Anna Aybar et al., Appellants, v Jose A. Aybar, Jr., et al., Defendants, and Ford Motor Company et al., Respondents. U.S. Tires and Wheels of Queens, LLC, Nonparty Respondent.
2021 NY Slip Op 05393 [37 NY3d 274]
Court of Appeals of the State of New York
October 7, 2021
37 N.Y.3d 274
Singas, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected through Wednesday, January 5, 2022
Aybar v Aybar, 169 AD3d 137, affirmed.
OPINION OF THE COURT
Singas, J.
The
In July 2012, defendant Jose A. Aybar, Jr., a New York resident, was operating a Ford Explorer on an interstate highway
Aybar purchased the vehicle in New York from a third party. Ford did not sell the vehicle in this state in the first instance, nor did Ford design or manufacture the vehicle here. Similarly, Goodyear designed, manufactured, and initially sold the tire in other states. It is undisputed that Ford was incorporated in Delaware and maintains its principal place of business in Michigan and that Goodyear was incorporated and has its principal place of business in Ohio. At all relevant times, Ford and Goodyear were registered with the New York Secretary of State as foreign corporations authorized to do business in this state and had appointed in-state agents for service of process in accordance with the
Ford and Goodyear separately moved to dismiss the complaint against them pursuant to
Supreme Court denied the motions in separate orders, concluding that New York courts could exercise general jurisdiction over Ford and Goodyear (2016 NY Slip Op 31138[U] [Sup Ct, Queens County 2016]; 2016 NY Slip Op 31139[U] [Sup Ct, Queens County 2016]). Citing Bagdon v Philadelphia & Reading Coal & Iron Co. (217 NY 432 [1916]), the court determined that Ford and Goodyear consented to general jurisdiction by registering to do business in New York as a foreign corporation and designating a local agent for service of process.
The Appellate Division reversed the orders and granted the motions of Ford and Goodyear to dismiss the complaint as to them (see 169 AD3d 137, 152-153 [2d Dept 2019]). Citing Bagdon and other authority, the Court agreed with the motion court that “[t]here has been longstanding judicial construction” that a foreign corporation‘s registration to do business in New
We granted plaintiffs leave to appeal from the Appellate Division order (see 34 NY3d 905 [2019]) and now affirm.
To begin, we clarify what issues are—and are not—presented here. Plaintiffs concede that they did not assert below that New York courts had specific jurisdiction over Ford and Goodyear under New York‘s long-arm statute,
As relevant here, the
These statutory provisions plainly require that, in order to do business in New York, a foreign corporation must register and designate an in-state agent for service of process. The statutes do not, however, condition the right to do business on consent to the general jurisdiction of New York courts or otherwise afford general jurisdiction to New York courts over foreign corporations that comply with these conditions. A different reading would improperly “amend [the] statute by adding words that are not there” (American Tr. Ins. Co. v Sartor, 3 NY3d 71, 76 [2004]) and would impermissibly “read into a statute a provision which the [l]egislature did not see fit to enact” (Matter of Chemical Specialties Mfrs. Assn. v Jorling, 85 NY2d 382, 394 [1995] [internal quotation marks and citation omitted]). Accordingly, a foreign corporation‘s registration to do business and designation of an agent for service of process in New York does not constitute consent to general jurisdiction under the
In Bagdon, the plaintiff, a New York resident, was injured while working in Pennsylvania for the defendant, a Pennsylvania corporation (see 217 NY at 433). The parties agreed that the defendant would compensate the plaintiff for his injuries, and the plaintiff later commenced the action in New York asserting a breach of that contract. The defendant conceded that it was engaged in unrelated business in New York. It was also registered to do business here and had designated an in-state agent to accept service of process in accordance with the registration statutes in effect at that time (see id.; former General Corporation Law § 16).4 The plaintiff commenced the action by
Resolving that narrow issue, we held that the service had the effect of conferring jurisdiction over the defendant corporation for any subject matter jurisdiction properly exercised by New York courts. We first determined that the defendant‘s designation of an in-state agent for service of process, in compliance with the statute, was “a real consent” or “true contract” for the designated person to accept “process against the corporation” (id. at 436 [internal quotation marks omitted]). In other words, the designation amounted to consent to in-state service. We did not conclude, however, as the dissent would have it, that the corporation‘s registration and designation of an agent, by itself, constituted consent to general jurisdiction (see dissenting op at 300). If we had, our analysis would have ended with our determination that the defendant‘s statutory consent to accept service through its designated agent was effective. We continued our analysis, however, separately “ascertain[ing] the meaning and defin[ing] the effect of” the service made in accordance with the defendant‘s consent to accept service under the statute (Bagdon, 217 NY at 436).
