Bexis recently filed a personal jurisdiction amicus brief in Pennsylvania – ground zero in the battle over general jurisdiction by “consent” due to a foreign corporation’s registration to do business in the state (technically, commonwealth).  As is readily apparent from our 50-state survey on general jurisdiction by consent, most states reject such an expansive reading of corporate domestication statutes.  But those states that don’t rely on a hoary United States Supreme Court decision, Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917), from deep within the old “territorial” age of personal jurisdiction, an age that ended over 70 year ago when International Shoe Co. v. Washington, 326 U.S. 310 (1945), supplanted Pennoyer v. Neff, 95 U.S. 714 (1877).

In Pennsylvania, where Bexis filed, that reliance has a Tinker to Evers to Chance flavor to it.  Webb-Benjamin, LLC v. International Rug Group, LLC, 192 A.3d 1133 (Pa. Super. 2018), followed Bors v. Johnson & Johnson, 208 F. Supp.3d 648 (E.D. Pa. 2016), which we blogged about here.  Bors, in turn, refused to “ignore” (208 F. Supp.3d at 652) the pre-Bauman Third Circuit decision in Bane v. Netlink, Inc., 925 F.2d 637 (3d Cir. 1991).  Bane had this to say about general jurisdiction by consent back in 1991:

[Defendant’s] application for a certificate of authority can be viewed as its consent to be sued in Pennsylvania under section 5301(a)(2)(ii), which explicitly lists “consent” as a basis for assertion of jurisdiction over corporations. Consent is a traditional basis for assertion of jurisdiction long upheld as constitutional.  See Hess v. Pawloski, 274 U.S. 352, 356-57 (1927).

Id. at 641 (other citation omitted).  Those three sentences are the entirety of the discussion of “consent” in Bane.  Right now, you could say those three sentences are the bane of our existence.

Hess, finally, relied on Pennsylvania Fire:

The mere transaction of business in a state by nonresident natural persons does not imply consent to be bound by the process of its courts.  The power of a state to exclude foreign corporations, although not absolute, but qualified, is the ground on which such an implication is supported as to them.  Pennsylvania Fire Insurance Co. v. Gold Issue Mining Co., 243 U. S. 93 [(1917)].

274 U.S. at 355 (other citation omitted).  See also Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196, 1198 (8th Cir. 1990) (also relying on Hess for the proposition “[t]:he doing of various acts within the State . . . was equated, by statute, with consent or submission to the jurisdiction, even by nonresidents”).

Other courts in the post-Bauman minority rely on Pennsylvania Fire much more directly.  For example, take a look at the only other post-Bauman appellate decision allowing general jurisdiction by consent:

In this appeal, we consider whether [defendant] consented to general personal jurisdiction in New Mexico courts when it registered to do business here.  To answer this question, we must determine whether the United States Supreme Court’s decision in Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917) . . . remain binding precedent in light of the evolution of general jurisdiction jurisprudence. . . .  We recognize the tension between the two lines of cases.  Nevertheless, because we conclude that . . . Pennsylvania Fire . . . [is] are still binding, we conclude that [defendant] consented to general jurisdiction in New Mexico.

Rodriguez v. Ford Motor Co., ___ P.3d ___, 2018 WL 6716038, at *1 (N.M. App. Dec. 20, 2018).

The rigor of briefing an issue – rather than writing blogposts – required Bexis to go back and actually read a number of the foundational Supreme Court personal jurisdiction decisions for the first time, probably, since law school.  It was a useful exercise, one that led him to conclude that, not only is Pennsylvania Fire no longer good law in light of Bauman, as so many recent decisions in our 50-state survey have concluded, but that Pennsylvania Fire has already been expressly overruled – more than 40 years ago.  The United States Supreme Court just didn’t overrule it by name.

We start with International Shoe Co. v. Washington, 326 U.S. 310 (1945), which discussed the demise of the “fictional” concept of corporate “presence” in a state under the new non-territorial version of Due Process.

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.  To say that the corporation is so far “present” there as to satisfy due process requirements . . . is to beg the question to be decided.  For the 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.  Those demands may be met by such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there. . . .

Id. at 316-17 (citations omitted) (emphasis added).  Indeed, the concept of “consent” was no longer needed for the exercise of what becomes known as “general” personal jurisdiction.

“Presence” in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given.

Id. at 317 (citation omitted) (emphasis added).  Likewise, “consent” is not essential to what becomes known as “specific jurisdiction.  As to “the commission of some single or occasional acts of the corporate agent in a state”:

True, some of the decisions holding the corporation amenable to suit have been supported by resort to the legal fiction that it has given its consent to service and suit. . . .  But more realistically it may be said that those authorized acts were of such a nature as to justify the fiction. . . .  Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.

Id. at 318-19 (citations omitted) (emphasis added).  “Consent” in the context of corporate activity, was thus repeatedly denounced in International Shoe as a “fiction,” while what was henceforth determinative was the “quality and nature of the [corporation’s] activity.”

