Genuine Parts Co. v. Cepec

137 A.3d 123

Genuine Parts Company, Defendant Below–Appellant

v.Ralph Allan Cepec and Sandra Faye Cepec, Plaintiffs Below–Appellees.

No. 528, 2015

Supreme Court of Delaware.

Submitted: March 9, 2016

Decided: April 18, 2016

Paul A. Bradley, Esquire, Stephanie A. Fox, Esquire, Maron Marvel Bradley & Anderson LLC, Wilmington, Delaware; James C. Grant, Esquire (Argued ), Jonathan D. Parente, Esquire, Alston & Bird LLP, Atlanta, Georgia, for Appellant.

Jeffrey S. Goddess, Esquire (Argued ), Rosenthal, Monhait & Goddess, P.A., Wilmington, Delaware; Lisa W. Shirley, Esquire, Charles E. Soechting, Jr., Esquire, Simon, Greenstone, Panatier & Bartlett, Dallas, Texas, for Appellees.

Kathaleen St. J. McCormick, Esquire, Nicholas J. Rohrer, Esquire, Julia B. Ripple, Esquire, Young Conaway Stargatt & Taylor, LLP, Wilmington, Delaware; Andrew J. Pincus, Esquire, Archis A. Parasharami, Esquire, Mayer Brown LLP, Washington, D.C.; Kathryn Comerford Todd, Esquire, Warren Postman, Esquire, U.S. Chamber Litigation Center, Inc., Washington, D.C., Amicus Curaie for The Chamber of Commerce of the United States of America.

William W. Erhart, Esquire, Estate and Elder Law Services, Wilmington, Delaware; David W. deBruin, Esquire, The deBruin Firm LLC, Wilmington, Delaware; Meghan Butters Houser, Esquire, Weiss & Saville, P.A., Wilmington, Delaware, Amicus Curaie for Delaware Trial Lawyers Association.

John C. Phillips, Jr., Esquire, David A. Bilson, Esquire, Phillips, Goldman, McLaughlin & Hall, P.A., Wilmington, Delaware; Robert L. Willmore, Esquire, Thomas Kinney, Esquire, Crowell & Moring LLP, Washington, D.C., Amicus Curiae for Coalition for Litigation Justice, Inc. and American Insurance Association.

Before STRINE, Chief Justice; HOLLAND, VALIHURA, VAUGHN, and SEITZ, Justices, constituting the Court en Banc.

STRINE, Chief Justice, for the Majority:

I. INTRODUCTION

Like every other state in our republic,¹ Delaware requires a foreign corporation that sells any product or service in the state to register to do business and agree to the appointment of a registered agent to receive service of process. In this case, a large Georgia corporation that properly registered to do business in Delaware has been sued in Delaware over claims having nothing to do with its activities in Delaware. Adhering to the interpretation given to our registration statutes—8 Del. C. §§ 371 and 376 —in Sternberg v. O'Neil,² our Superior Court held that, notwithstanding the U.S. Supreme Court's decision in Daimler AG v. Bauman,³ the foreign corporation consented to Delaware's general jurisdiction merely by registering to do business in Delaware. This interlocutory appeal raises the singular 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.

We conclude that after Daimler, it is not tenable to read Delaware's registration statutes as Sternberg did. Sternberg 's interpretation was heavily influenced by a prior reading given to § 376 by our U.S. District Court,⁴ and like that District Court decision, rested on a view of federal jurisprudence that has now been fundamentally undermined by Daimler and its predecessor Goodyear Dunlop Tires Operations, S.A. v. Brown.⁵ Not only that, Sternberg was a case where the exercise of personal jurisdiction over the foreign corporation was proper under the minimum-contacts test, anyway,⁶ and where the corporate governance claims at issue were closely connected to the internal affairs of a Delaware corporation.⁷ Most important, Sternberg represented just one plausible way to read a statute that on its face does not refer explicitly to personal jurisdiction, much less to consent to personal jurisdiction.

