Choosing a Proper Court

Unfortunately, the Supreme Court has yet to clarify the standards for exercising general in personam jurisdiction over a corporation. In Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011), the Court strongly implied that a corporation will be subject to general in personam jurisdiction in the state in which it is incorporated, and the state of its principal place of business. 131 S. Ct. at 2853-2854 (suggesting that a corporation is “at home” in those states and therefore will suffer no unfairness if sued there for claims that arose in other states). However, it remains unclear whether a corporation is subject to general in personam jurisdiction in other states as well if it has extensive activities in those other states. Suppose, for example, that Exeter Corporation has a factory in Iowa that employs 20 thousand people and produces a large percentage — perhaps all — of the company’s products. A good many federal cases prior to Goodyear suggested that Exeter would be subject to general in personam jurisdiction in Iowa based on this extensive in-state activity, but the Supreme Court has never adopted a clear standard for such cases, and the discussion in Goodyear carries some implication that perhaps general in personam jurisdiction is limited to the states of incorporation and principal place of business.

It is also unclear how the Court will interpret the phrase “principal place of business” for purposes of general in personam jurisdiction. In Hertz Corp. v. Friend, 130 S. Ct. 1181 (2010), the Court held that this phrase in the diversity statute (28 U.S.C. §1332(C)(1)) refers to the state in which the corporation has its headquarters. But it is not clear that the Court will borrow this subject matter analysis for use in assessing general in personam jurisdiction. A corporation might actually have a good many more local contacts in states other than the headquarters state. For example, Exeter’s headquarters might include twenty high-level employees in a one-floor office, but it might have a hundred-acre factory in a different state that employs 20 thousand. If so, Exeter would doubtless have more contact and activity in the second state. Thus, it is possible that the Court will interpret the phrase “principal place of business” differently in the personal jurisdiction context than it did in Hertz with regard to diversity. Thus, while both of these analyses consider the extent of the corporation’s business activity in the state, the two standards do differ, and the states that meet the standards will overlap but may not be exactly the same.

Venue in suits against corporations requires yet another related analysis. Under 28 U.S.C. §1391(b)(1), venue will lie in any judicial district in which a defendant “resides,” if all defendants reside in that state. For individuals, residence for venue purposes is equated with domicile, but, as explained above, corporations do not have a domicile in the common law sense of the term. Instead, corporate “residence” for venue purposes is defined in the venue statute. See 28 U.S.C §§1391(c) and (d). Under those provisions a corporate defendant resides for venue purposes in any judicial district in which its contacts would suffice to support personal jurisdiction.

Thus, corporate activity or presence in the district is relevant to determining venue in cases against corporate defendants, just as it is relevant to determining their state citizenship for diversity purposes and their amenability to personal jurisdiction. However, a much smaller quantum of corporate activity will satisfy the venue requirement than is needed to establish a corporation’s “principal place of business” for diversity purposes, or “substantial and continuous activities” for general in personam jurisdiction. Under §§1391(b)(1) and (c), for example, a district could be a proper venue based on a single act by a corporate employee in the district, if that act gave rise to the claim. Such a single act would support minimum contacts jurisdiction over the corporation for that claim, and therefore, under §§1391(c) and (d), the corporation would “reside” in that district for purposes of the venue statute. But the corporation may also “reside” in a district under §§1391(c) and (d) because it has extensive contacts there that would support general in personam jurisdiction. Sorting out these related, but different standards can admittedly be a bit trying.