Georgia Supreme Court: Consent by registration a valid way to exercise personal jurisdiction over out-of-state corporations
The Georgia Supreme Court has ruled, in Cooper Tire & Rubber Co. v. McCall, that consent by registration is a valid means of exercising general personal jurisdiction over an out-of-state corporation.
The decision, handed down last week, arose when the court was asked to determine whether Georgia’s consent by registration doctrine permitted the exercise of personal jurisdiction over a foreign defendant consistent with the bounds of the Due Process Clause of the Fourteenth Amendment to the US Constitution.
As explained in depth below, the Georgia court arrived at this conclusion because, it noted, the US Supreme Court has not overruled its decision in Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co.
Florida resident Tyrance McCall sued Cooper Tire & Rubber Company for injuries allegedly suffered in a motor vehicle collision. McCall was a passenger in a vehicle equipped with a rear tire designed, manufactured, and sold by Cooper Tire. He alleges that while the vehicle was traveling on a Florida roadway, the tire’s tread “suddenly failed and separated from the remainder of the tire,” causing the collision and his injuries. He subsequently brought suit in the Georgia State Court of Gwinnett County.
Cooper Tire filed a motion to dismiss, arguing Georgia lacked personal jurisdiction over it. McCall responded that Cooper Tire is subject to personal jurisdiction as a resident of Georgia because it is authorized to transact business in the state.
The trial court granted Cooper Tire’s motion and dismissed the action. But the Court of Appeals reversed the decision. Cooper Tire filed a petition for a writ of certiorari, which the Georgia Supreme Court granted.
Summary of Cooper Tire & Rubber Co. v. McCall
The Georgia Supreme Court granted certiorari to reconsider one of its holdings in Allstate Insurance Co. v Klein, 422 S.E.2d 863 (1992). In that case, the court had relied on the United States Supreme Court decision in Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917) to hold that Georgia courts could exercise general personal jurisdiction over an out-of-state corporation when a state statute or authoritative case law notifies it that by registering and appointing an agent for service of process in the state, the corporation has consented to general personal jurisdiction there. This is known as “consent by registration.”
In the Cooper Tire opinion, the Georgia Supreme Court noted that Klein is in tension with recent US Supreme Court cases addressing the exercise of general personal jurisdiction over out-of-state corporations and reevaluated its prior holding.
The court then thoroughly recounted the US Supreme Court’s Fourteenth Amendment Due Process Clause and personal jurisdiction decisions, beginning with the seminal case of Pennoyer v. Neff, 95 U.S. 714 (1878). Importantly, it recited the specific and general personal jurisdiction approaches set forth in International Shoe v. Washington, 326 U.S. 310 (1945) and its progeny.
In so doing, it recognized that the US Supreme Court has stated that a corporation will ordinarily be subject to general personal jurisdiction where it is a resident: either in its state of incorporation or the location of its principal place of business. Despite this, the Georgia Supreme Court emphasized that Pennsylvania Fire, a case preceding International Shoe, provides for the additional “consent by registration” method of exercising general personal jurisdiction, which has not been overruled.
With Pennsylvania Fire’s “consent by registration” jurisdiction theory in mind, the Georgia Supreme Court noted that its Klein decision notified out-of-state corporations that registering and appointing an agent for service of process in the state subjects it to general jurisdiction in the forum. Specifically, in Klein, the court held that the Georgia Long Arm Statute, which concerns the exercise of specific personal jurisdiction over nonresident corporations, defined a nonresident as, inter alia, “a corporation . . . not authorized to do or transact business in” Georgia.
From that definition, the court tenuously deduced that a corporation that is authorized to do or transact business in Georgia must be subject to general personal jurisdiction in the state. For this reason, the Court upheld Klein and found Georgia could exercise general personal jurisdiction over Cooper Tire.
Recent US Supreme Court decisions, the Georgia Supreme Court observed, have held that general personal jurisdiction is properly exercised where a corporation’s operations are so substantial, continuous, and systematic as to render the corporation essentially “at home” in the state. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 929 (2011). The connections rendering a corporation “at home” in a jurisdiction – incorporation and principal place of business location – are “affiliations [that] have the virtue of being unique[,] . . . ordinarily indicat[ing] only one place . . . .” Daimler AG v. Bauman, 571 U.S. 117, 137 (2014).
Accordingly, although the “consent by registration” jurisdiction theory in Pennsylvania Fire – a case decided decades before the landmark International Shoe decision – has not been overturned, courts have held it incompatible with the modern specific and general jurisdiction approach. See, eg, Brown v. Lockheed Martin Corp., 815 F.3d 619 (2d Cir. 2016); Lanham v. BNSF, 939 N.W.2d 363 (Neb. 2020); DeLeon v. BNSF, 426 P.3d 1 (Mont. 2018).
In its decision, the Georgia Supreme Court also acknowledged the tenuousness of consent by registration and suggested that the Georgia Assembly amend the state’s Long Arm Statute to “tailor [it] within constitutional limits.”
As the Second Circuit Court of Appeals noted in Brown, recent US Supreme Court personal jurisdiction holdings stand to be “robbed of meaning by a back-door thief” by consent by registration. That is, a state law or decision adopting the doctrine might not survive a legal challenge.
Learn more about the implications for your business of Cooper Tire and other consent by registration cases by contacting the authors or your usual DLA Piper attorney.