmed that ―only a limited set of
affiliations with a forum will render a defendant amenable to all-purpose
57
Id. (internal citation omitted) (emphasis in original).
58
Id. at 2856 (citing Int’l Shoe, 326 U.S. at 318).
59
Id. at 2857 (quoting Helicopteros, 466 U.S. at 416).
60
See, e.g., Pervasive Software Inc. v. Lexware GmbH & Co. KG, 688 F.3d 214 (5th Cir. 2012);
Flake v. Schrader-Bridgeport Int’l, Inc., 538 F. App‘x 604 (6th Cir. 2013); Abelesz v. OTP Bank,
692 F.3d 638 (7th Cir. 2012); Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG, 646
F.3d 589 (8th Cir. 2011); Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218 (9th Cir.
2011); Monge v. RG Petro-Mach. (Grp.) Co., 701 F.3d 598 (10th Cir. 2012).
19
jurisdiction there.‖61 Daimler involved another set of sad facts. Twenty-two
Argentine residents filed suit in California against a German car manufacturer
based in Stuttgart, DaimlerChrysler Aktiengesellschaft, alleging that Daimler‘s
Argentine subsidiary ―collaborated with state security forces to kidnap, detain,
torture, and kill‖ Argentine residents who worked for the subsidiary, including
certain plaintiffs and plaintiffs‘ relatives, during a period of military dictatorship
known as Argentina‘s ―Dirty War.‖62 The plaintiffs sought to establish personal
jurisdiction over Daimler in California based on one of Daimler‘s other
subsidiaries, which was incorporated in Delaware and had its principal place of
business in New Jersey, but distributed Daimler-manufactured cars throughout the
United States and California.63
In its discussion of the history of personal jurisdiction, the Daimler Court
acknowledged its ―post-International Shoe opinions on general jurisdiction‖ and
noted that Perkins v. Benguet Consolidated Mining Co.64 ―‗remains the textbook
case of general jurisdiction appropriately exercised over a foreign corporation that
has not consented to suit in the forum.‘‖ 65 Then in the heart of its analysis, the
U.S. Supreme Court confirmed that the proper inquiry for general jurisdiction
under Goodyear ―is not whether a foreign corporation‘s in-forum contacts can be
61
Daimler, 134 S. Ct. at 760.
62
Id. at 750–51.
63
Id. at 751.
64
342 U.S. at 438–50.
65
Daimler, 134 S. Ct. at 755–56 (quoting Goodyear, 131 S. Ct. at 2856).
20
said to be in some sense continuous and systematic, it is whether that corporation‘s
affiliations with the State are so continuous and systematic as to render [it]
essentially at home in the forum State.‖66 The Court noted that the ―paradigm‖
fora for general jurisdiction over a corporation are its place of incorporation and its
principal place of business because those affiliations are ―unique‖ and ―easily
ascertainable.‖67 But it also acknowledged that general jurisdiction might, ―in an
exceptional case,‖ be proper outside of those one or two places where the
corporation‘s operations are ―so substantial and of such a nature as to render the
corporation at home in that State.‖68 The Court added that ―[i]t is one thing to
hold a corporation answerable for operations in the forum State, quite another to
expose it to suit on claims having no connection whatever to the forum State.‖ 69
Importantly, the Daimler Court rejected the plaintiffs‘ argument that a
corporation is subject to general jurisdiction in every state in which it ―engages in a
substantial, continuous, and systematic course of business,‖ calling that position
66
Id. at 761 (quoting Goodyear, 131 S. Ct. at 2851) (internal quotation marks omitted) (emphasis
added).
67
Id. at 760.
68
Id. at 761 n.19 (emphasis added). The only example the U.S. Supreme Court offered of an
―exceptional case‖ is Perkins, in which a mining company‘s operations in the Philippines were
temporarily halted during the Second World War and the company‘s president managed the
company‘s affairs from Ohio, where he maintained an office, kept company files, communicated
with employees, and managed the company‘s funds. See id. at 755–56; see also Perkins, 342
U.S. at 447–48.
69
Id. at 761 n.19 (internal citation omitted).
21
―unacceptably grasping.‖70 The Court observed that ―such exorbitant exercises of
all-purpose jurisdiction would scarcely permit 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.‘‖71 The Court also made clear that ―[a]
corporation that operates in many places can scarcely be deemed at home in all of
them. Otherwise, ‗at home‘ would be synonymous with ‗doing business‘ tests
framed before specific jurisdiction evolved in the United States.‖72
Against this background of U.S. Supreme Court decisions, we consider the
general jurisdiction issues argued by the parties in this appeal.
E. The Parties’ Contentions
The parties‘ disagreement over the effect Daimler has on the ability of states
to condition a foreign corporation‘s right to do business in the state on being
subject to general jurisdiction frames the issue before us. Genuine Parts contends
that it would be inconsistent with Daimler‘s due-process restrictions on general
jurisdiction to maintain that a foreign corporation can be subject to Delaware‘s
general jurisdiction simply by registering to do business here and appointing an
in-state agent for service of process. Genuine Parts thus asks us to overrule that
aspect of Sternberg. Genuine Parts also argues that Delaware‘s registration
70
Id. at 761.
71
Id. at 761–62 (quoting Burger King, 471 U.S. at 472).
72
Id. at 762 n.20.
22
statutes do not state, imply, or in any way give notice that the foreign corporation
consents to general jurisdiction in Delaware by complying with them.
The Cepecs counter that Sternberg remains good law because Daimler did
not overrule U.S. Supreme Court cases including Neirbo and Pennsylvania Fire
that held that consent by registration is an independent and valid basis for general
jurisdiction.73 They also argue, based on those decisions, that the
minimum-contacts analysis does not apply when a defendant has consented to
jurisdiction. To support their position, the Cepecs point out that the Daimler Court
acknowledged that Perkins exemplifies a case in which general jurisdiction was
proper based on the foreign corporation‘s contacts with the forum state, even
though the foreign corporation did not consent to it. They argue that the Court was
thus mindful of its prior cases—in which general jurisdiction was based on
consent—without overruling that precedent, which suggests that the Court did not
intend Daimler to affect consent-based general jurisdiction. Finally, the Cepecs
contend that because § 376 provides no limits on the authority of a foreign
corporation‘s registered agent to accept service of process for the corporation, that
statute confers general jurisdiction over the nonresident corporation, which is the
reading that this Court gave to § 376 in Sternberg.
73
See Neirbo, 308 U.S. at 171–75; Pa. Fire, 243 U.S. at 95.
