New York’s highest court delivers remarkable decision on limits on personal jurisdiction over foreign companies

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As a product liability defense lawyer, of course, we stay abreast of important court decisions regarding the defense of personal jurisdiction. In cases where we represent a company which has not been sued in its State of origin (c. Beginning of the case. In a motion for dismissal for lack of personal jurisdiction, the defense argues that it does not is not subject to the jurisdiction of the court where the action is filed and that, therefore, the “forum court” does not have the power to issue a decision or judgment that binds the foreign company, since it does not does not have the requisite jurisdiction. A jurisdictional motion to dismiss can be extremely powerful and can protect a defendant from being wrongly brought before a court outside their home state that has no connection to the issues in dispute in the trial.Nevertheless, it is also important to carefully consider the prospects of raising this defense at the outset of the case, as the defense may be waived by a defendant, and in some cases a defendant may consent to personal jurisdiction. from a strange state r.

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There are of course situations in which a foreign company can be legally sued outside the state in which it resides. For example, in the situation where a company commits tortious conduct that causes prejudice to a plaintiff in the forum state, this is referred to a specific personal jurisdiction and may serve as the basis for forcing a foreign defendant to respond to the claims made. against her in the Forum Tribunal located outside her State of origin. However, in cases where the Forum Tribunal has no connection with the issues in the current lawsuit, such as in the case of a product liability lawsuit, where (1) the accident does not occur. ‘is not produced in the state where the Forum tribunal is located or (2) the product in question was not designed, manufactured or sold in the state where the Forum tribunal is located, the personal jurisdiction of the tribunal will be contested by the defendant. The foreign company will challenge the jurisdiction of the forum court in this case, because the criminal acts it allegedly committed did not take place in the forum State and therefore do not arise from its contacts with the forum State.

In the event that the foreign company is sued outside its State of origin, in a court located in a State which has no connection with the issues in dispute in the lawsuit, it cannot be required to plead its defense of the trial that in the Forum Court, if it can be observed that the foreign company is subject to the “general jurisdiction” of this court. When a company is subject to the general jurisdiction of a court, it can essentially be sued for any dispute before that court, whether or not the issues in dispute relate to the state where the court is located. Normally, a company cannot be subject to the general jurisdiction of a court in the state where it resides. If it turns out that a company is subject to the general jurisdiction of a court, it means that the defendant company may be required to respond to the claims made against it in this lawsuit, which the issues in dispute in the lawsuits arise from the activities of the defendant company within the state. Therefore, for a court to find that a foreign company is subject to the general jurisdiction of that court, there must be evidence that the foreign company has somehow waived its defense of jurisdiction, or has previously consented to the general jurisdiction of the Forum (out of State) Court.

New York Court of Appeals decision in Aybar vs. Aybar

The highest court in New York recently delivered a remarkable personal jurisdiction decision dealing with this specific issue of whether the defendants, who were foreign companies sued in New York, had consented to the general jurisdiction of the courts of New York. The New York Court of Appeals ruled in its decision of Aybar vs. Aybar [1] that the defendants who challenged jurisdiction in the case, Ford Motor Company (Ford) and The Goodyear Tire & Rubber Co. (Goodyear), were not subject to the general personal jurisdiction of the courts of New York by reason of their registering to do business in New York State as a foreign company and / or appointing an agent for service of pleadings in New York.

The decision of the New York Court of Appeals in Aybar follows the recent landmark decision of the United States Supreme Court in Ford v. Montana, which we have covered in previous articles on this site on December 22, 2020; April 2, 2021; and April 23, 2021. However, the SCOTUS decision in Ford v. Montana mainly dealt with the constitutional limits of a court’s specific personal jurisdiction over a foreign defendant company.

In Aybar, the action arose out of a traffic accident in the state of Virginia. The plaintiff, a New York resident, claimed that the Goodyear tire fitted to the Ford Explorer he was driving was defective and caused the accident. Instead of bringing this product liability action in the state where the accident occurred, which was Virginia, or in the states where the vehicle was manufactured or sold, the plaintiff brought the action in New York court, which has no connection with the issues in dispute in the lawsuit. In opposition to the jurisdictional challenge made by Ford and Goodyear, the plaintiff argued that these foreign companies consented to the general jurisdiction of the courts of New York by registering themselves as licensed foreign companies and by appointing a registered agent for the service of procedural documents within the State.

Under New York Business Corporation Law, a foreign corporation “must not do business in the state until it has been authorized to do so.”[2] As part of the registration process to do business in New York State as a foreign corporation, the foreign corporation must also appoint the Secretary of State as its attorney for service, and whether it has a registered agent , it must identify this registered agent for the service of procedural documents when registering.[3] However, the Court of Appeals correctly pointed out that the New York Corporations Act does not make the right to do business in New York State conditional on the consent of the foreign company to the general jurisdiction of the courts. from New York.

The Court of Appeal conceded that it could not find that a foreign defendant company came under the general personal jurisdiction of the courts of New York on the basis of that foreign company’s compliance with existing business registration laws. in New York State. The court ruled that compliance with these business registration laws does not constitute consent and a waiver of the general jurisdiction of the courts of New York, as argued by the plaintiff. The court further ruled that adopting the plaintiff’s argument would indeed constitute an unauthorized amendment to the law on joint stock companies and would include a provision which does not exist in the law.

Summary

This decision will serve as a useful case law precedent for foreign defendants who are forced to defend actions brought against them in New York State that have no connection with the state or do not arise from their activities within the state. – regardless of how these unrelated activities may be spread across New York State. As mentioned above, the personal jurisdiction defense should always be considered carefully at the start of a case, as it can be waived in some cases and, therefore, is not an absolute defense.

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