Aspen American Insurance Company v. Interstate Warehouseing, Inc.

2017 IL 121281

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

(Docket No. 121281)

ASPEN AMERICAN INSURANCE COMPANY, Appellee, v. INTERSTATE

WAREHOUSING, INC., Appellant.

Opinion filed September 21, 2017.

JUSTICE BURKE delivered the judgment of the court, with opinion.

Chief Justice Karmeier and Justices Freeman, Thomas, Kilbride, Garman, and

Theis concurred in the judgment and opinion.

OPINION

¶1 The plaintiff, Aspen American Insurance Company, filed a complaint in the

circuit court of Cook County in which it alleged that the roof of a Michigan

warehouse owned by the defendant, Interstate Warehousing, Inc., had collapsed,

causing the destruction of goods owned by plaintiff’s insured, Eastern Fish

Company. Defendant, an Indiana corporation, moved to dismiss the complaint for

lack of personal jurisdiction pursuant to Daimler AG v. Bauman, 571 U.S. ___, 134

S. Ct. 746 (2014). The circuit court denied the motion, and a divided appellate court

affirmed. 2016 IL App (1st) 151876. For the reasons that follow, we reverse the

judgments of the lower courts.

¶2 Background

¶3 Plaintiff’s complaint alleges the following. Eastern Fish Company (Eastern) is

a New Jersey-based corporation that sources and imports fish products. In 2013,

Eastern contracted with defendant to store some of its fish products in a refrigerated

warehouse near Grand Rapids, Michigan. On March 8, 2014, part of the

warehouse’s roof collapsed, causing ruptured gas lines and an ammonia leak. The

leak contaminated the fish products that were stored in the warehouse, rendering

them unfit for human consumption. Plaintiff, which insures Eastern, paid Eastern’s

claim for the loss and, in exchange, received subrogation rights.

¶4 On July 14, 2014, plaintiff filed this subrogation action against defendant in the

circuit court of Cook County. Plaintiff’s complaint sets forth various causes of

action, including breach of contract and negligence, and asserts that defendant is

responsible for the loss of Eastern’s fish products. The complaint also alleges that

defendant “maintain[s] a facility in or near Chicago.”

¶5 Attached to plaintiff’s complaint are several documents: a series of letters

between defendant and Eastern’s attorneys in which the roof collapse is discussed,

a copy of the warehousing contract between defendant and Eastern, and a printout

of the masthead from defendant’s website. The letterhead of defendant’s

correspondence and the warehousing contract both state that defendant’s corporate

office is located in Fort Wayne, Indiana. In addition, the letterhead, contract, and

website masthead all contain a list of eight warehouses operated by defendant

throughout the country. These include the Michigan warehouse that is at issue in

this case; a warehouse in Joliet, Illinois; two warehouses in Indiana; and other

warehouses in Colorado, Ohio, Tennessee, and Virginia.

¶6 Defendant filed a motion to quash service and dismiss plaintiff’s complaint for

lack of personal jurisdiction pursuant to section 2-301 of the Code of Civil

Procedure (735 ILCS 5/2-301 (West 2012)). In the motion, defendant did not

dispute that it was doing business in Illinois through the warehouse located in

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Joliet. However, defendant asserted that this was insufficient to subject it to general

personal jurisdiction in Illinois. Rather, according to defendant, under the United

States Supreme Court’s decision in Daimler AG v. Bauman, 571 U.S. ___, 134 S.

Ct. 746 (2014), plaintiff was required to show that defendant is domiciled or “at

home” in Illinois in order to establish jurisdiction. Defendant maintained that

plaintiff had not met this standard.

¶7 Attached to defendant’s motion to dismiss were an affidavit from Jeff Hastings,

defendant’s chief financial officer, and Ryan Shaffer, the general manager of the

Joliet warehouse. In his affidavit, Hastings states that defendant is an Indiana

corporation with its principal place of business in Fort Wayne, Indiana. Hastings

further states that defendant is “a 75% member of” Interstate Warehousing of

Illinois, LLC, a limited liability company organized under Indiana law, which also

maintains its principal place of business in Fort Wayne, Indiana. According to

Hastings’s affidavit, Interstate Warehousing of Illinois “operates” the Joliet

warehouse, while Ryan Shaffer, an employee of defendant, is the general manager.

