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Qualifying to Do Business: A Hidden Risk?

Posted on Oct. 3, 2022
Tiffany Li Qu
Tiffany Li Qu
Amy F. Nogid
Amy F. Nogid

Amy F. Nogid is counsel in Alston & Bird LLP’s New York office. Tiffany Li Qu is an associate in Alston & Bird’s Atlanta office.

In this installment of Audit & Beyond, Nogid and Li Qu discuss the potential impact of state business qualification on jurisdiction, provide some background on jurisdictional standards, and analyze a case on the issue pending before the U.S. Supreme Court.

The views expressed in this article are those of the authors only, are intended to be of a general nature, and should not be attributed to Alston & Bird LLP or any of its clients. The information provided herein is not legal advice, may not be applicable in all situations, and should not be acted upon without specific legal advice based on the particular situation.

Copyright 2022 Amy F. Nogid and Tiffany Li Qu.
All rights reserved.

Businesses seeking to conduct business in a new state generally understand that they must first qualify to do business by registering with the state’s secretary of state. Qualification is separate from any state or local tax registration requirement, such as the requirement that a vendor register as a vendor for state sales tax purposes. However, some states consider the mere act of qualifying to do business as a consent to general (all-purpose) jurisdiction, and businesses may not understand the Pandora’s box they may open by qualifying to do business in a state.

After Wayfair1 and its expansion of substantial nexus to include situations in which an in-state physical presence is lacking, companies that had not registered with some states may now opt to qualify to do business there. This raises the prospect of businesses being sued in those states for matters wholly unrelated to the nexus-generating event. Although “doing business” may have different meanings depending on the jurisdiction and the context, the mere act of registering to do business may open the door to assertions of tax nexus.2

The question scheduled for argument before the U.S. Supreme Court on October 11 in Mallory v. Norfolk Southern Railway Co. is whether registering in a state leaves a company open to general jurisdiction by the state over the company.3 In Mallory, the Supreme Court of Pennsylvania held that the state’s corporate registration statute is unconstitutional to the extent that it confers general jurisdiction over foreign corporations that are not “at home” in Pennsylvania. The court also held that the registration statute — which, unlike other state registration statutes, explicitly provides that registration constitutes consent — does not constitute voluntary consent to general jurisdiction by a foreign corporation.

Before Mallory, a petition for a writ of certiorari on the same issue was filed by Cooper Tire & Rubber Co.4 Cooper Tire, the petition for which remains pending before the Court, challenges a decision diametrically opposed to the Pennsylvania court’s view in Mallory: In Cooper Tire, the Georgia Supreme Court concluded that, by statute, the company’s registration to transact business in Georgia amounted to its consent to general jurisdiction by Georgia for claims lacking connection with that state.

The parties in Mallory argued that Mallory is “a better vehicle” than Cooper Tire to resolve whether it is constitutional to require consent to general jurisdiction as a condition for corporate registration. Apparently, the Supreme Court agreed. Unlike Georgia’s statute, which does not explicitly notify out-of-state companies that registration triggers general jurisdiction by Georgia courts, the Pennsylvania statute provides such notification.

We will briefly discuss state business qualification and provide some background on jurisdictional standards below. We will then explain the issue and its implications and discuss recent case law. Finally, we will make some observations and predict how the Court might rule in Mallory.

Business Qualification: Some Background and History

State business qualification requirements first arose in the context of corporations but have now generally been extended to limited partnerships, limited liability partnerships, limited liability companies, business trusts, real estate investment trusts, cooperatives, and public or private limited companies. We focus on corporate registrations, although the issue — whether the act of qualifying to do business should amount to consent to general jurisdiction — applies to all entity types.