Our duty under our law is to give as much effect as possible to a state statute, where it is constitutional to do so.⁸

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.⁹ 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 courts” 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.”¹⁰ 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.¹¹

We believe Sternberg 's more far-reaching interpretation of § 376 collides directly with the U.S. Supreme Court's holding in Daimler, and subjects § 376 to invalidation. In our republic, it is critical to the efficient conduct of business, and therefore to job- and wealth-creation, that individual states not exact unreasonable tolls simply for the right to do business. Businesses select their states of incorporation and principal places of business with care, because they know that those jurisdictions are in fact “home” and places where they can be sued generally.¹² An incentive scheme where every state can claim general jurisdiction over every business that does any business within its borders for any claim would reduce the certainty of the law and subject businesses to capricious litigation treatment as a cost of operating on a national scale or entering any state's market.¹³ Daimler makes plain that it is inconsistent with principles of due process to exercise general jurisdiction over a foreign corporation that is not “essentially at home” in a state for claims having no rational connection to the state.¹⁴ The foreign corporation in this case does not have its principal place of business in Delaware; nor is there any other plausible basis on which Delaware is essentially its home. Hence, Delaware cannot exercise general jurisdiction over it consistent with principles of due process. Furthermore, the plaintiffs concede that they cannot establish specific jurisdiction over the nonresident defendant under the long-arm statute or principles of due process. Therefore, the plaintiffs' claim must be dismissed for lack of personal jurisdiction. Accordingly, we reverse the Superior Court's judgment.

II. BACKGROUND¹⁵

The personal jurisdiction issue before us arises out of claims for wrongful exposure to asbestos. The plaintiffs-appellants, Ralph and Sandra Cepec, are residents of Georgia. The seven defendants are companies associated with the manufacture, distribution, or installation of products containing asbestos. One of the defendants is Genuine Parts Company. Between approximately 1988 and 1991, Ralph worked for Genuine Parts in a warehouse in Jacksonville, Florida.

In 2015, the Georgia plaintiffs sued the defendants in Delaware. Five of the seven defendants are Delaware corporations. Genuine Parts, however, is a Georgia corporation whose principal place of business is in Atlanta. That is, Genuine Parts is, like the Cepecs, at home in Georgia, not in Delaware. Nationally, Genuine Parts is known for operating NAPA auto-parts stores. It has never had a corporate office in Delaware, does not conduct its board or shareholder meetings in this state, and does not have any officers here. According to Genuine Parts, fewer than 1% of its employees work in Delaware, fewer than 1% of its auto-parts stores are here, and less than 1% of its revenue comes from our state. Genuine Parts is properly registered to do business in Delaware under § 371 and has a designated agent for service of process in Wilmington in accordance with § 376.

In their complaint, the Cepecs allege that Genuine Parts acted negligently, willfully and wantonly, and with reckless indifference to Ralph's health and safety by wrongfully exposing Ralph to asbestos during the three years that he worked for the company in Florida, which, combined with other asbestos exposure, caused him to develop malignant mesothelioma and other asbestos-related ailments. They also pled that Genuine Parts “is a foreign corporation doing business in the state of Delaware whose registered agent for service of process is: The Corporation Trust Company.”¹⁶

On June 30, 2015, Genuine Parts moved to dismiss the claims against it for lack of general and specific personal jurisdiction. In response, the Cepecs did not argue that our Superior Court had specific jurisdiction over Genuine Parts under the long-arm statute,¹⁷ but argued that Genuine Parts had consented to Delaware's general jurisdiction by registering to do business in this state and appointing an in-state agent for service of process.

In its August 31, 2015 order denying Genuine Parts' motion to dismiss, the Superior Court agreed with the Cepecs' position that Genuine Parts had consented to general jurisdiction in Delaware merely by complying with § 376.¹⁸ In reaching that result, the Superior Court relied...