We examined this effect-of-service question through the lens of the then-applicable jurisdiction principles and in light of the fact that the defendant‘s presence in New York was not in dispute. Indeed, the defendant conceded that it was doing business in New York, had registered to do business here, and had consented to service under the then-governing General Corporation Law by designating an in-state agent to accept service (see id. at 433). We ultimately held that the effect of the in-state service on the defendant‘s designated agent was to provide New York courts with what we would now term “general
Bagdon has been interpreted by others as holding, under the common law, that foreign corporations that have abided by the aforementioned registration and designation statutes have thereby contractually consented not only to service of process on a designated agent, but to general jurisdiction in New York. However, any such interpretation is a misreading of our decision that fails
A year after Bagdon was decided, we again addressed whether personal jurisdiction existed over a foreign corporation in Tauza v Susquehanna Coal Co. (220 NY 259 [1917]). In Tauza, the foreign corporation was not registered to do business in New York and had not designated an in-state agent for service of process. The case therefore turned on the propriety of the plaintiff‘s in-state service on the foreign corporation‘s managing sales agent (see former Code Civ Pro § 432 [3]). After reviewing the extent of the defendant corporation‘s business activities in New York, we concluded that it was present in New York because it was “engaged in business within this state” to “such a degree as to subject” it “to the jurisdiction of our courts” (220 NY at 266, 268). Because the defendant foreign corporation was “here,” we explained that “it may be served” with process (id. at 269). Citing Bagdon, we
Neither case “established ‘general’ personal jurisdiction through consent by registration” (dissenting op at 301-302). We never held in Bagdon that designation of an agent constituted consent to general jurisdiction. Moreover, the analysis a court would undertake to determine the effect of service in New York on a designated agent would be different today than it was at the time of our decision in Bagdon.
In that regard, it has consistently been understood that “[t]he Due Process Clause of the Fourteenth Amendment sets the outer boundaries of a state tribunal‘s authority to proceed against a defendant” (Goodyear, 564 US at 923). “Due process requires that the defendant be given
Supreme Court jurisprudence defining the contours of the personal jurisdiction analysis has evolved significantly over time. Shortly after the Fourteenth Amendment was ratified, the Supreme Court determined in Pennoyer that “[t]he authority of every tribunal is necessarily restricted by the territorial limits of the [s]tate in which it is established” (95 US at 720). In other words, under Pennoyer a defendant had to be present within the court‘s territorial jurisdiction before the court could assert personal jurisdiction over that defendant (see International Shoe Co. v Washington, 326 US 310, 316 [1945]). Pennoyer‘s territorial approach governed when we decided Bagdon.
Decades later, the Supreme Court decided International Shoe, a “transformative decision on personal jurisdiction” (BNSF R. Co. v Tyrrell, 581 US —, —, 137 S Ct 1549, 1557 [2017]) and a “momentous departure from Pennoyer‘s rigidly territorial focus” (Daimler, 571 US at 128; see World-Wide Volkswagen Corp., 444 US at 293). There, the Court expanded the states’ permissible exercise of jurisdiction by holding that they could exercise personal jurisdiction over an out-of-state defendant, in accord with the Due Process Clause, if the defendant has “certain minimum contacts with [the state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice” (International Shoe, 326 US at 316 [internal quotation marks and citation omitted]). “Following International Shoe, ‘the relationship among the defendant, the forum, and the litigation, rather than the mutually exclusive sovereignty of the [s]tates on which the rules of Pennoyer rest, became the central concern of the inquiry into personal jurisdiction’ ” (Daimler, 571 US at 126, quoting Shaffer v Heitner, 433 US 186, 204 [1977]; see Keane, 94 NY2d at 265 [“To satisfy the jurisdictional basis there must be a constitutionally adequate connection between the defendant, the (s)tate(,) and the action“]).
International Shoe crystallized the two categories of personal jurisdiction that we now recognize, “general or all-purpose jurisdiction . . . and specific or case-linked jurisdiction” (Goodyear, 564 US at 919). The former permits a court to exercise jurisdiction over a defendant in connection with a suit arising from events occurring anywhere in the world, whereas the latter permits a court to exercise jurisdiction only where the suit arises out of or relates to the defendant‘s contacts with the
As explained, Bagdon was decided in 1916 at the time of Pennoyer‘s territorial approach, long before International Shoe and the Supreme Court‘s subsequent cases on personal jurisdiction.7 Thus, despite the trajectory of Supreme Court precedent since Bagdon, the decision may still be read to support the
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Anna Aybar et al., Appellants, v Jose A. Aybar, Jr., et al., Defendants, and Ford Motor Company et al., Respondents. U.S. Tires and Wheels of Queens, LLC, Nonparty Respondent.
2021 NY Slip Op 05393 [37 NY3d 274]
Court of Appeals of the State of New York
October 7, 2021
Wilson, J. (dissenting). Jose Aybar, Jr., a resident of New York, owned a Ford Explorer equipped with Goodyear tires in New York, which was registered to him with the New York Department of Motor Vehicles. He purchased it in New York. On July 1, 2012, he was driving the Explorer, with members of his family as passengers, on a return trip from a vacation in Florida back to New York. All passengers were New York residents. On I-85 in Brunswick County, Virginia, the car crashed and rolled over multiple times. Three passengers, including an eight-year-old girl, died; three others, including a 14-year-old girl, were seriously injured. The six passengers, or their estates, filed this suit in New York against Ford Motor Company, The Goodyear Tire & Rubber Co. and others. The complaint alleged that the accident was caused by Ford and Goodyear‘s negligence. It is undisputed that both Ford and Goodyear: (a) have registered to do business in New York; (b) conduct a substantial amount of business in New York; and (c) are not incorporated in New York.
