Academic journal article St. John's Law Review

Emerging from Daimler's Shadow: Registration Statutes as a Means to General Jurisdiction over Foreign Corporations

Academic journal article St. John's Law Review

Emerging from Daimler's Shadow: Registration Statutes as a Means to General Jurisdiction over Foreign Corporations

Article excerpt

Introduction

In 1999, an American family of four travelled from Utah to Atlantis, a luxurious Bahamian getaway, for a long-anticipated vacation.1 Off the shores of Paradise Island, Victor, a thirteenyear-old boy, was snorkeling with his father and younger brother when a motorboat suddenly cut through the water and hit him.2 Victor was airlifted to Florida, where he underwent medical treatment for massive injuries.3 He survived, but his arm had been severed, and he was permanently disfigured.4

The motorboat operator conducted business at the Atlantis Hotel, owned by multinational corporations principally based in the Bahamas.5 Although the corporation attempted to hide behind its foreign citizenship, Victor and his family were able to hold the corporation accountable through an American court's exercise of general jurisdiction.6

Today, however, under the framework of a modern Supreme Court that has "systematically restricted plaintiffs' access to courts,"7 Victor and his family would have few avenues available to hold foreign corporations accountable in an American court.8 Since the United States Supreme Court's landmark holding in Daimler AG v. Bauman,9 this restrictive methodology has been applied to general jurisdiction.10 In that case, the Court narrowed the ability of states to exercise general jurisdiction over foreign corporations by applying a "proportionality" framework.11 Now, a corporation must be considered "at home" in the forum state in order for general jurisdiction to be exercised.12 Still, the Court left open a significant opportunity that states should use in order to ensure corporate accountability: consent to general jurisdiction through business registration statutes.13 Several states, notably New York and Delaware, have long held that registering to do business within a state forms a contractual relationship whereby a corporation is obligated to submit to the jurisdiction of that state's courts.14

This Note argues for the increased exercise of general jurisdiction based on registration statutes.15 Carefully drafted state statutes, explicitly stating that corporations registering to do business in a state thereby consent to general jurisdiction, not only solve the consequences of Daimler, but also fully comport with traditional values of fairness.

Part I outlines the jurisprudential history related to general jurisdiction. Section A begins with the concept of territoriality introduced in Pennoyer and the minimum contacts analysis in International Shoe, then discusses the modern doctrine in Perkins, Helicópteros, and Goodyear, culminating with Daimler. Section B outlines the jurisprudence of consent-based jurisdiction before Daimler. Next, Part II addresses the consequences of Daimler and how lower courts have interpreted and implemented the decision. Finally, Part III discusses statutory solutions. Section A summarizes legislation pending in New York that would codify consent-based jurisdiction. Section B addresses the criticisms of consent to jurisdiction based on registration statutes. Finally, Section C suggests improvements to legislation to ensure corporate accountability.

I.BACKGROUND LAW

When a court determines whether it has jurisdiction over the parties to a civil action, it divides that analysis into two avenues: specific jurisdiction and general jurisdiction.16 Specific jurisdiction is based solely on the relationship between the forum state and the events giving rise to the cause of action and exists when those events occurred within the state.17 In contrast, general jurisdiction is based on the relationship between the forum state and one of the parties to the suit without regard to the geographical location of the dispute being litigated.18 The authority of the state is a central feature of both forms of jurisdiction. From the earliest articulations of personal jurisdiction, the sovereignty of the forum state has played a pivotal role.19

A.General Jurisdiction: Pennoyer to Daimler

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