Registration To Do Business In New York Is Not Automatic Consent To Personal Jurisdiction – Transport – United States – Mondaq News Alerts
United States:
Registration To Do Business In New York Is Not Automatic Consent To Personal Jurisdiction
28 December 2021
Schnader Harrison Segal & Lewis LLP
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New York joins the list of states whose business registration
statutes do not automatically constitute consent to general
personal jurisdiction, according to the Court of Appeals’
decision in Aybar v. Aybar. This product liability
action arose from an automobile accident that occurred in Virginia
in a Ford vehicle equipped with Goodyear tires that defendant
purchased from a third party in New York. Ford is a Delaware
corporation with its principal place of business located in
Michigan. Goodyear is an Ohio corporation with its principal
place of business located in Ohio. Both companies registered
to do business in New York, whose statute required designation of
New York’s secretary of state as an agent upon whom legal
process may be served in
actions against them.
Ford and Goodyear both moved to dismiss the action for lack of
general personal jurisdiction in New York, which was the only type
of personal jurisdiction asserted by plaintiff. The trial
court denied those motions and found that the companies had
consented to general personal jurisdiction in New York by virtue of
registering to do business there and appointing the secretary of
state as their agent for service of process. The Appellate
Division reversed, however, explaining that recent Supreme Court
precedent rendered unconstitutional that application of the
registration statute.
The Court of Appeals granted plaintiff’s leave to appeal
from the Appellate Division’s decision. The Court began
with the language of the statute itself, which merely provides that
any company wishing to do business in New York must register and
designate the secretary of state as its agent for service of
process. To read into those provisions any consent to general
personal jurisdiction improperly would “amend [the] statute by
adding words that are not there.”
The Court’s analysis did not end with the language of the
statute itself. Instead, the Court addressed a prior New York
judicial opinion widely regarded as holding that appointment of an
agent for service of process constitutes consent to general
personal jurisdiction, Bagdon v. Philadelphia & Reading
Coal & Iron Co., 217 NY 432 (1916). That matter
arose from an action filed in New York against a defendant that
registered to do business in New York, but the conduct giving rise
to the claims occurred solely in Pennsylvania.
Bagdon held that the defendant’s consent to service
effectively conferred personal jurisdiction over the defendant in
New York for any matter.
The Aybar Court explained that Bagdon must be
read in the context of personal jurisdiction jurisprudence as it
existed in 1916. At that time, the United States Supreme
Court’s opinion in Pennoyer v. Neff was the law of the
land. Pennoyer held that jurisdiction was proper
over a defendant anywhere the defendant could be found. Since
then, the Supreme Court has redrawn the boundaries of personal
jurisdiction, including through Daimler AG v. Bauman,
which held that general personal jurisdiction over a corporation
properly may be exercised only where it is “essentially at
home,” such as where it is incorporated and where its
principal place of business is located. According to the
Aybar Court, Bagdon no longer comports with
personal jurisdiction jurisprudence.
The Court of Appeals in Aybar thus created a
distinction between acceptance of service of process in New York
and the effect of that service. Where the
“effect” of service of process on a registered agent in
New York exceeds the constitutional boundaries articulated by the
Supreme Court in Daimler and its progeny, general personal
jurisdiction will not be found. Aybar v.
Aybar, 2021 N.Y. LEXIS 2134 (Oct. 7, 2021).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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