23
F. Personal Jurisdiction In Today’s Economy
The Goodyear and Daimler decisions have generated many potted histories
of the complicated origins of personal jurisdiction jurisprudence as it relates to
foreign corporations. We do not believe it productive or necessary to engage in a
redundant recitation of our own, given the proliferation of excellent summaries. 74
Suffice it to say we no longer live in a time where foreign corporations cannot
operate in other states unless they somehow become a resident;75 nor do we live in
a time when states have no effective bases to hold foreign corporations accountable
for their activities within their borders.76 As importantly, we have long ago
74
See, e.g., Daimler, 134 S. Ct. at 753–58; Brown v. Lockheed Martin Corp., 814 F.3d 619, 631–
33 (2d Cir. Feb. 18, 2016); King v. Am. Family Mut. Ins. Co., 632 F.3d 570, 573–76 (9th Cir.
2011); see also William V. Dorsaneo, III, Pennoyer Strikes Back: Personal Jurisdiction in a
Global Age, 3 TEX. A&M L. REV. 1, 3–24 (2015); Bernadette Bollas Genetin, The Supreme
Court’s New Approach to Personal Jurisdiction, 68 SMU L. REV. 107, 113–35 (2015);
Monestier, supra note 1, at 1351–58; Leo E. Strine, Jr., Lawrence A. Hamermesh & Matthew C.
Jennejohn, Putting Stockholders First, Not the First-Filed Complaint, 69 BUS. LAW. 1, 25–41
(2013); Charles W. ―Rocky‖ Rhodes, Nineteenth Century Personal Jurisdiction Doctrine in A
Twenty-First Century World, 64 FLA. L. REV. 387 (2012).
75
Sarah C. Haan, Federalizing the Foreign Corporate Form, 85 ST. JOHN‘S L. REV. 925, 926
(2011) (―Today, more than at any time in history, a business entity chartered by one sovereign
government is likely to operate within the territory of a different sovereign government and to
achieve multiple layers of ‗citizenship‘ through pyramidal ownership arrangements and
corporate groups.‖); Note, The Internal Affairs Doctrine: Theoretical Justifications and Tentative
Explanations for Its Continued Primacy, 115 HARV. L. REV. 1480, 1488 (2002) (―At one time, a
corporation was considered a creature of the state of incorporation; it was legally recognized only
in the state of incorporation and therefore subject only to the corporation laws of that state.
Modern commercial needs have caused this conception of the corporation to yield to the ‗natural
entity‘ theory, which conceives of a corporation as a legal person, with rights virtually equivalent
to those of a natural person.‖).
76
Every U.S. state has a long-arm statute that enables the state to exercise personal jurisdiction
over a nonresident defendant. See, e.g., Stephen E. Sachs, How Congress Should Fix Personal
Jurisdiction, 108 NW. U. L. REV. 1301, 1346 (2014); Douglas D. McFarland, Dictum Run Wild:
24
become a truly national—even international—economy, and the ability of foreign
corporations to operate effectively throughout our nation is critical to our nation‘s
economic vitality and ability to create jobs.
It is in the context of this global economy that the U.S. Supreme Court
issued its rulings in Goodyear and Daimler. In these cases, the Court made clear
that it is inconsistent with principles of due process for a corporation to be subject
to general jurisdiction in every place it does business.77 In light of that guidance,
we are now faced with whether Sternberg‘s interpretation of our registration
statutes as conferring general jurisdiction over the foreign corporation remains
tenable.
G. Revisiting Sternberg In Light of Daimler
Sternberg involved a careful and accurate recitation of the U.S. Supreme
Court‘s personal jurisdiction jurisprudence before Goodyear and Daimler.
Although that jurisprudence‘s continued viability was the subject of scholarly
debates as of the time of Sternberg,78 the U.S. Supreme Court had yet to cast such
How Long-Arm Statutes Extended to the Limits of Due Process, 84 B.U. L. REV. 491, 496 (2004)
(―Every state today has a long-arm statute (or court rule).‖).
77
See supra notes 71–72 and accompanying text.
78
See Sternberg, 550 A.2d at 1110 (―[M]any legal scholars are of the view that the ‗due process‘
basis for the Pennsylvania Fire Ins. Co. decision (statutory consent in the absence of any other
contact) would no longer be viable under the ‗due process‘ standards of International Shoe and
its progeny (requiring minimum contacts).‖ (citing Lea Brilmayer, Jennifer Haverkamp, Buck
Logan, Loretta Lynch, Steve Neuwirth & Jim O‘Brien, A General Look at General Jurisdiction,
66 TEX. L. REV. 721, 758–59 (1988); William Lawrence Walker, Foreign Corporation Laws: A
Current Account, 47 N.C. L. REV. 733, 734–38 (1969))); see also D. Craig Lewis, Jurisdiction
25
serious doubt on the underlying principles of long-standing cases like
Pennsylvania Fire and Neirbo. Thus, at the time of Sternberg, it was still tenable
to rely on those cases for the principle that a state could exercise general
jurisdiction over a foreign corporation that complied with a state registration
statute without a separate minimum-contacts analysis under the Due Process
Clause.
It was against that backdrop that Sternberg read § 376 broadly as providing a
basis for general jurisdiction, consistent with an earlier decision of the U.S. District
Court for the District of Delaware.79 But notably absent from that prior District
Court decision was any reference to explicit statutory language in § 376 that
suggested that by registering under § 371 and designating an in-state agent for
service of process, the foreign corporation was thereby consenting to the general
Over Foreign Corporations Based on Registration and Appointment of an Agent: An
Unconstitutional Condition Perpetuated, 15 DEL. J. CORP. L. 1, 16–17 (1990) (―Although the
[U.S. Supreme] Court subsequently may have harbored doubts about the wisdom of
[Pennsylvania Fire], the decision has never been overruled. . . . [Pennsylvania Fire] may have
been correct under the controlling jurisdictional principles when it was issued, but it does not
withstand constitutional scrutiny today.‖); Kipp, supra note 1, at 35 (―Perkins cited Pennsylvania
Fire Insurance to support the proposition that continuous and substantial contacts with the forum
permitted the assertion of general jurisdiction. This interpretation of Pennsylvania Fire
Insurance, however, reflected the Pennoyer era‘s requirement of a foreign corporation‘s local
presence, as opposed to the International Shoe evaluation of the ‗quality and nature‘ of the
defendant‘s affiliation with the state. Shaffer‘s repudiation of the ‗legal and factual fictions‘
generated by Pennoyer strongly suggests that the Perkins view of Pennsylvania Fire Insurance
did not survive this refutation of Pennoyer.‖ (citing Shaffer, 433 U.S. at 219 (Brennan, J.,
concurring in part and dissenting in part))).
79
See Sternberg, 550 A.2d at 1115–16 (citing D’Angelo, 378 F. Supp. at 1039).
26
personal jurisdiction of Delaware.80 In fact, unlike the long-arm statute, § 3104,
which speaks of personal jurisdiction explicitly, § 376 provides only that a
qualified foreign corporation‘s designated agent can be served with ―[a]ll process
issued out of any court of this State [and] all orders made by any court of this
State . . . .‖81
Although it is possible, as Sternberg did, to read the concept of general
jurisdiction into § 376 because it provides for a broad consent to service of process
on the foreign corporation‘s registered agent, it is also possible to give that statute
a narrower and constitutionally unproblematic reading.82 That reading would be
tied into the statute itself, and the conditions that require registration in the first
instance. Under § 371, in order to ―do any business in this State, through or by
80
See D’Angelo, 378 F. Supp. at 1039.
