Companies authorized to conduct business in Georgia may not be aware of the potential ramifications: Merely registering to do business with the Georgia Secretary of State confers general personal jurisdiction in Georgia over a foreign company, according to the Supreme Court’s recent ruling Georgia in Cooper Tire & Rubber Co. v. McCall, 863 SE2d 81 (Ga. 2021).
Background of the corporate law “consent by registration”
Background: In 1917, the US Supreme Court ruled that a state statute that told a foreign corporation that it consented to general personal jurisdiction in that state by registering to do business in that state did not violate due process. Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling, 243 US 93, 95 (1917).
Then, in 1992, the Georgia Supreme Court ruled that any corporation registered to conduct business in Georgia is a Georgia resident for personal jurisdiction. Allstate Insurance Co. v. Klein, 262 Ga. 599, 601 (1992).
However, since the Georgia Supreme Court decision in Klein, the US Supreme Court has repeatedly held that general personal jurisdiction can be exercised only in the states where a corporation is essentially “home”—its state of incorporation and the state of its Client’s place of business. See Goodyear Dunlop Tires Operations, SA v. Brown, 564 US 915, 919 (2011); Daimler AG v. Bauman, 571 US 117, 137 (2014); Ford Motor Co. v. Montana Eighth Court. Dist. Ct., –US–, 141 S.Ct. 1017, 1024 (2021).
In Cooper Tire, Georgia Supreme Court upholds “consent by registration”
In Cooper Tire, a Florida plaintiff alleged that he was injured in a car accident in Florida. 863 SE2d at 83. He sued Cooper Tire, a Delaware incorporated tire manufacturer with principal offices in Ohio, in Georgia state court. ID. Cooper Tire sought termination on grounds of personal jurisdiction, but the plaintiff argued that Cooper Tire consented to general personal jurisdiction in Georgia by securing authorization to conduct business in the state. ID. at 83-84. The trial court granted Cooper Tire’s motion to dismiss, but the appeals court reversed it.
The Georgia Supreme Court granted certiorari, affirming its earlier decision in Klein, and ruling on general personal jurisdiction over Cooper Tire based on its registration to do business in Georgia. The court acknowledged the “tension” between its decision and the “course” of US Supreme Court cases that had narrowed general personal jurisdiction over foreign corporations, but argued that the US Supreme Court’s Pennsylvania Fire and subsequent ones had never expressly overridden cases. ID. at 84.
Simultaneously, Judge Bethel issued a clarion call to the Georgia Legislature, writing separately “for the sole purpose of calling the attention of the General Assembly to the special and precarious position of current Georgia law.” ID. at 92 (Bethel, J., agree). Judge Bethel reasoned that Georgia’s current approach of “consent by registration” “contradicts the often-expressed desire to make Georgia a ‘business-friendly’ state.” Id.
The “consent by registration” gap is widening between Georgia and other states
Since the Georgia Supreme Court issued its ruling in the Cooper Tire case in September 2021, at least three state supreme courts have declined to recognize a “consent-by-registration” approach to general personal jurisdiction. See Aybar v. Aybar, 37 NY3d 274, 283, 177 NE3d 1257, 1261, 156 NYS3d 104, 107 (2021) (“Accordingly, the registration of a foreign corporation for business and the appointment of an agent for service of proceedings in New York do not constitute consent to common jurisdiction under the simple terms of the Companies Act.”); Chavez v Bridgestone Americas Tire Operations, LLC, — P.3d —-, No. S-1-SC-37489, 2021 WL 5294978, at *9 (NM Nov. 15, 2021); Mallory vs Norfolk S Ry. Co., — A.3d —-, No. 3 EAP 2021, 2021 WL 6067172, at *17 (Pa. Dec. 22, 2021) (Repealing a state statute that constituted registration to do business as consent general personal jurisdiction as a breach of due process).
When the Georgia Legislature enters its 2022 session, it will have the opportunity to align Georgia’s personal jurisdiction doctrine with that of the US Supreme Court and other states. As Judge Bethel pointed out in his approval of Cooper Tire, current Georgia state law may bar foreign companies from registering to do business in Georgia to minimize their risk of being towed into the state for reasons of common personal jurisdiction to become.
