Sondergard v. Miles, Inc.

• Citation: 985 F.2d 1389
• Decision Date: 22 February 1993
• Docket Number: No. 92-1274,92-1274
• Parties: Donald Bruce SONDERGARD, Appellant, v. MILES, INC., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 1389

985 F.2d 1389

Donald Bruce SONDERGARD, Appellant, v. MILES, INC., Appellee.

No. 92-1274.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 11, 1992.

Decided Feb. 22, 1993.

Glen H. Johnson, Rapid City, SD, argued (Wayne F. Gilbert, Rapid City, SD, and Paul D. Rheingold, New York City, on the brief), for appellant.

Donald E. Shely, Detroit, MI, argued (William G. Porter and Patricia A. Meyers, Rapid City, SD, and Susan Artinian, Daniel J. Stephenson and Marie R. Deveney, Detroit, MI, on the brief), for appellee.

Before JOHN R. GIBSON and MAGILL, Circuit Judges, and VAN SICKLE, ^* Senior District Judge.

MAGILL, Circuit Judge.

Our task in this diversity of citizenship case is to consider the novel question whether the South Dakota courts would exercise personal jurisdiction over a foreign corporation based upon service of process on that corporation's registered agent, even though the cause of action arose outside the state before the corporation appointed the agent. South Dakota courts have not considered this precise question, and we can find no others that have. We believe, however, that South Dakota would accept jurisdiction over such a case, and that such jurisdiction would comply with the dictates of the due process clause. Therefore, we reverse.

I. FACTS

This products liability action comes to us on admitted facts. Appellant Donald Sondergard alleges that on October 27, 1989, he consumed Alka-Seltzer Plus cold medicine, which is manufactured by the appellee, Miles, Incorporated. Sondergard claims that the Alka-Seltzer Plus reacted chemically with the prescription drug Nardil, causing a hypertensive crisis resulting in a stroke. At the time he consumed the Alka-Seltzer Plus, Sondergard was a resident of Utah.

Miles, Incorporated, is an Indiana chartered corporation with its principal place of business in Pittsburgh, Pennsylvania. Miles produces Alka-Seltzer Plus at its Elkhart, Indiana, division. At the time Sondergard consumed Alka-Seltzer Plus, Miles sold the product in all fifty states. Miles had not at that time either registered to transact business as a foreign corporation in South Dakota or appointed an agent for service of process in South Dakota.

Two subsequent events give rise to the issue presented in this case. First, Sondergard moved from Utah to South Dakota. Second, Miles applied to the South Dakota Secretary of State for a Certificate of Authority to "do or engage in" business as a foreign corporation in South Dakota, and was granted such authority on August 30, 1991. On or about the same date, Miles appointed CT Corporation System as its registered agent for service of process in South Dakota.

Sondergard commenced the instant lawsuit in the Seventh Judicial Circuit Court, Pennington County, South Dakota, on October 9, 1991, by serving process upon CT. On November 6, 1991, Miles removed the case to the United States District Court for the District of South Dakota, Western Division, and on the same day moved to dismiss for lack of personal jurisdiction. The district court heard oral argument and granted the motion to dismiss on January 10, 1992. On January 15, 1992, Sondergard filed a motion requesting the court to reconsider its decision or in the alternative to stay its order pending limited discovery. The court denied this motion on January 24, 1992, and entered an order dismissing the case without prejudice. This appeal followed.

II. DISCUSSION

A. South Dakota Jurisdiction

South Dakota requires that foreign corporations seeking to "do or engage in any business" ¹ in South Dakota register as a foreign corporation with the secretary of state, and, inter alia, appoint a registered agent to accept process. S.D.Codified Laws §§ 47-8-1, 47-8-1.1, 47-8-11 (1991). The question we must consider is whether such appointment renders the corporation amenable to the personal jurisdiction of South Dakota's courts on any cause of action.

The analysis of personal jurisdiction questions involves two steps. We first must consider whether the state in question would accept jurisdiction under the circumstances. Then we must determine whether that exercise of jurisdiction comports with due process restrictions. Dakota Indus. v. Dakota Sportswear, 946 F.2d 1384, 1387-88 (8th Cir.1991). We examine these questions in turn.