81
Compare 10 Del. C. § 3104 (―[A]ny [corporation that] commits any of the acts enumerated in
[§ 3104] thereby submits to the jurisdiction of the Delaware courts. . . . As to a cause of action
brought by any [corporation] arising from any of the acts enumerated in [§ 3104], a court may
exercise personal jurisdiction over any nonresident, or a personal representative, who in person
or through an agent [commits any of the acts enumerated in § 3104].‖), with 8 Del. C. § 376(a)
(―All process issued out of any court of this State, all orders made by any court of this State, all
rules and notices of any kind required to be served on any foreign corporation which has
qualified to do business in this State may be served on the registered agent of the corporation
designated in accordance with § 371 of this title, or, if there be no such agent, then on any
officer, director or other agent of the corporation then in this State.‖).
82
The U.S. Court of Appeals for the Second Circuit recently took that approach in construing
Connecticut‘s registration statute. See Lockheed Martin Corp., 814 F.3d at 623 (―[W]e conclude
that by registering to transact business and appointing an agent under the Connecticut statutes—
which do not speak clearly on this point—[the defendant] did not consent to the state courts‘
exercise of general jurisdiction over it. A more sweeping interpretation would raise
constitutional concerns prudently avoided absent a clearer statement by the state legislature or
the Connecticut Supreme Court.‖).
27
branch offices, agents or representatives located in this State,‖83 a foreign
corporation must file a statement with the Secretary of State setting forth, among
other things, its designated in-state agent, ―the business it proposes to do in this
State, and a statement that it is authorized to do that business in the jurisdiction of
its incorporation.‖84
Further, by way of comparison, foreign corporations that do not properly
register are subject to pay fees, penalties, and taxes under § 383 before they can
―maintain any action or special proceeding in this State.‖85 But unqualified foreign
corporations are subject under § 382 to service of process in Delaware through the
Secretary of State only for ―any civil action, suit or proceeding against [the
corporation] in any state or federal court in this State arising or growing out of any
business transacted by it within this State.‖86 Although Sternberg read this as
suggesting that registered corporations must therefore be subjecting themselves to
general jurisdiction by registering because § 376 did not have similar language,
that gloss is only a possible one. Another is that the explicit reference to suits
―arising or growing out of any business transacted by it within this State‖87 was
intended to subject non-registered foreign corporations to equal treatment with
registered ones, and described the circumstances where a corporation could be
83
8 Del. C. § 371(b).
84
Id. § 371(b)(2).
85
Id. § 383(a).
86
Id. § 382(a) (emphasis added).
87
Id.
28
deemed by implied consent to be subject to personal jurisdiction to the same extent
as a properly registered corporation. Consistent with that reading, the phrase in
§ 382 is a good proxy for the circumstances that, if extant, require registration
under § 371.88 Section 381 makes the equal treatment point more emphatically by
addressing consent and limitations on personal jurisdiction for withdrawing
corporations. A withdrawing corporation is ―deemed to have consented‖ to service
of process, but only ―in any action, suit or proceeding based upon any cause of
action arising in this State . . . .‖89 It would therefore make sense to read § 371 as
requiring that a foreign corporation have a registered agent that can accept service
of process in situations when the very conduct that required registration in the first
instance—such as ―transact[ing] any business or perform[ing] any character of
work or service,‖ or ―contract[ing] to supply services or things‖90—gives rise to a
lawsuit.
That reading also fits with the long-arm statute, which explicitly provides
that ―[t]he term ‗person‘ in this section includes any natural person, association,
partnership or corporation.‖91 The long-arm statute also provides in explicit terms
that a foreign corporation ―submits to the jurisdiction of the Delaware courts‖ in
certain enumerated circumstances, which include when a claim arises out of the
88
See supra note 83 and accompanying text.
89
8 Del. C. § 381(c).
90
10 Del. C. § 3104.
91
Id. § 3104(a).
29
corporation doing business, or contracting to supply goods or services, in the
state.92 And in the case of a registered foreign corporation, a plaintiff can effect
service using § 376,93 and need not use the mailing procedure in the long-arm
statute.94 If § 376 alone could serve as a basis for general jurisdiction, the specific
jurisdiction provisions in the long-arm statute would apply only to foreign
corporations that have not registered in the state; instead § 3104 broadly applies to
―any natural person, association, partnership or corporation.‖95 Further,
Pennsylvania, which is the only state that currently expressly provides by statute
that registering to do business in the state is a sufficient basis for general
jurisdiction over a foreign corporation, has set forth this consequence of
registration in its long-arm statute, not its registration statute.96
92
Id. § 3104(c).
93
See id. § 3104(k) (―[Section 3104] does not invalidate any other section of the Code that
provides for service of summons on nonresidents. [Section 3104] applies only to the extent that
the other statutes that already grant personal jurisdiction over nonresidents do not cover any of
the acts enumerated in [§ 3104].‖).
94
See id. § 3104(d)(3) (―When the law of this State authorizes service of process outside the
State, the service, when reasonably calculated to give actual notice, may be made: . . . By any
form of mail addressed to the person to be served and requiring a signed receipt.‖).
95
Id. § 3104(a) (emphasis added). Our sister court recently made a similar point in its analysis
of Connecticut‘s registration statute and its long-arm statute for service of process on foreign
corporations. Lockheed Martin Corp., 814 F.3d at 636 (―[I]f the mere maintenance of a
registered agent to accept service under [Connecticut‘s registration statute] effected an
agreement to submit to general jurisdiction, it seems to us that the specific jurisdiction provisions
of the long-arm statute, ([the service of process statute] for registered corporations), wouldn‘t be
needed except with regard to un registered corporations: Registered corporations would be
subject to jurisdiction with regard to all matters simply by virtue of process duly served on its
appointed agent.‖).
96
See 42 Pa. Cons. Stat. § 5301(a)(2)(i) (―The existence of any of the following relationships
between a person and this Commonwealth shall constitute a sufficient basis of jurisdiction to
enable the tribunals of this Commonwealth to exercise general personal jurisdiction over such
30
A narrower reading of § 376 also avoids the perverse result of subjecting
foreign corporations that lawfully do business in Delaware to an overreaching
consequence—general jurisdiction—that does not apply to foreign corporations
that do business in Delaware without properly registering and are only subject to
specific jurisdiction in Delaware under § 382.97 The same perverse result would
occur with withdrawing corporations under § 381.98 When a narrower reading is
given to § 376 and that statute is read in concert with § 3104, foreign corporations
that properly registered or that wish to withdraw registration in Delaware are given
equitable treatment with scofflaws, not harsher treatment. That narrower reading
also makes sense of both § 3104 and § 371, because § 371 requires a foreign
corporation that engages in certain categories of business in Delaware to register
and appoint an agent for service of process.99 Working in tandem, § 3104 thus
provides for personal jurisdiction over registered businesses when causes of action
arise out of their activities in Delaware, with plaintiffs being able to use the
person, or his personal representative in the case of an individual, and to enable such tribunals to
render personal orders against such person or representative: . . . Incorporation under or
qualification as a foreign corporation under the laws of this Commonwealth.‖).
