Frances Guasch De La Guardia (Frances Guasch De La Guardia)
Depending on the circumstances, a nonresident foreign corporation’s travel to or email or business call into Florida may be treated as conducting business in the state such that the corporation may be amenable to suit in Florida.
Florida’s Long-Arm Statute, section 48.193, Florida Statutes, provides that a court can obtain personal jurisdiction over a foreign corporation when the corporation operates, conducts, engages in, or carries on a business or a business venture in Florida or when it has an office or agent in Florida. Personal jurisdiction may be based on either specific acts connected to the case being sued upon or general acts, unrelated to the subject litigation, that establish the foreign corporation is doing business in Florida. While the activities of the nonresident are considered collectively and must show a general course of business activity in the state for pecuniary benefit, a nonresident corporation (and its agents) should be aware that certain contacts within the state can be raised as a basis for personal jurisdiction under the statute. (The determination of whether jurisdiction is proper under Florida’s Long-Arm Statute is separate from the inquiry of whether a Florida court’s exercise of personal jurisdiction over the foreign corporation comports with the Due Process Clause of the U.S. Constitution.)
To determine whether a corporation is “carrying on business” in Florida, courts consider certain relevant factors, including:
1) whether the nonresident corporation has a presence and operates an office in Florida;
2) whether the nonresident corporation possesses and maintains a license to do business in Florida; or
3) the number of Florida clients the nonresident corporation serves and the percentage of overall revenue generated from Florida clients.
These factors do not comprise an exhaustive list of factors, as the type of conduct that constitutes “carrying on business” will vary from case to case. Thus, courts conduct a factually specific analysis of each case to determine if the nonresident corporation’s conduct in the State constitutes engaging in business.
Recently, the U.S. Court of Appeals for the Eleventh Circuit provided some guidance on when travel to, negotiations in, and use of an affiliate office in Florida can constitute carrying on business to obtain personal jurisdiction over a foreign corporation. In Pysca Panama v. Melgarejo, 537 Fed. Appx. 852 (11th Cir. 2013), the nonresident Panamanian corporation had no offices or business licenses in Florida, served no clients in Florida, and generated no revenue in Florida. Nonetheless, the plaintiff, a former employee, alleged that his Panamanian employer conducted business in Florida because it used the Florida office of an affiliate company and one of its representatives went to Florida to negotiate his contract.
Specifically, the plaintiff argued that the nonresident Panamanian corporation engaged in business when one of its corporate officers traveled to Florida to partially “negotiate” an employment contract with a Florida resident—despite that the contract was to be completely performed in Panama and governed by Panamanian law. Rejecting the plaintiff’s argument, the Eleventh Circuit determined that even if some contract negotiations had taken place in Florida that alone was insufficient. The partial negotiations of the contract—the corporate officer’s visit to Florida and series of phones calls—were found to be “limited activities” not qualifying as carrying on business in Florida. Sculptchair Inc. v. Century Arts, Ltd. 94 F. 2d 623, 628 (11th Cir. 1996) (holding that phone calls with Florida office and one hour meeting not sufficient to find nonresident was carrying on business).
Other cases, however, have found that a nonresident corporation that conducted meetings and negotiated contracts in Florida were indeed sufficient acts to subject the corporation to Florida’s jurisdiction under the long-arm statute. Future Tech, Today, Inc. v. OSF Healthcare Sys., 218 F. 3d. 1247 (11th Cir. 2000) (finding six trips to Florida and three business meetings were sufficient contact with state). A nonresident corporation, thus, must be wary of its travel to and business conduct in the state.
In Pysca, the Eleventh Circuit also addressed the presence of and use of an affiliate or subsidiary office in Florida. The Pysca court reasoned that the Panamanian corporation’s occasional and infrequent use of the affiliate’s office (unrelated to plaintiff’s contract), including the receipt of mail at the office, was not enough to establish a general course of business activity in the state. Therefore, more than occasional and insignificant business operations at an affiliate’s office is necessary to show a “general course of business activity.” Nonetheless, a nonresident corporation must tread carefully because even if the use of an affiliate’s office is infrequent, if the affiliate or subsidiary is not truly independent and is merely an agent of the nonresident corporation, personal jurisdiction may be found.
The case law in this arena continues to evolve. But to ascertain if a nonresident corporation’s conduct will be subject to Florida’s Long-Arm Statute, the court will measure the frequency of travel, the reason for the travel, the extent of the alleged negotiations, and the amount of and substance of the use of the subsidiary’s office in the state. Thus, a foreign corporation must consider its contacts carefully before venturing into the state.