• The Supreme Court recently denied certiorari in a case that presented the issue of whether corporate “tag” jurisdiction, which arises from serving a corporate executive temporarily present in the relevant territory (say, the United States), is permissible.
• Circuit Courts are split on corporate “tag” jurisdiction, with the First and Second Circuits permitting it and the Fifth and Ninth Circuits rejecting it.
• Unless and until the Supreme Court resolves the circuit split, international corporations doing business in the United States should be careful with their executives’ U.S. travel so as to avoid inadvertently subjecting themselves to jurisdiction.

On March 20, 2023, the United States Supreme Court denied certiorari in a case that could have resolved a conflict among the circuit courts on the issue of whether corporate “tag” jurisdiction is appropriate.¹ The Court’s decision not to hear the case means that corporations will have to continue to wait for nationwide uniformity as to when they might be subject personal jurisdiction in different parts of the United States.

“Tag” Jurisdiction Defined

Since 1945, the Supreme Court has held that the Constitution requires courts to have either specific or general personal jurisdiction over a defendant.² Specific jurisdiction exists only where the events underlying a lawsuit arise out of or relate to the defendant’s contact with the forum state. General jurisdiction, which extends personal jurisdiction to “any and all claims” brought against a defendant,³ exists in two circumstances: (1) when the defendant is “essentially at home” in the forum,⁴ or (2) when the defendant is physically present within the relevant court’s territory, “no matter how fleeting his visit.”⁵

Courts allowing corporate “tag” jurisdiction premise their decisions on this second circumstance, holding that the physical presence of a corporate executive within a jurisdiction suffices to bring the corporate entity within the personal jurisdiction of a U.S. court.⁶ Although the Supreme Court affirmed tag jurisdiction for individual defendants in Burnham v. Superior Court,⁷ it has not done so in the corporate context.

The Circuit Split

The federal circuit courts that have weighed in on the permissibility of corporate “tag” jurisdiction are evenly split, with the First and Second Circuits allowing the practice while the Fifth and Ninth Circuits disallowing it. The Supreme Court has acknowledged the split, noting that “some courts have sought to revive the tag rule for artificial entities while others argue that doing so would be inconsistent with International Shoe.”⁸

Second and First Circuits: “Tag, You’re It”

The Second Circuit explicitly affirmed the usage of tag jurisdiction for artificial entities in 1998. In First American Corp. v. Price Waterhouse LLP, that court enforced a subpoena against the British arm of an international accounting firm after a domestic corporation served a partner at the accounting firm during a temporary visit to New York.⁹ The court premised its decision on the Supreme Court’s decision in Burnham and the partner’s physical presence in New York, reasoning that the British entity knew, or should have known, that it was risking exposure to personal jurisdiction in New York when it chose to send one of its partners there.¹⁰ The First Circuit made a statement to similar effect in Northern Light Technology, Inc. v. Northern Lights Club in 2001, writing in a footnote that service on a foreign corporation’s president would suffice to confer general jurisdiction over the corporate entity.¹¹

Fifth and Ninth Circuits: “Tag, Not It”

In contrast, in its 1992 Wenche Siemer v. Learjet Acquisition Corp. decision, the Fifth Circuit rejected corporate “tag” jurisdiction and refused to exercise personal jurisdiction over an out-of-state aviation company based solely on “in state service on a designated corporate agent.”¹² The court found Burnham did not support corporate “tag” jurisdiction, as Burnham “did not involve a corporation and it did not decide any jurisdictional issue pertaining to corporations.”¹³ The Ninth Circuit similarly rejected of corporate “tag” jurisdiction in Martinez v. Aero Caribbean, another suit arising out of an aircraft accident.¹⁴ Although the defendant company had few contacts in the United States, plaintiffs sought personal jurisdiction by serving the company’s vice president of marketing when he attended a short conference in the forum state.¹⁵ The court declined to find personal jurisdiction over the defendant and rejected plaintiffs’ argument that Burnham provided an endorsement for corporate tag jurisdiction, stating that “[a]n officer of a corporation is not the corporation, even when the officer acts on the corporation’s behalf.”¹⁶