Corporations are creatures of statute. The state that authorizes a corporation’s existence (the right “to be”) is often referred to as the corporation’s domicile. In states where the corporation wants to conduct business as a foreign corporation,5 the entity that wants “to do” business must qualify to do business in that state. Corporations that conduct business in a state other than their state of domicile without first qualifying to do so are subject to noncompliance penalties that vary by state. For example, Wisconsin and Wyoming impose a $5,000 fine, while California imposes some of the harshest penalties for noncompliance, including a $250 suspension penalty, a $2,000 penalty per tax year for failure to file missing tax returns within 60 days of receiving a written demand to do so, and contract voidability and unenforceability for any contracts entered into while not in good standing.6

Some early pundits viewed the ability of states to regulate foreign commerce as antithetical to Congress’s exclusive regulatory right under the commerce clause. One expert argued that “a corporation created by a State has, like an individual, an absolute right to engage in interstate or foreign commerce.”7 Taxation of interstate commerce was barred until Spector Motor Service was overruled by Complete Auto Transit.8

Jurisdictional Standards: A Primer

Under the due process clause of the 14th Amendment, a state can exercise personal jurisdiction over an out-of-state defendant if the defendant has sufficient “minimum contacts” with the state and the suit does not offend “traditional notions of fair play and substantial justice.”9 There are two types of personal jurisdiction: (1) general or all-purpose jurisdiction, and (2) specific or case-linked jurisdiction.10 While general jurisdiction permits suits on causes of action regardless of whether they derive from actions in the state, specific jurisdiction is limited to causes of action derived from or connected with the particular jurisdiction.11

The burden on the defendant is the “primary concern” in determining whether personal jurisdiction exists. Specifically, the burden requires a court to consider not only the practical problems resulting from litigation in the forum but also the “more abstract matter” of the defendant’s submitting to the coercive power of a forum that may have little legitimate interest in the claims in question.12

In 2011 the Court heralded a shift in personal jurisdiction jurisprudence by concluding in Goodyear that a court may assert general, all-purpose jurisdiction over foreign corporations to hear any and all claims against them only when their affiliations with the forum state render them essentially “at home” in that state.13 Goodyear rejected the “sprawling” view of general jurisdiction and held that only a limited set of affiliations with a forum state will render a defendant amenable to all-purpose jurisdiction there.14

The shift in general jurisdiction jurisprudence announced in Goodyear was solidified in Daimler,15 when the Court reiterated that the inquiry under Goodyear was not whether a foreign corporation’s in-forum contacts can be said to be in “some sense” continuous and systematic but whether the corporation’s affiliations with the state are so continuous and systematic, as to render the corporation “essentially at home” in the forum state.16 Specifically, the Court looked at whether the corporation was incorporated in the state or whether it had its principal place of business there.17 Otherwise, approving the exercise of general jurisdiction in every state where a corporation engaged in “substantial, continuous, and systematic course of business” would be “unacceptably grasping.”18 Significantly, the Court viewed the general jurisdiction inquiry as “call[ing] for an appraisal of a corporation’s activities in their entirety, nationwide and worldwide,” and did not simply consider a defendant’s contacts with the state.19 For example, despite having over 2,000 miles of railroad track and employing 2,000 workers in Montana, the Court found that BNSF Railway was not “at home” in the state and that general jurisdiction was lacking.20

The narrowing of general jurisdiction by Daimler has expanded attempts by plaintiffs to find that defendant foreign corporations have consented to general jurisdiction by registering and qualifying to do business in their states. This is now considered a “go-to alternative to Daimler’s holding” and referred to as the “rise of Pennoyer’s ghost.”21

Is Qualifying to Do Business Equivalent to Consent to General Jurisdiction?

Corporations can consent to the exercise of personal jurisdiction over them.22 While corporations may decide not to do business in a particular state, they are not free to ignore states’ qualification requirements once they begin to conduct business there. Sometimes, moreover, corporations may register to do business in a state because they think they may eventually do business there but never actually do business there. Given due process and commerce clause protections and the recent U.S. Supreme Court jurisprudence limiting the scope of general jurisdiction, can a state’s qualification statute explicitly require that registrants consent to its exercise of general jurisdiction or implicitly deem corporations to have consented to general jurisdiction?

