Blum Explains Why Corporations Should Review State Business Registrations

Shook Partners Joseph Blum, Sean Wajert and Of Counsel John Lyons explain why corporations should diligently review their existing state business registrations to minimize any risk of being subject to long-arm jurisdiction in “Corporations: Are You Voluntarily Consenting to General Jurisdiction in Pennsylvania?,” Westlaw Journal: Corporate Officers & Directors Liability, July 10, 2017.

After the U.S. Supreme Court’s decision in Daimler limited the places in which a corporation may be subject to general jurisdiction, plaintiffs have presented various legal arguments to try to establish jurisdiction over foreign corporations – those incorporated in another state or country – including the theory that if a company registers to do business under a state’s business registration statutes, the company is then subject to general personal jurisdiction. 

But as the authors explain, Pennsylvania is the only state whose long-arm statute explicitly states that business registration constitutes a “sufficient basis” for courts to exercise general personal jurisdiction over a corporation. In other states, courts have reached conflicting conclusions about whether business registration establishes consent to personal jurisdiction. Unless the Supreme Court decides to resolve the issue, companies now risk being subject to general jurisdiction in any state where they are registered to do business – and face lawsuits in states that may have little or no connection to a legal dispute. To minimize that risk, the authors conclude that companies should now evaluate whether their business activities obligate state registration and consider withdrawing registrations that do not appear to be required by statute.