Illinois Supreme Court Fundamentally Limits the Ability to Sue Non-Illinois Corporations

by Polsinelli
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Following recent precedent from the U.S. Supreme Court, the Illinois Supreme Court limited the circumstances in which a non-resident corporate defendant can be subject to suit in Illinois on claims with no connection to the state. 

This Sept. 21 ruling will affect all claims brought by out-of-state plaintiffs in Illinois, which has been a popular forum for toxic and mass tort personal injury litigation. The Court found that appointing an agent for service of process in order to transact business in the state does not constitute “consent” to personal jurisdiction for actions that arise from actions outside the State of Illinois. 

In Aspen American Insurance Co. v. Interstate Warehousing, Inc., the plaintiff sued an Indiana-based warehousing company over a roof collapse in a Grand Rapids, Michigan, warehouse that allegedly damaged the plaintiff’s goods being stored there. The defendant maintained eight warehouses throughout the country, one of which was in Joliet, Illinois. Despite the fact the defendant was an Indiana-based company and the damage occurred at the warehouse in Michigan, the plaintiff filed suit in Illinois.

Defendant moved to dismiss on the basis of lack of personal jurisdiction pointing out the case had no relationship to Illinois. In response to the defendant’s motion, the plaintiff made two arguments. First, the plaintiff argued that because the defendant operated an unrelated warehouse in Illinois, it was “doing business in Illinois” and thus subject to general personal jurisdiction in Illinois. Second, the plaintiff argued that because the defendant registered to do business in Illinois under Illinois’ corporate registration statute, 805 ILCS 5/1.01 et seq., the defendant had consented to personal jurisdiction in Illinois and waived any due process objection. 

The Illinois Supreme Court rejected both arguments in a straightforward opinion that made no exception for certain types of claims or defendants.

Doing Unrelated Business in Illinois “Falls Far Short” of the Standard for General Jurisdiction

The Court held that establishing that the defendant did unrelated business in Illinois (through the warehouse in Joliet), “falls far short of showing that Illinois is a surrogate home for defendant.” The court reasoned that if merely operating a warehouse unrelated to the lawsuit would establish general jurisdiction, then the defendant would be subject to general jurisdiction in every other state where it did business. That reasoning, the Court noted, had been expressly rejected by the U.S. Supreme Court in Daimler AG v. Bauman, 134 S. Ct. 746 (2014). 

The Court further noted that although the Illinois Long Arm statute authorizes a court to exercise jurisdiction in any action arising within or without Illinois against any defendant “doing business within this State,” the statute cannot constitutionally be applied to establish general jurisdiction where there is no evidence the defendant is “at home” in Illinois. 

Maintaining a Registered Agent Does Not Constitute “Consent” to General Jurisdiction

Finally, the Court held that registering to do business under Illinois’ corporate registered agent statute and appointing an agent to accept service of process does not act as consent to jurisdiction over actions completely unrelated to the corporation's activities in Illinois. Looking at the language of the relevant statutes, the Court concluded that none of the “provisions require foreign corporations to consent to general jurisdiction as a condition of doing business in Illinois, nor do they indicate that, by registering in Illinois or appointing a registered agent, a corporation waives any due process limitations on Illinois’ exercise of genera personal jurisdiction. Indeed, the court noted the Act makes no mention of personal jurisdiction at all and cited similar cases reaching the same conclusion in other jurisdictions. 

This decision, by Justice Burke, and joined by Chief Justice Karmeier and Justices Freeman, Thomas, Kilbride, Garman, and Theis, follows two recent U.S. Supreme Court cases limiting the reach of personal jurisdiction over out-of-state defendants. See BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017) and Bristol-Meyers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017). In addition, and as noted by the Court, Illinois now also joins several other states who have recently held that registering to do business under a corporate registration statute does not constitute consent to general, “all-purpose” jurisdiction. 

Illinois has remained a popular forum for out-of-state plaintiffs bringing toxic tort personal injury litigation. While this decision should have an immediate impact on those cases and others brought against non-Illinois corporations for activities occurring outside of Illinois, those defendants will still bear the burden to bring this affirmative defense to the court’s attention at the earliest available opportunity.

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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