The Terraform Labs Matter

The Terraform Labs controversy arose when the SEC sought to subpoena both Terraform Labs, a Singapore-based company, and its chief executive officer Do Kwon, a resident of South Korea, by serving Kwon during a visit to New York for a blockchain conference.¹⁷ After Terraform and Kwon failed to comply, the SEC sought, and the Southern District of New York granted, judicial enforcement of the subpoenas.¹⁸ Thereafter, Terraform and Kwon appealed to the Second Circuit, which affirmed the subpoenas’ validity, and then petitioned the Supreme Court for a writ of certiorari. In their petition to the Court, defendants raised the argument that the Second Circuit unconstitutionally found general personal jurisdiction via corporate “tag” jurisdiction.¹⁹ In response, the SEC argued that the Second Circuit’s decision was not predicated on corporate “tag” jurisdiction, which is a form of general jurisdiction, but rather on specific jurisdiction.²⁰

The Existing Circuit Split Creates Continuing Uncertainty for Corporations and Their Executives Working Across Jurisdictions

With the Supreme Court’s denial of certiorari, the circuit split on corporate “tag” jurisdiction continues to create uncertainty, especially for international corporations and executives seeking to do business in the United States. Indeed, the current state of the law potentially allows for a corporation to unwittingly subject itself to the jurisdiction of a U.S. court, agency, or department due simply to the travel of a single executive officer.

Until the Supreme Court’s resolution of the issue, in-house and outside counsel can and should take precautionary measures to avoid inadvertently subjecting their clients to the jurisdiction of the United States. Should counsel be aware of, or anticipate, an investigation or litigation in the United States, counsel should be cautious in allowing executives to travel on corporate business or travel to the United States at all. In addition, international companies with frequent travel to the United States should train their U.S.-bound employees of the risks of traveling to the United States. As part of that training, traveling employees should be provided with the name and phone number of a U.S. attorney (whether in-house or outside counsel) who they can reach out to in the event they are confronted with federal agents or other process servers.

The authors are grateful to Andrew Stahl for his valuable contribution to this OnPoint.

1. Order Denying Certiorari, Terraform Labs Pte. Ltd. v. SEC, No. 22-332, Dkt. # 14 (March 20, 2023).
2. See International Shoe v. Washington, 326 U.S. 310 (1945); see also McGee v. International Life Insurance, 355 U.S. 220 (1957) (holding that general jurisdiction is unnecessary when a state has specific jurisdiction over a defendant).
3. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).
4. Id.
5. Burnham v. Superior Court, 495 U.S. 604, 610 (1990) (plurality opinion).
6. See, e.g., First American Corp. v. Price Waterhouse LLP, 154 F.3d 16, 20–21 (2d Cir. 1998); Northern Light Technology, Inc. v. Northern Lights Club, 236 F.3d 57, 63 n.10 (1st Cir. 2001).
7. 495 U.S. at 610.
8. Ford Motor Co. v. Mont. Eighth Judicial Dist. Court, 141 S. Ct. 1017, 1038 n.4 (2021) (Gorsuch, J., concurring) (citations omitted).
9. 154 F.3d 16 (2d Cir. 1998).
10. Id. at 20–21.
11. 236 F.3d 57, 63 n.10 (1st Cir. 2001).
12. 966 F.2d 179, 180 (5th Cir. 1992).
13. Id.
14. 764 F.3d 1062 (9th Cir. 2014).
15. Id. at 1064–65.
16. Id. at 1068 (citations omitted).
17. SEC v. Terraform Labs PTE Ltd., No. 22-368, 2022 WL 2066414, at *1 (2d Cir. June 8, 2022).
18. Id. According to Law360, which covered the Supreme Court’s denial of Terraform’s certiorari’s petition, a Terraform spokesperson told Law360 “that the company handed over the requested documents after the lower court ordered them to do so in March 2022 while maintaining its objections to the subpoenas.” Jessica Corso, Justices Won't Hear Terraform Appeal Over SEC Subpoenas, Law360 (March 20, 2023).
19. Pet. for Cert., Terraform Labs Pte. Ltd. v. SEC, No. 22-332, Dkt. # 3 (Oct. 6, 2022).
20. Brief in Opp., Terraform Labs Pte. Ltd. v. SEC, No. 22-332, Dkt. # 11 (Feb. 2, 2023).