Illinois Supreme Court Rejects Exercise of General Jurisdiction
In an opinion filed earlier today, the Illinois Supreme Court unanimously reaffirmed the standard for personal jurisdiction established in the United States Supreme Court case of Daimler AG v. Bauman, 571 U.S. ___, 134 S. Ct. 746 (2014). See Aspen American Insurance Company v. Interstate Warehousing, Inc., 2017 IL 121281, ¶ 3. This case arose following an ammonia leak at the defendant’s storage facility in Michigan. Aspen American Insurance Company v. Interstate Warehousing, Inc., 2017 IL 121281, ¶ 3. The plaintiff—who had insured the goods stored within the facility—had previously paid a claim for the loss and in doing so obtained subrogation rights. Id. The plaintiff subsequently brought suit against the defendant, Interstate Warehousing, Inc., in Cook County, Illinois alleging, inter alia, breach of contract and negligence. Id., ¶ 4.
The defendant is an Indiana corporation with its corporate office and principle place of business in Fort Wayne, Indiana. Id., ¶¶ 5, 7. The defendant conceded that it has one warehouse in Joliet, Illinois, and has been registered to do business within Illinois since 1988. Id., ¶ 7. However, the defendant also noted that it has other warehouses in Indiana, Colorado, Ohio, Tennessee, and Virginia. Id., ¶ 5. The defendant moved to dismiss the plaintiff’s cause of action for lack of personal jurisdiction. Id., ¶ 6. Writing for the court, Justice Burke held that Illinois courts could not constitutionally exercise jurisdiction over the defendant, and remanded the case to the circuit court to enter judgment dismissing the plaintiff’s complaint.
Operating a warehouse in Illinois did not subject the defendant to general jurisdiction.
The court began by affirming the general principle that the plaintiff bears the burden of establishing a prima facie basis for the exercise of personal jurisdiction over a non-resident defendant. Id., 2017 IL 121281, ¶ 12. In setting out the standard for establishing general jurisdiction, the Court expressly recognized that the United States Supreme Court has now firmly rejected the notion that the due process analysis rests simply on whether a foreign corporation is “doing business” within the state, or whether its contacts within the state are in some general sense continuous and systematic. Id. ¶ 16, citing Daimler, 571 U.S. at ___ n.20. Rather, the Court affirmed that a court may only assert general jurisdiction over a foreign corporation in those “exceptional cases” when its affiliations are so “continuous and systematic” to render it “essentially at home” within the state. Id., ¶¶ 16–17 (emphasis added).
In this case, the plaintiff failed to meet that burden. First, all parties agreed that the defendant was neither incorporated in Illinois nor has its principle place of business in Illinois. Id., ¶¶ 5, 7. Second, the court held that although the defendant conducted some business within Illinois, its act of maintaining one warehouse within the state fell “far short of showing that Illinois was a surrogate home” for the defendant. The court reasoned that “if the operation of the warehouse was sufficient, in itself, to establish general jurisdiction, then [the] defendant would also be at home in all the other states where its warehouses are located.” Id., ¶ 19. The Court stated that the United States Court had already expressly rejected that reasoning. Id., ¶ 19, citing Daimler, 571 U.S. at ___ n.20 (“[a] corporation that operates in many places can scarcely be deemed at home in all of them”).
Finally the court held that section (b)(4) of the Illinois long-arm statute—which purports to authorize a court to exercise jurisdiction over a defendant “doing business within this State”— cannot constitutionally be applied to establish jurisdiction over a non-resident defendant unless it is also “essentially as home’ within the state (as required by Daimler). 735 ILCS 5/2-209(b)(4); Aspen American Insurance Company, 2017 IL 121281, ¶ 21.
Compliance with the Business Corporation Act of 1983 did not subject the defendant to jurisdiction.
The plaintiff also argued that the defendant was subject to jurisdiction in Illinois because: (1) it had registered to do business within the state pursuant to the Business Corporation Act; and (2) pursuant to that Act had a registered agent for service of process within the state. Id., ¶ 21–22. The court rejected those arguments, holding that neither action subjected the defendant to jurisdiction. Id., ¶ 24. Relying on the plaint language of the Act, the court noted that:
None of [the Act’s] provisions require foreign corporations to consent to general jurisdiction as a condition of doing business in Illinois, nor do they indicate that, by registering in Illinois or appointing a registered agent, a corporation waives any due process limitations on this state’s exercise of general jurisdiction.
