To sue in a particular forum, a plaintiff must show personal jurisdiction over the defendant(s) in compliance with that forum’s long-arm statute and the Constitution’s Due Process Clause. Personal jurisdiction comes in two forms – specific jurisdiction or general jurisdiction. But until recently, general jurisdiction played little or no role in the defense strategy of large companies conducting business nationally. Unless the plaintiff had named the wrong corporate entity as a defendant, most companies conceded personal jurisdiction in every state because they do business in every state; companies (and courts) usually accepted the general jurisdiction mantra of “continuous and systematic” operations to be sufficient. Even with the United States Supreme Court, general jurisdiction fell into the shadows, while specific jurisdiction took center stage. The Supreme Court issued scores of opinions featuring specific jurisdiction to a mere three opinions on general jurisdiction.¹ However, the Supreme Court began pulling general jurisdiction from the shadows in two recent opinions beginning in 2011 in Goodyear Dunlop Tires Operations, S.A. v. Brown² and coming into full bloom in its 2014 unanimous decision in Daimler AG v. Bauman.³ Finally, general jurisdiction was fully in the spotlight. And in this new light, general jurisdiction shines as a potential rising star of corporate defense strategy.

THE BEGINNING: INTERNATIONAL SHOE AND ITS PROGENY

As its name implies, “specific” jurisdiction is premised on the relationship between the plaintiff’s claims and the defendant’s forum state activities. “General” jurisdiction, on the other hand, gives a court the power to require a defendant to answer all lawsuits in the state – whether or not the claims are related to the defendant’s presence or activity in the forum state.

In 1945, the Supreme Court laid the foundation for general personal jurisdiction against corporate defendants in International Shoe Company v. Washington.⁴ The Supreme Court adopted a broad interpretation of personal jurisdiction and the limits placed on it by the Due Process Clause. The Supreme Court issued the often-quoted rule that the defendant need only have certain “minimum contacts” with the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’”⁵ For the corporate defendant, the Court explained that “the continuous corporate operations” in the forum state could be ‘so substantial and of such a nature as to justify suit against it in causes of action arising from dealings entirely distinct from those activities.’”⁶

Seven years later, the Supreme Court formalized International Shoe’s “continuous and systematic” activities in Perkins v. Benguet Consolidated Mining Company.⁷ In Perkins, the foreign corporate defendant had relocated its operations temporarily from the Philippines to Ohio as a result of Japanese occupation of the Philippines during World War II. The Supreme Court held that the company was subject to general personal jurisdiction in Ohio because its wartime activities in Ohio – though limited in time – were “continuous and systematic.”⁸ Essentially, the company’s principal place of business was temporarily in Ohio.

Although Perkins presented unusual facts not likely to arise in other cases, in the decades that followed, many circuit courts of appeal embraced Perkins’ holding as the definitive test for general personal jurisdiction.⁹ For more than 30 years, the Supreme Court remained silent as to general personal jurisdiction. In 1984, the Supreme Court repeated its “continuous and systematic” formulation of general jurisdiction in Heliocopteros Nacionales de Columbia S.A. v. Hall.¹⁰ A single footnote in Keeton v. Hustler Magazine, Inc.,¹¹ issued by the Court that same year, suggested that its general jurisdiction decisions were largely fact-driven and that the Court maintained reservations about broad application of the “continuous and systematic” test. The Keeton Court emphasized that the “continuous and systematic” activities giving rise to general personal jurisdiction over the corporate defendant in Perkins were so pronounced that they effectively rendered the forum state “the corporation’s principal, if temporary, place of business.”¹²

Thus, for more than 60 years after International Shoe, general jurisdiction simply was not the focus of the Supreme Court’s personal jurisdiction jurisprudence, and “continuous and systematic” activities persisted as the catch-phrase of general jurisdiction.