Where can the plaintiffs sue Ford and Goodyear? The following points are undisputed. Ford could have been sued in Delaware and Goodyear in Ohio because, under the doctrine of general jurisdiction, those states are their homes, where they can be sued for anything at all. Ford and Goodyear could both have been sued in Virginia, because the doctrine of specific jurisdiction allows them to be sued where the accident occurred.
The majority concludes that Ford and Goodyear did not consent to our courts’ general jurisdiction by registering to do business here. The majority rests its conclusion on three propositions, none of which supports it.
First, it conducts a de novo statutory interpretation of the
Second, it explains United States Supreme Court jurisprudence on general and specific jurisdiction, despite noting that neither doctrine is relevant to this case (majority op at 282). The question is whether Ford and Goodyear have consented to New York‘s exercise of personal
Finally, it reinterprets Bagdon. But its novel reinterpretation of Bagdon and the registration statute it construed is incorrect, flying in the face of a century of jurisprudence firmly notifying businesses that registration to do business in our state subjects them to personal jurisdiction here.
The majority does not dispute that a defendant may consent to personal jurisdiction where it otherwise would not exist. The majority also does not dispute that actions, such as registering to do business in a state, could constitute consent to personal jurisdiction if that consequence were established by law. The sole question in this appeal, then, is whether New York law establishes that corporate registration equals consent to personal jurisdiction. It has, for a century and a half.
I.
As the majority observes, the
The majority‘s decision to interpret the
II.
Although the majority relies on International Shoe, Daimler AG v Bauman (571 US 117 [2014]) and Goodyear Dunlop Tires Operations, S. A. v Brown (564 US 915 [2011]), those cases do not support the majority‘s holding; indeed, the cases themselves tell us so. Jurisdiction may be established in three ways: specific jurisdiction (where the claim arose); general jurisdiction (where the defendant is at home); or consent. The majority recognizes that International Shoe substantially expanded the places where personal jurisdiction over defendants could be asserted, mainly by differentiating between specific and general jurisdiction and allowing specific jurisdiction to empower courts located where the claim arose, regardless of the extent of the defendant‘s presence. The majority points to Daimler and Goodyear as contracting general jurisdiction and emphasizing specific jurisdiction as the principal means by which personal jurisdiction over foreign defendants (whether corporate or natural) has been expanded. True though that may be, it has nothing to do with jurisdiction by consent.
At most, the majority demonstrates that the expansion of specific jurisdiction has in many cases provided an alternative way to address the problem of reaching foreign defendants that have caused injury in a state other than their home. The expanded availability of specific jurisdiction may make resort to consent-based jurisdiction less necessary, but it does not impugn its vitality in the least.
Indeed, the Supreme Court has been careful, in the very decisions relied on by the majority, to wall off consent-based jurisdiction theories from its developments around specific and general jurisdiction. In International Shoe, the Court tacitly affirmed the validity of consent-based jurisdiction by registration by noting that ” ‘[p]resence’ in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given” (326 US at 317 [emphasis added]). In Daimler, the Court noted that its holding on general jurisdiction applied only when a corporate defendant “has not consented to suit in the forum” (571 US at 129, quoting Goodyear, 564 US at 927-928). Likewise, in BNSF R. Co. v Tyrrell the Court held that neither general nor specific jurisdiction in that case existed “absent consent“—thus clearly separating its holding from any claim of jurisdiction based on consent (581 US —, —, 137 S Ct 1549, 1556 [2017]). In short, whatever the Supreme Court has done with regard to general and specific jurisdiction, it has been careful not to disturb settled law establishing that a State may demand consent to jurisdiction as a condition of doing business.
For more than a century, courts and commentators have widely understood that by registering to do business in New York, a corporation consents to personal jurisdiction in our courts. The majority asserts that Bagdon did not create a common-law consent to general jurisdiction (majority op at 286) but rather is merely a case about service. Bagdon is not a case about service, nor is it a common-law rule. It is our interpretation of a statute. It is not even our first interpretation of that statute. Until now, all our interpretations of that statute have been consistent: the legislative purpose in requiring foreign businesses to register was to obtain jurisdiction
A.
We must start not with Bagdon, not with Pennoyer v Neff (95 US 714 [1878]), but instead with M‘Queen v Middletown Mfg. Co. (16 Johns 5 [NY Sup Ct 1819]). At that time, a corporation was deemed to exist only in its state of incorporation and could be subject to judicial process in that state only, by service on its chief officer (id. at 6-7; see generally Edward Quinton Keasbey, Jurisdiction over Foreign Corporations, 12 Harv L Rev 1 [1898]). As explained by the United States Supreme Court:
“The principle that a corporation must dwell in the place of its creation, and cannot, as said by Mr. Chief Justice Taney, migrate to another sovereignty, coupled with the doctrine that an officer of the corporation does not carry his functions with him when he leaves his State, prevented the maintenance of personal actions against it. There was no mode of compelling its appearance in the foreign jurisdiction. Legal proceedings there against it were, therefore, necessarily confined to the disposition of such property belonging to it as could be there found; and to authorize them legislation was necessary” (St. Clair v Cox, 106 US 350, 354 [1882]).