In his affidavit, Ryan Shaffer confirms that he is the general manager of the Joliet

warehouse, is responsible for its day-to-day operations, and is employed by

defendant.

¶8 Plaintiff filed a response to defendant’s motion to dismiss in which it argued

that, because defendant was doing business in Illinois through the Joliet warehouse,

it was subject to general personal jurisdiction in this state. According to plaintiff,

defendant could, therefore, be sued on causes of action unrelated to its activities in

Illinois. Included with plaintiff’s response was a printout of a “corporation file

detail report” from the Illinois Secretary of State’s website. The report indicates

that defendant is an Indiana corporation that has been registered to do business in

Illinois since 1988. Plaintiff submitted no further filings in the circuit court and

made no discovery requests. 1

¶9 Following a hearing at which no testimony was taken, the circuit court denied

defendant’s motion to dismiss. The appellate court affirmed. 2016 IL App (1st)

1

Under Illinois Supreme Court Rule 201(l) (eff. July 1, 2014), the parties have the right

to discovery on the issue of personal jurisdiction. Jurisdictional discovery is warranted

only when it is shown that the requested discovery is “relevant to the subject matter” (Ill. S.

Ct. R. 201(b)(1) (eff. July 1, 2014)) of personal jurisdiction.

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151876. The appellate court concluded that plaintiff had made a prima facie

showing of general personal jurisdiction and that defendant had failed to overcome

this showing with contrary evidence. Justice Lampkin dissented, finding that, in

light of Daimler, plaintiff had failed to make a prima facie showing of jurisdiction.

Id. at ¶¶ 64-72 (Lampkin, J., dissenting).

¶ 10 We allowed defendant’s petition for leave to appeal. Ill. S. Ct. R. 315(a) (eff.

Mar. 5, 2016). In addition, we allowed the Illinois Trial Lawyers Association and

the American Association for Justice to file a joint amicus curiae brief in support of

plaintiff, and we allowed Certainteed Corporation, Honeywell International, Inc.,

and Union Carbide Corporation to file a joint amicus curiae brief in support of

defendant. Ill. S. Ct. R. 345 (eff. Sep. 20, 2010).

¶ 11 Analysis

¶ 12 The plaintiff has the burden of establishing a prima facie basis to exercise

personal jurisdiction over a nonresident defendant. Russell v. SNFA, 2013 IL

113909, ¶ 28 (citing Wiggen v. Wiggen, 2011 IL App (2d) 100982, ¶ 20). Where, as

here, the circuit court has determined that the plaintiff has met its burden based

solely on documentary evidence, our review is de novo. Id. On review, any

conflicts in the pleadings and supporting affidavits will be resolved in the

plaintiff’s favor but uncontradicted evidence offered by the defendant may defeat

jurisdiction. Id.

¶ 13 In Illinois, the exercise of personal jurisdiction over nonresident defendants is

authorized under the “long-arm” statute found in section 2-209 of the Code of Civil

Procedure (735 ILCS 5/2-209 (West 2012)). Plaintiff contends that subsection (c)

of the statute supports a finding of jurisdiction here. That provision states that a

court may exercise jurisdiction on any “basis now or hereafter permitted by the

Illinois Constitution and the Constitution of the United States.” 735 ILCS

5/2-209(c) (West 2012). Thus, to determine whether jurisdiction is appropriate

under subsection (c), we must consider the constitutional limits placed on a state’s

authority to exercise jurisdiction over a nonresident defendant. Because defendant

in this case does not argue that the Illinois Constitution imposes any greater

restraints on the exercise of jurisdiction than the federal constitution, we consider

only federal constitutional principles. Russell, 2013 IL 113909, ¶ 33.

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¶ 14 The United States Supreme Court has held that the federal due process clause

permits a state court to exercise personal jurisdiction over a nonresident defendant

only when the defendant has “certain minimum contacts with [the state] such that

the maintenance of the suit does not offend ‘traditional notions of fair play and

substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316

(1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Two types of

personal jurisdiction are subject to the due process analysis: specific and general.