97
See 8 Del. C. §§ 376, 382(a); see also AstraZeneca AB v. Mylan Pharm., Inc., 72 F. Supp. 3d
549, 557 (D. Del. 2014) (―[A] holding [that compliance with Delaware‘s registration statutes
subjects foreign corporations to general jurisdiction] would lead to perverse incentives: foreign
companies that comply with the statute in order to conduct business lawfully are disadvantaged,
whereas those who do not register and do business in Delaware illegally are immune.‖), aff’d on
other grounds sub. nom. Acorda Therapeutics, Inc. v. Mylan Pharm., Inc., __F.3d __, 2016 WL
1077048 (Fed. Cir. Mar. 18, 2016).
98
See 8 Del. C. § 381(c).
99
See id. § 371(b).
31
registered agent designated under § 371 as the recipient of process in accordance
with § 376 and § 3104(k).100
Most important of all, after Goodyear and Daimler, this narrower reading of
§ 376 has the intuitively sensible effect of not subjecting properly registered
foreign corporations to an ―unacceptably grasping‖ and ―exorbitant‖ exercise of
jurisdiction, consistent with Daimler‘s teachings.101 Under a broad reading of
§ 376, any foreign corporation seeking to sell any product or provide any service in
Delaware must, as a price to doing so lawfully, be deemed to have consented to
Delaware exercising general jurisdiction over it—i.e., to Delaware exercising
jurisdiction in cases having nothing at all to do with the foreign corporation‘s
activities in or even directed to Delaware. Nothing in the text of § 376 compels
such a broad reading of that statute.
For present purposes, however, what is most important is not whether
Sternberg was somehow incorrect; the question is how § 376 should be interpreted
in this case. The reality is that Sternberg‘s ruling on § 376 was not necessary to
the resolution of the case because the Court also found that the foreign corporation
had sufficient minimum contacts with Delaware through owning and managing its
Delaware subsidiary for over thirty years to provide a constitutional basis for
100
10 Del. C. § 3104(k) (―This section does not invalidate any other section of the Code that
provides for service of summons on nonresidents. This section applies only to the extent that the
other statutes that already grant personal jurisdiction over nonresidents do not cover any of the
acts enumerated in this section.‖).
101
See Daimler, 134 S. Ct. at 761.
32
specific jurisdiction.102 The other reality is that Sternberg‘s construction of § 376
was strongly influenced by prior U.S. Supreme Court jurisprudence whose
dependability has been undermined by Daimler.103
Our duty is to construe a statute of our state in a manner consistent with the
U.S. Constitution, when it is possible to do so with no violence to its plain
meaning.104 Nothing in the registration statutes explicitly says that a foreign
corporation registering thereby consents to the personal jurisdiction of this state.105
Nothing in the statutes explicitly says that by having to register in order to ―do any
business in this State, through or by branch offices, agents or representatives
102
Sternberg, 550 A.2d at 1125–26 (―[F]airness and justice permit jurisdiction to be asserted by
Delaware under the totality of the circumstances of this case. We find that the exercise of
specific jurisdiction in this case is consistent with the requirements of due process. We hold that
[the defendant‘s] ownership of [its subsidiary] is a minimum contact with Delaware which is
sufficient to support an exercise of specific jurisdiction by the Delaware Courts over [the
defendant] to hear and decide [the plaintiff‘s] double derivative complaint. This holding is an
independent and alternative basis for reversing the [trial court‘s] decision not to exercise specific
jurisdiction over [the defendant].‖).
103
See supra notes 71–72 and accompanying text; Daimler, 134 S. Ct. at 761 n.18
(―[U]nadorned citations [to cases upholding general jurisdiction based on a corporation‘s
continuous operations in the state] decided in the era dominated by Pennoyer‘s territorial
thinking, should not attract heavy reliance today.‖ (internal citations omitted)); see also Shaffer,
433 U.S. at 212 & n.39 (providing that ―all assertions of state-court jurisdiction must be
evaluated according to the standards set forth in International Shoe and its progeny‖ and that
―[t]o the extent that prior decisions are inconsistent with this standard, they are overruled‖);
Lockheed Martin Corp., 814 F.3d at 638–39 (―Pennsylvania Fire is now simply too much at
odds with the approach to general jurisdiction adopted in Daimler to govern as categorically . . . ,
the Supreme Court‘s analysis in recent decades, and in particular in Daimler and Goodyear,
forecloses [] an easy use of Pennsylvania Fire to establish general jurisdiction over a corporation
based solely on the corporation‘s registration to do business and appointment of an agent under a
state statute lacking explicit reference to any jurisdictional implications.‖).
104
See supra note 8.
105
Cf. Forest Labs., Inc., 2015 WL 880599, at *10 (―Neither Section 371 nor Section 376 of the
Delaware registration statute expressly sets out the types of actions for which registration of an
agent for service of process shall be effective.‖).
33
located in this State,‖106 and to appoint a registered agent in the state to receive
service of process, that meant a foreign corporation was waiving any objection to
personal jurisdiction for causes of action not arising out of the conduct in Delaware
that gave rise to the registration requirement.
In light of Daimler, § 376 can be given a sensible reading by construing it as
requiring a foreign corporation to allow service of process to be made upon it in a
convenient way in proper cases, but not as a consent to general jurisdiction.
Rather, a foreign corporation would have the protection of the Due Process Clause
if a plaintiff tried to use § 376 by suing the corporation for a cause of action that
was not addressed by the long-arm statute, which, among other things, essentially
tracks the circumstances that require registration under § 371.
By this reading, plaintiffs with a fair basis to subject a foreign corporation to
suit in Delaware may do so, but plaintiffs who do not will not. This reading
accords with Daimler and common sense. Delaware is a state of fewer than one
million people.107 Our citizens benefit from having foreign corporations offer their
goods and services here. If the cost of doing so is that those foreign corporations
will be subject to general jurisdiction in Delaware, they rightly may choose not to
do so.
106
8 Del. C. § 371(b).
107
See QuickFacts Delaware, U.S. CENSUS BUREAU, https://www.census.gov/quickfacts/table/
PST045215/10 (last visited Apr. 4, 2016) (estimating Delaware‘s population to be 945,934
people as of July 1, 2015).