What the Supreme Court Has Said

In 1917 the Court held in Pennsylvania Fire — a pre-International Shoe doctrine decision — that corporate registration could be treated as consent to general jurisdiction.23 In Pennsylvania Fire, a fire insurance company had filed a power of attorney with Missouri’s insurance department to obtain a license to do business in Missouri.24 The Court ruled that a claim regarding an insurance policy issued in Colorado, served on the superintendent of the Missouri insurance department, granted jurisdiction over the company to Missouri and that this grant did not deprive the defendant of due process.25 The Supreme Court has not explicitly overruled Pennsylvania Fire, although its recent jurisprudence, particularly Daimler, calls its continued vitality into serious doubt.

Before Pennsylvania Fire, the Court expressed similar views. In 1867 Congress enacted a corporate consent statute that authorized suits against foreign corporations doing business in the District of Columbia.26 In Harris, the Court applied the statute and concluded that it “made the company liable to suit.”27 Harris was favorably cited by the Court seven years later in Ex parte Schollenberger, which concerned a petition for a writ of mandamus requiring the judges of a federal circuit court to hear suits brought by insurance companies incorporated by the laws of other states but doing business in Pennsylvania.28 Applying the principles from Harris, the Court found that “there cannot be any doubt . . . of the jurisdiction of the Circuit Court over” the defendant insurance companies.29 The Court stated that “although the company was a foreign corporation, it was subject to suit in the District, because it had in effect consented to be sued there, in consideration of its being permitted by Congress to exercise therein its corporate powers and privileges.”30 In Louisville & N.R. Co. v. Chatters, the Court noted that the appointment of an agent “operates as a consent to suit upon a cause of action like the present arising out of an obligation incurred within the state, although the breach occurred without.”31 Whether the Court will overturn Pennsylvania Fire and the expansive view of consent presaged in Harris, Schollenberger, and Louisville & N.R. Co. will likely soon be decided in Mallory.

What State and Federal Courts Have Said

Unlike the Pennsylvania statutes at issue in Mallory, most states’ qualification provisions do not explicitly provide that registration equals consent to general jurisdiction, and most state and federal courts have concluded that consent should not be implied both pre- and post-Daimler.32 However, after Daimler, some courts have questioned the continuing viability of deemed consent to general jurisdiction. In its opposition to the petition for a writ of certiorari, Norfolk Southern Railway argued that courts have understood that Daimler and Goodyear resolved the issue and that “a state ‘may not exact’ a forfeiture of constitutional rights ‘as a condition of [a] corporation’s engaging in business within its limits.’”33

Cases in which courts found that consent to general jurisdiction exists without violating due process rely on Pennsylvania Fire and its progeny. Relying on the appointment by a registering corporation of an agent for service of process emphasized that the breadth of a corporation’s consent depended on “how broadly or narrowly the appointment was treated by the state itself.”34 In a 2011 (pre-Daimler) case, the Ninth Circuit highlighted that the Supreme Court “has never revisited Pennsylvania Fire, nor has it stated that its holding is no longer viable.”35 The Ninth Circuit then cited Perkins36 for the proposition that “due process did not prohibit a state from opening or compel it to open its courts to in personam jurisdiction over actions that did not arise out of a corporation’s activities in the state, and alluded to the appointment of an agent for service of process as one possible method in conferring jurisdiction.” The court cited Pennsylvania Fire in its reasoning.37

Post-Daimler, with the notable exception of Georgia in Cooper Tire,38 many state supreme court decisions on this issue have held that basing general personal jurisdiction on consent by registration to do business violates due process. For example, the Nebraska Supreme Court concluded that treating a corporation’s “registration to do business in Nebraska as implied consent to personal jurisdiction would exceed the due process limits prescribed” in Goodyear and Daimler, given that every state requires foreign corporations to register and appoint an agent for service of process.39 The court noted that allowing consent by registration would “permit a corporation to be subject to general jurisdiction in every state in which it does business,” which is the exact type of “global reach” jurisdiction that the U.S. Supreme Court “expressly rejected as being inconsistent with due process.”40 The Delaware Supreme Court reached the same conclusion in Genuine Parts Co. v. Cepec, going so far as to say that because “any use of the service of process provision for registered foreign corporations must involve an exercise of personal jurisdiction consistent with the Due Process Clause of the Fourteenth Amendment,” and in “most situations where the foreign corporation does not have its principal place of business in Delaware, that will mean that Delaware cannot exercise general jurisdiction over the foreign corporation.”41 After Daimler, the vast majority of state and federal courts have found consent by registration to be irreconcilable with Goodyear and Daimler, many for similar reasons.42 It will be interesting to see whether the Court in Mallory will hold firm to Pennsylvania Fire or jettison that decision and align with the majority of courts that have rejected a broad view of consent after Goodyear and Daimler.

