Thirty years later, is it time for the Georgia Supreme Court to revisit the Klein ruling?

On May 19, 2021, Ohio-based tire manufacturer Cooper Tire & Rubber Co. petitioned the Georgia Supreme Court to review and reverse its 1992 decision in Allstate Insurance Co. v Klein, 422 S.E.2d 863 (Ga. 1992), which holds that a foreign corporation's registration to do business in Georgia makes it a resident there for jurisdiction purposes. Cooper Tire argued, for the first time in this litigation, that the Klein decision unconstitutionally exerts jurisdiction over out-of-state corporations.

In 2018, a Florida resident sued Cooper Tire in a Georgia state court, alleging that while he was traveling on a Florida highway, the tread from a tire made by Cooper Tire separated and caused the vehicle to crash, resulting in very serious bodily injuries. The tire that is the subject of this litigation was on a Ford vehicle that was purchased from a Georgia car dealership six weeks prior to the accident.

The court granted Cooper Tire's motion to dismiss, finding that the company is not at home in Georgia for the purposes of jurisdiction.  This year, the Georgia Court of Appeals reversed that ruling, relying on the Klein decision and the fact that Cooper Tire is registered to do business in Georgia. 

Cooper Tire attorneys seek reversal from the Georgia Court of Appeals decision, arguing that, based on subsequent US Supreme Court rulings, the Klein decision wrongly interpreted the Georgia's long-arm statute and violates the 14th Amendment's due process clause. They point to the decisions from Daimler AG v Bauman, 571 U.S. 117 (2014) and Dunlop Tires Operations SA v Brown, 564 U.S. 915 (2011) to support their claims that Georgia's business registration statute doesn’t provide notice to foreign corporations that they are subject to jurisdiction in the state and that registering to do business in Georgia does not constitute consent to be sued there.

During oral argument, Georgia Supreme Court justices particularly challenged Cooper Tire attorneys on two main issues: whether Cooper Tire consented to Georgia jurisdiction simply by registering in the state; and whether the nearly 30-year-old Klein ruling serves as notice that companies doing business in Georgia will be subject to Georgia's jurisdiction. Justice David E. Nahmias stated, “Klein clearly holds that based on registration in Georgia there is general jurisdiction, and that may be very dubious from a constitutional standpoint, but not yet overruled."

Reversing this decades-old ruling on Georgia’s jurisdiction over out-of-state corporations is not something the Georgia Supreme Court is taking lightly as the decision will have a significant impact on commerce in the state. 

We will continue monitoring this case for further developments. Find out more by contacting the author or your DLA Piper relationship attorney.