34
Moreover, in our federal republic, exacting such a disproportionate toll on
commerce is itself constitutionally problematic.108 Such an exercise of
overreaching by Delaware will also encourage other states to do the same. Every
state in the union, and the District of Columbia, has enacted a registration statute
that requires foreign corporations to register to do business and appoint an in-state
agent for service of process.109 As the home of a majority of the United States‘
largest corporations, Delaware has a strong interest in avoiding overreaching in
this sensitive area.110 If all of our sister states were to exercise general jurisdiction
over our many corporate citizens, who often as a practical matter must operate in
all fifty states and worldwide to compete, that would be inefficient and reduce
legal certainty for businesses. Human experience shows that ―grasping‖111
108
See, e.g., United States v. Lopez, 514 U.S. 549, 579–80 (1995) (―One element of our dormant
Commerce Clause jurisprudence has been the principle that the States may not impose
regulations that place an undue burden on interstate commerce, even where those regulations do
not discriminate between in-state and out-of-state businesses.‖); Bendix Autolite Corp. v.
Midwesco Enters., Inc., 486 U.S. 888, 894 (1988) (holding that an Ohio tolling statute violated
the Commerce Clause because it gave nonresident corporations the choice between being subject
to general jurisdiction in the state by appointing an in-state agent for service of process or being
subject to a tolling of the statute of limitations on claims against them); see also T. Griffin
Vincent, Toward a Better Analysis for General Jurisdiction Based on Appointment of Corporate
Agents, 41 BAYLOR L. REV. 461, 485 (1989) (―Predicating jurisdiction solely on a corporate
defendant‘s designation of a resident agent for receipt of service may be an impermissible burden
on interstate commerce. Although such an exercise of judicial jurisdiction is not directly
discriminatory, there is no compelling state interest justifying general jurisdiction based on such
tenuous corporate contacts.‖).
109
See, e.g., Monestier, supra note 1, at 1363 (collecting statutes).
110
See, e.g., DEL. DIV. OF CORPS., 2013 ANNUAL REPORT 2 (2014), http://corp.delaware.gov/
Corporations_2013%20Annual%20Report.pdf (―Delaware remains the chosen home of more
than half of all U.S. publicly traded companies and 65% of Fortune 500 companies are
incorporated in Delaware.‖).
111
Daimler, 134 S. Ct. at 761.
35
behavior by one, can lead to grasping behavior by everyone, to the collective
detriment of the common good. It is one thing for every state to be able to exercise
personal jurisdiction in situations when corporations face causes of action arising
out of specific contacts in those states; it is another for every major corporation to
be subject to the general jurisdiction of all fifty states. Theoretically, under the
Cepecs‘ position, major Delaware public corporations with national markets could
be sued by its stockholders on an internal affairs claim in any state in the nation
because the corporations have had to register to do business in every state. And in
fact, many post-Daimler decisions involved situations where plaintiffs sought to
subject a Delaware corporation to the general jurisdiction of a state that had no
relation to the cause of action and was not the corporation‘s principal place of
business.112 Daimler rejected the notion that a corporation that does business in
many states can be subject to general jurisdiction in all of them. 113 Under a
sensible goose-and-gander approach, Delaware should be prudent and
112
See, e.g., Pitts v. Ford Motor Co., 127 F. Supp. 3d 676, 680 (S.D. Miss. Aug. 26, 2015)
(plaintiff seeking to establish general jurisdiction in Mississippi over a Delaware corporation
whose principal place of business is in Michigan); Keeley v. Pfizer Inc., 2015 WL 3999488, at *1
(E.D. Mo. July 1, 2015) (plaintiff seeking to establish general jurisdiction in Missouri over a
Delaware corporation headquartered in New York); Perrigo Co. v. Merial Ltd., 2015 WL
1538088, at *1, *3 (D. Neb. Apr. 7, 2015) (plaintiff seeking to establish general jurisdiction in
Nebraska over a Delaware corporation whose principal place of business is outside of Nebraska);
McCourt v. A.O. Smith Water Prods. Co., 2015 WL 4997403, at *1 (D.N.J. Aug. 20, 2015)
(plaintiff arguing that New Jersey has general jurisdiction over a Delaware corporation whose
principal place of business is in Massachusetts).
113
See supra notes 71–72 and accompanying text.
36
proportionate in exercising jurisdiction over foreign corporations, and a narrower
reading of § 376 accomplishes that.114
H. The Tension Created By Daimler’s Due-Process Limits On General
Jurisdiction Cannot Be Ignored
We acknowledge that some courts have maintained in Daimler‘s wake that
implied consent by virtue of simple registration to do business remains a
constitutionally valid basis for general jurisdiction over a nonresident
corporation.115 Our own U.S. District Court, for example, has split on this issue.116
114
We note that at least one state‘s registration statute expressly provides that appointing an
in-state agent for service of process does not by itself constitute consent to general jurisdiction.
Miss. Code Ann. § 79-35-15 (―The appointment or maintenance in this state of a registered agent
does not by itself create the basis for personal jurisdiction over the represented entity in this
state.‖). Adding similar language to § 371 would help dispel any potential uncertainty on the
part of foreign corporations as to the effect of complying with Delaware‘s registration statutes on
personal jurisdiction.
115
See, e.g., Perrigo Co., 2015 WL 1538088, at *7 (―Daimler only speaks to whether general
jurisdiction can be appropriately exercised over a foreign corporation that has not consented to
suit in the forum. It does nothing to affect the long-standing principle that a defendant may
consent to personal jurisdiction.‖ (internal citations omitted) (emphasis in original)); Otsuka
Pharm. Co. v. Mylan Inc., 106 F. Supp. 3d 456, 469 (D.N.J. 2015) (―[D]esignation of an in-state
agent for service of process in accordance with a state registration statute may constitute consent
to personal jurisdiction, if supported by the breadth of the statute‘s text or interpretation.‖);
Senju Pharm. Co. v. Metrics, Inc., 96 F. Supp. 3d 428, 437 (D.N.J. 2015) (―[Daimler] did not
disturb the consent-by-in-state service rule . . . .‖); Beach v. Citigroup Alt. Invs. LLC, 2014 WL
904650, at *6 (S.D.N.Y. Mar. 7, 2014) (―Notwithstanding these limitations, a corporation may
consent to jurisdiction in New York under [New York‘s general jurisdiction statute] by
registering as a foreign corporation and designating a local agent.‖); see also Gucci Am., Inc. v.
Weixing Li, 768 F.3d 122, 137 n.15 (2d Cir. 2014) (noting in dicta that ―[t]he district court may
also consider [on remand] whether [the defendant bank] has consented to personal jurisdiction in
New York by applying for authorization to conduct business in New York and designating the
New York Secretary of State as its agent for service of process‖).