Mallory

Mallory involves a suit brought in Pennsylvania by Robert Mallory, a citizen of Virginia, against Norfolk Southern Railway Co. Mallory alleges that the railroad’s negligent and reckless conduct caused him to be exposed to asbestos and other toxic chemicals during his work for the railroad as a carman in Ohio and Virginia, resulting in his developing colon cancer. The railway is incorporated and has its principal place of business in Virginia, and it moved to dismiss the complaint on due process grounds. The Pennsylvania trial court dismissed the complaint, observing that the railroad did not voluntarily consent to jurisdiction since it was required to register as a precondition of doing business in Pennsylvania, notwithstanding that section 5301(a)(2)(ii) of the Pennsylvania Judiciary Act provides that foreign corporations’ qualifying to do business in the state provides a sufficient basis to support general jurisdiction.43 The Pennsylvania court cited some of the Supreme Court’s recent due process decisions, including Goodyear and Daimler, stating that they “dramatically altered general jurisdiction analysis.”44

The Pennsylvania court stated that foreign corporations wanting to do business in Pennsylvania are faced with a “Hobson’s choice”45: They must consent to general jurisdiction or not do business there. The Supreme Court decisions, including Pennsylvania Fire, were viewed as “relics of the Pennoyer era” by the state court, which viewed Shaffer v. Heitner as acknowledging that these Pennoyer-era cases were overruled by International Shoe.46 The Pennsylvania trial court concluded that “wrapping general jurisdiction in the cloak of consent” violated the due process clause’s doctrine of federalism.47 The Supreme Court of Pennsylvania affirmed the trial court’s dismissal and held that “compliance with mandatory registration provisions . . . cannot serve as a voluntary relinquishment of due process rights.”48

Mallory argues that “any sensible application of ‘fair play and substantial justice’ must hold corporate persons to the same standards as flesh-and-blood people,” emphasizing that “the same Congress that proposed the Fourteenth Amendment enacted a consent-by-registration requirement for the District of Columbia.”49

Cooper Tire

Cooper Tire involved a product liability suit brought in Georgia by a Florida resident who sustained injuries in an auto accident in Florida purportedly because of a faulty tire. Cooper Tire is a Delaware corporation with its principal place of business in Ohio.50 The trial court dismissed the case against the company, but the Georgia Court of Appeals reversed, relying on the 1992 Georgia Supreme Court decision in Allstate Insurance Co. v. Klein 51 that found that “Georgia courts may exercise general personal jurisdiction over any out-of-state corporation that is ‘authorized to do or transact business in this state at the time a claim or cause of action arises.’”52 The court rejected Cooper Tire’s request to reconsider its holding in Allstate Insurance. Even though the court correctly observed that Allstate Insurance “is in tension with a recent line of United States Supreme Court cases,” it nonetheless held that because the U.S. Supreme Court had not overruled its 1917 decision in Pennsylvania Fire,53 it was appropriate to continue to follow Allstate Insurance because of stare decisis concerns.

Tax Administrator Positions

Several state revenue departments maintained that registering with the state’s secretary of state is sufficient to establish corporate income tax nexus,54 while other states expressed by legislation or guidance that merely registering to do business is insufficient to create nexus.55 States are presumably relying on specific jurisdiction rather than general jurisdiction to support their income tax nexus assertions — a position of questionable validity. It is worth noting that many of the jurisdictions that maintain that merely registering to do business in a state is in itself a tax-nexus-generating event inconsistently provide that registration does not trigger jurisdiction or have had court decisions rendered that reject the position that registration conveys general jurisdiction.56 Taxpayers that are faced with a tax department’s assertion of tax nexus based merely on the act of registering to do business would be well served by reviewing that state’s case law on the effect of registration.

