New York Court Of Appeals Confirms Registration To Do Business Under Business Registration Statute Does Not Constitute Consent To General Jurisdiction

• Published date: 11 January 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Cahill Gordon & Reindel LLP
• Author: Mr Joel Kurtzberg and Adam S. Mintz

For more than a century, companies that registered to do business under state business registration statutes were deemed to have consented to general personal jurisdiction ' i.e., jurisdiction over all disputes ' in that state, regardless of any link between the alleged misconduct and the forum. That was thrown into doubt in 2014, when the Supreme Court of the United States held in Daimler AG v. Bauman¹ that, except in extraordinary cases, a corporate defendant is only subject to general jurisdiction where it is "at home," meaning where it is incorporated or has its principal place of business.²

Before Daimler, courts, including those in New York, had consistently held that registering to do business provided a basis for general jurisdiction.³ Since Daimler, companies have argued that business registration statutes can no longer provide a basis for consent to general jurisdiction. Courts that have considered the question have, with few exceptions, agreed.

On October 7, 2021, in Aybar v. Aybar,⁴ the New York Court of Appeals definitively resolved this question, holding that registering to do business and consenting to service of process under the New York Business Corporation Law ("NYBCL") do not constitute consent to general personal jurisdiction. While the decision focused on an interpretation of the NYBCL, its reasoning strongly suggests that in New York, registration to do business under any statute does not amount to consent to general jurisdiction.

I. Background

In 2014, the U.S. Supreme Court in Daimler dramatically changed the law of general jurisdiction. The Daimler court rejected the practice of exercising general jurisdiction over a company whenever it conducted substantial business activities in the forum and instead limited general jurisdiction over a company to only those forums where it is "at home,"⁵ which it defined to be the corporation's principal place of business and state of incorporation in all but the most extraordinary of cases.⁶

The Daimler decision brought into doubt a line of cases dating back to 1917 that held that companies registered to do business under statutes that contained consent to service of process provisions automatically consented to general jurisdiction in that state. In Pennsylvania Fire Ins. Co. v. Gold Issue Mining Co.,⁷ a Pennsylvania company insured buildings in Colorado under a policy issued in Colorado. Seeking to recover on the policy, the policyholder sued the insurer in Missouri, where the insurer had obtained a license to conduct business. In applying for the license, the insurer had filed with the Missouri insurance superintendent "a power of attorney consenting that service of process upon the superintendent [of insurance] should be deemed personal service upon the company. . . ."⁸ The Court concluded that this statutory power of attorney subjected the Pennsylvania company to general personal jurisdiction in Missouri.⁹ Pennsylvania Fire and the case...