Registration to do Business in New York is Not Automatic Consent to Personal Jurisdiction

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New York joins the list of states whose business registration statutes do not automatically constitute consent to general personal jurisdiction, according to the Court of Appeals’ decision in Aybar v. Aybar. This product liability action arose from an automobile accident that occurred in Virginia in a Ford vehicle equipped with Goodyear tires that defendant purchased from a third party in New York. Ford is a Delaware corporation with its principal place of business located in Michigan. Goodyear is an Ohio corporation with its principal place of business located in Ohio. Both companies registered to do business in New York, whose statute required designation of New York’s secretary of state as an agent upon whom legal process may be served in
actions against them.

Ford and Goodyear both moved to dismiss the action for lack of general personal jurisdiction in New York, which was the only type of personal jurisdiction asserted by plaintiff. The trial court denied those motions and found that the companies had consented to general personal jurisdiction in New York by virtue of registering to do business there and appointing the secretary of state as their agent for service of process. The Appellate Division reversed, however, explaining that recent Supreme Court precedent rendered unconstitutional that application of the registration statute.

The Court of Appeals granted plaintiff’s leave to appeal from the Appellate Division’s decision. The Court began with the language of the statute itself, which merely provides that any company wishing to do business in New York must register and designate the secretary of state as its agent for service of process. To read into those provisions any consent to general personal jurisdiction improperly would “amend [the] statute by adding words that are not there.”

The Court’s analysis did not end with the language of the statute itself. Instead, the Court addressed a prior New York judicial opinion widely regarded as holding that appointment of an agent for service of process constitutes consent to general personal jurisdiction, Bagdon v. Philadelphia & Reading Coal & Iron Co., 217 NY 432 (1916). That matter arose from an action filed in New York against a defendant that registered to do business in New York, but the conduct giving rise to the claims occurred solely in Pennsylvania. Bagdon held that the defendant’s consent to service effectively conferred personal jurisdiction over the defendant in New York for any matter.

The Aybar Court explained that Bagdon must be read in the context of personal jurisdiction jurisprudence as it existed in 1916. At that time, the United States Supreme Court’s opinion in Pennoyer v. Neff was the law of the land. Pennoyer held that jurisdiction was proper over a defendant anywhere the defendant could be found. Since then, the Supreme Court has redrawn the boundaries of personal jurisdiction, including through Daimler AG v. Bauman, which held that general personal jurisdiction over a corporation properly may be exercised only where it is “essentially at home,” such as where it is incorporated and where its principal place of business is located. According to the Aybar Court, Bagdon no longer comports with personal jurisdiction jurisprudence.

The Court of Appeals in Aybar thus created a distinction between acceptance of service of process in New York and the effect of that service. Where the “effect” of service of process on a registered agent in New York exceeds the constitutional boundaries articulated by the Supreme Court in Daimler and its progeny, general personal jurisdiction will not be found. Aybar v. Aybar, 2021 N.Y. LEXIS 2134 (Oct. 7, 2021).

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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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