For the better part of the last century, companies that registered to do business under state business registration statutes were deemed to have consented to general personal jurisdiction -- i.e., jurisdiction over all disputes -- in that state, regardless of any link between the alleged misconduct and the forum. That was thrown into doubt in 2014, when the Supreme Court of the United States held in Daimler AG v. Bauman1 that, in all but the most extraordinary cases, a defendant is only subject to general jurisdiction where it is "at home," which generally means where a company is incorporated or has its principal place of business.2
Since Daimler, companies being sued in forums for conduct that occurred elsewhere have argued that various state business registration statutes cannot provide a basis for consent to general jurisdiction. The courts that have considered the question have, with few exceptions, agreed.
On March 31, 2020, in Chen v. Dunkin' Brands, Inc.,3 the Court of Appeals for the Second Circuit continued this trend holding that a company does not subject itself to the general jurisdiction of New York state and federal courts simply by registering to do business under New York's business registration statute. Previously, in its 2016 decision in Brown v. Lockheed Martin Corp.,4 the Second Circuit had suggested in dicta that the New York business registration statute likely requires companies to consent to general jurisdiction. In Chen, however, the Court definitively held that the statute does not so require and, therefore, companies from across the country and around the globe that do business in New York can do so without broadly exposing themselves to litigation for conduct that lacks a connection to New York.
In the 2014 Daimler decision,5 the Supreme Court dramatically changed the law of general jurisdiction and rejected the practice of exercising general jurisdiction over a company whenever it conducted substantial business activities in the forum and instead limited general jurisdiction over a company to only to those forums where it is "at home."6
Daimler brought into doubt a line of cases dating back to the Supreme Court's 1917 decision in Pennsylvania Fire Ins. Co. v. Gold Issue Mining Co.,7 which held that companies that registered to do business under statutes that contained consent to service of process provisions automatically consented to general jurisdiction in that state. There, a Pennsylvania company insured buildings in Colorado under a policy issued in Colorado. Seeking to recover on the policy, the policyholder sued the insurer in Missouri, where the insurer had obtained a license to conduct business. To attain the license, the insurer had filed with the Missouri insurance superintendent "a power of attorney consenting that service of process upon the superintendent [of insurance] should be deemed personal service upon the company. . ." Id. at 94. The Supreme Court concluded that this statutory power of attorney subjected the Pennsylvania company to general personal jurisdiction in Missouri.8 Pennsylvania Fire and the case law that followed highlighted an expansive approach to personal jurisdiction that continued until Daimler.
Since Daimler, courts have rejected the Pennsylvania Fire line of cases. For example, in 2016, the Second Circuit confronted the issue in Brown v. Lockheed Martin Corp.,9 a case that addressed Connecticut's business registration statute. The Second Circuit held that the defendant's registration under the Connecticut statute and its appointment of an in-state agent did not confer general jurisdiction. Notably, the Second Circuit stated that the "`essentially at home' test enunciated in Goodyear10 and Daimler . . . suggests that federal due process rights likely constrain an interpretation that transforms a run-of-the-mill registration . . . statute into a corporate `consent' . . . to the exercise of general jurisdiction by state courts."11 In light of Daimler's concerns, the Second Circuit read the Connecticut business registration statute to not require consent to general jurisdiction, but rather only to cases arising out of conduct in Connecticut (i.e., specific jurisdiction). In so holding, the Court made clear that it would not find any business registration statute to require consent to general jurisdiction "in the absence of a clear legislative statement" or "a definitive interpretation by the [state's highest court]" to that effect.12
Significantly, the Second Circuit left open the possibility that some business registration statutes could satisfy this test, and specifically cited the New York registration statute as one that probably would satisfy it. The Court specifically contrasted the New York statute with Connecticut's, noting that "[j]urisdictions other than Connecticut have enacted registration statutes that more plainly advise the registrant that enrolling in the state as a foreign corporation and transacting business will vest the local courts with general jurisdiction over the corporation" and that "[t]he registration statute in the state of New York has been definitively construed to accomplish that end, and legislation has been introduced to ratify that construction of the statute."13 However, the Second Circuit also recognized, without deciding, that even if there were statutes that required companies to consent to general jurisdiction they might be unconstitutional.14
