BILL NUMBER: S7476
SPONSOR: GIANARIS
 
TITLE OF BILL:
An act to amend the civil practice law and rules, the business corpo-
ration law, the general associations law, the limited liability company
law, the not-for-profit corporation law and the partnership law, in
relation to consent to jurisdiction by foreign business organizations
authorized to do business in New York
This is one in a series of measures being introduced at the request of
the Acting Chief Administrative Judge upon the recommendation of her
Advisory Committee on Civil Practice.
This measure would amend § 1301 of the Business Corporation Law (BCL) to
reinforce the continuing viability of consent as a basis for general
(all-purpose) personal jurisdiction over foreign corporations authorized
to do business in New York. In so doing, the measure serves a substan-
tial public interest. Being able to sue New York-licensed corporations
in New York on claims that arose elsewhere will save New York residents
and others the expense and inconvenience of traveling to distant forums
to seek the enforcement of corporate obligations. The measure likewise
amends the General Associations Law, the Limited Liability Company Law,
the Not-for-Profit Corporation Law, and the Partnership Law to encompass
other similarly situated foreign business organizations that must regis-
ter to do business in New York.
Until recently, a foreign corporation doing business in New York could
be sued here on claims arising anywhere in the world. The doing of busi-
ness in New York, such as soliciting and facilitating orders for New
York sales from an office in New York staffed by corporate employees,
was treated as corporate "presence," which traditionally allowed for the
assertion of general personal jurisdiction. When general jurisdiction
exists, the claim being sued upon need not arise out of activity of the
corporate defendant in New York. These principles were articulated in
the 1917 case of Tauza v. Susquehanna Coal Co., 220 N.Y. 259, and
carried forward by CPLR 301.
In the 2014 decision in Daimler AG v. Bauman, 134 S.Ct. 746 (2014),
however, the U.S. Supreme Court held that due process requires more than
the doing of business in a state before the courts of that state may
assert general jurisdiction. By analogy to the assertion of general
jurisdiction over individuals domiciled in the state, the corporation
must be "at home" in the state. This means that the only type of local
activity by a corporation that will ordinarily qualify for general
jurisdiction is incorporation in the state or maintenance of its princi-
pal place of business in the state. Id. at 760-62. Doing business in the
state, by itself, will not suffice, even if such business is conducted
on a regular and systematic basis from a local office or other facility.
Tauza-type general jurisdiction, therefore, is no longer available in
New York for those seeking to enforce corporate obligations incurred
outside the state. On the other hand, Daimler's at-home requirement has
no application to cases in which a corporation is subject to "specific"
jurisdiction pursuant to a long-arm statute, such as CPLR 302, which
confers jurisdiction for claims arising from a defendant's local acts.
Because Daimler's limitation on general jurisdiction was decided on the
basis of constitutional due process, amending the CPLR to explicitly
confer general jurisdiction over foreign corporations simply because
they are doing business in the state would be futile. The Daimler
Court, however, did not address consent-based general jurisdiction that
occurs through corporate licensing and registration with the Secretary
of State. (See 134 S.Ct. at 75556, citing the "textbook case" of Perkins
v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), for guidance as
to circumstances that permit exercise of general jurisdiction "over a
foreign corporation that has not consented to suit in the forum.")
A foreign corporation, as a condition of doing business in New York,
must apply for authorization to do so from the New York Secretary of
State. BCL § 1301(a). As a part of such licensing and registration, BCL
§ 304(b) specifies that the corporation must designate the Secretary of
State as its agent upon whom process may be served in a New York action.
See also BCL § 1304(a)(6). Furthermore, BCL § 304(c) provides that
foreign corporations already authorized to do business in New York as of
the 1963 effective date of the BCL were "deemed" to have made such
designation. (During the statutory regime that preceded adoption of the
BCL, foreign corporations seeking authorization to do business in New
York could appoint either a private individual or a public officer as
agent upon whom process could be served. See Karius v. All States
Freight, Inc., 176 Misc. 155, 159 (Sup.Ct. Albany Co. 1941)).
From 1916 until the decision in Daimler, New York courts - State and
Federal held that a foreign corporation's registration to do business in
New York constitutes consent by the corporation to general personal
jurisdiction in the New York courts. Judge Benjamin N. Cardozo wrote in
Bagdon v. Philadelphia & Reading Coal & Iron Co., 217 N.Y. 432 (1916),
that such consent flows from the foreign corporation's statutorily
required designation of a New York agent for service of process:
"The person designated is a true agent. The consent that he shall repre-
sent the corporation is a real consent. He is made the person "upon whom
process may be served." The actions in which he is to represent the
corporation are not limited. The meaning must, therefore, be that the
appointment is for any action which under the laws of this state may be
brought against a foreign corporation. . . that whenever jurisdiction
of the subject matter is present, service on the agent shall give juris-
diction of the person."
Id. at 436-37. Judge Cardozo rejected the notion that the consent at
issue in Bagdon was limited to claims that arose from the foreign corpo-
ration's New York activity. The consent extended to all claims, regard-
less of where they arose. Id. at 438.
Nonetheless, the Court of Appeals last year ruled by five to two vote
that our existent New York statutes do not "condition the right to do
business on consent to the general jurisdiction of New York courts or
otherwise afford general jurisdiction to New York courts over foreign
corporations that comply with these conditions." Aybar v. Aybar, 37
N.Y.3d 274, 283 (2021). As the Aybar majority saw it, Bagdon' s true
holding "when viewed in the context of the controlling jurisprudence of
the time" was merely that a corporation that chose to register to do
business per the BCL consented to be served via the designated agent,
not that it consented to be sued as to claims that did not arise from
its in-state activity (id. at 284).
After having concluded that our existent statutes do not purport to
condition registration upon consent to New York jurisdiction, the Aybar
majority expressly declined to say whether the Legislature could do so
if it wished: "Inasmuch as our conclusion rests solely on New York law
grounds, we have no occasion to address whether consent-by-registration,
if it existed in New York, would comport with federal due process under
 