THE OTHER SHOE DROPS: GOODYEAR AND DAIMLER

The accepted notion of “continuous and systematic” activities creating general personal jurisdiction in a state, coupled with a growing global economy and the rise of online commerce, contributed to companies’ resignation – and plaintiffs’ delight – that they could be called to defend themselves against lawsuits in all 50 states. Conventional wisdom began to change in 2011 in Goodyear¹³ when the Supreme Court finally began to formally rein in the boundaries of general jurisdiction. The underlying facts concerned two North Carolina residents who were killed in a bus accident in France. Plaintiffs sued the American parent company and several of its foreign subsidiaries in North Carolina, alleging that the defendants’ tires caused the accident. Reversing the lower court, the Supreme Court declined to exercise general personal jurisdiction over the foreign corporations. Although the products of the foreign companies continuously reached the forum state of North Carolina, the Court held these contacts were not so “continuous and systematic as to render [the corporate defendant] essentially at home in the forum State.”¹⁴ This new “at home” rule arose from Keeton’s characterization of the facts of Perkins, but its limitations were still somewhat unclear until January of this year in Daimler.

In Daimler,¹⁵ the Supreme Court clarified the “at home” standard. That clarification further limited the reach of general personal jurisdiction over corporate defendants. The Court explicitly held that a corporation is not “at home” in a forum merely because it “engages in a substantial, continuous and systematic course of business” there.¹⁶ “That formulation,” the Court held, “is unacceptably grasping.”¹⁷ The 22 plaintiffs in Daimler were Argentinian nationals, seeking damages in California for harms allegedly suffered in Argentina. “[G]iven the absence of any California connections” to the harms alleged, specific jurisdiction was lacking.¹⁸ Thus, the plaintiffs were forced to rely upon general personal jurisdiction.

In particular, the plaintiffs alleged that Daimler’s Argentinian subsidiary had collaborated with state security forces during Argentina’s “Dirty War” to kidnap, detain, torture and kill certain of its employees. Plaintiffs sued Daimler – a German public stock company headquartered in Stuttgart – in California, asserting general jurisdiction there based on the unrelated activities of another Daimler subsidiary, Mercedes-Benz USA (“MBUSA”) – a Delaware corporation with its principal place of business in New Jersey. The Court ruled that Daimler’s contacts with California, through MBUSA who distributed Daimler-manufactured vehicles throughout the United States, were not significant enough to render it “at home” in the forum state.

As such, Daimler changed more than 60 years of conventional wisdom in measuring general personal jurisdiction. As a general rule, a corporate defendant is only “at home” and – in the absence of specific personal jurisdiction – may be sued only in two locations: (1) its state of incorporation and (2) the state in which its principal place of business is located.¹⁹

THAT’S THE RULE – AND NO EXCEPTIONS

In articulating its rule regarding general jurisdiction, the Supreme Court called the corporate defendant’s state of incorporation and the state of its principal place of business the “paradigm all-purpose forums” or “exemplar bases” for general jurisdiction.²⁰ Plaintiffs have latched on to these phrases to push for exceptions to the general rule. Although it is theoretically possible that circumstances could give rise to another location being so similar to the “exemplar bases” or “paradigm all-purpose forums” that it could also invoke general jurisdiction,²¹ the Supreme Court’s additional requirement – that the volume of activities in the forum not be significantly outweighed by the defendant’s operations elsewhere – makes an exception to the general rule extremely rare.

The Supreme Court has expressly rejected the arguments that plaintiffs typically have asserted to gain access to a forum based on general jurisdiction. For example, substantial revenues from in-state sales are insufficient; MBUSA’s “substantial” in-state revenue, which accounted for 2.4% of Daimler’s worldwide sales, or $4.6 billion, did not make Daimler “at home” there. Likewise, numerous sales representatives and multiple offices did not warrant an exception to the new rule. To date, no courts have found the factual circumstances of any case warranted an exception to the rule articulated in Daimler.²²

In the first post-Daimler opinion on general jurisdiction from a U.S. Circuit Court of Appeal, Monkton Insurance Services, Ltd. v. Ritter, the Fifth Circuit expressly stated that Daimler’s rule makes it “incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.”²³ The plaintiff in Monkton, an insurance manager, was a Texas resident who at all relevant times remained in Texas.²⁴ The third-party defendant was a bank organized and regulated under Cayman Islands law and located on the island of Grand Cayman. Plaintiff based its “continuous and systematic” argument on the bank’s website, phone conversations with the defendant in Texas (initiated by defendant, not the bank) and its wire transfers to Texas banks. Id. at *5. But the Fifth Circuit – applying Daimler – rejected plaintiff’s argument that the Grand Cayman bank’s contacts were continuous and systematic enough to establish general jurisdiction in Texas. The court affirmed the district court’s dismissal of the Grand Cayman bank for lack of personal jurisdiction.²⁵