Thus, the challenge was not one of service—the burden of locating a corporate defendant and physically delivering papers. The issue was personal jurisdiction over the corporation.
The Court next described the pressing need to obtain personal jurisdiction over foreign corporations in America‘s burgeoning economy:
“This doctrine of the exemption of a corporation from suit in a State other than that of its creation was the cause of much inconvenience, and often of manifest injustice. The great increase in the number of corporations of late years, and the immense extent of their business, only made this inconvenience
and injustice more frequent and marked. Corporations now enter into all the industries of the country. The business of banking, mining, manufacturing, transportation, and insurance is almost entirely carried on by them, and a large portion of the wealth of the country is in their hands. Incorporated under the laws of one State, they carry on the most extensive operations in other States. To meet and obviate this inconvenience and injustice, the legislatures of several States interposed, and provided for service of process on officers and agents of foreign corporations doing business therein. Whilst the theoretical and legal view, that the domicile of a corporation is only in the State where it is created, was admitted, it was perceived that when a foreign corporation sent its officers and agents into other States and opened offices, and carried on its business there, it was, in effect, as much represented by them there as in the State of its creation. As it was protected by the laws of those States, allowed to carry on its business within their borders, and to sue in their courts, it seemed only right that it should be held responsible in those courts to obligations and liabilities there incurred” (id. at 355 [emphasis added]; see also William Laurens Walker, Foreign Corporation Laws: The Loss of Reason, 47 NC L Rev 1, 12 [1968]).
Against that background, to obtain jurisdiction, not merely service, over foreign corporations, our legislature first required foreign insurance companies to designate an agent for service of process filed with the Secretary of State (L 1853, ch 463, §§ 14-15; ch 466, § 23) and shortly thereafter expanded that requirement to all foreign corporations (L 1855, ch 279, § 1). The validity of this means of obtaining jurisdiction over foreign corporations was repeatedly and conclusively reaffirmed well before Bagdon. In Gibbs v Queen Ins. Co. (63 NY 114 [1875]), we considered the effect of the aforementioned statutes in connection with two questions:
“1. Has the legislature provided a mode in which a citizen of this State . . . may bring an action against [a foreign] company in some of the courts of record of this State? . . . and in what manner shall service of it be made. 2. Does the method provided,
and the process and mode of service of it prescribed, give some of the courts of record of this State such jurisdiction of the matter and of the defendant, as that they can render a personal judgment which will be valid in this State, and enforceable against any property of the defendant found within it?” (id. at 116 [emphasis added]).
We answered both in the affirmative, holding that
“the legislature of the State has enacted that the defendant, as a prerequisite to doing business in this State, shall designate an attorney
or an agent therein upon whom process in any suit to be commenced against it may be served, and [the defendant] has designated a person as such agent, and that service of process against the defendant has been made upon [the agent.] Is not the enactment of the statute by the legislature, a proffer to the defendant of the power to do business in this State, if it will subject itself to the jurisdiction of our courts, and is not the acceptance of that proffer by the defendant a submission to that jurisdiction?” (id. at 128 [emphasis added]).
The widely-accepted view was that a “corporation of one State cannot do business in another State without the latter‘s consent, express or implied, and that consent may be accompanied with such conditions as it may think proper to impose” (St. Clair, 106 US at 356; see also Lafayette Ins. Co. v French, 18 How [59 US] 404, 407 [1856] [“A corporation created by Indiana can transact business in Ohio only with the consent, express or implied, of the latter State. This consent may be accompanied by such conditions as Ohio may think fit to impose . . . . It cannot be deemed unreasonable that the State of Ohio should endeavor to secure to its citizens a remedy, in their domestic forum . . . nor that proper means should be used to compel foreign corporations, transacting this business of insurance within the State, for their benefit and profit, to answer there for the breach of their contracts of insurance there made and to be performed” (citation omitted)]; Ex parte Schollenberger, 96 US 369, 376 [1878] [“[T]here cannot be any doubt, as it seems to us, of the jurisdiction of the Circuit Court over these defendant companies. They have in express terms, in consideration of a grant of the privilege of doing business within the State, agreed that they may be sued there; that is
Responding to our holding in Demarest v Flack (128 NY 205, 217 [1891]), which gave effect to a corporation incorporated in West Virginia by New York residents designed to shield themselves from liability for injuries caused by their carnival properties in New York, the legislature took up our hint that “[t]he supervision of a foreign corporation by this state may easily be exercised by imposing terms as a condition of permitting it to do business here.” It amended the General Corporation Law to add sections 15 and 16 (L 1892, ch 687), which provided that foreign corporations could not do business in New York without obtaining a certificate from the Secretary of State, which required the corporation to designate an officer or agent for service of process. The statute further provided that the failure to do so prevented the foreign corporation from accessing our courts for redress (id.). From the above history, it is plain that the imposition of a requirement of an agent for service of process was implemented to ensure that New York courts would have jurisdiction over foreign corporations. The issue was not one of service per se; service was the means by which jurisdiction could be established.
B.