The Court returned to the “fiction” of corporate “consent” in Shaffer v. Heitner, 433 U.S. 186 (1977), rejecting “statutory presence” of intangible property (corporate securities) as a basis for personal jurisdiction.  The Court expressly abandoned “the fiction[] of implied consent to service on the part of a foreign corporation” in favor of “ascertain[ing] what dealings make it just to subject a foreign corporation to local suit.”  Id. at 202-03

Shaffer also observed that Pennoyer had “approved the practice of considering a foreign corporation doing business in a State to have consented to being sued in that State.”  433 U.S. at 201 (citing 95 U.S. at 735-36).  However, this “consent” theory was difficult to administer in practice:

[B]oth the fictions of implied consent to service on the part of a foreign corporation and of corporate presence required a finding that the corporation was “doing business” in the forum State.  Defining the criteria for making that finding and deciding whether they were met absorbed much judicial energy.

Id. at 202 (citations omitted).

International Shoe drastically changed all that:

Thus, the inquiry into the State’s jurisdiction over a foreign corporation appropriately focused not on whether the corporation was “present” but on whether there have been “such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.”  Mechanical or quantitative evaluations of the defendant’s activities in the forum could not resolve the question of reasonableness.

Id. at 203-04 (quoting International Shoe, 326 U.S. at 317).

Now we get to the good part.  Shaffer went on to bring the jurisdictional rules for in rem actions into line with International Shoe’s dramatic change[s],” id. at 205, to in personam personal jurisdiction.  Id. at 205-10.  The state statute before the court had “the express purpose . . . to compel the defendant to enter a personal appearance.”  As such, it was unconstitutional:

In such cases, if a direct assertion of personal jurisdiction over the defendant would violate the Constitution, it would seem that an indirect assertion of that jurisdiction should be equally impermissible.  The primary rationale for treating the presence of property as a sufficient basis for jurisdiction to adjudicate claims over which the State would not have jurisdiction if International Shoe applied. . . .

Id. at 209.

With that, the Court in Shaffer held that a state statute that sought to create a jurisdictional basis “to adjudicate claims over which the state would not have jurisdiction” under International Shoe Due Process was unconstitutional.  That’s exactly what the “general jurisdiction” language in the Pennsylvania Long Arm Statute does.  Critically, Shaffer reinforced its point by expressly overruling all contrary Pennoyer-era precedent:

We therefore conclude that all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.39

39 It would not be fruitful for us to re-examine the facts of cases decided on the rationale[] of Pennoyer . . . to determine whether jurisdiction might have been sustained under the standard we adopt today.  To the extent that prior decisions are inconsistent with this standard, they are overruled.

Id. at 212 & n. 39 (emphasis added).  That’s the 40+ years ago.  And we think “all” does mean all.

Given what the Court had already held in Shaffer about:  (1) the “fiction” of corporate “consent”; (2) its origins in Pennoyer; (3) that state statutes couldn’t gin up jurisdiction that doesn’t exist under International Shoe; and (4) that “all assertions” of personal jurisdiction must accord with International Shoe, there should be no doubt that Pennsylvania Fire (and its lesser-known adjunct Neirbo Co. v. Bethlehem Shipbuilding Corp., Ltd., 308 U.S. 165 (1939)), is among the prior “inconsistent” decisions that Shaffer expressly overruled.

We could end this post here, but we didn’t stop reading there, either.  So we find the overruling of Pennsylvania Fire is further bolstered by what the Supreme Court has done since.  We start with the admonition in Bauman itself that Pennoyer-era cases “should not attract heavy reliance today.”  Daimler AG v. Bauman, 571 U.S. 117, 138 n.18 (2014).  But the Supreme Court has said considerably more related specifically to general jurisdiction by consent.  That includes Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 445 (1952), which has since became Bauman’s “exceptional” case.  Perkins also rejected ipso facto personal jurisdiction based on a corporation’s “secur[ing] a license and [] designat[ing] a statutory agent upon whom process may be served” – those actions only “provide[] a helpful but not a conclusive test” for specific jurisdiction.  Id. at 445.  Ditto for McGee v. International Life Insurance Co., 355 U.S. 220 (1957):

[W]here this line of limitation falls has been the subject of prolific controversy, particularly with respect to foreign corporations.  In a continuing process of evolution this Court accepted and then abandoned ‘consent,’ ‘doing business,’ and ‘presence’ as the standard for measuring the extent of state judicial power over such corporations.

Id. at 222 (citations and quotation marks omitted) (emphasis added).