Mallory’s Effect on State Legislation to Secure Consent Jurisdiction

Pennsylvania is the only state that has a statutory provision stating that a foreign corporation consents to the general jurisdiction of the state’s courts by registering to do business there, and an affirmance by the Court in Mallory should bar any other state from seeking to provide consent by statute.57 It is a time-honored legal maxim that: “All the powers of the states, as sovereign states, must always be subject to the limitations expressed in the United States Constitution. . . . What is forbidden to them, and which they cannot do directly, they should not be permitted to do by color, pretense, or oblique indirection.”58 If Mallory is affirmed based on Goodyear and Daimler and the Court confirms that the due process clause limits general jurisdiction to corporations “at home” in a jurisdiction, any state legislation mandating consent to general jurisdiction for registrants will seemingly “subvert the very foundation of all written constitutions.”59

A Mallory decision that upholds the inclusion of explicit statutory authority for consent to general jurisdiction would also raise commerce clause concerns. Mandatory consent to general jurisdiction effectively restricts interstate commerce, and we would expect many or all states to revise their registration statutes.

Observations

Although the Supreme Court granted certiorari in Mallory rather than Cooper Tire, the Mallory decision will likely apply both to states that provide consent to general jurisdiction by statute and to states that do not. We predict that the Court will affirm the Pennsylvania court’s decision in Mallory. It is highly questionable that the 1917 decision in Pennsylvania Fire is still viable after the Court in Goodyear and Daimler concluded that an “at home” requirement was needed to support general jurisdiction. Upholding the Pennsylvania statute’s automatic trigger of general jurisdiction would eviscerate Daimler and Goodyear; any corporation registered to do business (after Wayfair, most multistate businesses are registered nationwide) would be compelled to consent to “sweeping” general jurisdiction even though they were not “at home” in the state of registration. It is also antithetical to International Shoe’s notion of “fair play and substantial justice” that corporations not domiciled in a state can be forced into domicile status if they want to do business there.

The Court has also been reluctant to take an expansive view of jurisdiction in the narrower and arguably less invasive domain of specific jurisdiction, which requires “purposeful availment” by the defendant for that jurisdiction to exist. The Court’s Ford Motor Co. decision provided a hint of how it may rule in Mallory. The majority opinion, drafted by Justice Elena Kagan, suggested that the hypothetical “retired guy in a small town” in Maine who “carves decoys” to sell over the internet might not have established jurisdiction in the states where he sells his decoys if his activities were isolated and sporadic, even though he purposefully availed himself of other state marketplaces.60 Justice Neil Gorsuch in his concurring opinion, joined by Justice Clarence Thomas, also recognized the reluctance of the majority of “hauling individuals to jurisdictions where they have never set foot.” These opinions signaled that the Court may not countenance states’ attempts to unilaterally force general jurisdiction on all corporations that register to do business.

We noted the due process concerns implicated by deemed consent to general jurisdiction. There are also commerce clause concerns. The commerce clause was drafted for the “maintenance of harmony and proper intercourse among the States.”61 The Constitution’s drafters were concerned with “future contrivances” by states that would act to limit consumers’ free access to goods and services necessary for the success of the nation.62 States’ protectionist impulse is to protect their populace, and imposing general jurisdiction on corporations that register to do business would negatively affect interstate commerce. Doing so would provide a substantial deterrent for out-of-state businesses to venture into other states for fear of being hauled into court for any cause of action, regardless of where it occurred or whether it had any relationship to the businesses’ activities in the state.

The Court narrowed general jurisdiction by its decisions in Daimler and Goodyear. If our prediction is incorrect and the Court reverses in Mallory, we expect that states will revise their registration and related statutes to provide that registration is deemed to constitute consent to general jurisdiction to secure for their citizens the ability to sue out-of-state companies for all manner of issues. This would open the floodgates to rampant forum shopping because businesses, particularly after Wayfair, are likely to have expansive registration footprints.

FOOTNOTES

1 South Dakota v. Wayfair Inc., 138 S. Ct. 2080 (2018).

2 See Amy F. Nogid, “Dueling ‘Doing Business’ Interstate-Commerce Exemptions: Anachronistic or Realistic?” State & Local Tax Insights (Winter 2014). The article does not focus on tax nexus, considering instead whether the mere act of registering should be deemed consent by the registrant to general jurisdiction (also known as all-purpose jurisdiction).

