Photo of Stephen McConnell

New Mexico calls itself the Land of Enchantment, and with good reason. Carlsbad Caverns, White Sands National Monument, the Albuquerque Balloon Festival, the ski slopes of Taos, and Chaco Culture National Historic Park are all splendid visual treasures. A green chili burger is a lovely work of art. And there is a reason all that background scenery in Breaking Bad and Better Call Saul is so arresting.

But New Mexico’s place in the law has not always been enchanting. The notorious McDonald’s hot coffee case was decided in New Mexico. (We might be asked to turn in our Defense Hack card for saying this, but we’re not sure that case was wrongly decided. Sure, everybody knows that coffee is hot. But McDonald’s coffee used to be insanely – call it unreasonably – hot. And did you see photos of that plaintiff’s burns?)

So much for history. Shortly before Thanksgiving, the New Mexico Supreme Court made corporate defendants grateful by rejecting the theory that corporate registration in the state constitutes consent to personal jurisdiction. The case, Chavez v. Bridgestone Ams. Tire Operations, LLC et al., 2021 N.M. LEXIS 74 (New Mexico Nov. 15, 2021), was a consolidated appeal involving four car accidents. The defendants were automobile and tire companies, so Chavez is not a drug or device case. Nevertheless, its holding has implications for our area of the law. Plus, the Chavez holding offers a bright contrast to some dimmer jurisdictions.

The defendants were foreign corporations (i.e., neither incorporated in nor having a principal place of business in New Mexico) that had challenged personal jurisdiction in the tort cases brought against them. The implicated products were not designed or manufactured in New Mexico, though they were marketed and distributed there. The lower courts rested personal jurisdiction on the corporations’ registrations to do business in New Mexico, citing both New Mexico precedent as well as the ancient (1917) SCOTUS decision in Pennsylvania Fire, which upheld consent by registration.

The defendants argued that the exercise of personal jurisdiction violated the 14th amendment, the dormant commerce clause, and the doctrine of unconstitutional conditions. More to the point, the defendants argued that “contemporary personal jurisdiction jurisprudence” (Bauman and progeny) “has overruled, sub silentio,” Pennsylvania Fire.

In a unanimous opinion, the New Mexico Supreme Court overturned the Court of Appeals and ruled that the corporation registrations to do business did not equal consent to personal jurisdiction. In an exercise of judicial modesty and restraint, the New Mexico Supreme Court did not reach the constitutional issues at all, including the viability of Pennsylvania Fire. Rather, the court decided that the New Mexico Business Corporation Act (BCA) “does not require a foreign corporation to consent to general personal jurisdiction in New Mexico.”

The best thing the plaintiffs had going for them was a 1993 New Mexico Court of Appeals decision construing the BCA to require foreign corporations to consent to personal jurisdiction. That construction did not rest upon the plain language of the BCA. Instead, the Court of Appeals discerned a legislative intent behind BCA to “equalize domestic and foreign corporations under New Mexico law.” Huh? We are not even sure what it means to equalize domestic and foreign corporations. They are clearly not equal; they are not equally situated. Moreover, what is the policy served by such equalization?

Justice Kagan said that we are all textualists now. Scalia had won. The triumph of textualism has now reached Santa Fe. In Chavez, the New Mexico Supreme Court concluded that “the plain language of the BCAs does not require a foreign corporation to consent to jurisdiction.” The court refused to graft a consent requirement onto registration, and saw no clear legislative intent to require foreign corporations to consent to jurisdiction.

The old equalization theory made no sense. In fact, it created inequality, because foreign corporations lost any right to challenge due process violations associated with personal jurisdiction, while domestic corporations retained such right. In any event, equalization was adequately assured by New Mexico’s long arm statute, which extends specific personal jurisdiction to any duties, restrictions, penalties, and liabilities arising from or relating to any corporation’s activities in the state, “thus ensuring that our state courts may enforce a foreign corporation’s forum-related obligations.”

The Chavez court acknowledged that the earlier construction of the BCA to require consent was read against older personal jurisdiction (e.g., the 1877 Pennoyer case, which bedeviled us in Civil Procedure class). We’ve come a long way since Pennoyer, through International Shoe to Bauman to Bristol-Myers Squibb. Now the primary focus is on the corporation’s relationship to the forum. Certainly since Bauman the focus of general personal jurisdiction has been on the due process rights of defendants, not the convenience of the plaintiffs. The Chavez court would not presume that the legislature “intended to embrace Pennoyer-era fictions discarded long before the BCA’s enactment.” Accordingly, the Chavez case overruled the Court of Appeal and held that corporate registration did not constitute consent to personal jurisdiction.

We saw a press account of the Chavez case in which one of the plaintiff lawyers predicted that there will still be personal jurisdiction over at least some of the companies because three of the four car accidents took place in New Mexico. Maybe. Maybe there will be specific personal jurisdiction via this year’s SCOTUS Ford Motor case, which we discussed here. But there is no maybe about the fact that the New Mexico Supreme Court took the right step in rejecting the consent via registration fiction. New Mexico is a beautiful place far, far away from where we live and practice. It would be nice if some courts in our area would follow New Mexico’s lead.

Speaking of which, in the past several weeks no fewer than three state high courts have decided this issue. We have posts about the other two — GA (bad) and NY (good). Most of the appellate decisions, both state and federal, are favorable. The Pennsylvania Supreme Court is currently considering the issue and is so pro-plaintiff that we tremble at the prospect of it becoming only the second appellate court since Bauman to go bad on the issue.

By the way, one of the appellate defense lawyers in Chavez was Sean Marotta (Hogan Lovells), who maintains one of the better lawyer Twitter accounts. He comes across as funny and generous and wise.