Consent of outside companies to action in Georgia

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In a recent decision, the Supreme Court of Georgia reaffirmed that under Georgian law, when a foreign company registers with the Georgian Secretary of State to do business in Georgia, it consents to general personal jurisdiction , which means she can be sued. Georgian courts for any claims, including claims unrelated to its Georgia business. Cooper Tire & Rubber Co. v. McCall, 312 Ga. 422, 422 (2021). But the legal basis underlying general personal jurisdiction has changed, and the Georgia Supreme Court‘s view has been disadvantaged by other courts since the US Supreme Court’s decisions. Goodyear Dunlop Tires Operations, SA vs. Brown564 US 915 (2011), and Daimler AG versus Bauman, 571 US 117 (2014). Today, a challenge to the Georgia Supreme Court’s decision in Cooper tire to the United States Supreme Court is ongoing. View Cooper TireNo. 21-926 (filed December 20, 2021).

To provide context, the courts of a given state may exercise personal jurisdiction over a corporation in two ways: first, specific jurisdiction, in which a corporation may be sued for claims arising from the conduct of the corporation in that state ; and second, general jurisdiction, which has been called “universal jurisdiction”, under which a company can be sued in one state for claims arising from any conduct, anywhere, whether or not related to the conduct of the company in that state. General jurisdiction, as its description suggests, allows plaintiffs to sue for a much wider range of activities than specific jurisdiction. In the interests of fairness, general personal jurisdiction has been limited under decisions of the United States Supreme Court in Good year and Daimler to states where a corporation can be “fairly regarded as at home” – generally, 1) its state of incorporation and 2) the state of its principal place of business (generally, its principal place of business), if different.

In Cooper Tire & Rubber Co. v. McCall, plaintiffs sued Cooper Tire and co-defendants in Georgia, alleging that a tire made by Cooper Tire malfunctioned, resulting in a car accident in Florida. The defendants sought to have the case dismissed because Cooper Tire is incorporated in Delaware and has a principal place of business in Ohio. But plaintiffs argued that because Cooper Tire was registered to do business in Georgia, it was therefore subject to general personal jurisdiction under Georgia law.

On appeal, the Georgia Supreme Court agreed with the plaintiffs, upholding its earlier decision in Allstate Insurance Co. v. Kleinin which it held that under Georgian laws, “Georgian courts may exercise general personal jurisdiction over any out-of-state company that is “authorized to do or transact business in that state at the time a claim occurs”. Cooper tire312 Ga. to 422, quoting Klein, 262 Ga. 599 (1992). Klein relied on a 1917 U.S. Supreme Court decision, Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 United States 93.

In Pennsylvania fire, the United States Supreme Court upheld a Missouri law that required out-of-state corporations registering to do business in Missouri to file a power of attorney with the state’s Superintendent of Insurance stating that the service to the superintendent should be considered a personal service to the company. 243 United States at 94.

This law did not violate due process, the court found, because the defendant voluntarily consented by executing the required power of attorney. 243 United States at 95-96. Pennsylvania fire has never been explicitly overturned, despite significant changes in the general landscape of personal jurisdiction since its decision in 1917. Based on this precedent, the Georgia Supreme Court concluded that consent by registration remains an allowable ground for assert general personal jurisdiction over a defendant.

And despite the fact that Georgia’s business registration process does not inform out-of-state companies that registering to transact in the state will subject them to general personal jurisdiction, the Supreme Court of Georgia said the companies are made aware of this fact based on its earlier decision in Klein. But the Georgia Supreme Court acknowledged that the U.S. Supreme Court’s view of general personal jurisdiction has since evolved. Klein was decided and that there was a “tension” between its decision and the recent jurisprudence of the Supreme Court of the United States in Good year and Daimler. Cooper tire312 Ga. to 422.

Part of the Georgia Supreme Court’s reluctance to strike down Georgia’s existing statutory scheme may be due to language in the Georgian code, which implicitly classifies corporations registered out of state as “residents.” OCGA § 9-10-90 defines a nonresident as “a corporation that is not organized or does not exist under the laws of this state and is not authorized to carry on or carry on business in that state at the time a claim or cause of action arises.” Only nonresidents are subject to the state’s long arm law, which provides specific jurisdiction. Therefore, as the Supreme Court of Georgia held in Klein and reiterated in Cooper tirea foreign company that East authorized to do business in Georgia is a “resident” for personal jurisdiction purposes, which subjects him or her to general personal jurisdiction, but not including specific personal jurisdiction under the Long Arm Act.

As the Supreme Court of Georgia described in Cooper tireif the court should cancel Kleinthis would lead to the absurd result that corporations registered out of state would not be subject to specific or general jurisdiction in Georgia: “This result would allow out-of-state corporations to insulate themselves from personal risk. jurisdiction in Georgia simply by obtaining the required certificate of authority and registering to do business here, thereby effectively protecting against suit for any cause whatsoever. Cooper tire312 Ga. to 436. Justice Bethel competed specially in the Cooper tire decision to draw lawmakers’ attention to this statutory matter, in which he noted that there was “a significant chance that Georgia’s current law will, at some point, be found to be inconsistent with the requirements of the procedural Federal,” which would open the door to a situation in which companies registered out of state would not be prosecuted in Georgia at all. 312 Ga. to 437.

One of the reasons the United States Supreme Court may be more likely to grant certiorari in Cooper tire is that the Pennsylvania Supreme Court recently reviewed the constitutionality of consent by recording with respect to Pennsylvania law (which contains similar, but not identical, language to Georgia) and came to the opposite conclusion – concluding that the Pennsylvania law violated due process and was therefore unconstitutional. Mallory v. Norfolk S.Ry. Co., 266 A.3d 542 (Pa. 2021). The decision in Mallory was also challenged in the United States Supreme Court. See Malloryno. 21-1168 (filed on February 18, 2022).

parties in both Cooper tire and Mallory have now completed their briefing on their respective motions for writs of certiorari, and each motion will be submitted to the judges for consideration. If four justices vote to grant the motion in either case, that case will be scheduled for the US Supreme Court to be heard this fall.

Copyright © 2022 Womble Bond Dickinson (US) LLP All rights reserved.National Law Review, Volume XII, Number 83

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