Genuine Parts Co. v. Cepec, 2016 WL 1569077 (Del. Apr. 18, 2016)
 

The Delaware Supreme Court is the latest court to weigh in on the increasingly contentious question of whether a foreign corporation’s compliance with a state’s statutory registration requirements amounts to a broad consent to general personal jurisdiction within that state.  Writing for the majority in a rare 4-1 split decision, Chief Justice Strine held that it would be “unacceptably grasping” in today’s economy to require foreign corporations to acquiesce to Delaware’s exercise of general jurisdiction as a price of doing business in the state.  In so ruling, the Court partially overruled its own decision in Sternberg v. O’Neil, 550 A.2d 1105 (Del. 1988), which held that registering to do business in the state pursuant to 8 Del. C. § 371 and designating an agent for service of process pursuant to 8 Del. C. § 376 amounted to “actual consent” to Delaware’s exercise of general jurisdiction.

Plaintiffs, who were Georgia residents, sued Genuine Parts, a Georgia corporation with its principal place of business in Georgia, in Delaware.  Plaintiffs alleged the defendant was liable for injuries suffered by one plaintiff after asbestos exposure during his employment at a warehouse in Florida owned by the defendant.  Relying on Sternberg, the plaintiffs alleged that Genuine Parts consented to general jurisdiction in Delaware by registering to do business and appointing a service agent.  Although fewer than 1% of Genuine Parts’s employees worked in Delaware and fewer than 1% of its stores were located in the state, the Delaware Superior Court found personal jurisdiction.

The Delaware Supreme Court disagreed, explaining that Sternberg’s holding was no longer tenable in light of Daimler AG v. Bauman, 134 S. Ct. 746 (2014).  Daimler held that Due Process permits general jurisdiction over a foreign corporation only when “that corporation’s affiliations with the [forum] State are so continuous and systematic as to render [it] essentially at home in the forum state.”  Although Daimler did not specifically overturn U.S. Supreme Court precedent holding that consent by registration is an independent and valid basis for general jurisdiction, Chief Justice Strine concluded Daimler’s guidance effectively did just that. 

Examining Delaware’s registration statutes, the Court noted that they were silent as to personal jurisdiction and, when considered with other provisions concerning foreign corporations and personal jurisdiction, found that registration and appointment of an agent to accept service could not be said, without more, to render a foreign corporation “essentially at home” in Delaware.  The Court found this outcome was imperative to “the ability of foreign corporations to operate effectively throughout our nation” and “critical to our nation’s economic vitality.”  Further, the decision invites other courts to follow the rationale of Genuine Parts and reject registration statutes as a basis for asserting general jurisdiction over foreign corporations.

In the wake of Genuine Parts, a foreign corporation can still be subject to specific jurisdiction in Delaware under the state’s long-arm statute.  Furthermore, the Delaware Supreme Court explicitly stated that neither its holding nor Daimler’s impacted the continued enforceability of contractual forum selection clauses, which remain a fully enforceable, consensual basis for jurisdiction.  But the Genuine Parts decision protects foreign corporations from general jurisdiction in Delaware simply on the basis of their registration to conduct business and provides a roadmap to other states to follow suit.