Delaware Tightens Jurisdictional Requirements for Filing Suit Against Foreign Corporations Selling Products in Delaware

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In Genuine Parts Company v. Cepec, — A.3d –, 2016 WL 1569077 (Del. Apr. 18, 2016), the plaintiffs, Ralph and Sandra Cepec, who are Georgia residents, filed suit against, among others, Genuine Parts Company (Genuine Parts), a Georgia corporation that was properly registered to do business in Delaware. The plaintiffs filed suit to pursue asbestos-related personal injury claims having nothing to do with Genuine Parts’ activities in Delaware. Genuine Parts moved to dismiss the claims against it for lack of general and specific personal jurisdiction. The trial court denied Genuine Parts’ motion, finding that, by complying with Delaware’s statute requiring foreign corporations to register to do business in Delaware and to appoint an in-state agent for service of process, Genuine Parts consented to general jurisdiction in Delaware. Because the Superior Court based its finding on a theory of express consent to personal jurisdiction, the court did not conduct a due process inquiry.

Subsequently, Genuine Parts filed an interlocutory appeal, which the Supreme Court of Delaware accepted. On appeal, the Supreme Court of Delaware discussed the issue of “whether Delaware may exercise general jurisdiction over a foreign corporation for claims having nothing to do with Delaware, as a price for the corporation agreeing simply to be able to do business in Delaware.” Although prior Delaware case law held that a foreign corporation consented to Delaware’s general jurisdiction merely by registering to do business in Delaware, the Supreme Court reconsidered its prior case law in light of Daimler AG v. Bauman, 134 S.Ct. 746 (2014). Based on the United States Supreme Court’s holding in Daimler, the Supreme Court of Delaware held that “Delaware’s registration statutes must be read as a requirement that a foreign corporation must appoint a registered agent to accept service of process, but not as a broad consent to personal jurisdiction in any cause of action, however unrelated to the foreign corporation’s activities in Delaware.” Thus, in addition to complying with the service of process provisions for serving foreign corporations registered to do business in Delaware, a plaintiff suing a registered foreign corporation must establish that exercising personal jurisdiction over the registered foreign corporation in Delaware comports with the Due Process Clause of the Fourteenth Amendment of the United States Constitution.

In Genuine Parts, the Supreme Court of Delaware, by insulating registered foreign corporations from claims unrelated to their activities in Delaware, made it more difficult for subrogating  insurers to file suit against registered foreign corporations in Delaware. Going forward, in addition to serving the registered foreign corporation’s Delaware service of process agent, a subrogating insurer will have to establish that the registered foreign corporation has sufficient contacts with Delaware to support a finding that Delaware’s exercise of jurisdiction over the registered foreign corporation comports with Due Process.

For a more detailed analysis of the Genuine Parts case, see the Products Liability Alert drafted by White and Williams LLP’s Christian Singewald, Timothy Martin and Randall MacTough.

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