3 Mallory v. Norfolk S. Railway Co., Dkt. No. 21-1168 (U.S. Sup. Ct. cert. granted Apr. 25, 2022). The question presented in Mallory is “whether the Due Process Clause of the Fourteenth Amendment prohibits a state from requiring a corporation to consent to personal jurisdiction to do business in the state.”

4 Cooper Tire & Rubber Co. v. McCall, Dkt. No. 21-926 (filed Dec. 22, 2021). This was distributed for conferences held on March 25, April 14, and April 22, 2022.

5 “Foreign” refers both to corporations not domiciled in a state and to corporations domiciled in a foreign country.

6 Wis. Stat. Ann. section 180.1502; Wyo. Stat. Ann. section 17-16-1502; California Franchise Tax Board, “My Business Is Suspended: Revive My Business.” In most states, noncompliant corporations can cure registration defects.

7 Frederick H. Cooke, “The Right to Engage in Interstate and Foreign Commerce as an Individual or as a Corporation,” 8 Mich. L. Rev. 458, 463 (1910). Cooke viewed the commerce clause as “never intended as anything more than an emergency provision” that was “scarcely used” during the first 80 years after the adoption of the U.S. Constitution, but that “has been dragged out of comparative obscurity and oblivion into an unnatural importance.” Id. at 466.

8 Spector Motor Service Inc. v. O’Connor, 340 U.S. 602 (1951); Complete Auto Transit Inc. v. Brady, 430 U.S. 274 (1977).

9 International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

10 Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1780 (2017).

11 Goodyear Dunlop Tires Operations S.A. v. Brown, 564 U.S. 915, 919 (2011); International Shoe, 326 U.S. at 310; and Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S. Ct. 1017 (2021).

12 Id.

13 Goodyear, 564 U.S. at 915, 919.

14 Id. at 929.

15 Daimler AG v. Bauman, 571 U.S. 117 (2014).

16 Id. at 138-39.

17 Id. at 139.

18 Id. at 138.

19 Id. at 140, n. 20.

20 BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017).

21 Kevin D. Benish, “Pennoyer’s Ghost: Consent, Registration Statutes, and General Jurisdiction After Daimler AG v. Bauman,” 90 N.Y.U. Law Rev. 1609, 1611 (2015). Pennoyer v. Neff, 95 U.S. 714 (1878). Expansions to specific jurisdiction are also possible.

22 See National Equipment Rental Ltd. v. Szukhent, 375 U.S. 311, 316 (1964) (holding that parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether); cf. Hess v. Pawloski, 274 U.S. 352 (1927) (holding that a state may make and enforce regulations reasonably calculated to promote public interest and require nonresidents to answer for their conduct in the state where there are causes of action alleged against them, as well as providing a convenient method for claimants to sue to enforce their rights).

