By David Dean on April 1, 2016

In February 2016, the United States Court of Appeals for the Second Circuit upheld dismissal of an out-of-state corporate defendant for lack of personal jurisdiction in an asbestos case, Brown v. Lockheed Martin Corp., No. 14-4083 (2nd Cir. Feb. 28, 2016).  courtIn finding that the Connecticut District Court could not exercise personal jurisdiction over defendant Lockheed Martin Corp., the Court rejected plaintiff’s argument that Lockheed’s registration to do business in Connecticut constituted consent to jurisdiction.

Conceding that there was no basis for specific personal jurisdiction—since plaintiff was a resident of Alabama and none of the alleged injuries occurred in Connecticut—plaintiff argued instead that Lockheed was subject to the general jurisdiction of the Connecticut district court.  General, or “all purpose,” jurisdiction allows a plaintiff to bring any and all claims against a defendant—even those wholly unrelated to the forum state.  In Daimler AG v. Bauman, 134 S. Ct. 746 (2014), the United States Supreme Court set forth a demanding standard for when a foreign corporation is amenable to general jurisdiction.  The Court held that the exercise of general jurisdiction comports with Due Process only when the corporation’s contacts render it “essentially at home” in the forum state.  The Court emphasized that, apart from exceptional cases, a corporation is “at home” only in its state of incorporation and its principal place of business.  Since the Daimler decision, plaintiffs have heavily relied on the “consent” argument to defeat challenges to general jurisdiction.

The Brown plaintiff argued that Lockheed was subject to general jurisdiction on two alternative grounds.  First, plaintiff maintained that Lockheed’s contacts with Connecticut were sufficient to render it “essentially at home” in the state, satisfying the standard established in Daimler.  Alternatively, plaintiff argued that Lockheed’s designation of an agent for service of process in Connecticut, and registration to do business in the state, constituted consent to the general jurisdiction of the district court.

The Second Circuit quickly dispensed with plaintiff’s minimum contacts argument. The Court “comfortably” concluded that Lockheed’s contacts with the state were insufficient to meet the “high bar” for general jurisdiction established by the Supreme Court in Daimler.  The Court emphasized that, under Daimler’s rubric, contacts with the forum state should be considered not just in absolute terms, but in proportion to the corporation’s total activities.  For example, although Lockheed employed 30 to 70 people in Connecticut, and derived $160 million in revenue from the state during the relevant period, this amounted to only 0.05% of its total workforce, and never more than 0.107% of its annual revenue.

The District Court rejected plaintiff’s consent argument on constitutional grounds, holding that it would violate Due Process to equate registration to do business with consent to general jurisdiction. The Second Circuit ultimately resolved the case without reaching the constitutional question, and instead issued a narrower holding based on statutory interpretation.  The Court determined that Connecticut law was “ambiguous” as to whether registration or appointment of an agent for service of process constituted consent to jurisdiction.  Absent clear statutory language or case law, the Court opted to interpret the statute narrowly, applying the principle of constitutional avoidance.  The Court “cautioned” that a broader interpretation of the statute would “implicate Due Process and other constitutional concerns.”

The Second Circuit issued a strongly-worded rebuke of plaintiff’s suggestion that a Due Process inquiry is unnecessary where a corporation has “consented” to jurisdiction by registering to do business:

If mere registration . . . sufficed to confer general jurisdiction by implicit consent, every corporation would be subject to general jurisdiction in every state in which it registered, and Daimler’s ruling would be robbed of meaning by a back‐door thief.

Several jurisdictions continue to wrestle with personal jurisdiction in asbestos cases, and we expect to see more case law on this issue emerge.