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Tuesday, May 10, 2016

Consent to General Personal Jurisdiction

The last time I was a guest blogger, I wrote about a pair of patent cases decided by the U.S. District Court for the District of Delaware raising an important question about general personal jurisdiction--namely, whether a corporation can consent to general jurisdiction in Delaware by registering to do business and appointing an agent for service of process there.  In Acorda v. Mylan, Judge Stark relied on the U.S. Supreme Court's decision in Pennsylvania Fire Ins. Co. v. Gold Issue Mining & Milling Co. (1917) and the Delaware Supreme Court's decision in Sternberg v. O'Neil (1988) to hold that registering to do business in Delaware constitutes consent to general jurisdiction.  In AstraZeneca v. Mylan, on the other hand, Judge Sleet refused to follow Pennsylvania Fire and Sternberg based on the U.S. Supreme Court's 2014 decision in Daimler AG v. Bauman, which rejected a "doing business" theory of general jurisdiction and held that corporations are only subject to general jurisdiction where they are "essentially at home." 

The U.S. Court of Appeals for the Federal Circuit recently issued its decision in Acorda and AstraZeneca.  Rather than resolving this split, however, the majority sidestepped the general jurisdiction question and held that Mylan is subject to specific jurisdiction in Delaware instead.  (The specific jurisdiction analysis also raises some interesting questions, which I plan to discuss in a later post.)  In a concurrence, Judge O'Malley argued that the court should decide the case on general jurisdiction grounds, which she believed was a more straightforward analysis than specific jurisdiction.  Much like Judge Stark and an amicus brief in which I participated, Judge O'Malley reasoned that Daimler--which addressed general jurisdiction based on a corporation's contacts--did not overrule Pennsylvania Fire and Sternberg--which addressed the question of general jurisdiction based on consent.

The panel's decision in Acorda and AstraZeneca may not be the last word in these cases.  Mylan has indicated that it plans to seek panel and en banc rehearing at the Federal Circuit.  Moreover, the fact that the parties are represented by Ted Olson, Paul Clement, and Kannon Shanmugam suggests that this case may end up at the Supreme Court.  Whatever happens in Acorda and AstraZeneca, the general jurisdiction question will have to be resolved sometime soon.  In an interesting turn of events, just a few weeks after the Federal Circuit issued its opinion, the Delaware Supreme Court decided Genuine Parts Co. v. Cepec, which overruled Sternberg in light of Daimler.  In dissent, Justice Vaughn aptly stated that "[i]t 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."

Posted by Megan La Belle on May 10, 2016 at 02:39 PM | Permalink

Comments

When you say "register[ed] to do business in Delaware," do you mean that they are formally incorporated there -- or just that they filed papers with the Secretary of State regarding an intent to do business there?

Posted by: Marcus Neff | May 10, 2016 3:48:04 PM

Marcus Neff: I mean the latter. Mylan is incorporated and headquartered in West Virginia. Before Daimler, companies like Mylan were sued in Delaware in pharmaceutical patent cases under a "doing business" theory of general jurisdiction. After Daimler, plaintiffs took a different approach and relied on earlier cases like Sternberg holding that registering to do business can constitute consent to general jurisdiction.

Posted by: Megan La Belle | May 10, 2016 3:56:51 PM

Doesn't Genuine Parts Co. eliminate any chance the consent-by-registration issue goes to the Supreme Court from Delaware? The Delaware Supreme Court interpreted its registration statute as a matter of state law (though, obviously, through a strong constitutional-avoidance lens), which prevents Supreme Court review. And Genuine Parts Co. means that Judge O'Malley's concurrence can't be the law in cases coming from Delaware.

I agree that the issue will bubble up to the Supreme Court at some point. But I doubt Acorda will be the case to do it.

Posted by: SM | May 10, 2016 3:59:28 PM

SM: The Federal Circuit decided Acorda and AstraZeneca on specific jurisdiction grounds, and that analysis raises some interesting questions (which, as noted, I plan to discuss in a later post). So, I think these cases could still make their way up to the Supreme Court.

Posted by: Megan La Belle | May 10, 2016 4:11:52 PM

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