Opinion ID: 2588382
Heading Depth: 1
Heading Rank: 5

Heading: Due Process Under K.S.A.2005 Supp. 17-7301

Text: The principle issue in most cases addressing consent statutes such as K.S.A. 2005 Supp. 17-7301 is not whether the statute provides a basis for jurisdiction but whether the exercise of jurisdiction under the provision comports with due process. Consent jurisdiction over corporations was recognized by the United States Supreme Court in the 1917 decision of Pennsylvania Fire Ins. Co., 243 U.S. at 95, 37 S.Ct. 344. The Court held that the Missouri requirement of consent to service of process did not deprive a foreign insurance company of due process even though the consent was its only apparent contact with Missouri. Pennsylvania Fire has not been expressly overruled and subsequently many courts have determined that a corporation's consent to jurisdiction satisfies due process. E.g., Bane, 925 F.2d at 640; Knowlton, 900 F.2d at 1199-1200; Holloway, 739 F.2d at 696-97; Sternberg, 550 A.2d at 1109, 1111. Novak is consistent with this line of cases. With little discussion and without engaging in any analysis of minimum contacts, the Novak court held that an insurer's presence in the state and consent to jurisdiction under K.S.A. 40-218 established personal jurisdiction. 29 Kan.App.2d at 532-33, 28 P.3d 1033. Summarizing the issue and the case law, one commentator has stated: [T]he modern rule is that a foreign corporation which, as a condition of doing business in the state, appoints an agent upon whom service of process may be made, has thereby given effective consent to be sued not only in the state court of that state, but in the federal courts as well. A foreign corporation's qualification to do business within a state, and its formal registration there, are sometimes viewed as `consenting' to be treated as a domestic corporation, thus permitting it to be sued there on causes of action over which the state's courts would otherwise decline to exercise jurisdiction. If a foreign corporation has not expressly consented to a state's jurisdiction by registration, `minimum contacts' with that state may provide a due process basis for the state's jurisdiction. However, if a foreign corporation has expressly consented to the jurisdiction of a state by registration, due process is satisfied and an examination of `minimum contacts' is unnecessary. Due process is satisfied by express consent, since express consent constitutes a waiver of all other personal jurisdiction requirements. 18 Fletcher, Cyclopedia of the Law of Private Corporations § 8641, pp. 123-24 (rev. ed.1999). However, some courts have rejected consent as a sole ground for finding that the exercise of jurisdiction comports with due process, concluding the due process holding in Pennsylvania Fire was implicitly overruled by International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In International Shoe, the Court considered whether Washington courts could subject a Missouri-based Delaware corporation to a suit to collect a tax based upon the presence of several salesman in the state. The case departed from the traditional foundation of jurisdiction, physical presence, and adopted a minimum contacts test, stating: Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence his presence within the territorial jurisdiction of court was prerequisite to its rendition of a judgment personally binding him. [Citation omitted.] But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.' [Citations omitted.]. 326 U.S. at 316, 66 S.Ct. 154. Based upon this holding, some courts have concluded that this test is not satisfied by consent alone; other minimum contacts are required. See, e.g., Consolidated Development Corp. v. Sherritt, Inc., 216 F.3d 1286, 1292-93 (11th Cir.2000); Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 183 (5th Cir.1992); Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745, 748 (4th Cir.1971). Some commentators have also criticized the consent theory of jurisdiction based on corporate registration. See, e.g., Note, General Jurisdiction Over Foreign Corporations: All that Glitters is not Gold Issue Mining, 14 Rev. Litig. 741 (1995); Kipp, Inferring Express Consent: The Paradox of Permitting Registration Statutes to Confer General Jurisdiction, 9 Rev. Litig. 