Illinois Supreme Court Rejects Plaintiff’s Fishy Basis for General Jurisdiction, Mandating that Out-of-State Corporation Be “Essentially at Home” Pursuant to Daimler

On September 21, 2017, in Aspen American Insurance Co. v. Interstate Warehousing, Inc., No. 121281 (Illinois, September 21, 2016), the Illinois Supreme Court held that an out-of-state corporation must be “essentially at home” in Illinois before general jurisdiction may be found, rejecting plaintiff’s argument that the presence of a single warehouse in the state meets this standard.  In a straightforward interpretation of Daimler AG v. Bauman, et al., 134 S.Ct. 746 (2014), the court confirmed that general jurisdiction requires “continuous and systematic” contacts with Illinois, which can be met by showing that a defendant is either incorporated in Illinois or has its principal place of business there.  The Illinois Supreme Court’s ruling follows on the heels of two recent U.S. Supreme Court Decisions, both of which confirm that Daimler meant what it said about the limits of general jurisdiction, and Illinois now joins other states – such as Delaware, Missouri, and Rhode Island – which have rendered similar rulings.

Aspen  arose after Eastern Fish Company, a corporation in the business of importing fish products, contracted with defendant Interstate Warehousing Inc. to store its products at one of defendant’s warehouses located in Michigan.  When the warehouse’s roof collapsed, the importer’s products were contaminated and deemed unfit for human consumption.  Plaintiff, which insures Eastern, paid Eastern’s claim for the loss and then brought this subrogation action in the circuit court of Cook County.  ¶ 3.

Defendant moved to dismiss the complaint on the ground that Illinois courts lacked personal jurisdiction.  ¶ 6.  In response, Plaintiff first argued that because the dcfendant has a warehouse located in Joliet, Illinois, it was doing business in the state and thus subject to personal jurisdiction.  Plaintiff further argued that because defendant Interstate was registered to do business in Illinois, it could be sued in Illinois.  ¶ 8.  The circuit court denied the motion to dismiss and the Appellate Court for the First District affirmed, finding that Plaintiff had made a prima facie showing of general jurisdiction.  Illinois’ highest court reversed the lower courts’ decisions.

The Illinois Supreme Court first examined the federal due process standards set forth in Daimler, as well as Illinois’ long-arm statute, codified at 735 ILCS 5/2-209 , which governs the exercise of personal jurisdiction over non-resident defendants.  In doing so, the court followed in Daimler’s footsteps by finding that a “plaintiff must make a prima facie showing that defendant is essentially at home in Illinois.”  ¶ 18.  In order to do so, a plaintiff must show that the “defendant is incorporated or has its principal place of business in Illinois or that defendant’s contacts with Illinois are so substantial as to render this an exceptional case.”  Id.

Although the defendant does business through its Joliet warehouse, the court found that it was insufficient to establish Illinois as a  “surrogate home,” even though the evidence established that the warehouse had been in continuous use in Illinois for 25 years.  ¶ 19.  If it were sufficient, the court reasoned, then that the defendant would be considered at home in every state in which it has a warehouse, opening up numerous forums for it to be sued within.  Id.  The U.S. Supreme court had previously rejected this idea in Daimler, holding that “[a] corporation that operates in many places can scarcely be deemed at home in all of them.”  Daimler AG v. Bauman, 134 S. Ct. 746, 762 n. 20 (2014). Aspen followed suit and held that general jurisdiction was not authorized under Illinois’ long-arm statute as it would deny defendant due process of law.  ¶ 20.

The Illinois Supreme Court next looked to the Business Corporation Act of 1983 (“Act”) to see if it permitted general jurisdiction.  Upon examination, the court found that Defendant’s registration to do business within Illinois under the Act is not enough to subject it to personal jurisdiction within the state.  The court further found that the fact that the defendant has a registered agent in Illinois for service of process is also not enough to subject it to personal jurisdiction.  ¶ 22.  The court reasoned that the Act does not require out of state corporations to consent to general jurisdiction as a condition of doing business in Illinois and that a corporation does not waive its due process rights by registering in Illinois or appointing a registered agent.  ¶ 24.  For these reasons, the court held that general jurisdiction is also not permitted under the Business Corporation Act of 1983.

Illinois now joins other states which have made clear that they will apply the Daimler court’s test for personal jurisdiction, requiring that a defendant’s “affiliations with the forum state be so ‘continuous and systematic’ as to render them essentially at home.” Under Daimler, this can be accomplished by a showing defendant’s incorporation in that state or by showing that the defendant’s principal place of business is located there.  Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).”    Accordingly, Aspen provides Illinois defendants a powerful new tool to fight forum shopping, and to ensure Constitutional due process to litigants in Illinois courts.