In a recent decision, Rassmussen v. General Motors Corp., 2011 WI 52 (July 11, 2011), the Wisconsin Supreme Court held that personal jurisdiction of a defendant under Wisconsin’s "long-arm statute" cannot be based merely on its agency relationship with an entity having sufficient contacts with the state.

The Court was addressing a class action suit brought against various automobile manufacturers for price fixing.  Among those manufactures was Nissan Japan.  The plaintiff maintained that its subsidiary, Nissan North America, which unquestionably engages in substantial activity within the state, functions as Nissan Japan’s alter-ego and that therefore Wisconsin courts have personal jurisdiction of Nissan Japan.

A majority of the Court disagreed.  It determined that even though Nissan North American is a subsidiary of Nissan Japan, and even if it as an agent of Nissan Japan, that is not sufficient to create personal jurisdiction to sue Nissan Japan in a Wisconsin court.  It must also be shown that the nonresident parent corporation exercises sufficient control over the subsidiary doing business in the state with respect to the minimum contacts necessary to establish personal jurisdiction.

The decision presents some interesting questions regarding the control by a parent corporation necessary to establish personal jurisdiction.  Arguably, merely profiting from a subsidiary’s contacts with Wisconsin, regardless of how extensive the profit may be, may not be enough to subject a parent to personal jurisdiction.  In addition, failing to exercise control with respect to pertinent contacts and activities while exercising control of others, would protect parent corporations from suit in a Wisconsin court.