1 (1990). In the Tenth Circuit Court of Appeals, the issue has not been clearly resolved. Schreiber v. Allis-Chalmers Corp., 611 F.2d 790, 793-94 (10th Cir.1979), following transfer from a Mississippi district court, considered whether Mississippi could exercise jurisdiction in a suit brought for injuries which occurred in Kansas and which were caused by a product manufactured by a Delaware corporation, headquartered in Wisconsin, and qualified to do business in Mississippi. The Tenth Circuit Court of Appeals considered both the continuous and systematic activities of the corporation and the fact it was registered to do business in Mississippi in holding that Mississippi could sustain jurisdiction. The federal district courts in Kansas have been inconsistent. In Slawson v. Dome Petroleum Corp., 561 F.Supp. 67, 73 (D.Kan. 1983), the court concluded the defendant corporation's appointment of a resident agent coupled with proper service on that agent were sufficient to subject it to personal jurisdiction. Assuming, but not deciding, that the defendant must also have sufficient minimum contacts to validate jurisdiction, the court found such minimum contacts existed. In two unpublished opinions of Kansas federal district courts, each followed a different approach: see 2000 International Ltd. v. Chambers, 2000 WL 1801835 (D. Kan. unpublished opinion filed November 6, 2000) (citing Consolidated Development, Wenche Siemer, and Ratliff for premise that registration to do business in a state is of little consequence in general personal jurisdiction analysis); Executive Aircraft Consulting, Inc. v. Towers Financial Corp., 1992 WL 402032 (D. Kan. unpublished opinion filed December 1, 1992) (citing Knowlton and Slawson for premise that registration to do business as a foreign corporation in Kansas constitutes a consent to personal jurisdiction on any cause of action and no further due process analysis is necessary). Thus, we have the benefit of well-reasoned authority on both sides of this issue. The Delaware Supreme Court's decision in Sternberg v. O'Neil, 550 A.2d 1105 (Del.1988), is one of the more thorough discussions of the view that International Shoe does not alter Pennsylvania Fire. Rather, [i]t would appear that the due process holdings of Pennsylvania Fire Ins. Co. (express consent by registration) and International Shoe (implied consent by minimum contacts) complement one another and are neither inconsistent nor mutually exclusive. Sternberg, 550 A.2d at 1110. As the Delaware court noted, many of the cases adopting the opposing view rely upon the reference in International Shoe to the legal fiction that [a corporation] has given consent to service and suit and ignore the clarification that this reference applies to consent being implied from [the corporation's] presence in the state through the acts of its authorized agent. [Emphasis added.]. International Shoe, 326 U.S. at 318, 66 S.Ct. 154. Thus, the Court in International Shoe was not referring to the express consent obtained through qualifying to do business. Additionally, the Delaware court noted that many courts which require more than consent have cited the United States Supreme Court's decision in Perkins v. Benguet Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485, reh. denied 343 U.S. 917, 72 S.Ct. 645, 96 L.Ed. 1332 (1952); the Delaware court rejected the view that Perkins requires more than consent. Sternberg, 550 A.2d at 1111. The courts citing Perkins as a basis for concluding consent alone does not satisfy due process rely on the following sentence in Perkins: The corporate activities of a foreign corporation which, under state statute, make it necessary for it to secure a license and to designate a statutory agent upon whom process may be served provide a helpful but not a conclusive test. 342 U.S. at 445, 72 S.Ct. 413. See, e.g., Freeman v. Dist. Ct., 116 Nev. 550, 1 P.3d 963 (2000). However, as the Delaware court correctly noted in Sternberg, the context of the quoted language from Perkins is the Court's minimum contacts analysis utilized for implied consent rather than its consideration of whether there was jurisdiction conferred by express consent. The implied consent analysis was necessary because the corporation was not qualified to do business in the state and had not appointed an agent. At another point in the decision, the Court reaffirmed the concept of express consent as a basis for jurisdiction, stating: Today if an authorized representative of a foreign corporation be physically present in the state of the forum and be there engaged in activities appropriate to accepting service and receiving notice on its behalf, we recognize that there is no unfairness in subjecting that corporation to the jurisdiction of the courts of that state through such service of process upon that representative. Perkins, 342 U.S. at 444, 72 S.Ct. 413. The Delaware court also noted the concept of express consent was recognized in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (Where a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there, due process is satisfied if the defendant has minimum contacts with the forum), and Bendix Autolite Corp. v. Midwesco Enterprises, 486 U.S. 888, 893, 108 S.Ct. 2218, 100 L.Ed.2d 896 (1988) (appointment of an agent for service of process would operate as a consent to general jurisdiction in any cause of action, including