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Freedom Transportation, Inc. v. Navistar International Corp.

United States District Court, D. Kansas

January 9, 2020

FREEDOM TRANSPORTATION, INC., Plaintiff,
v.
NAVISTAR INTERNATIONAL CORPORATION, ET AL., Defendants.

          MEMORANDUM AND ORDER

          JULIE A. ROBINSON CHIEF UNITED STATES DISTRICT JUDGE

         Plaintiff Freedom Transportation, Inc. filed this action against Defendants Navistar International Corporation and Navistar, Inc. (“Navistar Defendants”), Allstate Fleet and Equipment Sales of Houston, Inc. (“Allstate”), and Penske Truck Leasing Co., L.P., Penske Truck Leasing Corporation, and Penske Logistics LLC (the “Penske Defendants”), alleging a variety of claims stemming from its purchase of six allegedly defective box trucks for commercial use. The Navistar Defendants moved to dismiss under Fed.R.Civ.P. 12(b)(2), arguing that this Court could not properly exercise general personal jurisdiction over them solely on the basis of their registration to do business in Kansas under K.S.A. § 17-7931.

         In a Memorandum and Order dated September 26, 2019 (“Order”), the Court denied the Navistar Defendants' motion to dismiss, finding that the Kansas business registration statute, as interpreted by the Kansas Supreme Court, both requires consent to general personal jurisdiction in Kansas and comports with due process.[1] The Court also granted in part and denied in part motions to dismiss filed by Allstate and the Penske Defendants.

         This matter is now before the Court on the Navistar Defendants' Motion to Certify an Interlocutory Appeal (Doc. 57). The Navistar Defendants request leave, pursuant to 28 U.S.C. § 1292(b), to appeal the question of whether a foreign corporation's registration to transact business in a forum state, which is neither its state of incorporation nor its principal place of business, is a constitutionally permissible basis for establishing general jurisdiction in light of the United States Supreme Court's decisions in Goodyear Dunlop Tires Operations, S.A. v. Brown[2]and Daimler AG v. Bauman.[3] The motion is fully briefed and the Court is prepared to rule. For the reasons explained below, the Court denies the Navistar Defendants' motion.

         I. Procedural Background

         In support of their motion to dismiss, the Navistar Defendants urged the Court to find that exercising general jurisdiction on the basis of consent-by-registration would be inconsistent with Daimler, which they contend changed the landscape for analysis of general jurisdiction by rejecting the notion that a defendant corporation could be subject to general jurisdiction in every state in which it is merely “doing business.”

         In its Order, the Court noted that consent jurisdiction was recognized by the United States Supreme Court in Pennsylvania Fire Insurance Co. v. Gold Issue Mining and Milling Co., [4] and that although Daimler undoubtedly narrowed the scope of general personal jurisdiction and some courts have subsequently questioned whether Pennsylvania Fire remains good law, that case and other Supreme Court opinions sanctioning consent jurisdiction have not been expressly overruled.[5] The Court further found that binding Tenth Circuit precedent directed it to look to Kansas law to determine whether the business registration statute at issue, K.S.A. § 17-7931(g), provides a basis for general jurisdiction over registered corporations, and that the Kansas Supreme Court has held that the statute does provide for such jurisdiction through consent.[6]

         The Tenth Circuit has not yet addressed, post-Daimler, whether the Kansas business registration statute, as construed by the Kansas Supreme Court, provides a constitutional basis for general personal jurisdiction in Kansas over a defendant who registers to do business in the forum. This Court found that in the absence of specific guidance from the Supreme Court or the Tenth Circuit to the contrary, it could not disregard Supreme Court precedent finding consent by registration valid “based on speculation about how the [Supreme] Court might view jurisdiction in contexts other than that discussed in Daimler.”[7] The Court therefore found that it had personal jurisdiction over the Navistar Defendants on the basis of their consent through registration to do business in Kansas.[8] In so holding, the Court joined three other judges of this district.[9]

         II. Legal Standard

         The court of appeals may hear appeals from all final decisions of the district courts of the United States and certain interlocutory orders involving injunctions, appointing receivers, and determining rights in admiralty cases.[10] With regard to other interlocutory orders, a district judge may certify an interlocutory order for appeal when she is of the opinion that (1) such order involves a controlling question of law; (2) a substantial ground for difference of opinion exists with respect to the question of law; and (3) an immediate appeal from the order may materially advance the ultimate termination of the litigation.[11] “The[se] criteria are conjunctive, not disjunctive.”[12] The proponent of an interlocutory appeal bears the burden of establishing that all three of the substantive criteria are met.[13]

