Delaware Supreme Court Rejects Theory of Jurisdiction by Consent Due to Corporate Registration in an Asbestos CaseApril 2016
On Monday, April 18, 2016, the Delaware Supreme Court issued its opinion in Genuine Parts Co. v. Cepec, et al., an asbestos case, where the court held that a defendant's registration as a foreign corporation in Delaware (a statutory pre-requisite to conducting any business in the state) did not constitute consent to general jurisdiction of Delaware's courts.
The Delaware Supreme Court relied on the U.S. Supreme Court's reasoning in Daimler AG v. Bauman, 134 S.Ct. 746 (2014) to decline jurisdiction over a corporation when, according to the Court, the only notable contact between the cause of action and Delaware was the corporation's registration to do business in the state. In Daimler, the U.S. Supreme Court upheld the basic principle that an out-of-state corporation cannot be sued for claims that arose outside of the state unless the corporation's contacts with that state "are so continuous and systematic" that they render the corporation essentially "at home" there. The two "paradigm" examples of where a corporation is at home under Daimler are its state of incorporation and the state in which it maintains its principal place of business. The Daimler opinion expressly states that corporations are not subject to general jurisdiction in every state in which they transact business. Rather, they must be "at home" in the state before the company can be sued there for claims unrelated to that state.
The Genuine Parts court held that, after Daimler, "Delaware's 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." Because of this, courts will look to Delaware's long-arm statute to determine whether jurisdiction over a defendant corporation exists, and "[b]y this reading, plaintiffs with a fair basis to subject a foreign corporation to suit in Delaware may do so, but plaintiffs who do not will not."
Other courts have applied a theory of "jurisdiction by consent" to maintain jurisdiction over foreign-corporations and avoid the United States Supreme Court's 2014 ruling in Daimler. A recent decision out of Madison County, Illinois applied such a theory in an asbestos case, holding that by registering to do business in Illinois, the defendant "consented" to personal jurisdiction. Given the national influence of Delaware courts on corporate law, the Genuine Parts case could trigger a nationwide shift away from the "jurisdiction by consent" theory.
For more information regarding the Genuine Parts decision, asbestos litigation, or other environmental and toxic tort-related litigation, please contact Douglas M. Nieder, Corey M. Schaecher, David A. Weder, or Krista C. McCormack.