Georgia Supreme Court upholds expansive ‘consent by registration’ approach to general personal jurisdiction | Kilpatrick Townsend & Stockton LLP

0

Companies authorized to do business in Georgia may not be aware of the potential consequences: the mere fact of registering to do business with the Georgian Secretary of State confers general personal jurisdiction in Georgia over a foreign company, according to the recent decision of the Supreme Court of Georgia in Cooper Tire & Rubber Co. v. McCall863 SE2d 81 (Ga. 2021).

Context of business “consent by registration”

For your information, in 1917 the United States Supreme Court ruled that a state law notifying a foreign corporation that it consents to general personal jurisdiction in that state by registering to do business in the state did not violate due process. Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling243 US 93, 95 (1917).

Then, in 1992, the Supreme Court of Georgia ruled that any corporation registered to do business in Georgia is considered a resident of Georgia for personal jurisdiction purposes. Allstate Insurance Co. v. Klein262 Ga. 599, 601 (1992).

Since the decision of the Supreme Court of Georgia in Kleinhowever, the United States Supreme Court has repeatedly ruled that general personal jurisdiction can only be exercised in states where a corporation is essentially “home” – in its state of incorporation and in the state of its principal establishment. See Goodyear Dunlop Tires Operations, SA vs. Brown564 US 915, 919 (2011); Daimler AG versus Bauman571 US 117, 137 (2014); Ford Motor Co. v. Montana Eighth Judgment. Dist. CT., –U.S.–, 141 S. Ct. 1017, 1024 (2021).

In Cooper tireGeorgia Supreme Court reaffirms ‘consent by registration’

In Cooper tire, a plaintiff from Florida alleged that he was injured in a car accident in Florida. 863 SE2d at 83. He sued Cooper Tire, a tire manufacturer incorporated in Delaware with its principal place of business in Ohio, in Georgia state court. ID. Cooper Tire sought the termination on grounds of personal jurisdiction, but the plaintiff argued that Cooper Tire consented to general personal jurisdiction in Georgia by obtaining permission to do business in the state. ID. at 83-84. The trial court granted Cooper Tire’s motion to dismiss, but the Court of Appeal overturned it.

The Supreme Court of Georgia granted certiorari, reaffirmed its earlier decision in Klein, and found general personal jurisdiction over Cooper Tire based on its registration to do business in Georgia. The court acknowledged the “tension” between its decision and the “trajectory” of U.S. Supreme Court cases that had restricted general personal jurisdiction over foreign corporations, but found that the U.S. Supreme Court had never expressly canceled Pennsylvania fire and the cases that followed it. ID. at 84 years old.

In a deal, Justice Bethel issued a clarion call to the Georgia Legislative Assembly, writing separately “for the sole purpose of calling the attention of the General Assembly to the peculiar and precarious position of the current law of Georgia”. ID. at 92 (Bethel, J., concordant). Justice Bethel found that Georgia’s current “consent-by-registration” approach runs “against the oft-expressed desire to make Georgia a ‘business-friendly’ state.” ID.

‘Consent-by-registration’ gap widens between Georgia and other states

Since the Supreme Court of Georgia rendered its opinion in Cooper tire in September 2021, at least three state supreme courts declined to recognize a “consent by registration” approach to general personal jurisdiction. See Aybar vs. Aybar37 NY3d 274, 283, 177 NE3d 1257, 1261, 156 NYS3d 104, 107 (2021) (“Accordingly, the registration of a foreign company to do business and the appointment of an agent for service of proceedings in New York do not constitute consent to jurisdiction under the clear terms of the Corporations Act.”); Chavez vs. Bridgestone Americas Tire Operations, LLC— P.3d —-, # S-1-SC-37489, 2021 WL 5294978, at *9 (NM 15 Nov 2021); Mallory v. Norfolk S.Ry. Co., — A.3d —-, No. 3 EAP 2021, 2021 WL 6067172, at *17 (Pa. Dec. 22, 2021) (invalidating a state law that found registration to do business constituted a general personal jurisdiction consent as violating due process).

As the Georgia Legislature enters its 2022 session, it has the opportunity to align Georgia’s personal jurisdiction doctrine with that of the United States Supreme Court and other states. As Justice Bethel pointed out in his Cooper tire agreement, the current state of Georgian law may deter foreign companies from registering to do business in Georgia to minimize their risk of being dragged into the state on general grounds of personal jurisdiction.

Share.

Comments are closed.