By: Justin Joy
The dismissal of a company for lack of jurisdiction is not necessarily noteworthy, but with the U.S. Supreme Court decision in Mallory v. Norfolk Southern Railway Co., the often-mundane consideration of personal jurisdiction over corporations is back in the spotlight for business law practitioners. (An analysis of the opinion is available for TBA members.) Perhaps axiomatically, Tennessee business lawyers are rarely called upon to analyze personal jurisdiction issues for entities domiciled in the state. However, clients with operations outside of Tennessee are likely to seek out Tennessee business lawyers for advice about whether Tennessee courts would find jurisdiction for a certain transaction or proposed business activity. (Although, in doing so, that may beg the question — perhaps for another day — is seeking out legal advice from a Tennessee lawyer a “contact” for jurisdictional analysis?)
As the Supreme Court noted in the Mallory decision, there are certain circumstances that render such an analysis a foregone conclusion, the inclusion of a forum selection clause in a contract being one of those. In certain states, consent through registration as a foreign corporation — the primary issue in the Mallory case — is another. While the issue how a federal or state court in Tennessee would apply the Mallory general jurisdiction analysis warrants a more detailed discussion than can be provided here, Tennessee appellate court opinions on corporate entity jurisdictional issues perhaps deserve more consideration post-Mallory, particularly when analyzing the existence or absence of specific jurisdiction.
The recent Tennessee Court of Appeals opinion in Williams, et al. v. Collins, et al. presents such an opportunity. In the case, the sole member of a Texas-domiciled limited liability company (LLC) and the LLC were sued in Davidson County. While noting that Tennessee permits jurisdiction to the extent constitutionally permissible under the federal Due Process Clause of the 14th Amendment, the court found that there was no jurisdiction over the defendant company because the LLC was not registered as a foreign company in Tennessee (and additionally, had no agent for service of process), had no physical presence or bank account in Tennessee, and had not advertised its services in Tennessee. In focusing the analysis on the defendant’s relationship with Tennessee, and not the relationship between the defendant and the plaintiff, the court noted that the only relevant contact that the defendant company had with Tennessee was sporadic communication with the plaintiff, who had moved to Tennessee after the contract was executed. The appellate court upheld the dismissal for lack of personal jurisdiction over both the LLC and its sole member.
While the Mallory court stated the matter at issue was “not a new one” but rather “a very old question” which had been resolved over a century ago, many commentators viewed the opinion as an expansion of personal jurisdiction jurisprudence applicable to corporations.[1] As recently noted, the 6th Circuit has yet to address this issue, under Tennessee law or any state within the circuit.[2] Regardless of whether the Mallory Court answered a new question or reminded us about an old one previously decided, many lawyers probably agree that the issue of personal jurisdiction over a corporation, which, prior to the Mallory opinion, was generally regarded as well-settled, has been somewhat disrupted by the recent U.S. Supreme Court decision. Decisions by Tennessee appellate courts analyzing the circumstances that do and do not give rise to specific personal jurisdiction over entities domiciled in foreign states but sued in here may be more in the spotlight because of the jurisdictional jurisprudence waters churned in the wake of the Mallory opinion.
Justin Joy, a shareholder in the Memphis office, recently wrote the above article, Tennessee Court of Appeals Dismisses Case (post-Mallory) for Lack of Personal Jurisdiction which was in the March 13 2024 Business Law Section of TBA Connect.
[1]. While not addressed in Mallory, there is no reason why the consent through registration analysis would not apply equally to limited liability companies.[2]. Davidson v. Nguyen-Sperry, No. 2:22-cv-4376, 2023 U.S. Dist. LEXIS 207465, at *6 n.1 (S.D. Ohio Nov. 20, 2023) (stating “the 6th Circuit . . . [has not] had the opportunity to consider the impact of Mallory on the case law.”)
[2]. Davidson v. Nguyen-Sperry, No. 2:22-cv-4376, 2023 U.S. Dist. LEXIS 207465, at *6 n.1 (S.D. Ohio Nov. 20, 2023) (stating “the 6th Circuit . . . [has not] had the opportunity to consider the impact of Mallory on the case law.”)