Illinois Supreme Court homes in on “at home”

Merely doing business, even if continuous and systematic, is not enough to comport with federal due process and subject a nonresident defendant to general personal jurisdiction in Illinois. The Illinois Supreme Court recently denied jurisdiction over a nonresident defendant in an insurance dispute that gained widespread attention from major corporations and the Illinois Trial Bar. On September 21, 2017, the Court issued its opinion in Aspen American Insurance Company v. Interstate Warehouse, Inc., reversing the First District Appellate Court and holding that the plaintiff failed to meet its burden of establishing a prima facie basis to exercise personal jurisdiction over the defendant. 2017 IL 121281, ¶ 18.

Aspen American Insurance (Aspen) sued Interstate Warehousing, Inc. (Interstate) in Illinois state court, alleging that the roof of Interstate’s Michigan warehouse collapsed and caused damage to Aspen’s insured. Id. at ¶ 1. Like many plaintiffs before it, Aspen argued that because the defendant was operating and registered to do business in Illinois, it could be sued on causes of action unrelated to its activities in Illinois. Id. at ¶ 8. Interstate, an Indiana Corporation, moved to dismiss for lack of personal jurisdiction under Daimler AG v. Bauman, 134 S. Ct. 746, 748 (2014), asserting that its operation of a warehouse in Joliet was insufficient to subject it to general personal jurisdiction in Illinois. Id. at ¶ 6. In response, Aspen presented evidence of Interstate’s corporate registration to do business in Illinois and argued on appeal that Interstate’s continuous and substantial business in Illinois establishes a prima facie case of general jurisdiction. Id. at ¶ 8, 15.

The Court rejected Aspen’s contention that an Illinois court may exercise general jurisdiction under the Illinois “long arm” statute pursuant to either subsection (c) or (b)(4). 735 ILCS 5/2-209. In so doing, the Court recognized:

…[T]o comport with the federal due process standards laid out in Daimler …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.

Id. at ¶ 20.

The Court also specifically noted that although Aspen established that Interstate was doing business in Illinois through its Joliet warehouse, that fact alone fell “far short of showing that Illinois is a surrogate home for [Interstate].” Id. at ¶ 19. The Court recognized that Daimler instructs that the test for general jurisdiction is whether a defendant is “essentially at home,” while rejecting a test based simply on whether a defendant’s in-state contacts are “continuous and systematic.” Id. at ¶ 16. Accordingly, Illinois litigants can no longer rely entirely on subsection (b)(4) of the long-arm statute, authorizing a court to exercise jurisdiction over a defendant “doing business within this State.” Id. at ¶ 21.

Finally, the Court found that jurisdiction could not be established under the Illinois Business Corporation Act (Act). 805 ILCS 5/1.01 et seq. The Court reasoned that the Act does not require (or make any mention of) foreign corporations consenting to general jurisdiction, but rather gives authority to transact business in Illinois.

Overall, the holding in Aspen gives clarity to the application of Daimler in contesting personal jurisdiction in Illinois. With its latest decision, Illinois Supreme Court jurisprudence aligns with other jurisdictions holding that the test for general jurisdiction is whether the corporation is “essentially at home” in the forum state. 