         The district court retains “first line discretion” to determine whether to certify an interlocutory order for appeal under § 1292(b).[14] If the district court determines that certification is appropriate, “the Court of Appeals may or may not decide to permit the appeal in its discretion.”[15] In deciding whether to exercise its discretion under § 1292(b), this Court is mindful that certification is “limited to extraordinary cases in which extended and expensive proceedings probably can be avoided by immediate and final decision of controlling questions encountered early in the action, ”[16] and that “there is a long-established policy preference in the federal courts disfavoring piecemeal appeals.”[17] “[I]nterlocutory appeals are not appropriate to ‘merely . . . provide review of difficult rulings in hard cases.'”[18]

         III. Discussion

         The Navistar Defendants argue that interlocutory appeal of the Court's Order denying their motion to dismiss is justified under § 1292(b) because whether a foreign corporation's registration to do business in the forum state is a constitutionally permissible basis for the exercise of general personal jurisdiction is a controlling question of law, there is substantial ground for a difference of opinion, and appeal of the Order may materially advance the ultimate termination of this litigation. In opposition, Plaintiff argues that the latter two factors are not met here.[19] The Court addresses each criterion under § 1292(b) in turn.

         A. Controlling Question of Law

         “A ‘question of law' involves the meaning of a statute, constitution, regulation, or common-law doctrine, as opposed to a question of fact.”[20] And a question of law “is controlling if resolution of the issue on appeal could materially affect the outcome of litigation in the district court”[21] or where “its incorrect disposition would require reversal of a final judgment.”[22]Plaintiff does not dispute, and the Court finds, that whether the Court may exercise general personal jurisdiction over the Navistar Defendants on the basis of their registration to do business in Kansas is a controlling question of law. There is no dispute that the Navistar Defendants are registered to do business in Kansas, and the effect of that registration on their amenability to suit in this forum is a purely legal question that does not call for the application of facts.[23]

         B. Substantial Ground for Difference of Opinion

         For substantial ground for a difference of opinion to exist, it is not enough that the issue is one of first impression, or that the only other case on point reached the opposite conclusion.[24]Rather, this standard requires that “the question presented for certification must be difficult, novel, and involve ‘a question on which there is little precedent or one whose correct resolution is not substantially guided by previous decisions.'”[25] A substantial difference of opinion may exist if the district court's ruling “appears contrary to the rulings of all courts of appeal which have reached the issue, [or] if the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point . . . .”[26]

         It is true that multiple post-Daimler circuit court decisions call into question the constitutionality of consent by registration, but these decisions do not ultimately reach the constitutional question by instead construing the statute at issue not to require consent.[27] In arguing that there exists substantial ground for a difference of opinion, the Navistar Defendants rely on these opinions and on district court cases from other circuits finding that consent by registration does not satisfy due process, even where the statute at issue contains an explicit consent provision.[28]

         However, this Court has ruled consistently with other district court judges within the Tenth Circuit who have found that consent by registration is a result that must be allowed given binding Tenth Circuit precedent directing courts to look to state law to determine whether the business registration statute at issue provides a basis for general jurisdiction over registered corporations and Supreme Court precedent endorsing consent jurisdiction.[29] In fact, Judge Carlos Murguia of this district recently denied a motion for interlocutory appeal on this precise issue, stating that he was

unconvinced that this question is one in which there is substantial ground for difference of opinion. [Defendant] cites numerous cases that have found that consent to jurisdiction by business registration is inconsistent with Daimler. All the cases, however, are from other jurisdictions, and none come from a circuit court. This court's order finding general jurisdiction is consistent with other cases in this district.[30]

         The same reasoning largely could be said to apply here. It is true, as Plaintiff points out, that the Navistar Defendants have not cited any case in which a court has ruled that consent jurisdiction under K.S.A. § 17-7931 violates due process or any case questioning the constitutionality of consent jurisdiction from within the Tenth Circuit.

         While the Court's Order is consistent with other cases from this district and from within the Tenth Circuit, the Court acknowledges that the law on the constitutionality of consent by registration is in a state of flux, that the Tenth Circuit has not spoken on the issue since Daimler, and that this Court has previously found substantial ground for a difference of opinion where a party presents “colorable arguments” in support of its alternative position.[31] Very recently, in a case involving Navistar, Inc. as the sole defendant, the United States District Court for the District of New Mexico certified for interlocutory appeal the question of whether general personal jurisdiction can be based on New Mexico's consent-by-registration statute after finding substantial ground for a difference of opinion.[32] That court noted a pre-Daimler circuit split regarding the constitutionality of jurisdiction based on registration, ...


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