Specific jurisdiction is case-specific. That is, specific jurisdiction exists when the

plaintiff’s cause of action arises out of or relates to the defendant’s contacts with

the forum state. Russell, 2013 IL 113909, ¶ 40 (citing Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472 (1985)). In contrast, general jurisdiction is

all-purpose. Where general jurisdiction exists, the plaintiff may pursue a claim

against the defendant even if the conduct of the defendant that is being challenged

occurred entirely outside the forum state. Id. ¶ 36 (citing Goodyear Dunlop Tires

Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011)). In this case, plaintiff does

not complain of any conduct committed by defendant in Illinois. Thus, only general

jurisdiction is at issue here.

¶ 15 Plaintiff maintains that, “consistent with U.S. Supreme Court decisions”

interpreting the federal due process clause, a state may exercise general jurisdiction

over a defendant “where the defendant has continuous and systematic general

business contacts with the forum state.” Therefore, according to plaintiff, to

establish a prima facie case of general jurisdiction under subsection (c) of the

long-arm statute, a plaintiff need only “show a defendant’s continuous and

substantial business activity in Illinois.” Plaintiff emphasizes that, in this case,

defendant’s “Illinois contacts are not tenuous or random, but have been continuous

and systematic for over twenty-five years.” For this reason, plaintiff asserts that

defendant may be subjected to general personal jurisdiction in this state. We

disagree.

¶ 16 In Daimler AG v. Bauman, 571 U.S. ___, 134 S. Ct. 746 (2014), the United

States Supreme Court held that the due process analysis for general personal

jurisdiction does not rest simply on “whether a foreign corporation’s in-forum

contacts can be said to be in some sense ‘continuous and systematic.’ ” Id. at ___,

134 S. Ct. at 761 (quoting Goodyear, 564 U.S. at 919). Such a standard, the Court

explained, is “unacceptably grasping.” Id. at ___, 134 S. Ct. at 760. Instead, the

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Court held that, under the federal due process clause, “ ‘[a] court may assert general

jurisdiction over [a] foreign *** corporation[ ] to hear any and all claims against

[it] when [its] affiliations with the State are so “continuous and systematic” as to

render [it] essentially at home in the forum State.’ ” (Emphasis added.) Id. at ___,

134 S. Ct. at 754 (quoting Goodyear, 564 U.S. at 919); see also, e.g., BNSF Ry. Co.

v. Tyrrell, 581 U.S. ___, ___ 137 S. Ct. 1549, 1558 (2017); Brown v. Lockheed

Martin Corp., 814 F.3d 619, 626-27 (2d Cir. 2016); Kipp v. Ski Enterprise Corp. of

Wisconsin, Inc., 783 F.3d 695, 698 (7th Cir. 2015) (Daimler “raised the bar” for

general jurisdiction); Sonera Holding B.V. v. Çukurova Holding A.Ş., 750 F.3d 221,

226 (2d Cir. 2014) (Daimler makes “clear that even a company’s ‘engage[ment] in

a substantial, continuous, and systematic course of business’ is alone insufficient to

render it at home in a forum” (quoting Daimler, 571 U.S. at ___, 134 S. Ct. at 761));

State ex rel. Norfolk Southern Ry. Co. v. Dolan, 512 S.W.3d 41, 51 n.6 (Mo. 2017)

(noting Daimler’s “rejection of doing business as a basis for jurisdiction”); Barrett

v. Union Pacific R.R. Co., 390 P.3d 1031, 1040 (Or. 2017) (same); ClearOne, Inc.

v. Revolabs, Inc., 2016 UT 16, ¶ 42, 369 P.3d 1269 (same).