While there have been a handful of exceptions,15 most courts have held that the business registration statutes they considered did not subject the companies that registered under them to general jurisdiction.16
II. The Second Circuit's Decision in Chen
After Brown suggested that New York's business registration statute might satisfy the standard for requiring consent to general jurisdiction, New York state courts began interpreting Daimler as requiring an interpretation that rejects that result. In Aybar v. Aybar,17 the Second Department adopted Brown's reasoning about requiring a "clear legislative statement" before finding that the New York business registration statute could permit consent to general jurisdiction but rejected Brown's suggestion that the New York statute contained such a clear directive. While the Aybar court recognized longstanding precedent in New York state and federal courts holding that registering to do business in New York and appointing an agent for service of process constitutes consent to general jurisdiction, it found Daimler did away with that.18 The First Department in Fekah v. Baker Hughes Incorporated19 and the Fourth Department in Best v. Guthrie Med. Group, P.C.20 reached the same conclusion, as did at least one federal court.21
In the context of these decisions and the broader line of cases rejecting most registration statutes as a basis for general jurisdiction, the Second Circuit in Chen22 addressed whether companies that registered to do business under New York's business registration statute thereby consented to general jurisdiction. It held that, "under New York law, the act of registering to do business under 1301 of [New York's Business Corporation law (the "BCL")] does not constitute consent to general personal jurisdiction in New York."23
In Chen, the plaintiffs commenced a class action alleging that Dunkin' Donuts, a Delaware registered company with a principal place of business in Massachusetts, deceptively marketed two of its products. The District Court dismissed the complaint for lack of personal jurisdiction.24 Plaintiffs appealed, arguing that the District Court erred in dismissing the claims because Dunkin' Donuts consented to general jurisdiction in New York by registering as a foreign corporation under 1301 of the New York Business Corporation Law.25
The Second Circuit affirmed the District Court's dismissal, holding that "a foreign corporation does not consent to general personal jurisdiction in New York by merely registering to do business in the state and designating an in-state agent for service of process under BCL 1301(a)."26 The Court recognized that, before Daimler, New York courts had interpreted the act of registering under BCL 1301(a) as consent to general jurisdiction,27 but held that Daimler mandates that, except in a truly exceptional case, a corporate defendant may be treated as essentially "at home" only where it is incorporated or maintains its principal place of business.28 For that reason, it had "little trouble" affirming the District Court's dismissal.29
The Court also acknowledged its earlier suggestion in Brown that the New York statute had been "definitively construed" to allow for consent to general jurisdiction and that "legislation [had] been introduced to ratify that construction of the statute."30 But the Court noted that things had changed since Brown: "The legislation referenced in Brown . . . never passed, and the `definitive[ness]' of New York law interpreting registration under BCL 1301(a) as consenting to general jurisdiction in New York is no longer settled." Noting that the three intermediate appellate courts that have addressed the issue have rejected the suggestion in Brown that the New York registration statute clearly allows for consent to general jurisdiction, the Court concluded that, under the test set forth in Brown, the New York statute could not be read to permit such broad consent.
Daimler made it clear that a court has general jurisdiction over a company generally only in the states where a company is incorporated or has its principal place of business. Since then, courts have considered whether several state business registration statutes can still be read as requiring consent to general jurisdiction and generally held that they do not. Most recently, the Second Circuit in Chen confirmed that New York's business registration statute does not require companies to consent to general jurisdiction.
Chen confirms that companies can register to do business in New York without fear of subjecting themselves to lawsuits in New York that have no connection to the state. The decision also poses serious questions as to the continued viability of business registration statutes as a basis for establishing general jurisdiction over outof-state companies. The question remains, however, as to whether state legislatures can, consistent with due process, try to circumvent Daimler by amending their business registration statutes so as to require companies to consent to general jurisdiction.