The Supreme Court has held that states exercise two broad types of personal jurisdiction: specific jurisdiction and general jurisdiction. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414-16, 104 S.Ct. 1868, 1872-73, 80 L.Ed.2d 404 (1984). Specific jurisdiction refers to jurisdiction over causes of action arising from or related to a defendant's actions within the forum state. Id. at 414, 104 S.Ct. at 1872. General jurisdiction, on the other hand, refers to the power of a state to adjudicate any cause of action involving a particular defendant, regardless of where the cause of action arose. Id. at 415, 104 S.Ct. at 1872.

Miles argues correctly that South Dakota would not exercise specific jurisdiction in this case, as none of the actions complained of occurred within or had any connection to South Dakota. Thus, we must examine whether South Dakota has authorized the exercise of general jurisdiction over non-resident corporations, and whether it would apply the doctrine in this case.

The South Dakota Supreme Court has not held that the doctrine of general jurisdiction extends to all non-resident corporations. It has, however, discussed the issue in a more limited setting on two occasions. In Thomson v. Meridian Life Ins. Co., 38 S.D. 570, 162 N.W. 373 (1917), the South Dakota Supreme Court held that personal service upon the South Dakota insurance commissioner established valid personal jurisdiction over an insurance company registered to do business in the state even though the policy was issued and the death occurred outside the state. When considering the question of jurisdiction over the out-of-state insurance corporation, the court stated: "But it seems to be the general policy of our law to place individuals and foreign corporations coming into this state upon the same basis, so far as the right to sue them is concerned, and it is our duty to give effect to that intent until the federal courts shall affirm or deny the constitutionality of such legislation." Id. 162 N.W. at 376 (emphasis added). The court also concluded that

[t]he weight of modern authority ... seems to support the proposition that a modern corporation may be sued on a transitory cause of action in any jurisdiction where it can be found in the sense that service may be perfected upon an agent or officer transacting business for the corporation within that jurisdiction, and that in the absence of statutory provisions to the contrary, the residence of the plaintiff and the place at which the cause of action arose are not material questions to be determined to maintain jurisdiction if the corporation can be found and served.

Id. The question whether such service in fact did confer jurisdiction, as opposed to whether it merely could, was a question of legislative intent, the court said. It found such an intent in the insurance statute, noting that the statute provided for service on the commissioner "with the same effect as if the company existed in this state." Id. at 375.

The South Dakota Supreme Court considered the same issue in 1985. Sharkey v. Washington Nat'l Ins. Co., 373 N.W.2d 421 (S.D.1985). The court reaffirmed the Thomson view, noting that in Thomson, "[t]he court adopted the view that a corporation may be sued on a transitory cause of action in any jurisdiction in which it may be served with process, and that the residence of the plaintiff and the place at which the cause of action arose are immaterial to the question of jurisdiction." Id. at 425. The court's language concerning general jurisdiction is not limited solely to insurance companies, but includes all corporations.

Miles initially contends that these cases are inapposite, as they apply only to insurance companies. We disagree. Miles confuses the question of whether the South Dakota courts would accept the doctrine of general jurisdiction with the question of whether service of process on the company's registered agent confers such general personal jurisdiction. Thomson and Sharkey are irrelevant to the latter question because the courts there considered a statutory scheme limited to insurance companies. The two cases are relevant, however, to the question whether South Dakota would adopt the doctrine of general jurisdiction for all corporations. The Thomson and Sharkey courts did adopt the doctrine of general jurisdiction, as they allowed the insurance companies to be sued on causes of action arising outside the state. Moreover, the language in these cases clearly extends beyond insurance corporations to include all corporations, and suggests that if the corporation could properly be served, the court would uphold jurisdiction over any cause of action. Given South Dakota's consistent trend of broadly construing its personal jurisdiction, ² we believe that the South Dakota Supreme Court would hold that the doctrine of general jurisdiction accepted for insurance companies in Thomson and Sharkey applies to all foreign corporations.

We now must consider whether the South Dakota legislature intended a foreign corporation's appointment of an agent for service of process to constitute submission to the general jurisdiction of the South Dakota courts. As Thomson and Sharkey put it, the question is whether the corporation "can be served" with process when the cause of action arose outside the state. We believe that the South Dakota legislature intended the authority of a foreign corporation's registered agent to accept process to extend to causes of action arising outside the state prior to the appointment of the agent.

We start with the backdrop provided by this court's decision in Knowlton v. Allied...