Recent Illinois and Missouri Supreme Court Decisions Reduce Litigation Risks of Companies Operating in Multiple States

On September 21, 2017, the Illinois Supreme Court handed down its decision in Aspen American Insurance Company v. Interstate Warehousing, Inc, greatly limiting the ability of plaintiffs to sue foreign corporations in Illinois simply because the corporation is registered to do business in and may have minimal contacts with Illinois. As described below, the decision joins Illinois with a nationwide trend disfavoring forum-shopping – a practice in which plaintiffs bring suit against defendants in plaintiff-friendly venues unrelated to the defendant’s contacts and the injury giving rise to the action.

The Aspen case concerned a claim filed in Illinois by a plaintiff who had been injured in a fire which occurred in Indiana. The defendant corporation was incorporated in and maintained its principal place of business in Indiana, although it did maintain a warehouse in Illinois and was also registered to do business in Illinois. The defendant corporation moved to dismiss the lawsuit for lack of proper jurisdiction as a result of these facts and the Circuit Court agreed. On appeal, the plaintiff argued that maintenance of a warehouse in Illinois and being registered as a foreign corporation in Illinois was sufficient to impart general jurisdiction over the corporation. The Illinois Supreme Court rejected that argument, finding those facts alone – where a foreign corporation merely maintains some facility or office in Illinois which are unrelated to the injury in question – to be insufficient to subject the corporation to a lawsuit in Illinois under general jurisdiction. In so holding, the Supreme Court added that while the facts in Aspen were insufficient to impart general jurisdiction, a foreign corporation’s more substantial contacts with Illinois could potentially trigger sufficient notice and consent to be sued in Illinois.

As noted above, the Illinois decision joins a recent trend of state supreme court decisions ruling against forum-shopping. For instance, earlier this year, the Supreme Court of Missouri in Norfolk Southern v. Dolan held that corporations do not consent to jurisdiction for claims unrelated to Missouri simply by registering to do business in Missouri and appointing a registered agent. That case concerned a personal injury action against a railroad brought in Missouri for an injury also occurring in Indiana.

The trend of recent state supreme court decisions follows guidance from the U.S. Supreme Court in Daimler v. Bauman. There, the Supreme Court clarified the basic principle that a corporation cannot be sued in a state unrelated to the injury in question unless the corporation’s contacts with the state are so continuous and systematic that it may be considered “at home” in that state. The Court explained that, unless there were substantial operations constituting exceptional circumstances, “at home” meant only the state of the corporation’s incorporation and where its principal place of business is located. “At home,” the Court reasoned, was not intended to apply to each state wherein a corporation conducts business.

The effect of the Aspen decision, along with those in Norfolk and Daimler, is that companies who have or want to have operations in Illinois will have less exposure to litigation in plaintiff-friendly jurisdictions such as Madison County, St. Clair County, and Cook County. In the past, having any kind of operations in the state would subject the company to being sued in Illinois on claims completely unrelated to anything occurring in Illinois. The holding from all three of these decisions suggests a company can safely have facilities in multiple states and only be subjected to general personal jurisdiction in the state of its incorporation or principal place of business or, in exceptional cases, in states in which it has extensive operations.  Of course, this does not change the fact that a corporation can be sued under specific jurisdiction (long arm statutes) for events which relate to or are caused by its operations in that particular state.

Posted Attorney  Michael J. McKitrick. With over 30 years of hands-on commercial litigation and transactional law experience, McKitrick’s practice encompasses business and transactional advice, commercial real estate matters, and regulatory and practice management guidance for health care professionals. Most of his clients are in the medical, financial services, and manufacturing sectors.