NOT JUST THE STAR FOR NON-US SUBSIDIARIES

The change in the test for general jurisdiction does not just affect foreign subsidiaries in the colloquial sense of non-U.S. corporations. A mass tort judge in Cook County, Illinois – a longstanding plaintiff-friendly jurisdiction – noted that “international relations,” a public policy reason cited by the Supreme Court in support of its rule in Daimler, was not a basis for distinguishing Daimler.²⁶ Domestic companies with operations in many states no longer need to resign themselves to assertions of personal jurisdiction in each of those states. Indeed, the Supreme Court’s decision has the potential to significantly impact litigation against corporate defendants in a number of positive ways from restricting forum-shopping to providing new avenues for removal of multi-plaintiff actions.

Corporate defendants have become intimately familiar with the handful of “magnet jurisdictions” that forum-shopping plaintiffs flock to by the hundreds or thousands. The new general jurisdiction rule, however, means that doing business in that state – no matter how much revenue those operations bring – is no longer dispositive for personal jurisdiction. Unless the facts of a particular plaintiff’s case establish specific personal jurisdiction, general personal jurisdiction challenges should be considered in all states other than the state of incorporation and the company’s principal place of business.

And personal jurisdiction is a claim- and plaintiff-specific inquiry;²⁷ therefore, corporate defendants need not concede personal jurisdiction in multi-plaintiff cases in which only one (or some) of the plaintiffs can connect the alleged tort with the forum state. Accordingly, Daimler also provides a removal tool to combat the common practice by plaintiffs’ lawyers of joining dozens of unrelated, out-of-state plaintiffs with one or two in-state plaintiffs and bringing all claims in a single lawsuit in an attempt to thwart the defendant’s right to remove the case to federal court. In these cases, none of the out-of-state plaintiffs alleges taking the drug or being implanted with the medical device in the forum state, one or two resident plaintiffs are diversity-destroyers, sharing their citizenship with the corporate defendant. In such a situation, corporate defendants now can move to dismiss the out-of-state plaintiffs for lack of personal jurisdiction and simultaneously remove the case to federal court on the basis of fraudulent or sham joinder. Because there is no personal jurisdiction in that forum state over the claims alleged by the out-of-state plaintiffs against the defendants, the plaintiffs cannot establish a cause of action against those defendants in that state.

For example, in the In re Plavix mass tort litigation in Cook County, Illinois, 486 non-resident plaintiffs whose claims had nothing to do with the forum state were dismissed on this basis. The court rejected plaintiffs’ arguments that the corporate defendants’ contacts with the forum – which included a branch office, sales reps and other employees, as well as $1.7 billion in revenue from sales of Plavix to Illinois residents – gave rise to general personal jurisdiction over the defendants. And the removals and associated briefing in at least a dozen cases currently pending in, or pending transfer to, the six Pelvic Repair System Products Liability MDLs in the Southern District of West Virginia likewise rely upon Daimler as the basis for removal and dismissal or severance of the out-of-state plaintiffs.²⁸ Similarly, this basis for removal was recently endorsed by a United States District Judge for the Southern District of Texas. In his November 10, 2014, order,²⁹ the judge denied plaintiffs’ motion to remand and granted the corporate defendants’ motion to dismiss the 76 out-of-state plaintiffs and retain jurisdiction over the one remaining plaintiff, a Texas resident.

CONCLUSION: WILL THE RESURGENCE OF GENERAL JURISDICTION END SUCCESSFUL FORUM SHOPPING?

While it is still too early to tell whether Daimler has sounded the death knell for forum-shopping or just how big of a star general jurisdiction will be for corporate defendants, one takeaway is clear: From this point forward, lack of personal jurisdiction should be back on the shortlist of defense strategies to consider if the company is sued anywhere other than the location of the alleged tort, the company’s principal place of business or its state of incorporation.

