Facts
- Benguet Consolidated Mining Co. was a Philippine corporation that owned and operated gold and silver mines in the Philippines.
- During World War II and the Japanese occupation of the Philippines, the company’s mining operations were suspended.
- The corporation’s president, an American citizen, returned to Ohio and conducted corporate affairs there for a period.
- In Ohio, the corporation carried on “continuous and systematic, but limited” business activities, including directors’ meetings, maintaining correspondence and records, using bank accounts, making stock transfers, paying salaries, and purchasing machinery.
- A shareholder, Lilian Perkins, filed two Ohio state-court actions: one seeking unpaid dividends and another seeking damages for failure to issue stock certificates.
- The asserted claims arose outside Ohio and did not relate to the corporation’s Ohio activities.
- Perkins served process on the corporation’s president while he was in Ohio.
Issues
- Whether the Due Process Clause of the Fourteenth Amendment permitted Ohio courts to exercise in personam jurisdiction over a foreign corporation based on continuous and systematic in-state corporate operations when the claims were unrelated to those operations.
- Whether the Federal Constitution either required Ohio to provide a forum for the suits or barred Ohio from doing so on due process grounds.
Decision
- The U.S. Supreme Court vacated the Ohio Supreme Court’s judgment and remanded for further proceedings.
- The Court held that the Federal Constitution did not require Ohio to open its courts to these actions.
- The Court also held that due process did not forbid Ohio from exercising jurisdiction over the corporation on these facts.
- The Court concluded that the corporation’s Ohio activities were sufficiently substantial in nature and continuity to permit Ohio to entertain the suits, despite the lack of a connection between the claims and Ohio.
- Because it was unclear whether the Ohio Supreme Court had rejected jurisdiction as a matter of state law or as constitutionally compelled by the Fourteenth Amendment, remand was necessary.
Legal Principles
- A state may, consistent with the Due Process Clause, exercise general personal jurisdiction over a foreign corporation when the corporation’s forum activities are continuous and systematic and constitute a limited but ongoing part of its general business.
- Due process sets an outer boundary on state-court jurisdiction; within that boundary, a state may choose by state law whether to assert jurisdiction.
- The Federal Constitution neither compels a state to provide a forum for claims against a foreign corporation in these circumstances nor prohibits the state from doing so when the defendant’s forum contacts are substantial.
- When a state-court decision is ambiguous as to whether it rests on state law or federal constitutional grounds, vacatur and remand may be appropriate to allow the state court to clarify its basis.
Conclusion
The Court held that Benguet’s continuous and systematic corporate operations conducted from Ohio during wartime were sufficient, as a matter of federal due process, to allow Ohio to exercise general jurisdiction over the corporation for claims unrelated to Ohio, while emphasizing that Ohio remained free under state law to accept or decline jurisdiction within constitutional limits.