Today’s guest post is by friend of the blog Dick Dean, of Tucker Ellis. He had an interesting idea the last time he posted about personal jurisdiction, and he’s following up with another one – this time rousing the previously dormant Commerce Clause. As always, our guest posters are 100% responsible (all credit and any blame) for the contents of their posts.
Bexis and Kevin Hara recently posted a 50-state survey on consent by registration statues – specifically, analyzing which states have concluded that Daimler AG v. Bauman’s due process holdings “trump” such consent statutes. See Dec 18, 2017 post. But besides due process, there is another argument to attack such statutes- the Dormant Commerce Clause. In Re Syngenta AG MIR 162 Corn Litigation, MDL No. 2591, 2016 WL 2866166, (D. Kan. May 17, 2016) (invalidating Kansas registration statute based on the Dormant Commerce Clause); see also my prior guest post, “Corn, Justice Brandeis, Litigation Tourism and the Dormant Commerce Clause.” (July 5, 2016).
There is now a comprehensive article discussing these issues and, within that context, assessing whether registration statutes are constitutional under the Dormant Clause: J. Preis, “The Dormant Commerce Clause as a Limit on Personal Jurisdiction,” 102 Iowa L. Rev. 121 (Nov. 2016). It is a must-read for those briefing the validity of consent statutes. The introduction comments on the interplay between Due Process and the Dormant Commerce Clause:
After standing in the background for so long, it is high time for the Dormant Commerce Clause to step forward. In recent years, the Supreme Court has issued a spate of major personal jurisdiction decisions. These decisions have set off a wave of commentary in the legal academy, but the questions raised by these new cases are not simply academic. At present, jurists across the country are wrestling with a new and vexing issue of personal jurisdiction: whether a company’s registration to do business in a state amounts to consent to personal jurisdiction in that state. What no scholar or jurist has recognized, however, is that the Dormant Commerce Clause clarifies modern personal jurisdiction law in a way that the Due Process Clause, on its own, cannot.
Id. at 123-124
Briefly, the Dormant Commerce Clause provides that states may not interfere with commerce in other states. This is the flip side of the constitutional provision which says the Congress has the power to regulate commerce between the states. When it comes to general jurisdiction, out-of-state companies have an advantage over in-state companies – the ability to avoid suits unrelated to its activities in the State. The article examines various scenarios of citizenship and states of injury and whether they pass muster under the Dormant Commerce Clause. It concludes:
. . . [J]urisdiction-via-registration will be unconstitutional in suits brought by non-residents injured out of state. In those cases, the local benefit is completely absent and the burden on interstate commerce will be “clearly excessive in relation to the putative local benefits.” In cases where the plaintiff is a resident or was injured in the state, however, a local benefit exists and jurisdiction-via-registration will be constitutional.
Id. at 147.
Not only does the Dormant Commerce Clause present serious obstacles for registration statutes which impact general jurisdiction, but it may offer an argument to bar cases where specific jurisdiction has been found based on very tenuous “connections” between plaintiff’s injury and the forum state, such as the single-claim situation discussed in my (and Nick Janizeh’s) prior post. If the Iowa Law Review article’s conclusion that the Dormant Commerce Clause bars claims by non-residents not injured in the state holds true, then that premise transcends issues of general or specific jurisdiction. Put another way, even if there is general or specific jurisdiction over a defendant, there may still be a defense on the merits based on the Dormant Commerce Clause. The Dormant Commerce Clause is a separate concept from jurisdiction and must be evaluated separately. Comptroller of Treasury of Maryland v. Wynne, 135 S.Ct 1787, 1798-99 (2015). And of course, that is the clear holding of In re Syngenta, which found a consent-by-registration statute passed due process muster but not Dormant Commerce Clause muster. Thus, even though the Beck & Hara blog suggested that Kansas was a “murky” state on where it stood on the due process issue, it remains clear that consent-by-registration fails in Kansas because the federal court rejected the statute on Dormant Commerce Clause grounds. This is an important argument available in the continuing saga of litigation tourism.
[Editor’s note: This dormant commerce clause argument could be particularly useful in Pennsylvania, not just because of the peculiar challenge of the Commonwealth’s registration statute, but also because of yesterday’s “let anybody sue” decision from the Pennsylvania Supreme Court allowing litigation tourists from anywhere to assert the Pennsylvania consumer protection statute against Pennsylvania companies no matter where the transaction occurred.]