116
Compare AstraZeneca AB, 72 F. Supp. 3d at 556–57 (―In light of the holding in Daimler, the
court finds that [the defendant corporation‘s] compliance with Delaware‘s registration statutes—
mandatory for doing business within the state—cannot constitute consent to jurisdiction, and the
Delaware Supreme Court‘s decision in Sternberg can no longer be said to comport with federal
due process. . . . Administrative statutes like Delaware‘s sections 371 and 376 merely outline
37
Two conflicting Delaware District Court decisions were recently addressed by the
U.S. Court of Appeals for the Federal Circuit on interlocutory appeal, but the
majority of the panel declined to address the issue of general jurisdiction.117 One
of the three judges, however, concurred in the judgment but wrote separately to
express his view that the defendant was subject to Delaware‘s general jurisdiction
by virtue of having registered to do business in our state on the ground that
―Daimler did not overrule the line of Supreme Court authority establishing that a
corporation may consent to jurisdiction over its person by choosing to comply with
a state‘s registration statute.‖118 But, the majority of federal courts that have
considered the issue of whether consent by registration remains a constitutional
basis for general jurisdiction after Daimler have taken the position that we adopt.119
procedures for doing business in the state; compliance does not amount to consent to jurisdiction
or waiver of due process.‖) (emphasis in original), aff’d on other grounds sub. nom. Acorda
Therapeutics, Inc., __F.3d __, 2016 WL 1077048, with Acorda Therapeutics, Inc., 78 F. Supp.
3d at 588 (―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.‖), aff’d on other grounds, __F.3d
__, 2016 WL 1077048, Novartis Pharm. Corp., 2015 WL 1246285, at *3–4 (finding that, even
after Daimler, registering to do business and appointing an in-state agent for service of process
constitutes consent to general jurisdiction in Delaware), and Forest Labs., Inc., 2015 WL
880599, at *12–15 (same).
117
Acorda Therapeutics Inc., __ F.3d at __, 2016 WL 1077048, at *1 (―On interlocutory appeal,
we affirm, holding that [the defendant] is subject to specific personal jurisdiction in these cases.
We do not address the issue of general personal jurisdiction.‖).
118
Id. at *10 (O‘Malley, J., concurring).
119
See, e.g., U.S. Bank Nat. Ass’n v. Bank of Am., N.A., 2015 WL 5971126, at *6 (S.D. Ind. Oct.
14, 2015) (rejecting the argument that a foreign corporation ―waived its objection to personal
jurisdiction by registering to do business in Indiana and designating an agent for purposes of
service of process in the State‖ and finding that ―registering to do business in Indiana and also
appointing an agent for purposes of service of process, does not establish personal jurisdiction
over a corporation‖); Pitts, 127 F. Supp. 3d at 483–84 (quoting Daimler, 134 S. Ct. at 760–61)
38
The decisions that have read Daimler differently than we do stress that
Daimler did not reach out and explicitly overrule older precedent in stark tension
with its reasoning.120 But, that reality does nothing to relieve that tension, or to
(finding that a foreign corporation that registered to do business in Mississippi, appointed an
in-state agent for service of process, and was carrying on operations in the state, was ―at most
‗doing business‘ in Mississippi,‖ and did not have sufficient affiliations with the state to render it
―at home‖ there for purposes of general jurisdiction); Keeley, 2015 WL 3999488, at *4 (―If
following [corporate registration] statutes creates jurisdiction, national companies would be
subject to suit all over the country. This result is contrary to the holding in Daimler that merely
doing business in a state is not enough to establish general jurisdiction. . . . A defendant‘s
consent to jurisdiction must satisfy the standards of due process and finding a defendant consents
to jurisdiction by registering to do business in a state or maintaining a registered agent does not.‖
(internal citations omitted)); Neeley v. Wyeth LLC, 2015 WL 1456984, at *3 (E.D. Mo. Mar. 30,
2015) (―Foreign corporations authorized to transact business in Missouri are also required to
maintain a registered agent in the state. Therefore, to extend the Plaintiff‘s reasoning to its
natural conclusion, every foreign corporation transacting business in the state of Missouri would
be subject to general jurisdiction here. Daimler clearly rejects this proposition.‖ (internal
citation omitted)); McCourt, 2015 WL 4997403, at *4 (―The single fact that Defendant registered
to do business in New Jersey is insufficient to conclude that it ‗consented‘ to jurisdiction here.‖);
Chatwal Hotels & Resorts LLC v. Dollywood Co., 90 F. Supp. 3d 97, 105 (S.D.N.Y. 2015)
(―After Daimler . . . the mere fact of [the defendant‘s] being registered to do business is
insufficient to confer general jurisdiction in a state that is neither its state of incorporation [n]or
its principal place of business.‖ (internal citation omitted)); Hazim v. Schiel & Denver Publ’g
Ltd., 2015 WL 5227955, at *4 (S.D. Tex. Sept. 8, 2015) (―[E]ven if [the plaintiff] made [a]
showing [that the foreign corporation had a registered agent in Texas], effecting service in the
forum State on a registered corporate agent is not enough to show personal jurisdiction over the
nonresident corporation.‖); see also Lockheed Martin Corp., 814 F.3d at 640 (―If mere
registration and the accompanying appointment of an in-state agent—without an express consent
to general jurisdiction—nonetheless sufficed to confer general jurisdiction by implicit consent,
every corporation would be subject to general jurisdiction in every state in which it registered,
and Daimler‘s ruling would be robbed of meaning by a back-door thief.‖).
120
See, e.g., Acorda Therapeutics, Inc., 78 F. Supp. 3d at 590 (―The Supreme Court in Daimler
did not reference [cases dealing with consent to general jurisdiction]. It follows that Daimler did
not overrule or even criticize these precedents.‖); Novartis Pharm. Corp., 2015 WL 1246285,
at *3 (―I do not think it appropriate for me to ‗overrule‘ Supreme Court precedent that the
Supreme Court has not overruled.‖); Forest Labs., Inc., 2015 WL 880599, at *7 (―[T]he Supreme
Court has never explicitly stated that the holdings in Pennsylvania Fire and Neirbo were
overruled by International Shoe.‖); Otsuka Pharm. Co., 106 F. Supp. 3d at 468 (―[T]he Supreme
Court has never explicitly overruled the holdings of [cases holding that consent by registration is
a valid basis for general jurisdiction], and in the absence of such declaration, the Supreme Court
directs the continued application of its precedents.‖).
