Add §301-a, CPLR; amd §1301, BC L; amd §18, Gen Assoc L; amd §802, Lim Lil L; amd §1301, N-PC L; amd
§§121-902 & 121-1502, Partn L
Provides that a foreign corporation's application for authority to do business in this state constitutes consent to jurisdiction of the courts of this state and a surrender of such application constitutes withdrawal of such consent.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8303
SPONSOR: Lunsford TITLE OF BILL:
An act to amend the civil practice law and rules, the business corpo-
ration law, the general associations law, the limited liability company
law, the not-for-profit corporation law and the partnership law, in
relation to consent to jurisdiction by foreign business organizations
authorized to do business in New York
SOURCE OF BILL:
This bill is being introduced at the request of the Unified Court
System.
PURPOSE OF BILL:
This measure would amend the Business Corporation Law, the General Asso-
ciations Law, the Limited Liability Company Law, the Not-for-Profit
Corporation Law, and the Partnership Law to reinforce the continuing
viability of consent as a basis for general (all-purpose) personal
jurisdiction over foreign corporations authorized to do business in New
York in relation to actions brought by or on behalf of: (1) a resident
of this state; (2) a domestic corporation, unincorporated association,
partnership, individually-owned business, limited liability company,
limited partnership or limited liability partnership; or (3) a foreign
corporation, limited liability company, limited partnership or limited
liability partnership authorized to do business in the state.
SUMMARY OF PROVISIONS:
Section 1 adds a new section 301-a to the Civil Practice Law and Rules
regarding termination of consent to jurisdiction in certain cases.
Section 2 adds a new subdivision (e) to section 1301 of the Business
Corporation Law providing that a foreign corporation's application for
authority to do business in this state constitutes consent to the juris-
diction of the New York state courts for all actions against such corpo-
ration brought by or on behalf of: (1) a resident of the state; (2) a
domestic corporation, unincorporated association, partnership, individu-
ally-owned business, limited liability company, limited partnership or
limited liability partnership; or (3) a foreign corporation, limited
liability company, limited partnership or limited liability partnership
authorized to do business in the state.
Section 3 adds a new subdivision 5 to section 18 of the General Associ-
ations Law providing that an association's certificate of designation
constitutes consent to the jurisdiction of the New York state courts for
all actions against such association brought by or on behalf of: (1) a
resident of the state; (2) a domestic corporation, unincorporated asso-
ciation, partnership, individually-owned business, limited liability
company, limited partnership or limited liability partnership; or (3) a
foreign corporation, limited liability company, limited partnership or
limited liability partnership authorized to do business in the state.
Section 4 adds a new subdivision (c) to section 802 of the Limited
Liability Company Law providing that a foreign limited liability compa-
ny's application for authority do business in this state constitutes
consent to the jurisdiction of the New York state courts for all actions
against such limited liability company brought by or on behalf of: (1) a
resident of the state; (2) a domestic corporation, unincorporated asso-
ciation, partnership, individually-owned business, limited liability
company, limited partnership or limited liability partnership; or (3) a
foreign corporation, limited liability company, limited partnership or
limited liability partnership authorized to do business in the state.
Section 5 adds a new subdivision (e) to section 1301 of the Not-for-Pro-
fit Corporation Law providing that a foreign corporation's application
for authority to conduct activities in this state constitutes consent to
the jurisdiction of the New York state courts for all actions against
such corporation brought by or on behalf of: (1) a resident of the
state; (2) a domestic corporation, unincorporated association, partner-
ship, individually-owned business, limited liability company, limited
partnership or limited liability partnership; or (3) a foreign corpo-
ration, limited liability company, limited partnership or limited
liability partnership authorized to do business in the state.
Section 6 adds a new subdivision (e) to section 121-902 of the Partner-
ship Law to provide that a foreign limited partnership's application to
do business in this state constitutes consent to the jurisdiction of the
New York state courts for all actions against such foreign limited part-
nership brought by or on behalf of (1) a resident of the state; (2) a
domestic corporation, unincorporated association, partnership, individu-
ally-owned business, limited liability company, limited partnership or
limited liability partnership; or (3) a foreign corporation, limited
liability company, limited partnership or limited liability partnership
authorized to do business in the state.
Section 7 adds a new subdivision (r) to section 121-1502 of the Partner-
ship Law to provide that a foreign limited liability partnership's
notice to carry on or conduct or transact business or activities as a
New York registered foreign limited liability partnership in this state
constitutes consent to the jurisdiction of the New York state courts for
all actions against such foreign limited liability partnership brought
by or on behalf of: (1) a resident of the state; (2) a domestic corpo-
ration, unincorporated association, partnership, individually-owned
business, limited liability company, limited partnership or limited
liability partnership; or (3) a foreign corporation, limited liability
company, limited partnership or limited liability partnership authorized
to do business in the state.
Section 8 provides that the bill will take effect on the first of Janu-
ary next succeeding the date on which it shall become law.
JUSTIFICATION:
This bill would reinforce the continuing viability of consent as a basis
for general personal jurisdiction over foreign corporations authorized
to do business in New York.
