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Conducting Business in Illinois May Be Insufficient to Establish Personal Jurisdiction

Posted in Premises Liability

According to the Supreme Court of Illinois, merely conducting business within that state is insufficient to satisfy the standards for personal jurisdiction established by the U.S. Supreme Court in Daimler AG v. Bauman, 134 S. Ct. 746 (2014).  The Illinois Supreme Court recently explored that issue in Aspen American Insurance Company v. Interstate Warehousing, Inc., where a plaintiff headquarted in Indiana attempted to bring an action in Illinois for damages allegedly caused by the collapse of a warehouse in Michigan.  Plaintiff Aspen brought a subrogation action in Cook County, Illinois seeking to recover damages allegedly caused by the collapse of a warehouse near Grand Rapids, Michigan, which was owned by Defendant Interstate Warehousing. The Defendant, which is headquartered in Indiana, operates eight warehouses across the country, one of which is in Joliet, Illinois.

 

In its pleadings, the Plaintiff sought to rely upon the Defendant’s Joliet warehouse to establish personal jurisdiction in Illinois. In its motion to dismiss for lack of personal jurisdiction, the Defendant did not dispute that it was doing business in Illinois. Instead, the Defendant argued that the business it was conducting in Illinois was insufficient to subject it to general personal jurisdiction under the U.S. Supreme Court’s decision in Daimler AG v. Bauman. Relying on Daimler, the Defendant explained that the Plaintiff failed to establish that the Defendant was either domiciled or “at home” in Illinois. The circuit court disagreed, and denied the Defendant’s motion. A divided appellate court affirmed the dismissal denial of the motion to dismiss.

                                                                                                                                                                                   

Writing on behalf of a unanimous Court, Justice Burke reversed the lower court decisions, holding that the Plaintiff failed to make a prima facie showing that the Defendant was “essentially at home” in Illinois, as required by Daimler. More specifically, the Court determined that the Plaintiff’s burden was to show that the Defendant was incorporated or had its principal place of business in Illinois, or in the alternative, that the Defendant’s contacts with Illinois were so substantial that an exception was warranted. In making its determination, the Court looked at Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), in which the defendant, a Philippines company, was forced to relocate from the Philippines to Ohio during World War II. In that case, the Supreme Court found that Ohio was “the center of the corporation’s wartime activities” and, effectively, a “surrogate for the place of incorporation or head office.” Perkins, 342 U.S. at 448.

 

In the Aspen case, the Defendant Interstate Warehousing was an Indiana corporation with its principal place of business in Indiana, which was registered to conduct business in Illinois and employed the general manager of a warehouse in Joliet. The Plaintiff pointed both to the Defendant’s registration with the Illinois Secretary of State and the business it carried out at its Joliet warehouse as establishing jurisdiction; however, the Illinois Supreme Court ultimately concluded that those facts were insufficient either to render the Defendant at home in the state or to establish that the Defendant’s contacts constituted the type of exceptional connection to the forum that was recognized by the Perkins Court. The Aspen Court reasoned that “if the operation of the warehouse was sufficient, in itself, to establish general jurisdiction, then the defendant would also be at home in all the other states where its warehouses are located.” That kind of reasoning already was expressly rejected by the U.S. Supreme Court in Daimler.

 

Therefore, the Illinois Supreme Court reversed the lower court rulings and remanded the case to be dismissed for lack of personal jurisdiction. The Aspen decision is consistent with the Delaware Supreme Court’s decision last year that merely registering to do business in that state is insufficient to establish personal jurisdiction.  See Genuine Parts Co v. Cepec (137 A.3d 123 (Del. 2016). Earlier this year the U.S. Supreme Court left open the question of whether registration to do business may constitute consent to personal jurisdiction.  See BNSF Railway Co. v. Tyrrell (May 30, 2017), slip op. at 12.  Accordingly, the issue remains unsettled.  However, the Aspen and Genuine Parts decisions suggest that until the U.S. Supreme Court weighs in, momentum currently runs against the use of business registration statutes to establish personal jurisdiction.