39
obscure another reality, which is that the older case law was rooted in an era where
foreign corporations could not be sued in other states unless there was some
fictional basis to find them present there.121 And to give some credit to our
predecessor generations, plaintiffs typically did not sue defendants in fora that had
no rational relation to causes of action; the increasing embrace of that practice
among segments of the plaintiffs‘ bar has instead built over recent decades.122
121
See, e.g., Burnham v. Superior Court, 495 U.S. 604, 617–18 (1990) (―[In the past, s]tates
required, for example, that nonresident corporations appoint an in-state agent upon whom
process could be served as a condition of transacting business within their borders, and provided
in-state ‗substituted service‘ for nonresident motorists who caused injury in the State and left
before personal service could be accomplished. We initially upheld these laws under the Due
Process Clause on grounds that they complied with Pennoyer‘s rigid requirement of either
‗consent,‘ or ‗presence[.]‘ As many observed, however, the consent and presence were purely
fictional.‖ (internal citations omitted)); Int’l Shoe, 326 U.S. at 316–17 (―Since the corporate
personality is a fiction . . . it is clear that unlike an individual its ‗presence‘ without, as well as
within, the state of its origin can be manifested only by activities carried on in its behalf by those
who are authorized to act for it. . . . [T]he terms ‗present‘ or ‗presence‘ are used merely to
symbolize those activities of the corporation‘s agent within the state which courts will deem to
be sufficient to satisfy the demands of due process.‖ (internal citation omitted)); Shaffer, 433
U.S. at 219 (Brennan, J., concurring in part and dissenting in part) (―[T]he minimum-contacts
analysis developed in [International Shoe] represents a far more sensible construct for the
exercise of state-court jurisdiction than the patchwork of legal and factual fictions that has been
generated from the decision in [Pennoyer].‖); see also Rhodes, supra note 74, at 393–94
(―Corporate defendants posed [] conceptual challenges to [the] power-based jurisdictional
regime. Because a corporation, as an intangible entity, could not truly be ‗physically present‘
within the state‘s borders, jurisdiction over a corporation depended on various fictions. One such
jurisdictional fiction was that by designating a corporate agent within the state, the corporation
consented that in-state service of process on the agent established its amenability.‖ (footnotes
omitted)).
122
See Alan O. Sykes, Transnational Forum Shopping As A Trade and Investment Issue, 37 J.
LEGAL STUD. 339, 339 (2008) (―Forum shopping by tort plaintiffs is commonplace in the
American legal system.‖); Douglas G. Smith, Resolution of Mass Tort Claims in the Bankruptcy
System, 41 U.C. DAVIS L. REV. 1613, 1621 (2008) (―[Mass tort] claims have gravitated toward
certain jurisdictions that plaintiffs believe are more favorable. As a result, the bulk of the
litigation has occurred in a handful of jurisdictions. . . . [E]xtensive and widespread forum
shopping continues.‖ (footnotes omitted)); Lester Brickman, Lawyers’ Ethics and Fiduciary
Obligation in the Brave New World of Aggregative Litigation, 26 WM. & MARY ENVTL. L. &
40
Some of the decisions that suggest that Daimler does not prevent states from
exacting general jurisdiction as a price for merely doing business also confuse two
issues that are, in our view, fundamentally distinct. These cases suggest that if
states cannot condition a foreign corporation‘s right to do business on consent to
general jurisdiction, that it therefore logically follows that parties cannot rely in
commerce on the enforceability of forum-selection clauses that provide explicitly
for a consent to personal jurisdiction.123 Candidly, we view these as distinct
categories. In the first case, the argument is that a business somehow must agree to
being subject to general jurisdiction in every state in our nation, as a condition to
doing business nationally. Daimler‘s reasoning indicates that such a grasping
assertion of state authority is inconsistent with principles of due process, and
POL‘Y REV. 243, 258 (2001) (―While forum shopping has always been an occasional form of
litigation abuse, with the increased frequency of mass tort litigation, forum shopping abuse has
become both more prevalent and has taken on new importance.‖); see also Matthew D. Cain &
Steven Davidoff Solomon, A Great Game: The Dynamics of State Competition and Litigation,
100 IOWA L. REV. 465, 468, 477 (2015) (finding, based on an analysis of ―1117 public
transactions comprising all takeover deals announced and completed between 2005 and 2011
having a transaction value greater than $100 million,‖ that in 2005, ―multi-state litigation
occurred in 8.3% of all transactions that resulted in litigation‖ and that by 2011, that number rose
to 53%); Minor Myers, Fixing Multi-Forum Shareholder Litigation, 2014 U. ILL. L. REV. 467,
479–99 (demonstrating the prevalence of multi-forum litigation through empirical data on
multi-forum shareholder litigation).
123
See, e.g., Acorda Therapeutics, Inc., 78 F. Supp. 3d at 591 (―Daimler [did not mean] to
eliminate consent as a basis for jurisdiction. Such a holding would threaten to fundamentally
alter the personal jurisdiction defense from a waivable to a non-waivable right, a characteristic of
the defense that was not before the Daimler Court and is not explicitly addressed in its opinion.
The scope of a corporation‘s right to consent to jurisdiction in the courts of a particular state has
never been thought to be limited to any certain number of states. It may well be that a
corporation will voluntarily consent—whether by compliance with state registration statutes, by
contract, or by some other means—to the jurisdiction of courts in many more states than the
number of states in which that corporation might be found to be ‗at home‘ for purposes of
general jurisdiction.‖ (footnote omitted)).
41
impliedly, with interstate commerce.124 Moreover, a foreign corporation‘s consent
to personal jurisdiction cannot be coerced or conditioned on the corporation
waiving its right not to be subject to all-purpose jurisdiction in all but a few places
where it has sufficient contacts.125 By contrast, nothing in Daimler is at all in
tension with the traditional idea that a party to a non-adhesion contract can subject
itself to personal jurisdiction via a forum-selection clause.126 Notably, in M/S
Bremen v. Zapata Off-Shore Co.,127 the U.S. Supreme Court held that a
forum-selection clause in a freely negotiated agreement is ―prima facie valid and
124
See supra notes 70–72 and accompanying text; see also supra note 108 and accompanying
text.
125
See, e.g., Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586, 2594 (2013) (―[Under
the unconstitutional conditions doctrine,] ‗the government may not deny a benefit to a person
because he exercises a constitutional right.‘ . . . [T]he [doctrine] vindicates the Constitution‘s
enumerated rights by preventing the government from coercing people into giving them up.‖
(quoting Regan v. Taxation With Representation of Wash., 461 U.S. 540, 545 (1983))); Frost v.
R.R. Comm’n of Cal., 271 U.S. 583, 593–94 (1926) (―[A]s a general rule, the state, having power
to deny a privilege altogether, may grant it upon such conditions as it sees fit to impose. But the
power of the state in that respect is not unlimited, and one of the limitations is that it may not
impose conditions which require the relinquishment of constitutional rights. If the state may
compel the surrender of one constitutional right as a condition of its favor, it may, in like
manner, compel a surrender of all. It is inconceivable that guaranties embedded in the
Constitution of the United States may thus be manipulated out of existence.‖); see also Kathleen
M. Sullivan, Unconstitutional Conditions, 102 HARV. L. REV. 1413, 1421–22 (1989)
(―Unconstitutional conditions problems arise when government offers a benefit on condition that
the recipient perform or forego an activity that a preferred constitutional right normally protects
from government interference.‖); Richard A. Epstein, Unconstitutional Conditions, State Power,
and the Limits of Consent, 102 HARV. L. REV. 4, 6–7 (1988) (―In its canonical form, [the
unconstitutional conditions] doctrine holds that even if a state has absolute discretion to grant or
deny a privilege or benefit, it cannot grant the privilege subject to conditions that improperly
‗coerce,‘ ‗pressure,‘ or ‗induce‘ the waiver of constitutional rights.‖).
