Businesses Can Often Sue Foreign Corporations In Georgia

As business litigation lawyers, we can tell you that as technology has increasingly made the United States a smaller place to do business, it is now commonplace for Georgia businesses and Georgia residents to regularly transact business with companies based in other states hundreds or thousands of miles away. While these companies often have a presence in Georgia through stores, offices, advertising, or even just their willingness to ship their products to a Georgia address, if they are not incorporated under Georgia’s laws they are considered a foreign corporation by Georgia law. Inevitably issues can arise between foreign corporations and their customers or clients who are Georgia residents which may cause the Georgia resident to want to sue the corporation. Generally, the rule in civil litigation in Georgia is that a lawsuit must be filed in the county where the defendant who is being sued “resides.” So what happens if the defendant you are suing is a foreign corporation based in another state? Can you even sue them in Georgia?

Foreign Corporations Often Can Be Sued In Georgia

Generally, the answer is yes, you can sue a foreign corporation in Georgia if the corporation transacts business in Georgia. In order to lawfully transact business in Georgia, foreign corporations must register with the Georgia Secretary of State and obtain authorization to transact business in this state. Being authorized to transact business in Georgia involves a bit of a quid pro quo between the state and the foreign corporation. In exchange for receiving the benefits and protections of Georgia’s business and tax laws, the foreign corporation consents to being sued in the state of Georgia. This system was put in place to protect Georgia’s citizens from being wronged by a foreign corporation in Georgia and having no ability to take legal action against the company without going to the great trouble and expense of suing the foreign corporation in their foreign home state.

Look For A Registered Agent In Georgia

One of the conditions for foreign corporations to obtain authorization to transact business in Georgia is that they maintain a registered office and a registered agent in Georgia. The registered agent is the person or entity designated by the foreign corporation to be their authorized representative in Georgia to receive any lawsuits filed against the corporation. The registered agent must by physically located in Georgia at a physical address and not a post office box. The registered office is the corporation’s official location in Georgia.

By designating a registered office, the foreign corporation consents to being sued in whatever Georgia county the registered office’s address is located within. Under Georgia law, the foreign corporation may also be sued in any county where they have an office and transact business if that county is the location where the tortious injury that is the subject of the lawsuit occurred or where a contract that is the subject of the lawsuit was either entered into or was to have been performed. Thus, foreign corporations authorized to do business in Georgia can be sued in at least one Georgia county and sometimes multiple Georgia counties.

BEWARE—- Foreign Corporation Can Remove Suit From Georgia County

However, if the amount of money damages sought from the foreign corporation in the lawsuit exceeds $75,000, the foreign corporation has the right to remove the lawsuit from the Georgia trial court and have it heard instead in the closest federal court in Georgia. This is typically not that advantageous for the plaintiff pursuing the foreign corporation due to the extra time and expense involved in litigating a federal lawsuit.

Thus, it is important to include in every contract and other agreement with a foreign corporation a provision designating not only jurisdiction in Georgia for any suit between the parties but also a county in Georgia where such a suit would have to be filed and heard. This guarantees your action will not be removed to federal court.

What If The Foreign Corporation Is Not Authorized To Do Business in Georgia?

Can they still be sued here for an injury or breach of contract involving a Georgia resident? This answer is much more complicated. Georgia has what is known as a “Long Arm” statute, which along with the 14th Amendment to the U.S. Constitution (due process), governs when a foreign corporation has had sufficient contact with the state of Georgia that it can be sued in a Georgia court. There is no clear formula for whether or not the foreign corporation can be fairly subjected to defending a lawsuit in Georgia. Rather, the court must consider and weigh multiple factors including:

  • whether the foreign corporation transacted any business in Georgia
  • how regularly the foreign corporation transacts business in Georgia
  • what percentage of its revenue the corporation derives from Georgia transactions
  • whether the foreign corporation actively solicits business in Georgia
  • whether in light of the foreign corporation’s activities and transactions or lack of activities and transactions in Georgia, the exercise of jurisdiction over the corporation by a Georgia court would be fair and reasonable

A court must receive and weigh evidence regarding all of these factors and others if a foreign corporation objects to being sued in Georgia. The issue is further complicated by the tendency of the law to lag behind technology, which now easily enables online companies to market and sell their products to anyone anywhere in the United States without having a physical presence in or directly marketing their products to any specific states.

Is Mere Shipping of Product Enough?

Is the mere act of shipping a product to a Georgia address enough to subject the corporation to being sued in Georgia for any injuries or contractual issues related to the product? The issue is being continually litigated, not just in Georgia but in other states and federal courts as well, and the law continues to develop and adapt in response to the way technology continues to revolutionize the way we do business. The current case law in Georgia holds that the mere act of shipping a product into Georgia does not necessarily afford you the ability to sue a foreign corporation here in a Georgia court.

If you or your business is contemplating the pursuit of a cause of action against a foreign corporation and you have questions or concerns about the action, please do not hesitate to give one of our business litigation lawyers a call. We would be happy to help.