That history lays bare the majority‘s reinterpretation of Bagdon. In Bagdon, a New Yorker sued the Philadelphia & Reading Coal & Iron Company (PRCI), a Pennsylvania corporation, alleging the breach of a contract arising from Mr. Bagdon‘s work for PRCI in Pennsylvania (Bagdon, 217 NY at 433). PRCI had registered to do business in New York under section 16 of the General Corporation Law, giving it the right to sue in New York in exchange for subjecting itself to suit here. As required, PRCI had designated an agent to receive service in New York (id.). But when Mr. Bagdon served the designated agent, PRCI argued that it could not be haled into court in New York because “the plaintiff‘s cause of action ha[d] no relation to business transacted in New York” but rather “owe[d] its origin to business transacted in Pennsylvania” (id.). That is, PRCI did not argue that its registration did not constitute consent to jurisdiction; it argued that its consent to jurisdiction was limited to injuries arising from its operations in New York. Our Court rejected that argument because PRCI had consented to jurisdiction in our courts by registering to do business here.
Writing for a unanimous court, Judge Cardozo held that jurisdiction over PRCI was proper in New York—even though the “cause of action has no relation to business transacted in New York“—because the corporation had registered to do business here (id. at 434, 438-439). As had been settled by that point for at least 75 years, the act of designating an agent to receive service, a required part of the business registration process, was an act of “real consent” to litigation in New York such that jurisdiction here was proper and consistent with the Due Process Clause of the United States Constitution (id. at 437-438).
Contrary to the majority‘s assertion (majority op at 284, 286), consent is the analytical lynchpin of Bagdon. First, we noted that New York‘s business registration statute required corporations to designate an agent to receive service in New York:
“The state of New York has said that a foreign stock corporation . . . shall not do business here until it has obtained a certificate from the secretary of state. . . . To obtain such a certificate, however, there are conditions that must be fulfilled. One of them is a stipulation, to be
filed in the office of the secretary of state, ‘designating a person upon whom process may be served within this state’ ” (id. at 436, quoting General Corporation Law § 16).
The penalty for failing to comply with New York‘s business registration requirement, we observed, was that the foreign corporation “may not maintain any action in our courts ‘upon any contract made by it in this state, unless before the making of the contract it has procured such certificate’ ” (id., quoting General Corporation Law § 15). We then emphasized the crucial point—that such a penalty was not so burdensome as to undermine consent:
“The business, though unlicensed, is not illegal; the contract is not void; it may be enforced in other jurisdictions; all that is lost is the right to sue in the courts of the state . . . . The stipulation is, therefore, a true contract. The person designated is a true agent. The consent that he shall represent the corporation is a real consent” (id.).
Because the corporation‘s consent to receive service in New York was “real,” we held that jurisdiction in New York over the defendant was proper even though the subject of the lawsuit was not related to the defendant‘s business in New York.
Indeed, one year later, we explicitly reaffirmed that portion of Bagdon‘s holding. Judge Cardozo, again writing for a unanimous Court, announced in Tauza v Susquehanna Coal Co.:
“We hold . . . that the jurisdiction does not fail because the cause of action sued upon has no relation in its origin to the business here transacted. That in principle was our ruling in Bagdon v. Phila. & Reading C. & I. Co.” (220 NY 259, 268 [1917]).
In other words, as we talk about it today, Bagdon established “general” personal jurisdiction through consent by registration
Bagdon does employ the language of whether ”service [wa]s invalid” in its analysis (Bagdon, 217 NY at 434 [emphasis added]). But understanding “service” in that context to mean only what we think of today as “service“—the delivery of papers on the appropriate person so that sufficient notice is provided to a party—can be done only by ignoring history, by taking our modern definition of “service” and superimposing it over the word‘s historical meaning. When, over the course of many decades, our Court, the Supreme Court and the courts of many other states discussed imposing on foreign corporations a requirement to designate an agent for “service,” they understood that doing so would subject the corporation to jurisdiction by consent. Corporations understood that too; PRCI‘s argument—rejected by our Court—was that its consent to jurisdiction was limited to injuries arising from its operations in New York, not that it hadn‘t consented to jurisdiction at all. Bagdon did not establish a rule that registration (and with it appointment of an agent for service of process) constituted consent to jurisdiction—that rule was long established by our prior precedents and
The majority rests its misinterpretation of Bagdon on the proposition that PRCI‘s “presence in New York was not in dispute” and that it had “conceded that it was doing business in New York” (majority op at 285). Thus, the majority explains, our Court in Bagdon found jurisdiction not because PRCI had consented to it by registering to do business here, but because PRCI had conceded it was present here and then accepted service of process here. The problem with the majority‘s confection is that actual presence in New York was legally irrelevant at the time because consent-by-registration statutes had rendered them so. Nearly 40 years before Bagdon, the United States Supreme Court explained:
“It is unnecessary to inquire whether these several companies were inhabitants of the district. . . . [T]hat question, we think, was settled in Railroad Company v. Harris, [12 Wall (79 US) 65 (1871)]. . . . The Baltimore and Ohio Railroad Company, a
Maryland corporation, was authorized by Congress to construct and extend its railroad into the District of Columbia. Harris, having been injured while travelling as a passenger upon the railroad outside of the District, sued the company in the Supreme Court of the District, and caused the writ to be served upon the president of the company within the District. The company objected to the jurisdiction of the court, and insisted that it was neither an inhabitant of nor found within the District. In ruling upon this objection, we held that, although the company was a foreign corporation, it was suable in the District, because it had in effect consented to be sued there, in consideration of its being permitted by Congress to exercise therein its corporate powers and privileges” (Schollenberger, 96 US at 375-376).