23 See Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917).

24 Id. at 94.

25 Id. at 95.

26 Railroad Co. v. Harris, 79 U.S. (12 Wall.) 65 (1870).

27 Id. at 84.

28 Ex parte Schollenberger, 96 U.S. 369, 374 (1877).

29 Id. at 376.

30 Id.

31 Louisville & N. R. Co. v. Chatters, 279 U.S. 329 (1929).

32 After Daimler and Mallory, several state high courts or federal appellate courts have held that general jurisdiction based on corporate registration does not satisfy due process. See Genuine Parts Co. v. Cepec, 137 A.3d 123, 127 (Del. 2016) (concluding that after Daimler, Delaware registration statutes “must be read as a requirement that a foreign corporation must appoint a registered agent to accept service of process, but not as a broad consent to personal jurisdiction in any cause of action, however unrelated to the foreign corporation’s activities in Delaware”). Before Daimler, the Ohio Supreme Court held that compliance with the state’s registration statute “does not eliminate or abolish the due-process requirement that the necessary minimum contacts exist in order for Ohio courts to acquire in personam jurisdiction.” Wainscott v. St. Louis-San Francisco Railway. Co., 351 N.E.2d 466, 468 (Ohio 1976). The Sixth Circuit affirmed, stating that the “mere designation of an agent in compliance with the service-of-process statute does not automatically eliminate the requirement of minimum contacts to establish personal jurisdiction.” Pittock v. Otis Elevator Co., 8 F.3d 325, 329 (6th Cir. 1993). However, eight other state high courts or federal appellate courts held that general jurisdiction based on corporate registration does not violate due process rights and followed Pennsylvania Fire. See Rykoff-Sexton Inc. v. American Appraisal Associates Inc., 469 N.W.2d 88, 90 (Minn. 1991) (holding that “consent remains a viable method of obtaining personal jurisdiction over a nonresident defendant”); Merriman v. Crompton Corp., 282 Kan. 433, 444-45 (2006) (finding that there was statutory authority that required a foreign corporation registering to do business in Kansas to expressly consent to personal jurisdiction); Sternberg v. O’Neil, 550 A.2d 1105, 1113 (Del. 1988) (concluding, pre-Daimler, that a foreign corporation can expressly consent to the jurisdiction of a state by registration and satisfy due process without examination of “minimum contacts” to find implied consent); Allstate Insurance Co. v. Klein, 262 Ga. 599, 601 n.3 (1992) (commenting that while the constitutionality of the definition of nonresident in the long-arm statute was not being challenged in Klein, a cause of action not arising out of the corporation’s activities in the state was not prohibited by the requirement of “fair play and substantial justice” when it comes to personal jurisdiction over foreign corporations); Sharkey v. Washington National Ins. Co., 373 N.W.2d 421 (S.D. 1985) (finding that South Dakota had jurisdiction even though the insurance policy was applied for in Wyoming and the death occurred in Wyoming); Bane v. Netlink Inc., 925 F.2d 637 (3d Cir. 1991) (holding that while a Delaware corporation with its principal place of business in North Carolina applied for and received authorization to do business in Pennsylvania, because Pennsylvania law explicitly stated that the qualification was sufficient contact for personal jurisdiction, there was no due process violation); Knowlton v. Allied Van Lines Inc., 900 F.2d 1196 (8th Cir. 1990) (agreeing with plaintiff that Minnesota had jurisdiction over the defendant because the defendant consented to be sued in Minnesota by appointing a registered agent to receive service of process, even though the car accident happened en route between Iowa and Nebraska); Budde v. Kentron Hawaii Ltd., 565 F.2d 1145 (10th Cir. 1977) (holding that Colorado state courts have jurisdiction over foreign corporations qualified to do business in the state when personal service on the foreign corporations was affected in Colorado, even if the plaintiff was not a state resident, negligent acts were not committed there, and the corporation was not incorporated in Colorado); cf. King v. American Family Mutual Insurance Co., 632 F.3d 570 (9th Cir. 2011) (finding that appointment of agent for service of project does not, standing alone, subject foreign corporations to jurisdiction in Montana for acts performed outside of Montana when companies transact no business in the state, but following Pennsylvania Fire in determining no issue with due process in exercising personal jurisdiction over actions not arising out of the corporation’s activities in the state).

33 Brief in opposition at 1, Mallory, Dkt. No. 21-1168 (citing Hanover Fire Insurance Co. v. Harding, 272 U.S. 494, 507 (1926)).

34 King, 632 F.3d at 570 (citing Louisville & N. R. Co., 279 U.S. at 320).

35 King, 632 F.3d at 583.

36 Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952).

37 King, 632 F.3d at 583.

38 Cooper Tire & Rubber Co. v. McCall, 312 Ga. 422 (2021).

39 Lanham v. BNSF Railway Co., 305 Neb. 124, 134 (2020).

40 Id. at 134-35.

41 Genuine Parts, 137 A.3d at 127.

42 Lanham, 305 Neb. at 124, 135.

43 Mallory v. Norfolk Southern Railway Co., 2018 Phila. Ct. Com. Pl. LEXIS 216 (2018).

44 Id. at *5.

45 Thomas Hobson (1544-1631) was an English livery stable owner noted for giving customers the “choice” of the horse closest to the stable door, in effect giving them no choice at all.

