Wal-Mart Stores, Inc. v. Lemaire

• Decision Date: 11 May 2017
• Docket Number: No. 1 CA-SA 17-0003,1 CA-SA 17-0003
• Citation: 395 P.3d 1116
• Parties: WAL–MART STORES, INC., Petitioner, v. The Honorable Kerstin LEMAIRE, Judge of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge, Kathi Buss, Real Party in Interest.
• Court: Arizona Court of Appeals

395 P.3d 1116

WAL–MART STORES, INC., Petitioner,

v. The Honorable Kerstin LEMAIRE, Judge of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge,Kathi Buss, Real Party in Interest.

No. 1 CA-SA 17-0003

Court of Appeals of Arizona, Division 1.

FILED May 11, 2017

Lewis Roca Rothgerber Christie, LLP, Phoenix, By Craig W. Phillips, Lawrence A. Kasten, Jennifer Lee–Cota, Counsel for Petitioner

The Keating Law Firm, PLC, Scottsdale, By Kevin R. Keating, Counsel for Real Party in Interest

Presiding Judge Peter B. Swann delivered the opinion of the court, in which Judge Kent E. Cattani and Judge Donn Kessler joined.

OPINION

SWANN, Judge:

¶ 1 Kathi Buss sued Wal–Mart Stores, Inc., a company incorporated in Delaware with its principal place of business in Arkansas, in Arizona over a slip-and-fall accident that occurred at a store in Oregon. Wal–Mart filed a motion to dismiss for lack of jurisdiction, and the superior court, relying on our opinion in Bohreer v. Erie Insurance Exchange , 216 Ariz. 208, 165 P.3d 186 (App. 2007), denied it, finding Wal–Mart was subject to general jurisdiction in Arizona. Wal–Mart then filed a petition for special action.¹

¶ 2 Because the facts of the case have no connection to Arizona, Wal–Mart can be sued here only if the Arizona courts have general jurisdiction over it. Buss maintains that Wal–Mart's pervasive presence and substantial business activities in Arizona are sufficient to create general jurisdiction, and any claim against Wal–Mart is therefore cognizable in Arizona. We disagree. In keeping with Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011), and Daimler AG v. Bau man , ––– U.S. ––––, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014), we hold that the magnitude of a corporation's business activities in Arizona is not sufficient to create general jurisdiction when that corporation is neither incorporated nor has its principal place of business in Arizona. We further hold that foreign corporations do not impliedly consent to general jurisdiction in Arizona merely by registering as foreign corporations and appointing agents for service of process under A.R.S. §§ 10–1501 to –1510. Wal–Mart therefore is subject only to specific jurisdiction in Arizona, and actions against it in the Arizona courts must relate to its activities in the state.

JURISDICTION

¶ 3 Special action jurisdiction is discretionary, "reserved for ‘extraordinary circumstances' and is not available ‘where there is an equally plain, speedy, and adequate remedy by appeal.’ " Stapert v. Ariz. Bd. of Psychologist Exam'rs , 210 Ariz. 177, 182, ¶ 21, 108 P.3d 956 (App. 2005) (citations omitted). We accept jurisdiction when, as here, "the motion [to dismiss] reveals an absence of jurisdiction, as an appeal inadequately remedies a trial court's improperly requiring a defense in a matter where it has no jurisdiction." Sigmund v. Rea , 226 Ariz. 373, 375, ¶ 5, 248 P.3d 703 (App. 2011) (citation and internal quotation marks omitted).

DISCUSSION

¶ 4 States may exercise two forms of personal jurisdiction. First, specific jurisdiction exists when the defendant establishes minimum contacts with the forum state by purposefully directing its activities to that state, and the litigation arises out of those activities. See Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Second, general jurisdiction allows a forum state to hear any claim against the defendant, even when the facts giving rise to it have no connection to the forum. Goodyear , 564 U.S. at 919, 131 S.Ct. 2846. General jurisdiction exists over a corporation in several circumstances. For example, a corporation is subject to general jurisdiction in the state in which it is incorporated, the state in which it has its principal place of business, id. at 924, 131 S.Ct. 2846, a state in which it has consented to general jurisdiction, see id. at 928, 131 S.Ct. 2846, a state in which its "affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State," id. at 919, 131 S.Ct. 2846 (citation omitted), and in other states in "exceptional cases" where circumstances make general jurisdiction appropriate, see Daimler , 134 S.Ct. at 761 n.19.

¶ 5 Because this case arises entirely out of Wal–Mart's activities in Oregon, Arizona courts lack specific jurisdiction. The sole issue in this special action is the extent to which Arizona may exercise general jurisdiction over foreign corporations. Buss suggests two theories to support general jurisdiction over Wal–Mart in Arizona: (1) by appointing an agent for service of process, it has consented to general jurisdiction, and (2) the sheer magnitude of Wal–Mart's presence in Arizona relative to other corporations means that Wal–Mart is "at home" here. We address each argument in turn.

