The interlocutory appeal in the case of Genuine Parts Company v. Cepec presented one question: “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.” Genuine Parts Company v. Cepec, No. 528, 2015, *1 (Apr. 18, 2016).
Genuine Parts Company (“Genuine Parts”) brought this significant question to the forefront when it filed a motion to dismiss the claims against it for lack of personal jurisdiction in the trial court. The Superior Court denied the motion. The Superior Court relied on the decision in Sternberg v. O’Neil, 550 A.2d 1105 (Del. 1988) in holding that consent to Delaware’s general jurisdiction is found in registering to do business in Delaware. On appeal Genuine Parts urged the Supreme Court to depart from Sternberg and to overrule the Superior Court. It support of its position, Genuine Parts argued that United States Supreme Court decisions such as Daimler AG v. Bauman, 134 S. Ct. 746 (2014) altered the legal landscape since the Sternberg decision.
In a four to one decision reversing the Superior Court the Majority agreed with Genuine Parts stating in part:
After Daimler, we hold 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. Rather, any use of the service of process provision for registered foreign corporations must involve an exercise of personal jurisdiction consistent with the Due Process Clause of the Fourteenth Amendment.
In most situations where the foreign corporation does not have its principal place of business in Delaware, that will mean that Delaware cannot exercise general jurisdiction over the foreign corporation. In that circumstance, the core statute to evaluate whether the foreign corporation is subject to specific jurisdiction is Delaware’s long-arm statute, 10 Del. C. § 3104. The long-arm statute operates smoothly in tandem with § 376, which provides that a foreign corporation can be served via its registered agent in the state. Under the long-arm statute, a foreign corporation ‘submits to the jurisdiction of the Delaware court’ as to any cause of action that arises out of certain enumerated acts by the corporation in this state such as ‘transact[ing] any business or perform[ing] any character of work or service,’ or ‘contract[ing] to supply services or things.’ Moreover, a plaintiff who brings a cause of action fitting under the long-arm statute against a registered foreign corporation need not use cumbersome means of service of process, but instead can serve the foreign corporation‘s registered agent, as contemplated in the long-arm statute. Genuine Parts Company v. Cepec, No. 528, 2015, *3. (citations omitted)
The dissenting opinion by Justice Vaughn states:
I agree with those federal judicial officers who have concluded that Daimler and Goodyear have no effect upon general jurisdiction that is based upon consent through corporate registration statutes. Daimler and Goodyear involved only general jurisdiction by presence where the corporate defendant had not consented to jurisdiction. Just last month, a circuit court judge of the Federal Circuit wrote in a concurring opinion mentioned by the Majority that ― Daimler did not overrule the line of Supreme Court authority establishing that a corporation may consent to jurisdiction over its person by choosing to comply with a state‘s registration statute. The case originated in Delaware and the opinion concluded that [Sternberg v. O’Neil, 550 A.2d 1105 (Del. 1988)] itself remains good law. I fully agree with the reasoning of that concurring opinion and see no need to duplicate it here.
It may be that the United States Supreme Court will go in the same direction as the Majority. But we won‘t know until it gets there. I would not divest the trial courts of this state of significant jurisdiction unless I was sure I was right, and I am not sure the Majority is right. I would affirm the judgment of the Superior Court. Id. at 45. (citations omitted)
The decision may be read in its entirety here.
Leslie Spoltore is a Partner with the law firm Fox Rothschild LLP. Leslie practices in Fox Rothschild’s Wilmington, Delaware office. You can reach Leslie at (302) 622-4203, or email@example.com.