DAIMLER." Aybar, 37 N.Y.3d at 291.
Notably, the two dissenters in Aybar reached the issue the majority
declined to reach: whether consent by registration was constitutional.
They answered in the affirmative. The reasoning was that such would be
unconstitutional only if consent was coerced, and that such was plainly
not the case. Thus, in the case then before the Court, no one forced
Ford to do business in New York. More than that, Ford did not have to
register in order to do business in New York. It had to register only if
it wanted to bring suit in New York in those cases in which it preferred
to bring its suit in New York. The dissent put it this way:
As the United States Supreme Court has recently articulated, "unconsti-
tutional conditions" cases are ones in which "someone refuses to cede a
constitutional right in the face of coercive pressure" ( 
KOONTZ V. ST.
JOHNS RIV. WATER MGT. DIST., 570 U.S. 595, 607, 133 S. CT. 2586, 2596,
186 L.ED.2D 697 (2013)).ct. Ford and Goodyear have identified no
authority supporting their assertion that they are being forced to cede
a constitutional right. Nor do they face coercive pressure. Ford and
Goodyear incorrectly frame their choice as "consent to general jurisdic-
tion or stop doing business in New York." They are correct they have a
choice, which itself undermines their coercion argument. But their
choice is much less severe: it is to consent to personal jurisdiction or
forfeit the ability to initiate an action in New York's courts if the
court finds that the corporation is doing business without having regis-
tered (N.Y. Bus Corp L § 1312). Indeed, corporations derive the greater
benefit in their bargain with the State. A corporation may do business
here without registering-thereby rendering itself immune to suit here on
causes of action beyond the jurisdiction of our courts-until the moment
it decides it wants to sue in New York, and then it can register. In
addition, nothing deprives a corporation from making non jurisdictional
arguments to move a suit out of New York; for example, forum non conven-
iens remains an available tool to litigants. It is New York. State that
bears the cost if its residents are unable to recover against an unreg-
istered corporate defendant.
Aybar, 37 N.Y.3d at 310-311.
Consent to general jurisdiction is a fair requirement to impose on
corporations that benefit from conducting business in New York. Such
consent provides the certainty of a forum with open doors for the
enforcement of obligations of New York-licensed corporations without the
expense and burden of proving jurisdiction on a case-by-case basis. In
Daimler, the Supreme Court recognized the value of having an "easily
ascertainable" and "clear and certain forum in which a corporate defend-
ant may be sued on any and all claims." 134 S.Ct. at 760.
There is substantial judicial support for the proposition that the
proposed addition to BCL sec. 1301 would pass constitutional muster.
The Pennsylvania registration statute has for years provided that "qual-
ification" of a foreign corporation "shall constitute a sufficient basis
of jurisdiction to enable the tribunals of this Commonwealth to exercise
general personal jurisdiction", and that explicit notice has insulated
general jurisdiction claimants from dismissal in a plethora of cases.
See, e.g., Healthcase Servs. Grp. V. Moreta, 2019 U.S.Dist. LEXIS
198954 (E.D.Pa.), and Gronch Co., Inc. v Simon Prop. Group, Inc., 2019
N.Y.Misc. LEXIS 1821, *7 (Sup.Ct.N.Y.Co) rejecting general jurisdiction
because section 1304, as currently written, "does not expressly require
a corporation to consent to jurisdiction to do business within the
state."
Enactment of the proposed addition to BCL sec. 1304 will not burden the
New York courts with cases which ought not to be litigated here when
corporate defendants are registered in New York, courts retain the
discretionary power to decline the exercise of jurisdiction over them in
the interests of justice and convenience pursuant to the doctrine of
forum non conveniens. CPLR 327; see, e.g., Bewers v. American Home
Products Corp., 99 A.D.2d 949 (1st Dep't), affd, 64 N.Y.2d 630 (1984).
BCL § 1312(a) will continue to provide an indirect enforcement mechanism
to encourage foreign corporations doing business in New York to become
authorized and thereby confer consent to general jurisdiction. BCL §
1312(a) states that a foreign corporation doing business in New York
without authority may not maintain an action in the state's courts until
it obtains the necessary authorization and pays relevant fees, taxes,
penalties and interest charges. This statute "regulate 
S foreign corpo-
rations which are conducting business in New York so that they will not
be on a more advantageous footing than domestic corporations." Reese v.
Harper Surface Finishing Systems, 129 A.D.2d 159, 162 (2d Dep't 1987).
BCL § 13 12(a) applies to corporations engaged in "regular, systematic
and continuous" business in New York. See, e.g., Highfill, Inc. v.
Bruce and Iris, Inc., 50 A.D.3d 742, 743 (2d Dep't 2008). This standard
encompasses corporations that maintain offices or other facilities in
New York for the purpose of engaging in a mix of local and interstate
business and provides sufficient flexibility for the inclusion of corpo-
rations that do business in New York without a fixed location, as was
the case in High/Ill. It has been noted that the "regular, systematic
and continuous business" standard helps to ensure compliance with
constitutional limits on state regulation of purely interstate business.
See Airtran New York, LLC v. Air Group, Inc., 46 A.D.3d 208, 214 (1st
Dep't 2007).
Consistent with the history, policy and caselaw relating to foreign
business corporations, this measure also codifies the principle that
other types of foreign business organizations consent to general juris-
diction when they do business in New York and, pursuant to statute,
expressly appoint the Secretary of State as their agent upon whom proc-
ess may be served. This measure thus includes foreign joint stock asso-
ciations and business trusts (see Gen. Assoc. Law §§ 18; 2(4) (these are
the only "associations" that must designate the Secretary of State as
agent)); foreign limited liability companies (see Ltd. Liability Co. Law
§§ 301(a); 802(a)); foreign not-for-profit corporations (see Not-for-
Profit Corp. Law §§ 304. 1301, 1304(a)(6)); foreign limited partnerships
(see Partnership Law §§ 121-104; 121-902); and foreign limited liability
partnerships (see Partnership Law § 121-1502).
Authorized foreign corporations not wishing to continue their consent to
jurisdiction may, of course, surrender their authority to do business in
New York at any time in accordance with BCL § 1310. Other types of busi-
ness organizations may likewise withdraw their authorization or certif-
icate of designation to do business in the State. Currently, however,
there is no statutory language specifically delineating the date upon
which the consent to jurisdiction is deemed withdrawn. Accordingly, this
measure would also enact a new CPLR 301-a to provide that where a busi-
ness organization which is registered, authorized or designated to do
business in this state surrenders, withdraws or otherwise revokes its
registration, authorization or certificate of designation, its consent
to jurisdiction terminates on the date of such surrender, withdrawal or
revocation.
With respect to not-for-profit corporations, the amendment of the Not-
for-Profit Corporation Law (§ 1301(e)) recognizes that some not-for-pro-
fits, such as religious corporations, are exempt from the requirement
that they designate the Secretary of State as an agent upon whom process
may be served. See Relig. Corp. Law § 2-b. See also Not-for-Profit Corp.
Law § 113(b); Private Housing Finance Law § 13-a (limited-profit housing
companies). In such cases, consent-based jurisdiction is lacking.
Furthermore, foreign banks and foreign insurance companies are excluded
from this measure. Although these foreign entities must register to do
business in New York, their concomitant designation of the Secretary of
Banking and the Secretary of Insurance, respectively, as an agent upon
whom process may be served is explicitly limited by statute to a narrow
range of claims. See Banking Law § 200(3); Ins. Law § 1212(a).
This measure, which would have no fiscal impact on the State, would take
effect on the first of January next succeeding the date on which it
shall have become law.
 