Until 2014, a foreign corporation doing business in New York could be
sued here on claims arising anywhere in the world. However, in Daimler
AG v. Bauman, 571 U.S. 117 (2014), the Supreme Court held that due proc-
ess requires more than doing business in a state before the courts of
that state may assert general jurisdiction. By analogy to the assertion
of general jurisdiction over individuals domiciled in the state, the
corporation must be "at home" in the state. This means that the only
type of local activity by a corporation that will ordinarily qualify as
a basis for general jurisdiction is incorporation in the state or main-
tenance of its principal place of business in the state. Doing business
in the state, by itself, does not suffice, even if it is conducted on a
regular and systematic basis from a local office or other facility.
General jurisdiction, therefore, is no longer available in New York for
those seeking to enforce corporate obligations incurred outside the
state.
The Court of Appeals took up the issue in 2021 in Aybar v. Aybar and
ruled by a five-to-two vote that current New York statutes do not
"condition the right to do business on consent to the general jurisdic-
tion of New York courts or otherwise afford general jurisdiction to New
York courts over foreign corporations that comply with these condi-
tions." Aybar v. Aybar, 37 N.Y.3d 274, 283 (2021). In Aybar, a car acci-
dent occurred when a New York resident was operating a Ford Explorer in
Virginia and the vehicle's Goodyear tire failed, resulting in the death
of three passengers and injuries to three others. The accident victims
commenced an action against the driver, Ford and Goodyear in a New York
court. The vehicle involved in the accident was not initially sold by
Ford in New York, and Ford did not manufacture or design that vehicle
within New York. Moreover, the tire was not designed, manufactured, or
initially sold by Goodyear in New York. Both Ford and Goodyear moved to
dismiss the complaint against them under CPLR 3211(a)(8), on the ground
that the court lacked personal jurisdiction over them. The Court of
Appeals held that the defendants' motions to dismiss were properly
granted and that foreign corporations do not consent to the exercise of
general jurisdiction by New York courts simply by registering to do
business in the state and designating a local agency for service of
process.
As the Aybar majority saw it, Daimler 's true holding, "when viewed in
the context of the controlling jurisprudence of the time," is merely
that a corporation that registers to do business per the Business Corpo-
ration Law consents to be served via the designated agent; it does not
consent to be used for claims that did not arise from its in-state
activity. Id. at 284.
Having concluded that New York's existing statutes did not purport to
condition registration upon consent to New York jurisdiction, the Aybar
majority expressly declined to say whether the Legislature could do so
if it wished: "Inasmuch as our conclusion rests solely on New York law
grounds, we have no occasion to address whether consent-by-registration,
if it existed in New York, would comport with federal due process under
Daimler." Aybar, 37 N.Y.3d at 291.
Notably, the two dissenters in Aybar reached the issue the majority
declined to reach: whether consent by registration was constitutional.
They answered in the affirmative, reasoning that such consent would be
unconstitutional only if the consent were coerced, and that was plainly
not the case. In the case before the Court, no one forced Ford to do
business in New York. More than that, Ford did not have to register in
order to do business in New York. It had to register only if it wanted
to bring suit in New York in those cases in which it preferred to bring
its suit in New York.
Consent to general jurisdiction is a fair requirement to impose on
corporations that benefit from conducting business in New York. Such
consent provides the certainty of a forum with open doors for the
enforcement of obligations of New York-licensed corporations without the
expense and burden of proving jurisdiction on a case-by-case basis. Even
in Daimler, the Supreme Court recognized the value of having an "easily
ascertainable" and "clear and certain forum in which a corporate defend-
ant may be sued on any and all claims." 571 U.S. at 137.
A related bill has been vetoed by the Governor twice, in 2021 and 2023.
In her 2023 veto message, the Governor noted that the bill:
would require foreign companies that register to do business or are
designated to do business in New York automatically consent to the
jurisdiction of the courts in the State, regardless of whether such
company maintains a principal place of business in New York and regard-
less of whether the circumstances at issue relate to New York. Addi-
tionally, in both the 2021 and 2023 veto messages the Governor noted
that:
the proposal would represent a massive expansion of New York's laws
governing general jurisdiction, likely deterring out-of-state companies
from doing business in New York because it would require them to be
subject to lawsuits in the State regardless of any connection to New
York. The bill would cause uncertainty for those businesses and burden
the judicial system.
The scope of this bill is different from that of prior versions, and
that difference is intended to address the Governor's stated concerns.
Specifically, this bill significantly limits the class of potential
plaintiffs who could sue foreign business organizations; only New York
residents and businesses that are licensed in New York would be able
commence an action against a company that conducts business in New York.
This proposal would re-establish the jurisdiction of New York courts
over foreign companies doing business in this state, which had been a
given for over 150 years, and only serves to protect New Yorkers.
PRIOR LEGISLATIVE HISTORY:
Related legislation has been submitted since Daimler was decided in
2014. The bill passed the Assembly in 2014 (A.9576) and 2015 (A.6714),
and passed both houses but was. vetoed in 2021 (A.7769/S.7253; Veto 79)
and 2023 (A.7351/S.7476 (Veto 147).
FISCAL IMPLICATIONS:
This bill would have no fiscal impact on the State.
EFFECTIVE DATE:
This bill would take effect on the first of January next succeeding the
date on which it became law.
