As we reported in a recent Advisory, the Supreme Court of Delaware held in April that foreign corporations registered to do business in the state are no longer deemed to have consented to general personal jurisdiction over all causes of action. Genuine Parts Co. v. Cepec, No. 528, 2015, 2016 WL 1569077 (Del. Apr. 18, 2016). According to the Supreme Court of Delaware, the Genuine Parts decision, which is a substantial departure from the prior rule announced in Sternberg v. O’Neil, 550 A.2d 1105 (Del. 1988), was necessary based on the United States Supreme Court’s decisions in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), which held that, absent exceptional circumstances, a state may exercise general jurisdiction over a corporation only in the one or two states where it is “at home.”
In Genuine Parts, a Georgia couple brought an asbestos lawsuit in Delaware Superior Court against seven corporations, including Genuine Parts. The plaintiffs alleged that the husband was exposed to asbestos while working for the company in Florida. Genuine Parts is a Georgia corporation with its principal place of business in Atlanta. The company does not have corporate offices in Delaware; less than 1% of its workforce is comprised of Delaware residents; less than 1% of its auto-parts stores are located in Delaware; and less than 1% of its revenue is derived from Delaware sales. Plaintiffs alleged Delaware had jurisdiction over the matter solely based on Genuine Parts’s compliance with Delaware law requiring the company to register as a foreign corporation and appoint a registered agent for service of process.
Under Sternberg, Delaware had long regarded such registration to be consent to jurisdiction in Delaware for any and all causes of action. But after reviewing the applicable statutes and Sternberg in light of the United States Supreme Court’s recent opinion in Daimler, the Court disagreed. It held that nothing in the relevant Delaware statutes required foreign companies operating in Delaware to consent to general personal jurisdiction on a lesser showing than that required by Daimler. Instead, the Court held, the Delaware statutes were better read “as requiring that a foreign corporation have a registered agent that can accept service of process in situations when the very conduct that required registration in the first instance . . . gives rise to a lawsuit.”
The Court cautioned that a broader reading of the registration statute could only be considered “unacceptably grasping” and an “exorbitant” exercise of jurisdiction. The Court was concerned that if doing business in Delaware exposed foreign companies to general personal jurisdiction, they may stop doing business in Delaware. The Court also wanted to protect the companies that were sited within Delaware from overreaching by other states as well: because “‘grasping’ behavior by one can lead to grasping behavior by everyone,” the Court feared that other states may apply the same consent analysis to Delaware companies doing business in their borders.
Not every state regards registration to do business as consent to jurisdiction. Genuine Parts reinforces that the Supreme Court’s watershed opinion in Daimler calls into question even those states that do.