LEGISLATIVE HISTORY 2022:
A10469 (MA Weinstein)(Ref to Judiciary)
OCA-95
 
LEGISLATIVE HISTORY 2021:
A7769 (MA Weinstein)(PASSED)(Vetoed memo 79)
S7253 (Sen Gianaris) (PASSED)
 
LEGISLATIVE HISTORY 2019-2020:
A7595 (MAWeinstein) (ref to Rules-2019; reported to Rules 2020)
S6352 (Sen Kaplan) (ref to Rules-2019; recommitted to Rules 2020)
 
LEGISLATIVE HISTORY 2017-2018: S5889 (Sen Bonacic) (committed to
Rules-2017; referred to Judiciary-2018)
A5918 (MA Weinstein) (advanced to 3rd Rdg-2017; ordered to 3rd Rdg Cal.
421-2018)
 
LEGISLATIVE HISTORY 2015-2016:
S4846 (Sen Bonacic) (committed to Rules)
A6714 (MA Weinstein) (PASSED in 2015; ordered to 3rd Rdg.,
Cal. 253-2016)
 
LEGISLATIVE HISTORY 2014:
S7078 (Sen Bonacic) (subst. by Assembly 9576)
A9576 (MA Weinstein) (PASSED; committed to Rules)

Statutes affected:
S7476: 1301 business corporation law, 18 general associations law, 802 limited liability company law, 121-902 partnership law, 121-1502 partnership law