Thus, given the historical legal import of registering to do business and appointing an agent to receive service, Bagdon‘s holding is in no way dependent on PRCI‘s physical presence in New York. Indeed, the majority does not dispute that even today, a corporation with no presence in New York could consent to personal jurisdiction here (majority op at 282 n 1). But this is not that case: like PRCI, Ford and Goodyear admit they are doing business in New York too; Ford and Goodyear concededly have substantial business operations and have deliberately “serve[d] a market for a product in a State” (Ford Motor Co. v Montana Eighth Judicial Dist. Court, 592 US —, —, 141 S Ct 1017, 1022 [2021]).
In short, a proper reading of Bagdon shows that we were not examining whether papers had been delivered in a manner that gave constitutionally sufficient notice of suit (majority op at 285-286). Rather, in Bagdon, we were analyzing whether it was fundamentally fair for a New York court to exercise jurisdiction over a Pennsylvania corporation that had allegedly breached a contract arising from work done in Pennsylvania for that corporation by a New York resident. We emphatically said “yes,” because PRCI had consented to jurisdiction in our courts by registering to do business in New York.
C.
The majority‘s suggestion that International Shoe, in liberalizing specific jurisdiction, eliminated the need for jurisdiction through consent is both irrelevant and misleading (majority op at 288-289). It is irrelevant because, while the need for jurisdiction by consent has indeed been reduced, it has not been eliminated by the expansion of specific jurisdiction. For example, had this accident occurred in New York, before International Shoe the only way to assert jurisdiction over these defendants would have been by consent through registration. Today, if the accident had occurred in New York, specific jurisdiction over Ford and Goodyear would exist in New York. But reduced need for jurisdiction by consent and legal invalidity of jurisdiction by consent are two wholly different matters. If Bagdon were decided today, a court could find neither general nor specific jurisdiction in New York: the defendant was a Pennsylvania company; the contract was to be performed in Pennsylvania; and the fact that the company had business operations in New York would not have been sufficient to confer general jurisdiction on it. Thus, there are classes of cases like Bagdon—or this case—as to which jurisdiction by consent remains crucial. Why should these New York plaintiffs be able to sue both Goodyear and Ford in Virginia but not New York? What superior claim to “fair play and substantial justice” (International Shoe, 326 US at 316) lies in Virginia?
More troublingly, International Shoe simply does not say what the majority claims it says. The Supreme Court said:
“Finally, although the commission of some single or occasional acts of the corporate agent in a state sufficient to impose an obligation or liability on the corporation has not been thought to confer upon the state authority to enforce it, Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U. S. 516, other such acts, because of their nature and quality and the
circumstances of their commission, may be deemed sufficient to render the corporation liable to suit. Cf. Kane v. New Jersey, 242 U. S. 160; Hess v. Pawloski, supra; Young v. Masci, supra. True, some of the decisions holding the corporation amenable to suit have been supported by resort to the legal fiction that it has given its consent to service and suit, consent being implied from its presence in the state through the acts of its authorized agents. Lafayette Insurance Co. v. French, 18 How. 404, 407; St. Clair v. Cox, supra, 356; Commercial Mutual Co. v. Davis, supra, 254; Washington v. Superior Court, 289 U. S. 361, 364-365. But more realistically it may be said that those authorized acts were of such a nature as to justify the fiction. Smolik v. Philadelphia & Reading Co., 222 F. 148, 151. Henderson, The Position of Foreign Corporations in American Constitutional Law, 94-95” (International Shoe, 326 US at 318-319).
A careful study of the paragraph and the authorities it cites demonstrates the opposite of the majority‘s conclusion, namely: a state may subject foreign corporations to personal jurisdiction as a condition of doing business within its borders. First, the Court contrasted Rosenberg Bros. & Co. v Curtis Brown Co. (260 US 516, 518 [1923]), where the defendant Oklahoma company had “never applied, under the foreign corporation laws, for a license to do business in New York” and therefore was not subject to personal jurisdiction here, with three cases involving out-of-state motorists (not corporations) over whom personal jurisdiction was deemed to exist by virtue of statutes conditioning use of the roads on registration (Kane v New Jersey, 242 US 160 [1916]), or deeming use of the roads as consent (Hess v Pawloski, 274 US 352 [1927]), or holding that consistent with due process, New York could impose liability on the New Jersey owner of a vehicle who loaned it to a New Jersey resident who drove it into New York and injured a New Yorker (Young v Masci, 289 US 253 [1933]). Those cases establish the power of states to impose personal jurisdiction as a condition of use of the state‘s facilities, where the absence of a condition (as in Rosenberg) would render personal jurisdiction unavailable.
