By Michael Farinacci | Managing Editor
Nearly a century ago, Justice Cardozo formulated, what has become known as, the “doing business” doctrine for determining whether New York has general jurisdiction over a corporation. This later became part of CPLR §301. However, recent United States Supreme Court decisions in Goodyear Dunlop Tires Operations, S.A. v. Brown and Daimler AG v. Bauman have raised the question whether CPLR §301’s extensive reach is consistent with the Due Process clause of the Fourteenth Amendment.
In Goodyear, the court held that only a “limited set of affiliations with the forum” would sustain the exercise of general jurisdiction over a defendant. For a corporation, general jurisdiction can only be asserted when its contacts with the state are so “continuous and systematic” to render it “at home” in that state. The paradigm “at home” factors are a corporation’s place of incorporation and principal place of business.
The court in Daimler echoed the “at home” factors of Goodyear and expanded on the Due Process constraint from International Shoe. The plaintiffs in Daimler brought suit against Daimler in California for the alleged human rights violations they suffered in Argentina from Daimler’s Argentine subsidiary. The plaintiffs asserted that Daimler was amendable to general jurisdiction in California based on the contacts its subsidiary, Mercedes-Benz USA (MBUSA), had with California. Daimler was incorporated in Delaware and had its principal place of business in New Jersey. MBUSA had its principal place of business in New Jersey but maintained multiple facilities in California. MBUSA was the largest supplier of luxury vehicles to California, and its California sales accounted for 2.4% of Daimler’s worldwide sales. The court held that neither Daimler nor MBUSA was amendable to general jurisdiction in California because neither was “at home” in California. Then, the court elaborated on the Due Process constraint. General jurisdiction is not only to be determined by the magnitude of a corporation’s in-state activities. An assessment of a corporation’s out-of-state activities must be made and compared with its in-state activity. This creates a degree of predictability for corporations, since they can hardly be considered “at home” in every place where they have significant sales. “Otherwise, ‘at home’ would be synonymous with ‘doing business’ tests framed before specific jurisdiction evolved in the United States.”
However, New York still uses a “doing business” test for general jurisdiction. In New York, courts can exercise general jurisdiction over a foreign corporation, under CPLR §301, when a corporation “has engaged in such a continuous and systematic course of ‘doing business’ here that a finding of its ‘presence’ in this jurisdiction is warranted.” The New York Court of Appeals has refrained from issuing a bright-line rule for “doing business.” Instead, the court evaluates a corporation’s contacts with New York on a case-by-case basis. Although the test varies, certain prevailing factors have been consistently applied. These factors include whether the corporation has offices, employees, bank accounts, or property in New York and whether it solicited business in New York.
But under Daimler, New York’s general jurisdiction under CPLR 301 would reach too far, thus a century of New York case law could be rendered unconstitutional.. For example, as far back as 1917, in Tauza v. Susquehanna Coal Co., the New York Court of Appeals determined that a Pennsylvania corporation with its principal office in Philadelphia was amenable to general jurisdiction in New York because the corporation maintained a New York sales office, which transmitted orders back to Pennsylvania with a degree of regularity. In Bryant v. Finnish Nat’l Airline, the court held that a Finnish corporation, not even registered in the United States, was amenable to general jurisdiction in New York for an accident occurring in France. The Finnish corporation was “doing business” in New York because it had an office and bank account in New York and was engaged in continuous contact with travel agencies in New York. In Chestnut Ridge Air, Ltd. v. Ontario Inc., general jurisdiction over a Canadian corporation was predicated on it soliciting business in New York through its website, which created “a virtual community in New York.” The corporation did not have a New York office, but the court found it had continuous activity in New York, since at least 4% of its annual revenue came from New York. In Chestnut, the court found that the Canadian corporation’s minimum contacts with New York did not violate International Shoe’s “traditional notions of fair play and justice.” However, under Daimler, all these attenuated contacts with New York would not be sufficient to render the corporations “at home” in New York. Thus, exercising general jurisdiction over them would violate the Due Process clause.
Change is imminent. Recent New York decisions, in both State and Federal court, have discussed Daimler’s narrowing of the general jurisdiction parameters. But the issues before those courts did not require them to decide the constitutionality of the “doing business” doctrine.
New York courts’ application of Daimler is an important matter for corporations. New York is a global center for multiple industries, and corporations have structured their operations based on the “doing business” test. Daimler has introduced a degree of uncertainty. Countless corporations are “doing business” in New York, but not all of them are “at home” in New York. The New York Court of Appeals’ interpretation of Daimler may have a great impact on New York jurisdiction.
 Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267 (1917).
 131 S. Ct. 2846 (2011).
134 S. Ct. 746 (2014).
 Id. at 758-60.
 Goodyear, 131 S. Ct. at 2851.
 See Id. at 2853-54.
 International Shoe Co. v. Washington, 326 U.S. 310, 316-18 (1945).
 See Daimler, 134 S. Ct. at 752.
 Id. at 753.
 Id. at 762.
 Id. at 762 n. 20 (citations omitted).
 Landoil Resources Corp. v. Alexander & Alexander Services, Inc., 77 N.Y.2d 28, 33 (1990) (citations omitted).
 See Sterling Novelty Corp. v. Frank & Hirsch Distrib. Co., 299 N.Y. 208, 210 (1949).
 See, id. at 201-11; Frummer v. Hilton Hotels Int’l, Inc., 19 N.Y.2d 533 (1967).
 See Tauza, 115 N.E. at 916-17.
 See 15 N.Y.2d 426, 441-42 (1965).
 See, 827 N.Y.S.2d 461, 465 (Sup. Ct. 2006).
 Id. citing: International Shoe, 326 U.S. at 316.
 See Putnam Leasing Co. v. Pappas, 995 N.Y.S.2d 457, 460 (Dist. Ct. Sept. 25, 2014) (holding that contractual forum selection provisions are a permissible substitute for minimum contacts); See also, Chambers v. Weinstein, 997 N.Y.S.2d 668 (Sup. Ct. Aug. 22, 2014) (holding New York lacks general jurisdiction over a New Jersey law firm having its principal place of business in New Jersey and is not authorized to do business in New York.); Deutsche Zentral-Genossenschaftsbank AG v. UBS AG, 2014 WL 1495632 (N.Y.Sup. April 17, 2014)(holding that the maintenance of a branch in New York was sufficient under the doing business test for general jurisdiction, but notes that the Daimler decision calls into question the doing business doctrine); Meyer v. Bd. of Regents of Univ. of Oklahoma, 2014 WL 2039654 (S.D.N.Y. May 14, 2014)(holding that Daimler raises the question whether “doing business” doctrine is constitutional, but does not have to address the issue as the defendant’s contacts with New York are not sufficient for general jurisdiction under either CPLR§301 or Daimler).