those in which it did not have minimum contacts necessary for supporting personal jurisdiction, without offending the requirements of due process). Sternberg, 550 A.2d at 1112; see also Burnham v. Superior Court of Cal., Marin County, 495 U.S. 604, 616, 110 S.Ct. 2105, 109 L.Ed.2d 631 (1990) (rejecting argument that there must be continuous and systematic contacts even where an individual defendant was served with process in the state; finding the argument rests on a thorough misunderstanding of cases). The Delaware court's analysis in Sternberg is persuasive and effectively refutes the arguments of courts adopting the opposing view. Moreover, much of the opposing analysis is based upon the argument that the consent is not an express agreement because the statutes often relate to service, not jurisdiction. One commentator argues that if states want their corporate registration statutes to establish general jurisdiction over foreign corporations, they should include an express consent provision in the statute, rather than simply inferring consent from the corporation's appointment of a resident agent. Kipp, 9 Rev. Litig. at 43-44. As an example of a state statute which successfully establishes general jurisdiction, Kipp cites Arkansas' statute, which provides: `Before authority is granted to any foreign corporation to do business in the State, it must file with the Secretary of State a resolution adopted by its board of directors, consenting that service of process upon the registered agent of the company in this state, or upon the Secretary of State of this state, in any action brought or pending in this state, shall be a valid service upon said company.' Kipp, 9 Rev. Litig. at 44 (quoting Ark. Stat. Ann. § 64-1223 [1980]). The Kansas statute is virtually identical and contains an equally clear provision requiring a foreign corporation to file an irrevocable written consent . . . that actions may be commenced against it . . . by service of process on the secretary of state . . . and stipulating and agreeing that such service shall be taken and held, in all courts, to be as valid and binding as if due service had been made upon an officer of the corporation. K.S.A.2005 Supp. 17-7301(b)(7). In other words, Kansas does not merely infer consent to jurisdiction from a foreign corporation's registration to do business and appointment of a resident agent; Kansas requires express written consent to jurisdiction. We hold that the Due Process Clause is not violated when jurisdiction over a foreign corporation is based upon the corporation's express written consent to jurisdiction under K.S.A.2005 Supp. 17-7301(b)(7). In this case, the plaintiff alleges that some defendants have expressly consented and others have consented through the actions of an affiliated company. This later theory seems to suggest an alter ego theory. See Farha v. Signal Companies, Inc., 216 Kan. 471, 479-81, 532 P.2d 1330 (1975) (jurisdiction over a parent corporation will give the state jurisdiction over a subsidiary corporation, and vice versa, if the parent so controls and dominates the subsidiary as in effect to disregard the latter's independent corporate existence). The record is not entirely clear which corporations have agents and which corporations are merely alleged to have an agent because an affiliated corporation has a registered agent. However, the plaintiff alleges that Crompton Corporation, both of its Uniroyal subsidiaries, and Bayer Corporation were authorized to do business in Kansas pursuant to K.S.A.2005 Supp. 17-7301 and had designated an agent for service of process. These defendants have not raised the alter ego theory as an issue on appeal. We, therefore, will not address the merits or application of the theory in the context of consent jurisdiction. Rather, we accept for purposes of considering a motion to dismiss that the plaintiff has made a prima facie case that K.S.A.2005 Supp. 17-7301 applies to these defendants based upon each corporation's express consent to jurisdiction. The plaintiff suggests that the two Flexsys corporations were arguably authorized to do business in Kansas as well. The argument is based upon the allegation that the corporations are owned in part by Solutia, Inc., a corporation which had designated an agent for service of process in Kansas. Plaintiff seems to suggest that service on Solutia's resident agent would also give the court jurisdiction over the two Flexsys corporations based on the alter ego theory. However, the plaintiff has not named Solutia as a party, so service on Solutia would not equate to jurisdiction over Solutia; therefore, plaintiff cannot reach Flexsys through Solutia in this manner. Thus, we must examine whether there are other bases for jurisdiction over the Flexsys corporations and any other defendant which has not consented to jurisdiction.