Sooner or later we knew it would happen. The law on general jurisdiction by consent has been developing very favorably – maybe even too favorably. Since Daimler AG v. Bauman, 571 U. S. 117 (2014), almost every appellate decision (including every state court of last resort and federal circuit court) has rejected general jurisdiction by consent: Lanham v. BNSF Railway Co., 939 N.W.2d 363, 371 (Neb. 2020); State ex rel. Cedar Crest Apartments, LLC v. Grate, 577 S.W.3d 490, 494 (Mo. 2019); DeLeon v. BNSF Railway Co., 426 P.3d 1, 4, 8-9 (Mont. 2018); Aspen American Insurance Co. v. Interstate Warehousing, Inc., 90 N.E.3d 440, 447-48 (Ill. 2017); State ex. rel. Norfolk Southern Railway Co. v. Dolan, 512 S.W.3d 41, 47 (Mo. 2017); Figueroa v. BNSF Railway Co., 390 P.3d 1019, 1021-22 (Or. 2017); Segregated Account of Ambac Assurance Corp. v. Countrywide Home Loans, 898 N.W.2d 70, 81-82 (Wis. 2017); Bristol-Myers Squibb Co. v. Superior Court, 377 P.3d 874, 884 (Cal. 2016), reversed on other grounds, 137 S.Ct. 1773 (2017); Magill v. Ford Motor Co., 379 P.3d 1033, 1038 (Colo. 2016); Genuine Parts Co. v. Cepec, 137 A.3d 123, 127-28 (Del. 2016); Chufen Chen v. Dunkin’ Brands, Inc., 954 F.3d 492, 499 (2d Cir. 2020) (applying New York law); Fidrych v. Marriott International, Inc., 952 F.3d 124, 137 (4th Cir. 2020) (applying South Carolina law); Waite v. All Acquisition Corp., 901 F.3d 1307, 1319 & n.5 (11th Cir. 2018) (applying Florida law); Brown v. Lockheed-Martin Corp., 814 F.3d 619, 640 (2d Cir. 2016) (applying Connecticut law); Aybar v. Goodyear Tire & Rubber Co., 106 N.Y.S.3d 361, 362 (N.Y.A.D. 2019); Fekah v. Baker Hughes, Inc., 110 N.Y.S.3d 1, 2 (N.Y.A.D. 2019); Best v. Guthrie Medical Group., P.C., 107 N.Y.S.3d 258, 260 (N.Y.A.D. 2019); Aybar v. Aybar, 93 N.Y.S.3d 159, 166 (N.Y.A.D. 2019), app. granted, 139 N.E.3d 391 (N.Y. 2019); Seeley v. Caesars Entertainment Corp., 206 A.3d 1129, 1133 & n.9 (Pa. Super. 2019); Wal-Mart Stores, Inc. v. Lemaire, 395 P.3d 1116, 1120 (Ariz. App. 2017); Dutch Run Mays Draft, LLC v. Wolf Block LLP, 164 A.3d 435, 444 (N.J. App. Div. 2017); Magwitch, LLC v. Pusser’s West Indies, Ltd., 200 So.3d 216, 218 (Fla. App. 2016). Federal district courts in over 20 additional jurisdictions have agreed. See the Blog’s Post-BMS Personal Jurisdiction Cheat Sheet (search for “register”).
On the other side, not so much, just Rodriguez v. Ford Motor Co., 458 P.3d 569, 575-78 (N.M. App. 2018), cert. granted, No. S-1-SC-37491 (N.M. April 8, 2019), and Webb-Benjamin, LLC v. International Rug Group, LLC, 192 A.3d 1133, 1137-38 (Pa. Super. 2018), and a smattering of district courts, mostly in Pennsylvania.
All this uniformity meant that no split in authority had developed, either between state high courts or among federal circuit courts (or both), such that an appeal to the United States Supreme Court of the issue would have a decent likelihood of success.
Until now. We thought that Pennsylvania, with its pro-plaintiff supreme court, “deep end” jurisdictional rulings on other issues, split appellate authority, and unusual Long Arm statute (discussed here), was the most likely candidate to break the string and to create a certiorari-worthy precedential split.
Turns out we were wrong.
On the same day that the general jurisdiction by consent issue was argued to the Pennsylvania Supreme Court, the Georgia Supreme Court created a state high court split in Cooper Tire & Rubber Co. v. McCall, ___ S.E.2d ___, 2021 Ga. Lexis 626 (Ga. Sept. 21, 2021) (“McCall”). However, the Georgia court did so reluctantly – essentially anticipating that the United States Supreme Court would take the case. Moreover, the ruling was driven by a longstanding problem with the Georgia Long Arm statute.