46 Mallory at *16-17.

47 Id. at *19.

48 Mallory v. Norfolk S. Railway Co., 266 A. 3d 542, 564 (Pa. 2021).

49 Brief for Petitioner at 2, 4, Mallory, Dkt. No. 21-1168.

50 Cooper Tire, 312 Ga. at 422.

51 Allstate, 262 Ga. at 599.

52 Cooper Tire, 312 Ga. at 422 (citing Allstate, 262 Ga. at 601).

53 Pennsylvania Fire, 243 U.S. at 93.

54 Bloomberg Bureau of National Affairs, “2021 Survey of State Tax Departments.” The survey lists Alabama, Connecticut, the District of Columbia, Idaho, Louisiana, Maryland, Massachusetts, New Hampshire, New Jersey, Pennsylvania, Vermont, and Virginia. The survey also lists other types of registration (e.g., payroll collection, workers’ compensation, government vendor or contractor, and sales tax) as potential bases to support jurisdiction, along with holding a business or specialty license.

55 See, e.g., Colorado Department of Revenue, GIL-2009-028 (June 30, 2009) (“In general, the department believes that the mere registration by a taxpayer with the secretary of state to do business in this state does not create nexus for income tax purposes.”); Wash Rev. Code section 35.102.050 (“Mere registration under or compliance with the streamlined sales and use tax agreement does not constitute nexus for the purposes of this section.”).

56 See, e.g., Facebook Inc. v. K.G.S., 294 So. 3d 122 (Ala. 2019); D.C. Code section 29-104.14 (providing that “designation or maintenance in the District of a registered agent shall not in itself create the basis for personal jurisdiction over the represented entity in the District”); Idaho Code section 30-21-414 (“The designation or maintenance in this state of a registered agent does not by itself create the basis for personal jurisdiction over the represented entity in this state.”).

57 Although New York’s highest court recently rejected an interpretation of its qualification provision under the Business Corporation Law as a consent to general jurisdiction, the state’s Legislature has long pursued legislation that would have “reinforce[d] the continuing viability of consent as a basis for general (all-purpose) jurisdiction over foreign corporations authorized to do business in New York. In so doing, the measure serves a substantial public interest. Being able to sue New York-licensed corporations in New York on claims that arose elsewhere will save New York residents and others the expense and inconvenience of traveling to distant forums to seek the enforcement of corporate obligations.” Memorandum in Support of Legislation — A.7769 (2020-2021 legislative session). The New York City Bar Association has long opposed the legislation, asserting that “it is out of step with current United States Supreme Court jurisprudence and raises significant issues under the Due Process and Commerce Clauses of the United States Constitution, guaranteeing years of follow-up litigation likely resulting in courts striking down the legislation as unconstitutional.” New York’s Legislature had proposed bills in several earlier sessions. See A.7595/S.6352 (2019-2020); S.7078/A.9576 (2013-2014). On December 31, 2021, Gov. Kathy Hochul (D) rejected the (hopefully) last attempt to do so. (A.7769 vetoed on Dec. 31, 2021; Gov. veto memo 79).

58 West River Bridge Co. v. Dix, 47 U.S. (6 How.) 507, 516 (1848); see also Gelpcke v. City of Dubuque, 68 U.S. (1 Wall.) 175, 192 (1864) (“What the legislature cannot do directly, it cannot do indirectly. The stream can mount no higher than its source.”).

59 Marbury v. Madison, 5 U.S. (1 Cranch.) 137, 178 (1803).

60 Ford Motor Co., 141 S. Ct. at 1017, 1028, n.4. Arguably, the Court was expanding its view of specific jurisdiction after limiting the scope of general jurisdiction. And it should be noted that individuals do not need to register to do business, so the decoy carver would not need to wrestle with the issue of consent resulting from registration.

61 James Madison, “General View of the Powers Conferred by the Constitution,” The Federalist Papers No. 41 (1788).

62 Madison, “The Powers Conferred by the Constitution Further Considered,” The Federalist Papers No. 42 (1788).

END FOOTNOTES

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