Recent Supreme Court Decision Limits the General Jurisdiction of U.S. Courts Over Foreign and Out-Of-State Corporations
By STEPHEN B. KINNAIRD, CHARLES A. PATRIZIA, IGOR V. TIMOFEYEV, SEAN D. UNGER & IAN A. HERBERT
In its recent decision in Daimler AG v. Bauman, No. 11-965 (January 14, 2014), the Supreme Court significantly limited the forums in which a foreign (or out-of-state) corporation may be sued for foreign conduct. The Court has largely constrained the exercise of “all-purpose” or “general” personal jurisdiction — the ability to hear claims unrelated to forum state — to states where a corporation is incorporated or has its principal place of business. The decision effectively abrogated many state statutes that authorize exercise of general jurisdiction against any out-of-state company found to be “doing business” in the state. In addition, the Court severely curtailed plaintiffs’ ability to use a subsidiary’s presence in the forum state to claim jurisdiction over a foreign or out-of-state parent corporation. Because Daimler strengthens the ability of foreign and out-of-state corporations to avoid court proceedings in inhospitable forums, it has substantial strategic implications for defendants and plaintiffs alike.