The facts in McCall are relatively typical of this sort of case. A Florida litigation tourist, claiming injury from an accident that occurred in Florida, sued the defendant, a nation-wide corporation, in Georgia. There was nothing particularly special about Georgia in the defendant’s operations – it was neither the defendant’s principal place of business nor its state of incorporation. 2021 Ga. Lexis 626, at *2-3.
The Georgia Long Arm statute permitted “personal jurisdiction over any nonresident . . . in the same manner as if he or she were a resident of this state” with respect to certain “enumerated acts”: “business” in Georgia, a “tortious act or omission” in Georgia or causes “tortious injury” in Georgia, if the defendant “regularly does” business or “derives substantial revenue from goods” in Georgia.” Ga. Code §9-10-91. Oddly, however, the statute defined “nonresident” as excluding corporations that had registered to do business in Georgia.
the term “nonresident” includes . . . a corporation which is not organized or existing under the laws of this state and is not authorized to do or transact business in this state
Ga. Code §9-10-90 (emphasis added) (quoted in McCall, 2021 Ga. Lexis 626, at *13).
That definitional quirk caused problems, since Ga. Code §9-10-91 is considered to be a definition of specific, rather than general, personal jurisdiction. McCall, 2021 Ga. Lexis 626, at *13. With registration to do business statutorily excluded as a basis for specific jurisdiction, unless it formed a basis for general jurisdiction, the Georgia Long Arm statute provided no basis at all for the exercise of personal jurisdiction over registered foreign corporations. In a pre-Bauman decision, Allstate Insurance Co. v. Klein, 422 S.E.2d 863 (Ga. 1992) (“Klein”), the court confronted this drafting mistake, and rather than tell the legislature to fix it, it opted to subject registered foreign corporations to general personal jurisdiction by negative implication, considering them to be state “residents.”
[A] corporation which is “authorized to do or transact business in this state at the time a claim” arises is a “resident” for purposes of personal jurisdiction over that corporation in an action filed in the courts of this state. As a resident, such a foreign corporation may sue or be sued to the same extent as a domestic corporation.
Klein, 422 S.E.2d at 865. Klein was a very short opinion, and neither side raised a constitutional issue. Id. n.3. McCall conceded that Klein’s “inverse implication” creating general jurisdiction by registration “may not have been well-explained,” but it was also “not clearly wrong under the [pre-Bauman] governing case law at the time. Id. at *26.
Thus, hanging over the McCall decision, and mentioned several times, was the Georgia Long Arm statute’s poor draftsmanship:
[H]ad the Court [in Klein] reached a different conclusion, a jurisdictional gap would have emerged whereby a registered out-of-state corporation would apparently not have been subject to any jurisdiction in Georgia − specific or general.
McCall, 2021 Ga. Lexis 626, at *26; accord id. at *27, 28.
The United States Supreme Court’s intervening constitutional decisions, however, had limited general personal jurisdiction in ways that the Georgia court candidly (and repeatedly) admitted were “in tension” with the holding in Klein. McCall, 2021 Ga. Lexis 626, at *1, 3, 29. McCall quoted the Supreme Court’s most recent statement of general jurisdiction:
General jurisdiction, as its name implies, extends to any and all claims brought against a defendant. Those claims need not relate to the forum State or the defendant’s activity there; they may concern events and conduct anywhere in the world. But that breadth imposes a correlative limit: Only a select set of affiliations with a forum will expose a defendant to such sweeping jurisdiction. In what we have called the “paradigm” case, an individual is subject to general jurisdiction in her place of domicile. And the equivalent forums for a corporation are its place of incorporation and principal place of business.
Id. at *10 (quoting Motor Co. v. Montana Eighth Judicial Dist. Court, 141 S. Ct. 1017, 1024 (2020)). Other decisions that McCall acknowledged as applying this limited scope to general jurisdiction are: Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017), Daimler AG v. Bauman, 571 U.S. 117 (2014), and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011). McCall, 2021 Ga. Lexis 626, at *9-10.
To avoid a result that would resurrect the “jurisdictional gap” that it had avoided in Klein, the Georgia Supreme Court in McCall relied on the century-old, Pennoyer-era decision, Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917), which allowed general jurisdiction to be based on “consent” created by a foreign corporation’s registration to do business. McCall justified doing so because Pennsylvania Fire was a “decision that the Supreme Court has not overruled.” 2021 Ga. Lexis 626, at *1; see id. at *9, 19. “Unless and until the United States Supreme Court overrules Pennsylvania Fire, that federal due process precedent remains binding on this Court and lower federal courts.” Id. at *23-24.
