FORT LAUDERDALE BUSINESS LITIGATION: PERSONAL JURISDICTION OVER FOREIGN CORPORATIONS

In business litigation, parties sometimes try to sue out-of-state corporations in the state where the plaintiff resides or conducts its business, i.e., the “home state.” Federal Constitutional law, under due process clause as applied through the Fourteenth Amendment to the United States Constitution, however, places limits on the ability to sue a foreign corporation (i.e., and out-of-state corporation) because the foreign corporation would not expect to be sued in state where it does not conduct business. Some plaintiffs have nevertheless attempted to sue foreign corporations in the plaintiff’s home state via “tag jurisdiction,” which typically means a corporation’s officer or director is present in the home state and the process server hands that person the lawsuit. This is often like a game of “tag” that children often play. The corporate officer or director is “tagged” by handing him the lawsuit, and saying in effect that his corporate employer is now subject to the lawsuit in the home state. Federal courts refer to “tag jurisdiction” as meaning personal jurisdiction based on physical presence in a state. Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

The body of case law applying “tag jurisdiction” applies to individuals, not corporations. For example, the United Supreme Court precedent in Burnham v. Superior Ct. of California, Cnty. Of Marin, 495 U.S. 604 (1990), analyzed whether a New Jersey resident husband in a divorce proceeding could be subject to “tag jurisdiction” in California while doing business there, and the plurality of the Supreme Court allowed tag jurisdiction for an individual. Similarly, in Durkee v. Durkee, 906 So. 2d 1176 (Fla. 3th DCA 2005), Florida’s Third District Court of Appeal in Miami, Florida determined there was personal jurisdiction over a husband in a divorce proceeding who was served in Florida while living and working there, regardless of whether he was a resident of Florida or Texas). The Supreme Court of Florida in Garrett v. Garrett, 668 So. 2d 991 (Fla. 1996) (concurring) stated in dicta (meaning a statement of law that is not essential to the appellate decision, and therefore is not considered precedent) that a husband living in Indiana in a divorce proceeding may have been subject to personal jurisdiction in Florida if he was served there.

By contrast, the consensus of federal circuit and district courts (including the U.S. District Court for the Southern District of Florida) is that tag jurisdiction does not apply to corporations. Although Florida courts have not addressed this, they would likely follow federal court precedent barring tag jurisdiction over foreign corporations because of their due process rights under the Fourteenth Amendment Due Process Clause of the United States Constitution. Federal courts generally have held that the Supreme Court’s decision in Burnham applies “tag jurisdiction” only to individuals. For example, the United States Court of Appeals for the Ninth Circuit in Martinez v. Aero Caribbean, 764 F.3d 1062, 1071 (9th Cir. 2014), held that “Burnham does not authorize tag jurisdiction over corporations.” Similarly, the Fifth Circuit Court of Appeals in Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 182 (5th Cir. 1992), affirmed a Texas District court ruling against personal jurisdiction over a foreign corporation where its registered agent in Texas was served, in pertinent part because “Burnham did not involve a corporation and did not decide any jurisdictional issue pertaining to corporations.” The United States District Court for the Southern District of Florida recently held in In re Inmobiliaria Tova, S.A., No. 20-24981-MC, 2021 WL 925517, at *7 (S.D. Fla. Mar. 10, 2021), that “‘Tag’ jurisdiction does not apply to corporations[.]”

There are strong public policy reasons to avoid deviating from the substantial body of federal case law declining to extend “tag jurisdiction” to corporations. From a practical standpoint, it would be an enormous burden on foreign corporations to keep tabs on directors or officers to ensure they avoid “tag jurisdiction” by refraining from physical presence in Florida. “Tag jurisdiction” over foreign corporations could lead to unreasonable and unintended consequences, such as burdening corporations with personal jurisdiction in Florida when officers or directors have connecting flights, vacation cruises, industry or professional conventions, or professional seminars in Florida, or even visit relatives such as children attending Florida colleges and universities or parents who are hospitalized in Florida.

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.