I. WAL–MART DID NOT CONSENT TO GENERAL JURISDICTION IN ARIZONA.

¶ 6 The superior court concluded under Bohreer that Wal–Mart impliedly consented to general jurisdiction in Arizona by registering and appointing an agent to receive process here. Bohreer held that Arizona courts may exercise general jurisdiction over a foreign insurer because the insurance statutes provide "for an irrevocable appointment of the director of insurance for service of process which remains in effect ‘as long as there is in force in this state any contract made by the insurer or obligations arising therefrom.’ " 216 Ariz. at 211, ¶¶ 10–11, 165 P.3d 186 (quoting A.R.S. § 20–221(A) ). The Bohreer court interpreted § 20–221 as creating express (not implied) consent to general personal jurisdiction.

¶ 7 Wal–Mart argues that Bohreer was impliedly overruled by the United States Supreme Court's recent opinions in Goodyear Dunlop Tires Operations and Daimler AG . Those cases do not address general jurisdiction by express consent, and we need not decide the continuing vitality of Bohreer , because Wal–Mart is not registered under § 20–221.

¶ 8 No Arizona case has decided whether foreign corporations consent to general jurisdiction by registering pursuant to A.R.S. §§ 10–1501 to –1510. Those statutes provide that foreign corporations authorized to conduct business in Arizona are "subject to the same duties, restrictions, penalties and liabilities now or later imposed on a domestic corporation of like character." A.R.S. § 10–1505(B). And foreign corporations must maintain in Arizona a known place of business and a statutory agent for service of process. A.R.S. § 10–1507.

¶ 9 We hold that these provisions do not create general personal jurisdiction over foreign corporations, either by prescription or consent. First, corporations do not expressly consent to general jurisdiction by registering. The equal treatment of foreign and domestic corporations prescribed by § 10–1505(B) refers to substantive liabilities and duties without any mention of general jurisdiction. Had the Legislature intended to endow Arizona courts with the ability to hear all cases (including those in which Arizona has no interest) against all registered foreign corporations, it would have said so. We think it is unlikely that the Legislature intended to give Arizona courts the constitutionally dubious authority to hear any case against any registered foreign corporation when such cases need not involve any Arizonans.² Buss argues that it would be "manifestly unfair to Arizonans" to hold that we lack general jurisdiction over Wal–Mart such that Arizona residents cannot sue for causes of action that arise in other states. But, it is settled law that the specific-jurisdiction analysis focuses exclusively on "the relationship among the defendant, the forum, and the litigation," Walden v. Fiore , ––– U.S. ––––, 134 S.Ct. 1115, 1126, 188 L.Ed.2d 12 (2014) (citation omitted), and the convenience to the plaintiff has no bearing on whether a defendant's due process rights are violated by subjecting it to general jurisdiction.

¶ 10 Second, we conclude that the statutes do not create general jurisdiction by implied consent. A corporation cannot fairly be deemed to have consented to waive its due process rights when, as here, the statutes give no notice that such a waiver is the price of registration.

¶ 11 We acknowledge that some recent decisions still hold that consent to service of process is consent to general personal jurisdiction. See, e.g. , Senju Pharm. Co. v. Metrics, Inc. , 96 F.Supp.3d 428, 439–40 (D.N.J. 2015) ; Otsuka Pharm. Co. v. Mylan Inc. , 106 F.Supp.3d 456, 467 (D.N.J. 2015). The Senju and Otsuka courts reasoned that because the Supreme Court has not expressly overruled its implied-consent jurisprudence, corporate defendants consent to jurisdiction by consenting to service of process in the forum state. Senju , 96 F.Supp.3d at 436–40 ; Otsuka , 106 F.Supp.3d at 467. We are not persuaded by those decisions.

¶ 12 The concept of consent implied from registration statutes originated in response to Pennoyer v. Neff , 95 U.S. 714, 24 L.Ed. 565 (1877), in which the Supreme Court held that state courts' jurisdiction was based on physical presence in the forum. Implied consent allowed state courts to assert jurisdiction over companies that at the time were considered "present" only within their respective states of incorporation. See Brown v. Lockheed Martin Corp. , 814 F.3d 619, 631–32 (2d Cir. 2016) (citing Bank of Augusta v. Earle , 38 U.S. 13 Pet. 519, 10 L.Ed. 274 (1839) ). Thus, registration statutes "secure[d] local jurisdiction in respect [to] business transacted within the State." Robert Mitchell FurnitureCo. v. Selden Breck Constr. Co. , 257 U.S. 213, 215, 42 S.Ct. 84, 66 L.Ed. 201 (1921). The Supreme Court's personal "jurisdiction by consent" cases, such as Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co. , 243 U.S. 93, 37 S.Ct. 344, 61 L.Ed. 610 (1917), and Louisville & N.R. Co. v. Chatters , 279 U.S. 320, 328, 49 S.Ct. 329...