On March 31, the Second Circuit upheld the Eastern District of New York’s dismissal of false advertising claims against Dunkin Donuts, rejecting the out-of-state plaintiffs’ claims for lack of personal jurisdiction. The court held that registering to do business in New York does not constitute consent to general jurisdiction in the State—an issue of first impression in the circuit. The court also rejected the remaining New York plaintiff’s claims on the merits.

• In 2018, five named plaintiffs filed a class action suit alleging that Dunkin Donuts deceptively marketed its Angus Steak & Egg Breakfast Sandwich and Angus Steak & Egg Wake-Up Wrap to consumers. Plaintiffs’ main beef with Dunkin Donuts was that the company’s ads allegedly deceived consumers into believing that the sandwiches contained an “intact” steak, even though the sandwiches actually contained ground beef patties with additives. Plaintiffs asserted violations of various state consumer protection laws, including New York General Business Law §§ 349 and 350, and the Magnuson-Moss Warranty Act.
  • Dunkin Donuts is incorporated in Delaware, headquartered in Massachusetts, and has franchises throughout New York. It is registered to do business in New York under New York Business Corporation Law § 1301.
• The district court dismissed the complaint, holding that Dunkin Donuts could not be subject to general personal jurisdiction in New York with respect to the claims of the four named plaintiffs who purchased sandwiches at franchises in other states. The court also held that Dunkin Donuts’ advertisements were neither deceptive nor misleading to a reasonable consumer.
• On appeal, the Second Circuit first addressed the plaintiffs’ contention that Dunkin Donuts consented to general personal jurisdiction by registering to do business and designating an agent for service of process in New York. New York’s highest court has not decided whether the act of registering to do business under § 1301 confers general jurisdiction over a non-resident defendant.
  • The Second Circuit observed that, while inferior New York courts were divided on the issue, New York’s intermediate appellate courts had uniformly interpreted the act of registering under § 1301 as consenting to general jurisdiction in the State. Citing the U.S. Supreme Court’s decision in Daimler AG v. Bauman, the court explained that a state’s exercise of general personal jurisdiction over a foreign corporation will not comport with due process unless the corporation’s affiliations with the state are so “continuous and systematic” as to render the corporation essentially at home in the forum. As a result, a corporation is “at home” only where it is incorporated or has its principal place of business, absent an “exceptional case.”
  • The court expressed reservations about whether Daimler permitted a state to coerce a foreign corporation to consent to general jurisdiction merely by registering to do business in the forum state. Such coercion raised constitutional concerns in the post-Daimler general jurisdiction regime.
  • Moreover, nothing in the text of § 1301 expressly conditioned registration on consent to general jurisdiction in the state. Accordingly, the court predicted that New York’s highest court would hold that registering to do business under § 1301 was not sufficient to confer general jurisdiction over a non-resident defendant.
  • Dunkin Donuts also was not subject to general jurisdiction based on the presence of franchises in New York, as there was no showing that the company’s relationship with New York was in any way significant compared to its nationwide activity.
• As for the merits, the court rejected the New York plaintiff’s §§ 349 and 350 claims, which were based on the allegation that Dunkin’s television advertisements were deceptive because they used the word “steak.” The ads all concluded with multiple zoomed-in images that clearly depicted the “steak” in the sandwiches as a beef patty. The court also noted that the word “steak” can be defined as “ground beef prepared for cooking or for serving in the manner of a steak,” which meant that Dunkin’s descriptions of the sandwiches would not have misled a reasonable consumer.
• The Second Circuit’s general jurisdiction analysis confirms that non-resident plaintiffs face a high bar in suing a corporation that is not incorporated or headquartered in the forum state, at least absent some connection between the plaintiff’s claims and the defendant’s forum-based activities.

The case is Chen v. Dunkin’ Brands, Inc., No. 18-3087-cv (2d Cir.). Read more here.