Next, the Court collected several cases (Lafayette Ins. Co, 18 How [59 US] 404; St. Clair, 106 US 350; Commercial Mut. Accident Co. v Davis, 213 US 245 [1909]; Washington ex rel. Bond & Goodwin & Tucker, Inc. v Superior Court of Wash. for Spokane Cty., 289 US 361 [1933]) that upheld the assertion of personal jurisdiction over foreign corporations on the basis of the actual or implied appointment of an agent within the state for service of process. Note, importantly, that the Court did not describe consent in those cases as consent to service only, but rather as “consent to service and suit” (International Shoe, 326 US at 318 [emphasis added]).
Finally, the Court pointedly explained, “those authorized acts were of such a nature as to justify” the finding of jurisdiction (id. at 318-319). The two citations following that sentence, one to (then Federal District) Judge Learned Hand‘s decision in Smolik v Philadelphia & Reading Coal & Iron Co. (222 F 148 [SD NY 1915]), the other to a treatise by Gerald Carl Henderson, offer further insight into the Court‘s conclusion. In Smolik, the defendant (PRCI again) executed a broad written consent to jurisdiction and argued that it should be limited in the same way New York had limited its implied consent to jurisdiction. Judge Hand rejected that argument, holding that whereas the implied consent, “[b]eing a mere creature of justice . . . will have such consent only as justice requires,” whereas the “actual consent in the cases at bar has no such latitudinarian possibilities” (id. at 151). Mr. Henderson‘s book, at the pages cited by the Court, contrasts Smolik to Judge Cardozo‘s decision in Bagdon, emphasizing our Court‘s holding that “the actual appointment of an agent manifests consent quite independently of any law. In the words of Judge Cardozo, speaking for the Court of Appeals, ‘The stipulation is, therefore, a true contract. The person designated is a true agent. The consent that he shall represent the corporation is a real consent’ ” (Henderson at 94-95). In
D.
Courts and scholars have routinely read Bagdon as establishing jurisdiction by consent through registration (see e.g. Serov v Kerzner Intl. Resorts, Inc., 52 Misc 3d 1214[A], 2016 NY Slip Op 51150[U] [Sup Ct, NY County 2016] [collecting cases and scholarship]; Muollo v Crestwood Vil., 155 AD2d 420, 421 [2d Dept 1989] [“It is true that a foreign corporation is deemed to have consented to personal jurisdiction over it when it registers to do business in New York and appoints the Secretary of State to receive process for it pursuant to Business Corporation Law §§ 304 and 1304“]; Le Vine v Isoserve, Inc., 70 Misc 2d 747, 749 [Sup Ct, Albany County 1972] [“When a foreign corporation is licensed to do business in New York, it consents to be sued on causes of action arising within and without the State“], citing Bagdon; Republique Francaise v Cellosilk Mfg. Co., 124 NYS2d 93, 99 [Sup Ct, NY County 1953], revd on other grounds 284 App Div 699 [1st Dept 1954], revd on other grounds 309 NY 269 [1955] [“(J)urisdiction which cannot be acquired by law may be conferred by consent of the parties; and even where the consent is given because it must be given in order to obtain desired benefits or avoid undesired discomforts, it still is consent and effective as such“], citing Bagdon; Brown v Lockheed Martin Corp., 814 F3d 619, 640 [2d Cir 2016] [“Jurisdictions other than Connecticut have enacted registration statutes that more plainly advise the registrant that enrolling in the state as a foreign corporation and transacting business will vest the local courts with general jurisdiction over the corporation. The registration statute in the state of New York has been definitively construed to accomplish that end” (citations omitted)]; Vincent C. Alexander, 2015 Supp Practice Commentaries, McKinney‘s Cons Laws of NY, CPLR C301:8 [“Certainly in New York, foreign corporations have been on notice since 1916 that their registration to do business here constitutes consent to the general jurisdiction of the courts“]; Oscar G. Chase, Consent to Judicial Jurisdiction: The Foundation of “Registration” Statutes, 73 NYU Ann Surv Am L 159, 168 [2018] [“New York . . . is one of the states that treats registration as consent to general jurisdiction“]).
On several occasions, the United States Supreme Court has understood Bagdon as establishing a consent-based rule for jurisdiction. One year after Bagdon, the Court validated general jurisdiction by consent in Pennsylvania Fire Ins. Co. of Philadelphia v Gold Issue Mining & Milling Co. (243 US 93, 94 [1917]). In that case, an Arizona corporation filed suit in a Missouri court seeking coverage from a Pennsylvania insurance company that had insured its building in Colorado (id.; see also Gold Issue Min. & Milling Co. v Pennsylvania Fire Ins. Co. of Phila., 267 Mo 524, 184 SW 999 [1916]). The Pennsylvania defendant was registered to do business in Missouri (Pennsylvania Fire, 243 US at 94). The Court held that jurisdiction in Missouri was proper because “when a power actually is conferred by a document, the party executing it takes the risk of the interpretation that may be put upon it by the courts. The execution was the defendant‘s voluntary act” (id. at 96). That “document” was a power of attorney “filed with the superintendent of the insurance department” in compliance with the governing business registration statute “consenting that service of process upon the superintendent should be deemed personal service upon the company” (id.).
