Georgia Supreme Court Finds Out-of-State Entity Authorized to do Business in State is Subject to General Personal Jurisdiction

Schnader Harrison Segal & Lewis LLP

Schnader Harrison Segal & Lewis LLP

The Georgia Supreme Court recently stood by a 1992 case holding that a foreign company that is authorized to do business in the state subjects itself to general personal jurisdiction, although it noted the “trajectory” of U.S. Supreme Court general jurisdiction jurisprudence is trending markedly in the direction of curtailing the extent to which courts can subject foreign corporations to general jurisdiction.

In Cooper Tire & Rubber Co. v. McCall, the Florida-domiciled plaintiff alleged he sustained injuries while travelling in Florida when the rear tire of his car failed. The plaintiff sued the tire manufacturer, a Delaware corporation with its principal place of business in Ohio, in Georgia state court. The issue before the court was whether its former decision in Allstate Ins. Co. v. Klein, 422 S.E.2d 863 (1992), which held that authorization to conduct business in Georgia confers general jurisdiction over foreign businesses, still was good law. Despite the recent line of U.S. Supreme Court cases that have narrowed general jurisdiction over foreign corporations, see, e.g., Daimler AG v. Bauman, 571 U.S. 117 (2014), the court rooted its analysis in a 1917 U.S. Supreme Court case that it believed established and permitted “consent by registration,” Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93, and noted that the U.S. Supreme Court never has expressly overruled Pennsylvania Fire. Thus, in the Georgia Supreme Court’s view, consent by registration is alive and well in the Peach State.

Georgia is not alone in grappling with this contentious issue. Schnader’s Bruce Merenstein recently argued a similar case before the Pennsylvania Supreme Court on behalf of a foreign defendant railroad company. See Mallory v. Norfolk Southern Railway, No. 3 EAP 20211. There, the foreign company argued that Pennsylvania’s registration statute was not voluntary and that a company should not be forced to make the untenable decision between doing business in a state and thereby subjecting itself to general jurisdiction, or not doing business in the state. The Mallory court has not yet published its decision.

These cases illustrate that consent to general jurisdiction by virtue of registering to do business currently is a state-by-state issue, and is rapidly evolving. For example, Bob Williams’ article in this edition discusses a recent case in New York regarding this issue. It likely will take U.S. Supreme Court guidance to give a nationwide measure of certainty to litigants, and this issue should be of primary concern to entities when deciding whether to register to conduct business in a given state. Cooper Tire & Rubber Co. v. McCall, 863 S.E.2d 81 (Ga. 2021).

1 Since this article was first published, the Pennsylvania Supreme Court unanimously decided in Mallory that Pennsylvania’s statute authorizing personal jurisdiction over companies that registered to do business in Pennsylvania was unconstitutional. Simply registering to do business in Pennsylvania no longer bestows general jurisdiction over out-of-state defendants, and brings Pennsylvania more in-line with recent U.S Supreme Court cases that have tightened states’ ability to exercise general jurisdiction. The court noted: “Our statutory scheme of conditioning the privilege of doing business in the Commonwealth on the submission of the foreign corporation to general jurisdiction in Pennsylvania courts strips foreign corporations of the due process safeguards guaranteed in Goodyear and Daimler.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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