Second Circuit Holds That Qualifying to Do Business in New York Is Not Consent to General Jurisdiction

New YorkChen v. Dunkin Brands Inc., 954 F.3d 492 (2d Cir. 2020), decided March 31, 2020. The U.S. Court of Appeals, 2nd Circuit held that a foreign corporation was not subject to general personal jurisdiction in New York merely because it registered to do business as a foreign corporation under Sec. 1301 of the New York Business Corporation Law. The plaintiff filed a suit against a Delaware corporation with its principal place of business in Massachusetts, alleging a violation of New York consumer protection laws by implying that two sandwiches had intact pieces of steak when they actually had ground beef. The District Court dismissed for lack of personal jurisdiction. The plaintiff appealed, arguing that the corporation consented to the general jurisdiction of New York’s courts by registering to do business.

The Second Circuit Court of Appeals affirmed the dismissal. The court noted that in Daimler AG v. Bauman, 571 U.S. 117 (2014) the U.S. Supreme Court held that general jurisdiction will not comport with due process unless the out-of-state company’s affiliations with the state are so systematic and continuous that they render the company at home there. Daimler’s “at home” requirement has been interpreted as meaning general jurisdiction only exists in the state of incorporation or the state where the principal place of business is located.

Before Daimler, New York’s courts had interpreted Sec. 1301 as conditioning foreign registration on the corporation consenting to general jurisdiction in New York. Although New York’s highest state court has not ruled on whether this interpretation survives Daimler, the Second Circuit predicted New York’s Court of Appeals would hold that an interpretation that registration constitutes consent would not survive. The Second Circuit pointed out that all three intermediate appellate courts that ruled on the issue held that foreign registration no longer constitutes consent, that there is nothing in the text of Sec. 1301 that conditions registration on consent to general jurisdiction, and that a holding that registration constitutes consent would mean that a corporation could be subject to general jurisdiction even where it does no business.

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