Two decades later in Neirbo Co. v Bethlehem Shipbuilding Corp. (308 US 165 [1939]), the Court considered New York‘s business registration statute and reaffirmed that consent through
“It took half a century of litigation in this Court finally to confer on a corporation, through the use of a fiction, citizenship in the chartering state for jurisdictional purposes. Throughout, the mode of thought was metaphorical. The classic doctrine was that a corporation ‘must dwell in the place of its creation, and cannot migrate to another sovereignty.’ Logically applied, this theory of non-migration prevented suit in a non-chartering state, for the corporation could not be there. And such was the practice of the circuit courts until the opinion of Chief Justice Waite in Ex parte Schollenberger displaced metaphor with common sense. The essential difference between the practice which Mr. Justice Nelson initiated at circuit and the decision in Schollenberger‘s case was not a matter of technical legal construction, but a way of looking at corporations. Men‘s minds had become habituated to corporate activities which crossed state lines. The fact that corporations did do business outside their originating bounds made intolerable their immunity from suit in the states of their activities. And so they were required by legislatures to designate agents for service of process in return for the privilege of doing local business. That service upon such an agent, in conformity with a valid state statute, constituted consent to be sued in the federal court and thereby supplanted the immunity as to venue, was the rationale of Schollenberger‘s case” (id. at 169-170 [citations omitted]).
Our legislature has made it clear, starting in 1853 and reiterated several times thereafter, that its purpose in requiring foreign corporations registering to do business here is to subject them to jurisdiction here. Our Court repeatedly construed the statute that way; the Supreme Court acknowledged and supported the theory behind that construction; our lower courts and commentators have understood it that way. Only the majority does not, and to what end? To compel the legislature to reenact the statute using the contemporary word “jurisdiction” because the majority refuses to recognize that, 150 years ago, “service” meant “jurisdiction“? The majority plainly understands that the legislature‘s intent when it enacted and reenacted the registration requirement was to establish jurisdiction over foreign corporations, not to save the cost of a process server.
Contrary to Ford and Goodyear‘s arguments, personal jurisdiction conferred through consent by registration is neither coerced nor an impermissible burden on interstate commerce.
As the United States Supreme Court has recently articulated, “unconstitutional conditions” cases are ones in which “someone refuses to cede a constitutional right in the face of coercive pressure” (Koontz v St. Johns River Water Management Dist., 570 US 595, 607 [2013]). Ford and Goodyear have identified no authority supporting their assertion that they are being forced to cede a constitutional right. Nor do they face coercive pressure. Ford and Goodyear incorrectly frame their choice as “consent to general jurisdiction or stop doing business in New York.” They are correct they have a choice, which itself undermines their coercion argument. But their choice is much less severe: it is to consent to personal jurisdiction or forfeit the ability to initiate an action in New York‘s courts if the court finds that the corporation is doing business without having registered (
Further, when New York courts have found that a plaintiff foreign corporation is “doing business in New York without having qualified pursuant to section 1312 of the
Likewise, Ford and Goodyear‘s interstate commerce claim is without merit. The governing rule, which Ford and Goodyear do not cite, is that when a “statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental,
V.
New York requires that foreign corporations wishing to do business here renew their registrations every two years. Ford first registered here in 1920, Goodyear in 1956. They each renewed their registrations many times; both re-registered in 2014. Plaintiffs filed this lawsuit in 2015. As regards the disposition of this case, the question is not what this Court decides registration means starting today, but rather what registration meant in 2015, when this suit was filed.
Unquestionably, today‘s holding puts future registrants on notice that, by registering, they are not consenting to jurisdiction here. But there is nothing to which Ford and Goodyear could point, or have pointed, to show such a position would have been reasonable in 2015. Until today, Bagdon‘s rule of general jurisdiction by consent through registration was “well settled” (Vincent C. Alexander, Practice Commentaries, McKinney‘s Cons Laws of NY, CPLR C301:6 [c]). No intervening Supreme Court case law has overturned it. Ford and Goodyear had been given sufficient notice “to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit” (Daimler, 571 US at 139, quoting Burger King Corp. v Rudzewicz, 471 US 462, 472 [1985]). That is, they could have chosen not to do business in New York, or continued to do business in New York without registering and lost only the ability to bring suit in the courts of New York. For reasons of their own, good or bad, they opted to register in New York. Both employ highly sophisticated counsel, who could have (and perhaps did) advise them in 2014 as to the legal effect of New York‘s registration statute. It would strain credulity to argue that Ford and Goodyear believed they had not, in fact, consented to jurisdiction in our courts—and they have made no such showing nor even such an argument. What the broader record does suggest, however, is that had these plaintiffs brought this suit in Virginia, where the accident occurred but no plaintiff or defendant resided, Ford and Goodyear likely would have claimed that the Virginia courts lacked personal jurisdiction—the position Ford took in 2018, and the United Sates Supreme Court rejected this year, in Ford Motor Co. v Montana Eighth Judicial Dist. Court, 592 US —, 141 S Ct 1017 [2021].
More than a century ago, our court correctly interpreted our legislature as having ensured that residents of New York, injured by corporations that had registered to do business here and chosen to take advantage of our laws, could seek judicial relief here, even if the injury took place somewhere else. Query what offends fair play and substantial justice.
Chief Judge DiFiore and Judges Fahey, Garcia and Cannataro concur; Judge Wilson dissents in an opinion, in which Judge Rivera concurs.
Order affirmed, with costs.