¶ 17 The Supreme Court went on to explain in Daimler that the “paradigm” forums

in which a corporate defendant is “essentially at home” are the corporation’s place

of incorporation and its principal place of business. Daimler, 571 U.S. at ___, 134

S. Ct. at 760. The Court further noted that, in an “exceptional case,” a corporate

defendant’s activities in a forum outside its place of incorporation or principal

place of business “may be so substantial and of such a nature as to render the

corporation at home in that State.” Id. at ___ n.19, 134 S. Ct. at 761 n.19. To

illustrate what it meant by an “exceptional case,” the Supreme Court pointed to

Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952). Daimler, 571

U.S. at ___ n.19, 134 S. Ct. at 761 n. 19. In that case, the defendant corporation was

forced to relocate temporarily from the Philippines to Ohio because of World War

II. Perkins, 342 U.S. at 447-48. Ohio was thus “the center of the corporation’s

wartime activities” and, effectively, a “ ‘surrogate for the place of incorporation or

head office.’ ” Daimler, 571 U.S. at ___ n.8, 134 S. Ct. at 756 n.8 (quoting Arthur

T. von Mehren & Donald T. Trautman, Jurisdiction to Adjudicate: A Suggested

Analysis, 79 Harv. L. Rev. 1121, 1144 (1966)). As such, the defendant corporation

was subject to general jurisdiction in that state. Perkins, 342 U.S. at 448.

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¶ 18 Accordingly, in this case, to comport with the federal due process standards laid

out in Daimler and, in doing so, comply with subsection (c) of the long-arm statute,

plaintiff must make a prima facie showing that defendant is essentially at home in

Illinois. This means that plaintiff must show that 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. Plaintiff has failed to make

this showing.

¶ 19 Plaintiff does not dispute that defendant is incorporated in Indiana and

Hastings’s uncontradicted affidavit establishes that defendant’s principal place of

business is in Indiana. Further, plaintiff’s complaint does not allege, and there is

nothing in the record to suggest, that this is an exceptional case on the order of

Perkins. To be sure, plaintiff has established that defendant does business in Illinois

through the warehouse in Joliet. But this fact falls far short of showing that Illinois

is a surrogate home for defendant. Indeed, if the operation of the warehouse was

sufficient, in itself, to establish general jurisdiction, then defendant would also be at

home in all the other states where its warehouses are located. The Supreme Court

has expressly rejected this reasoning. Daimler, 571 U.S. at ___ n.20, 134 S. Ct. at

762 n.20 (“[a] corporation that operates in many places can scarcely be deemed at

home in all of them”); see also, e.g., Brown, 814 F.3d at 629 (the plaintiff failed to

establish an exceptional case under Daimler where the defendant’s contacts in the

forum state did not establish a “ ‘surrogate principal place of business’ ”); Kipp,

783 F.3d at 698 (noting Daimler’s “stringent criteria” for establishing general

jurisdiction); Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014)

(“Daimler makes clear the demanding nature of the standard for general personal

jurisdiction over a corporation”); Monkton Insurance Services, Ltd. v. Ritter, 768

F.3d 429, 432 (5th Cir. 2014) (under Daimler, it is “incredibly difficult to establish

general jurisdiction in a forum other than the place of incorporation or principal

place of business”).

¶ 20 Plaintiff has failed to show that defendant’s contacts with Illinois render it at

home in this state. To subject defendant to general personal jurisdiction would

therefore deny it due process of law. Accordingly, jurisdiction is not authorized

under subsection (c) of the long-arm statute.

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¶ 21 Plaintiff also notes, however, that subsection (b)(4) of the long-arm statute

authorizes a court to exercise jurisdiction in any action arising within or without

Illinois against any defendant “doing business within this State.” 735 ILCS

5/2-209(b)(4) (West 2012). Plaintiff asserts that jurisdiction in this case is

authorized under this provision. We reject this contention. In light of Daimler,

subsection (b)(4) cannot constitutionally be applied to establish general jurisdiction

where, as here, there is no evidence that defendant’s contacts with Illinois have

rendered it “essentially at home” in this state.

¶ 22 Finally, plaintiff argues that, because defendant has registered to do business in

Illinois under the Business Corporation Act of 1983 (Act) (805 ILCS 5/1.01 et seq.

(West 2012)), and because defendant has a registered agent in Illinois for service of

process, it has “subjected itself to the jurisdiction and laws of Illinois.” That is,

plaintiff maintains that, by registering to do business in Illinois, defendant has

effectively consented to the exercise of general jurisdiction in this state and thereby

obviated any due process concerns. Again, we disagree.