Id. In fact, the court continued, the “Act makes no mention of personal jurisdiction at all.” Id., ¶ 24.
Finally, the court rejected the plaintiff’s argument that section 5.25(A) of the Act—which states that a foreign corporation “shall be subject to the same duties . . . now or hereafter imposed upon a domestic corporation of like character”—subjected the defendant to jurisdiction. The court simply noted that jurisdiction is not a duty, and as such the section was inapplicable.
For additional information, please contact Simon Baker at sbaker@sinarslaw.com.
The defendant is an Indiana corporation with its corporate office and principle place of business in Fort Wayne, Indiana. Id., ¶¶ 5, 7. The defendant conceded that it has one warehouse in Joliet, Illinois, and has been registered to do business within Illinois since 1988. Id., ¶ 7. However, the defendant also noted that it has other warehouses in Indiana, Colorado, Ohio, Tennessee, and Virginia. Id., ¶ 5. The defendant moved to dismiss the plaintiff’s cause of action for lack of personal jurisdiction. Id., ¶ 6. Writing for the court, Justice Burke held that Illinois courts could not constitutionally exercise jurisdiction over the defendant, and remanded the case to the circuit court to enter judgment dismissing the plaintiff’s complaint.
Operating a warehouse in Illinois did not subject the defendant to general jurisdiction.
The court began by affirming the general principle that the plaintiff bears the burden of establishing a prima facie basis for the exercise of personal jurisdiction over a non-resident defendant. Id., 2017 IL 121281, ¶ 12. In setting out the standard for establishing general jurisdiction, the Court expressly recognized that the United States Supreme Court has now firmly rejected the notion that the due process analysis rests simply on whether a foreign corporation is “doing business” within the state, or whether its contacts within the state are in some general sense continuous and systematic. Id. ¶ 16, citing Daimler, 571 U.S. at ___ n.20. Rather, the Court affirmed that a court may only assert general jurisdiction over a foreign corporation in those “exceptional cases” when its affiliations are so “continuous and systematic” to render it “essentially at home” within the state. Id., ¶¶ 16–17 (emphasis added).
In this case, the plaintiff failed to meet that burden. First, all parties agreed that the defendant was neither incorporated in Illinois nor has its principle place of business in Illinois. Id., ¶¶ 5, 7. Second, the court held that although the defendant conducted some business within Illinois, its act of maintaining one warehouse within the state fell “far short of showing that Illinois was a surrogate home” for the defendant. The court reasoned that “if the operation of the warehouse was sufficient, in itself, to establish general jurisdiction, then [the] defendant would also be at home in all the other states where its warehouses are located.” Id., ¶ 19. The Court stated that the United States Court had already expressly rejected that reasoning. Id., ¶ 19, citing Daimler, 571 U.S. at ___ n.20 (“[a] corporation that operates in many places can scarcely be deemed at home in all of them”).
Finally the court held that section (b)(4) of the Illinois long-arm statute—which purports to authorize a court to exercise jurisdiction over a defendant “doing business within this State”— cannot constitutionally be applied to establish jurisdiction over a non-resident defendant unless it is also “essentially as home’ within the state (as required by Daimler). 735 ILCS 5/2-209(b)(4); Aspen American Insurance Company, 2017 IL 121281, ¶ 21.
Compliance with the Business Corporation Act of 1983 did not subject the defendant to jurisdiction.
The plaintiff also argued that the defendant was subject to jurisdiction in Illinois because: (1) it had registered to do business within the state pursuant to the Business Corporation Act; and (2) pursuant to that Act had a registered agent for service of process within the state. Id., ¶ 21–22. The court rejected those arguments, holding that neither action subjected the defendant to jurisdiction. Id., ¶ 24. Relying on the plaint language of the Act, the court noted that:
None of [the Act’s] provisions require foreign corporations to consent to general jurisdiction as a condition of doing business in Illinois, nor do they indicate that, by registering in Illinois or appointing a registered agent, a corporation waives any due process limitations on this state’s exercise of general jurisdiction.
Id. In fact, the court continued, the “Act makes no mention of personal jurisdiction at all.” Id., ¶ 24.
Finally, the court rejected the plaintiff’s argument that section 5.25(A) of the Act—which states that a foreign corporation “shall be subject to the same duties . . . now or hereafter imposed upon a domestic corporation of like character”—subjected the defendant to jurisdiction. The court simply noted that jurisdiction is not a duty, and as such the section was inapplicable.
For additional information, please contact Simon Baker at sbaker@sinarslaw.com.