126
See, e.g., Burger King Corp., 471 U.S. at 473 n.14 (―[I]n the commercial context, parties
frequently stipulate in advance to submit their controversies for resolution within a particular
jurisdiction. Where such forum-selection provisions have been obtained through ‗freely
negotiated‘ agreements and are not ‗unreasonable and unjust,‘ their enforcement does not offend
due process.‖ (internal citation omitted)).
127
407 U.S. 1 (1972).
42
should be enforced unless enforcement is shown by the resisting party to be
‗unreasonable‘ under the circumstances‖ where there was ―strong evidence that the
[] clause was a vital part of the agreement.‖128 Of equal note is the reality that
forum-selection clauses almost always involve parties being subject to personal
jurisdiction in the chosen forum over a particular class of claims—that is, they
involve consent to specific jurisdiction as to the claims outlined in the
agreement.129 Daimler does not suggest that this traditional avenue of consent to
personal jurisdiction is no longer viable.
128
Id. at 10, 14; see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 593–95 (1991)
(finding that a forum-selection clause in a commercial cruise passage contract ticket was
reasonable and enforceable, and that the respondents ―have not satisfied the ‗heavy burden of
proof,‘ required to set aside the clause on grounds of inconvenience‖); Monestier, supra note 1,
at 1385–86 (―[A] party who has agreed to a forum selection clause, and thereby consented to the
jurisdiction of a certain court, may be able to escape the clause‘s effect by demonstrating that
enforcement would be unreasonable. Although claims that a forum selection clause is
unreasonable are not often successful, the rule nonetheless provides an important escape hatch
for a party resisting enforcement of a forum selection clause. . . . Additionally, the Supreme
Court in Bremen reaffirmed that traditional contract doctrines such as ‗fraud, undue influence, or
overweening bargaining power‘ are also available to a party seeking to avoid a forum selection
clause. Other contract doctrines such as mistake, public policy, and unconscionability could also
be used by litigants to avoid the effects of a forum selection clause. In cases where a corporation
‗consents‘ to jurisdiction by the act of registering to do business, there are no escape hatches.‖).
129
See, e.g., Monestier, supra note 1, at 1383–84 (noting that the most important distinction
between consent based on a forum-selection clause or voluntary submission, and consent by
registration, is that the former constitutes limited consent ―to a particular dispute involving a
particular plaintiff‖ whereas the latter ―extends to any and all disputes involving any and all
plaintiffs‖ (emphasis omitted)).
43
IV. CONCLUSION
In light of the U.S. Supreme Court‘s clarification of the due-process limits
on general jurisdiction in Goodyear and Daimler, we read our state‘s registration
statutes as providing a means for service of process and not as conferring general
jurisdiction. Accordingly, we reverse the Superior Court‘s judgment that denied
Genuine Parts‘ motion to dismiss the claims against it for lack of personal
jurisdiction.
44
VAUGHN, Justice, dissenting:
I agree with those federal judicial officers who have concluded that Daimler
and Goodyear have no effect upon general jurisdiction that is based upon consent
through corporate registration statutes.130 Daimler and Goodyear involved only
general jurisdiction by presence where the corporate defendant had not consented
to jurisdiction. Just last month, a circuit court judge of the Federal Circuit wrote in
a concurring opinion mentioned by the Majority that ―Daimler did not overrule the
line of Supreme Court authority establishing that a corporation may consent to
jurisdiction over its person by choosing to comply with a state‘s registration
130
See Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 2016 WL 1077048, at *10 (Fed. Cir.
Mar. 18, 2016) (O‘Malley, J., concurring), aff’g 78 F. Supp. 3d 572, 587 (D. Del. 2015);
Novartis Pharm. Corp. v. Mylan Inc., 2015 WL 1246285, at *3–4 (D. Del. Mar. 16, 2015);
Forest Labs, Inc. v. Amneal Pharm, LLC, 2015 WL 880599, at *12 (D. Del. Feb. 26, 2015); see
also Helsinn Healthcare S.A. v. Hospira, Inc., 2016 WL 1338601, at *3 (D.N.J. Apr. 5, 2016)
(―Daimler did not address the issue of consent-based jurisdiction . . . .‖); In re Syngenta AG MIR
162 Corn Litig., 2016 WL 1047996, at *3 (D. Kan. Mar. 11, 2016) (―The Court is not prepared
to ignore such Supreme Court precedent based on speculation about how the Court might view
jurisdiction in contexts other than that discussed in Daimler.‖); Mitchell v. Eli Lilly & Co., 2016
WL 362441, at *5–9 (E.D. Mo. Jan. 29, 2016) (rejecting the argument that Daimler altered
general jurisdiction by consent); Grubb v. Day to Day Logistics, Inc., 2015 WL 4068742, at *4
(S.D. Ohio July 2, 2015) (declining to extend Daimler to consent); Fesniak v. Equifax Mortg.
Servs. LLC, 2015 WL 2412119, at *6 (D.N.J. May 21, 2015) (acknowledging that one may still
consent to personal jurisdiction); Gracey v. Janssen Pharms., Inc., 2015 WL 2066242, at *3 n.4
(E.D. Mo. May 4, 2015) (noting that Daimler did not alter jurisdiction by consent); Perrigo Co.
v. Merial Ltd., 2015 WL 1538088, at *7 (D. Neb. Apr. 7, 2015) (―Daimler only speaks to
whether general jurisdiction can be appropriately exercised over a foreign corporation that has
not consented to suit in the forum.‖); Senju Pharm. Co., Ltd. v. Metrics, Inc., 96 F. Supp. 3d 428,
437 (D.N.J. Mar. 31, 2015) (―Daimler did not discuss instate service and there was no indication
in Daimler that the defendant had registered to do business in the state or been served with
process there.‖); Otsuka Pharm. v. Mylan, 2015 WL 1305764, at *9–10 (D.N.J. Mar. 23, 2015)
(declining to extend Daimler to consent).
statute.‖131 The case originated in Delaware and the opinion concluded that
Sternberg itself remains good law. I fully agree with the reasoning of that
concurring opinion and see no need to duplicate it here.
It may be that the United States Supreme Court will go in the same direction
as the Majority. But we won‘t know until it gets there. I would not divest the trial
courts of this state of significant jurisdiction unless I was sure I was right, and I am
not sure the Majority is right. I would affirm the judgment of the Superior Court.
131
Acorda, 2016 WL 1077048, at *10 (O‘Malley, J., concurring).
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