We don’t think that’s right. A case that McCall doesn’t cite, Shaffer v. Heitner, 433 U.S. 186 (1977), 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 then expressly “overruled” all earlier decisions “inconsistent” with current Due Process standards.
It would not be fruitful for us to re-examine the facts of cases decided on the rationales of Pennoyer and [another century-old case] 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.
433 U.S. at 212 n.39 (emphasis added). In a subsequent case, the Supreme Court again “cast aside” the registration theory of “consent” to general jurisdiction as “purely fictional”:
We initially upheld these [corporate registration] laws . . . 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. . . .
Burnham v. Superior Court, 495 U.S. 604, 617-18 (1990) (citations omitted).
The “tension” that McCall repeatedly acknowledged between Pennsylvania Fire and “the trajectory of recent United States Supreme Court decisions,” 2021 Ga. Lexis 626, at *3, thus puts Pennsylvania Fire squarely within the Shaffer “to the extent” of “inconsisten[cy]” overruling footnote.
The tenor of the McCall decision was often apologetic – seemingly expecting the defendant to take the matter to the Supreme Court and get Pennsylvania Fire specifically overruled by name. McCall asserted that, because Pennsylvania Fire survives, “we are not required to overrule Klein as a matter of binding federal constitutional law.” 2021 Ga. Lexis 626, at *1.
[A]lthough Klein’s general-jurisdiction holding is in tension with the trajectory of recent United States Supreme Court decisions addressing a state’s authority to exercise general personal jurisdiction over corporations, Klein cannot be overruled on federal constitutional grounds [because of Pennsylvania Fire]
Id. at *3-4. McCall also conceded that the Georgia Long Arm statute “does not expressly notify out-of-state corporations that obtaining authorization to transact business in this State and maintaining a registered office or registered agent in this State subjects them to general jurisdiction.” Id. at 23. (McCall claimed that Klein provides such notice, id., although the word “general” does not even appear in the Klein opinion.) Finally, McCall “acknowledge[d] that some other courts have held to the contrary.” Id. at *21.
A lot of courts, actually − as we discussed at the beginning of this post the precedent that rejects general jurisdiction by consent. As precedential support for the contrary position McCall cited: Three early post-Bauman federal district court cases decided between 2015 and 2017, the New Mexico case we cited above, misattributed to the New Mexico Supreme Court, and a case that does not exist, “Weinstein v. Kmart Corp., 99 A3d 997, 997 (N.Y. 2012).” 2021 Ga. Lexis 626, at *21.
Umm . . ., New York Court of Appeals cases are not even in the Atlantic Reporter. After a bit of digging, we found Weinstein v. Kmart Corp., 952 N.Y.S.2d 459 (N.Y.A.D. 2012) – a pre-Bauman intermediate appellate case with all of one substantive paragraph. As our introductory caselaw discussion indicates, four more recent New York Appellate Division cases, as well as the Second Circuit applying New York law, have rejected general jurisdiction by consent in reliance on United States Supreme Court’s more recent precedent.
In sum, it appears to us that not even the Georgia Supreme Court itself was comfortable with what it did. It did so because the state’s Long Arm statute, as written, would lead to an absurd (McCall calls it “perverse”) result if the court had followed the last decade of United States Supreme Court personal jurisdiction precedent:
[I]f we were to overrule Klein’s general-jurisdiction holding, these corporations would not be subject to general jurisdiction in this State, either. This outcome would allow out-of-state corporations to insulate themselves from personal jurisdiction in Georgia simply by obtaining the requisite certificate of authority and registering to do business here, thereby effectively immunizing themselves from suit for any cause whatsoever.
2021 Ga. Lexis 626, at *28-29 (emphasis original). The McCall court even advised the legislature that it should fix the statute:
[W]e note that the tension between Klein and recent United States Supreme Court precedent remains, and Klein’s general-jurisdiction holding may be undermined if the Supreme Court ever reconsiders and overrules Pennsylvania Fire. For these reasons, the General Assembly could preemptively obviate that risk by modifying the governing statutes to enable Georgia courts to exercise specific personal jurisdiction over out-of-state corporations . . . [by] tailor[ing] this State’s jurisdictional scheme within constitutional limits.
Id. at *29.
We hope that the defendant in McCall does what that court expected it would do – take the matter to the United States Supreme Court and get the anachronistic Pennsylvania Fire decision overruled by name. That would save those of us in Pennsylvania the trouble.