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[1] Daimler at 755 (“Since International Shoe, ‘specific jurisdiction has become the centerpiece of modern jurisdiction theory while general jurisdiction [has played] a reduced role.’” “Our post-International Shoe opinions on general jurisdiction, by comparison, are few.”)

[2] 131 S. Ct. 2846 (2011).

[3] 134 S. Ct. 746 (2014).

[4] 326 U.S. 310 (1945).

[5] 362 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

[6] Id. (citing Missouri, K. & T.R. Co. v. Reynolds, 255 U.S. 565 (1921) and collecting cases).

[7] 342 U.S. 437, 438, 449 (1952).

[8] Id. at 438.

[9] See, e.g., Harlow v. Children’s Hospital, 432 F. 3d 50, 57, 64 (1st Cir. 2005); Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1996); Gorman v. Ameritrade Holding Corp., 293 F.3d 560, 568 (D.C. Cir. 2002).

[10] 466 U.S. 408, 416 (1984).

[11] 465 U.S. 770 (1984).

[12] Id. at 779 n. 11.

[13] Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011).

[14] Id. (emphasis added).

[15] 134 S. Ct. 746 (2014). The decision was authored by Justice Ginsburg and was joined by all except Justice Sotomayor, who wrote a concurring opinion.

[16] Id. at 761.

[17] Id.

[18] Id. at 751.

[19] See id. at 760-61; see also Earnest v. Boston Scientific Corp., 2:12-cv-6521, 20134 WL 1566734 (S.D.W. Va. Apr. 15, 2013) (Goodwin, J., presiding).

[20] Daimler, 134 S. Ct. at 760-61.

[21] See id. at 761 n. 19 (“We do not foreclose the possibility that in an exceptional case, see, e.g. Perkins, . . . But this case presents no occasion to explore that question, because Daimler’s activities in California plainly do not approach that level.”)

[22] Even in Texas—home to numerous favorite venues of plaintiffs—federal district courts thus far have rejected plaintiffs’ arguments of general jurisdiction over corporate defendants not incorporated in Texas and with their principal places of business in other states. See, e.g., Air Tropiques, SPRL v. Northern & Western Ins. Co., 2014 U.S. Dist. LEXIS 44255, at *23, 28-31 (S.D. Tex. Mar. 31, 2014) (noting that “the Supreme Court has stepped away from the continuous-andsystematic-contacts test in favor of an even more stringent test” and holding that plaintiffs could not establish general personal jurisdiction in Texas over foreign insurance company with its principal place of business in St. Kitts, even though defendant has an “administrative office” in Texas and its “managing agent” was a Texas corporation).

[23] Monkton Ins. Servs., Ltd. v. Ritter, No. 13-50941, –F.3d–, 2014 WL 4799716, at *2 (5th Cir. Sept. 26, 2014).

[24] Monkton, 2014 WL 4799716, at *1.

[25] Id.

[26] See In re Plavix, 2014 WL 3928240, at *6 (Ill. Cir. Cook Co. Aug. 11, 2014).

[27] See Heliocopteros, 466 U.S. 408, 414 n. 8 (1984) (noting that each plaintiff must show that his or her claims arise out of or related to the defendant’s contacts with the forum state); see also Phillips Exeter Academy v. Howard Phillips Fund, Inc., 196 F.3d 284 (1st Cir. 1999) (examining plaintiff’s contract and tort claims separately in its specific jurisdiction analysis and noting, “[q]uestions of specific jurisdiction are always tied to the particular claims asserted”); McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009) (noting that “specific personal jurisdiction is a claim-specific inquiry”).

[28] The Judicial Panel on Multidistrict Litigation (“JPML”) has announced that it will consider transfer of five such cases at its December 4, 2014, hearing. See 12/4/14 Hearing Session Order, available on the JPML’s website, http://www.jpml.uscourts.gov/sites/jpml/files/Hearing_Order-12-4-14.pdf (last accessed Nov. 6, 2014).

[29] Locke et.al. v. Ethicon (USDC, SDTX) 4:14-CV-2648 (November 10, 2014)

Finis