The question in this case is whether a foreign corporation consents to personal jurisdiction in a state by registering to do business and appointing an agent for the service of process there.
The Due Process clause of the 14th Amendment imposes limitations on a state court’s ability to exercise personal jurisdiction. Those limitations vary depending on whether the personal jurisdiction is “specific” or “general.” Specific jurisdiction allows the court to adjudicate claims arising from the defendant’s contacts with the state. The Due Process clause permits such jurisdiction so long as the defendant’s contacts with the state establish that the defendant “purposely availed itself of the privilege” of conducting activities there.
General jurisdiction, on the other hand, allows a state court to adjudicate claims regardless of whether they arise from the defendant’s contacts with the state. Historically, a court could exercise general jurisdiction, in effect, only if the defendant had a critical mass of contacts with the state. But in Goodyear Dunlop Tires Operations v. Brown, 564 U.S. 915 (2011), the U.S. Supreme Court held that a state court could exercise general jurisdiction over a defendant only if the defendant was “at home” in the state. Goodyear and the rulings that followed pared back the number of jurisdictions that could exercise general jurisdiction over a corporate defendant; in all but exceptional cases, a corporation can now be subject to general jurisdiction only in the state where it is incorporated and the state where it has its principal place of business (if those two are different).
Companies that seek to do business in a state other than the state where they were incorporated typically must register with a state agency. All fifty states have some such business registration statute; those provisions typically also require the foreign corporation to appoint an in-state agent to receive service of process. (The relevant provision in New York is found in Business Corporation Law ยง 304.) Since Goodyear, plaintiffs have argued that registering to do business and appointing an in-state agent to receive service means that a foreign corporation has consented to the personal jurisdiction of the state courts. This consent, they argue, constitutes an alternate basis for personal jurisdiction that is not subject to the limitations described above for general and specific jurisdiction.
Plaintiffs in this case raised the same argument. They were injured in a car accident in Virginia; the driver was a New York resident. Plaintiffs filed an action in New York alleging negligence against the driver, as well as the car manufacturer (Ford) and the tire manufacturer (Goodyear). Ford is incorporated in Delaware, with its principal place of business in Michigan; Goodyear is incorporated and has its principal place of business in Ohio. Those defendants moved to dismiss the actions against them for lack of personal jurisdiction, arguing that this case did not involve specific jurisdiction (because the claims did not arise from something that happened in New York) and neither defendant could be subject to general jurisdiction in New York under Goodyear.
Supreme Court, Queens County denied the motions, holding that Ford and Goodyear consented to jurisdiction by registering to do business here. But the Second Department reversed. On the consent issue, the court noted that the state’s business registration statute did not expressly require consent to personal jurisdiction as a condition of registering to do business in the State. The court acknowledged that earlier judicial decisions had equated compliance with the registration statute as a submission to the state’s jurisdiction. But those decisions, the court held, were a product of the earlier understanding of general jurisdiction that prevailed before Goodyear. Their view of jurisdiction could no longer be sustained, and the court declined to treat them as good law for the proposition that registering to do business in New York constitutes consent to the personal jurisdiction of the State’s courts.
The Court of Appeals granted leave to appeal.
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