¶ 23 Section 13.05 of the Act states that “a foreign corporation organized for profit,

before it transacts business in this State, shall procure authority so to do from the

Secretary of State.” 805 ILCS 5/13.05 (West 2012). Section 13.15 of the Act (805

ILCS 5/13.15 (West 2012)) lists the requirements that must be met and information

that must be provided before authorization is approved. The Act also requires,

under section 5.05 (805 ILCS 5/5.05 (West 2012)), that each foreign (and

domestic) corporation having authority to transact business in Illinois maintain a

registered office and registered agent in this state. In addition, section 5.25 of the

Act (805 ILCS 5/5.25 (West 2012)) states that a foreign corporation having

authority to transact business in Illinois may be served with process either upon the

registered agent appointed by the corporation or upon the Secretary of State.

¶ 24 None of the foregoing provisions require foreign corporations to consent to

general jurisdiction as a condition of doing business in Illinois, nor do they indicate

that, by registering in Illinois or appointing a registered agent, a corporation waives

any due process limitations on this state’s exercise of general jurisdiction. Indeed,

the Act makes no mention of personal jurisdiction at all. Accord Surita v. AM

General LLC, No. 15 C 7164, 2015 WL 12826471, at *3 (N.D. Ill. 2015) (the Act

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“does not contain a provision with jurisdictional consent language” (emphasis in

original)).

¶ 25 Further, section 5.25(a) of the Act states that service on the registered agent of a

foreign corporation is for that process, notice or demand that is “required or

permitted by law.” 805 ILCS 5/5.25(a) (West 2012). This phrase indicates “some

limitation in accordance with law.” Brown, 814 F.3d at 636. There is no basis for

excluding constitutional due process limitations from an inquiry into what is

“permitted by law.” Id. at 636-37.

¶ 26 Plaintiff points to section 13.10 of the Act (805 ILCS 5/13.10 (West 2016)).

This provision states that a foreign corporation “shall be subject to the same duties,

restrictions, penalties, and liabilities now or hereafter imposed upon a domestic

corporation of like character.” Id. Plaintiff suggests that this provision supports a

finding of jurisdiction. However, as defendant observes, a duty is a “legal

obligation that is owed or due to another.” Black’s Law Dictionary 615 (10th ed.

2014). Personal jurisdiction is not a duty but, instead, “refers to the court’s power

‘ “to bring a person into its adjudicative process.” ’ ” People v. Castleberry, 2015

IL 116916, ¶ 12 (quoting Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc.,

199 Ill. 2d 325, 334 (2002), quoting Black’s Law Dictionary 870 (8th ed. 2004)).

Thus, the fact that a foreign corporation registered to do business in Illinois is

subject to the same duties as a domestic one in no way suggests that the foreign

corporation has consented to general jurisdiction.

¶ 27 Under the Act, a foreign corporation must register with the Secretary of State

and appoint an agent to accept service of process in order to conduct business in

Illinois. We hold, however, that in the absence of any language to the contrary, the

fact that a foreign corporation has registered to do business under the Act does not

mean that the corporation has thereby consented to general jurisdiction over all

causes of action, including those that are completely unrelated to the corporation’s

activities in Illinois. Notably, other courts have reached similar conclusions. See,

e.g., Perez v. Air & Liquid Systems Corp., No. 3:16-CV-00842-NJR-DGW, 2016

WL 7049153, at *6-9 (S.D. Ill. 2016) (interpreting the Act); Brown 814 F.3d at 641

(interpreting Connecticut law); Genuine Parts Co. v. Cepec, 137 A.3d 123 (Del.

2016) (Delaware law).

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¶ 28 Conclusion

¶ 29 For the foregoing reasons, the judgments of the appellate and circuit courts are

reversed. The cause is remanded to the circuit court to enter judgment dismissing

plaintiff’s complaint.

¶ 30 Appellate court judgment reversed.

¶ 31 Circuit court judgment reversed.

¶ 32 Cause remanded with directions.

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