The Court’s most comprehensive, relatively recent, analysis of consent jurisdiction took place in Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982) (“ICI”).  Each and every one of the “variety of legal arrangements” recognized as “consent” in ICI were grounds for case specific – not general − jurisdiction:

  • “[S]ubmi[ssion] to the jurisdiction of the court by appearance”;
  • “[P]arties to a contract may agree in advance”;
  • “[A] stipulation entered into by the defendant”;
  • “[C]onsent [is] implicit in agreements to arbitrate”;
  • “[C]onstructive consent to the personal jurisdiction of the state court [inheres] in the voluntary use of certain state procedures;”
  • “[W]aive[r] if not timely raised”; and
  • “[F]ail[ure] to comply with a pretrial discovery order.”

Id. at 704-06 (citations and quotation marks omitted).  These are all actions that take place on a one-off basis in particular cases.

The only item on the ICI list that could possibly encompass general jurisdiction by consent – “constructive consent” due to “voluntary use of certain state procedures – really doesn’t.  The ICI Court gave two examples of what it was describing, both of which were likewise specific to individual cases.  See Adam v. Saenger, 303 U.S. 59, 67-68 (1938) (non-resident plaintiff consents to counterclaims); Chicago Life Insurance Co. v. Cherry, 244 U.S. 25, 30 (1917) (“filing a plea in abatement, or taking the question to a higher court”).  Those are the kind of things that parties decide to do (or not) on a case-by-case basis.  Thus, while there is reason to believe that Adams and Chicago Life are not victims of Shaffer’s global overruling of Pennoyer-era precedent, conversely, there is no basis for saving Pennsylvania Fire.  In accordance with Shaffer, ICI did not even recognize corporate registration as a modern form of “consent.”

Then, in Burnham v. Superior Court, 495 U.S. 604 (1990), similarly to Shaffer, the Court again expressly “cast aside” “consent” arguments for general jurisdiction as “purely fictional”:

We initially upheld [corporate registration] 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.  Our opinion in International Shoe cast those fictions aside. . . .

Id. at 617-18 (citations omitted) (plurality opinion).

Finally, the fate of general jurisdiction by consent is also discussed in the “stream of commerce” case, J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873 (2011).  The plurality listed “consent” as one of four possible bases of jurisdiction.  Id. at 880-81.  Absent consent, “those who live or operate primarily outside a State have a due process right not to be subjected to judgment in its courts.”  Id. at 881.  “Purposeful availment” was a basis for the “more limited form,” specific jurisdiction, only.  Id.  Interestingly, in Nicastro, the more pro-jurisdiction dissenters were even less kind to notions of “consent”:

Finally, in International Shoe itself, and decisions thereafter, the Court has made plain that legal fictions, notably “presence” and “implied consent,” should be discarded, for they conceal the actual bases on which jurisdiction rests. “[T]he relationship among the defendant, the forum, and the litigation” determines whether due process permits the exercise of personal jurisdiction . . ., and “fictions of implied consent” or “corporate presence” do not advance the proper inquiry. . . .  [C]onsent [a]s the animating concept draws no support from controlling decisions of this Court. Quite the contrary, the Court has explained, a forum can exercise jurisdiction when its contacts with the controversy are sufficient; invocation of a fictitious consent, the Court has repeatedly said, is unnecessary and unhelpful.

Id. at 900-01 (citations omitted) (Ginsburg +2, dissenting). Thus, even the justices who were inclined to interpret personal jurisdiction more expansively in Nicastro weren’t willing to endorse the “consent” notions that animated Pennsylvania Fire.

Based on the above analysis, we think it is entirely proper, not only for defendants in general-jurisdiction-by-consent cases to argue that Pennsylvania Fire should not be followed because it is obsolete and inherently inconsistent with Bauman, but to go further and argue that Pennsylvania Fire – and thus the entire concept of general jurisdiction by consent – was already expressly overruled on its jurisdictional holding in Shaffer.  Overruling Pennsylvania Fire 40+ years ago is entirely consistent with how the United States Supreme Court has since treated that decision and the “consent” concept.  First, International Shoe and Shaffer thoroughly trashed the notion of “consent” as a basis for general jurisdiction.  Second, Pennsylvania Fire has not been cited for any jurisdictional proposition whatever since Shaffer (as opposed to its holding about the Full Faith and Credit clause, 243 U.S. at 96-97, which appears to remain valid).  Third, every Supreme Court case since Shaffer has treated “consent” jurisdiction generally as a factor for resolving specific jurisdiction, not general jurisdiction.

Finally, we’d also recommend that our readers share this post with anyone in their firms who is engaged in asbestos litigation.  While defeating general jurisdiction by consent is important to our drug/device clients, it is absolutely critical in asbestos litigation.  Asbestos plaintiffs typically sue dozens of corporate defendants, so that litigation requires a general, not specific, jurisdiction theory to continue aggregating cases in plaintiff-friendly places where plaintiffs don’t reside.  Defeating general jurisdiction by consent in asbestos cases will force asbestos plaintiffs to stay home, where they can assert specific jurisdiction over most (if not all) of their defendants.  Otherwise, asbestos litigation tourists should stand to lose 95% or so of the defendants they sue to personal jurisdiction defenses.