When we see a case title with the same name on both sides of the v, we think of Jarndyce v. Jarndyce, the will contest described by Dickens in Bleak House. That fictional case dragged on for years and throughout the course of the book, ending only when legal expenses devoured all the estate funds. When a case is Surname X vs. Surname X, it is usually a family law matter. That is not the usual stuff for our cozy little blog, and maybe that’s why did not pay much attention to Aybar v. Aybar, 2019 WL 288307 (N.Y. App. Jan. 23, 2019), when it came out a little more than a year ago.
Aybar was about a car accident – a bad one, involving three fatalities and three serious injuries. The plaintiffs were the survivors and the estates of the decedents. The defendants included the driver (who must have been a relative of at least one of the plaintiffs, thereby accounting for the same names) and the manufacturers of the vehicle and the tires. The auto manufacturer and tire manufacturer moved to dismiss the case against them for lack of personal jurisdiction. The vehicle was manufactured in Missouri and sold in Ohio. Nothing involving the manufacture of the vehicle in question occurred in New York. The auto manufacturer had no factories in New York and, to the extent it did any business there, operated via independent dealers. The tires were made in Tennessee and tested and inspected outside of New York.
The plaintiffs did not assert that there was specific jurisdiction against these defendants. The only issue was whether New York could exercise general personal jurisdiction — i.e., whether the companies engaged in such a continuous and systematic course of doing business in New York such that a plaintiff could hail them into New York courts for any case. The lower court said that New York did have such general jurisdiction over the companies. The appellate court said that the lower court was wrong.
Under the SCOTUS decision in Daimler, there is general jurisdiction over companies that are “at home” in the forum in question. Companies are “at home” in states where they are incorporated and states that house the principal place of business. Nothing else really does the trick, apparently, save having a temporary place of business in a state during a war. None of that applied in Aybar, thus it looked like the companies could escape from New York. The plaintiffs resorted to the usual gambit, pointing to the companies’ long histories of doing lots of business in New York. Of course, any big corporation in this country cannot help doing lots of business in New York. If plaintiffs’ argument won the day, Daimler would be a dead letter, at least within the territorial limits of New York (and, undoubtedly, California, as well). So far, Aybar is pretty ordinary.
What makes Aybar interesting is court’s rejection of plaintiffs’ argument that there was general jurisdiction over the companies because they consented to jurisdiction in New York by registering to do business in New York and appointing an agent for service of process. This argument usually does not work, though it has made headway in a few courts. Those few courts were unspeakably dim, so we won’t speak of them — we’ll leave that to Bexis. But we will speak (kindly) about the reasoning in Aybar.
At first, you might think the Aybar court had it easy, because the New York business registration statutes do not expressly require consent to general jurisdiction as a cost of doing business in New York, nor do they expressly notify a foreign corporation that registering to do business in New York has such an effect. Nevertheless, there is a long line of New York cases (both federal and state) holding that registering to do business in New York does, indeed, constitute consent to general jurisdiction. It was, for sure, a long line, but it was also an old line. The New York theory of consent by registration traces back to a 1916 decision by Judge (not yet Justice) Cardozo. Cardozo, like Holmes, Marshall, etc., gets a lot of cred, and we in the legal business are supposed to treat legal legends as if they were infallible. (By the way, they were not). The Aybar court does not label Cardozo as wrong; rather, his personal jurisdiction decision was of its time. The Aybar court takes us on a tour of personal jurisdiction law from Pennoyer through International Shoe etc., culminating in Daimler. (If you can read the Aybar opinion and not have an anxiety nightmare that night about your law school Civ Pro I exam, you are made of stronger stuff than we are.) Let’s cut to the chase. Daimler was a game changer. And the game now is a lot better for defendant corporations. The old New York consent-by-registration cases are confined to the pre-International Shoe era. Post Daimler, companies do not consent to general jurisdiction in New York merely by registering to do business there.
Unlike Jarndyce v. Jarndyce, in which the justice system perpetuated insanity after insanity, eventually grinding the parties to dust, Aybar v. Aybar shows a justice system capable of evolving, learning, and improving.