If a corporation qualifies to do business in a state, that corporation is “in” that state, right? It has to send in annual registration fees, appoint an agent for service of process, and file tax returns. Hasn’t the corporation consented to general jurisdiction by reason of its registration?
The Delaware Supreme Court, in the recent case of Genuine Parts Company v. Cepec, No. 528, 2015 (Del. Sup. Ct. Apr. 18, 2016), came to a slightly surprising conclusion about state jurisdiction over a corporation qualified to do business in Delaware. In that case, the named defendant Genuine Parts was a Georgia corporation registered to do business in Delaware. Overturning 30 years of established precedent, the Court concluded that general jurisdiction can apply to non-Delaware corporations only where the corporations’ affiliations with the State “are so ‘continuous and systematic’ as to render them essentially at home in the forum State” (citing the US Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014)). Because Genuine Parts did not have its “home” in Delaware, there was no general jurisdiction of the State of Delaware over Genuine Parts. The Court conceded, however, that if the underlying action arose out of a corporation’s contacts and conduct within the State of Delaware, then there could be a finding of specific (rather than general) jurisdiction.
Right now, this holding applies only to actions brought in the State of Delaware. There are, however, similar rulings from courts in Indiana, New Jersey, and New York. Given the influence of the Delaware Supreme Court on corporate law throughout the nation, there will probably be additional states that follow the lead. This is an issue that will ultimately be resolved by the US Supreme Court. For now, keep this ruling in mind if your client is registered in Delaware but does not have a corporate “home” in that state.