Supreme Court Raises Threshold to Sue Non-Delaware Corporations in Delaware

By Francis Pileggi on April 18, 2016POSTED IN DELAWARE SUPREME COURT UPDATES

The Delaware Supreme Court decided today, over a dissenting opinion, that a non-Delaware corporation cannot be sued in Delaware, even if it is registered to do business in Delaware, if the basis for the suit against it in Delaware is unrelated to the fact that it is registered to do business in Delaware as a foreign corporation. Genuine Parts Co. v. Cepec, Del. Supr., No. 528, 2015 (April 18, 2016). This ruling should be compared generally with an unrelated recent opinion of the Delaware Supreme Court, in Hazout v. Tsang, highlighted on these pages, that interpreted a statute to make it easier to impose jurisdiction in Delaware over directors and officers of Delaware corporations.

This recent Supreme Court opinion in Genuine Auto Parts needs to be read by anyone who wants to understand the latest iteration of Delaware law on the two types of personal jurisdiction and, in particular, the difference between general jurisdiction and specific jurisdiction as it applies to foreign corporations who are registered to do business in Delaware. 

The court distances itself from a decision of almost thirty years ago in Sternberg v. O’Neil, 550 A.2d 1105 (Del. 1988), in connection with applying the registration statutes at Sections 371 and 376 of Title 8, as well as the long-arm statute at Section 3104 of Title 10 of the Delaware Code.

In sum, Delaware’s high court applies the U.S. Supreme Court decision in Daimler AG v. Bauman, 143 S. Ct. 746 (2014), to interpret the Delaware statutes requiring foreign corporations to register to do business in Delaware to mean, for purposes of an analysis of personal jurisdiction consistent with the Due Process Clause of the U.S. Constitution, as follows: “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.” 

This ruling has wide application for those engaged in the practice of commercial litigation in Delaware and other types of civil litigation involving corporations.

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