Court’s Jurisdiction Over Businesses

Supreme Court Decision on State Court Jurisdiction

The U.S. Supreme Court has held that registration to do business in a state is sufficient for personal jurisdiction even if the subject of the lawsuit has no connection to the state. This decision will have a huge and immediate impact on the ability of consumers, employees, and others to sue businesses outside of their home state. In Mallory v. Norfolk Southern Railway, the court held that an out-of-state defendant corporation could be subject to general jurisdiction in a state based on its consent through a “doing business” registration.

General Jurisdiction over Corporations

General jurisdiction lets a court rule on a corporate defendant in that state without going against due process., irrespective of the nature of the claim. Recent Supreme Court decisions have severely constrained the extent to which states may subject companies to personal jurisdiction based solely on their operations. General jurisdiction over a corporation exists only in jurisdictions where the company’s continuous operations are so extensive and of such a type as to “justify litigation against it on causes of action arising from deals wholly unrelated to those activities.” – source.

Corporate Personal Jurisdiction

A court in the United States—whether state or federal—may enter a valid judgment against a corporate defendant only if the court has personal jurisdiction over the corporation. Unless a corporate defendant consents to jurisdiction, the U.S. Constitution allows a court to exercise personal jurisdiction only if there are sufficient “minimum contacts” between the corporation and the “forum state”—the state in which the court is located.

Long-Arm Statutes and Non-resident Jurisdiction

Long-arm statutes allow a state to exercise personal jurisdiction over a non-resident defendant who has certain contacts with the state. For example, New York’s long-arm statute generally gives its courts the power to exercise personal jurisdiction over non-New York residents who transact business within New York. Long-arm jurisdiction is the authority of local courts to exercise their jurisdiction against overseas defendants on a statutory or inherent basis.

Business Courts and Special Jurisdiction

Business courts are specialized courts that handle commercial disputes. Texas, for example, has recently created a new business court to provide a more specialized, efficient, and predictable forum for resolving commercial disputes. The establishment of business courts can lead to more businesses choosing a particular jurisdiction as the preferred venue for their commercial disputes due to the court’s specialization, efficiency, and predictability.

how to Challenge jurisdiction in state Court

To challenge jurisdiction in a state court, a defendant typically files a motion to dismiss, which is a formal request for the court to dismiss the case based on a lack of personal jurisdiction or subject-matter jurisdiction. Personal jurisdiction refers to the court’s power over the party being sued, while subject-matter jurisdiction refers to the court’s power to hear the type of case being filed.

Here are the steps to challenge jurisdiction in state court:

1. File an Acknowledgment of Service: After being served with the claim, the defendant needs to file an Acknowledgment of Service, indicating their intent to dispute jurisdiction (CPR 10.1(3)(b)).
2. Make an Application to the Court: Within 14 days after filing the Acknowledgment of Service, the defendant must make an application to the court to challenge jurisdiction. The application can be based on a lack of personal jurisdiction, subject-matter jurisdiction, or both.
3. Present Evidence and Arguments: During the application process, the defendant should present evidence and arguments supporting their claim that the court lacks jurisdiction over the case. This may include demonstrating that the court lacks personal jurisdiction over the defendant or that the court lacks subject-matter jurisdiction to hear the case.
4. Wait for the Court’s Decision: The court will review the application and the evidence presented by the defendant. If the court finds that it lacks jurisdiction, it may dismiss the case. If the court finds that it has jurisdiction, the case will proceed, and the defendant will have to file a defense.

Jurisdictional challenges should be raised as soon as possible, and any general objections to jurisdiction should be stated expressly. If a defendant fails to challenge jurisdiction in a timely manner, they may be deemed to have submitted to the court’s jurisdiction.